[Congressional Record (Bound Edition), Volume 146 (2000), Part 12]
[Senate]
[Pages 17386-17404]
[From the U.S. Government Publishing Office, www.gpo.gov]



          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      Mr. INHOFE:
  S. 3013. To make technical amendments concerning contracts affecting 
certain Indian tribes in Oklahoma, and for other purposes; to the 
Committee on Indian Affairs.


  legislation concerning contracts affecting certain indian tribes in 
                                oklahoma

  Mr. INHOFE. Mr. President, today I am pleased to introduce 
legislation which will remedy a long outdated statute which impedes 
economic development for the Five Civilized Tribes of Oklahoma. For 
years tribes have been required to seek approval by the Secretary of 
the Interior before they may engage in contracts. Section 81, as it is 
known, provides that a contract `relating to Indian lands' is not valid 
unless it is approved by the Secretary. This statute was enacted with 
good intentions but unfortunately has outgrown its usefulness. Today 
this provision constitutes a confusing legal obstacle for tribal 
development.

[[Page 17387]]

  Early last year, Senator Ben Nighthorse Campbell introduced 
comprehensive legislation to address the current problems associated 
with this statute. That legislation has passed the Senate and now 
awaits action before the House. However, the Five Tribes have often 
been treated with separate statutes unique to eastern Oklahoma. The 
legislation I propose simply corrects a technical oversight which 
affects only the Five Civilized Tribes of Oklahoma which is commonly 
referred to as Section 82a. Without this correction, the Five Civilized 
Tribes of Oklahoma would be the only tribes in the nation which may 
still be required to seek Secretarial approval for these contracts. I 
urge my colleagues to join me in correcting this oversight.
                                 ______
                                 
      Mr. ASHCROFT:
  S. 3015. A bill to grant the consent of Congress to the Kansas and 
Missouri Metropolitan Culture District Compact; to the Committee on the 
Judiciary.


 The Kansas and Missouri Metropolitan Cultural District Compact Act of 
                                  2000

  Mr. ASHCROFT. Mr. President, today I rise to introduce a bill to 
grant the consent of Congress to the Kansas and Missouri Metropolitan 
Cultural District Compact.
  This bill would allow the people in 2002, or after, to consider 
additional projects which contribute or enhance the aesthetic, 
artistic, historical, intellectual of social development or 
appreciation of members of the general public. This definition has been 
expanded to include sports facilities. This compact has made the 
restoration of Kansas City's Union Station possible.
  The original enabling legislation, which passed in 1994 established a 
bi-state cultural district for the Kansas City metropolitan area of 
five counties in Western Missouri and Eastern Kansas. This provides a 
secure source of local funding for metropolitan cooperation across 
state lines to restore historic structures and cultural facilities. The 
Federal authority for this bi-state compact expires at the end of 2001. 
We must see to it that a new compact is approved to continue this 
successful venture.
  Mr. President, this legislation does not cost the Federal government 
any money. It is funded through a \1/8\ sales tax, passed by the voters 
of Jackson, Johnson, Clay and Platte counties, and merely needs Federal 
approval. This measure is a perfect example of the appropriate 
relationship between the Federal government and the states. This 
approval would allow these local communities to make decisions on how--
and whether--their tax dollars are to be spent on cultural activities.
  This bill has bipartisan support in the House of Representatives. The 
companion legislation, HR 4700, passed the House Judiciary Committee by 
voice vote and the full House also by voice vote. It is supported by 
the Greater Kansas City Chamber of Commerce, the Mid-American Regional 
Council, the Overland Park Chamber of Commerce, Kansas City Area 
Development Council, Johnson County President's Council, Labor-
Management Council of Greater Kansas City, Jackson County Executive, 
Kansas Governor Bill Graves, and Missouri Governor Mel Carnahan.
                                 ______
                                 
      Mr. ROTH (for himself, Mr. Jeffords, Mr. Gramm, Mr. Murkowski, 
        Mr. Campbell, Mr. Nickles, Mr. Lott, Mr. Stevens, Mr. Frist, 
        Mr. Domenici, Mr. Craig, and Mr. Grams):
  S. 3016. To amend the Social Security Act to establish an outpatient 
prescription drug assistance program for low-income medicare 
beneficiaries and medicare beneficiaries with high drug costs; to the 
Committee on Finance.


