[Congressional Record Volume 149, Number 96 (Thursday, June 26, 2003)]
[House]
[Pages H6107-H6178]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 2245
MEDICARE PRESCRIPTION DRUG AND MODERNIZATION ACT OF 2003--Continued
Ms. PELOSI. Mr. Speaker, the Democratic plan does just that. This
Republican bill, I repeat, is not guaranteed. It is not affordable. It
is not a defined prescription drug benefit under Medicare that our
seniors want and deserve. The Republican plan is a plan to end
Medicare. I urge my colleagues to reject this raw deal for America's
seniors and vote no on the Republican bill and yes on the very
excellent Democratic proposal.
Mr. TAUZIN. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, when we test the arguments made on the floor of the
House on a major piece of legislation such as this, it is important to
test the credibility of those arguments. The best way to test that
credibility is to first of all tell Members a fairy tale.
Once upon a time Bill Clinton proposed Medicare prescription drug
coverage for America. Once upon a time my Democratic friends, the
gentleman from California (Mr. Stark), the gentleman from Michigan (Mr.
Dingell), the gentleman from California (Mr. Waxman), the gentleman
from New York (Mr. Rangel), the gentleman from Ohio (Mr. Brown), and
many others introduced a bill, H.R. 1495.
Once upon a time Democrats recommended a bill with a $200 deductible,
80 percent cost sharing by the government up to $1,700 of drug
expenses, a doughnut hole, and then $3,000 out-of-pocket catastrophic
coverage with no defined premium. And guess what, once upon a time
their bill provided that the benefits would be provided through a PBM.
Members might ask how would the PBM be selected: By competitive
bidding.
Members might further ask how would the contracts be awarded under
this privatization of Medicare, and the answer in a fairy tale world
would be shared risk capitation of performance. But the truth is this
is not a fairy tale. It happens to be the truth. That was the
Democratic proposal on Medicare prescription drugs, but tonight
Democrats have come to the floor one after the other and criticized
this plan because it contained many of those same features. Different,
however, in some respects because this plan provides better coverage
for seniors on the bottom. In fact, while some of my friends came to
the floor and called this a sad day and said how sorry they were for
the citizens of California, this bill we proposed would put 1.4 million
California senior citizens in plans that would cost them no premiums,
no deductibles, free entry for drugs in California for 1.4 million
senior citizens, half a million in Indiana, half a million in Ohio,
half a million in Pennsylvania, almost a million in Texas, and so on
and so forth, free drug coverage under this plan, and yet the fantasy
plan offered by the Clinton administration just a few years ago
containing many of the same elements is somehow forgotten. It is
somehow put away in a closet. It is somehow not to be remembered, and
this plan is to be attacked. When we test credibility of arguments on
the floor of the House, test them against the reality of the plan
offered by the Democrats and the reality of the plan offered today.
I want to thank the gentleman from Michigan (Mr. Dingell) for the
courtesies and the respect and the statesmanship he has always shown me
in debates in committee and on the floor of House. The gentleman is a
dear friend. I wish I could say that about all Members all the time.
But let me say something, I am offended that anyone would come to this
floor and accuse anyone in this House of wanting to get old people. Do
Members think for a second they love their moms and dads any more than
we love ours?
I ask the gentleman from California (Mr. Stark), do you really
believe that? God bless them. That is the sort of unstatesmanship that
should never enter the halls of this House.
There is nobody in this House that loves their mother more than I
love my mother. I challenge Members on that. She is a three-time cancer
survivor, she is 84 years old, and she won first place at the Senior
Olympics this year in shotput, and if you give her trouble, I will sic
her on you.
There are Members who have come to the floor and said seniors cannot
understand choice. Let me tell Members something, I grew up in a
poverty family. My mom and dad never earned above poverty. They made
hard choices all their life for us. They sent three out of their four
children to college. They fed and clothed us and gave us a great
education and a chance for me to come to Congress. I love that woman
and I loved my dad as long as I had him. How dare anyone suggest
otherwise. We love our parents and grandparents the same.
We differ on how to structure this program today. Apparently we did
not a few years ago, but we do now. That is a legitimate debate and
that is worthy of this House, but to suggest that any of us care less
about old people, to suggest that any of us love those citizens who
gave so much and made those hard choices for us any less than we do is
a shame. My parents made hard choices. My mother knows how to make hard
choices. If we give her choices, she will make the right ones, just
like she did all her life. I trust her and I trust seniors in America.
We are going to give them drug coverage in Medicare and we are going to
give them other choices, too, if they want to make those choices. And
if Members do not want to help us do it today, I suggest in a month
from now when the conference
[[Page H6108]]
committee report is back after a compromise with the Senate, you might
want to join us then.
Mr. ISTOOK. Mr. Speaker, this bill will hasten the day when Medicare
will go bankrupt, and it also threatens to unravel our children's
future.
Medicare is already on shaky financial legs, and this will add
enormous extra expenses that will make it worse. Do we expect our
children to pay a lifetime of higher taxes, and still find there's
nothing left for them when they retire? That is what we face.
I would like to add prescription drug benefits, but it's wrong to
promise something we cannot pay for.
I want to preserve what's good about Medicare, not destroy it by
making extravagant promises for political gain.
The enormous extra spending under this bill will be far more than
projected. Because today's Medicare is a huge price control system,
many doctors already refuse to see Medicare patients. In just a few
years this will make it worse, including price controls that will
destroy the incentives for companies to create new medicines.
What should we be doing?
Since 76 percent of seniors already have drug coverage, we could
focus on helping those who don't. But this bill undoes the coverage for
those 76 percent, and puts them in a confusing new medical experiment.
We should be stabilizing Medicare, so it can keep the promises
already made, not making new promises that we don't have the money to
keep.
We should address the reasons why drug prices and healthcare costs
are so high. By banning re-imported drugs, we're forcing Americans to
subsidize far-lower drug prices in other countries. We should change
our policies so Americans only pay the lower world price, not a higher
price.
We should end the 130,000 pages of federal regulations that have
driven the costs of medicine and healthcare through the roof. On
average, for every hour they spend with a patient, doctors and nurses
spend another half-hour doing government paperwork.
We should stress personal responsibility in healthcare, just as we
did in welfare reform, so government resources are focused on those who
cannot care for themselves, not on those who can.
Bit-by-bit, Congress is undoing the principles of welfare reform, and
undercutting basic American principles in the process. Both political
parties are making extravagant promises today, trying to outbid each
other to win votes. Unfortunately, they are bidding with taxpayers' own
money, and our children's hopes will be crushed by the bills they will
inherit.
Mr. UDALL of New Mexico. Mr. Speaker, for far too long, as I traveled
around the state of New Mexico, seniors have told me their
heartbreaking stories of being forced to choose between purchasing
their medicine and purchasing groceries as a result of the exploding
costs of prescription drugs. Today we have an excellent opportunity to
address this tragic situation by providing a prescription drug benefit
for Medicare beneficiaries and put an end to the outrageous dilemma
facing our seniors throughout the country. In addition, we have an
historic opportunity to modernize the incredibly important Medicare
program, including updating formulas for our health care providers in
rural areas--an issue that is of particular importance to my
constituents and me.
Thankfully, H.R. 1 does address the latter concern, but unfortunately
falls far short on the critically important issue of prescription drug
coverage. The prescription drug benefit provided under H.R. 1 would be
the first step toward privatizing one of the most successful government
programs in history, leaves seniors at the mercy of insurance
companies, forces seniors into HMOs, has an incredible gap in coverage,
and does nothing to control the exploding costs of prescription drugs.
As such, I am forced to vote against H.R. 1.
Under this bill, seniors and disabled Medicare beneficiaries can
obtain their prescription drug coverage only from HMOs and private
insurance companies. Given the history of HMOs and other private health
plans in rural areas, I have serious concerns about this approach. In
fact, in 1997 in the state of New Mexico, HMOs dropped approximately
18,000 individuals because of rising costs. These individuals were left
with nowhere to turn.
H.R. 1 would put beneficiaries at a similar risk by relying on
untested private drug-only plans, which can decide whether or not to
serve rural areas, and they can decide to leave every 12 months.
Further contributing to the risk of this provision is the fact that
there is no fallback option to allow traditional Medicare to provide
prescription drug coverage if private plans decline to provide coverage
in rural areas. Because much of my district is rural, this legislation
would put the seniors in my district at particular risk. I cannot
support this.
This is greatly disappointing to me given the several major rural
healthcare provisions that are including in this legislation. The labor
share revision, the geographic physician payment adjustment, equalizing
the Medicare disproportionate share payments, increasing home health
services furnished in rural areas, critical access hospital
improvements--these are all incredibly important provisions that I
strongly support in order to help strengthen the health care system in
rural areas. I cannot, however, vote in support of H.R. 1 with the
extremely flawed prescription drug benefit included with these strong
rural health provisions.
Mr. Speaker, I strongly support adding a voluntary prescription drug
benefit to Medicare. I strongly believe that we must take action to
provide relief for our nation's seniors. I simply do not believe,
however, that H.R. 1 is the most effective way to do so. Tonight I will
be voting in support of the substitute being offered by Mr. Rangel and
Mr. Dingell.
In addition to including stronger rural provisions than those
included in the Majority's bill, the substitute includes a guaranteed
benefit of a $25 premium, a $100 deductible, 20% co-insurance, and a
$2,000 catastrophic protection. The substitute also allows for lower
drug prices by granting the Secretary of Health and Human Services the
authority to use the collective purchasing power of Medicare's 40
million beneficiaries to negotiate lower drug prices. Also, the
substitute grants access to generic drugs, and allows the safe re-
importation of pharmaceuticals, providing further tools to seniors for
gaining access to cheaper prescription drugs.
Perhaps most importantly, the substitute will not force seniors to
leave traditional Medicare to get drug coverage. Nor will they be
forced to join a private insurance plan that will restrict access to
needed drugs, deny coverage for the medicine their doctor prescribes,
or force them to change pharmacies.
Mr. Speaker, our seniors deserve a real prescription drug benefit,
not the flawed benefit included in H.R. 1. I urge my colleagues to vote
against H.R. 1 and support the substitute. Our seniors should not be
forced into the unconscionable position of being forced to choose
between medications and groceries any longer, and, unfortunately, H.R.
1 will not adequately address this situation.
Mr. SHAYS. Mr. Speaker, I rise in support of H.R. 1, the Medicare
Modernization and Prescription Drug Act. I want to begin by
appreciating the incredible time and energy that my colleague, Nancy
Johnson, has put into crafting what I consider to be a good product,
and thank her for her efforts.
When Medicare was created in 1965, the program's principal purpose
was to help seniors pay for their hospital costs. Since that time,
Medicare has not kept pace with how health care is delivered. Today, we
are bringing this program into the 21st Century by including coverage
for prescription drugs.
Our seniors need and deserve prescription drug coverage under
Medicare. This legislation will give them tremendous assistance. After
a $250 deductible, seniors will get 80 percent of their first $2,000
paid for by the program, catastrophic protection from any cost over
$3,700, and discount on all their pharmaceutical costs from an Rx Drug
Discount Card. The card will save beneficiaries between 10 and 25
percent on every purchase.
I believe this bill takes a positive step towards injecting
competition into Medicare, but I regret we did not go further in
reforming the program to ensure its solvency for future generations.
I also believe anything free, even health care, is over-utilized. I
support the House proposal to add a small co-payment to home health
care and to index Part B deductibles to inflation, and I support the
Senate proposal to have seniors pay a portion of their catastrophic
costs. This way, seniors have a greater incentive to get care because
they need it, not just because it is offered.
Finally, we must be concerned with what this program will ultimately
cost. It could go well over the $400 billion we budgeted and accelerate
the program's financial demise if we are not vigilant.
There is a lot to like in the bill we hope to pass tonight, and the
Senate has already passed a plan I can support. My hope is the House
and Senate conferees will draft a final bill that takes the best
approaches from each chamber and that we can ultimately send the
President a Medicare prescription drug bill supported by both sides of
the aisle. I urge my colleagues to support H.R. 1.
Mr. DAVIS of Illinois. Mr. Speaker, late last night, the House Rules
Committee sent a terrible message to our Nation's seniors and
hospitals. Two amendments I proposed were not allowed to pass onto the
House floor. The first amendment would have stricken the language
regarding the ``market basket'' index. Under the current bill hospitals
would lose $12 billion over the next ten years. My amendment would have
kept the funding streams toward hospitals level so that hospitals would
not be forced to make difficult cuts in services and jeopardize patient
care.
[[Page H6109]]
My second amendment would have assured that the prescription drug
benefits we members of Congress enjoy would be comparable to those of
Medicare beneficiaries. My colleagues in the Senate passed such an
amendment, but the Members of the House Rules Committee seem reluctant
to subject themselves to the very same benefits they would give our
Nation's seniors. They have sent the clear message that these benefits
are not good enough for them, the relatively young and healthy, but are
adequate for our Nation's seniors and disabled persons.
Once again this Congress has proven that the Democratic process is
not working. Not only are the voices of America's seniors not being
heard, but neither are those of Members of Congress. As we go home to
celebrate our Nation's independence, we will have to explain to our
seniors that yes, a prescription drug bill passed, but it will not
benefit them. It will not benefit middle America, it will not benefit
the poor, it will not benefit those who are already struggling to buy
their prescription drugs. It will only benefit those who can currently
afford their drugs, afford to pay more for hospital services, and
afford to pass this bill. Mr. Speaker, I oppose this rule and I oppose
the underlying bill.
Mr. HOLT. Mr. Speaker, for forty years, the federal government has
kept a promise to our nation's seniors. That promise is called
Medicare, and it means that every senior will receive affordable,
reliable health care in their later years.
Four years ago, I came to this Congress having made a promise to the
seniors in my Congressional district--that I would work to bring
Medicare into the twenty-first century by including coverage for
prescription drugs. Coverage that, like the original Medicare program,
is comprehensive, voluntary, universal, and reliable--without hampering
the innovation that has brought us so many miraculous drugs over the
past few decades.
Today I am voting to keep that promise by opposing a bill that would
undermine the Medicare program itself. H.R. 1 purports to offer seniors
coverage for the prescription drugs they rely on every day.
Unfortunately, it falls far short when held up to the spirit and
practice of Medicare.
The most distressing aspect of this bill, to me, to my constituents,
and to the AARP, is that it takes the entire Medicare program down a
short road to privatization. By the year 2010, Medicare would be
converted to a voucher program with competition between managed care
plans and traditional fee-for-service--only the deck would be stacked
against the traditional plans. Seniors would find themselves have
forced to enroll in managed care programs like the Medicare+Choice
programs that have failed so miserably in central New Jersey.
Rather than giving seniors what they want and deserve--a reliable,
affordable drug benefit under Medicare, this provision, glibly called
``premium support,'' will destabilize the program and lead to
substantially higher costs for seniors who want to stay in traditional
Medicare.
Yet another element of confusion comes from the bizarre ``donut
hole'' in coverage under this bill. Seniors would find themselves
paying 20 percent of drug costs up to $2000 in drug costs--then having
no coverage until they reach $4900 in drug costs, when a catastrophic
cap finally kicks in. Not only is this extremely convoluted, it ends up
leaving seniors with a very paltry benefit. A beneficiary with $5000 in
annual drug costs would pay nearly $4000 out of their own pocket!
This may be alarming to seniors who currently have no drug coverage.
There are millions out there, however, who may think this debate won't
really affect them because they already have coverage under their
company's retiree benefit packages. I want them to know that the
Republicans have quite a surprise in store for them.
If this bill passes, nearly one-third of employers currently offering
retiree drug benefits--covering 11 million seniors--would drop that
coverage. Retiree benefits would not count towards the beneficiary's
out-of-pocket limit, making it almost impossible for seniors with
retiree coverage to ever reach the catastrophic cap. So the bill
actually discriminates against seniors with existing coverage and will
have the practical effect of employers ending their benefits. This
provision makes no sense--why on earth do we want to have less private
sector drug coverage?
While I am disappointed with the underlying bill, I am pleased to see
that the Rules Committee made the Dingell-Rangel substitute bill in
order. This legislation would go a long way to fulfilling the promise I
mentioned--it would provide a reliable, stable benefit under Medicare.
Beneficiaries know exactly what they would pay--20 percent of drug
costs up to $2000 in out-of-pocket costs with a defined premium of $25
per month and a defined deductible of $100.
Tonight, in this body, by passing H.R. 1 we could be bringing about
the end of a program that served seniors so well. Instead, we should
pass the Dingell-Rangel substitute. That is what seniors need and
deserve.
Ms. CHRISTENSEN. Mr. Speaker, I rise in strong opposition to the
Republican prescription drug bill, and in favor of the Dingell/Rangel
Substitute.
We have been talking about a Medicare drug benefit for at least as
long as I have been here--seven years. It is time to deliver. We owe it
to our seniors who need it because their lives depend on it.
I have longed for the day when all people living in this country have
reliable, comprehensive insurance coverage. Today we can bring this
within the reach of every person on Medicare.
About 25 percent of my patients when I was in practice were on
Medicare. Many could not get a full month's supply of medication
because they could not afford it on their fixed income. We would try to
make it up with samples, with medication that might not have been as
effective but was within their price range, and better than nothing,
and with a lot of prayer. It is probably the latter which got them
through.
The bill, H.R. 1, as usual comes with a good sounding name, but true
to form it does nothing good at all. Instead, it misleads the older
Americans who have been looking to us for help.
We need a benefit that is truly a benefit--one that is affordable and
fair--through a program they know, have used all along and trust;
It needs to be available to all benies without having to navigate
through the maze of managed care.
And we need to make it reliable--no holes to fall through when they
might need it most;
No dropping them like hot potatoes like happened with Medicare +
choice.
Finally tonight, we have such a bill in the Democratic, Rangel/
Dingell substitute.
In this bill, there are no slight of hands. What you see is what you
get.
And our plan strengthens Medicare, while the Republican plan would
slowly kill it.
No tricky numbers, no fancy words, just a simple, Medicare
prescription drug plan. That is what the senior and disabled citizens
have been asking for and that is what they deserve. It is what God-
willing; I hope I would have when I am on Medicare.
I want for Medicare beneficiaries, who have played an important role
in making this country what it is, and paved the way for all of us, and
those who have special needs, what I want for my family and myself.
The Democratic substitute, developed under the leadership of John
Dingell and Charles Ringell, is the only bill before either body, which
honors our seniors' gift to all of us.
Let us do the right thing. Reject the Republican bill and pass the
Democratic substitute.
Mr. HINOJOSA. Mr. Speaker, I rise today in opposition to the
Republican prescription drug bill. For years, our seniors have been
begging for help to obtain affordable prescription drugs.
Unfortunately, however, the bill before us today gives relief not to
our vulnerable seniors, but to the large drug companies.
It forces Medicare patients into multiple private drug plans and out
of Medicare. It undercuts seniors' collective purchasing power and
enables the drug industry to maintain its unjustifiably high prices.
Seniors who live in rural and undeserved areas will find themselves
without any coverage because insurance companies will not be required
to serve them and are given no incentives to provide coverage. Because
of a large coverage gap, over half of all seniors will still be
required to pay thousands of dollars a year for prescription drugs as
well as the program premiums.
Hidden in this bill is also another provision that will change the
way cancer patients are treated and subject them to delays and reduced
access to care.
By contrast, the Democratic plan offered by Mr. Rangel would provide
voluntary prescription drug coverage for all Medicare beneficiaries.
The plan curbs drug costs by allowing this Secretary to use the
collective bargaining power of Medicare's 40 million beneficiaries to
negotiate lower drug prices.
I urge my colleagues to oppose the sham Republican proposal and
support the Rangel substitute that provides real benefit to our
Nation's seniors.
Ms. MILLENDER-McDONALD. Mr. Speaker, I stand here with my colleagues
tonight to talk about the need for affordable prescription drug
coverage for women. Because women suffer more from chronic illnesses
requiring medication than men do, they pay more out of pockets for
medicine though their financial resources are often limited.
The proposed House bill would fail to offer meaningful prescription
drug coverage to the millions of low-income women with incomes below
the 135 percent poverty level who do not meet the requirements of asset
tests. Also, the House bill would raise the amount of co-payments that
our country's poorest women Medicare beneficiaries are forced to pay.
[[Page H6110]]
Unlike the House bill, the Senate proposal, while not perfect, would
be far more helpful to elderly women who range from 74 to 160 percent
of the poverty level. Under the House bill, the out-of-pocket costs
paid by elderly women will still make it difficult for them to get
their much-needed prescriptions filled. If the House bill is enacted,
our struggling women seniors who are in greatest need of assistance
will receive up to 40 percent fewer prescriptions than those seniors
who are able to afford private insurance. Our elderly women, who are
among our most vulnerable citizens, deserve far better treatment than
this. It is critical that as Members of Congress, we help women and all
seniors by expanding Medicare to offer a prescription drug benefit that
is universal, affordable, dependable, and voluntary. We can do no less
than to offer elderly women access to adequate healthcare that they can
afford and easily access.
Our Republican colleagues are offering a plan that gives no real
guarantees or assistance to those who need quality prescription drug
coverage the most.
Furthermore, the House plan would force seniors to purchase their own
private insurance, a tactic that will benefit insurance companies, and
not seniors. This is a catastrophe we can avoid if we craft the right
policy to benefit our elderly now. When it come to our elderly women,
we know that:
Women make up 58 percent of the Medicare population at age 65, and 71
percent of the Medicare population at age 85.
Overall, elderly women have more chronic health problems than elderly
men do.
On average, women live another 19 years after retirement, while men
typically live another 15 years after retiring.
Due to the obstacles they face in enrolling, almost half of elderly
women with incomes under the poverty limit are not enrolled in
Medicare.
As compared to married women, widows are four times as likely, and
divorced or single women are five times as likely to live in poverty
upon retiring.
Many elderly women survive on fixed incomes. Over half of the older
women age 65 and above earn less than $10,000 annually, and three out
of four earn under $15,000 yearly. In contrast to elderly men, older
women age 65 and above earned $14,820 as compared to $26,543 for men in
the same age group.
Once retired, women earn less than men because:
Women tend to save less than men do throughout their lives which
decreases their lifetime earnings.
Elderly women usually have smaller Social Security benefits and
pension incomes than men do.
Minority women are much more likely to earn less and live in poverty
than are White women. Even when they have similar educational
backgrounds, minority women tend to earn less money and own fewer
assets.
The sad fact is, the older and poorer a woman is, the higher her out-
of-pocket health care costs will be, and the more help an elderly woman
requires, the less likely she is to receive assistance. As a nation,
though we are facing a great economic crisis, we are still obligated to
provide assistance to our most needy citizens. Let us take good care of
our elderly women and men by not enacting a prescription drug policy
that will force them to choose between either buying food or paying for
necessary medication.
Mr. COSTELLO. Mr. Speaker, I rise in strong opposition to H.R. 1, the
Medicare Prescription Drug and Modernization Act of 2003. I recently
informed over 70,000 seniors in my district that I would not support
legislation that would fundamentally change the nature of Medicare and
provide a prescription drug benefit that relies solely on insurance
companies. I am opposing the bill because it does just that.
Medicare has been a success because it provides guaranteed coverage
for all elderly and disabled Americans. H.R. 1 would end Medicare as we
know it and may particularly harm rural areas that depend on the
traditional Medicare program. Beginning in 2010, H.R. 1 would force the
Medicare fee-for-service program for doctors and hospitals visits to
compete with private insurance plans. People who wanted to remain in
traditional Medicare would find their premiums going up as other
beneficiaries opted for bargain private insurance coverage. Seniors and
the disabled would essentially be forced out of the traditional fee-
for-service program and into some form of managed care.
In addition, the Republican approach does not guarantee the same
benefits for all seniors. Seniors who live where hospitals and doctors
negotiate lucrative contracts with managed care plans would have to pay
more; seniors with higher incomes would have to pay more; seniors in
rural areas would have fewer choices of doctors and pharmacies; and
seniors with low incomes but with assets such as a savings account
might get nothing at all. These provisions violate the central promise
of Medicare: to provide a consistent, guaranteed benefit that allows
everyone, no matter where they live, how much they have, or how sick
they are, access to quality medical care.
Finally, H.R. 1 is flawed because it offers seniors an inadequate
prescription drug benefit. I support a voluntary prescription drug
benefit paid for by Medicare. I am committee to providing a
comprehensive benefit that is affordable and dependable for all
beneficiaries with no gaps or gimmicks in its coverage. The Senate is
currently working on a prescription drug bill that provides a
government fallback provision, providing Americans with more of a
reliable, consistent benefit. The Senate is moving in the right
direction and I am hopeful, progress will continue to be made when this
legislation goes to conference.
H.R. 1 relies too heavily on the insurance industry to bring drug
costs down and does not guarantee seniors access to the medicine
prescribed by their doctor or that they can get prescriptions filled at
their local pharmacy. Seniors deserve fair drug prices and a real,
affordable prescription drug plan.
Mr. Speaker, for these reasons, I oppose H.R. 1. I urge my colleagues
to do the same.
Mr. FILNER. Mr. Speaker, I rise today to discuss the prescription
drug benefit proposal that my colleagues on the other side of the aisle
have rammed through the legislative process. I rise to decry this bill
because it does not give seniors what they deserve. It seems pretty
simple to me: a prescription drug benefit under Medicare ought to work
the same way that Medicare has always worked. That is, it is a
guaranteed benefit for all seniors, no matter where they live, how ill
they are, or what kind of illness they have.
This bill proposes to turn the prescription drug benefit over to HMOs
and the private insurance industry. That means, for one thing, that
premium prices are not guaranteed--the insurance industry would be able
to charge what ever they wanted for the premium. In addition, it would
be the insurance companies that get to decide which drugs would be
covered. What this means for seniors is that there will not be a
consistent, reliable program for all seniors is that there will not be
a consistent, reliable program for all seniors across the country.
Seniors in my district might pay higher premiums and get less coverage
than their counterparts in other areas of the country. Or, they may get
better coverage for lower premiums. We just don't know because it will
be left up to the private insurance companies and the HMOs.
This bill also raises out-of-pocket costs for those who need the
protection that Medicare had traditionally provided: the sickest and
the poorest beneficiaries. In addition to the ``mystery'' premium,
seniors will have to pay for the first $250 worth of drugs without any
help from the Federal Government. After they have paid $250, they must
pay 20 percent of all their drug costs. Once they reach $2,000 worth of
medications, they must pay all of their drug costs until they reach
$4,900 worth of drug costs. So, once they get to $2,000, in addition to
the premium, the $250, the 20 percent copay, they must cover all of
their prescription costs until they get to $4,900. That is quite a lot
of money.
Allowing HMOs and private insurance companies to take over the
Medicare Prescription Drug benefit also presents a problem for rural
areas. A very large portion of my district is rural. Everyone knows
that for private companies, the bottom line rules. Rural areas aren't
as profitable for insurance companies, so there is less incentive for
them to offer benefits in those area. This means that there will be
fewer choices--if any choices at all--for seniors in rural areas.
In one fell swoop, this bill takes the great success story that is
Medicare: Universal healthcare for all beneficiaries, and crushes it.
Under this Republican bill, your benefits and your costs depend on your
income, where you live and the whim of the insurance company or HMO
that is running the program in your area.
Mr. Speaker, I have received many letters and calls from my
constituents who are worried about this proposal. They know that this
proposal will cost them more money, may not even be available to them
if they live in rural areas, and will not cover all their medication
needs--especially for those with diabetes or even cancer. I will read
one example from my constituent, Edna Monk:
[[Page H6111]]
Dear Sir, I am writing my Senators and Representatives to
plead our case regarding Medicare proposals that could
endanger patent access to chemotherapy. I am a lung cancer
survivor, age 71, and my husband, age 78, is now undergoing
chemo, for liver cancer. Chemo drugs are required for my
husband's quality of life now and MRI's have shown the tumors
have diminished in size, so ``it's working!''
She goes on to say, ``We in the cancer community want one thing: for
all critical cancer services, including chemotherapy and patient care
services to be covered fully and fairly by Medicare.''
Mrs. Monk makes a good point. Services must be covered fully and
fairly by Medicare. It does seniors no good to have unequal coverage of
medications! That is why I cannot support the Republican bill and I
urge my colleagues to vote against this poison pill for Medicare!
Mr. PASTOR. Mr. Speaker, I rise today in opposition to the Medicare
Prescription Drug and Modernization Act. This bill, long heralded by
the Republicans and the Administration as a comprehensive overhaul of
the Medicare system, will do nothing to alleviate the harsh effect on
our seniors of the high cost of prescription drugs. It only will
continue to aggravate the cause of health care inflation.
Depsite all Republican claims to the contrary, the bill, which calls
for private drug-only plans, would not make drugs affordable. It has no
mechanism for keeping prices down, no negotiation for acceptable terms,
no guarantee of defined and stable costs. Seniors would be at the mercy
of private plans. They would lose their choice of doctors. They would
be at risk of continuous coverage.
Private plans would only have to promise to stay in the program for
one year. We've had these problems before with the Medicare Plus Choice
program which failed to deliver its expanded benefits, leaving millions
of seniors out on a limb.
Seniors have voiced their concerns. They fear the absence of
provisions to limit drug prices and the lack of certainty about the
future cost and coverage provided. Many seniors in rural areas are
worried because they have no access to private plans and would have no
``fallback'' to offer coverage. Seniors are particularly concerned with
the ``gap-in-coverage'' that means no coverage at all for drug spending
between $2,000 and $5,100.
Instead of passing this plan which would privatize Medicare, we
should support a plan that would establish a real Medicare prescription
drug benefit within the Medicare program. The plan should be available
to everyone regardless of income or place of residence. It should be
voluntary and comprehensive. And, most importantly, it should be
affordable.
The Medicare Prescription Drug and Modernization Act fills none of
these requirements. Therefore, Mr. Speaker, I vote ``no'' on H.R. 1.
Ms. WOOLSEY. Mr. Speaker, this debate is a question of priorities,
and it's a question of values. Under the Republican plan, after seniors
have incurred $2,000 in prescription drug benefits, they will still pay
a premium, but they better not expect anything in return. And why is
that?
It's because just last week, the Republican leadership decided that
they would rather eliminate estate taxes for millionaires than help
seniors afford prescription drugs. They insisted on spending a total of
$820 billion to help 8,000 millionaires. For almost the same cost, we
could give millions of seniors a real prescription drug benefit.
Millionaires or millions of seniors? The Republicans give new meaning
to the phrase ``better off dead.'' If you're rich and dead, Republicans
don't want you to lose a dime. But if you're alive and can't afford the
high cost of prescription drugs--well, good luck.
You might want to be dead. I dare my Republican colleagues to tell
their mothers what they're doing to Medicare.
My priority is giving every American senior a real prescription drug
benefit, like the one in the Democratic alternative. Oppose the
Republican bill, support the Democratic alternative.
Mr. OBERSTAR. Mr. Speaker, Medicare, the most successful social
service program since Social Security, will be dramatically transformed
and, in the long run, unraveled by this Republican bill we are debating
tonight.
Their plan will convert Medicare from a defined benefit plan to a
defined contribution voucher plan. In plain English, it means that
seniors will lose the guaranteed coverage and the security of knowing
which benefits are covered. Instead of having predictability about
Medicare premiums and copayments, seniors will essentially receive a
voucher for services to cover the lowest-cost private insurance plan.
If this plan does not pay for the services they need, seniors will have
to cover the difference--which could be a big figure--out of their own
meager income.
As a result, this untested, speculative health care experiment
threatens to abandon all seniors, especially rural seniors. The
Republican bill replaces Medicare with an illusory promise that private
health insurance companies will offer health insurance polices in rural
America. Under current law, health insurance companies have found it
unprofitable to offer policies in rural America; worse, the Republican
plan does not guarantee that rural seniors will have access to the same
benefits as seniors in metropolitan areas enjoy.
Not only does this bill undermine Medicare, it fails to provide an
affordable prescription drug benefit. I don't understand how the
majority, on the one hand can justify trillion dollar tax cuts, and in
the other hand, impose an arbitrary limit on Medicare and prescription
drug benefits. To comply with this artificial limitation, the
Republican plan offers a complicated and untested prescription drug
benefit, with an enormous gap in coverage.
The Republican plan is difficult to explain, but let me try: it
begins with uncertain private health insurance premiums; then, seniors
must pay a $250 deductible before they receive any assistance, and
there is a large coverage gap, the ``hole'' in the doughnut, where
seniors will be paying premiums but receiving no assistance at all.
Seniors first have to spend $250 a year, then they will pay 20 percent
co-insurance for up to $2,000 in drug costs. However, no assistance
would be provided between $2,000 and $5,100 in drug spending, forcing
seniors to pay $3,100 out-of-pocket in drug costs. This plan is as
unfair as it is complicated and costly to older Americans living on
fixed incomes.
In contrast, the Democratic plan is guaranteed, defined, dependable,
and understandable. It sets a premium of $25 a month; a $100 per year
deductible; a 20 percent co-insurance payment for beneficiaries, with
Medicare paying 80 percent; and a limit of $2,000 in out-of-pocket
costs per beneficiary per year.
Health care is essential in greater Minnesota. The hospitals in many
small communities throughout northern and northeastern Minnesota are
the major employer in town, and the health care they offer is critical
for economic development and tourism. The Rangel/Dingell bill offers a
substantial improvement in payments to the hospitals and doctors in
rural Minnesota who provide those critical health care services.
In particular, I am please that the Democratic Substitute includes
numerous provisions to improve reimbursement for rural providers. The
increased funding for low-volume, ``critical access'' and ``sole
community'' hospitals, rural home health and ambulance providers, and
rural physicians adds up to very significant improvements for hospitals
in my district, and will assure their continued viability for years to
come.
To be specific, the Democratic bill eliminates the 35-mile rule
presently in place for Critical Access Hospital ambulance services.
That improvement would save the hospital in Ely, Minnesota, and would
strengthen ambulance services at nine other Critical Access Hospitals
in my district.
The Democratic plan would provide an additional $6 billion for all
rural ambulance providers by increasing payments for ambulance
services. The increases we propose would ensure the financial solvency
of St. Mary's Life Flight, enabling it to continue assisting, for
example, people who are injured while vacationing in the Boundary
Waters Canoe Area Wilderness.
On the whole, rural health care providers plan are better served,
better funded, and treated more fairly under the Democratic plan, which
also has the advantage of preserving Medicare. For that reason, I will
be supporting the Rangel/Dingell bill.
Mr. BURR. Mr. Speaker, as vice chairman of the Energy and Commerce
Committee and a member of the Health Subcommittee, I have worked on
Medicare prescription drug legislation for more than four years. The
House has passed Medicare prescription drug legislation twice and I
voted for both bills.
Mr. Speaker, I will not vote for this bill.
The $400 billion allocated for the Medicare drug benefit is not being
spent widely under this legislation. High-income Medicare beneficiaries
like Warren Buffett are subsidized 73 percent by the Federal government
for their drug-only insurance plans. Low-income seniors who are not
dually eligible have no cost-sharing assistance for their drug spending
between $2,000 and $3,500. The Secretary is commanded to negotiate with
insurance companies who will game the system to receive a 99.99-percent
subsidy when 73 percent would have been fine. Mr. Speaker, that's not a
negotiation--the insurance company will hold all of the cards. No money
is being spent on a fallback plan. Seniors in rural areas of North
Carolina will not have drug coverage if insurance companies refuse to
offer a plan, even when the companies are bribed with an almost no-risk
contract. This bill would benefit insurance companies, not extend a
benefit to our Nation's seniors.
Yet insurance companies do not want any part of this legislation. For
four years insurance companies have been telling Congress
[[Page H6112]]
that they do not want to insure Medicare beneficiaries' drug
expenditures, but we keep throwing money at them in the hope that they
will finally say yes. The premium subsidy used to be 67 percent, now it
is 73 percent and Congress demands that it grow to 99.99 percent if
need be. At the end of the day, who are we kidding? Of course it will
be 99.99 percent.