                 MEDICARE TEMPORARY DRUG ASSISTANCE ACT

  Mr. ROTH. Mr. President, for the past two years, the Finance 
Committee has been working on comprehensive Medicare reform--reform 
intended both to modernize the Medicare benefit package, which would 
include the creation of an outpatient prescription drug benefit, and to 
protect the long-term solvency of the program. The Committee has held 
15 hearings on many different aspects of Medicare reform. We have 
listened to testimony from scores of witnesses.
  And we appreciate how important, but also how complex an undertaking 
Medicare reform is, as what we do will affect 40 million Americans who 
rely on the program.
  Working closely with colleagues on both sides of the aisle, this July 
I introduced an ambitious Medicare plan that took the best ideas from 
Republicans and Democrats--a plan that would achieve the modern reforms 
we all seek. I am committed to adding a comprehensive prescription drug 
benefit to the Medicare program, coupled with other major reforms that 
are badly needed.
  The plan that I have been working on includes not only comprehensive 
drug coverage added to the basic Medicare benefit package, but 
improvements to hospital and other benefits, low-income beneficiary 
protections, access to medical technologies, private sector drug 
benefit management, improvements to Medicare's long-term solvency and a 
strengthened Medicare+Choice Program.
  I have been working for several months to refine my bill and to get 
the finalized estimates from the Congressional Budget Office that are 
necessary to advance any major piece of legislation in the Congress. 
These steps are also essential to make sure that the program is kept 
affordable for beneficiaries and taxpayers alike. I intend shortly to 
share the latest information with my colleagues on the Finance 
Committee.
  It is my intention to continue to work aggressively with my 
colleagues on the Finance Committee--as well as with all members of 
this body--to build on my initiative introduced in July and to move 
ahead with successful bipartisan reform. I appreciate the strong 
interest and support our agenda for reform is receiving from both sides 
of the aisle.
  However, there are real reasons why we don't yet have agreement on 
Medicare. Program reform efforts are enormously complex. In no small 
part because Medicare is such an important part of our social fabric. 
We must work through extraordinarily diverse views on the proper role 
of government, how best to achieve affordability for beneficiaries and 
taxpayers--all while ensuring stability and continuity in the program.
  In view of the fact that at this time there is no clear consensus on 
comprehensive reform, and that even if there were, such reform would 
take two or three years to implement, I am today introducing 
legislation that will help us see that low-income beneficiaries are not 
denied prescription drug coverage while we continue to move forward 
with long-term reform.
  I call this legislation the Medicare Temporary Drug Assistance Act, 
and it actually includes two versions--one that meets current budget 
guidelines and will only require a simple majority for passage, and a 
second version that is larger, covers more beneficiaries, but exceeds 
budget guidelines and will thus require a sixty-vote majority.
  I call this initiative the Medicare Temporary Drug Assistance Act, 
because that's exactly what it is. This effort is not to be mistaken 
with the lasting, comprehensive Medicare reform that we will continue 
to aggressively pursue--a reform effort that will build on our more 
comprehensive plan offered in July. What this temporary legislation 
offers is an assurance to low-income seniors that they will be able to 
receive the help they need while Congress completes the larger task of 
overhauling the Medicare program.
  It's an assurance that their immediate needs will not be put on hold 
as we deliberate and debate the complex intricacies of long-term 
Medicare reform.
  In testimony before our committee, the AARP repeatedly reminded us 
how important it is that we proceed carefully with long-term reform. 
AARP also told our Committee that a program aiding low-income 
beneficiaries could be achieved in a shorter time frame. I agree with 
their assessment and support the goal of providing immediate help to 
low-income beneficiaries.