Our problem is that the Congressional Budget Office has written this
bill. The last time I checked, Mr. Speaker, it was not the job of the
Congressional Budget Office to write highly technical and important
health care legislation. But policymakers are so convinced that a
purely insurance-based product will work that they are willing to
follow CBO's instructions and tweak the product one thousand different
ways--and cut provider payments at the same time--to fit it under some
magical budget ceiling. If CBO is wrong in its estimate, and this drug
benefit costs more than $400 billion, our entire health care system
will be at risk. This is not wise health care policy.
Where do my colleagues think the extra money is going to come from?
When CBO realizes that their estimated insurance penetration rate was
off by 10 percent that money will come out of future physician,
hospital, nursing home, and home health care reimbursement rates. If
only 85 percent of seniors sign up for drug coverage and plans'
subsidies skyrocket, that money will come out of Food and Drug
Administration modernization efforts, National Institutes of Health
research, and bioterrorism preparedness. Congress is working with a
limited pot of money, but we are promising a defined benefit.
Obviously, the experiences of the private sector have taught us
nothing.
If Congress listened to the private sector, we would mirror the
success of defined contribution plans and individual empowerment by
offering choice. Seniors could choose between twenty different discount
drug cards based on the cards' formularies, pharmacy networks, and drug
discounts. The government would set up accounts and contribute money to
those accounts based on the seniors' needs. Seniors, their family
members, friends, and former employers could put money into the
accounts and receive a tax deduction. And insurance companies would
offer catastrophic coverage that is subsidized by the federal
government for low-income seniors. Unfortunately, that plan is not on
the floor today.
Mr. Speaker, I wanted to be able to come to the floor today and vote
for a good Medicare prescription drug benefit because of the bills
passed by the House in the last 3 years this one has the greatest
chance of actually becoming law. But not only does this bill contain a
bad drug benefit, it also contains a cut in the overall hospital market
basket update, a new home health copayment, multiple reimportantion
provisions that will harm our Nation's drug supply, and a reduction in
the overall reimbursement rate for physicians such as oncologists and
rheumatologists who administer Part B drugs. It also constitutes a
threat to the very future of our health care system.
I can only compare my feelings today to my experience in 1997, when I
voted against the Balanced Budget Act. I was one of only 32 Republicans
who opposed that bill. I came to Congress to balance the federal
budget, but in the end I could not vote for the legislation because of
the drastic and thoughtless cuts in Medicare reimbursements. Since
1997, Congress has done nothing substantive in Medicare except try to
fix the damage done under the BBA. I cannot support this legislation
that builds on and magnifies those 6-year-old mistakes.
I regret that I cannot and will not vote for this legislation.
Mr. UDALL of Colorado. Mr. Speaker, I want to support a Medicare
prescription drug bill, but I can't support the one we are considering
today. It is inadequate, unreliable, will force seniors into HMOs, and
will endanger drug benefits that many seniors get through their
retirement plans. In fact, instead of drafting a Medicare drug benefit
bill, the Republican Majority has used this opportunity to try to end
Medicare as we know it.
I have long believed that Congress should act to help seniors with
their prescription drug expenses. Nearly everyone agrees that Medicare
should be updated with a drug benefit; it is the right and sensible
thing to do. How we design that benefit is where the rub is. I had
hoped that we would vote on a bill similar to the one in the Senate
because I think it's a good start toward building a workable,
financially sound prescription drug benefit. But the House bill is not
the same as the Senate bill.
First, I think Congress should give seniors greater choice in
coverage, however, it should provide an equal prescription drug benefit
to all beneficiaries, regardless of whether they enroll in a private
health plan or traditional fee-for-service Medicare. We shouldn't force
seniors into managed care, which I believe this bill will do by opening
the traditional Medicare program up to competitive bidding against
private insurers in 2010.
Second, the House bill does not include an important ``fallback''
provision that requires that traditional Medicare would step in as a
backup if private insurers show no interest in selling drug plans in a
particular area. Currently, private plans don't exist in many parts of
the country, including many smaller cities, rural and mountain areas in
Colorado. I've heard from many seniors in my district who have been
dropped from their Medicare HMO and are now having trouble finding a
doctor. In addition, 88 percent of all Medicare beneficiaries are
enrolled in traditional Medicare. So, without this ``fallback'' safety
net provision, seniors would have no coverage in regions where insurers
say it's unprofitable to provide it, especially rural areas.
Taken together, I think these provisions undermine the traditional
Medicare program. By opening traditional Medicare to competitive
bidding and with no fallback mechanism, I fear that our country will
revert to the time before Medicare was established in 1965 when private
insurers wouldn't provide affordable coverage to seniors. That's a step
backward, not a step forward, in fixing Medicare.
I also have problems with the home health copayment provision in the
bill, which I believe will discourage seniors from accessing home
health care, which is more cost effective than accessing treatment an
emergency room or a skilled nursing facility. And I am concerned that
opening durable medical equipment to competitive bidding will give
seniors less choice and put many small businesses out of business.
On top of everything, this 692-page bill was introduced at midnight
last night. How can anyone know what's in it, except the people who
wrote it? Our seniors deserve greater respect.
Mr. Speaker, it is misguided at best that Medicare will pay for a
senior's care following a stroke but will not pay for the anti-
hypertension drugs that prevent them. The time is ripe to pass a
Medicare prescription drug benefit, but not this one. I regret I can't
support it. I hope that a bill can be worked out in conference that I
can support. We need to put ideological and partisan politics aside and
get it done this year.
Mr. CROWLEY. Mr. Speaker, I rise in support of the Democratic
substitute because this bill meets the 4 basic tenets that any
prescription drug plan under Medicare should absolutely provide for.
First, it means lower drug prices. The House Democratic bill allows
HHS to negotiate lower drug prices. The Republican bill, unfortunately,
does not.
Second, this bill guarantees coverage under Medicare.
Because of this, a senior knows what his premium, cost-sharing level,
and catastrophic coverage is. The Republican bill has no such
guarantees.
Third, this bill provides coverage for all drugs prescribed by a
doctor. Under the Republican bill, a payer could deny coverage for a
drug if the payer decides to not include it in its formulary.
Fourth, this bill has no gaps in coverage. Under the Democratic plan,
when a senior has spent $2,000 on drugs, the government picks up the
remaining costs.
When a senior has spent $2,000 under the Republican plan, they're
dropped. They get zero coverage until they've spent $4,900.
The Republican bill does not simply have one big problem. It has
several huge problems.
Only the Democratic substitute provides seniors in my district
guaranteed, quality coverage. I urge an ``aye'' vote.
Mr. BUYER. Mr. Speaker, I rise in opposition to the bill, H.R. 1, the
Medicare Prescription Drug and Modernization Act.
I fully support the effort to provide prescription drug coverage to
Medicare beneficiaries. The successes in modern medicine that we see
today can be partly attributed to the advent of safer and more
effective pharmaceutical drug therapy. Illnesses and serious diseases
that often required hospitalization 40 years ago, when Medicare was
created, can now be treated with outpatient care and pharmaceuticals.
This is a testament to the many scientists in numerous companies that
toil daily to find compounds to treat and manage disease. The
pharmaceutical industry is a testament to the free market system of the
United States that rewards hard work, initiative, and enterprise. As
the great minds of the world push the bounds of modern science, new
discoveries in pharmacology lead to the betterment of mankind.
While H.R. 1 has some positive features, including addressing medical
doctor and dentist provider reimbursement concerns and regulatory
impediments, an insurance product built and guaranteed by the
government is not the approach to provide a drug benefit under
Medicare.
And, make no mistake, we MUST get it right. I have serious levels of
concern.
First, the legislation before us has the government assuming 73
percent of the risk of offering the insurance, 43 percent of the
initial
[[Page H6113]]
benefit and 30 percent of reinsurance retrospectively. This is the
floor! We must all understand that the taxpayer's exposure to risk can
only increase. The bill permits the government to assume more risk, up
to 99.9 percent if it is necessary to entice an insurance product into
a region. And this is an unknown factor. We simply do not, nor cannot,
know what this provision will cost the taxpayers.
Today, Medicare already consumes nearly 12 percent of the federal
budget. It is expected to be 30 percent or 35 percent of the federal
budget in 2030 without the addition of prescription drugs, or any other
benefit. It is irresponsible of this Congress to simply add a
prescription drug benefit without also addressing the budgetary impact
of this benefit. H.R. 1 leaves the federal budget and the taxpayers
exposed to unknown expenditure levels in the future. I do not believe
that this drug bill will remain within the proposed budget of $400
billion over the next 10 years.
Second, there is no provision in the House bill on how to provide a
benefit to seniors in areas where two insurance products are not
available in January 2006. It is simply neither realistic, nor fair,
for seniors in one region to have products available and seniors in
another region to not have choice because two plans have not been
forthcoming.
Furthermore, I am adamantly opposed to the proposal by some,
especially in the other body, that the government provide this
coverage. This will only lead to the government determining what
prescription drugs a senior can have and ultimately the imposition of
price controls that will have a chilling effect upon research and
development of pharmaceutical therapies.
Third, the premium charged to seniors for the drug-only insurance
plan is estimated to be $35 per year initially. This premium number is
not found in the bill--it is an estimate by the Congressional Budget
Office. What if it is more? Will seniors decide that this premium is
worth the benefit they will receive under a drug insurance plan? There
will be a great deal of kitchen table math being done by seniors in
2005 to decide whether this new benefit meets their drug needs and
their wallet realities.
I am also concerned about a number of modifications made under the
bill to reimbursement for providers and to the last minute inclusion of
language regarding the Patent Term Restoration Act, the so-called
Hatch-Waxman legislation. Although some very necessary provider
reimbursement changes were made in the bill, particurlary regarding
doctors and rural areas, nonetheless, I am concerned about the changes
to the market basket update for hospitals, as well as the changes to
skilled nursing facilities and home health care providers. In addition,
I share the concern of others regarding the sufficiency of the
reimbursement to oncologists. It is very true that the Congress needed
to address the use of the ``average wholesale price,'' which was
neither average nor wholesale, and left Medicare beneficiaries paying
20 percent of an inflated drug price, but oncologists need to be
reasonably compensated for the level of care they provide to Medicare
patients. I am not convinced that this has been sufficiently addressed.
I also have grave reservations over the inclusion of provisions
regarding patent term and generic drugs, the changes to the Hatch-
Waxman law. Initiating more litigation of patent rights is not
conducive to encouraging innovation in pharmaceuticals. Unfortunately,
this is exactly what this provision will do.
The vast majority of seniors have drug coverage today through either
an existing government program or through the private sector. However,
27 percent of seniors have nothing. These seniors pay the highest
prices when they go to the pharmacy because they have no means to
bargain for lower costs. These seniors also tend to be those between
100 percent and 175 percent of the federal poverty level (FPL). A
Medicare drug benefit should not displace existing coverage and should
address the needs of those seniors who do not have coverage.
The government should encourage employers, families and others to
help seniors with the purchase of expensive prescription drugs. It is
time that we admit that no proposal that comes to the House floor that
meets the budget requirements will fully address all the prescription
drug requirements of seniors. Every plan will have a ``so-called donut
hole.'' There should be a way to tackle this without putting our heads
in the sand and expecting it to simply ``work out.''
We live by a system of checks and balances. We run into the
limitations with everything that we do. How can we then create a system
that is dependent upon the unknown? The government's assistance to
beneficiaries should be a defined contribution. This type of benefit
would be manageable and known.
I am committed to providing a prescription drug benefit for seniors.
Seniors should have access to the same mechanisms that are available in
the private sector to drive down costs and improve health care
services.
Along with four of my colleagues on the Energy and Commerce
Committee, we submitted legislation, that would address these issues
and provide a prescription drug benefit under Medicare. I testified
before the Rules Committee to request a vote on our bill. The request
was denied. This benefit would have been delivered through a
prescription drug discount, or value, card that would be available to
all seniors on a voluntary basis for an annual $30 fee. This is an
approach that has been recommended by the President.
Any entity qualified by the Centers for Medicare and Medicaid
Services could offer a drug value card to seniors. Card issuers would
negotiate with pharmaceutical manufacturers for discounts on drug
utilizing the same techniques that are found in the marketplace today.
These discounts would range from 15 percent to 35 percent of current
retail prices. The competition among these card issuers would result in
attractive offerings to beneficiaries.
Recognizing that some beneficiaries need financial assistance to pay
for prescription drugs, this legislation would tie the drug value card
to an account to which the federal government would provide assistance
related to the income of the beneficiary. Others could add
contributions on a tax preferred basis up to $5,000 for a beneficiary
and family; and $5,000 for an employer. Non-profit organizations, like
local churches, and State pharmaceutical assistance programs could add
contributions to the accounts. Contributions on the accounts would roll
over from year to year.
Protection from catastrophic drug expenses would also be offered at
$10,000 through the private sector, with federal subsidies on the
premium for those with low incomes.
In my opinion, this delivery mechanism for a prescription drug
benefit works best for the beneficiary, and best for the taxpayers.
Beneficiaries would have access to negotiated discounts and some
financial assistance to buy drugs. The taxpayers would have a defined
contribution that could be planned from year to year in the federal
budget.
My colleagues, this has been a long road for us all. But, it is
nothing compared to what could happen if Congress gets this wrong.
Please be mindful of our obligations to our nation, not just to
seniors.
It is my opinion that Congress needs to grasp this opportunity to
provide a prescription drug benefit with a full appreciation of the
duty and responsibility this nation has to our seniors, taxpayers, and
future generations. To do anything less, we break the trust of all
Americans.
Because the margin for error is so thin, my hope is that the majority
is right. However, my intellect and instincts tell me that this bill
will not fulfill the desired result. I must vote against final passage
of this measure.
Mr. PAUL. Mr. Speaker, while there is little debate about the need to
update and modernize the Medicare system to allow seniors to use
Medicare funds for prescription drugs, there is much debate about the
proper means to achieve this end. However, much of that debate is
phony, since neither H.R. 1 nor the alternative allows seniors the
ability to control their own health care. Both plans give a large
bureaucracy the power to determine which prescription drugs senior
citizens can receive. Under both plans, federal spending and control
over health care will rise dramatically. The only difference is that
the alternative puts seniors under the total control of the federal
bureaucracy, while H.R. 1 shares this power with ``private'' health
maintenance organizations and insurance companies. No wonder supporters
of nationalized health care are celebrating the greatest expansion of
federal control over health care since the Great Society.
I am pleased that the drafters of H.R. 1 incorporate regulatory
relief legislation, which I have supported in the past, into the bill.
This will help relieve some of the tremendous regulatory burden imposed
on health care providers by the Federal Government. I am also pleased
that H.R. 1 contains several good provisions addressing the
congressionally-created crisis in rural health and attempts to ensure
that physicians are fairly reimbursed by the Medicare system.
However, Mr. Speaker, at the heart of this legislation is a fatally
flawed plan that will fail to provide seniors access to the
pharmaceuticals of their choice. H.R. 1 provides seniors a choice
between staying in traditionally Medicare or joining an HMO or a
Preferred Provider Organization (PPO). No matter which option the
senior selects, choices about which pharmaceuticals are available to
seniors will be made by a public or private sector bureaucrat.
Furthermore, the bureaucrats will have poor to determine the aggregate
prices charged to the plans. Being forced to choose between types of
bureaucrats is not choice.
Thus, in order to get any help with their prescription drug costs,
seniors have to relinquish their ability to choose the type of
prescriptions that meet their own individual needs! The inevitable
result of this process will be rationing,
[[Page H6114]]
as Medicare and/or HMO bureaucrats attempt to control costs by reducing
the reimbursements paid to pharmacists to below-market levels (thus
causing pharmacists to refuse to participate in Medicare), and
restricting the type of pharmacies seniors may use in the name of
``cost effectiveness.'' Bureaucrats may even go so far as to forbid
seniors from using their own money to purchase Medicare-covered
pharmaceuticals. I remind may colleagues that today the federal
government prohibits seniors from using their own money to obtain
health care services that differ from those ``approved'' of by the
Medicare bureaucracy!
This bill is even more pernicious when one realizes that this plan
provides a perverse incentive for private plans to dump seniors into
the government plans. In what is likely to be a futile effort to
prevent this from happening, H.R. 1 extends federal subsidies to
private insurers to bribe them to keep providing private drug coverage
to senior citizens. However, the Joint Economic Committee has estimated
that nearly 40 percent of private plans that currently provide
prescription drug coverage to seniors will stop providing such coverage
if this plan is enacted. This number is certain to skyrocket once the
pharmaceutical companies begin passing on any losses caused by Medicare
price controls to private plans.
Furthermore, these private plans will be subject to government
regulations. Thus, even seniors who are able to maintain their private
coverage will fall under federal control. Thus, H.R. 1 will reduce the
access of many seniors to the prescription drugs of their choice!
Setting up a system where by many of those currently receiving
private coverage are hired into the government program exacerbates one
of the major problems with this bill: it hastens the bankruptcy of the
Medicare program and the federal government. According to Medicare
Trustee, and professor of economics at Texas A&M University, Tom
Saving, the costs of this bill could eventually amount to two-thirds of
the current public-held debt of $3.8 trillion! Of course, estimates
such as this often widely underestimate the costs of government
programs. For example, in 1965, the government estimate that the
Medicare Part B hospitalization program would cost $9 billion in 1990,
but Medicare Part B costs $66 billion in 1990!
This new spending comes on top of recent increases in spending for
``homeland security,'' foreign aid, federal education programs, and new
welfare initiatives, such as those transforming churches into agents of
the welfare state. In addition we have launched a seemingly endless
program of global reconstruction to spread ``democratic capitalism.''
The need to limit spending is never seriously discussed: it is simply
assumed that Congress can spend whatever it wants and rely on the
Federal Reserve to bail us out of trouble. This is a prescription for
disaster.
At the least, we should be debating whether to spend on warfare or
welfare and choosing between corporate welfare and welfare for the poor
instead of simply increasing spending on every program. While I would
much rather spend federal monies on prescription drugs then another
unconstitutional war, increasing spending on any program without
corresponding spending reductions endangers our nation's economic
future.
Congress further exacerbates the fiscal problems created by this bill
by failing to take any steps to reform the government policies
responsible for the skyrocketing costs of prescription drugs. Congress
should help all Americans by reforming federal patent laws and FDA
policies, which provide certain large pharmaceutical companies a
government-granted monopoly over pharmaceutical products. Perhaps the
most important thing Congress can do to reduce pharmaceutical policies
is liberalize the regulations surrounding the reimportation of FDA-
Approved pharmaceuticals.
As a representative of an area near the Texas-Mexico border, I often
hear from angry constituents who cannot purchase inexpensive quality
imported pharmaceuticals in their local drug store. Some of these
constituents regularly travel to Mexico on their own to purchase
pharmaceuticals. It is an outrage that my constituents are being denied
the opportunity to benefit from a true free market in pharmaceuticals
by their own government.
Supporters of H.R. 1 claim that this bill does liberalize the rules
governing the importation of prescription drugs. However, H.R. 1's
importation provision allows the Secretary of Health and Human Services
to arbitrarily restrict the ability of American consumers to import
prescription drugs--and HHS Secretary Thompson has already gone on
record as determined to do all he can to block a free trade in
pharmaceuticals! Thus, the importation language in H.R. 1 is a
smokescreen designed to fool the gullible into thinking Congress is
acting to create a free market in pharmaceuticals.
The alternative suffers from the same flaws, and will have the same
(if not worse) negative consequences for seniors as will H.R. 1. There
are only two differences between the two: First, under the alternative,
seniors will not be able to choice to have a federally subsidized HMO
bureaucrat deny them their choice of prescription drugs; instead,
seniors will have to accept the control of bureaucrats at the Center
for Medicare and Medicaid Services (CMS). Second, the alternative is
even more fiscally irresponsible than H.R. 1.
Mr. Speaker, our seniors deserve better than a ``choice'' between
whether a private or a public sector bureaucrat will control their
health care. Meaningful prescription drug legislation should be based
on the principles of maximum choice and flexibility for senior
citizens. For example, my H.R. 1617 provides seniors the ability to use
Medicare dollars to cover the costs of prescription drugs in a manner
that increases seniors' control over their own health care.
H.R. 1617 removes the numerical limitations and sunset provisions in
the Medicare Medical Savings Accounts (MSA) program. Medicare MSAs
consist of a special saving account containing Medicare funds for
seniors to use for their routine medical expenses, including
prescription drug costs. Unlike the plans contained in H.R. 4504, and
the Democratic alternative, Medicare MSAs allow seniors to use Medicare
funds to obtain the prescription drugs that fit their unique needs.
Medicare MSAs also allow seniors to use Medicare funds for other
services not available under traditional Medicare, such as mammograms.
Medicare MSAs will also ensure that seniors have access to a wide
variety of health care services by minimizing the role of the federal
bureaucracy. As many of my colleagues know, an increasing number of
health care providers have withdrawn from the Medicare program because
of the paperwork burden and constant interference with their practice
by bureaucrats from the Center for Medicare and Medicaid Services. The
MSA program frees seniors and providers from this burden, thus making
it more likely that quality providers will remain in the Medicare
program!
There are claims that this bill provides seniors access to MSAs. It
is true that this bill lifts the numerical caps on Medicare MSAs;
however, it also imposes price controls and bureaucratic requirements
on MSA programs. Thus, the MSAs contained in this bill do nothing to
free seniors and health care providers from third party control of
health care decisions!
Mr. Speaker, seniors should not be treated like children by the
federal government and told what health care services they can and
cannot have. We in Congress have a duty to preserve and protect the
Medicare trust fund. We must keep the promise to America's seniors and
working Americans, whose taxes finance Medicare, that they will have
quality health care in their golden years. However, we also have a duty
to make sure that seniors can get the health care that suits their
needs, instead of being forced into a cookie cutter program designed by
Washington, DC-based bureaucrats! Medicare MSAs are a good first step
toward allowing seniors the freedom to control their own health care.
Finally, Mr. Speaker, I would like to comment on the procedure under
which this will was brought before the House. Last week, the committees
with jurisdiction passed two separate, but similar Medicare
prescription drug bills. In the middle of last night, the two bills
were merged to produce H.R. 1. The bills reported out of Committee were
each less than 400 pages, yet the bill we are voting on today is 692
pages. So in the middle of the night, the bill mysteriously doubled in
size! Once again, members are asked to vote on a significant piece of
legislation with far reaching effects on the American people without
having had the chance to read, study, or even see major portions of the
bill.
In conclusion, Mr. Speaker, both H.R. 1 and the alternative force
seniors to cede control over which prescription medicines they may
receive. The only difference between them is that H.R. 1 gives
federally funded HMO bureaucrats control over seniors' prescription
drugs, whereas the alternative gives government functionaries the power
to tell seniors which prescription drug they can (and can't) have.
Congress can, and must, do better for our Nation's seniors, by
rejecting this command-and-control approach. Instead, Congress should
give seniors the ability to use Medicare funds to pay for the
prescription drugs of their choice by passing my legislation that gives
all seniors access to Medicare Medical Savings Accounts.
Mr. THORNBERRY. Mr. Speaker, health care is an important but complex
issue for Congress and for America's seniors. Two facts, however, seem
clear:
One fact is that Medicare is currently headed toward financial
collapse. The last report of the Medicare trustees shows that in nine
years the income of the Medicare trust fund will not be enough to cover
its expenses. After that, the problem gets much worse with the
retirement of the baby boom generation.
A second clear fact is that Medicare was enacted in 1965 and has been
largely unchanged since then. It does not reflect modern
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medical practices, including our reliance upon prescription drugs. If
we were designing a new federal health care program for seniors today--
rather than in 1965 when Medicare was created--we would unquestionably
include some form of prescription drug coverage.
Our objective then should be to update and strengthen Medicare so
that it does a better job of providing health care for seniors and at
the same time put Medicare on a sound financial footing so that it can
be sustained through the baby boom generation retirement.
This bill takes some steps in that direction. It contains some
reforms that improve Medicare and give beneficiaries more control over
their health care. It also adds prescription drug coverage, and there
are too many seniors in my district who are not able to afford the
prescription medicines they need, forcing them either to do without and
become sick or to sacrifice other necessities of life.
I am gravely concerned, however, that the reforms take too long to
implement and that the new drug benefit will cost far more than
expected. Without changes, this bill may add a major new benefit to
Medicare but, at the same time, hasten the day of its financial
collapse.
At the same time if we do nothing, we are guaranteeing that Medicare
will not survive for long. The alternative proposals are far more
expensive and are fiscally irresponsible.
I have other concerns with this bill, such as the reductions in
payments for cancer treatments. Today, however, I will vote to send the
House bill to conference with the Senate. I strongly urge that
improvements be made to ensure Medicare solvency and to improve the
quality of health care for America's seniors. We can do better. If
improvements are not made, I will not be able to support the final
conference report.
Mr. KIND. Mr. Speaker, providing affordable Medicare prescription
drug coverage for our nation's seniors is one of the most pressing
issues facing our country today. Even though the elderly use the most
prescriptions, more than 75 percent of seniors on Medicare lack
reliable drug coverage. It is time to modernize Medicare to reflect our
current health care delivery system. The use of prescription
medications is as important today as the use of hospital beds was in
1965 when Medicare was created.
I have heard from a number of seniors in western Wisconsin regarding
the problems they have paying for prescription drugs. One woman from
Deer Park, Wisconsin, a small town in my district, wrote to me and
said:
My medication is $135.00 per month. Fortunately my husband is not on
any medication. If we both were not working part-time, I guess that we
would have to make a choice between food and Medication--does one eat
to survive or take the medication for a ``long and happy life''?
What is to happen to this couple if the husband falls ill and has
high drug costs too?
The cost of prescription medicines should not place financial strains
on seniors that would force them to choose between buying drugs and
buying food. We need to make prescription medicines affordable and
accessible to all of our seniors.
I came to Congress to work toward a real solution to this problem.
Unfortunately, today's debate is a sham. We will not have the
opportunity to discuss this issue in a fair and open process. There
were several alternatives presented at the Rules Committee late last
night and they should be debated on the floor today. The majority,
however, chose to dedicate only one day to this debate and allowed only
one alternative and no amendments to be made in order. Our Nation's
seniors deserve better. They deserve an open process, but the
Republican leadership has failed to deliver this.
The Leadership has also failed seniors with their prescription drug
proposal. The Republican plan is doomed to fail because the plan relies
on health insurance companies to offer drug only policies which they
have said they won't offer. Further, there is no fall back option. So,
if insurance companies won't offer these policies, how will seniors
actually obtain prescription drug coverage under the leadership plan?
Providing a drug benefit through private plans could be problematic,
specifically for folks living in rural and small communities. There are
no requirements as to what has to be covered and the coverage may vary
from area to area depending on the plan. Because is there is no
guaranteed benefit, Wisconsin may end up on the short end of the stick
like we have in the past under Medicare.
The biggest problem with the leadership bill is the fact that it will
fully privatize Medicare in 2010. This is a radical provision that will
be the demise of the traditional Medicare program on which our seniors
have depended for nearly 40 years. In 2010, seniors will be given a
lump sum to purchase health isuruance, including traditional Medicare.
There is concern that the healthy seniors will leave traditional
Medicare and the premiums will increase dramatically, up to 47 percent.
In addition, under the leadership bill, each local area will have a
different premium for fee-for-service Medicare. For example, seniors in
Wisconsin might have to pay more to enroll in fee-for-service Medicare
than seniors in Florida. This is a drastic departure from Medicare's
fundamental principle that seniors across the country pay the same
premium for the fee-for-service benefit.
We must provide a real solution to the problem of prescription drug
coverage for our seniors. The Republican plan falls woefully short.
All of the Democratic alternatives offered at the Rules Committee
would be better than the leadership bill. One proposal, the Medicare Rx
NOW Act, is a simple straightforward plan that provides assistance to
the seniors most in need, those with low incomes and seniors with high
drug costs. This proposal builds on the Medicare program seniors know
and provides them with a guaranteed benefit for no additional premium.
Another proposal put forward by the Blue Dogs is based on the
bipartisan Senate bill. Unlike the House bill, this proposal includes a
fall back provision to ensure that all seniors would have access to a
prescription drug plan. In addition, this bill does not include the
privatization components of the leadership plan.
In addition, both of these alternatives provide substantial
improvements to Medicare payments for rural providers. Both pieces of
legislation include equalizing the disproportionate share hospital
payments for rural hospitals, an increase in the bed limit for critical
access hospitals, and a geographic adjustment for rural physicians.
None of these provisions are included in the leadership's bill.
It is unfortunate that the Republican leadership has squandered an
excellent opportunity to try and solve the problem of prescription drug
coverage in a bipartisan fashion. Instead they have steamrolled ahead
and present our nation's seniors with an unworkable solution to a grave
problem. I urge my colleagues to reject this flawed proposal.
Mr. RAMSTAD. Mr. Speaker, I rise in strong support of the Medicare
Prescription Drug and Modernization Act.
Today is an historic day. Congress is finally delivering on our
promise to create a meaningful and long overdue prescription drug
benefit for Medicare seniors and people with disabilities.
This bill means seniors will no longer have to choose between
purchasing life-savings drugs or the basic necessities of food and
housing.
In addition to this important new prescription drug benefit, the bill
modernizes and improves Medicare to give seniors better choices and
greater access to state-of-the-art health care.
I am grateful for the many important provisions in this package from
my Medicare Innovation Responsiveness Act (H.R. 941), which will
increase seniors' access to lifesaving medical technology.
As founder and co-chair of the Medical Technology Caucus, I have seen
first-hand the incredible advances that medical technology and
prescription drugs have made to treat and cure debilitating conditions.
The current Medicare system is crying out for reform with its failure
to incorporate these critical improvements.
Currently, seniors and people with disabilities face unconscionable
delays of up to five years before Medicare provides access to
technology that can literally be a matter of life or death.
The bill before us incorporates many of the reforms I have proposed
in Medicare's coverage, coding and payment process that will speed
access to lifesaving technology.
Thanks to this legislation, we are finally tearing down barriers that
discourage innovation and deny America's seniors the medical
technologies they desperately need. Seniors have waited too long for
access to the same treatment options as other Americans.
In addition to the excellent work and leadership of Chairman Thomas
and Chairman Johnson, I want to thank two unsung staff heroes--John
McManus and Deb Williams--who have worked so tirelessly on these
provisions.
I am also pleased the bill includes H.R. 841, legislation I
introduced with Mr. Cardin to break down regulatory barriers facing
specialized Medicare+Choice plans that serve the frail elderly.
Mr. Speaker, this package of reforms will improve the lives of our
seniors and generations to come who count on Medicare. I urge my
colleagues to support this landmark legislation and deliver on our
promise to modernize and strengthen Medicare.
Mr. BACA. Mr. Speaker, I rise in opposition to H.R. 1, the Medicare
Prescription Drug & Modernization Act of 2003.
This Republican plan is bad for seniors! It's bad for Hispanics! And
it's simply bad for the American people!
For millions of Americans, this plan will replace traditional
Medicare with vouchers that won't guarantee benefits.
It forces seniors into risky HMO plans and new private fee-for-
service plans that will not cover all of seniors' costs!
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Forty-seven percent of seniors in Medicare will have a $1,900 gap in
their drug coverage. How are our seniors supposed to make up for that
gap?
How are our parents and grandparents going to afford that! Most
seniors are on fixed incomes with nothing to spare!
Forty percent of poor and disabled seniors won't get the additional
help they need to pay deductibles and premiums. 40 percent.
This plan will not give taxpaying pregnant women and children
benefits!
It will not help the twenty million Hispanics without Health
insurance!
And it will not help our parents and grandparents pay for their
medicines!
We must take care of our seniors! We must not gamble with their
health and well-being. Seniors deserve to be protected in a safe and
fair healthcare plan.
In my district, San Bernardino, California, seniors are boarding
buses to Tijuana so they can afford to buy prescription drugs.
Our seniors have to go all the way to Mexico to get the life-saving
medicine they need. Mexico!
This is not safe and it is not fair.
I am angered when I think about all of the people that the
Republicans are leaving behind in this plan!
Why are we letting this happen to our abuelos? Our parents and
grandparents? How can we be so heartless?
When I think about this plan, I think about all of the seniors who
can't afford life saving prescription drugs.
I think about the senior who has glaucoma and prostate cancer and
makes only $8,000 a year.
Like 750,000 other Hispanics, he won't get help paying for his
prescription drugs, because he is lucky enough to have assets and owns
a car.
According to Republicans, that is wealthy!
They will give tax breaks to millionaires, but under their plan, a
man who makes $8,000 a year and is lucky enough to own a car, is too
wealthy to get medicines that will ease his pain and save his life!
This is an outrage!
Under the Republican plan he would have to sell his car and pass an
assets test to be poor enough to receive aide for low-income seniors.
When I think about this plan, I think about the senior who might make
$10,000 a year.
That senior will pay one-fifth of his or her income to cover the
Republican coverage gap.
One-fifth! This won't get him off the bus to Tijuana!
Like 63 percent of Americans, seniors in my district want and need
the security of Medicare.
Under the Republican plan they may start in Medicare.
But after a couple of years, Medicare will only be a voucher program
and where will seniors be?
In an HMO plan and still in a pharmacy in Tijuana buying medicine.
My constituents deserve better than the Republican plan!
They deserve more!
They deserve the Democratic plan that we have been fighting for for
years!
A plan that cares about the health and safety of America's seniors!
A plan that actually works for America's seniors!
A plan that offers coverage to all seniors--even Hispanics!
It's time to take seniors off the bus to Tijuana!
Mr. MICHAUD. Mr. Speaker, tonight the House of Representatives
considered a plan that would supposedly create a Medicare prescription
drug benefit. While some touted the plan as an innovative approach, the
fact is that when you look past the smoke and mirrors, it turns out to
be a very bad deal for Maine's seniors. In fact, the House plan could
make the current situation for seniors a lot worse: it will do nothing
to control rising prescription costs, it will jeopardize the
traditional Medicare fee-for-service plan that seniors enjoy right now,
it has a large gap in coverage that will force seniors to pay thousands
of dollars out of their pockets, and it may cause employers to drop
their health coverage.
We all know that drug prices are spiraling out of control. Maine
seniors are forced to take bus trips to Canada to buy affordable
prescription drugs. Our best hope for getting affordable medicines to
people is to lower prices--that is why Maine passed the innovative
Maine Rx law, and that's why I introduced a national version of the
bill called America Rx. Yet, the House legislation does nothing to
control rising costs. In fact, this plan expressly prohibits the
Secretary of Health and Human Services from ever negotiating with drug
companies for better prices. Pharmaceutical companies are reaping huge
profits while seniors are often forced to choose between medicine and
food.
Furthermore, this plan doesn't guarantee a prescription benefit for
seniors and it actually jeopardizes current Medicare coverage. The
proposed benefit is entirely run by the private insurance industry and
has no fallback provision of areas with no private plan. Without a
fallback provision, there is no guarantee that private plans will be
established in largely rural areas like Maine--so our seniors will be
left in the cold. This has happened before with Medicare Plus Choice,
and it is very likely to happen again, meaning that Maine's seniors
would get nothing from this bill.
In addition, this bill also contains a ``premium assistance''
provision that aims to phase out traditional fee-for-service Medicare
and replace it with a voucher program. This is just another step toward
total privatization of Medicare and the elimination of the only plan
available to seniors in areas such as Maine--the traditional Medicare
plan. Forcing seniors into private plans, and making them give up
Medicare, is not the right approach--but that's what this bill would
do.
This bill also has a very large gap in coverage seniors would have to
continue to pay a monthly premium, but would receive absolute no
benefit fro drug costs between $2,000-$4,900. Having this kind of a gap
in coverage is like telling people that their auto insurance doesn't
cover accidents in June, July and August.
Finally, and perhaps worst of all, there is a provision in this bill
that does not allow for retiree coverage to count toward the out-of-
pocket spending cap. It has been estimated that the bill passed by the
House would result in up to \1/3\ of employers dropping their retiree
coverage, the seniors who enjoy these plans would be forced into a
Medicare plan with fewer benefits. The House should not pass a plan
that forces seniors to lose what benefits they have.