[[Page 17388]]

  And this is what my legislation will do--it allows us to continue the 
intricate work of long-term reform without forcing Americans to dilute 
their prescription dosages or to choose between prescription drugs and 
food.
  It is my hope--as I believe there is sufficient bipartisan consensus 
on the subject of prescription drug coverage--that we can come together 
to pass this legislation. Like I've said, the first version of this 
bill requires only a simple majority. It has been designed to fit 
within current budget restrictions.
  Having my preference, Mr. President, I would like to see us pass the 
broader version that will require sixty votes, as it will offer more 
extensive coverage. But either way, these bills--once enacted--will 
implement a temporary, state-based, program to provide low-income 
Medicare beneficiaries with prescription drug coverage outside the 
Medicare program.
  Now, Mr. President, let me clear up a couple of misunderstandings 
that appear to surround this. First of all, I have heard concerns 
raised that this legislation depends on the appropriations process for 
funding. This is wrong; they do not. Just like the State Children 
Health Insurance Program, funding is mandatory under the Social 
Security Act.
  Second, I know that some have tried to attach a welfare stigma to the 
new program. Let me be clear: prescription drug coverage is not 
welfare, it is common sense. Frankly, I am surprised that there are 
those who would imply otherwise, because for years, we have worked to 
de-stigmatize important programs such as Medicaid and the State 
Children's Health Insurance Program.
  The legislation I'm introducing is modeled on the State Children's 
Health Insurance Program--a solution designed to extend drug coverage 
to lower-income Medicare beneficiaries--beneficiaries with incomes 
below 150 percent of the poverty, and those with the highest out-of-
pocket drug costs. If we have sufficient support to pass the more 
generous measure, we can cover beneficiaries up to 175 percent of the 
poverty level.
  State participation in the new program would be optional, as it is 
under SCHIP. According to the National Conference of State 
Legislatures, 22 states have passed some type of pharmacy assistance 
law. Senior Pharmacy Assistance Programs currently are in place in 16 
states, and another five states have passed laws to create such 
programs. Many of these states will likely opt to immediately 
participate in the new program--receiving federal funds to allow them 
to quickly expand their programs to provide drug benefits to even more 
Medicare beneficiaries.
  Eligible beneficiaries living in states that choose not to 
participate in the new program would receive coverage through a fall-
back option administered by the Health Care Financing Administration. 
HCFA would contract with a pharmacy benefit manager to provide these 
beneficiaries with a drug benefit comparable to that offered to all 
Federal employees through the Blue Cross Standard Option plan.
  Under either scenario, beneficiaries will receive immediate 
assistance. They will not have to wait, they will not have to wonder, 
and most importantly they will not have to worry about what happens in 
Washington.
  Again, Mr. President, this effort is not to be mistaken with the 
lasting, comprehensive Medicare reform that we must continue to pursue. 
It is best seen as a bridge--a bridge that will provide a low-income 
Medicare beneficiaries with prescription drugs--a bridge that the 
Washington Post acknowledged just today would be of material value to 
lower-income individuals while we continue our work on long-term, 
bipartisan reform.
  I will continue to work in the Finance Committee toward long-term 
Medicare reform--reform which will include a comprehensive outpatient 
prescription drug benefit. If we can't pass such a package this year, 
we will resume our efforts on the first day of the next session, and we 
will not stop until we get the job done. But low-income Medicare 
beneficiaries should not have to wait for comprehensive reform to be 
enacted in order to receive prescription drug benefits.
  This legislation will provide prescription drug coverage and peace of 
mind while Congress continues to work on the larger reform package. 
Passing it will certainly not obviate the need, nor diminish the 
pressing objective that we will have to achieve Medicare reform. There 
is no argument on either side of the aisle that long-term reform is not 
necessary. But in the interim, we should also take this step.
  Then when we get the long-term reform initiative passed--when 
comprehensive reform is enacted--this interim step will automatically 
be repealed. In that way, it will not replace or compete with reform. 
But it will provide valuable protection for many. Full enactment of 
this legislation will ensure that 82 percent of all Medicare 
beneficiaries will have prescription drug coverage, through the new 
program and through other sources of coverage. If Congress votes for 
increased coverage, 85 percent of all Medicare beneficiaries would have 
prescription drug coverage.
  Mr. President, I urge my colleagues to join me on this important 
issue. Our many successes in advancing the Medicare program these last 
three years have been achieved through cooperation from both sides of 
the aisle. We have seen what we can do when we move forward on those 
issues where we have a consensus. Now, let's join together to take this 
step, as well. Let's implement a principle on which I believe we all 
agree--helping our neediest Medicare beneficiaries pay for their 
prescription drugs. Toward achieving this important objective, there is 
no legitimate reason to delay.
  Mr. President, I ask unanimous consent that the bill I am introducing 
be printed in the Record following my remarks.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 3016

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medicare Temporary Drug 
     Assistance Act''.