For all these reasons, groups from AARP to the National Committee to
Preserve Social Security and Medicare have sharply criticized this
plan. I supported a number of alternative bills that would address the
problems with this plan and vastly improve the benefit available to
seniors. Unfortunately, the leadership of the House was more concerned
about pushing any bill through as quickly as possible than with
providing a quality benefit for seniors, and they weren't willing to
fix the serious flaws in the bill that could hurt seniors. In fact, the
House leadership refused to allow even one real amendment to the
legislation.
I want to pass a real prescription drug benefit--but I would not vote
for a plan that hurts Maine's seniors. I am disappointed with the
legislation that was passed by the House, however the fight for a real
Medicare benefit is not over. It is my hope that this legislation will
be improved in the upcoming conference with the Senate. I will continue
to fight to make sure that all Maine seniors receive an affordable and
real Medicare prescription benefit.
Mr. LANGEVIN. Mr. Speaker, I rise in opposition to H.R. 1, the
Medicare Prescription Drug & Modernization Act. Like many of my
colleagues, I held sincere hope that the 108th Congress would overcome
the inaction that has plagued this issue, at the expense of America's
senior citizens, for many years. I am extremely disappointed that the
bill before the House this week not only fails to offer a structurally
sound prescription drug benefit for Medicare beneficiaries, but also
contains provisions that threatens the stability of the program that
has provided health benefits for millions of elderly people and younger
adults with disabilities for the past 38 years.
In particular, I want to call attention to the fact that this bill
does nothing to address the rapidly rising costs of prescription drugs.
It not only fails to address this crisis, it contains a
``noninterference'' clause prohibiting the agents of the Department of
Health & Human Services from using the bulk purchasing power of
Medicare beneficiaries to negotiate for lower prices for senior
citizens. Without taking measures to curb the escalating prices of the
medications our seniors need to stay alive, the benefit is rendered
meaningless. Seniors will pay more out of pocket in 2007 with the
prescription drug benefit than they are paying in 2003 without it.
I urge my colleagues to pay careful attention to the details of the
Medicare Prescription Drug & Modernization Act and to think critically
about the effect--or lack thereof--it will have on the seniors in their
districts.
Mr. ISRAEL. Mr. Speaker, I am proud to be a Democratic Member of this
body. I have always been proud to be a Democrat. And always will be.
But I came to Congress 2\1/2\ years ago with a promise to my
constituents that I would work hard to break through partisan gridlock.
I promised that when I agreed with the Republicans I would vote with
them; and when I disagreed I would vote against them. But that I would
always work to develop consensus and move our country forward.
That is what brings me here today, Mr. Speaker.
In those 2\1/2\ years, I have focused on a health care crisis for
seniors on Long Island. We used to have 12 Medicare HMOs in my
communities. Now we have two
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left. Eighty-five thousand seniors have been tossed out of their
Medicare HMOs. One out of five is skipping their medication because
they can't afford them.
And in those 2\1/2\ years, I have listened to Republicans blame
Democrats for this crisis; Democrats blame Republicans; the House blame
the Senate; the Senate blame the House; Congress blame the White House;
the White House blame Congress; and everyone blame the insurance
companies.
There is plenty of blame to go around. But all the blame in the world
isn't going to help a single senior citizen get their prescription
drugs at a more affordable price.
It's time to stop blaming. It's time to stop finger pointing. It's
time for conservatives to stop railing against a $400 billion
prescription drug plan because it's too liberal. It's time for liberals
to stop railing against a $400 billion prescription drug plan because
it's too conservative. It's time for everyone to stop rejecting the
imperfect because we can't get the perfect. It's time to move this
process forward.
Mr. Speaker, I believe the Democrats are right. It will take at least
$800 billion to provide America's seniors with a truly comprehensive,
voluntary prescription drug plan.
Is an $800 billion prescription drugs program better than a $400
billion program that's before us today? Of course. $400 billion is only
half as good as $800 billion . . . but it is $400 billion better than
nothing. And nothing is exactly what we will leave our seniors if we
reject this proposal today.
To reject the largest expansion of Medicare in its 38-year history
because it's $400 billion instead of $800 billion just doesn't make
sense to me.
Mr. Speaker, only a short time ago, President Bush argued for a $190
billion prescription drug plan. My side of the aisle proposed an $800
billion plan. Some say we have ended up at a $400 billion plan.
I disagree. I think we are beginning with a $400 billion plan. It is
the largest expansion of Medicare in its 38-year history. It is, in my
view, a down payment. An investment.
Is this plan flawed? I believe it is. I believe the Senate plan,
supported by Ted Kennedy, is much better. But we can't get near that
plan unless we go to a House-Senate conference. And we can't go to a
House-Senate conference unless we pass this bill today.
Yesterday at the White House, I listened carefully to President Bush.
He said clearly we must move this process forward and pledged to work
on a bipartisan basis to develop a final bill that represents
consensus.
But there's no hope for consensus, no hope for a penny of
prescription drug spending, if we slam the brakes on the process today
by killing this bill today.
Mr. Speaker, of particular importance to me and the constituents I
represent is that this bill contains the Greenwood-Israel-Fossella
amendment, which ends the economic discrimination in federal
reimbursement formulas to suburban Medicare HMOs that have forced
85,000 of my constituents out of their prescription drug plans.
Those seniors are watching us today. They are tired of blame, tired
of gridlock, tired of excuses. They don't care whether it's a
Democratic solution or a Republican solution, as long as it's a good
solution.
This is not a perfect solution. But it is a good start. It is the
largest expansion of Medicare in its 38-year history. It ends the price
discrimination on Long Island and other suburbs around the nation.
Mr. Speaker, let me close by repeating this: $400 billion is only
half as good as $800 billion . . . but it is $400 billion better than
nothing. And nothing is exactly what we will leave our seniors if we
reject this proposal today. In the spirit of advancing the process, I
will support this bill. I reserve the right, however, to vote against a
bill that emerges from Conference that does not address the significant
flaws in the legislation before us tonight.
Mr. EVANS. Mr. Speaker, this Republican Medicare bill falls well
short of what our country's retirees deserve. And I believe, that if
this Congress and this President had not squandered the budget surplus
we could afford to give our seniors a benefit they deserve.
It is well past time to assist with our seniors prescription drug
costs. The Democratic substitute provides a reliable and affordable
benefit to America's seniors. This voluntary prescription drug coverage
costs only $25 a month with a $100 deductible and provides a $2000
stop-loss protection with no gaps in coverage. There are also special
provisions to help the poorest seniors with either full payment or
assistance on a sliding fee scale.
The Democratic substitute I support also allows the Secretary of
Health and Human Services to wield the collective bargaining power of
the 40 million Medicare beneficiaries to negotiate lower drug prices.
And as the ranking member on the Veterans' Affairs Committee, I was
proud to help craft a similar plan which has helped our nation's
veterans lower their out of pocket drug costs.
As a member representing a rural district, I also want to highlight
the rural health care provisions included in the Democratic substitute.
These provisions are essential to create equity in the reimbursement
system between urban and rural hospital. They allow fair payments to
hospitals that have a disproportionate share of low-income patients,
increases payments to rural home health providers without requiring a
co-pay, and adjusts low-volume payments for small hospitals. It also
takes into account the physician shortage crisis in rural areas by
finally correcting the huge disparity between urban rural hospitals,
that drives providers from our small towns.
All of these reasons make the Democratic alternative to H.R. 1 the
right answer to the spiraling costs for prescription drugs for seniors.
Medicare works for America's seniors but, I oppose the GOP's efforts to
privatize this system and provide a second-rate prescription drug
benefit. I proudly support the Democratic substitute and I urge my
colleagues to vote down H.R. 1 and vote Yes on the substitute.
Mr. CUMMINGS. Mr. Speaker, I rise today to speak against the
inadequate Medicare prescription drug bill being considered today, H.R.
2473 and in support of the Rangel/Dingell Substitute.
With over 40 million elderly and disabled persons covered under the
38-year-old Medicare entitlement, Congress' chief objective should be
to ensure that these Americans have access to quality health care
coverage. However, today we consider legislation that will do more harm
than good because it is the first step in privatizing the Medicare
program and as former Speaker Gingrich predicted, causing it to
``wither on the vine''. Passage of this legislation will cause many of
our seniors to wither right along with the Medicare program--which will
no longer be seen as the social compact with our seniors that this
nation embraces.
Medicare is the nation's second largest social welfare program. As an
entitlement program, it is imperative to realize that with the
implementation of H.R. 2473, fee-for-service Medicare payments would
naturally increase. This will result in many seniors facing the
horrible prospect of being unable to afford the increasing payments. I
think many of my colleagues would agree that this is a very troubling
proposition and a totally unnecessary result.
Additionally, with the establishment of the Voluntary Prescription
Drug Benefit Program, seniors again would lose because of the lack of
negotiated prices for the prescription drugs. Also, although federal
subsidies would be provided to encourage participation, the bill would
increase the annual out-of-pocket threshold for many beneficiaries.
Once again a pseudo-solution of adding a prescription drug benefit
while increasing the cost for persons who need the benefit but will not
be able to afford its costs.
Furthermore, the use of health maintenance organizations (HMOs) and
other private organizations to obtain prescription drugs would deter
many seniors from getting the benefit. As Rep. Charles B. Rangel,
Ranking Democrat on the Committee on Ways and Means stated, ``to get
prescription drug coverage, seniors would have to go to an HMO by
another name. Then, all the choices would belong to the private
insurance provider--which drugs are covered, which pharmacies you can
choose, who your doctor is, etc.'' Mr. Speaker, this bill is an empty
pillbox--it is a paltry solution to the problem of providing adequate
prescription drug coverage to our seniors; rather, it is creating an
inadequate system--based on a provider concept that does not currently
exist and will not likely work in practice.
A better alternative to H.R. 2473 is The Medicare RX Drug Benefit an
Discount Act (H.R. 1199) offered by my friend Charlie Rangel of New
York. This prescription drug plan would guarantee that every Medicare
beneficiary, no matter where they live, could have a benefit with a $25
monthly premium, $100 annual deductible, 20 percent co-insurance and
$2000 out-of-pocket limit. The bill would also:
Lower prescription drug cost for all Americans, regardless of whether
they are covered by Medicare;
Give all Medicare beneficiaries the option of a reasonably priced
guaranteed prescription benefit under Medicare;
Ensure that senior citizens and people with disabilities receive
coverage for the drug that their doctor prescribes; and
Provide additional assistance for low-income beneficiaries such that
many seniors would pay nothing for their prescription drugs.
Unlike the proposal put forth by the Bush Administration and endorsed
and worsened by the House GOP Leadership, H.R. 1199 would not require
seniors to join an HMO or similar private plan in order to get a
prescription drug benefit. In fact, Medicare beneficiaries would be
guaranteed a prescription drug benefit rather than offered a marginal,
voluntary plan under H.R. 2473. This plan would ensure that we keep our
social compact with our seniors. The Republic plan fails to do that.
[[Page H6118]]
Since its inception 1965, Medicare has provided important protection
for millions of aged and disabled persons. H.R. 2473 would be a
detriment to improving and securing this system. I lend my voice in
opposition and urge my colleagues to vote against H.R. 4273 and to
support H.R. 1199.
Ms. WATERS. Mr. Speaker, I rise to oppose this Medicare privatization
plan, which is masquerading as a prescription drug bill.
This bill would force seniors who want prescription drug coverage to
get it from private insurance companies. It provides no guarantee that
insurance plans will be available, and when they are, premiums and
benefits will vary widely. The bill also 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 give-away 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 in
the pharmaceutical industry and the insurance industry that give
campaign contributions to Republicans.
However, the most outrageous aspect of this bill is what it does to
traditional Medicare. The bill would increase seniors' cost for visits
to the doctor's office by raising the Medicare Part B deductible and
indexing it for inflation. This could cost American seniors an
estimated $8 billion. While this may seem like a tiny fraction of the
Republicans' $350 billion tax-cut-for-the-rich, it is a huge expense
for senior citizens, many of whom live on limited incomes.
This bill also divides Medicare into 10 or more regional plans in
2006 and then converts the entire Medicare program into a voucher
program depending upon private insurance companies in 2010. If the
Republicans really want to privatize Medicare, they should be honest
with the American people and call this plan what it is, the Medicare
Privatization Act.
The Democrats alternative prescription drug plan on the other hand
provides prescription drug coverage under Medicare with guaranteed and
affordable premiums and benefits for all American seniors and no gaps
in coverage. It is time for Congress to make prescription drugs
available to all seniors who need them.
I urge my colleagues to oppose the Republican Medicare Privatization
Act and support the Democratic alternative.
Mr. ISTOOK. Mr. Speaker, this bill will hasten the day when Medicare
will go bankrupt, and it also threatens to unravel our children's
future.
Medicare is already on shaky financial legs, and this will add
enormous extra expenses that will make it worse. Do we expect our
children to pay a lifetime of higher taxes, and still find there's
nothing left for them when they retire? That is what we face.
I would like to add prescription drug benefits, but it's wrong to
promise something we cannot pay for.
I want to preserve what's good about Medicare, not destroy it by
making extravagant promises for political gain.
The enormous extra spending under this bill will be far more than
projected. Because today's Medicare is a huge price control system,
many doctors already refuse to see Medicare patients. In just a few
years this will make it worse, including price controls that will
destroy the incentives for companies to create new medicines.
What should we be doing?
Since 76 percent of seniors already have drug coverage, we could
focus on helping those who don't. But this bill undoes the coverage for
those 76 percent, and puts them in a confusing new medical experiment.
We should be stabilizing Medicare, so it can keep the promises
already made, not making new promises that we don't have the money to
keep.
We should address the reasons why drug prices and healthcare costs
are so high. By banning re-imported drugs, we're forcing Americans to
subsidize far-lower drug prices in other countries. We should change
our policies so Americans only pay the lower world price, not a higher
price.
We should end the 130,000 pages of federal regulations that have
driven the costs of medicine and healthcare through the roof. On
average, for every hour they spend with a patient, doctors and nurses
spend another half-hour to a full hour doing government paperwork.
We should stress personal responsibility in healthcare, just as we
did in welfare reform, so government resources are focused on those who
cannot care for themselves, not on those who can.
Bit-by-bit, Congress is undoing the principles of welfare reform, and
undercutting basic American principles in the process. Both political
parties are making extravagant promises today, trying to outbid each
other to win votes. Unfortunately, they are bidding with taxpayers' own
money, and our children's hopes will be crushed by the bills they
inherit.
Mr. PORTMAN. Mr. Speaker, I rise to speak in supper of provisions in
H.R. 1, The Medicare Prescription Drug and Modernization Act, that are
designed to address the special pharmacy needs of beneficiaries
residing in nursing homes.
Nursing home residents are not in a position to fill prescriptions
like everyone else. They cannot simply walk into a pharmacy and have
their prescription filled. Many nursing home residents, because of
their physical or mental condition, are not able to take their
prescription drugs on their own, especially if they have to take
multiple medications throughout the day. Their unique circumstances
require specialized pharmacy care that retail and mail order pharmacies
do not provide. Long-term care pharmacies meet these special needs.
They contract with nursing homes to provide specialized packaging, 24-
hour delivery, infusion therapy services, geriatric-specific
formularies, clinical consultation and other services that are critical
to a nursing home. Importantly, long-term pharmacies play a critical
role in preventing medication errors that add to the cost of care and
suffering of Medicare patients. In fact, one study estimates $3.6
billion in medication errors have been avoided as a result of long term
pharmacy care. I believe it makes sense to preserve specialty
pharmacies' ability to perform these vital services for nursing home
residents, and I want to point out how H.R. 1 does this.
First, the bill requires the Secretary of Health and Human Services
to review the current standards of practice for pharmacy services
provide to patients in nursing facilities. Prior to implementation of
the prescription drug benefit, the Secretary will submit its findings
to Congress on how long-term pharmacy services will be available to
nursing home residents, including appropriate reimbursement levels for
the specialty pharmacies that currently serve these nursing home
residents. The Secretary's report is to include a detailed description
of its plans to implement the provisions of this legislation in a
manner consistent with state and federal laws designed to protect the
safety and quality of care of nursing facility patients.
Second, H.R. 1 directs plan sponsors to implement medication therapy
management programs as a tool to reduce medication errors and improve
patient outcomes. Long-term care pharmacies currently employ such
initiatives to meet the complex medication needs of nursing facility
patients, and the bill appropriately allows plan sponsors' programs to
distinguish between services provided in ambulatory and institutional
settings.
Finally, the bill includes provisions to ensure that beneficiaries
are guaranteed access to pharmacy services, including emergency
services. These provisions are vitally important to maintain the high
standard of care for all beneficiaries, but particularly for patients
in nursing facilities, who receive specialized pharmacy services 25
hours-a-day, seven days-a-week, through networks of long-term care
pharmacies that contract with nursing facilities to meet their
patients' needs.
Mr. Speaker, I believe these long-term pharmacy provisions take a
significant step toward ensuring that our nation's most frail and
elderly citizens will have affordable, appropriate prescription drugs
and delivery services.
Mr. BASS. Mr. Speaker, as a member of the Energy and Commerce
Committee, I am extremely pleased to have had the opportunity to
develop a strong Medicare modernization package that will significantly
improve this critical government program.
The seniors of New Hampshire have long clamored for a prescription
drug benefit under Medicare, as is the case in the rest of the nation.
I am pleased to represent those same seniors today as we pass this bill
and take one giant step closer toward our goal of creating a new and
voluntary prescription drug benefit that makes lifesaving medications
more accessible.
This benefit is the product of years of research, study, testimony,
and compromise. I have no doubt whatsoever that each of us might wish
for a slightly different version of this bill. We represent different
regions with different demographics.
And, I am sure we all wish lifesaving drugs were more affordable for
our families, friends, and constituents. The goal is formulating a
fiscally responsible plan that will remain solvent in years to come, is
easily accessible, and increasingly beneficial to seniors of all
regions and means, was a daunting one.
Yet, the bill makes a number of Medicare improvements for care
providers in New Hampshire. This proposal represents one of the most
generous rural packages ever contemplated by the House. Notably, after
several years of efforts on the part of the rural medical community,
uniform standards for Medicare reimbursements will be established for
rural and small urban facilities.
Beginning October 1, Medicare reimbursements to rural areas would
finally mirror those for large urban ones. Having lamented for a
[[Page H6119]]
number of years over the inequity of this provision within the Medicare
reimbursement system, I am particularly pleased that this is being
addressed in the bill.
A drug benefit for seniors and a rejuvenation of the Medicare system
are essential to seniors and their caretakers. The delivery of medical
care has changed enormously since this program was first conceived, and
the program ought to be modernized to reflect the increases in medical
technology and the utilization of a wide range of care options.
As I have noted many times, no plan can be as all-encompassing and
immediately satisfying as we might prefer. However, this bill puts the
framework in place for a system that can be adjusted and improved upon
over time and will directly and immediately help the population most in
need.
I applaud all Members of the Energy and Commerce Committee and the
Members of the Ways and Means Committee for the joint work on this
essential legislation. It is my hope that upon completion of our floor
vote today, we will see this measure moved forward immediately to
conference with the Senate.
Mr. KNOLLENBERG. Mr. Speaker, today we have an opportunity to provide
our seniors with a new prescription drug benefit and improved access to
health care. It is a long overdue step in updating and improving
Medicare.
Today's legislation will provide help for those who need it most. Our
6.5 million low-income seniors will receive a fully covered premium and
a cost sharing benefit when their drug benefit switches from Medicaid
to Medicare, paying no more than $2 per generic prescription, and no
more than $5 for name brand drugs. This will also save states about
$6.8 billion a year in Medicaid costs.
It is imperative that Medicare advance with technology. Prescription
drugs are an increasingly important part of modern medicine, helping to
relieve pain, cure disease, and enhance the lives of millions of
Americans. Adding a drug benefit and updating how existing benefits are
provided will be a very significant accomplishment.
Mr. Speaker, I encourage my colleagues to vote for this legislation
that helps our seniors by providing a prescription drug benefit that
they deserve.
Mr. MOORE. Mr. Speaker, I rise today to express my opposition to this
legislation and my support for the Blue Dog substitute, offered by Rep.
Thompson, which we have not been allowed to debate on the House floor
today, despite support on both sides of the Capitol.
We in Congress have been talking for years now about the necessity of
adding a prescription drug benefit to Medicare. We know, as seniors
know, that this talk has been cheap and it is imperative that a
compromise be reached this year. The Senate has been proceeding in a
bipartisan way toward a compromise that adds a substantial, but not
perfect, benefit to Medicare and protects the long-term integrity of
this social insurance program.
Instead of following the Senate's lead and working toward a
compromise that will improve Medicare, a wildly popular and successful
program, the House Republican leadership has chosen instead of add
provisions to this legislation that attack the foundation of the
Medicare program. The bill does not include a federal fallback if
private plans choose not to offer a benefit. The experience that my
constituents have had with Medicare+Choice show that private health
care plans are at best an unstable partner for Medicare, and financial
analysts have consistently publicly questioned whether ``drug only''
plans will ever be offered. For these reasons, it is absolutely vital
that Medicare provide a viable and guaranteed fallback for all Medicare
beneficiaries.
Additionally, H.R. 1 would transform Medicare, beginning in 2010,
from a defined-benefit program to a defined-contribution program. This
provision would gradually shift enormous costs onto people when they
are sick and most in need of care, and destroy the fabric of this
program that has served seniors well for nearly 50 years.
The Senate has crafted legislation that has broad support among
Senators across the ideological spectrum. This legislation has won the
support of both President Bush and Senator Ted Kennedy. Together with
Representative Thompson and the Blue Dog Caucus, I am supporting
legislation that uses the framework of the Senate compromise and
improves on it, making it a much stronger bill. The Thompson plan
includes a provision phasing in employer contributions to they will
count toward the out-of-pocket limit for catastrophic coverage, thus
giving employers an incentive to keep offering retiree benefits. The
substitute guarantees a Medicare fall-back plan for all areas that do
not have two private plans available. It also gives relief to state
Medicaid plans by making Medicare the primary payer for all individuals
eligible for Medicare and Medicaid. Finally, the Blue Dog substitute
includes language that will reduce the high cost of prescription drugs
by allowing Americans to reimport drugs from Canada and speeding
approval of generic drugs.
The House bill falls short on several other fronts as well. It
ignores the needs of community and teaching hospitals, meaning that
hospitals in my district stand to lose over $11 million in denied
inflation updates. Kansas teaching hospitals, like KU Med, would
additionally lose out to the tune of $3.9 million in 2003 and $21
million over five years due to the Federal Government's failure to help
pay for the excess costs of medical education. The Thompson substitute
provides an adequate inflation update for all hospitals. Finally, H.R.
1 would cut $16 billion over 10 years from oncology services. Cancer
patients all over the country will have to pay for provisions in this
bill that sharply cut funding for cancer-fighting drugs and allow
Medicare to continue to underpay for costs associated with providing
chemotherapy services.
I cannot support the Democratic substitute because I believe that it
is simply too expensive. I voted against the most recent tax cut
because I believe that it is irresponsible for Congress to run up bills
for our children to pay, and the Democratic substitute, although a much
more robust benefit for our seniors, is simply more than our country
can afford at this time. The Senate bill and the Blue Dog substitute
both hew to the budget agreed to by the House and Senate. Neither bill
is perfect, but I believe that the Thompson substitute builds a strong
foundation for a prescription drug benefit on which we can build in
future years.
Mr. CAPUANO. Mr. Speaker, today we have the opportunity to provide
our seniors with a real prescription drug benefit, but instead of
giving seniors the plan they deserve, we are taking steps to dismantle
a program that older Americans have known and trusted for 38 years.
The Republican plan before us today fails to offer the types of
guarantees that our seniors need and deserve. There is no defined
benefit and no standard premium. So when my seniors ask now much their
premiums will be or how much their drugs will cost, I cannot answer
them. This is unacceptable.
This bill allows private insurance companies to decide premiums,
prescription drug coverage benefits and even where coverage will be
offered. This proposal threatens to dismantle Medicare and replace it
with private health insurance coverage for all seniors. This is
precisely the problem many seniors face--they cannot afford private
insurance, and depend on Medicare.
This bill also provides additional funding for rural hospitals, but
not urban teaching hospitals. This is a serious oversight. Urban
teaching hospitals are facing incredible budget shortfalls. They play a
critical role in training tomorrow's physicians, and their needs must
also be addressed. If the Federal Government is going to offer
additional funding to some hospitals, it must offer additional funding
to urban teaching hospitals.
The Federal Government has a responsibility to ensure that Americans
who contribute to the Medicare program during their working years will
have access to dependable, equitable, and affordable health coverage.
The Democratic substitute does just that--it lowers drug prices,
guarantees coverage and enables seniors to get their medicines at the
pharmacy of their choice. The Rangel/Dingell substitute addresses my
concerns more effectively and I will strongly support it.
Mr. LEACH. Mr. Speaker, seldom has there been a more important bill
for the State of Iowa.
On the one hand, this legislation provides for greater equity in
Medicare reimbursement which will bring millions of additional dollars
to the state and help prevent an exodus of healthcare providers from
rural counties.
In addition, the brunt of the bill is about providing voluntary
prescription drug coverage to Medicare eligible individuals. There is a
conservative critique that the program is far too expensive, and a
liberal critique that it is not generous enough. Both philosophical
perspectives have a degree of validity, but the big picture is that
Congress is moving in a direction of providing health security for
millions of citizens. Low income individuals will, for the most part,
be provided full comprehensive prescription drug coverage. Higher
income citizens on a sliding scale will be provided partial coverage
and all citizens will be provided coverage for catastrophic expenses.
There will be a cost to society in providing these benefits but the
benefits far outweigh the costs. There may be better approaches that
can be envisioned now or developed later, but this is the only
framework approach that has a chance of receiving majority support in
both bodies without a Presidential veto. It may not be enough and it
may be too deferred in implementation but it nevertheless marks an
important first step to meeting the most challenging need of many
senior citizens.
Ms. DeGETTE. Mr. Speaker, I want to highlight a piece of the Dingell/
Rangel substitute that pertains to Disproportionate Share Hospitals.
[[Page H6120]]
This was an amendment I offered in the Energy & Commerce Committee
and I understand that since our mark-up the DSH allocation has been
increased and I want to commend this action. I know there is real
bipartisan support on this issue and I want to just reiterate how
important it is that we get funding to our DSH hospitals right away.
The provision in the substitute would give DSH hospitals a large
portion of the funding that has been cut in the past year. It would
expend a billion dollars in FY '03 and then adjust payments in future
years to ensure that our vital DSH hospitals do not go bankrupt.
The reason it is so important that this money is available next year
is that our DSH hospitals have already suffered a cut of a billion
dollars in the past year and now are in such bad shape financially, if
we help them in dribs and drabs then many of them won't be around ten
years from now.
There are public hospitals who are currently planning to make cuts of
25 percent next year in order to try to stay afloat.
Mr. Speaker, our public hospitals cannot afford these cuts. We are in
real danger of losing numerous DSH hospitals over the next few years if
we do not assist them right now.
This provision also helps the low-DSH hospitals which are the most
strapped of all. Eighteen states have low DSH hospitals due to
historical expenditures that were basically frozen in place at a
certain point.
These low-DSH states have been struggling for years with their
Medicaid payments and they are currently held to only 1 percent of
their Medicaid expenditures. My amendment, which accomplishes the same
thing that a bill Rep. Heather Wilson introduced, would raise this to 3
percent which would help these states considerably.
While low-DSH states have been dealing with this situation for years,
recently it has gotten much worse. The pressure on these hospitals has
increased due to numerous factors such as increasing numbers of the
uninsured, increasing numbers of Medicaid patients, the extreme
situation so many states are in in terms of budget crises.
The fact of the matter is that DSH hospitals need help and need help
now. They can't wait and we need to rectify this situation while the
DSH hospitals are still around to help our most vulnerable citizens.
Mr. DeLAURO. Mr. Speaker, in my 13 years in Congress, this House has
sometimes risen to the occasion on matters of great national
importance. My very first vote on the first Gulf War followed days of
debate in which Members stated their heartfelt views on the prospect of
war. After September 11th, we came together--Democrats and
Republicans--to bind the nation's wounds and provide for the national
security of the nation's victims of that terrorist act.
I wish I could say that this is one of those eoccsions--I wish I
could say that, as we consider the very future of Medicare, we could
rise above partisan politics and ideological viewpoint and do the right
thing by our senior citizens. Medicare is one of the most important and
successful government programs ever enacted, a program that has
provided quality health care and a measure of economic security to
hundreds of millions of senior citizens over the past four decades.
Together, Medicare and Social Security represent the twin pillars of a
social safety net and constitute what is in effect a social contract
between the generations--that if you work hard all your life you may
look forward to a dignified retirement and economic security in your
old age.
I understand that we bear the responsibility of meeting the newest
challenges that face our seniors--of finding new ways to care for our
aging population and that changes to Medicare need to be made. Central
to that process is dealing with the cost of prescription drugs and
helping seniors afford them.
Unfortunately, the legislation before the House this week fails on
both counts. It does not deliver an acceptable or adequate prescription
drug benefit and it will not hold down the cost of drugs.
What it does do is open the door to privatization of Medicare--in
other words, a return to the way things were before, when 1 out of
every 3 seniors lived in poverty, largely due to the cost of medical
expenses. Today, thanks to Medicare, that rate is closer to 1 in 10.
This bill sets in motion the privatization of Medicare by converting
the program into a voucher system--essentially turning it over to the
HMOs, the very organizations that have dropped 52 percent of the
Medicare enrollees in my state over the last four years.
And it does nothing to contain costs. It prohibits the Secretary of
Health and Human Services from even engaging in negotiations with the
drug companies to lower prices. As a result, many seniors will pay more
than they do now and their premiums will rise as the cost of drugs
rises.
But the most inexplicable aspect of this bill is the huge gap in
coverage. Once a senior receives drug benefits totaling $2,000, he or
she is cut off until her bills total $4,900, necessitating that they
pay $2,900 out of her own pocket--at the same time that they pay
premiums for this supposed drug benefit.
It makes no sense. Throughout my time in Congress, the single most
common concern I have heard from seniors at the local Stop N' Shop
every weekend is how expensive their prescription drug bills are.
Seniors know they are being taken advantage of. They know they can get
drugs cheaper in Canada and overseas.
And I assure you when they find out we are doing nothing to hold down
the excessive profiteering of the pharmaceutical companies, they are
going to be angry. When seniors find out that their coverage
essentially stops during mid-summer while they still have to pay
premiums, they are not only going to be confused, they are going to
feel utterly betrayed.
Mr. Speaker, we must provide a meaningful drug plan with guaranteed,
defined benefits--with no gaps and no doughnut holes. We should act to
contain costs by giving the Secretary of HHS the authority to negotiate
lower prices so that seniors will not have to pay more than seniors in
other countries for the same drug.
And perhaps most importantly we should honor our social contract with
America's seniors by not privatizing Medicare and subjecting seniors to
the uncertainties of the private health care market. We should not be
penalizing seniors who live in rural communities, where pharmacies and
private plans are scarce at best. We should be giving them a plan fully
contained within the Medicare system, where seniors will not be forced
to shop around for a plan only to be unceremoniously dropped soon
thereafter. Giving them a plan that seniors have come to rely on and
feel safe with is what we should be doing. That is real economic
security. Medicare--the same plan my 89 year-old mother relies on
today.
This debate is as important and historic as any I have been a part of
in this body. If we allow this bill to become law, we are essentially
tearing that social contract up--a contract my friend from Michigan,
Mr. Dingell, fought to pass 38 years ago. And by doing so, we would be
saying that guaranteed health care for our seniors is no longer an
obligation or responsibility of this government.
I did not come to Congress to preside over the dismantling of
Medicare. That contract must be honored. I urge my colleagues to
support a plan that does that.
Ms. LINDA T. SANCHEZ of California. Mr. Speaker, I rise in strong
opposition to H.R. 1, the Medicare Prescription Drug and Modernization
Act. I want to thank Congresswoman Lynn Woolsey for her hard work in
bringing Democratic women together to speak against the Republican's
shameful Prescription Drug bill.
As a freshman Member of Congress, I came here with a tremendous sense
of optimism. By nature, I am an eternal optimist. But I am no fool, and
the American people shouldn't be fooled either. Unfortunately, that is
exactly what the Republicans are trying to do with their sham
Prescription drug bill.
If you believe the Republican bill solves the prescription drug
crisis facing our seniors . . . If you think that seniors will get the
medications they need, at a price they can afford . . . If you believe
private insurance companies--the same people who brought you HMOs--will
provide better coverage for seniors than a reformed Medicare system . .
. or if you think you can get all the drugs your doctor prescribed,
including the most expensive, at your local pharmacy. . . . Then you
should be listening to that old country song by George Strait called
``Ocean Front Property.'' It goes something like this:
I've got some ocean front property in Arizona from my front
porch you can see the sea.
I've got some ocean front property in Arizona and if you'll
buy that I'll throw the Golden Gate in free.
Republicans are just like scam artists trying to sell you an ocean
front property in the desert. But now they are trying to sell you a
phony prescription drug package. We must not fall for it, especially
when this is not what seniors want.
I say to my Republican colleagues, it is time to stop this heinous
scam on seniors! It is time to show the greatest generation in our
country the respect they deserve. After all, they are the people who
served us in times of war, got us through the Great Depression, raised
their children and made countless contributions to this country.
Worst of all, the Republican bill ignores the reality of older women,
the face of Medicare. Women constitute 58 percent of the Medicare
population at 65 and 71 percent at the age of 85. Since women normally
outlive their male counterparts and many women spend time out of the
workforce, caring for their children and sometimes, their own parents,
Medicare beneficiaries are disproportionately female.
We need to make sure that every prescription is covered without a
gap. Seniors, particularly women, must retain their right to see their
[[Page H6121]]
doctor of choice. We must empower seniors to make the right choices,
not insurance companies. This is exactly what the democratic plan does
and exactly what seniors want. In fact, according to a survey conducted
by AARP: 4 out of 5 seniors don't want the GOP proposal.
Today, Mr. Speaker, I urge my colleagues not to support H.R. 1. Let's
tell the Republicans don't try to sell seniors something they don't
want.
Mr. JANKLOW. Mr. Speaker, I would like to submit the following letter
into the Congressional Record.
Business for Affordable Medicine,
Washington, DC, June 24, 2003.
Hon. Dennis Hastert,
Speaker, U.S. House of Representatives,
Washington, DC.
Dear Speaker Hastert: We urge you to pass legislation as
part of Medicare reform that will improve the Drug Price
Competition and Patent Term Restoration Act, and the patent
listing requirements under the Federal Food Drug, and
Cosmetic Act (FFDCA).
States spend billions of dollars annually and provide
prescription medicine to residents, state employees, and
retirees. Tax payers are forced to pay hundreds of millions
of dollars in excess costs for the medicine because of
loopholes in the Hatch-Waxman Act that restrict timely access
to lower-cost generic pharmaceuticals. As a result, BAM
members, including states, companies, and labor groups,
support changes to the Hatch-Waxman Act that will provide
greater pharmaceutical competition and more timely access to
generic.
Bipartisan legislation passed by the Senate last week will
provide all purchasers with greater access to generics, and
will produce hundreds of millions of dollars in savings for
federal and state programs. We urge the House to adopt
similar legislation as part of the effort by Congress to add
a prescription drug benefit to Medicare, and urge you to
resist changes or amendments that would weaken the most
important cost-savings provisions in the Senate bill.
Specifically, BAM supports the proposed limit of one 30-
month stay against FDA approval of generic products, as well
as provisions to prevent the use of ``late-listed'' patents--
those filed after generic applications are submitted--to
obtain additional stays. Litigation under the Hatch-Waxman
Act is increasingly tied to patents that have been listed
after the filing of generic applications, resulting in the
need for legislation to restrict the use of 30-month stays to
only those patents listed in the Orange Book prior to the
filing of related generic applications. We also support
changes to provisions in the law that allow drug
manufacturers to intentionally delay litigation on certain
drug patents until the end of any 30-month stay.
In addition we are concerned that consumers, taxpayers and
institutional purchasers have no standing under current law
to challenge abusive listing. As a result, all purchasers
have been forced at times to pay millions of dollars more
than necessary for products that should have faced more
timely competition from generics. We support efforts to
ensure generic manufacturers will be provided with the most
effective avenues possible for relief from unlawful listings.
BAM is committed to working with all members of Congress to
restore balance to the Hatch-Waxman Act and improve
pharmaceutical competition. We look forward to assisting your
efforts.
Sincerely,
Governor M.J. ``Mike'' Foster, Jr.,
Louisiana,
Governor Bob Wise,
West Virginia.
Governor Brad Henry,
Oklahoma.
Governor Bob Holden,
Missouri.
Governor Ronnie Musgrove,
Mississippi.
Governor Thomas Vilsack,
Iowa.
Mr. ROGERS of Alabama. Mr. Speaker, one of the promises I made when I
came to Washington was to improve the lives of East Alabama seniors.
Unlike retirees in our country's metropolitan areas, the seniors of the
Third District face far greater challenges.
For starters, most Third District seniors lives in rural areas with
few choices in health care providers. This undoubtedly means higher
health costs and fewer costs when it comes to doctors, and higher out-
of-pocket expenses for covering the same level of basic medical needs.
Part of the problem, Mr. Speaker, is Medicare does not fairly and
adequately reimburse doctors for their services. This is not fair,
especially when retirees just across the Georgia border have far better
access to doctors who are reimbursed by Medicare at higher rates.
Seniors should not be penalized just because they live in rural areas.
But assuming we fix the reimbursement problem, this still leaves
Medicare as a program designed for the 1960s, yet providing care in
2003. That's why I'm pleased to be in the House today to offer my full
support for adding a prescription drug benefit under Medicare.
Earlier this year, Speaker Hastert appointed me to his Prescription
Drug Action Team to help craft a prescription drug benefit for
Medicare. I've taken this responsibility around the Third District to
listen to seniors describe what they think this benefit should do, and
how it should be designed.
First and foremost, we must reduce the costs of prescription drugs.
Modern medicine relies on these life-saving drugs more than ever, and
doctors shown no signs of slowing the expected growth in prescriptions.
But with Alabama seniors now paying an average of $1,200 per year for
prescriptions, these costs are getting out of hand.
Consider seniors on fixed incomes, Mr. Speaker. These Alabamians,
already strapped with highly monthly bills, now face the costs of
prescriptions rising beyond their means. We've already seen
prescription drugs double or even triple in cost over the years. What
will these seniors do when these drugs are priced out of reach? Will
they be faced with filling their medicine cabinet or their pantry?
Mr. Speaker, this simply cannot continue. The U.S. House of
Representatives has drafted a bill, the Medicare Prescription Drug
Modernization Act of 2003, which includes a prescription drug benefit
for seniors in both the traditional fee-for-service and in the new
integrated health plans. The bill is not limited to adding prescription
drug coverage for our state's seniors, but also includes much-needed
modernizations to Medicare and improvements for health care providers,
such as an increase in Medicare payments to doctors to ensure that
seniors continue to have access to physician services. Most
importantly, the bill includes improvements and increased funding for
rural hospitals in the Third District.
This is hardly a perfect bill, but it is a good bill. The legislation
helps Alabama's seniors receive better health care under Medicare and
provides immediate relief from high prescription drug costs. President
Bush supports it, and is ready to sign this bill should the House and
Senate pass it.
Mr. Speaker, I'm proud to be in this House today and have the chance
to improve the lives of Alabama's seniors. I will continue to work with
my colleagues on both sides of the aisle, as well as those in the
Senate, to help pass this important legislation now, and send it to the
White House for President Bush to sign into law.
Mr. TAUZIN. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Hastings of Washington). All time for
general debate has expired.
General Leave
Mr. TAUZIN. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days within which to revise and extend their remarks
on H.R. 1.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Louisiana?
There was no objection.
Amendment in the Nature of a Substitute Offered by Mr. Rangel
Mr. RANGEL. Mr. Chairman, I offer an amendment in the nature of a
substitute.
The SPEAKER pro tempore. The Clerk will designate the amendment in
the nature of a substitute.
The text of the amendment in the nature of a substitute is as
follows:
Amendment in the nature of a substitute offered by Mr.
Rangel:
Strike all after the enacting clause and insert the
following:
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 MEDICINE BENEFIT
Sec. 101. Voluntary medicare outpatient prescription medicine program.
``Part D--Voluntary Prescription Medicine Benefit for the Aged and
Disabled
``Sec. 1859. Medicare outpatient prescription medicine benefit.
[[Page H6122]]
``Sec. 1859A. Negotiating fair prices with pharmaceutical
manufacturers.
``Sec. 1859B. Contract authority.
``Sec. 1859C. Eligibility; voluntary enrollment; coverage.
``Sec. 1859D. Provision of, and entitlement to, benefits.
``Sec. 1859E. Administration; quality assurance.
``Sec. 1859F. Federal Medicare Prescription Medicine Trust Fund.
``Sec. 1859G. Compensation for employers covering retiree medicine
costs.
``Sec. 1859H. Medicare Prescription Medicine Advisory Committee.
Sec. 102. Provision of medicare outpatient prescription medicine
coverage under the Medicare+Choice program.
Sec. 103. Medigap revisions.
Sec. 104. Transitional assistance for low income beneficiaries.
Sec. 105. Expansion of membership and duties of Medicare Payment
Advisory Commission (MedPAC).
Sec. 106. State Pharmaceutical Assistance Transition Commission.
TITLE II--MEDICARE+CHOICE
Sec. 201. Medicare+choice improvements.
Sec. 202. Making permanent change in Medicare+Choice reporting
deadlines and annual, coordinated election period.
Sec. 203. Specialized Medicare+Choice plans for special needs
beneficiaries.
Sec. 204. Medicare MSAs.
Sec. 205. Extension of reasonable cost contracts.
Sec. 206. Extension of municipal health service demonstration projects.
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. Reform of payment for drugs and biologicals under the
medicare program.
Sec. 304. Demonstration project for use of recovery audit contractors.
TITLE IV--RURAL HEALTH CARE IMPROVEMENTS
Sec. 401. Fairness in the medicare disproportionate share hospital
(DSH) adjustment for rural hospitals.
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. Medicare inpatient hospital payment adjustment for low-volume
hospitals.
Sec. 419. Treatment of certain clinical diagnostic laboratory tests
furnished by a sole community hospital.
Sec. 420. Establishment of floor on geographic adjustments of payments
for physicians' services.
Sec. 421. Ambulance payment rates.
TITLE V--PROVISIONS RELATING TO PART A
Subtitle A--Inpatient Hospital Services
Sec. 501. Adjustment for indirect costs of medical education (IME).
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. Clarifications to certain exceptions to medicare limits on
physician referrals.
Subtitle B--Other Provisions
Sec. 511. Payment for covered skilled nursing facility services.
Sec. 512. Coverage of hospice consultation services.
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.
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. Extension of coverage of intravenous immune globulin (IVIG)
for the treatment of primary immune deficiency diseases
in the home.
Sec. 629. Medicare coverage of diabetes laboratory diagnostic tests.
TITLE VII--PROVISIONS RELATING TO PARTS A AND B
Subtitle A--Home Health Services
Sec. 701. Update in home health services.
Sec. 702. MedPAC study on medicare margins of home health agencies.
Sec. 703. Demonstration project to clarify the definition of homebound.
Subtitle B--Chronic Care Improvement
Sec. 721. Voluntary chronic care improvement under traditional fee-for-
service.
Sec. 722. Chronic care improvement under Medicare+Choice plans.
Sec. 723. Institute of Medicine report.
Sec. 724. MedPAC report.
Subtitle C--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. Medicare pancreatic islet cell transplant demonstration
project.
TITLE VIII--MEDICAID
Sec. 801. Continuation of medicaid DSH allotment adjustments under BIPA
2000.
Sec. 802. Increase in floor for treatment as an extremely low DSH State
to 3 percent in fiscal year 2003.
Sec. 803. Clarification of inclusion of inpatient drug prices charged
to certain public hospitals in the best price exemptions
for the medicaid drug rebate program.
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.
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.
[[Page H6123]]
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.
TITLE X--IMPORTATION OF PRESCRIPTION DRUGS
Sec. 1001. Importation of prescription drugs.
TITLE XI--ACCESS TO AFFORDABLE PHARMACEUTICALS
Sec. 1101. Short title.
Sec. 1102. 30-month stay-of-effectiveness period.
Sec. 1103. Forfeiture of 180-day exclusivity period.
Sec. 1104. Bioavailability and bioequivalence.
Sec. 1105. Remedies for infringement.
Sec. 1106. Conforming amendments.
TITLE I--MEDICARE PRESCRIPTION MEDICINE BENEFIT
SEC. 101. VOLUNTARY MEDICARE OUTPATIENT PRESCRIPTION MEDICINE
PROGRAM.
(a) In General.--Title XVIII (42 U.S.C. 1395 et seq.) is
amended--
(1) by redesignating section 1859 and part D as section
1858 and part E, respectively; and
(2) by inserting after part C the following new part:
``Part D--Voluntary Prescription Medicine Benefit for the Aged and
Disabled
``medicare outpatient prescription medicine benefit
``Sec. 1859. Subject to the succeeding provisions of this
part, the voluntary prescription medicine benefit program
under this part provides the following:
``(1) Premium.--The monthly premium is $25.
``(2) Deductible.--The annual deductible is $100.
``(3) Coinsurance.--The coinsurance is 20 percent.
``(4) Out-of-pocket limit.--The annual limit on out-of-
pocket spending on covered medicines is $2,000.
``negotiating fair prices with pharmaceutical manufacturers
``Sec. 1859A. (a) Authority to Negotiate Prices with
Manufacturers.--The Secretary shall, consistent with the
requirements of this part and the goals of providing quality
care and containing costs under this part, negotiate
contracts with manufacturers of covered outpatient
prescription medicines that provide for the maximum prices
that may be charged to individuals enrolled under this part
by participating pharmacies for dispensing such medicines to
such individuals.
``(b) Promotion of Breakthrough Medicines.--In conducting
negotiations with manufacturers under this part, the
Secretary shall take into account the goal of promoting the
development of breakthrough medicines (as defined in section
1859H(b)).
``contract authority
``Sec. 1859B. (a) Contract Authority.--
``(1) In general.--The Secretary is responsible for the
administration of this part and shall enter into contracts
with appropriate pharmacy contractors on a national or
regional basis to administer the benefits under this part.
``(2) Procedures.--The Secretary shall establish procedures
under which the Secretary--
``(A) accepts bids submitted by entities to serve as
pharmacy contractors under this part in a region or on a
national basis;
``(B) awards contracts to such contractors to administer
benefits under this part to eligible beneficiaries in the
region or on a national basis; and
``(C) provides for the termination (and nonrenewal) of a
contract in the case of a contractor's failure to meet the
requirements of the contract and this part.
``(3) Competitive procedures.--Competitive procedures (as
defined in section 4(5) of the Office of Federal Procurement
Policy Act (41 U.S.C. 403(5))) shall be used to enter into
contracts under this part.
``(4) Terms and conditions.--Such contracts shall have such
terms and conditions as the Secretary shall specify and shall
be for such terms (of at least 2 years, but not to exceed 5
years) as the Secretary shall specify consistent with this
part.
``(5) Use of pharmacy contractors in price negotiations.--
Such contracts shall require the contractor involved to
negotiate contracts with manufacturers that provide for
maximum prices for covered outpatient prescription medicines
that are lower than the maximum prices negotiated under
section 1859A(a), if applicable. The price reductions shall
be passed on to eligible beneficiaries and the Secretary
shall hold the contractor accountable for meeting performance
requirements with respect to price reductions and limiting
price increases.
``(6) Area for contracts.--
``(A) Regional basis.--
``(i) In general.--Except as provided in clause (ii) and
subject to subparagraph (B), the contract entered into
between the Secretary and a pharmacy contractor shall require
the contractor to administer the benefits under this part in
a region determined by the Secretary under subparagraph (B)
or on a national basis.
``(ii) Partial regional basis.--
``(I) In general.--If determined appropriate by the
Secretary, the Secretary may permit the benefits to be
administered in a partial region determined appropriate by
the Secretary.
``(II) Requirements.--If the Secretary permits
administration pursuant to subclause (I), the Secretary shall
ensure that the partial region in which administration is
effected is no smaller than a State and is at least the size
of the commercial service area of the contractor for that
area.
``(B) Determination.--
``(i) In general.--In determining regions for contracts
under this part, the Secretary shall--
``(I) take into account the number of individuals enrolled
under this part in an area in order to encourage
participation by pharmacy contractors; and
``(II) ensure that there are at least 10 different regions
in the United States.
``(ii) No administrative or judicial review.--The
determination of administrative areas under this paragraph
shall not be subject to administrative or judicial review.
``(7) Submission of bids.--
``(A) Submission.--
``(i) In general.--Subject to subparagraph (B), each entity
desiring to serve as a pharmacy contractor under this part in
an area shall submit a bid with respect to such area to the
Secretary at such time, in such manner, and accompanied by
such information as the Secretary may reasonably require.
``(ii) Bid that covers multiple areas.--The Secretary shall
permit an entity to submit a single bid for multiple areas if
the bid is applicable to all such areas.
``(B) Required information.--The bids described in
subparagraph (A) shall include--
``(i) a proposal for the estimated prices of covered
outpatient prescription medicines and the projected annual
increases in such prices, including the additional reduction
in price negotiated below the Secretary's maximum price and
differentials between preferred and nonpreferred prices, if
applicable;
``(ii) a statement regarding the amount that the entity
will charge the Secretary for administering the benefits
under the contract;
``(iii) a statement regarding whether the entity will
reduce the applicable coinsurance percentage pursuant to
section 1859E(a)(1)(A)(ii) and if so, the amount of such
reduction and how such reduction is tied to the performance
requirements described in subsection (c)(4)(A)(ii);
``(iv) a detailed description of the performance
requirements for which the administrative fee of the entity
will be subject to risk pursuant to subsection (c)(4)(A)(ii);
``(v) a detailed description of access to pharmacy services
provided by the entity, including information regarding
whether the pharmacy contractor will use a preferred pharmacy
network, and, if so, how the pharmacy contractor will ensure
access to pharmacies that choose to be outside of that
network, and whether there will be increased cost-sharing for
beneficiaries if they obtain medicines at such pharmacies;
``(vi) a detailed description of the procedures and
standards the entity will use for--
``(I) selecting preferred prescription medicines; and
``(II) determining when and how often the list of preferred
prescription medicines should be modified;
``(vii) a detailed description of any ownership or shared
financial interests with pharmaceutical manufacturers,
pharmacies, and other entities involved in the administration
or delivery of benefits under this part as proposed in the
bid;
``(viii) a detailed description of the entity's estimated
marketing and advertising expenditures related to enrolling
and retaining eligible beneficiaries; and
``(ix) such other information that the Secretary determines
is necessary in order to carry out this part, including
information relating to the bidding process under this part.
[[Page H6124]]
The procedures under clause (vi) shall include the use of a
pharmaceutical and therapeutics committee the members of
which include practicing pharmacists.
``(8) Awarding of contracts.--
``(A) Number of contracts.--The Secretary shall, consistent
with the requirements of this part and the goals of providing
quality care and of containing costs under this part, award
in a competitive manner at least 2 contracts to administer
benefits under this part in each area specified under
paragraph (6), unless only 1 pharmacy contractor submitting a
bid meets the minimum standards specified under this part and
by the Secretary.
``(B) Determination.--In determining which of the pharmacy
contractors that submitted bids that meet the minimum
standards specified under this part and by the Secretary to
award a contract, the Secretary shall consider the
comparative merits of each bid, as determined on the basis of
relevant factors, with respect to--
``(i) how well the contractor meets such minimum standards;
``(ii) the amount that the contractor will charge the
Secretary for administering the benefits under the contract;
``(iii) the performance standards established under
subsection (c)(2) and performance requirements for which the
administrative fee of the entity will be subject to risk
pursuant to subsection (c)(4)(A)(ii);
``(iv) the proposed negotiated prices of covered outpatient
medicines and annual increases in such prices;
``(v) factors relating to benefits, quality and
performance, beneficiary cost-sharing, and consumer
satisfaction;
``(vi) past performance and prior experience of the
contractor in administering a prescription medicine benefit
program;
``(vii) effectiveness of the contractor in containing costs
through pricing incentives and utilization management; and
``(viii) such other factors as the Secretary deems
necessary to evaluate the merits of each bid.
``(C) Exception to conflict of interest rules.--In awarding
contracts with pharmacy contractors under this part, the
Secretary may waive conflict of interest laws generally
applicable to Federal acquisitions (subject to such
safeguards as the Secretary may find necessary to impose) in
circumstances where the Secretary finds that such waiver--
``(i) is not inconsistent with the--
``(I) purposes of the programs under this part; or
``(II) best interests of beneficiaries enrolled under this
part; and
``(ii) permits a sufficient level of competition for such
contracts, promotes efficiency of benefits administration, or
otherwise serves the objectives of the program under this
part.
``(D) No administrative or judicial review.--The
determination of the Secretary to award or not award a
contract to a pharmacy contractor under this part shall not
be subject to administrative or judicial review.
``(9) Access to benefits in certain areas.--
``(A) Areas not covered by contracts.--The Secretary shall
develop procedures for the provision of covered outpatient
prescription medicines under this part to each eligible
beneficiary enrolled under this part that resides in an area
that is not covered by any contract under this part.
``(B) Beneficiaries residing in different locations.--The
Secretary shall develop procedures to ensure that each
eligible beneficiary enrolled under this part that resides in
different areas in a year is provided the benefits under this
part throughout the entire year.
``(b) Quality, Financial, and Other Standards and
Programs.--In consultation with appropriate pharmacy
contractors, pharmacists, and health care professionals with
expertise in prescribing, dispensing, and the appropriate use
of prescription medicines, the Secretary shall establish
standards and programs for the administration of this part to
ensure appropriate prescribing, dispensing, and utilization
of outpatient medicines under this part, to avoid adverse
medicine reactions, and to continually reduce errors in the
delivery of medically appropriate covered benefits. The
Secretary shall not award a contract to a pharmacy contractor
under this part unless the Secretary finds that the
contractor agrees to comply with such standards and programs
and other terms and conditions as the Secretary shall
specify. The standards and programs under this subsection
shall be applied to any administrative agreements described
in subsection (a) the Secretary enters into. Such standards
and programs shall include the following:
``(1) Access.--
``(A) In general.--The pharmacy contractor shall ensure
that covered outpatient prescription medicines are accessible
and convenient to eligible beneficiaries enrolled under this
part for whom benefits are administered by the pharmacy
contractor, including by offering the services 24 hours a day
and 7 days a week for emergencies.
``(B) On-line review.--The pharmacy contractor shall
provide for on-line prospective review available 24 hours a
day and 7 days a week in order to evaluate each prescription
for medicine therapy problems due to duplication,
interaction, or incorrect dosage or duration of therapy.
``(C) Guaranteed access to medicines in rural and hard-to-
serve areas.--The Secretary shall ensure that all
beneficiaries have guaranteed access to the full range of
pharmaceuticals under this part, and shall give special
attention to access, pharmacist counseling, and delivery in
rural and hard-to-serve areas, including through the use of
incentives such as bonus payments to retail pharmacists in
rural areas and extra payments to the pharmacy contractor for
the cost of rapid delivery of pharmaceuticals and any other
actions necessary.
``(D) Preferred pharmacy networks.--
``(i) In general.--If a pharmacy contractor uses a
preferred pharmacy network to deliver benefits under this
part, such network shall meet minimum access standards
established by the Secretary.
``(ii) Standards.--In establishing standards under clause
(i), the Secretary shall take into account reasonable
distances to pharmacy services in both urban and rural areas.
``(E) Adherence to negotiated prices.--The pharmacy
contractor shall have in place procedures to assure
compliance of pharmacies with the requirements of subsection
(d)(3)(C) (relating to adherence to negotiated prices).
``(F) Continuity of care.--
``(i) In general.--The pharmacy contractor shall ensure
that, in the case of an eligible beneficiary who loses
coverage under this part with such entity under circumstances
that would permit a special election period (as established
by the Secretary under section 1859C(b)(3)), the contractor
will continue to provide coverage under this part to such
beneficiary until the beneficiary enrolls and receives such
coverage with another pharmacy contractor under this part or,
if eligible, with a Medicare+Choice organization.
``(ii) Limited period.--In no event shall a pharmacy
contractor be required to provide the extended coverage
required under clause (i) beyond the date which is 30 days
after the coverage with such contractor would have terminated
but for this subparagraph.
``(2) Enrollee guidelines.--The pharmacy contractor shall,
consistent with State law, apply guidelines for counseling
enrollees regarding--
``(A) the proper use of covered outpatient prescription
medicine: and
``(B) interactions and contra-indications.
``(3) Education.--The pharmacy contractor shall apply
methods to identify and educate providers, pharmacists, and
enrollees regarding--
``(A) instances or patterns concerning the unnecessary or
inappropriate prescribing or dispensing of covered outpatient
prescription medicines;
``(B) instances or patterns of substandard care;
``(C) potential adverse reactions to covered outpatient
prescription medicines;
``(D) inappropriate use of antibiotics;
``(E) appropriate use of generic products; and
``(F) the importance of using covered outpatient
prescription medicines in accordance with the instruction of
prescribing providers.
``(4) Coordination.--The pharmacy contractor shall
coordinate with State prescription medicine programs, other
pharmacy contractors, pharmacies, and other relevant entities
as necessary to ensure appropriate coordination of benefits
with respect to enrolled individuals when such individual is
traveling outside the home service area, and under such other
circumstances as the Secretary may specify.
``(5) Cost data.--
``(A) The pharmacy contractor shall make data on
prescription medicine negotiated prices (including data on
discounts) available to the Secretary.
``(B) The Secretary shall require, either directly or
through a pharmacy contractor, that participating
pharmacists, physicians, and manufacturers--
``(i) maintain their prescription medicine cost data
(including data on discounts) in a form and manner specified
by the Secretary;
``(ii) make such prescription medicine cost data available
for review and audit by the Secretary; and
``(iii) certify that the prescription medicine cost data
are current, accurate, and complete, and reflect all
discounts obtained by the pharmacist or physician in the
purchasing of covered outpatient prescription medicines.
Discounts referred to in subparagraphs (A) and (B) shall
include all volume discounts, manufacturer rebates, prompt
payment discounts, free goods, in-kind services, or any other
thing of financial value provided explicitly or implicitly in
exchange for the purchase of a covered outpatient
prescription medicine.
``(6) Reporting.--The pharmacy contractor shall provide the
Secretary with periodic reports on--
``(A) the contractor's costs of administering this part;
``(B) utilization of benefits under this part;
``(C) marketing and advertising expenditures related to
enrolling and retaining individuals under this part; and
``(D) grievances and appeals.
``(7) Records and audits.--The pharmacy contractor shall
maintain adequate records related to the administration of
benefits under this part and afford the Secretary access to
such records for auditing purposes.
``(8) Approval of marketing material and application
forms.--The pharmacy contractor shall comply with
requirements of
[[Page H6125]]
section 1851(h) (relating to marketing material and
application forms) with respect to this part in the same
manner as such requirements apply under part C, except that
the provisions of paragraph (4)(A) of such section shall not
apply with respect to discounts or rebates provided in
accordance with this part.
``(c) Incentives for Cost and Utilization Management and
Quality Improvement.--
``(1) In general.--The Secretary shall include in a
contract awarded under subsection (b) with a pharmacy
contractor such incentives for cost and utilization
management and quality improvement as the Secretary may deem
appropriate. The contract may provide financial or other
incentives to encourage greater savings to the program under
this part.
``(2) Performance standards.--The Secretary shall provide
for performance standards (which may include monetary bonuses
if the standards are met and penalties if the standards are
not met), including standards relating to the time taken to
answer member and pharmacy inquiries (written or by
telephone), the accuracy of responses, claims processing
accuracy, online system availability, appeal procedure
turnaround time, system availability, the accuracy and
timeliness of reports, and level of beneficiary satisfaction.
``(3) Other incentives.--Such incentives under this
subsection may also include--
``(A) financial incentives under which savings derived from
the substitution of generic and other preferred multi-source
medicines in lieu of nongeneric and nonpreferred medicines
are made available to pharmacy contractors, pharmacies,
beneficiaries, and the Federal Medicare Prescription Medicine
Trust Fund; and
``(B) any other incentive that the Secretary deems
appropriate and likely to be effective in managing costs or
utilization or improving quality that does not reduce the
access of beneficiaries to medically necessary covered
outpatient medicines.
``(4) Requirements for procedures.--
``(A) In general.--The Secretary shall establish procedures
for making payments to each pharmacy contractor with a
contract under this part for the administration of the
benefits under this part. The procedures shall provide for
the following:
``(i) Administrative payment.--Payment of administrative
fees for such administration.
``(ii) Risk requirement.--An adjustment of a percentage
(determined under subparagraph (B)) of the administrative fee
payments made to a pharmacy contractor to ensure that the
contractor, in administering the benefits under this part,
pursues performance requirements established by the
Secretary, including the following:
``(I) Quality service.--The contractor provides eligible
beneficiaries for whom it administers benefits with quality
services, as measured by such factors as sustained pharmacy
network access, timeliness and accuracy of service delivery
in claims processing and card production, pharmacy and member
service support access, and timely action with regard to
appeals and current beneficiary service surveys.
``(II) Quality clinical care.--The contractor provides such
beneficiaries with quality clinical care, as measured by such
factors as providing notification to such beneficiaries and
to providers in order to prevent adverse drug reactions and
reduce medication errors and specific clinical suggestions to
improve health and patient and prescriber education as
appropriate.
``(III) Control of medicare costs.--The contractor contains
costs under this part to the Federal Medicare Prescription
Medicine Trust Fund and enrollees, as measured by generic
substitution rates, price discounts, and other factors
determined appropriate by the Secretary that do not reduce
the access of beneficiaries to medically necessary covered
outpatient prescription medicines.
``(B) Percentage of payment tied to risk.--
``(i) In general.--Subject to clause (ii), the Secretary
shall determine the percentage of the administrative payments
to a pharmacy contractor that will be tied to the performance
requirements described in subparagraph (A)(ii).
``(ii) Limitation on risk to ensure program stability.--In
order to provide for program stability, the Secretary may not
establish a percentage to be adjusted under this paragraph at
a level that jeopardizes the ability of a pharmacy contractor
to administer the benefits under this part or administer such
benefits in a quality manner.
``(C) Risk adjustment of payments based on enrollees in
plan.--To the extent that a pharmacy contractor is at risk
under this paragraph, the procedures established under this
paragraph may include a methodology for risk adjusting the
payments made to such contractor based on the differences in
actuarial risk of different enrollees being served if the
Secretary determines such adjustments to be necessary and
appropriate.
``(d) Authority Relating to Pharmacy Participation.--
``(1) In general.--Subject to the succeeding provisions of
this subsection, a pharmacy contractor may establish
consistent with this part conditions for the participation of
pharmacies, including conditions relating to quality
(including reduction of medical errors) and technology.
``(2) Agreements with pharmacies.--Each pharmacy contractor
shall enter into a participation agreement with any pharmacy
that meets the requirements of this subsection and section
1859E to furnish covered outpatient prescription medicines to
individuals enrolled under this part.
``(3) Terms of agreement.--An agreement under this
subsection shall include the following terms and conditions:
``(A) Applicable requirements.--The pharmacy shall meet
(and throughout the contract period continue to meet) all
applicable Federal requirements and State and local licensing
requirements.
``(B) Access and quality standards.--The pharmacy shall
comply with such standards as the Secretary (and such a
pharmacy contractor) shall establish concerning the quality
of, and enrolled individuals' access to, pharmacy services
under this part. Such standards shall require the pharmacy--
``(i) not to refuse to dispense covered outpatient
prescription medicines to any individual enrolled under this
part;
``(ii) to keep patient records (including records on
expenses) for all covered outpatient prescription medicines
dispensed to such enrolled individuals;
``(iii) to submit information (in a manner specified by the
Secretary to be necessary to administer this part) on all
purchases of such medicines dispensed to such enrolled
individuals; and
``(iv) to comply with periodic audits to assure compliance
with the requirements of this part and the accuracy of
information submitted.
``(C) Adherence to negotiated prices.--(i) The total charge
for each medicine dispensed by the pharmacy to an enrolled
individual under this part, without regard to whether the
individual is financially responsible for any or all of such
charge, shall not exceed the price negotiated under section
1859A(a) or, if lower, negotiated under subsection (a)(5)
(or, if less, the retail price for the medicine involved)
with respect to such medicine plus a reasonable dispensing
fee determined contractually with the pharmacy contractor.
``(ii) The pharmacy does not charge (or collect from) an
enrolled individual an amount that exceeds the individual's
obligation (as determined in accordance with the provisions
of this part) of the applicable price described in clause
(i).
``(D) Additional requirements.--The pharmacy shall meet
such additional contract requirements as the applicable
pharmacy contractor specifies under this section.
``(4) Applicability of fraud and abuse provisions.--The
provisions of section 1128 through 1128C (relating to fraud
and abuse) apply to pharmacies participating in the program
under this part.
``eligibility; voluntary enrollment; coverage
``Sec. 1859C. (a) Eligibility.--Each individual who is
entitled to hospital insurance benefits under part A or is
eligible to be enrolled in the medical insurance program
under part B is eligible to enroll in accordance with this
section for outpatient prescription medicine benefits under
this part.
``(b) Voluntary Enrollment.--
``(1) In general.--An individual may enroll under this part
only in such manner and form as may be prescribed by
regulations, and only during an enrollment period prescribed
in or under this subsection.
``(2) Initial enrollment period.--
``(A) Individuals currently covered.--In the case of an
individual who satisfies subsection (a) as of November 1,
2005, the initial general enrollment period shall begin on
August 1, 2005, and shall end on March 1, 2006.
``(B) Individual covered in future.--In the case of an
individual who first satisfies subsection (a) on or after
November 1, 2005, the individual's initial enrollment period
shall begin on the first day of the third month before the
month in which such individual first satisfies such paragraph
and shall end seven months later. The Secretary shall apply
rules similar to the rule described in the second sentence of
section 1837(d).
``(3) Special enrollment periods (without premium
penalty).--
``(A) Employer coverage at time of initial general
enrollment period.--In the case of an individual who--
``(i) at the time the individual first satisfies subsection
(a) is enrolled in a group health plan (including
continuation coverage) that provides outpatient prescription
medicine coverage by reason of the individual's (or the
individual's spouse's) current (or, in the case of
continuation coverage, former) employment status, and
``(ii) has elected not to enroll (or to be deemed enrolled)
under this subsection during the individual's initial
enrollment period,
there shall be a special enrollment period of 6 months
beginning with the first month that includes the date of the
individual's (or individual's spouse's) retirement from or
termination of current employment status with the employer
that sponsors the plan, or, in the case of continuation
coverage, that includes the date of termination of such
coverage, or that includes the date the plan substantially
terminates outpatient prescription medicine coverage.
``(B) Dropping of retiree prescription medicine coverage.--
In the case of an individual who--
``(i) at the time the individual first satisfies subsection
(a) is enrolled in a group health plan that provides
outpatient prescription medicine coverage other than by
reason of the individual's (or the individual's spouse's)
current employment; and
[[Page H6126]]
``(ii) has elected not to enroll (or to be deemed enrolled)
under this subsection during the individual's initial
enrollment period,
there shall be a special enrollment period of 6 months
beginning with the first month that includes the date that
the plan substantially terminates outpatient prescription
medicine coverage and ending 6 months later.
``(C) Loss of medicare+choice prescription medicine
coverage.--In the case of an individual who is enrolled under
part C in a Medicare+Choice plan that provides prescription
medicine benefits, if such enrollment is terminated because
of the termination or reduction in service area of the plan,
there shall be a special enrollment period of 6 months
beginning with the first month that includes the date that
such plan is terminated or such reduction occurs and ending 6
months later.
``(D) Loss of medicaid prescription medicine coverage.--In
the case of an individual who--
``(i) satisfies subsection (a);
``(ii) loses eligibility for benefits (that include
benefits for prescription medicine) under a State plan after
having been enrolled (or determined to be eligible) for such
benefits under such plan; and
``(iii) is not otherwise enrolled under this subsection at
the time of such loss of eligibility,
there shall be a special enrollment period specified by the
Secretary of not less than 6 months beginning with the first
month that includes the date that the individual loses such
eligibility.
``(4) Late enrollment with premium penalty.--The Secretary
shall permit an individual who satisfies subsection (a) to
enroll other than during the initial enrollment period under
paragraph (2) or a special enrollment period under paragraph
(3). But, in the case of such an enrollment, the amount of
the monthly premium of the individual is subject to an
increase under section 1859C(e)(1).
``(5) Information.--
``(A) In general.--The Secretary shall broadly distribute
information to individuals who satisfy subsection (a) on the
benefits provided under this part. The Secretary shall
periodically make available information on the cost
differentials to enrollees for the use of generic medicines
and other medicines.
``(B) Toll-free hotline.--The Secretary shall maintain a
toll-free telephone hotline (which may be a hotline already
used by the Secretary under this title) for purposes of
providing assistance to beneficiaries in the program under
this part, including responding to questions concerning
coverage, enrollment, benefits, grievances and appeals
procedures, and other aspects of such program.
``(6) Enrollee defined.--For purposes of this part, the
term `enrollee' means an individual enrolled for benefits
under this part.
``(c) Coverage Period.--
``(1) In general.--The period during which an individual is
entitled to benefits under this part (in this subsection
referred to as the individual's `coverage period') shall
begin on such a date as the Secretary shall establish
consistent with the type of coverage rules described in
subsections (a) and (e) of section 1838, except that in no
case shall a coverage period begin before January 1, 2006. No
payments may be made under this part with respect to the
expenses of an individual unless such expenses were incurred
by such individual during a period which, with respect to the
individual, is a coverage period.
``(2) Termination.--The Secretary shall provide for the
application of provisions under this subsection similar to
the provisions in section 1838(b).
``(d) Provision of Benefits to Medicare+Choice Enrollees.--
In the case of an individual who is enrolled under this part
and is enrolled in a Medicare+Choice plan under part C, the
individual shall be provided the benefits under this part
through such plan and not through payment under this part.
``(e) Late Enrollment Penalties; Payment of Premiums.--
``(1) Late enrollment penalty.--
``(A) In general.--In the case of a late enrollment
described in subsection (b)(4), subject to the succeeding
provisions of this paragraph, the Secretary shall establish
procedures for increasing the amount of the monthly premium
under this part applicable to such enrollee by an amount that
the Secretary determines is actuarially sound for each such
period.
``(B) Periods taken into account.--For purposes of
calculating any 12-month period under subparagraph (A), there
shall be taken into account months of lapsed coverage in a
manner comparable to that applicable under the second
sentence of section 1839(b).
``(C) Periods not taken into account.--
``(i) In general.--For purposes of calculating any 12-month
period under subparagraph (A), subject to clause (ii), there
shall not be taken into account months for which the enrollee
can demonstrate that the enrollee was covered under a group
health plan that provides coverage of the cost of
prescription medicines whose actuarial value (as defined by
the Secretary) to the enrollee equals or exceeds the
actuarial value of the benefits provided to an individual
enrolled in the outpatient prescription medicine benefit
program under this part.
``(ii) Application.--This subparagraph shall only apply
with respect to a coverage period the enrollment for which
occurs before the end of the 60-day period that begins on the
first day of the month which includes the date on which the
plan terminates or reduces its service area (in a manner that
results in termination of enrollment), ceases to provide, or
reduces the value of the prescription medicine coverage under
such plan to below the value of the coverage provided under
the program under this part.