     SEC. 2. OUTPATIENT PRESCRIPTION DRUG ASSISTANCE PROGRAM.

       (a) Establishment.--The Social Security Act (42 U.S.C. 301 
     et seq.) is amended by adding at the end the following new 
     title:

     ``TITLE XXII--OUTPATIENT PRESCRIPTION DRUG ASSISTANCE PROGRAM

     ``SEC. 2201. PURPOSE; OUTPATIENT PRESCRIPTION DRUG ASSISTANCE 
                   PLANS.

       ``(a) Purpose.--The purpose of this title is to provide 
     funds to States to enable States, individually or in a group, 
     to establish a program, separate from the medicaid program 
     under title XIX, to provide assistance to low-income medicare 
     beneficiaries (as defined in section 2202(b)) and, at State 
     option, medicare beneficiaries with high drug costs (as 
     defined in section 2202(c)) to obtain coverage for outpatient 
     prescription drugs.
       ``(b) Outpatient Prescription Drug Assistance Plan 
     Required.--A State may not receive payments under section 
     2205 unless the State, individually or as part of a group of 
     States, submits in writing to the Secretary an outpatient 
     prescription drug assistance plan under section 2206(a)(1) 
     that--
       ``(1) describes how the State or group of States intends to 
     use the funds provided under this title to provide outpatient 
     prescription drug assistance to low-income medicare 
     beneficiaries and, if applicable, medicare beneficiaries with 
     high drug costs consistent with the provisions of this title;
       ``(2) includes a description of the budget for the plan 
     (updated periodically as necessary) and details on the 
     planned use of funds, the sources of the non-Federal share of 
     plan expenditures, and any requirements for cost-sharing by 
     beneficiaries;
       ``(3) describes the procedures to be used to ensure that 
     the outpatient prescription drug assistance provided to low-
     income medicare beneficiaries and, if applicable, medicare 
     beneficiaries with high drug costs under the plan does not 
     supplant coverage for outpatient prescription drugs available 
     to such beneficiaries under group health plans; and
       ``(4) has been approved by the Secretary under section 
     2206(a)(2).
       ``(c) Entitlement.--Subject to subsection (d)(2), this 
     title constitutes budget authority in advance of 
     appropriations Acts and represents the obligation of the 
     Federal Government to provide for the payment to States, 
     groups of States, and contractors described in section 
     2209(a)(2)(A), of amounts provided under section 2204.
       ``(d) Period of Applicability.--
       ``(1) In general.--No State, group of States, or contractor 
     described in section 2209(a)(2)(A), may receive payments 
     under

[[Page 17389]]

      section 2205 for outpatient prescription drug assistance 
     provided for periods beginning before October 1, 2000, or 
     after December 31, 2003.
       ``(2) Medicare reform.--If medicare reform legislation that 
     includes coverage for outpatient prescription drugs is 
     enacted during the period that begins on October 1, 2000, and 
     ends on December 31, 2003, this title shall be repealed upon 
     the effective date of such legislation, and no State, group 
     of States, or contractor described in section 2209(a)(2)(A) 
     shall be entitled to receive payments for any outpatient 
     prescription drug assistance provided on or after such date.

     ``SEC. 2202. BENEFICIARY ELIGIBILITY.

       ``(a) Eligibility.--
       ``(1) In general.--In order for a State (individually or as 
     part of a group of States) to receive payments under section 
     2205 with respect to an outpatient prescription drug 
     assistance program, the program must provide, subject to the 
     availability of funds, outpatient prescription drug 
     assistance to each individual who--
       ``(A) resides in the State;
       ``(B) applies for such assistance; and
       ``(C) establishes that the individual is--
       ``(i) a low-income medicare beneficiary (as defined in 
     subsection (b)); or
       ``(ii) at the option of the State, a medicare beneficiary 
     with high drug costs (as defined in subsection (c)).
       ``(2) Residency rules.--In applying paragraph (1), 
     residency rules similar to the residency rules applicable to 
     the State plan under title XIX shall apply.
       ``(b) Low-Income Medicare Beneficiary Defined.--
       ``(1) In general.--In this title, except as provided in 
     section 2209(a)(2)(B), the term `low-income medicare 
     beneficiary' means an individual who--
       ``(A) is entitled to benefits under part A of title XVIII 
     or enrolled under part B of such title, including an 
     individual enrolled in a Medicare+Choice plan under part C of 
     such title;
       ``(B) subject to subsection (d), is not entitled to medical 
     assistance with respect to prescribed drugs under title XIX 
     or under a waiver under section 1115 of the requirements of 
     such title;
       ``(C) is determined to have family income that does not 
     exceed a percentage of the poverty line for a family of the 
     size involved specified by the State that, subject to 
     paragraph (2), may not exceed 150 percent; and
       ``(D) at the option of the State, is determined to have 
     resources that do not exceed a level specified by the State.
       ``(2) State-only drug assistance programs.--In the case of 
     a State that has a State-based drug assistance program 
     described in section 2203(e) that provides outpatient 
     prescription drug coverage for individuals described in 
     paragraph (1)(A) who have family income up to or exceeding 
     150 percent of the poverty line, the State may specify a 
     percentage of the poverty line under paragraph (1)(C) that 
     exceeds the income eligibility level specified by the State 
     for such program but does not exceed 50 percentage points 
     above such income eligibility level.
       ``(c) Medicare Beneficiary With High Drug Costs Defined.--
       ``(1) In general.--In this title, except as provided in 
     section 2209(a)(2)(C), the term `medicare beneficiary with 
     high drug costs' means an individual--
       ``(A) who satisfies the requirements of subparagraphs (A) 
     and (B) of subsection (b)(1);
       ``(B) whose family income exceeds the percentage of the 
     poverty line specified by the State in accordance with 
     subsection (b)(1)(C);
       ``(C) at the option of the State, whose resources exceed a 
     level (if any) specified by the State in accordance with 
     subsection (b)(1)(D); and
       ``(D) who has out-of-pocket expenses for outpatient 
     prescription drugs and biologicals (including insulin and 
     insulin supplies) for which outpatient prescription drug 
     assistance is available under this title that exceed such 
     amount as the State specifies in accordance with paragraph 
     (2).
       ``(2) Determination of out-of-pocket expenses.--A State 
     that elects to provide outpatient prescription drug 
     assistance to an individual described in paragraph (1) shall 
     provide the Secretary with the methodology and standards used 
     to determine the individual's eligibility under subparagraph 
     (D) of such paragraph.
       ``(d) Access for Medicaid Expansion States.--
       ``(1) In general.--Notwithstanding any other provision of 
     this title, with respect to any State that, as of the date of 
     enactment of this title, has made outpatient prescription 
     drug coverage for individuals described in paragraph (2) 
     available through the State medicaid program under title XIX 
     under a section 1115 waiver, the Secretary, in consultation 
     with such State, shall establish procedures under which the 
     State shall be able to receive payments from the allotment 
     made available under section 2204 for such State for a fiscal 
     year for purposes of offsetting the costs of making such 
     coverage available to such individuals.
       ``(2) Individuals described.--Individuals described in this 
     paragraph are individuals who are--
       ``(A) entitled to benefits under part A of title XVIII or 
     enrolled under part B of such title, including an individual 
     enrolled in a Medicare+Choice plan under part C of such 
     title; and
       ``(B) eligible for outpatient prescription drug coverage 
     only, under a State medicaid program under title XIX as a 
     result of a section 1115 waiver.
       ``(e) Individual Nonentitlement.--Nothing in this title 
     shall be construed as providing an individual with an 
     entitlement to outpatient prescription drug assistance 
     provided under this title.