``(2) Incorporation of premium payment and government
contributions provisions.--The provisions of sections 1840
and 1844(a)(1) shall apply to enrollees under this part in
the same manner as they apply to individuals 65 years of age
or older enrolled under part B. For purposes of this
subsection, any reference in a section referred to in a
previous subsection to the Federal Supplementary Medical
Insurance Trust Fund is deemed a reference to the Federal
Medicare Prescription Medicine Trust Fund.
``(f) Election of Pharmacy Contractor To Administer
Benefits.--The Secretary shall establish a process whereby
each individual enrolled under this part and residing in a
region may elect the pharmacy contractor that will administer
the benefits under this part with respect to the individual.
Such process shall permit the individual to make an initial
election and to change such an election on at least an annual
basis and under such other circumstances as the Secretary
shall specify.
``provision of, and entitlement to, benefits
``Sec. 1859D. (a) Benefits.--Subject to the succeeding
provisions of this section, the benefits provided to an
enrollee by the program under this part shall consist of the
following:
``(1) Covered outpatient prescription medicine benefits.--
Entitlement to have payment made on the individual's behalf
for covered outpatient prescription medicines.
``(2) Limitation on cost-sharing for part b outpatient
prescription medicines.--
``(A) In general.--Once an enrollee has incurred aggregate
countable cost-sharing (as defined in subparagraph (B)) equal
to the stop-loss limit specified in subsection (c)(4) for
expenses in a year, entitlement to the elimination of cost-
sharing otherwise applicable under part B for additional
expenses incurred in the year for outpatient prescription
medicines or biologicals for which payment is made under part
B.
``(B) Countable cost-sharing defined.--For purposes of this
part, the term `countable cost-sharing' means--
``(i) out-of-pocket expenses for outpatient prescription
medicines with respect to which benefits are payable under
part B, and
``(ii) cost-sharing under subsections (c)(3)(B) and
(c)(3)(C)(i).
``(b) Covered Outpatient Prescription Medicine Defined.--
``(1) In general.--Except as provided in paragraph (2), for
purposes of this part the term `covered outpatient
prescription medicine' means any of the following products:
``(A) A medicine which may be dispensed only upon
prescription, and--
``(i) which is approved for safety and effectiveness as a
prescription medicine under section 505 of the Federal Food,
Drug, and Cosmetic Act;
``(ii)(I) which was commercially used or sold in the United
States before the date of enactment of the Drug Amendments of
1962 or which is identical, similar, or related (within the
meaning of section 310.6(b)(1) of title 21 of the Code of
Federal Regulations) to such a medicine, and (II) which has
not been the subject of a final determination by the
Secretary that it is a `new drug' (within the meaning of
section 201(p) of the Federal Food, Drug, and Cosmetic Act)
or an action brought by the Secretary under section 301,
302(a), or 304(a) of such Act to enforce section 502(f) or
505(a) of such Act; or
``(iii)(I) which is described in section 107(c)(3) of the
Drug Amendments of 1962 and for which the Secretary has
determined there is a compelling justification for its
medical need, or is identical, similar, or related (within
the meaning of section 310.6(b)(1) of title 21 of the Code of
Federal Regulations) to such a medicine, and (II) for which
the Secretary has not issued a notice of an opportunity for a
hearing under section 505(e) of the Federal Food, Drug, and
Cosmetic Act on a proposed order of the Secretary to withdraw
approval of an application for such medicine under such
section because the Secretary has determined that the
medicine is less than effective for all conditions of use
prescribed, recommended, or suggested in its labeling.
``(B) A biological product which--
``(i) may only be dispensed upon prescription;
``(ii) is licensed under section 351 of the Public Health
Service Act; and
``(iii) is produced at an establishment licensed under such
section to produce such product.
``(C) Insulin approved under appropriate Federal law, and
needles, syringes, and disposable pumps for the
administration of such insulin.
``(D) A prescribed medicine or biological product that
would meet the requirements of subparagraph (A) or (B) but
that is available over-the-counter in addition to being
available upon prescription, but only if the particular
dosage form or strength prescribed and required for the
individual is not available over-the-counter.
``(E) Smoking cessation agents (as specified by the
Secretary).
[[Page H6127]]
``(2) Exclusion.--The term `covered outpatient prescription
medicine' does not include--
``(A) medicines or classes of medicines, 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), as the
Secretary may specify and does not include such other
medicines, classes, and uses as the Secretary may specify
consistent with the goals of providing quality care and
containing costs under this part;
``(B) except as provided in paragraphs (1)(D) and (1)(E),
any product which may be distributed to individuals without a
prescription;
``(C) any product when furnished as part of, or as incident
to, a diagnostic service or any other item or service for
which payment may be made under this title; or
``(D) any product that is covered under part B of this
title.
``(c) Payment of Benefits.--
``(1) Covered outpatient prescription medicines.--There
shall be paid from the Federal Medicare Prescription Medicine
Trust Fund, in the case of each enrollee who incurs expenses
for medicines with respect to which benefits are payable
under this part under subsection (a)(1), amounts equal to the
sum of--
``(A) the price for which the medicine is made available
under this part (consistent with sections 1859A and 1859B),
reduced by any applicable cost-sharing under paragraphs (2)
and (3); and
``(B) a reasonable dispensing fee.
The price under subparagraph (A) shall in no case exceed the
retail price for the medicine involved.
``(2) Deductible.--The amount of payment under paragraph
(1) for expenses incurred in a year, beginning with 2006,
shall be reduced by an annual deductible equal to the amount
specified in section 1859(2) (subject to adjustment under
paragraph (8)). Only expenses for countable cost-sharing (as
defined in subsection (a)(2)(B)) shall be taken into account
in applying this paragraph.
``(3) Coinsurance.--
``(A) In general.--The amount of payment under paragraph
(1) for expenses incurred in a year shall be further reduced
(subject to the stop-loss limit under paragraph (4)) by
coinsurance as provided under this paragraph.
``(B) Preferred medicines.--The coinsurance under this
paragraph in the case of a preferred medicine (including a
medicine treated as a preferred medicine under paragraph
(5)), is equal to 20 percent of the price applicable under
paragraph (1)(A) (or such lower percentage as may be provided
for under section 1859E(a)(1)(A)(ii)). In this part, the term
`preferred medicine' means, with respect to medicines
classified within a therapeutic class, those medicines which
have been designated as a preferred medicine by the Secretary
or the pharmacy contractor involved with respect to that
class and (in the case of a nongeneric medicine) with respect
to which a contract has been negotiated under this part.
``(C) Nonpreferred medicines.--The coinsurance under this
paragraph in the case of a nonpreferred medicine that is not
treated as a preferred medicine under paragraph (5) is equal
to the sum of--
``(i) 20 percent of the price for lowest price preferred
medicine that is within the same therapeutic class; and
``(ii) the amount by which--
``(I) the price at which the nonpreferred medicine is made
available to the enrollee; exceeds
``(II) the price of such lowest price preferred medicine.
``(4) No coinsurance once out-of-pocket expenditures equal
stop-loss limit.--Once an enrollee has incurred aggregate
countable cost-sharing under paragraph (3) (including cost-
sharing under part B attributable to outpatient prescription
drugs or biologicals) equal to the amount specified in
section 1859(4) (subject to adjustment under paragraph (8))
for expenses in a year--
``(A) there shall be no coinsurance under paragraph (3) for
additional expenses incurred in the year involved; and
``(B) there shall be no coinsurance under part B for
additional expenses incurred in the year involved for
outpatient prescription drugs and biologicals.
``(5) Appeals rights relating to coverage of nonpreferred
medicines.--
``(A) Procedures regarding the determination of medicines
that are medically necessary.--Each pharmacy contractor shall
have in place procedures on a case-by-case basis to treat a
nonpreferred medicine as a preferred medicine under this part
if the preferred medicine is determined to be not as
effective for the enrollee or to have significant adverse
effect on the enrollee. Such procedures shall require that
such determinations are based on professional medical
judgment, the medical condition of the enrollee, and other
medical evidence.
``(B) Procedures regarding denials of care.--Such
contractor shall have in place procedures to ensure--
``(i) a timely internal review for resolution of denials of
coverage (in whole or in part and including those regarding
the coverage of nonpreferred medicines) in accordance with
the medical exigencies of the case and a timely resolution of
complaints, by enrollees in the plan, or by providers,
pharmacists, and other individuals acting on behalf of each
such enrollee (with the enrollee's consent) in accordance
with requirements (as established by the Secretary) that are
comparable to such requirements for Medicare+Choice
organizations under part C;
``(ii) that the entity complies in a timely manner with
requirements established by the Secretary that (I) provide
for an external review by an independent entity selected by
the Secretary of denials of coverage described in clause (i)
not resolved in the favor of the beneficiary (or other
complainant) under the process described in such clause and
(II) are comparable to the external review requirements
established for Medicare+Choice organizations under part C;
and
``(iii) that enrollees are provided with information
regarding the appeals procedures under this part at the time
of enrollment with a pharmacy contractor under this part and
upon request thereafter.
``(6) Transfer of funds to cover costs of part b
prescription medicine catastrophic benefit.--With respect to
benefits described in subsection (a)(2), there shall
transferred from the Federal Medicare Prescription Medicine
Trust Fund to the Federal Supplementary Medical Insurance
Trust Fund amounts equivalent to the elimination of cost-
sharing described in such subsection.
``(7) Permitting application under part b of negotiated
prices.--For purposes of making payment under part B for
medicines that would be covered outpatient prescription
medicines but for the exclusion under subparagraph (B) or (C)
of subsection (b)(2), the Secretary may elect to apply the
payment basis used for payment of covered outpatient
prescription medicines under this part instead of the payment
basis otherwise used under such part, if it results in a
lower cost to the program.
``(8) Inflation adjustment.--
``(A) In general.--With respect to expenses incurred in a
year after 2006--
``(i) the deductible under paragraph (2) is equal to the
deductible determined under such paragraph (or this
subparagraph) for the previous year increased by the
percentage increase in per capita program expenditures (as
estimated in advance for the year involved under subparagraph
(B)); and
``(ii) the stop-loss limit under paragraph (3) is equal to
the stop-loss limit determined under such paragraph (or this
subparagraph) for the previous year increased by such
percentage increase.
The Secretary shall adjust such percentage increase in
subsequent years to take into account misestimations made of
the per capita program expenditures under clauses (i) and
(ii) in previous years. Any increase under this subparagraph
that is not a multiple of $10 shall be rounded to the nearest
multiple of $10.
``(B) Estimation of increase in per capita program
expenditures.--The Secretary shall before the beginning of
each year (beginning with 2007) estimate the percentage
increase in average per capita aggregate expenditures from
the Federal Medicare Prescription Medicine Trust Fund for the
year involved compared to the previous year.
``(C) Reconciliation.--The Secretary shall also compute
(beginning with 2008) the actual percentage increase in such
aggregate expenditures in order to provide for reconciliation
of deductibles, stop-loss limits, and premiums under the
second sentence of subparagraph (A) and under section
1859D(d)(2).
``(d) Amount of Premiums.--
``(1) Monthly premium rate in 2006.--The monthly premium
rate in 2006 for prescription medicine benefits under this
part is the amount specified in section 1859(1).
``(2) Inflation adjustment for subsequent years.--The
monthly premium rate for a year after 2006 for prescription
medicine benefits under this part is equal to the monthly
premium rate for the previous year under this subsection
increased by the percentage increase in per capita program
expenditures (as estimated in advance for the year involved
under subsection (c)(8)(B)). The Secretary shall adjust such
percentage in subsequent years to take into account
misestimations made of the per capita program expenditures
under the previous sentence in previous years. Any increase
under this paragraph that is not a multiple of $1 shall be
rounded to the nearest multiple of $1.
``administration; quality assurance
``Sec. 1859E. (a) Rules Relating to Provision of
Benefits.--
``(1) Provision of benefits.--
``(A) In general.--In providing benefits under this part,
the Secretary (directly or through the contracts with
pharmacy contractors) shall employ mechanisms to provide
benefits appropriately and efficiently, and those mechanisms
may include--
``(i) the use of--
``(I) price negotiations (consistent with subsection (b));
``(II) reduced coinsurance (below 20 percent) to encourage
the utilization of appropriate preferred medicines; and
``(III) methods to reduce medication errors and encourage
appropriate use of medications; and
``(ii) permitting pharmacy contractors, as approved by the
Secretary, to make exceptions to section 1859D(c)(3)(C)
(relating to cost-sharing for non-preferred medicines) to
secure best prices for enrollees so long as the payment
amount under section 1859D(c)(1) does not equal zero.
[[Page H6128]]
``(B) Construction.--Nothing in this subsection shall be
construed to prevent the Secretary (directly or through the
contracts with pharmacy contractors) from using incentives to
encourage enrollees to select generic or other cost-effective
medicines, so long as--
``(i) such incentives are designed not to result in any
increase in the aggregate expenditures under the Federal
Medicare Prescription Medicine Trust Fund; and
``(ii) a beneficiary's coinsurance shall be no greater than
20 percent in the case of a preferred medicine (including a
nonpreferred medicine treated as a preferred medicine under
section 1859D(c)(5)).
``(2) Construction.--Nothing in this part shall preclude
the Secretary or a pharmacy contractor from--
``(A) educating prescribing providers, pharmacists, and
enrollees about medical and cost benefits of preferred
medicines;
``(B) requesting prescribing providers to consider a
preferred medicine prior to dispensing of a nonpreferred
medicine, as long as such request does not unduly delay the
provision of the medicine;
``(C) using mechanisms to encourage enrollees under this
part to select cost-effective medicines or less costly means
of receiving or administering medicines, including the use of
therapeutic interchange programs, disease management
programs, and notification to the beneficiary that a more
affordable generic medicine equivalent was not selected by
the prescribing provider and a statement of the lost cost
savings to the beneficiary;
``(D) using price negotiations to achieve reduced prices on
covered outpatient prescription medicines, including new
medicines, medicines for which there are few therapeutic
alternatives, and medicines of particular clinical importance
to individuals enrolled under this part; and
``(E) utilizing information on medicine prices of OECD
countries and of other payors in the United States in the
negotiation of prices under this part.
``(b) Price Negotiations Process.--
``(1) Requirements with respect to preferred medicines.--
Negotiations of contracts with manufacturers with respect to
covered outpatient prescription medicines under this part
shall be conducted in a manner so that--
``(A) there is at least a contract for a medicine within
each therapeutic class (as defined by the Secretary in
consultation with such Medicare Prescription Medicine
Advisory Committee);
``(B) if there is more than 1 medicine available in a
therapeutic class, there are contracts for at least 2
medicines within such class unless determined clinically
inappropriate in accordance with standards established by the
Secretary; and
``(C) if there are more than 2 medicines available in a
therapeutic class, there is a contract for at least 2
medicines within such class and a contract for generic
medicine substitute if available unless determined clinically
inappropriate in accordance with standards established by the
Secretary.
``(2) Establishment of therapeutic classes.--The Secretary,
in consultation with the Medicare Prescription Medicine
Advisory Committee (established under section 1859H), shall
establish for purposes of this part therapeutic classes and
assign to such classes covered outpatient prescription
medicines.
``(3) Disclosure concerning preferred medicines.--The
Secretary shall provide, through pharmacy contractors or
otherwise, for--
``(A) disclosure to current and prospective enrollees and
to participating providers and pharmacies in each service
area a list of the preferred medicines and differences in
applicable cost-sharing between such medicines and
nonpreferred medicines; and
``(B) advance disclosure to current enrollees and to
participating providers and pharmacies in each service area
of changes to any such list of preferred medicines and
differences in applicable cost-sharing.
``(4) No review.--The Secretary's establishment of
therapeutic classes and the assignment of medicines to such
classes and the Secretary's determination of what is a
breakthrough medicine are not subject to administrative or
judicial review.
``(c) Confidentiality.--The Secretary shall ensure that the
confidentiality of individually identifiable health
information relating to the provision of benefits under this
part is protected, consistent with the standards for the
privacy of such information promulgated by the Secretary
under the Health Insurance Portability and Accountability Act
of 1996, or any subsequent comprehensive and more protective
set of confidentiality standards enacted into law or
promulgated by the Secretary. Nothing in this subsection
shall be construed as preventing the coordination of data
with a State prescription medicine program so long as such
program has in place confidentiality standards that are equal
to or exceed the standards used by the Secretary.
``(d) Fraud and Abuse Safeguards.--The Secretary, through
the Office of the Inspector General, is authorized and
directed to issue regulations establishing appropriate
safeguards to prevent fraud and abuse under this part. Such
safeguards, at a minimum, should include compliance programs,
certification data, audits, and recordkeeping practices. In
developing such regulations, the Secretary shall consult with
the Attorney General and other law enforcement and regulatory
agencies.
``federal medicare prescription medicine trust fund
``Sec. 1859F. (a) Establishment.--There is hereby created
on the books of the Treasury of the United States a trust
fund to be known as the `Federal Medicare Prescription
Medicine 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.
``(b) Application of SMI Trust Fund Provisions.--The
provisions of subsections (b) through (i) of section 1841
shall apply to this part and the Trust Fund in the same
manner as they apply to part B and the Federal Supplementary
Medical Insurance Trust Fund, respectively.
``compensation for employers covering retiree medicine costs
``Sec. 1859G. (a) In General.--In the case of an individual
who is eligible to be enrolled under this part and is a
participant or beneficiary under a group health plan that
provides outpatient prescription medicine coverage to
retirees the actuarial value of which is not less than the
actuarial value of the coverage provided under this part, the
Secretary shall make payments to such plan subject to the
provisions of this section. Such payments shall be treated as
payments under this part for purposes of sections 1859F and
1859C(e)(2). In applying the previous sentence with respect
to section 1859C(e)(2), the amount of the Government
contribution referred to in section 1844(a)(1)(A) is deemed
to be equal to the aggregate amount of the payments made
under this section.
``(b) Requirements.--To receive payment under this section,
a group health plan shall comply with the following
requirements:
``(1) Compliance with requirements.--The group health plan
shall comply with the requirements of this Act and other
reasonable, necessary, and related requirements that are
needed to administer this section, as determined by the
Secretary.
``(2) Annual assurances and notice before termination.--The
sponsor of the plan shall--
``(A) annually attest, and provide such assurances as the
Secretary may require, that the coverage offered under the
group health plan meets the requirements of this section and
will continue to meet such requirements for the duration of
the sponsor's participation in the program under this
section; and
``(B) guarantee that it will give notice to the Secretary
and covered enrollees--
``(i) at least 120 days before terminating its plan, and
``(ii) immediately upon determining that the actuarial
value of the prescription medicine benefit under the plan
falls below the actuarial value required under subsection
(a).
``(3) Beneficiary information.--The sponsor of the plan
shall report to the Secretary, for each calendar quarter for
which it seeks a payment under this section, the names and
social security numbers of all enrollees described in
subsection (a) covered under such plan during such quarter
and the dates (if less than the full quarter) during which
each such individual was covered.
``(4) Audits.--The sponsor or plan seeking payment under
this section shall agree to maintain, and to afford the
Secretary access to, such records as the Secretary may
require for purposes of audits and other oversight activities
necessary to ensure the adequacy of prescription medicine
coverage, the accuracy of payments made, and such other
matters as may be appropriate.
``(c) Payment.--
``(1) In general.--The sponsor of a group health plan that
meets the requirements of subsection (b) with respect to a
quarter in a calendar year shall be entitled to have payment
made on a quarterly basis of the amount specified in
paragraph (2) for each individual described in subsection (a)
who during the quarter is covered under the plan and was not
enrolled in the insurance program under this part.
``(2) Amount of payment.--
``(A) In general.--The amount of the payment for a quarter
shall approximate, for each such covered individual, \2/3\ of
the sum of the monthly Government contribution amounts
(computed under subparagraph (B)) for each of the 3 months in
the quarter.
``(B) Computation of monthly government contribution
amount.--For purposes of subparagraph (A), the monthly
Government contribution amount for a month in a year is equal
to the amount by which--
``(i) \1/12\ of the average per capita aggregate
expenditures, as estimated under section 1859D(c)(8) for the
year involved; exceeds
``(ii) the monthly premium rate under section 1859D(d) for
the month involved.
``medicare prescription medicine advisory committee
``Sec. 1859H. (a) Establishment of Committee.--There is
established a Medicare Prescription Medicine Advisory
Committee (in this section referred to as the `Committee').
``(b) Functions of Committee.--The Committee shall advise
the Secretary on policies related to--
``(1) the development of guidelines for the implementation
and administration of the outpatient prescription medicine
benefit program under this part; and
``(2) the development of--
[[Page H6129]]
``(A) standards required of pharmacy contractors under
section 1859D(c)(5) for determining if a medicine is as
effective for an enrollee or has a significant adverse effect
on an enrollee under this part;
``(B) standards for--
``(i) defining therapeutic classes;
``(ii) adding new therapeutic classes;
``(iii) assigning to such classes covered outpatient
prescription medicines; and
``(iv) identifying breakthrough medicines;
``(C) procedures to evaluate the bids submitted by pharmacy
contractors under this part;
``(D) procedures for negotiations, and standards for
entering into contracts, with manufacturers, including
identifying medicines or classes of medicines where
Secretarial negotiation is most likely to yield savings under
this part significantly above those that which could be
achieved by a pharmacy contractor; and
``(E) procedures to ensure that pharmacy contractors with a
contract under this part are in compliance with the
requirements under this part.
For purposes of this part, a medicine is a `breakthrough
medicine' if the Secretary, in consultation with the
Committee, determines it is a new product that will make a
significant and major improvement by reducing physical or
mental illness, reducing mortality, or reducing disability,
and that no other product is available to beneficiaries that
achieves similar results for the same condition. The
Committee may consider cost-effectiveness in establishing
standards for defining therapeutic classes and assigning
drugs to such classes under subparagraph (B).
``(c) Structure and Membership of the Committee.--
``(1) Structure.--The Committee shall be composed of 19
members who shall be appointed by the Secretary.
``(2) Membership.--
``(A) In general.--The members of the Committee shall be
chosen on the basis of their integrity, impartiality, and
good judgment, and shall be individuals who are, by reason of
their education, experience, and attainments, exceptionally
qualified to perform the duties of members of the Committee.
``(B) Specific members.--Of the members appointed under
paragraph (1)--
``(i) 5 shall be chosen to represent practicing physicians,
2 of whom shall be gerontologists;
``(ii) 2 shall be chosen to represent practicing nurse
practitioners;
``(iii) 4 shall be chosen to represent practicing
pharmacists;
``(iv) 1 shall be chosen to represent the Centers for
Medicare & Medicaid Services;
``(v) 4 shall be chosen to represent actuaries,
pharmacoeconomists, researchers, and other appropriate
experts;
``(vi) 1 shall be chosen to represent emerging medicine
technologies;
``(vii) 1 shall be chosen to represent the Food and Drug
Administration; and
``(viii) 1 shall be chosen to represent individuals
enrolled under this part.
``(d) Terms of Appointment.--Each member of the Committee
shall serve for a term determined appropriate by the
Secretary. The terms of service of the members initially
appointed shall begin on January 1, 2005.
``(e) Chairperson.--The Secretary shall designate a member
of the Committee as Chairperson. The term as Chairperson
shall be for a 1-year period.
``(f) Committee Personnel Matters.--
``(1) Members.--
``(A) Compensation.--Each member of the Committee who is
not an officer or employee of the Federal Government shall be
compensated at a rate equal to the daily equivalent of the
annual rate of basic pay prescribed for level IV of the
Executive Schedule under section 5315 of title 5, United
States Code, for each day (including travel time) during
which such member is engaged in the performance of the duties
of the Committee. All members of the Committee who are
officers or employees of the United States shall serve
without compensation in addition to that received for their
services as officers or employees of the United States.
``(B) Travel expenses.--The members of the Committee shall
be allowed travel expenses, including per diem in lieu of
subsistence, at rates authorized for employees of agencies
under subchapter I of chapter 57 of title 5, United States
Code, while away from their homes or regular places of
business in the performance of services for the Committee.
``(2) Staff.--The Committee may appoint such personnel as
the Committee considers appropriate.
``(g) Operation of the Committee.--
``(1) Meetings.--The Committee shall meet at the call of
the Chairperson (after consultation with the other members of
the Committee) not less often than quarterly to consider a
specific agenda of issues, as determined by the Chairperson
after such consultation.
``(2) Quorum.--Ten members of the Committee shall
constitute a quorum for purposes of conducting business.
``(h) Federal Advisory Committee Act.--Section 14 of the
Federal Advisory Committee Act (5 U.S.C. App.) shall not
apply to the Committee.
``(i) Transfer of Personnel, Resources, and Assets.--For
purposes of carrying out its duties, the Secretary and the
Committee may provide for the transfer to the Committee of
such civil service personnel in the employ of the Department
of Health and Human Services (including the Centers for
Medicare & Medicaid Services), and such resources and assets
of the Department used in carrying out this title, as the
Committee requires.
``(j) Authorization of Appropriations.--There are
authorized to be appropriated such sums as may be necessary
to carry out the purposes of this section.''.
(b) Application of General Exclusions from Coverage.--
(1) Application to part d.--Section 1862(a) (42 U.S.C.
1395y(a)) is amended in the matter preceding paragraph (1) by
striking ``part A or part B'' and inserting ``part A, B, or
D''.
(2) Prescription medicines not excluded from coverage if
appropriately prescribed.--Section 1862(a)(1) (42 U.S.C.
1395y(a)(1)) is amended--
(A) in subparagraph (H), by striking ``and'' at the end;
(B) in subparagraph (I), by striking the semicolon at the
end and inserting ``, and''; and
(C) by adding at the end the following new subparagraph:
``(J) in the case of prescription medicines covered under
part D, which are not prescribed in accordance with such
part;''.
(c) Conforming Amendments.--(1) Part C of title XVIII is
amended--
(A) in section 1851(a)(2)(B) (42 U.S.C. 1395w-21(a)(2)(B)),
by striking ``1859(b)(3)'' and inserting ``1858(b)(3)'';
(B) in section 1851(a)(2)(C) (42 U.S.C. 1395w-21(a)(2)(C)),
by striking ``1859(b)(2)'' and inserting ``1858(b)(2)'';
(C) in section 1852(a)(1) (42 U.S.C. 1395w-22(a)(1)), by
striking ``1859(b)(3)'' and inserting ``1858(b)(3)'';
(D) in section 1852(a)(3)(B)(ii) (42 U.S.C. 1395w-
22(a)(3)(B)(ii)), by striking ``1859(b)(2)(B)'' and inserting
``1858(b)(2)(B)'';
(E) in section 1853(a)(1)(A) (42 U.S.C. 1395w-23(a)(1)(A)),
by striking ``1859(e)(4)'' and inserting ``1858(e)(4)''; and
(F) in section 1853(a)(3)(D) (42 U.S.C. 1395w-23(a)(3)(D)),
by striking ``1859(e)(4)'' and inserting ``1858(e)(4)''.
(2) Section 1171(a)(5)(D) (42 U.S.C. 1320d(a)(5)(D)) is
amended by striking ``or (C)'' and inserting ``(C), or (D)''.
SEC. 102. PROVISION OF MEDICARE OUTPATIENT PRESCRIPTION
MEDICINE COVERAGE UNDER THE MEDICARE+CHOICE
PROGRAM.
(a) Requiring Availability of an Actuarially Equivalent
Prescription Medicine Benefit.--Section 1851 (42 U.S.C.
1395w-21) is amended by adding at the end the following new
subsection:
``(j) Availability of Prescription Medicine Benefits.--
``(1) In general.--Notwithstanding any other provision of
this part, each Medicare+Choice organization that makes
available a Medicare+Choice plan described in section
1851(a)(2)(A) shall make available such a plan that offers
coverage of covered outpatient prescription medicines that is
at least actuarially equivalent to the benefits provided
under part D. Information respecting such benefits shall be
made available in the same manner as information on other
benefits provided under this part is made available. Nothing
in this paragraph shall be construed as requiring the
offering of such coverage separate from coverage that
includes benefits under parts A and B.
``(2) Treatment of prescription medicine enrollees.--In the
case of a Medicare+Choice eligible individual who is enrolled
under part D, the benefits described in paragraph (1) shall
be treated in the same manner as benefits described in part B
for purposes of coverage and payment and any reference in
this part to the Federal Supplementary Medical Insurance
Trust Fund shall be deemed, with respect to such benefits, to
be a reference to the Federal Medicare Prescription Medicine
Trust Fund.''.
(b) Application of Quality Standards.--Section
1852(e)(2)(A) (42 U.S.C. 1395w-22(e)(2)(A)) is amended--
(1) by striking ``and'' at the end of clause (xi);
(2) by striking the period at the end of clause (xii) and
inserting ``, and''; and
(3) by adding at the end the following new clause:
``(xiii) comply with the standards, and apply the programs,
under section 1859B(b) for covered outpatient prescription
medicines under the plan.''.
(c) Payment Separate From Payment for Part A and B
Benefits.--Section 1853 (42 U.S.C. 1395w-23) is amended--
(1) in subsection (a)(1)(A), by striking ``and (i)'' and
inserting ``(i), and (j)''; and
(2) by adding at the end the following new subsection:
``(j) Payment for Prescription Medicine Coverage Option.--
``(1) In general.--In the case of a Medicare+Choice plan
that provides prescription medicine benefits described in
section 1851(j)(1), the amount of payment otherwise made to
the Medicare+Choice organization offering the plan shall be
increased by the amount described in paragraph (2). Such
payments shall be made in the same manner and time as the
amount otherwise paid, but such amount shall be payable from
the Federal Medicare Prescription Medicine Trust Fund.
``(2) Amount.--The amount described in this paragraph is
the monthly Government contribution amount computed under
section 1859G(c)(2)(B), but subject to adjustment under
paragraph (3). Such amount shall be uniform geographically
and shall not vary based on the Medicare+Choice payment area
involved.
[[Page H6130]]
``(3) Risk adjustment.--The Secretary shall establish a
methodology for the adjustment of the payment amount under
this subsection in a manner that takes into account the
relative risks for use of outpatient prescription medicines
by Medicare+Choice enrollees. Such methodology shall be
designed in a manner so that the total payments under this
title (including part D) are not changed as a result of the
application of such methodology.''.
(d) Separate Application of Adjusted Community Rate
(ACR).--Section 1854 (42 U.S.C. 1395w-24) is amended by
adding at the end the following:
``(i) Application to Prescription Medicine Coverage.--The
Secretary shall apply the previous provisions of this section
(including the computation of the adjusted community rate)
separately with respect to prescription medicine benefits
described in section 1851(j)(1).''.
(f) Conforming Amendments.--
(1) Section 1851 (42 U.S.C. 1395w-21) is amended--
(A) in subsection (a)(1)(A), by striking ``parts A and B''
and inserting ``parts A, B, and D''; and
(B) in subsection (i) by inserting ``(and, if applicable,
part D)'' after ``parts A and B''.
(2) Section 1852(a)(1)(A) (42 U.S.C. 1395w-22(a)(1)(A)) is
amended by inserting ``(and under part D to individuals also
enrolled under such part)'' after ``parts A and B''.
(3) Section 1852(d)(1) (42 U.S.C. 1395w-22(d)(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:
``(F) the plan for part D benefits guarantees coverage of
any specifically named prescription medicine for an enrollee
to the extent that it would be required to be covered under
part D.
In carrying out subparagraph (F), a Medicare+Choice
organization has the same authority to enter into contracts
with respect to coverage of preferred medicines as the
Secretary has under part D, but subject to an independent
contractor appeal or other appeal process that would be
applicable to determinations by such a pharmacy contractor
consistent with section 1859D(c)(5).''.
(e) Limitation on Cost-Sharing.--Section 1854(e) (42 U.S.C.
1395w-24(e)) is amended by adding at the end the following
new paragraph:
``(5) Limitation on cost-sharing.--In no event may a
Medicare+Choice organization include a requirement that an
enrollee pay cost-sharing in excess of the cost-sharing
otherwise permitted under part D.''.
SEC. 103. MEDIGAP REVISIONS.
(a) Required Coverage of Covered Outpatient Prescription
Medicines.--Section 1882(p)(2)(B) (42 U.S.C. 1395ss(p)(2)(B))
is amended by inserting before ``and'' at the end the
following: ``including a requirement that an appropriate
number of policies provide coverage of medicines which
complements but does not duplicate the medicine benefits that
beneficiaries are otherwise eligible for benefits under part
D of this title (with the Secretary and the National
Association of Insurance Commissioners determining the
appropriate level of medicine benefits that each benefit
package must provide and ensuring that policies providing
such coverage are affordable for beneficiaries;''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on January 1, 2006.
(c) Transition Provisions.--
(1) In general.--If the Secretary of Health and Human
Services identifies a State as requiring a change to its
statutes or regulations to conform its regulatory program to
the amendments made by this section, the State regulatory
program shall not be considered to be out of compliance with
the requirements of section 1882 of the Social Security Act
due solely to failure to make such change until the date
specified in paragraph (4).
(2) NAIC standards.--If, within 9 months after the date of
enactment of this Act, the National Association of Insurance
Commissioners (in this subsection referred to as the
``NAIC'') modifies its NAIC Model Regulation relating to
section 1882 of the Social Security Act (referred to in such
section as the 1991 NAIC Model Regulation, as subsequently
modified) to conform to the amendments made by this section,
such revised regulation incorporating the modifications shall
be considered to be the applicable NAIC model regulation
(including the revised NAIC model regulation and the 1991
NAIC Model Regulation) for the purposes of such section.
(3) Secretary standards.--If the NAIC does not make the
modifications described in paragraph (2) within the period
specified in such paragraph, the Secretary of Health and
Human Services shall make the modifications described in such
paragraph and such revised regulation incorporating the
modifications shall be considered to be the appropriate
regulation for the purposes of such section.
(4) Date specified.--
(A) In general.--Subject to subparagraph (B), the date
specified in this paragraph for a State is the earlier of--
(i) the date the State changes its statutes or regulations
to conform its regulatory program to the changes made by this
section; or
(ii) 1 year after the date the NAIC or the Secretary first
makes the modifications under paragraph (2) or (3),
respectively.
(B) Additional legislative action required.--In the case of
a State which the Secretary identifies as--
(i) requiring State legislation (other than legislation
appropriating funds) to conform its regulatory program to the
changes made in this section; but
(ii) having a legislature which is not scheduled to meet in
2004 in a legislative session in which such legislation may
be considered;
the date specified in this paragraph is the first day of the
first calendar quarter beginning after the close of the first
legislative session of the State legislature that begins on
or after January 1, 2004. For purposes of the previous
sentence, in the case of a State that has a 2-year
legislative session, each year of such session shall be
deemed to be a separate regular session of the State
legislature.
SEC. 104. TRANSITIONAL ASSISTANCE FOR LOW INCOME
BENEFICIARIES.
(a) QMB Coverage of Premiums and Cost-Sharing.--Section
1905(p)(3) (42 U.S.C. 1396d(p)(3)) is amended--
(1) in subparagraph (A)--
(A) by striking ``and'' at the end of clause (i),
(B) by adding ``and'' at the end of clause (ii), and
(C) by adding at the end the following new clause:
``(iii) premiums under section 1859D(d).'';
(2) in subparagraph (B), by inserting ``and section
1859D(c)(3)(B) and 1859D(c)(3)(C)(i)'' after ``1813''; and
(3) in subparagraph (C), by striking ``and section
1833(b)'' and inserting ``, section 1833(b), and section
1859D(c)(2)''.