     ``SEC. 2203. COVERAGE REQUIREMENTS.

       ``(a) Required Scope of Coverage.--
       ``(1) In general.--The outpatient prescription drug 
     assistance provided under the plan may consist of any of the 
     following:
       ``(A) Benchmark coverage.--Outpatient prescription drug 
     coverage that is equivalent to the outpatient prescription 
     drug coverage in a benchmark benefit package described in 
     subsection (b).
       ``(B) Aggregate actuarial value equivalent to benchmark 
     package.--Outpatient prescription drug coverage that has an 
     aggregate actuarial value that is at least equivalent to one 
     of the benchmark benefit packages.
       ``(C) Existing comprehensive state-based coverage.--
     Outpatient prescription drug coverage under an existing 
     State-based program, described in subsection (e).
       ``(D) Secretary-approved coverage.--Any other outpatient 
     prescription drug coverage that the Secretary determines, 
     upon application by a State or group of States, provides 
     appropriate outpatient prescription drug coverage for the 
     population of medicare beneficiaries proposed to be provided 
     such coverage.
       ``(2) Consistent design.--A State or group of States may 
     only select one of the options described in paragraph (1) 
     (and, if the State or group chooses to provide outpatient 
     prescription drug coverage that is equivalent to the 
     outpatient prescription drug coverage in a benchmark benefit 
     package, only one of the benchmark benefit package options 
     described in subsection (b)) in order to provide outpatient 
     prescription drug assistance in a uniform manner for the 
     population of medicare beneficiaries provided such coverage.
       ``(b) Benchmark Benefit Packages.--The benchmark benefit 
     packages are as follows:
       ``(1) Medicaid outpatient prescription drug coverage.--In 
     the case of--
       ``(A) a State, the outpatient prescription drug coverage 
     provided under the State medicaid plan under title XIX; or
       ``(B) a group of States, the outpatient prescription drug 
     coverage provided under the State medicaid plan under such 
     title of one of the States in the group, as identified in the 
     outpatient prescription drug assistance plan.
       ``(2) FEHBP-equivalent outpatient prescription drug 
     coverage.--The outpatient prescription drug coverage provided 
     under the Standard Option Blue Cross and Blue Shield Service 
     Benefit Plan described in and offered under section 8903(1) 
     of title 5, United States Code.
       ``(3) State employee outpatient prescription drug 
     coverage.--In the case of--
       ``(A) a State, the outpatient prescription drug coverage 
     provided under a health benefits coverage plan that is 
     offered and generally available to State employees in the 
     State involved; or
       ``(B) a group of States, the outpatient prescription drug 
     coverage provided under a health benefits coverage plan that 
     is offered and generally available to State employees in one 
     of the States in the group, as identified in the outpatient 
     prescription drug assistance plan.
       ``(4) Outpatient prescription drug coverage offered through 
     largest hmo.--In the case of--
       ``(A) a State, the outpatient prescription drug coverage 
     provided under a health insurance coverage plan that is 
     offered by a health maintenance organization (as defined in 
     section 2791(b)(3) of the Public Health Service Act) and has 
     the largest insured commercial, nonmedicaid enrollment of 
     covered lives of such coverage plans offered by such a health 
     maintenance organization in the State involved; or
       ``(B) a group of States, the outpatient prescription drug 
     coverage provided under a health insurance coverage plan that 
     is offered by a health maintenance organization (as defined 
     in section 2791(b)(3) of the Public Health Service Act) and 
     has the largest insured commercial, nonmedicaid enrollment of 
     covered lives of such coverage plans offered by such a health 
     maintenance organization in one of the States involved.
       ``(c) Determination of Actuarial Value of Coverage.--
       ``(1) In general.--The actuarial value of outpatient 
     prescription drug coverage offered under benchmark benefit 
     packages and the outpatient prescription drug assistance plan 
     shall be set forth in an opinion in a report that has been 
     prepared--
       ``(A) by an individual who is a member of the American 
     Academy of Actuaries;
       ``(B) using generally accepted actuarial principles and 
     methodologies;
       ``(C) using a standardized set of utilization and price 
     factors;
       ``(D) using a standardized population that is 
     representative of the population to be covered under the 
     outpatient prescription drug assistance plan;