(b) Expanded SLMB Eligibility.--Section 1902(a)(10)(E) (42
U.S.C. 1396a(a)(10)(E)) is amended--
(1) by striking ``and'' at the end of clause (iii);
(2) by adding ``and'' at the end of clause (iv); and
(3) by adding at the end the following new clause:
``(v)(I) for making medical assistance available for
medicare cost-sharing described in section 1905(p)(3)(A)(iii)
and medicare cost-sharing described in section 1905(p)(3)(B)
and section 1905(p)(3)(C) but only insofar as it relates to
benefits provided under part D of title XVIII, subject to
section 1905(p)(4), for individuals (other than qualified
medicare beneficiaries) who are enrolled under part D of
title XVIII and are described in section 1905(p)(1)(B) or
would be so described but for the fact that their income
exceeds 100 percent, but is less than 150 percent, of the
official poverty line (referred to in such section) for a
family of the size involved;
``(II) subject to section 1905(p)(4), for individuals
(other than qualified medicare beneficiaries and individuals
described in subclause (I)) who are enrolled under part D of
title XVIII and would be described in section 1905(p)(1)(B)
but for the fact that their income exceeds 150 percent, but
is less than 175 percent, of the official poverty line
(referred to in such section) for a family of the size
involved, for making medical assistance available for
medicare cost-sharing described in section 1905(p)(3)(A)(iii)
and medicare cost-sharing described in section 1905(p)(3)(B)
and section 1905(p)(3)(C) but only insofar as it relates to
benefits provided under part D of title XVIII, and the
assistance for medicare cost-sharing described in section
1905(p)(3)(A)(iii) is reduced (on a sliding scale based on
income) from 100 percent to 0 percent as the income increases
from 150 percent to 175 percent of such poverty line;''.
(c) Federal Financing.--The third sentence of section
1905(b) (42 U.S.C. 1396d(b)) is amended by inserting before
the period at the end the following: ``and with respect to
amounts expended that are attributable to section
1902(a)(10)(E)(v) (other than for individuals described in
section 1905(p)(1)(B))''.
(d) Treatment of Territories.--
(1) In general.--Section 1905(p) (42 U.S.C. 1396d(p)) is
amended--
(A) by redesignating paragraphs (5) and (6) as paragraphs
(6) and (7), respectively; and
(B) by inserting after paragraph (4) the following new
paragraph:
``(5)(A) In the case of a State, other than the 50 States
and the District of Columbia--
``(i) the provisions of paragraph (3) insofar as they
relate to section 1859D and the provisions of section
1902(a)(10)(E)(v) shall not apply to residents of such State;
and
``(ii) if the State establishes a plan described in
subparagraph (B) (for providing medical assistance with
respect to the provision of prescription medicines 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
subparagraph (C).
``(B) The plan described in this subparagraph is a plan
that--
``(i) provides medical assistance with respect to the
provision of covered outpatient medicines (as defined in
section 1859D(b)) to low-income medicare beneficiaries; and
``(ii) assures that additional amounts received by the
State that are attributable to the operation of this
paragraph are used only for such assistance.
``(C)(i) The amount specified in this subparagraph for a
State for a year is equal to the product of--
``(I) the aggregate amount specified in clause (ii); and
``(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.
[[Page H6131]]
``(ii) The aggregate amount specified in this clause for--
``(I) 2006, is equal to $25,000,000; or
``(II) a subsequent year, is equal to the aggregate amount
specified in this clause for the previous year increased by
annual percentage increase specified in section
1859D(c)(8)(B) for the year involved.
``(D) The Secretary shall submit to Congress a report on
the application of this paragraph and may include in the
report such recommendations as the Secretary deems
appropriate.''.
(2) Conforming amendment.--Section 1108(f) (42 U.S.C.
1308(f)) is amended by inserting ``and section
1905(p)(5)(A)(ii)'' after ``Subject to subsection (g)''.
(e) Application of Cost-Sharing.--Section 1902(n)(2) (42
U.S.C. 1396a(n)(2)) is amended by adding at the end the
following: ``The previous sentence shall not apply to
medicare cost-sharing relating to benefits under part D of
title XVIII.''.
(f) Effective Date.--The amendments made by this section
apply to medical assistance for premiums and cost-sharing
incurred on or after January 1, 2006, with regard to whether
regulations to implement such amendments are promulgated by
such date.
SEC. 105. EXPANSION OF MEMBERSHIP AND DUTIES OF MEDICARE
PAYMENT ADVISORY COMMISSION (MEDPAC).
(a) Expansion of Membership.--
(1) In general.--Section 1805(c) (42 U.S.C. 1395b-6(c)) is
amended--
(A) in paragraph (1), by striking ``17'' and inserting
``19''; and
(B) in paragraph (2)(B), by inserting ``experts in the area
of pharmacology and prescription medicine benefit programs,''
after ``other health professionals,''.
(2) Initial terms of additional members.--
(A) In general.--For purposes of staggering the initial
terms of members of the Medicare Payment Advisory Commission
under section 1805(c)(3) of the Social Security Act (42
U.S.C. 1395b-6(c)(3)), the initial terms of the 2 additional
members of the Commission provided for by the amendment under
paragraph (1)(A) are as follows:
(i) One member shall be appointed for 1 year.
(ii) One member shall be appointed for 2 years.
(B) Commencement of terms.--Such terms shall begin on
January 1, 2004.
(b) Expansion of Duties.--Section 1805(b)(2) (42 U.S.C.
1395b-6(b)(2)) is amended by adding at the end the following
new subparagraph:
``(D) Prescription medicine benefit program.--Specifically,
the Commission shall review, with respect to the prescription
medicine benefit program under part D, the following:
``(i) The methodologies used for the management of costs
and utilization of prescription medicines.
``(ii) The prices negotiated and paid, including trends in
such prices and applicable discounts and comparisons with
prices under section 1859E(a)(2)(E).
``(iii) The relationship of pharmacy acquisition costs to
the prices so negotiated and paid.
``(iv) The methodologies used to ensure access to covered
outpatient prescription medicines and to ensure quality in
the appropriate dispensing and utilization of such medicines.
``(v) The impact of the program on promoting the
development of breakthrough medicines.''.
SEC. 106. 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+Choice 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).
TITLE II--MEDICARE+CHOICE
SEC. 201. MEDICARE+CHOICE 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+Choice 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+Choice 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) Revision of Blend.--
(1) Revision of national average used in calculation of
blend.--Section 1853(c)(4)(B)(i)(II) (42 U.S.C. 1395w-
23(c)(4)(B)(i)(II)) is amended by inserting ``who (with
respect to determinations for 2004) are enrolled in a
Medicare+Choice plan'' after ``the average number of medicare
beneficiaries''.
(2) Change in budget neutrality.--Section 1853(c) (42
U.S.C. 1395w-23(c)) is amended--
(A) in paragraph (1)(A), by inserting ``(for a year before
2004)'' after ``multiplied''; and
(B) in paragraph (5), by inserting ``(before 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 (B)(iv), by striking ``and each
succeeding year'' and inserting ``, 2003, and 2004'';
(B) in subparagraph (C)(iv), by striking ``and each
succeeding year'' and inserting ``and 2003''; and
(C) 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+Choice capitation
rate under this paragraph for the area for the previous year;
or
``(II) the annual Medicare+Choice capitation rate under
this paragraph for the area for the previous year increased
by the national per capita Medicare+Choice 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-
[[Page H6132]]
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+Choice 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+Choice 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+Choice
plans in different areas and its impact on lowering premiums
and increasing benefits under such plans.
(h) Limitation on Application to 2004 and 2005.--
Notwithstanding any other provision of law, the amendments
made by this section shall only apply to payment rates for
2004 and 2005 and for subsequent years the payment shall be
made on the basis of law as in effect before the date of the
enactment of this Act.
SEC. 202. MAKING PERMANENT CHANGE IN MEDICARE+CHOICE
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''.
SEC. 203. SPECIALIZED MEDICARE+CHOICE 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+Choice plans for special needs beneficiaries (as
defined in section 1859(b)(4)) may be any type of coordinated
care plan.''.
(b) Specialized Medicare+Choice 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+choice plans for special needs
beneficiaries.--
``(A) In general.--The term `specialized Medicare+Choice
plan for special needs beneficiaries' means a Medicare+Choice
plan that exclusively serves special needs beneficiaries (as
defined in subparagraph (B)).
``(B) Special needs beneficiary.--The term `special needs
beneficiary' means a Medicare+Choice 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+Choice 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+Choice Plans for Special Needs Beneficiaries.--In
the case of a specialized Medicare+Choice 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) 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+Choice 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).
(e) Effective Dates.--
(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 of Health
and Human Services shall issue 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. 204. MEDICARE MSAS.
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)''.
SEC. 205. 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+Choice 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. 206. EXTENSION OF MUNICIPAL HEALTH SERVICE DEMONSTRATION
PROJECTS.
The last sentence of section 9215(a) of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (42 U.S.C. 1395b-1
note), as previously amended, is amended by striking
``December 31, 2004, but only with respect to'' and all that
follows and inserting ``December 31, 2009, but only with
respect to individuals who reside in the city in which the
project is operated and so long as the total number of
individuals participating in the project does not exceed the
number of such individuals participating as of January 1,
1996.''.
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
[[Page H6133]]
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 2009; and
``(II) at least \2/3\ of such areas in 2010; 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).
``(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, 2007, 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).
``(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.
[[Page H6134]]
``(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, 2008; 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
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.
SEC. 303. REFORM OF PAYMENT FOR DRUGS AND BIOLOGICALS UNDER
THE MEDICARE PROGRAM.
(a) Payment Reform.--
(1) In general.--Section 1842(o) (42 U.S.C. 1395u(o)) is
amended to read as follows:
``(o) Payment for Drugs and Biologicals.--
``(1) General rule.--If a physician's, supplier's, or any
other person's bill or request for payment for services
includes a charge for a drug or biological for which payment
may be made under this part and the drug or biological is not
paid on a cost or prospective payment basis as otherwise
provided in this part, the amount payable for the drug or
biological shall be based on the following:
``(A) Multi-source (generic) drugs.--In the case of a drug
or biological that meets the requirements for a multi-source
drug under subclauses (I) and (II) of section
1927(k)(7)(A)(i), 105 percent of the volume-weighted median
average acquisition price for any drug or biological covered
under the same medicare HCPCS code.
``(B) Single source (brand) drugs and biologicals.--In the
case of a drug or biological that meets the requirements for
a single source drug under section 1927(k)(7)(A)(iv), 105
percent of the average acquisition price for the drug or
biological.
``(C) Access exception.--The Secretary may modify the rate
otherwise applicable in order to assure access to necessary
drugs and biologicals in the case of sole community providers
in rural and other areas where the providers are not
reasonably able to obtain the drugs and biologicals at the
payment rates otherwise applicable. Such modification shall
not result in a change of more than 15 percent of the rate
otherwise applicable.
``(D) Data-related exception.--If the Secretary determines
that there is insufficient data available with respect to
compute an average acquisition price for a drug or biological
for a quarter or that, because of a significant change in
price from quarter-to-quarter, the available data on the
average acquisition price does not accurately reflect the
actual, current acquisition cost for the drug or biological,
the Secretary may substitute for the quarters involved an
appropriate payment for the drug or biological for such
average acquisition price.
``(E) Application of ndc codes.--If the Secretary
determines that it is appropriate to provide for payment
under this subsection using national drug code (NDC) instead
of HCPCS codes, in applying subparagraph (A) the reference to
the same HCPCS code shall be deemed a reference to the
appropriate national drug codes for those drugs or
biologicals that are therapeutically and pharmaceutically
equivalent and bioequivalent (as defined for purposes of
section 1927(k)(7)(A)).
``(2) Definition of average acquisition price.--
``(A) In general.--For purposes of this subsection, the
term `average acquisition price' means, with respect to a
drug or biological and with respect to each dosage form and
strength of the drug or biological product (without regard to
any special packaging, labeling, or identifiers on the dosage
form or
[[Page H6135]]
product or package), the average of all final sales prices
charged by the manufacturer of the drug or biological product
in the United States, excluding sales exempt from inclusion
in the calculation of best price under section 1927(c)(1)(C)
(other than under clause (ii)(III) of such section) and
excluding sales subject to a rebate under section 1927, as
reported under paragraph (3).
``(B) Net price.--Such average acquisition price shall be
calculated net of all of the following (as estimated by the
Secretary):
``(i) Volume discounts.
``(ii) Prompt pay discounts and cash discounts.
``(iii) Charge-backs.
``(iv) Short-dated product discounts (for spoilage and
other factors).
``(v) Free goods and services.
``(vi) Rebates.
``(vii) All other price concessions provided by the drug
manufacturer.
The Secretary may make subsequent adjustments in such average
acquisition price to take into account updated information
and differences between the price previously estimated and
the actual average acquisition price.
``(C) Weighting.--The average of all final sales prices
described in subparagraph (A) shall be determined by
dividing--
``(i) the sum of all final prices charged by the
manufacturer (net of the adjustments made under subparagraph
(B)) for sales in the period involved that are included in
subparagraph (A) for the drug or biological, by
``(ii) the total number of units of such sales in the
period.
``(D) Distribution of reports.--The Secretary shall
promptly distribute applicable payment rates under this
subsection to carriers and fiscal intermediaries and other
contractors that make payment for drugs and biologicals under
this section in order to apply a uniform reimbursement rate
under this section.
``(3) Price reporting requirement.--
``(A) In general.--As a condition for payment for any drug
or biological of a manufacturer under this subsection, the
manufacturer of the drug or biological shall--
``(i) report, on a quarterly basis, to the Secretary (or
the Secretary's designee) the manufacturer's average
acquisition price and the information required under
subparagraph (C) for all drugs and biologicals of the
manufacturer by national drug code (NDC);
``(ii) maintain such records (in written or electronic
form) regarding such sales and prices for all such drugs and
biologicals as may be necessary to audit the information so
reported or required to be reported; and
``(iii) provide the Secretary with access to such records
in order to permit the Secretary to audit information so
reported or required to be reported.
``(B) Penalties.--The provisions of section 1927(b)(3)(C)
shall apply with respect to the reporting of information
under subparagraph (A) in the same manner as it applies to
the reporting of information under section 1927(b)(3)(A),
except that the reference in clause (i) of such section to
$10,000 is deemed a reference to $100,000 and any reference
to a suspension of an agreement is deemed a reference to a
suspension of payment for the drug or biological involved
under this part. The Secretary shall promptly refer to the
Inspector General of the Department of Health and Human
Services and, if appropriate, to appropriate officials in the
Department of Justice cases in which the Secretary becomes
aware of a false price representation made in the information
submitted under this paragraph.
``(C) Form of reporting.--Information required to be
reported under subparagraph (A)(i) shall be reported in a
form and manner specified by the Secretary. The information
required to be reported shall include the identification of
the generic name of the drug or biological and its brand name
(if any), the national drug code (NDC) and the HCPCS code
assigned to the drug or biological, the dosage form,
strength, volume, and package size involved. The information
for a quarter shall be submitted not later than 30 days after
the end of the quarter. The information shall be accompanied
by a written and signed certification by an officer of the
manufacturer attesting to the accuracy of the information
reported. Such information shall include updated information
on the net price realized (taking into account rebates and
other amounts affecting net price), regardless of the period
for which such a rebate or other adjustment in net price
might have been earned.
``(D) Auditing.--The Secretary shall audit on a periodic
basis information reported or required to be reported under
this paragraph. The Secretary may conduct such independent
price gathering activities, such as surveys and review of
published catalog information or other transactional
information, as may be appropriate to verify the accuracy of
the information reported.
``(4) Dispensing fee.--If payment for a drug or biological
is made to a licensed pharmacy approved to dispense drugs or
biologicals under this part, the Secretary shall pay a
dispensing fee (less the applicable deductible and
coinsurance amounts) to the pharmacy. Such a dispensing fee
shall be subject to adjustment from year to year based upon
changes in the consumer price index over time and may be
adjusted as the Secretary determines to be appropriate to
reflect differences in the costs of dispensing different
drugs and biologicals.
``(5) Payment required on an assignment-related basis.--
``(A) In general.--Payment for a charge for any drug or
biological for which payment may be made under this part may
be made only on an assignment-related basis.
``(B) Application of enforcement provisions.--The
provisions of subsection (b)(18)(B) shall apply to charges
for such drugs or biologicals in the same manner as they
apply to services furnished by a practitioner described in
subsection (b)(18)(C).''.
(2) Effective date.--Subject to subsection (i)(2), the
amendment made by paragraph (1) shall apply to drugs and
biologicals furnished on or after January 1, 2004.
(b) Medicare Payment For Drug Administration Services.--
(1) In general.--The Secretary shall revise the practice
expense relative value units for drug administration services
for years beginning with the year 2005 in accordance with
this subsection. For purposes of this subsection, the term
``drug administration services'' includes chemotherapy
administration services, therapeutic and diagnostic infusions
and injections, and such other services as the Secretary
specifies.
(2) Direct costs equal to 100 percent of cpep estimates.--
Using the information, including estimates of clinical staff
time, developed in the clinical practice expert panel
process, including refinements by American Medical
Association committees, the Secretary shall estimate the
costs of the nursing and other clinical staff, supplies, and
procedure-specific equipment (exceeding a cost specified by
the Secretary) used in furnishing each type of drug
administration service. The Secretary shall utilize without
revision the minutes of clinical staff time determined in
such process. The Secretary shall convert the information
from such process to estimated costs by applying the most
current available data on staff salary, supply, and equipment
costs, and such costs shall be updated to 2005 based on
estimated changes in prices since the date of such data.
(3) Total practice expenses.--The Secretary shall estimate
the total practice expenses of each drug administration
service by assuming that the direct costs for the service
determined under paragraph (3) are 33.2 percent of such total
practice expenses.
(4) Conversion to relative value units.--The Secretary
shall convert the total practice expenses determined under
paragraph (3) to practice expense relative value units for
each drug administration service by dividing such expenses by
the conversion factor that will be in effect for the
physician fee schedule for 2005. The relative value units as
so determined shall be used in determining the fee schedule
amounts paid for drug administration services under section
1848 of the Social Security Act (42 U.S.C. 1395w-4).
(5) Updates.--For years after 2005, the relative values
determined under paragraph (4) shall continue in effect
except that the Secretary shall revise them as necessary to
maintain their accuracy, provided that such revisions are
consistent with the methodology set forth in this subsection.
(6) Multiple pushes.--In establishing the payment amounts
under this subsection, the Secretary shall establish the
payment amount for intravenous chemotherapy administration by
push technique based on the administration of a single drug.
The Secretary shall make the same payment for each additional
drug administered by push technique during the same
encounter, except to the extent that the Secretary finds that
the cost of administering additional drugs is less than the
cost of administering the first drug.
(c) Payments for Chemotherapy Support Services.--
(1) General.--Beginning in 2005, the Secretary shall
recognize and make payments under section 1848 of the Social
Security Act (42 U.S.C. 1395w-4) for chemotherapy support
services furnished incident to physicians' services. For the
purposes of this section, the term ``chemotherapy support
services'' are services furnished by the staff of physicians
to patients undergoing treatment for cancer that were not
included in the computation of clinical staff costs under
subsection b(2). Such services include social worker
services, nutrition counseling, psychosocial services, and
similar services.
(2) Direct costs.--The Secretary shall estimate the cost of
the salary and benefits of staff furnishing chemotherapy
support services as they are provided in oncology practices
that furnish these services to cancer patients in a manner
that is considered to be high quality care. The estimate
shall be based on the weekly cost of such services per
patient receiving chemotherapy.
(3) Total costs.--The Secretary shall estimate the total
practice expenses of chemotherapy support services by
assuming that the direct costs for the service determined
under paragraph (2) are 33.2 percent of such total practice
expenses.
(4) Conversion to relative value units.--The Secretary
shall convert the total practice expenses determined under
paragraph (3) to practice expense relative value units for
chemotherapy support services by dividing such expenses by
the conversion factor that will be in effect for the
physician fee schedule for 2005. The relative value units as
so determined shall be used in determining the fee schedule
amounts paid for chemotherapy support services under such
section 1848.
(5) Updates.--For years after 2005, the relative values
determined under paragraph (4) shall continue in effect
except that the Secretary shall revise them as necessary to
maintain their accuracy, provided that such
[[Page H6136]]
revisions are consistent with the methodology set forth in
this subsection.
(d) Cancer Therapy Management Services.--Beginning in 2005,
the Secretary shall recognize and establish a payment amount
for the service of cancer therapy management to account for
the greater pre-service and post-service work associated with
visits and consultations conducted by physicians treating
cancer patients compared to typical visits and consultations.
The payment amount may vary by the level and type of the
related visit or consultation.
(e) Other Services Without Physician Work Relative Value
Units.--Beginning in 2005, the Secretary shall develop a
revised methodology for determining the payment amounts for
services that are paid under the fee schedule established by
section 1848 of the Social Security Act (42 U.S.C. 1395w-4)
and that do not have physician work relative value units,
including radiation oncology services. Such methodology shall
result in payment amounts that fully cover the costs of
furnishing such services. Until such time as the methodology
for such services is revised and implemented, all such
services shall be protected from further payment cuts due to
factors such as shifts in utilization or removal of any one
specialty's services that are paid under the fee schedule
established by such section 1848 and that do not have
physician work relative value units.
(f) Report to Congress.--Not later than April 1, 2004, the
Secretary shall submit to Congress a report on the payment
amounts that are projected to be adopted under subsections
(b), (c), (d), and (e) of this section.
(g) Institute of Medicine Study.--
(1) General.--The Secretary shall request the Institute of
Medicine to conduct the study described in this subsection.
(2) Baseline study.--The first phase of the study shall
include the following objectives:
(A) An assessment of the extent to which the current
medicare payment system, prior to implementation of the
amendments made by this section, facilitates appropriate
access to care by cancer patients in the various treatment
settings.
(B) The identification of the comprehensive range of
services furnished to cancer patients in the outpatient
setting, including support services such as psychosocial
services and counseling, and recommendations regarding the
types of services that ought to be furnished to medicare
patients with cancer.
(C) A discussion of the practice standards necessary to
assure the safe provision of services to cancer patients.
(D) An analysis of the extent to which the current medicare
payment system supports the role of nurses in the provision
of oncology services and recommendations for any necessary
improvements in the payment system in that respect.
(E) The development of a framework for assessing how the
amendments made by this act affect the provision of care to
medicare patients with cancer in the various treatment
settings.
(3) Second phase of study.--After the implementation of the
amendments made by this section, the study shall determine
whether and how those amendments affected the provision of
care to medicare patients with cancer.
(4) Consultation.--The Institute of Medicine shall consult
with the National Cancer Policy Board and organizations
representing cancer patients and survivors, oncologists,
oncology nurses, social workers, cancer centers, and other
healthcare professionals who treat cancer patients in
planning and carrying out this study.
(5) Due dates.--
(A) The study required by paragraph (2) shall be submitted
to the Congress and the Secretary of Health and Human
Services no later than June 30, 2004.
(B) The study required by paragraph (3) shall be submitted
to the Congress and the Secretary of Health and Human
Services no later than December 31, 2006.
(i) Study of Payments for Blood Clotting Factors and Other
Biologicals.--
(1) In general.--The Secretary of Health and Human Services
shall provide for a study of the appropriateness of the
medicare payment methodology for blood clotting factors and
other biologicals under part B of title XVIII of the Social
Security Act. Not later than 9 months after the date of the
enactment of this Act, the Secretary shall submit to Congress
a report on such study and shall include in such report
recommendations regarding whether to apply the payment
methodology provided under the amendment made by subsection
(a)(1) and alternative recommendations for appropriate
dispensing fees.
(2) Delay in effective date.--The amendment made by
subsection (a)(1) shall not apply to blood clotting factors
furnished before the first day of the first calendar year
that begins at least 6 months after the date the report under
paragraph (1) has been submitted to the Congress.
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
with private insurers.--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 in recovery audits
with private insurers or under the medicaid program under
title XIX of such 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. FAIRNESS IN THE MEDICARE DISPROPORTIONATE SHARE
HOSPITAL (DSH) ADJUSTMENT FOR RURAL HOSPITALS.
(a) Equalizing DSH Payment Amounts.--
(1) In general.--Section 1886(d)(5)(F)(vii) (42 U.S.C.
1395ww(d)(5)(F)(vii)) is amended by inserting ``, and, after
October 1, 2004, for any other hospital described in clause
(iv),'' after ``clause (iv)(I)'' in the matter preceding
subclause (I).
(2) Conforming amendments.--Section 1886(d)(5)(F) (42
U.S.C. 1395ww(d)(5)(F)) is amended--
(A) in clause (iv)--
(i) in subclause (II)--
(I) by inserting ``and before October 1, 2004,'' after
``April 1, 2001,''; and
(II) by inserting ``or, for discharges occurring on or
after October 1, 2004, is equal to the percent determined in
accordance with the applicable formula described in clause
(vii)'' after ``clause (xiii)'';
(ii) in subclause (III)--
(I) by inserting ``and before October 1, 2004,'' after
``April 1, 2001,''; and
(II) by inserting ``or, for discharges occurring on or
after October 1, 2004, is equal to the percent determined in
accordance with the applicable formula described in clause
(vii)'' after ``clause (xii)'';
(iii) in subclause (IV)--
(I) by inserting ``and before October 1, 2004,'' after
``April 1, 2001,''; and
(II) by inserting ``or, for discharges occurring on or
after October 1, 2004, is equal to the percent determined in
accordance with the applicable formula described in clause
(vii)'' after ``clause (x) or (xi)'';
(iv) in subclause (V)--
(I) by inserting ``and before October 1, 2004,'' after
``April 1, 2001,''; and
(II) by inserting ``or, for discharges occurring on or
after October 1, 2004, is equal to the percent determined in
accordance with the applicable formula described in clause
(vii)'' after ``clause (xi)''; and
(v) in subclause (VI)--
(I) by inserting ``and before October 1, 2004,'' after
``April 1, 2001,''; and
(II) by inserting ``or, for discharges occurring on or
after October 1, 2004, is equal to the percent determined in
accordance with the applicable formula described in clause
(vii)'' after ``clause (x)'';
[[Page H6137]]
(B) in clause (viii), by striking ``The formula'' and
inserting ``For discharges occurring before October 1, 2004,
the formula''; and
(C) in each of clauses (x), (xi), (xii), and (xiii), by
striking ``For purposes'' and inserting ``With respect to
discharges occurring before October 1, 2004, for purposes''.
(b) Effective Date.--The amendments made by this section
shall apply to discharges occurring on or after October 1,
2004.
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.
``(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.
``(C) Quality care.--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.
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) Permitting CAHs To Allocate Swing Beds and Acute Care
Inpatient Beds Subject to a Total Limit of 25 Beds.--
[[Page H6138]]
(1) In general.--Section 1820(c)(2)(B)(iii) (42 U.S.C.
1395i-4(c)(2)(B)(iii)) is amended to read as follows:
``(iii) provides not more than a total of 25 extended care
service beds (pursuant to an agreement under subsection (f))
and acute care inpatient beds (meeting such standards as the
Secretary may establish) for providing inpatient care for a
period that does not exceed, as determined on an annual,
average basis, 96 hours per patient;''.
(2) Conforming amendment.--Section 1820(f) (42 U.S.C.
1395i-4(f)) is amended by striking ``and the number of beds
used at any time for acute care inpatient services does not
exceed 15 beds''.
(3) Effective date.--The amendments made by this subsection
shall with respect to designations made on or after October
1, 2004.
(d) Elimination of the Isolation Test for Cost-Based CAH
Ambulance Services.--
(1) Elimination.--
(A) In general.--Section 1834(l)(8) (42 U.S.C.
1395m(l)(8)), as added by section 205(a) of BIPA (114 Stat.
2763A-482), is amended by striking the comma at the end of
subparagraph (B) and all that follows and inserting a period.
(B) Effective date.--The amendment made by subparagraph (A)
shall apply to services furnished on or after January 1,
2005.
(2) Technical correction.--Section 1834(l) (42 U.S.C.
1395m(l)) is amended by redesignating paragraph (8), as added
by section 221(a) of BIPA (114 Stat. 2763A-486), as paragraph
(9).
(e) 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.
(f) 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).
(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 may adjust 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 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--
[[Page H6139]]
(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) Prohibition on Nurse Practitioner Certifying Need for
Hospice.--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
an increase in the base rate of the fee schedule for mileage
for a trip established under this subsection. In establishing
such increase, the Secretary shall, based on the relationship
of cost and volume, estimate the average increase in cost per
trip for such services as compared with the cost per trip for
the average ambulance service.
``(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 three quartiles 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 10
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)) is amended--
(1) in subparagraph (E), by striking ``and'' after the
semicolon at the end;
(2) in subparagraph (F), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(G) 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)(G) 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
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''.
[[Page H6140]]
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. MEDICARE INPATIENT HOSPITAL PAYMENT ADJUSTMENT FOR
LOW-VOLUME HOSPITALS.
Section 1886(d) (42 U.S.C. 1395ww(d)) is amended by adding
at the end the following new paragraph:
``(12) Payment adjustment for low-volume hospitals.--
``(A) Payment adjustment.--
``(i) In general.--Notwithstanding any other provision of
this section, for each cost reporting period (beginning with
the cost reporting period that begins in fiscal year 2004),
the Secretary shall provide for an additional payment amount
to each low-volume hospital (as defined in clause (iii)) for
discharges occurring during that cost reporting period which
is equal to the applicable percentage increase (determined
under clause (ii)) in the amount paid to such hospital under
this section for such discharges.
``(ii) Applicable percentage increase.--The Secretary shall
determine a percentage increase applicable under this
paragraph that ensures that--
``(I) no percentage increase in payments under this
paragraph exceeds 25 percent of the amount of payment that
would (but for this paragraph) otherwise be made to a low-
volume hospital under this section for each discharge;
``(II) low-volume hospitals that have the lowest number of
discharges during a cost reporting period receive the highest
percentage increases in payments due to the application of
this paragraph; and
``(III) the percentage increase in payments to any low-
volume hospital due to the application of this paragraph is
reduced as the number of discharges per cost reporting period
increases.
``(iii) Low-volume hospital defined.--For purposes of this
paragraph, the term `low-volume hospital' means, for a cost
reporting period, a subsection (d) hospital (as defined in
paragraph (1)(B)) other than a critical access hospital (as
defined in section 1861(mm)(1)) that--
``(I) the Secretary determines had an average of less than
2,000 discharges (determined with respect to all patients and
not just individuals receiving benefits under this title)
during the 3 most recent cost reporting periods for which
data are available that precede the cost reporting period to
which this paragraph applies; and
``(II) is located at least 15 miles from a like hospital
(or is deemed by the Secretary to be so located by reason of
such factors as the Secretary determines appropriate,
including the time required for an individual to travel to
the nearest alternative source of appropriate inpatient care
(after taking into account the location of such alternative
source of inpatient care and any weather or travel conditions
that may affect such travel time).
``(B) Prohibiting certain reductions.--Notwithstanding
subsection (e), the Secretary shall not reduce the payment
amounts under this section to offset the increase in payments
resulting from the application of subparagraph (A).''.
SEC. 419. TREATMENT OF CERTAIN CLINICAL DIAGNOSTIC LABORATORY
TESTS FURNISHED BY A SOLE COMMUNITY HOSPITAL.
Notwithstanding subsections (a), (b), and (h) of section
1833 of the Social Security Act (42 U.S.C. 1395l) and section
1834(d)(1) of such Act (42 U.S.C. 1395m(d)(1)), in the case
of a clinical diagnostic laboratory test covered under part B
of title XVIII of such Act that is furnished in 2004 or 2005
by a sole community hospital (as defined in section
1886(d)(5)(D)(iii) of such Act (42 U.S.C.
1395ww(d)(5)(D)(iii))) as part of services furnished to
patients of the hospital, the following rules shall apply:
[[Page H6141]]
(1) Payment based on reasonable costs.--The amount of
payment for such test shall be 100 percent of the reasonable
costs of the hospital in furnishing such test.
(2) No beneficiary cost-sharing.--Notwithstanding section
432, no coinsurance, deductible, copayment, or other cost-
sharing otherwise applicable under such part B shall apply
with respect to such test.
SEC. 420. ESTABLISHMENT OF FLOOR ON GEOGRAPHIC ADJUSTMENTS OF
PAYMENTS FOR PHYSICIANS' SERVICES.
Section 1848(e)(1) (42 U.S.C. 1395w-4(e)(1)) is amended--
(1) in subparagraph (A), by striking ``subparagraphs (B)
and (C)'' and inserting ``subparagraphs (B), (C), (E), and
(F)''; and
(2) by adding at the end the following new subparagraphs:
``(E) Floor for work geographic indices.--
``(i) In general.--For purposes of payment for services
furnished on or after January 1, 2004, and before January 1,
2008, after calculating the work geographic indices in
subparagraph (A)(iii), the Secretary shall increase the work
geographic index to the work floor index for any locality for
which such geographic index is less than the work floor
index.
``(ii) Work floor index.--For purposes of clause (i), the
term `applicable floor index' means--
``(I) 0.980 with respect to services furnished during 2004;
and
``(II) 1.000 for services furnished during 2005, 2006, and
2007.
``(F) Floor for practice expense and malpractice geographic
indices.--For purposes of payment for services furnished on
or after January 1, 2005, and before January 1, 2008, after
calculating the practice expense and malpractice indices in
clauses (i) and (ii) of subparagraph (A) and in subparagraph
(B), the Secretary shall increase any such index to 1.00 for
any locality for which such index is less than 1.00.
SEC. 421. AMBULANCE PAYMENT RATES.
(a) Payment Rates.--Section 1834(l)(3) (42 U.S.C.
1395m(l)(3)) is amended to read as follows:
``(3) Payment rates.--
``(A) In general.--Subject to any adjustment under
subparagraph (B) and paragraph (9) and the full payment of a
national mileage rate pursuant to subparagraph (2)(E), in
establishing such fee schedule, the following rules shall
apply:
``(i) Payment rates in 2003.--
``(I) Ground ambulance services.--In the case of ground
ambulance services furnished under this part in 2003, the
Secretary shall set the payment rates under the fee schedule
for such services at a rate based on the average costs (as
determined by the Secretary on the basis of the most recent
and reliable information available) incurred by full cost
ambulance suppliers in providing nonemergency basic life
support ambulance services covered under this title, with
adjustments to the rates for other ground ambulance service
levels to be determined based on the rule established under
paragraph (1). For the purposes of the preceding sentence,
the term `full cost ambulance supplier' means a supplier for
which volunteers or other unpaid staff comprise less than 20
percent of the supplier's total staff and which receives less
than 20 percent of space and other capital assets free of
charge.
``(II) Other ambulance services.--In the case of ambulance
services not described in subclause (I) that are furnished
under this part in 2003, the Secretary shall set the payment
rates under the fee schedule for such services based on the
rule established under paragraph (1).
``(ii) Payment rates in subsequent years for all ambulance
services.--In the case of any ambulance service furnished
under this part in 2004 or any subsequent year, the Secretary
shall set the payment rates under the fee schedule for such
service at amounts equal to the payment rate under the fee
schedule for that service furnished during the previous year,
increased by the percentage increase in the Consumer Price
Index for all urban consumers (United States city average)
for the 12-month period ending with June of the previous
year.
``(B) Adjustment in rural rates.--For years beginning with
2004, the Secretary, after taking into consideration the
recommendations contained in the report submitted under
section 221(b)(3) the Medicare, Medicaid, and SCHIP Benefits
Improvements and Protection Act of 2000, shall adjust the fee
schedule payment rates that would otherwise apply under this
subsection for ambulance services provided in low density
rural areas based on the increased cost (if any) of providing
such services in such areas.''.
(b) Conforming Amendment.--Section 221(c) of BIPA is
repealed.
TITLE V--PROVISIONS RELATING TO PART A
Subtitle A--Inpatient Hospital Services
SEC. 501. ADJUSTMENT FOR INDIRECT COSTS OF MEDICAL EDUCATION
(IME).
Section 1886(d)(5)(B)(ii) (42 U.S.C. 1395ww(d)(5)(B)(ii))
is amended--
(1) by striking ``and'' at the end of subclause (VI);
(2) in subclause (VII)--
(A) by striking ``on or after October 1, 2002,'' and
inserting ``during fiscal year 2003,''; and
(B) by striking the period at the end and inserting ``;
and''; and
(3) by inserting after subclause (VII) the following new
subclauses:
``(VIII) during each of fiscal years 2004 and 2005, `c' is
equal to 1.47; and
``(IX) on or after October 1, 2005, `c' is equal to
1.35.''.
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-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 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
[[Page H6142]]
a diagnosis-related group where the average costs of care
most closely approximate the costs of care of using the new
technology. In such case, the new technology would no longer
meet the threshold of exceeding 75 percent of the standard
deviation for the diagnosis-related group involved under
clause (ii)(I). 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.--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),''.
(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 2003
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 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 cost reporting period
beginning on or after October 1, 2004.
SEC. 505. CLARIFICATIONS TO CERTAIN EXCEPTIONS TO MEDICARE
LIMITS ON PHYSICIAN REFERRALS.
(a) Ownership and investment interests in whole
hospitals.--
(1) In general.--Section 1877(d)(3) (42 U.S.C.
1395nn(d)(3)) is amended--
(A) by striking ``and'' at the end of subparagraph (A); and
(B) by redesignating subparagraph (B) as subparagraph (C)
and inserting after subparagraph (A) the following:
``(B) the hospital is not a specialty hospital (as defined
in subsection (h)(7)); and''.
(2) Definition.--Section 1877(h) (42 U.S.C. 1395nn(h)) is
amended by adding at the end the following:
``(7) Specialty hospital.--
``(A) In general.--For purposes of this section, except as
provided in subparagraph (B), the term `specialty hospital'
means a hospital that is primarily or exclusively engaged in
the care and treatment of one of the following:
``(i) patients with a cardiac condition;
``(ii) patients with an orthopedic condition;
``(iii) patients receiving a surgical procedure; or
``(iv) any other specialized category of patients or cases
that the Secretary designates as inconsistent with the
purpose of permitting physician ownership and investment
interests in a hospital under this section.
``(B) Exception.--For purposes of this section, the term
`specialty hospital' does not include any hospital--
``(i) determined by the Secretary--
``(I) to be in operation before June 12, 2003; or
``(II) under development as of such date;
``(ii) for which the number of beds and the number of
physician investors at any time on or after such date is no
greater than the number of such beds or investors as of such
date; and
``(iii) that meets such other requirements as the Secretary
may specify.''.
(b) Effective Date.--Subject to subsection (c), the
amendments made by this section shall apply to referrals made
for designated health services on or after January 1, 2004.
(c) Application of Exception for Hospitals Under
Development.--For purposes of section 1877(h)(7)(B)(i)(II) of
the Social Security Act, as added by subsection (a)(2), in
determining whether a hospital is under development as of
June 12, 2003, the Secretary shall consider--
(1) whether architectural plans have been completed,
funding has been received, zoning requirements have been met,
and necessary approvals from appropriate State agencies have
been received; and
(2) any other evidence the Secretary determines would
indicate whether a hospital is under development as of such
date.
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);
[[Page H6143]]
(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.
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).
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.
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
[[Page H6144]]
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 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) Adjustment to Technical Component.--For diagnostic
mammography performed on or after January 1, 2004, for which
payment is made under the physician fee schedule under
section 1848 of the Social Security Act (42 U.S.C. 1395w-4),
the Secretary, based on the most recent cost data available,
shall provide for an appropriate adjustment in the payment
amount for the technical component of the diagnostic
mammography.
(c) 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 procedure 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:
[[Page H6145]]
``(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 drug or biological to
be identical to or similar to another drug or biological with
respect to its mechanism of action or clinical effect to deny
pass-through status to new drugs or biologics or to remove
such status of an existing eligible drug or biologic under
this paragraph unless--
``(i) the Secretary develops by regulation (after providing
notice and a period for public comment) criteria for the
application of such standard; and
``(ii) such criteria provide for coordination with the
Federal Food and Drug Administration and require scientific
studies that show the clinical relationship between the drugs
or biologicals treated as functionally equivalent.''.
(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 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--
(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 not be less than 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
[[Page H6146]]
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.
``(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. 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. 629. 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.
[[Page H6147]]
``(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.
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'';
(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. 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. 703. 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 the
beneficiary--
(1) has been certified by one physician as an individual
who has a permanent and severe condition that will not
improve;
(2) requires the individual to receive assistance from
another individual with at least 3 out of the 5 activities of
daily living for the rest of the individual's life;
(3) requires 1 or more home health services to achieve a
functional condition that gives the individual the ability to
leave home; and
(4) requires technological assistance or the assistance of
another person to leave the home.
(c) Demonstration Project Sites.--The demonstration project
established under this section shall be conducted in 3 States
selected by the Secretary to represent the Northeast,
Midwest, and Western regions of the United States.
(d) Limitation on Number of Participants.--The aggregate
number of such beneficiaries that may participate in the
project may not exceed 15,000.
(e) Data.--The Secretary shall collect such data on the
demonstration project with respect to the provision of home
health services to medicare beneficiaries that relates to
quality of care, patient outcomes, and additional costs, if
any, to the medicare program.
(f) Report to Congress.--Not later than 1 year after the
date of the completion of the demonstration project under
this section, the Secretary shall submit to Congress a report
on the project using the data collected under subsection (e)
and shall include--
(1) an examination of whether the provision of home health
services to medicare beneficiaries under the project--
(A) adversely effects the provision of home health services
under the medicare program; or
(B) directly causes an unreasonable increase of
expenditures under the medicare program for the provision of
such services that is directly attributable to such
clarification;
(2) the specific data evidencing the amount of any increase
in expenditures that is a directly attributable to the
demonstration project (expressed both in absolute dollar
terms and as a percentage) above expenditures that would
otherwise have been incurred for home health services under
the medicare program; and
(3) specific recommendations to exempt permanently and
severely disabled homebound beneficiaries from restrictions
on the length, frequency and purpose of their absences from
the home to qualify for home health services without
incurring additional unreasonable costs to the medicare
program.
(g) Waiver Authority.--The Secretary shall waive compliance
with the requirements of title XVIII of the Social Security
Act (42 U.S.C. 1395 et seq.) to such extent and for such
period as the Secretary determines is necessary to conduct
demonstration projects.
(h) Construction.--Nothing in this section shall be
construed as waiving any applicable civil monetary penalty,
criminal penalty, or other remedy available to the Secretary
under title XI or title XVIII of the Social Security Act for
acts prohibited under such titles, including penalties for
false certifications for purposes of receipt of items or
services under the medicare program.
(i) Authorization of Appropriations.--Payments for the
costs of carrying out the demonstration project under this
section shall be made from the Federal Supplementary
Insurance Trust Fund under section 1841 of such Act (42
U.S.C. 1395t).
(j) Definitions.--In this section:
(1) Medicare beneficiary.--The term ``medicare
beneficiary'' means an individual who is enrolled under part
B of title XVIII of the Social Security Act.
(2) Home health services.--The term ``home health
services'' has the meaning given such term in section 1861(m)
of the Social Security Act (42 U.S.C. 1395x(m)).
(3) Activities of daily living defined.--The term
``activities of daily living'' means eating, toileting,
transferring, bathing, and dressing.
(4) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
Subtitle B--Chronic Care Improvement
SEC. 721. VOLUNTARY CHRONIC CARE IMPROVEMENT UNDER
TRADITIONAL FEE-FOR-SERVICE.
Title XVIII is amended by inserting after section 1806 the
following new section:
``chronic care improvement
``Sec. 1807. (a) In General.--
``(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 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
[[Page H6148]]
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+CHOICE
PLANS.
(a) In General.--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+Choice organization with
respect to each Medicare+Choice plan it offers shall have in
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+Choice plan of a Medicare+Choice 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)
[[Page H6149]]
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+Choice 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+Choice 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) 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 1807 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 C--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 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
[[Page H6150]]
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) Criteria and evidence used in making national
coverage determinations.--The Secretary shall make available
to the public the criteria the Secretary uses in making
national coverage determinations, including how evidence to
demonstrate that a procedure or device is reasonable and
necessary is considered.
``(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 12 months after the date
of the request.
``(3) Process for public comment in national coverage
determinations.--At the end of the 6-month period 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 or temporary or permanent code during
the 60-day period referred to in subparagraph (C).
``(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, 2001, and before January 1, 2006, 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 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.
[[Page H6151]]
SEC. 735. MEDICARE PANCREATIC ISLET CELL TRANSPLANT
DEMONSTRATION PROJECT.
(a) Establishment.--In order to test the appropriateness of
pancreatic islet cell transplantation, not later than 120
days after the date of the enactment of this Act, the
Secretary shall establish a demonstration project which the
Secretary, provides for payment under the medicare program
under title XVIII of the Social Security Act for pancreatic
islet cell transplantation and related items and services in
the case of medicare beneficiaries who have type I (juvenile)
diabetes and have end stage renal disease.
(b) Duration of Project.--The authority of the Secretary to
conduct the demonstration project under this section shall
terminate on the date that is 5 years after the date of the
establishment of the project.
(c) Evaluation and Report.--The Secretary shall conduct an
evaluation of the outcomes of the demonstration project. Not
later than 120 days after the date of the termination of the
demonstration project under subsection (b), the Secretary
shall submit to Congress a report on the project, including
recommendations for such legislative and administrative
action as the Secretary deems appropriate.
(d) Payment Methodology.--The Secretary shall establish an
appropriate payment methodology for the provision of items
and services under the demonstration project, which may
include a payment methodology that bundles, to the maximum
extent feasible, payment for all such items and services.
(e) Waiver Authority.--The Secretary may waive compliance
with the requirements of title XVIII of the Social Security
Act to such extent and for such period as the Secretary
determines is necessary to conduct the demonstration project.
TITLE VIII--MEDICAID
SEC. 801. CONTINUATION OF MEDICAID DSH ALLOTMENT ADJUSTMENTS
UNDER BIPA 2000.
(a) In General.--Section 1923(f) of the Social Security Act
(42 U.S.C. 1396r-4(f))--
(1) in paragraph (2)--
(A) in the heading, by striking ``through 2002'' and
inserting ``through 2000'';
(B) by striking ``ending with fiscal year 2002'' and
inserting ``ending with fiscal year 2000''; and
(C) in the table in such paragraph, by striking the columns
labeled ``FY 01'' and ``FY02'';
(2) in paragraph (3)(A), by striking ``paragraph (2)'' and
inserting ``paragraph (4)''; and
(3) in paragraph (4), as added by section 701(a)(1) of 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)--
(A) by striking ``for fiscal years 2001 and 2002'' in the
heading;
(B) in subparagraph (A), by striking ``Notwithstanding
paragraph (2), the'' and inserting ``The'';
(C) in subparagraph (C)--
(i) by striking ``No application'' and inserting
``Application''; and
(ii) by striking ``without regard to'' and inserting
``taking into account''.
(b) Increase in Medicaid DSH Allotment for the District of
Columbia.--
(1) In general.--Effective for DSH allotments beginning
with fiscal year 2003, the item in the table contained in
section 1923(f)(2) of the Social Security Act (42 U.S.C.
1396r-4(f)(2)) for the District of Columbia for the DSH
allotment for FY 00 (fiscal year 2000) is amended by striking
``32'' and inserting ``49''.
(2) Construction.--Nothing in paragraph (1) shall be
construed as preventing the application of section 1923(f)(4)
of the Social Security Act (as amended by subsection (a)) to
the District of Columbia for fiscal year 2003 and subsequent
fiscal years.
(c) Effective Date.--The amendments made by this section
shall apply to DSH allotments for fiscal years beginning with
fiscal year 2003.
SEC. 802. INCREASE IN FLOOR FOR TREATMENT AS AN EXTREMELY LOW
DSH STATE TO 3 PERCENT IN FISCAL YEAR 2003.
(a) Increase in DSH Floor.--Section 1923(f)(5) of the
Social Security Act (42 U.S.C. 1396r-4(f)(5)) is amended--
(1) by striking ``fiscal year 1999'' and inserting ``fiscal
year 2001'';
(2) by striking ``August 31, 2000'' and inserting ``August
31, 2002'';
(3) by striking ``1 percent'' each place it appears and
inserting ``3 percent''; and
(4) by striking ``fiscal year 2001'' and inserting ``fiscal
year 2003''.
(b) Effective Date.--The amendments made by subsection (a)
take effect as if enacted on October 1, 2002, and apply to
DSH allotments under title XIX of the Social Security Act for
fiscal year 2003 and each fiscal year thereafter.
SEC. 803. 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)''.
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.
(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.''.
[[Page H6152]]
(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
902(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
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
[[Page H6153]]
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 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
[[Page H6154]]
(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.
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
[[Page H6155]]
``(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).
``(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
[[Page H6156]]
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--
(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
[[Page H6157]]
``(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''.
(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
[[Page H6158]]
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
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.
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:
[[Page H6159]]
``(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), each
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));
``(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.
[[Page H6160]]
``(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.
``(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
[[Page H6161]]
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 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
[[Page H6162]]
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 (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
[[Page H6163]]
(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 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;
[[Page H6164]]
``(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 preceding sentence, if the National
Committee on Vital and Health Statistics has not made a
recommendation to the Secretary before 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 for
the reporting of diagnoses, the Secretary may implement ICD-
10-PCS only with respect to inpatient services 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.
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.
[[Page H6165]]
(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:
``(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 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 described in subclause (II) of section
1886(d)(5)(F)(vi) of the Social Security Act (42 U.S.C.
1395ww(d)(5)(F)(vi)) used in computing the disproportionate
patient percentage under such section for that hospital. 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
[[Page H6166]]
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.
TITLE X--IMPORTATION OF PRESCRIPTION DRUGS
SEC. 1001. 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; or
``(E) a drug that is inhaled during surgery.
``(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, after consultation with
the United States Trade Representative and the Commissioner
of Customs, 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 safeguards be in place to ensure 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 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); and
``(3) contain any additional provisions determined by the
Secretary to be appropriate as a safeguard to protect the
public health or as a means to facilitate the importation of
prescription drugs.
``(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 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) In the case of a prescription drug that is shipped
directly from the first foreign recipient of the prescription
drug from the manufacturer:
``(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)(aa) 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.
``(bb) In the case of any subsequent shipment,
documentation demonstrating that a statistically valid sample
of the shipment was tested for authenticity and degradation.
``(ii) In the case of a prescription drug that is not
shipped directly from the first foreign recipient of the
prescription drug from the manufacturer, documentation
demonstrating that each batch in each shipment offered for
importation into the United States 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
``(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 or otherwise complying with this Act; 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.
``(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.
[[Page H6167]]
``(i) Prohibition of Discrimination.--
``(1) In general.--It shall be unlawful for a manufacturer
of a prescription drug to discriminate against, or cause any
other person to discriminate against, a pharmacist or
wholesaler that purchases or offers to purchase a
prescription drug from the manufacturer or from any person
that distributes a prescription drug manufactured by the drug
manufacturer.
``(2) Discrimination.--For the purposes of paragraph (1), a
manufacturer of a prescription drug shall be considered to
discriminate against a pharmacist or wholesaler if the
manufacturer enters into a contract for sale of a
prescription drug, places a limit on supply, or employs any
other measure, that has the effect of--
``(A) providing pharmacists or wholesalers access to
prescription drugs on terms or conditions that are less
favorable than the terms or conditions provided to a foreign
purchaser (other than a charitable or humanitarian
organization) of the prescription drug; or
``(B) restricting the access of pharmacists or wholesalers
to a prescription drug that is permitted to be imported into
the United States under this section.
``(j) 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.
``(k) Waiver Authority for Importation by Individuals.--
``(1) Declarations.--Congress declares that in the
enforcement against individuals of the prohibition of
importation of prescription drugs and devices, the Secretary
should--
``(A) focus enforcement on cases in which the importation
by an individual poses a significant threat to public health;
and
``(B) exercise discretion to permit individuals to make
such importations in circumstances in which--
``(i) the importation is clearly for personal use; and
``(ii) the prescription drug or device imported does not
appear to present an unreasonable risk to the individual.
``(2) Waiver authority.--
``(A) In general.--The Secretary may 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.
``(B) Guidance on case-by-case waivers.--The Secretary
shall publish, and update as necessary, guidance that
accurately describes circumstances in which the Secretary
will consistently grant waivers on a case-by-case basis under
subparagraph (A), so that individuals may know with the
greatest practicable degree of certainty whether a particular
importation for personal use will be permitted.
``(3) Drugs imported from canada.--In particular, the
Secretary shall by regulation grant individuals a waiver to
permit individuals to import into the United States a
prescription drug that--
``(A) is imported from a licensed pharmacy for personal use
by an individual, not for resale, in quantities that do not
exceed a 90-day supply;
``(B) is accompanied by a copy of a valid prescription;
``(C) is imported from Canada, from a seller registered
with the Secretary;
``(D) is a prescription drug approved by the Secretary
under chapter V;
``(E) is in the form of a final finished dosage that was
manufactured in an establishment registered under section
510; and
``(F) is imported under such other conditions as the
Secretary determines to be necessary to ensure public safety.
``(l) 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, the United States Trade
Representative, and the Commissioner of Patents and
Trademarks 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).
``(m) 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.
``(n) Effectiveness of Section.--
``(1) In general.--If, after the date that is 1 year after
the effective date of the regulations under subsection (b)
and before the date that is 18 months after the effective
date, the Secretary submits to Congress a certification that,
in the opinion of the Secretary, based on substantial
evidence obtained after the effective date, the benefits of
implementation of this section do not outweigh any detriment
of implementation of this section, this section shall cease
to be effective as of the date that is 30 days after the date
on which the Secretary submits the certification.
``(2) Procedure.--The Secretary shall not submit a
certification under paragraph (1) unless, after a hearing on
the record under sections 556 and 557 of title 5, United
States Code, the Secretary--
``(A)(i) determines that it is more likely than not that
implementation of this section would result in an increase in
the risk to the public health and safety;
``(ii) identifies specifically, in qualitative and
quantitative terms, the nature of the increased risk;
``(iii) identifies specifically the causes of the increased
risk; and
``(iv)(I) considers whether any measures can be taken to
avoid, reduce, or mitigate the increased risk; and
``(II) if the Secretary determines that any measures
described in subclause (I) would require additional statutory
authority, submits to Congress a report describing the
legislation that would be required;
``(B) identifies specifically, in qualitative and
quantitative terms, the benefits that would result from
implementation of this section (including the benefit of
reductions in the cost of covered products to consumers in
the United States, allowing consumers to procure needed
medication that consumers might not otherwise be able to
procure without foregoing other necessities of life); and
``(C)(i) compares in specific terms the detriment
identified under subparagraph (A) with the benefits
identified under subparagraph (B); and
``(ii) determines that the benefits do not outweigh the
detriment.
``(o) Authorization of Appropriations.--There are
authorized to be appropriated such sums as are necessary to
carry out this section.
``(p) Conditions.--This section shall become effective only
if the Secretary certifies to the Congress that
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
covered products 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)''.
TITLE XI--ACCESS TO AFFORDABLE PHARMACEUTICALS
SEC. 1101. SHORT TITLE.
This title may be cited as the ``Greater Access to
Affordable Pharmaceuticals Act''.
SEC. 1102. 30-MONTH STAY-OF-EFFECTIVENESS PERIOD.
(a) Abbreviated New Drug Applications.--Section 505(j) of
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(j))
is amended--
(1) in paragraph (2), 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
[[Page H6168]]
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
(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''; and
(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).'';
(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.--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 does
not bring a civil action against the applicant for
infringement of the patent on or before the date that is 45
days after the date on which the notice given under paragraph
(2)(B) was received, the applicant may bring a civil action
against the owner or holder (but not against any owner or
holder that has brought such a civil action against that
applicant, unless that civil action was dismissed without
prejudice) for a declaratory judgment under section 2201 of
title 28, United States Code, that the patent is invalid or
will not be infringed by the drug for which the applicant
seeks approval.
``(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), 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.
``(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
(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--
[[Page H6169]]
``(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''; and
(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
(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.--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 does
not bring a civil action against the applicant for
infringement of the patent on or before the date that is 45
days after the date on which the notice given under
subsection (b)(3) was received, the applicant may bring a
civil action against the owner or holder (but not against any
owner or holder that has brought such a civil action against
that applicant, unless that civil action was dismissed
without prejudice) for a declaratory judgment under section
2201 of title 28, United States Code, that the patent is
invalid or will not be infringed by the drug for which the
applicant seeks approval.
``(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) Infringement Actions.--Section 271(e) of title 35,
United States Code, is amended by adding at the end the
following:
``(5) The filing of an application described in paragraph
(2) that includes a 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), and the
failure of the owner of the patent to bring an action for
infringement of a patent that is the subject of the
certification before the expiration of 45 days after the date
on which the notice given under subsection (b)(3) or
(j)(2)(B) of that section is received, shall establish an
actual controversy between the applicant and the patent owner
sufficient to confer subject matter jurisdiction in the
courts of the United States in any action brought by the
applicant under section 2201 of title 28 for a declaratory
judgment that any patent that is the subject of the
certification is invalid or not infringed.''.
(d) 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. 1103. 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 1102) 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.--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.
``(cc) Substantially complete application.--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
[[Page H6170]]
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. 1104. 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. 1105. REMEDIES FOR INFRINGEMENT.
Section 287 of title 35, United States Code, is amended by
adding at the end the following:
``(d) Consideration.--In making a determination with
respect to remedy brought for infringement of a patent that
claims a drug or a method or using a drug, the court shall
consider whether information on the patent was filed as
required under 21 U.S.C. 355 (b) or (c), and, if such
information was required to be filed but was not, the court
may refuse to award treble damages under section 284.''.
SEC. 1106. 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)''.
The SPEAKER pro tempore. Pursuant to House Resolution 299, the
gentleman from New York (Mr. Rangel) and the gentleman from Louisiana
(Mr. Tauzin) each will control 30 minutes.
Mr. TAUZIN. Mr. Speaker, I yield 15 minutes to the gentleman from
California (Mr. Thomas) or his designee, and ask unanimous consent that
he may control that time.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Louisiana?
There was no objection.
Mr. RANGEL. Mr. Speaker, I yield 15 minutes to the gentleman from
Michigan (Mr. Dingell) and ask unanimous consent that he be permitted
to further allocate that time.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from New York?
There was no objection.
The SPEAKER pro tempore. The gentleman from New York (Mr. Rangel) is
recognized for 15 minutes.
Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I appreciate the statement made by the gentleman from
Louisiana (Mr. Tauzin) that we all are concerned about our older
citizens and those that are to follow, and certainly we all have to
appreciate the fact that we are all here because we stand on someone
else's shoulders, someone else who made the sacrifice, and I am very
proud to share the responsibility of this bill with the gentleman from
Michigan (Mr. Dingell), who has dedicated his entire life, and his dad
before him, in making certain that he and those of us who support him
and what he believes in improves the quality of life of not only the
seniors today.
It took us a long time to get where we are where people feel some
degree of comfort that the Federal Government will be there for them,
whether it is Social Security, whether it is Medicaid, whether it is
Medicare. It has been government, yes, this government, this wonderful
government, this government who gave me the GI bill, this government
which allowed older citizens to have some degree of pride in having
Social Security to cushion themselves from poverty, and this government
that provided health care for the very poor, and under Medicare we had
hoped that we would have provided prescription drugs for them.
I do not know when this animosity came against government, why we
felt we had to starve these programs which some of us have been so
proud of. Somebody asked how do you pay for your bill? This is a
strange thing to ask, especially when the chairman of the Committee on
the Budget is on the floor. He has been able to do magic with numbers
over there. He started out with a $5.6 trillion surplus, and with magic
converted it to a $3.4 trillion deficit. He can take $9 trillion and
find some way to spend it in tax cuts. Even tonight, some $173 billion,
$100 billion just found last night, and we will get $400 billion from
what they have allocated, but we think that it takes twice that much.
Is that asking to do, is that something that we have to go to the
Committee on the Budget for and ask? Can you sprinkle your magic powder
on us and make it possible for the older people not to have gaps in
services? Is it asking too much to treat them, not that they are
wealthy in dollars and cents, but they are wealthy in terms of the
investment they made in this country to make it possible for the
multinationals and the wealthy people to get the tax breaks that they
are getting, and it seems to me since compassion is not there, that
maybe we can look at it as a cost savings vehicle.
How many senior citizens will not have to go to the hospitals which
are so expensive, how much of a part of our health expenses is a part
of the institutions which our seniors are forced to go
[[Page H6171]]
into? If you have to make a decision and you are in doubt, why not make
the doubt in favor of the senior citizens? Everything that is missing
in the Republican bill that is good, we put in our bill to make certain
that it is better.
One thing that we are saying is this, do not hate the government
until you do not have any need for it. And seniors when they read the
difference of the bills, and you bet your life they can read, they may
be old but they are not stupid. They can pick up the daily newspapers,
and if they do not go to the pharmaceutical corporations but rather go
to the local drugstore, they will find out in short order who is their
best friend.
Do not knock the government. It is not as bad as some Members think.
Give the people an opportunity so that we can say citizens, we
appreciate all that you have done for us, and we in the Congress
believe that the least we can do for you as you grow older is to ease
your pain and, more important, the fear you have that once you go to
the doctor that at least you will be able to get the drugs that are
prescribed for your illness.
Mr. Speaker, we do not have to challenge each other's integrity, but
I tell Members this, that there are Members on the other side of the
aisle that hold Social Security in utter contempt. There are Members
who talk about Medicare as though the communists created the package,
and they resented it when it started, and they think it is worse than
ever today.
What I am saying is let us do what they tell doctors to do, and do no
harm. Let us leave here saying that at least on this day there was a
substitute, they did not have to do it the way the majority would want.
Mr. Speaker, I yield the balance of my time to the gentleman from
California (Mr. Stark), the ranking member of the Subcommittee on
Health, and I ask unanimous consent that he may further allocate that
time.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from New York?
There was no objection.
(Mr. WILSON of South Carolina asked and was given permission to speak
out of order and to revise and extend his remarks.)
South Carolina Loses a Legend
Mr. WILSON of South Carolina. Mr. Speaker, it is with great sadness
tonight that I announce that Senator Strom Thurmond passed away at
9:45. I was a former staff member of Senator Thurmond, my wife was a
staff person for Senator Thurmond, and our three sons have been pages
with his office.
With the death of Strom Thurmond, South Carolina has lost its
greatest statesman of the 20th century, just as John Calhoun was the
most revered South Carolinian of the 19th century. Strom Thurmond will
never be replaced in the countless hearts of those who loved and
respected him.
The entire Wilson family mourns this profound loss and we extend our
sympathy to the Thurmond family.
Senator Strom Thurmond will endure as the leading example of a public
servant due to his love and devotion to all the people of South
Carolina regardless of status, race, politics or region.
He was our living legend. Strom's life was dedicated to achieving
peace through strength, as shown by his military service in liberating
Europe from Nazi fascists, his tireless work in fighting for a strong
national defense in Congress which ultimately led to the defeat of
Soviet communism.
{time} 2300
He pioneered the development of the South Carolina Republican Party
from effective nonexistence in the 1960s to majority status by the end
of the century. He has been a role model of service to South Carolina's
young people and our family has had three generations on his staff: my
wife's two uncles were staff attorneys, my wife and I were interns, and
our three oldest sons were pages. A distinguished highlight for our
family was to host Senator Thurmond on the last Sunday before his last
election in 1996 at the First Presbyterian Church in Columbia.
The legacy of Strom Thurmond will always be felt in South Carolina
because of his steadfast integrity and the meaningful results of his
thoughtful constituent service. He was my personal hero, and I will
miss him dearly.
Mr. TAUZIN. Mr. Speaker, I yield myself such time as I may consume.
Let me join in expressing the sorrow of the folks in Louisiana for
your loss in South Carolina. We will pray for his soul.
Mr. Speaker, the Democratic substitute in this debate can be summed
up rather easily. According to CBO, it will spend over a trillion
dollars. It busts the budget. Therefore, it is on the floor with a
budget waiver. It at the same time excludes and does not contain any of
the reforms that the base bill includes, that are designed to save
Medicare from failure, from insolvency. I am not predicting Medicare's
failure or insolvency. CBO is. CRS is. Everyone who has estimated the
strength of our Medicare system predicts very soon, in our lifetimes,
it will go insolvent. None of the reforms that are designed to save
Medicare from insolvency are here. In fact, the Democratic substitute
piles on a trillion dollars' worth of expenses to the Medicare system
with no reforms to make sure the system is saved.
When I mentioned earlier that you ought to test the credibility of
arguments on this floor by what is said and what is fact and what is of
record, let me take you back to the statements of the distinguished
gentlewoman from California who criticized the base bill because CBO
said it might mean that as much as 30 percent or so of employers might
drop their retiree coverage under the base bill in favor of the plans
we offer. CBO estimated the Democratic substitute, too, on that point.
How credible is an argument against the base bill that complains
about a potential 30 percent loss of employer coverage when CBO
estimates that 100 percent of employers will drop retiree coverage
under the Democratic substitute? That all taxpayer dollars will be used
to substitute private dollars? And the Medicare system, already crushed
and about to go into insolvency, will have to assume all that
responsibility, too? If you really believe in Medicare, why would you
burden it so? Why would you eliminate private coverage in America, as
CBO estimates would happen under the Democratic substitute?
This substitute busts our budget. It purports to provide more drug
coverage than the base bill but no reforms, it does not save Medicare;
and on top of that it virtually eliminates private retiree coverage in
America. Why would we want to go that direction? We rejected that
direction during the Clinton years when Mrs. Clinton presented us with
one-size-fits-all health care for all Americans. We recognized then
that if you do not have the competitive choices in America in health
care, just as we do with so many other services, that things go bad in
this country and that sooner or later the crushing weight of benefits
added upon benefits added upon benefits means the working people of
America have to pay more and more and more taxes. In fact, it is
estimated that within 70 years, if we do not begin today making
decisions like we ask the House to make, entitlements in America will
eat up every tax dollar paid into the Treasury by every citizen in
America, and we will have no money for any other function in this
country. That is where this substitute takes us, and that is why we
need to reject it.
Mr. Speaker, I reserve the balance of my time.
Mr. DINGELL. Mr. Speaker, I yield myself 3 minutes.
(Mr. DINGELL asked and was given permission to revise and extend his
remarks.)
Mr. DINGELL. My dear friends and colleagues, I lay before you the
Republican plan. I ask you to look at it with a straight face, because
it is inexplicable, and I cannot explain it to you with a straight
face. The amendment which was offered by my dear friend, the gentleman
from New York (Mr. Rangel), on behalf of him and me, does the following
things: it gives and sets forth a very clear set of benefits. Senior
citizens pay $25 a month; they get 80 percent of drug costs from
government after a $100 deductible. This is what you get if you get the
Republican plan. But that is not the worst you get. If you are a senior
citizen, you fall into a doughnut hole. After you get $2,000 in drugs
that you get under the plan, all of a sudden your payments by the
government stop; you have to keep on paying premiums, but you get no
benefit
[[Page H6172]]
until you have got $5,100. They are going to privatize your Medicare in
the year 2010. That is pretty bad.
But it is followed by other things: massive subsidies to the
insurance companies which commence in 2 years, in 2006. But that is not
all. No guarantee as to what it costs you in terms of what you have to
pay in the way of premiums, no assurance that you will get any
particular level of benefits. The only person who is going to cut a fat
hog out of this deal are those goodhearted, flinty-hearted, cold-
hearted folk in the insurance business who are going to all of a sudden
get a key to the United States Treasury, the right to collect any
amount of money they want and to sucker the Secretary of HHS any old
way they are minded and to walk home and to pay the money perhaps to
the senior citizens but possibly to their shareholders or in dividends
or perhaps to pay it in salaries or in bonuses to their corporate
officers. That is what you get under the Republican plan. And
privatization of Social Security as you know it today.
The Republicans have said that they intend to do away with Social
Security. Well, this is what is happening here. The Democratic plan
compels the drug houses to negotiate with the Federal Government and
the Secretary. The Republicans preclude him by absolutely prohibiting
him from negotiating. We do not tolerate under the Democratic plan the
Republican opportunity to privatize Medicare. And just wait till your
senior citizens find out what you are doing to them with privatization
and doing away with fee-for-service and substituting in lieu of this
the kind of plan that you talk about where there is no assurance of
protection for the senior citizens.
The Republicans say the bill costs too much. Well, it pays some $800
billion to 40 million senior citizens. Just last week, without a gasp
of shame, my Republican friends set it up so that 200,000 families got
the same amount of money. I think it is time we looked after the senior
citizens and not the fat cats that my Republican colleagues and friends
look after.
Vote for the Democratic plan. Vote down the Republican plan. Let us
take care of the senior citizens. It is the right thing to do.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield myself such time as
I may consume.
Mr. Speaker, let us look at the facts behind the rhetoric here. What
is going to be the impact of this Democratic substitute on seniors? My
colleague from Louisiana just reminded us that 100 percent of employers
are going to drop their plans. If there is one thing my senior citizens
say to me when I go into senior centers it is, look, help those who
need it, but do not destroy my employer-provided retiree plan. Do not
touch it. This amendment destroys it, wipes it out. That is not in the
interest of your seniors.
But let us look at what it will do to premiums. You were concerned
that we did not sock a premium into law. Look what you do in your bill.
You sock the premium into law and then you have it rise according to
drug inflation. Drug inflation is double-digit. Do you not get it?
Those premiums are going to rise steeply. Why would you do that to our
seniors?
And let us look at the effect on prices. There is one thing seniors
say to you over and over again, the prices are too high. Yet according
to Dr. Holtz-Eakin's testimony of April 9, 2003, he says, ``If you
subsidize 90 percent of any insurance product versus 70 percent of the
product, the larger subsidy will lead to a lower incentive to control
costs and will lead to higher prices and higher spending.'' Yours is a
giveaway to the pharmaceutical industry. It will drive prices up
because there is no incentive for the PBM or the plan to negotiate
prices down and they can just pass it on to the government, because we
are going to pay it all. Yours is going to drive prices up, premiums up
and employer plans out of the market. I do not know why you think you
are doing the seniors a good service.
And look at the impact on their kids, because they care about their
kids and their grandkids. We have heard testimony over and over again
that if you have a 10-year-old child, in 20 years when that kid is 30
and trying to pay back college loans, trying to buy a house, trying to
get established, having to buy a car, that child will live in a Nation
in which three-quarters of all the Federal revenues will go to Social
Security, Medicare and Medicaid.
What is that child to do about education for their children? What is
that young person to do to make a living? You shoulder so much debt on
the next generation that they will not have public education the way we
know it today. They will not have the roads and bridges that a strong
economy depends on. They will not be able to defend this Nation in a
world that is going to be far more dangerous than the one we have
known. This is utterly irresponsible. It is so irresponsible that when
the other body proposed this plan in the Senate the last session of
Congress, they could not write a budget resolution because they did not
know how to handle the extraordinary debt that this creates in the
decades ahead.
I urge my colleagues to think that something that looks pretty for
your seniors, in fact, will be terrible for their health.
Mr. Speaker, I reserve the balance of my time.
Mr. STARK. Mr. Speaker, I yield myself such time as I may consume. I
know earlier I moved the distinguished gentleman from Louisiana, the
chairman of the Committee on Energy and Commerce, to talk about his
poverty and I wanted to join him in that. I too was raised poor. I was
raised so poor that I never slept alone until I was married. I want to
go on and suggest that I am not going to let you have that field all to
yourself.
We have introduced a substitute. Unlike your bill, ours has specific
benefits. Your bill, I would remind the gentlewoman from Connecticut,
has no benefit in it. It is all estimates. It is all examples. There is
no benefit in your bill, and indeed in our substitute there is. You
have heard it. It is simple. It is $25 a month, 20 percent coinsurance,
no gaps; and we pay out of pocket after $2,000.
Yes, you will say it costs a lot of money. The gentlewoman from
Connecticut forgets about the $5.6 trillion surplus that Bush had when
he came into office and which he squandered on tax cuts in the
meantime. But we do have an income transfer as we have been accused of.
It is very simple. You can look at it this way. You have given $800
billion to 10,000 of the richest families each year when you did away
with the inheritance tax. No question about it. That is what it costs.