[[Page 17390]]

       ``(E) applying the same principles and factors in comparing 
     the value of different coverage;
       ``(F) without taking into account any differences in 
     coverage based on the method of delivery or means of cost 
     control or utilization used; and
       ``(G) taking into account the ability of a State or group 
     of States to reduce benefits by taking into account the 
     increase in actuarial value of benefits coverage offered 
     under the outpatient prescription drug assistance plan that 
     results from the limitations on cost-sharing under such 
     coverage.
       ``(2) Requirement.--The actuary preparing the opinion shall 
     select and specify in the report the standardized set and 
     population to be used under subparagraphs (C) and (D) of 
     paragraph (1).
       ``(d) Prohibited Coverage.--Nothing in this section shall 
     be construed as requiring any outpatient prescription drug 
     coverage offered under the plan to provide coverage for an 
     outpatient prescription drug for which payment is prohibited 
     under this title, notwithstanding that any benchmark benefit 
     package includes coverage for such an outpatient prescription 
     drug.
       ``(e) Description of Existing Comprehensive State-Based 
     Coverage.--
       ``(1) In general.--A program described in this paragraph is 
     an outpatient prescription drug coverage program for 
     individuals who are entitled to benefits under part A of 
     title XVIII or enrolled under part B of such title, including 
     an individual enrolled in a Medicare+Choice plan under part C 
     of such title, that--
       ``(A) is administered or overseen by the State and receives 
     funds from the State;
       ``(B) was offered as of the date of the enactment of this 
     title;
       ``(C) does not receive or use any Federal funds; and
       ``(D) is certified by the Secretary as providing outpatient 
     prescription drug coverage that satisfies the scope of 
     coverage required under subparagraph (A), (B), or (D) of 
     subsection (a)(1).
       ``(2) Modifications.--A State may modify a program 
     described in paragraph (1) from time to time so long as it 
     does not reduce the actuarial value (evaluated as of the time 
     of the modification) of the outpatient prescription drug 
     coverage under the program below the lower of--
       ``(A) the actuarial value of the coverage under the program 
     as of the date of enactment of this title; or
       ``(B) the actuarial value described in subsection 
     (a)(1)(B).
       ``(f) Beneficiary Premiums and Cost-Sharing.--
       ``(1) Description; general conditions.--
       ``(A) Description.--
       ``(i) In general.--An outpatient prescription drug 
     assistance plan shall include a description, consistent with 
     this subsection, of the amount of any premiums or cost-
     sharing imposed under the plan.
       ``(ii) Public schedule of charges.--Any premium or cost-
     sharing described under clause (i) shall be imposed under the 
     plan pursuant to a public schedule.
       ``(B) Protection for beneficiaries.--The outpatient 
     prescription drug assistance plan may only vary premiums and 
     cost-sharing based on the family income of low-income 
     medicare beneficiaries and, if applicable, medicare 
     beneficiaries with high drug costs, in a manner that does not 
     favor such beneficiaries with higher income over 
     beneficiaries with low-income.
       ``(2) Limitations on premiums and cost-sharing.--
       ``(A) No premiums or cost-sharing for beneficiaries with 
     income below 100 percent of poverty line.--In the case of a 
     low-income medicare beneficiary whose family income does not 
     exceed 100 percent of the poverty line, the outpatient 
     prescription drug assistance plan may not impose any premium 
     or cost-sharing.
       ``(B) Other beneficiaries.--For low-income medicare 
     beneficiaries not described in subparagraph (A) and, if 
     applicable, medicare beneficiaries with high drug costs, any 
     premiums or cost-sharing imposed under the outpatient 
     prescription drug assistance plan may be imposed, subject to 
     paragraph (1)(B), on a sliding scale related to income, 
     except that the total annual aggregate of such premiums and 
     cost-sharing with respect to all such beneficiaries in a 
     family under this title may not exceed 5 percent of such 
     family's income for the year involved.
       ``(g) Restriction on Application of Preexisting Condition 
     Exclusions.--The outpatient prescription drug assistance plan 
     shall not permit the imposition of any preexisting condition 
     exclusion for covered benefits under the plan and may not 
     discriminate in the pricing of premiums under such plan 
     because of health status, claims experience, receipt of 
     health care, or medical condition.