Those are the beneficiaries. We would take that money as an alternative
and give it to what will be in a short 10 years 100 million seniors.
What you have given away to the richest seniors in this country would
more than pay for a drug benefit of the magnitude that we offer, a
standard Medicare drug benefit, and I suggest that that is a transfer
worth making and that that defines the difference between us.
{time} 2315
You give $800 billion to 10,000 families a year, the richest in
America. We would give that $800 billion to 100 million seniors who
needed a drug benefit that they can define, depend on and understand,
and that is why the Members should support the Democratic substitute.
It is defined. It is real. It solves the problem for seniors, and it
is, I think, one of the highest priorities that this House has.
Mr. Speaker, I reserve the balance of my time.
Mr. TAUZIN. Mr. Speaker, I yield 3 minutes to the gentleman from
Pennsylvania (Mr. Greenwood), the chairman of the Oversight and
Investigations Subcommittee of the Committee on Energy and Commerce.
Mr. GREENWOOD. Mr. Speaker, I thank the chairman of the committee for
yielding me this time.
The gentleman from Michigan (Mr. Dingell) and others have presented a
chart earlier that purported to show that somehow our plan was too
complicated. It is a complicated issue to provide prescription drug
benefits to millions of Americans who have never had them.
Let me show another chart that describes our plan and it is not
complicated at all. Today a senior citizen walks into a drugstore and
wants to buy Lopressor, 100 milligrams. She has to pay, for 30 tabs,
$45.99 right out of her pocket. Under our bill the price first comes
down because of the group purchasing power to $36.79 and then what does
she pay? She pays $7.36 and if she is low income she pays $5. That is a
big difference from $46.
[[Page H6173]]
Let us look at Lipitor. An awful lot of Americans take Lipitor every
day to keep their cholesterol down. I do. It costs $108.65 today
because for 40 years the Democrats did not do anything about
prescription drugs and for 8 years President Clinton did not do
anything about prescription drugs, but under our plan Lipitor goes down
to $86.92 because of our purchasing power, but the beneficiary pays,
his/her share, $17.38. Pretty straightforward. Pretty simple. Nothing
complicated about that.
Celebrex, an important anti-
inflammatory drug for arthritis that so many seniors suffer from, a
very popular drug, $86.28 today to get 30 tablets of that for 1 month.
We bring it down to $69.02 because of our power of purchasing, but the
beneficiary pays $13.80 for a month's supply and if they are a poor
senior citizen, $5. $5, down from $86.28.
Zoloft, 100 milligrams, 30 tabs for a month, it is an antidepressant.
A lot of elderly suffer from depression, unfortunately, at their age in
part because they do not have good health care. We bring the price down
to $63.17. The beneficiary pays $12.63 a month and, if she is poor, $5
a month.
This chart is pretty straightforward and pretty simple. This
demonstrates what happens when good-minded people do very hard work
with very smart staff, employing very good ideas. We get the job done
for the elderly, a job that I am sorry to the gentleman from California
(Mr. Stark), I am sorry to the gentleman from Michigan (Mr. Dingell).
They have been here for a long time and they have done nothing. A lot
of talk tonight. A lot of good talk, a lot of bogeyman talk, a lot of
scare-the-seniors talk tonight, but we will get this done. It will be
very simple. It will be very straightforward. The senior citizens will
love it, and as a measure of that you are all going to be voting for it
next month.
Mr. DINGELL. Mr. Speaker, I yield myself 15 seconds.
I hope my colleagues look at that chart because it has the same
factual value as Alice in Wonderland. There is no requirement that any
of those drugs be made available. There is no requirement that they be
made available at any particular price or that they have to be made
available under the plan at any particular cost because of cost sharing
with the insurance.
Mr. Speaker, I yield 2\1/2\ minutes to the distinguished gentleman
from California (Mr. Waxman).
Mr. WAXMAN. Mr. Speaker, today the House should be considering a
Medicare prescription drug benefit for all America's seniors and
disabled citizens that would be a benefit that is certain, a benefit
that is affordable, and a benefit that helps Medicare beneficiaries
with all of their drugs. It should not have large gaps in coverage as
the Republican bill does. It should not let private insurance companies
charge whatever premium they want and cover whatever drugs they want as
the Republican bill does. It should be available in every part of the
country, not only in areas where private insurers decide they can make
a profit, and it should not cost seniors more if they live in Iowa
instead of Virginia or California instead of Rhode Island. Most
importantly, it should be a part of the Medicare program, just as
dependable as the rest of the Medicare is for seniors and disabled
people today.
The Republican bill fails all of these tests. It makes promises on
the one hand and then takes them away when we read the fine print. It
claims to give special help to America's low-income seniors so that
they can afford to pay for the prescription drug program, but then it
makes seniors subject to a detailed and invasive assets test before
they can get help.
If they have over $6,000 in the bank, they do not get any help. When
we figure out what they have got if they count the value of their car
and it is worth more than $4,500, and what car is not? They do not get
any help. They count the value of the clothes and furniture and
appliances if they are worth more than $2,000. They can even count the
value of their burial plot if it exceeds $1,500. So instead of making
sure people of very modest income who need help to get in, they get the
fine print eliminating a lot of these people who should be helped, and
it makes all of them go through a demeaning and complex process to
prove they have few assets.
All this to get help with their drug expenses. This is just wrong.
Instead of spending the public's money to get the best possible drug
benefit, this Republican bill spends our dollars to bribe insurance
companies to sell a drug plan. It pays for profits for the insurance
companies instead of the bills for our seniors.
What we should be doing is using the purchasing power of America's
seniors, 40 million of them, to get good prices on their drugs as they
do in Canada and get good coverage. That is what the Democratic
substitute does. I urge my colleagues to vote for the Democratic
substitute and against the Republican bill.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 2 minutes to the
gentleman from Iowa (Mr. Nussle), a member of the Committee on Ways and
Means and esteemed chairman of the Committee on the Budget.
Mr. NUSSLE. Mr. Speaker, I thank the gentlewoman for yielding me this
time.
I would like to know where the new Democrat budget hawks are tonight,
those new birds who seem to have flown the coop, who have spent the
last many months here on the floor talking about the debt tax,
something that does not exist but they have sure gotten a lot of ink
about it. All sorts of national debt charts have been coming across the
floor. In fact, they even one day used the pages, these young high
school students, to demonstrate the national debt. But where are they
tonight? Where are they when we read the letter from the Congressional
Budget Office that says that their so-called substitute would add $1
trillion to the deficit? Where are they? They have flown the coop. We
are not hearing about the deficit all of a sudden. In fact, what we
heard about is that tax cuts have caused all of the problems.
In fact, one gentleman even had the audacity to stand up and act as
though Washington hands money out to people. Tax relief, my friends, is
money left in the pockets of people that they earned. We do not hand
money out. Money comes from them. And if you are going to waste it on a
$1 trillion program, that not only does not fit within the budget that
controls tonight but did not even fit within your substitute budget of
just 4 months ago.
In fact, if we add the Democrat budget together with the budget that
controls today, you bust not only the Republican budget, you bust the
Democrat budget, but you bust both budgets combined. That takes a lot
of work, to be able to bust both budgets and add $1 trillion to the
deficit and have all of these new deficit Democrat hawks whom we cannot
find tonight.
It is interesting. Boy, we heard a lot from them all year long,
nickeling and diming and worrying about all of that. But when you come
to the floor with $1 trillion that says in the same letter that all the
employers are going to drop their coverage for retirees, 100 percent
are going to drop their coverage, and you have the audacity to present
that kind of substitute that busts both budgets, do not come here any
more this year and talk about the deficit.
Mr. STARK. Mr. Speaker, I yield myself 30 seconds.
I have the same letter, and it says nothing about employers dropping
coverage.
Mr. Speaker, I yield 2 minutes to the gentleman from Washington (Mr.
McDermott), a member of the Committee on Ways and Means, who
understands that spending money to provide a decent drug benefit for
seniors is not wasting money.
Mr. McDERMOTT. Mr. Speaker, Members of the House and those listening
to this, I think you ought to take a piece of paper right now and write
this down. The premium is $25. The deductible is $100 a year. The
coinsurance means you pay 20 percent, the government pays 80 percent
for your drugs, and there is a cap on how much you can spend out of
pocket, $2,000. That is written into our bill.
In contrast, we have this magic pill that has been given to us where
the other side says trust us. Remember, these are the people who told
us that there were weapons of mass destruction in Iraq. They were right
there. They were going to be delivered in 45 minutes. And, in fact, the
President of the United States stood right here and
[[Page H6174]]
said, Mr. Speaker, that he believed that they had tried to buy uranium
from Niger. It was known that that was a lie. It was known. So now they
come out here with this drug bill and they say listen, we think it will
be about $35 and maybe you will get this and maybe you will get that,
but nothing is written down. I want the people to remember those four
things.
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (Mr. Hastings of Washington). The Chair
reminds the Member not to make personal remarks regarding the President
of the United States.
Mr. TAUZIN. Mr. Speaker, it is almost like Minister of Information
Baghdad Bob just arrived here.
Mr. Speaker, I yield myself 2 minutes.
Parliamentary Inquiry
Mr. McDERMOTT. Mr. Speaker, Parliamentary inquiry.
The SPEAKER pro tempore. The gentleman from Louisiana has the floor.
Does the gentleman yield?
Mr. TAUZIN. Mr. Speaker, I do not yield.
Mr. McDERMOTT. Point of personal privilege, Mr. Speaker. Were you
making some reference about Baghdad whom? Is that appropriate for the
Speaker of the House?
The SPEAKER pro tempore. The gentleman from Washington (Mr.
McDermott) is not in order since the gentleman from Louisiana (Mr.
Tauzin) has the time and such a point may not challenge debate.
Mr. TAUZIN. Mr. Speaker, I want to illustrate one of the real
inadequacies of the Democratic substitute. In the main bill we reformed
something called average wholesale price. I hope everyone knows what
that is. I am going to illustrate it for you tonight. Under average
wholesale price systems built into Medicare by the Democratic Party all
these years, this is what happens. A person goes in for cancer therapy,
a senior citizen, and the doctor needs a drug that costs $10; so the
doctor buys a chemotherapy drug for $10. The patient ought to have to
pay $2 under that, 20 percent co-pay under law. But that is not what
happens. Under the average wholesale price system devised by Democratic
administrations in the past under Medicare, this is what happens. The
government has a phony average wholesale price posted. It might be $200
for that drug that only costs the doctor $10, and the poor patient has
to put up 20 percent, not of the $10 but 20 percent of the $200. The
patient puts up $40 for a drug that only costs the doctor $10 when the
patient should have put up $2. That is called the average wholesale
price system. It is rotten. It stinks. Our bill gets rid of it. And we
replace it by reimbursing oncologists in America for not one time what
their practice expense really ought to be reimbursed under the law, but
we double it.
{time} 2330
We give them $430 million, twice what CMS estimates they ought to
get.
So we get rid of this stinky system that is charging American seniors
20 percent of phoney prices and costing the government Medicare system
tens of times what the drugs are really costing the doctors, and we
replace it with a rational, a rational reimbursement system.
Now, the Democrats try to settle that system too. Let me tell my
colleagues what they do in their substitute. They substitute this
average wholesale price system with a system of reimbursement that,
according to CBO estimates, is going to cost $14 billion over 10 years;
and it is going to cost seniors another $3 billion of copays. We ought
to reject that solution.
Mr. DINGELL. Mr. Speaker, I yield 2\1/2\ minutes to the distinguished
gentleman from New Jersey (Mr. Pallone).
Mr. PALLONE. Mr. Speaker, the only thing that stinks here is the
Republican bill, and it stinks for a lot of reasons.
First of all, because it is not going to give the seniors any
benefit. They are not going to have really any drug benefit whatsoever.
It is going to force them into an HMO. They will not have any choice of
doctors. And fundamentally, in the end what the Republican bill does is
kill Medicare by setting up a voucher system so we do not even have
traditional Medicare.
I am sick and tired of hearing my Republican colleagues on the other
side criticize traditional Medicare. Medicare is not insolvent.
Medicare is a good program. Do not tell me that Medicare is broke or
Medicare needs to be fixed. And I say to the gentlewoman from
Connecticut, do not insult me and say the Democrats are irresponsible,
the Democrats are putting us in debt. The Republicans are the ones that
are putting us in debt, because you are borrowing from the trust fund
so there is no money left in it because you want to kill Medicare. That
is what you are all about.
These gentlemen over here, these Democrats who have been here for a
long time, they are here tonight because they want to save Medicare.
They understand that Medicare can be helped by putting on a
prescription drug benefit, so they look at the tried and true system,
they look at what we do in part B for our doctor bills, and they say,
yes, let us just add a benefit like part B. We will have a low premium.
We will have a low deductible. We will pay 80 percent of the cost on
the Federal Government. We will have a catastrophic at 2,000. Just add
the tried and true program, like we have in part B, and add a drug
benefit. We do not need HMOs. We do not need all of these other
gimmicks that the Republicans come up with.
And then these gentlemen, my colleagues, the gentleman from Michigan
(Mr. Dingell) and the gentleman from New York (Mr. Rangel), they say,
well, we can pay for this very easily by negotiating the price and
giving the Secretary the power to lower the prices. That would cut the
program in half. That is what our Democratic leader said. That would
cut the cost of the program in half so we would not have to go into
debt. We would not have to borrow from the trust fund and make it
insolvent, which is what my Republican colleagues have been doing here
and what they are proposing.
Mr. Speaker, do not sell out to the HMOs and the insurance companies.
That is what you are doing. You are selling out by saying everybody has
got to go into an HMO because you are in bed with the insurance
companies. You are selling out to the pharmaceutical industry because
you want no price reductions, because you are going to get some benefit
from the pharmaceutical industry.
And then you come up with: this is complicated. The gentleman from
Pennsylvania (Mr. Greenwood) said, oh this is complicated. There is
nothing complicated here. It is simple. We have had the program for
years. We just add the prescription drug benefit, and we have a
negotiated price. It is very simple.
Do not give me this chart. I mean, look at this garbage. How could
anyone possibly understand it? I cannot even understand it myself, and
you expect my mother or somebody's grandmother to understand this
thing? You are making it complicated. You are destroying Medicare. Do
not insult us as Democrats. We have been out there protecting it for
years.
Mrs. JOHNSON of Connecticut. Mr. Speaker, it is my pleasure to yield
2 minutes to the gentleman from Wisconsin (Mr. Ryan), a member of the
Committee on Ways and Means.
Mr. RYAN of Wisconsin. Mr. Speaker, I thank the gentlewoman for
yielding me this time.
I want to calm down a little bit. There has been a lot of shouting
around here, a lot of heated rhetoric, a lot of hyperbole. Let us just
look at a couple of facts.
It is a fact that the Medicare actuaries are telling us that Medicare
is going insolvent in 13 years. The entire trust fund goes bankrupt in
2036. It is a fact that if we add more money on top of Medicare without
doing any reforms, you are going to accelerate the insolvency of
Medicare. We can try and speak those facts away, but the fact remains
that those are facts.
Now, what this Democrat substitute does is it costs over $1 trillion.
It accelerates the bankruptcy of Medicare. The basic assumption in this
CBO estimate is that every employer providing private drug coverage for
the retirees is going to drop it. And why would they not? Why would
they not drop it if the Federal Government is going to pay for it all?
[[Page H6175]]
What the facts are is that this plan is going to accelerate the
bankruptcy of Medicare.
Now, what are we trying to achieve with the Republican bill? Mr.
Speaker, there are parts of this bill that none of us all like. I have
my own criticisms. But what we are trying to achieve is not only
modernizing this program so it works for today's seniors by giving them
cheaper drugs and coverage of drugs, but we are also trying to
modernize this program and save it for the baby boom generation.
We have 77 million retirees coming in this country starting in 15
years; and if we accelerate the bankruptcy of this program as the
Democrats are proposing to do, it is not going to be there for them.
So what we are doing with these market-based reforms and giving
seniors more choices? We are giving them the chance that this program
will be solvent for the boomers when they retire. That is the
responsible thing to do here. The responsible thing is to make it work
for today's seniors, make it modern, make it comprehensive, work on
prescription drug prices, work on prescription drug coverage, but give
seniors more choices, use competition, use the things that have worked
in the past so we can save this program for the baby boomers. That is
what the Republican bill does.
Mr. STARK. Mr. Speaker, I yield myself 30 seconds for a couple of
housekeeping things.
In 13 years, the revenues start to decline, but it does not go
insolvent for 24 years. And I say to the gentleman from Ohio (Mr.
Nussle), if he has indeed the same letter that we are informed we have
from CBO dated June 26, it says nothing in there about employers
turning back Medicare, so he either misspoke or made it up, which, in
my State, we call telling a lie. Unless he has a different letter,
which I am assured by CBO he does not, then he made that up.
Mr. Speaker, I yield 1 minute to the gentleman from New Jersey (Mr.
Menendez).
Mr. MENENDEZ. Mr. Speaker, I rise on behalf of my 84-year-old mother
and millions like her across this country. She worked her entire life
in the factories of New Jersey. Today she has Alzheimer's and spends
over half of her social security check on prescription drugs. If it was
not for my sister and me, she would not be able to live with the
dignity she deserves.
Now, this Republican package is wrapped in a label that says, ``I
care,'' but when you open it up, it contains nothing more than an empty
promise.
Under this Republican plan, which lacks the compassion promised by
the President and expected from our doctors, millions of seniors who
want to stay in traditional Medicare with their own doctor would
essentially be forced into HMOs and left without the choices they
deserve. This bill is the road towards privatizing Medicare.
Republicans just cannot help themselves. Once again, they have chosen
corporate interests over human interests. America's seniors deserve our
respect. They have worked too hard, sacrificed too much to be forced to
choose between paying their rent, putting food on the table, and having
access to life-enhancing drugs.
Support the Democratic substitute that has a real prescription drug
provision under Medicare.
Mr. TAUZIN. Mr. Speaker, I am pleased to yield 2 minutes to the
gentleman from California (Mr. Cunningham), our fighter pilot commander
extraordinaire.
Mr. CUNNINGHAM. Mr. Speaker, I had pneumonia about 5 years ago, and I
went to pick up the prescription drug and I looked at it. It was 120
bucks. As I picked it up, I sat there and I thought, how does a family
with three or four children afford 120 bucks per bottle of Augmentin to
help them with the flu or with other antibiotics? It is a real fact. It
is hard.
But Mr. Speaker, I say to the gentleman from Michigan (Mr. Dingell),
does he know the cost of my prescription drug? It cost me $17. Because
my wife worked with the Encinitas school district and she had
insurance. That is what we want, is a private-public partnership for
those people that cannot afford prescription drugs to help them. Over
1.4 million people in California will have no copay, no cost
whatsoever. But it will help them in our bill.
I think that your bill, with its costs, is devastating in the long
run. It will not help.
If Democrats can demonize pharmaceutical companies, then what is
left? The government. If you can demonize insurance companies, what is
left for health care? Government-controlled health care. We rejected
that in 1993 when the then First Lady offered it. I oppose government-
controlled health care, and maybe that is the difference in us, because
it will drive this country in debt.
I talked to some people from Canada. Do my colleagues know where they
go to get their health care? They come clear down to Buffalo, New York
to get it, because it is so bad with their government-controlled health
care.
Let us defeat the Democratic substitute and support the primary bill.
Mr. DINGELL. Mr. Speaker, I yield 2\1/2\ minutes to the distinguished
gentleman from Michigan (Mr. Stupak).
Mr. STUPAK. Mr. Speaker, the Republican prescription drug plan is bad
for America and even worse for rural America.
Today I sent around a letter to Members explaining exactly why this
GOP bill shortchanges rural areas like Northern Michigan, which I
represent.
The Rangel-Dingell substitute ensures that rural areas are treated
fairly. The Republican plan continues to put citizens in these areas at
a huge disadvantage. The Rangel-Dingell bill goes far beyond the meager
provisions for rural health care providers included in the GOP bill.
Our bill, the Democratic bill, provides over $10 billion in additional
relief for rural areas and removing the harmful Medicare privatization
provisions that just have not worked in rural America.
Instead of helping seniors with their prescription drug plan, the
Republican plan subsidizes private insurance companies. This plan tends
to bribe private insurance companies to provide service in rural
districts like mine. These insurance companies have come before our
Committee on Energy and Commerce and have testified that they will not
be providing the service, and the Republican plan just will not work.
If insurance companies do change their minds, there is nothing in
this bill that will prevent them from shifting the added costs to our
seniors. I had an amendment in the Committee on Energy and Commerce
that would have prevented increases in the monthly premiums for
seniors, no matter where they live. But unfortunately, it was voted
down on a party line vote.
The GOP plan has a huge gap in coverage and does nothing to reduce
the inflated prices big drug companies are charging for prescription
drugs. In fact, the Republican plan has a noninterference clause that
says the Health and Human Services Secretary will not, will not be
allowed to negotiate lower prices for Americans.
The Rangel-Dingell bill will ensure that every senior, regardless of
where they live, will be able to obtain the prescription drugs and the
quality of health care they require to live a healthy life. This
coverage will be provided through Medicare. Democrats are working to
strengthen this program, not to do away with it, as the gentleman from
California (Mr. Thomas) called for when he said, and I quote him, ``To
those who say the GOP bill will end Medicare as we know it, our answer
is: We certainly hope so.'' Thus, the real motive behind the GOP plan
is to do away with Medicare. Democrats proudly stand behind Medicare.
Support the Rangel-Dingell substitute.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 2 minutes to the
gentleman from Arizona (Mr. Hayworth), a member of the Committee on
Ways and Means.
Mr. HAYWORTH. Mr. Speaker, I thank my friend from Connecticut, and
she has visited Arizona, and I know that the hour grows late and the
debate grows heated and sometimes well-intentioned efforts from some
are thrown in the confusion.
Mr. Speaker, I rise to urge this House to reject the Democratic
substitute and to vote ``yes'' for H.R. 1, for reasonable, rational,
clear-cut reform of Medicare that will bring Medicare into the 21st
century with prescription drug coverage.
{time} 2345
Mr. Speaker, we have read even tonight in Europe the development of a
[[Page H6176]]
cardiac drug that is estimated to cut heart attacks by 80 percent. We
have made great gains in pharmacology; but we do not continue those
gains, Mr. Speaker, if we opt for a trillion dollar travesty. And make
no mistake, that is what the minority substitute is offering to us this
evening.
It was interesting, my friend from Iowa, who pointed out that the
deficit hawks on the other sides had flown the coop. It is interesting,
so many on the left who are so quick to indict folks higher on the
economic scale tonight are strangely silent when we offer a plan where
we give the priorities to those who need the help first.
The irony is, my friends on the left in the trillion dollars travesty
section say, do not worry. Let us break the bank. Let the good times
roll. Take command and control, put it together with a trillion bucks.
No worries. But we know what would happen under that plan. It is a
prescription for bankruptcy. And it is a prescription to mortgage the
future of the working families that my friends purport to support.
People of good will can have different opinions, and we certainly
have them here in the House tonight. The question often comes down to
this, when is enough enough? With the left it is never enough.
Reject insanity. Vote for rationality, ``yes'' to H.R. 1; ``no'' to
the Democratic substitute.
The SPEAKER pro tempore (Mr. Hastings of Washington). The Chair would
remind Members of the time remaining. The gentleman from Louisiana (Mr.
Tauzin) has 4\1/2\ minutes remaining and the right to close. The
gentleman from California (Mr. Stark) has 3\1/2\ minutes remaining and
would be next in line to close. The gentlewoman from Connecticut (Mrs.
Johnson) has 5\1/2\ minutes remaining and would be the second to close.
The gentleman from Michigan (Mr. Dingell) has 4\1/4\ minutes remaining
and would be the first to close.
The Chair recognizes the gentleman from California.
Mr. STARK. Mr. Speaker, I yield 1 minute to the gentleman from Ohio
(Mr. Kucinich).
Mr. KUCINICH. Mr. Speaker, everyone in America knows the price of
drugs is too high. Seniors know it best. Proponents of H.R. 1 are not
representing the seniors of America. They represent the biggest
campaign contributors in America, the private health insurance industry
led by drug makers.
The Rangel-Dingell substitute will bring down the cost of the drugs.
It allows Medicare to buy drugs in bulk and negotiate for lower prices,
which the VA already does. Skyrocketing drug costs are not only driving
up health care expenses but are causing seniors to make cruel choices
between prescriptions and food, prescriptions and clothing. Some
seniors are even splitting pills to make prescriptions last.
Seniors are crying out for help, but their pleas are drowned out by
the cash registers humming away at the majority party headquarters,
while insurance and pharmaceutical company lobbyists rush to the great
Medicare sell-out event.
Yes, some of our friends are indeed trying to take care of people in
their old age. Themselves.
Mr. TAUZIN. Mr. Speaker, I yield myself 30 seconds.
Mr. Speaker, I want to point out that despite what you may have heard
on the floor tonight, our basic package contains $27.2 billion of
assistance to rural health care. That is the largest package of rural
health care we have ever voted on all the times we have voted on
Medicare prescription drugs.
Mr. Speaker, I yield 2 minutes to the gentleman from Michigan (Mr.
Upton), the chairman of the Subcommittee on Telecommunications and the
Internet of the Committee on Energy and Commerce.
(Mr. UPTON asked and was given permission to revise and extend his
remarks.)
Mr. UPTON. Mr. Speaker, I have heard a lot of criticism tonight about
this drug bill; and I want to remind all of us as we go back to our
districts, as we have heard for so many years at our town meetings and
so many events, America wants and needs a prescription drug program for
our seniors. I remind all of our colleagues here tonight that this
program is voluntary. You do not have to participate if you do not want
to, but for many Americans they will want to participate. They are
going to participate.
Mr. Speaker, I want to relate a little story that happened to me in
my district last summer. I was at my son's little league game. A woman
ran up to me as I was getting in my car and packing up the gear. She
said, My mom just had a stroke. It will cost her $600 a month to
survive. We never had that in our budget. We cannot afford it. Is the
plan that you passed last week, this was last year, is that going to
help my mom? I put my hands on her shoulders and I said, Yes, I believe
that it will. She will be able to benefit from this plan. You will be
able to use the assets that you have and to have her survive in a
meaningful way.
Yet, the other body never came back. The other body never came back
with a plan and, in fact, that woman and her family were very
distraught.
This is a plan tonight that can pass with bipartisan support, not
only in this Chamber but the other Chamber on the other side of the
Capitol. The President will sign this bill. It is within the budget.
No, it is not perfect. But we can take a step to help the woman that I
had talked to last year as well as the thousands of people that have
come to our town meetings over the course of the last number of years.
Mr. Speaker, I urge my colleagues to defeat the Democratic substitute
and, yes, support this plan that we take up a little bit later this
morning.
Mr. DINGELL. Mr. Speaker, I yield 2\1/4\ minutes to the distinguished
gentlewoman from Illinois (Ms. Schakowsky).
Ms. SCHAKOWSKY. Mr. Speaker, once upon a time in 1989, a group of
very angry seniors chased their Congressman, the powerful chairman of
the House Committee on Ways and Means, into his car because they wanted
him to know that they did not like the catastrophic health care bill.
This happens to be the picture that appeared on the front page of the
Chicago Tribune in August of 1989. This was a bill that passed this
body with overwhelming bipartisan support and all of the national
senior citizens organizations supported the bill. There was only one
problem. No one had checked in with rank-and-file seniors around the
country who sat down with their calculators and they figured out what
the benefit would be that they would get and how much it would cost
them, and they did not like the answer.
Now, I show you this photo not to revive the debate on catastrophic
because within a couple of months the bill was repealed, something very
unusual and usually very difficult. I show you this photo as a friendly
warning. If you pass H.R. 1 tonight, you better also go out and buy
some running shoes because senior citizens are too smart to be fooled
by Republican speeches or anybody else's speeches. They will figure out
on their own what this bill does, which is, as the current chairman of
the powerful House Committee on Ways and Means hopes, destroy Medicare
as we know it.
Seniors will get out their calculators and figure it out.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 1\1/2\ minutes to
the gentleman from Ohio (Mr. Portman).
Mr. PORTMAN. Mr. Speaker, it has been a very interesting debate, too,
as you listen to this debate tonight. We had 3 hours of good debate on
the Republican legislation, the underlying bill which provides historic
prescription drug coverage and does so within the budget. Now is the
opportunity for the Democrats to talk about their substitute. So what
is your idea? And you know what we are having? More discussion of the
underlying legislation. Again, historic legislation to add prescription
drug coverage that is within the budget.
The Democrats are not talking about their bill. It adds $1 trillion
to the deficit. That busts our budget. It busts their budget. In fact,
it busts both budgets combined.
The Democrat legislation does so by loading up the bill, not by
helping those seniors who need it the most. The underlying legislation
provides for about 30 percent of the seniors that need it most, those
under 150 percent of poverty, no deduction, no deductible, no cost
sharing, a simple copay when you go to the pharmacy, total subsidy for
the prescription drug coverage. Instead, the Democrat plan by going to
a
[[Page H6177]]
trillion dollars would provide coverage for those who do not even need
it. It sounds like what they accuse Republicans of.
I was really interested to see, when you look at page 12 of the
Democrat bill, there is also something else interesting. They say we do
not provide guaranteed access. We do provide guaranteed access. The
government actually steps in when there are not plans available,
negotiates down the risk which assures coverage.
If you look at page 12, what does the Democrat plan do? It says,
``The Secretary shall develop procedures to ensure coverage.''
That will give you some comfort. I can see why they are not talking
about their legislation. I would not either. Vote for the underlying
bill. Vote down this substitute that they will not talk about.
Mr. STARK. Mr. Speaker, I yield myself 1\1/2\ minutes.
Mr. Speaker, just to straighten out some of the figures, the
Republicans do indeed add $26.7 billion for rural providers. We add
$39.1 billion for rural providers. That is $2.5 billion more, and I
would hope that the Republicans are not lying to the seniors.
You can lie to us because we are used to it. The White House has set
the tone for that. But do not lie to the seniors. There is nothing in
your bill. I say to the gentleman from Ohio (Mr. Portman), there is
nothing in your bill that guarantees anything, and to say that to the
seniors is lying to them.
There is nothing in your bill that guarantees a thing to the seniors
and you know it. And if you do not know it, read it again. Otherwise,
you are lying to the seniors.
Our bill provides a Medicare benefit which is definable. Yours does
not. You do not require any benefits if no insurance company steps up
to the plate and there is nothing that requires it. There is not one
line in your bill that requires an insurance company to provide
anything. So it is all a fantasy. At least we are requiring the
government to provide a benefit to the seniors in the same manner they
are now familiar, under Medicare with a determined premium, a
determined deductible, determined benefits, the same across the
country. None of that is available through the Republican bill. To tell
the seniors otherwise is lying. You have lied to us tonight and stop
lying to the seniors. So support our substitute and vote down the great
Republican lie.
Mr. DINGELL. Mr. Speaker, I have an inquiry as to time first before I
yield the balance of my time. I believe the gentlewoman from Illinois
(Ms. Schakowsky) did not get the full 2\1/4\ minutes that I yielded to
her. I would like to know how much time I have left and how much I can
properly yield the gentlewoman from Illinois.
The SPEAKER pro tempore. The gentleman from Michigan has 3 minutes
remaining.
Mr. DINGELL. Mr. Speaker, I yield 1 minute to the distinguished
gentlewoman from Illinois (Ms. Schakowsky).
Ms. SCHAKOWSKY. Mr. Speaker, I thank the gentleman from Michigan (Mr.
Dingell) for yielding me time.
Again, this is just a warning, a friendly warning to you that if you
pass H.R. 1 tonight, you better also go out and get your running shoes
because the seniors are too smart to be fooled by your proposal. And
you can trash Medicare all you want. You can call it an outdated
program, antiquated; but I do not know who you are talking to.
I do believe that you love your mothers, but it is obvious to me that
you do not call them enough. You do not go to senior centers enough.
Not the ones I have gone to in my 5 years as director of the State
Council of Senior Citizens. Seniors love their Medicare. The only thing
they do not like is that it does not cover prescription drugs. And that
is why if you are smart or out of shape and not able to be chased by
seniors, you will vote for the Rangel-Dingell substitute.
The Democratic substitute is what seniors have been asking for and
what every politician has been promising them, an understandable,
defined, dependable Medicare prescription drug benefit. It has all the
features of Medicare that our seniors know and love, a set premium, no
copayments.
Vote for the substitute or start running.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 1\1/2\ minutes to
the gentleman from Virginia (Mr. Tom Davis).
Mr. TOM DAVIS of Virginia. Mr. Speaker, I would like to engage in a
colloquy with my colleague.
Can she confirm that the language in H.R. 1 includes plans under the
Federal Employee Retirement Plan as an employment base plan?
{time} 0000
Mrs. JOHNSON of Connecticut. Mr. Speaker, will the gentleman yield?
Mr. TOM DAVIS of Virginia. I yield to the gentlewoman from
Connecticut.
Mrs. JOHNSON of Connecticut. Mr. Speaker, yes, that is correct.
Mr. TOM DAVIS of Virginia. This will allow OPM to take advantage of
the subsidies in the bill just as other employees and unions will?
Mrs. JOHNSON of Connecticut. That is correct.
Mr. TOM DAVIS of Virginia. Mr. Speaker, I appreciate the
gentlewoman's and the chairman's willingness to work with us on this
issue. I think that allowing the subsidies H.R. 1 provides for will
result in lower premiums and improved benefits for all FEHBP enrollees.
Mrs. JOHNSON of Connecticut. I thank the gentleman, and I look
forward to working with the gentleman on this issue as the bill moves
to conference.
Mr. TOM DAVIS of Virginia. Mr. Speaker, as I said, I appreciate the
willingness of the gentlewoman to clarify that.
I have another concern, that Federal employees are often treated
differently from current Federal employees in ways that are not always
equitable. Retirees are different from current Federal employees. For
example, current employees are allowed to pay their health insurance
premiums from pre-tax dollars. Federal retirees are not.
FEHBP currently does not provide different benefits for retirees and
current employees. One is simply a member of FEHBP. I think it is
important that this dynamic remain once a Medicare prescription drug
benefit is put into place, whichever plan passes.
As chairman of the Committee on Government Reform, I look at this
from an employer's perspective. We do not want private employers to
drop the prescription drug coverage they provide for their retirees.
H.R. 1 provides incentives so that they will not do so, but we as the
Federal Government have to lead by example.
I have introduced legislation that simply states that Federal
retirees will continue to be treated on par with current Federal
employees when it comes to prescription benefits. I regret we were
unable to include this language in H.R. 1, but I am grateful to have
the commitment of the Speaker and the majority leader to bring this
bill to the floor as soon as we return from recess.
Mr. TAUZIN. Mr. Speaker, may I inquire how many minutes are left for
each one of the four who have allocated time.
The SPEAKER pro tempore (Mr. Hastings of Washington). The gentleman
from Louisiana (Mr. Tauzin) has 2 minutes remaining and the right to
close. The gentleman from California (Mr. Stark) has 1 minute remaining
and would be next to close. The gentlewoman from Connecticut (Mrs.
Johnson) has 2\1/2\ minutes remaining, and the gentleman from Michigan
(Mr. Dingell) has 2 minutes remaining.
Mr. TAUZIN. Mr. Speaker, we reserve the balance of our time. If
anyone wants to use some more time at this time would be a good time to
do it.
Mr. DINGELL. Mr. Speaker, I reserve the balance of my time, and I
want to yield it to our leader.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield myself 30 seconds.
This is a historic evening. It is our opportunity tonight to provide
prescription drugs to all seniors under Medicare as an entitlement and
to do it in a way that is fair, simple and generous and sustainable. It
is our opportunity tonight to modernize the benefit program under
Medicare to deal with chronic care for our seniors, a big concern for
them, and to structure Medicare in such a way that it will be
sustainable, the dollars will be there and Medicare will be able to
provide the health retirement security in the future that it has in the
past.
I urge support of H.R. 1 and defeat of the substitute.
[[Page H6178]]
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