     ``SEC. 2204. ALLOTMENTS.

       ``(a) Appropriation.--
       ``(1) In general.--For the purpose of providing allotments 
     under this section to States, there is appropriated, out of 
     any money in the Treasury not otherwise appropriated--
       ``(A) for fiscal year 2001, $1,200,000,000;
       ``(B) for fiscal year 2002, $4,200,000,000;
       ``(C) for fiscal year 2003, $9,000,000,000; and
       ``(D) for fiscal year 2004, $3,000,000,000.
       ``(2) Availability.--Amounts appropriated under paragraph 
     (1) shall only be available for providing the allotments 
     described in such paragraph during the fiscal year for which 
     such amounts are appropriated. Any amounts that have not been 
     obligated by the Secretary for the purposes of making 
     payments from such allotments under section 2205, or under 
     contracts entered into under section 2209(b)(2)(B), on or 
     before September 30 of fiscal year 2001, 2002, or 2003 (as 
     applicable) or, with respect to fiscal year 2004, December 
     31, 2003, shall be returned to the Treasury.
       ``(b) Allotments to 50 States and District of Columbia.--
       ``(1) In general.--Subject to paragraph (3), of the amount 
     available for allotment under subsection (a) for a fiscal 
     year, reduced by the amount of allotments made under 
     subsection (c) for the fiscal year, the Secretary shall allot 
     to each State (other than a State described in such 
     subsection) with an outpatient prescription drug assistance 
     plan approved under this title the same proportion as the 
     ratio of--
       ``(A) the number of medicare beneficiaries with family 
     income that does not exceed 150 percent of the poverty line 
     residing in the State for the fiscal year; to
       ``(B) the total number of such beneficiaries residing in 
     all such States.
       ``(2) Determination of number of medicare beneficiaries 
     with income that does not exceed 150 percent of poverty.--For 
     purposes of paragraph (1), a determination of the number of 
     medicare beneficiaries with family income that does not 
     exceed 150 percent of the poverty line residing in a State 
     for the calendar year in which such fiscal year begins shall 
     be made on the basis of the arithmetic average of the number 
     of such medicare beneficiaries, as reported and defined in 
     the 5 most recent March supplements to the Current Population 
     Survey of the Bureau of the Census before the beginning of 
     the fiscal year.
       ``(3) Minimum allotment.--In no case shall the amount of 
     the allotment under this subsection for one of the 50 States 
     or the District of Columbia for a fiscal year be less than an 
     amount equal to 0.5 percent of the amount provided for 
     allotments under subsection (a) for that fiscal year (reduced 
     by the amount of allotments made under subsection (c) for the 
     fiscal year). To the extent that the application of the 
     previous sentence results in an increase in the allotment to 
     a State or the District of Columbia above the amount 
     otherwise provided, the allotments for the other States and 
     the District of Columbia under this subsection shall be 
     reduced in a pro rata manner (but not below the minimum 
     allotment described in such preceding sentence) so that the 
     total of such allotments in a fiscal year does not exceed the 
     amount otherwise provided for allotment under subsection (a) 
     for that fiscal year (as so reduced).
       ``(c) Allotments to Territories.--
       ``(1) In general.--Of the amount available for allotment 
     under subsection (a) for a fiscal year, the Secretary shall 
     allot 0.25 percent among each of the commonwealths and 
     territories described in paragraph (3) in the same proportion 
     as the percentage specified in paragraph (2) for such 
     commonwealth or territory bears to the sum of such 
     percentages for all such commonwealths or territories so 
     described.
       ``(2) Percentage.--The percentage specified in this 
     paragraph for--
       ``(A) Puerto Rico is 91.6 percent;
       ``(B) Guam is 3.5 percent;
       ``(C) the United States Virgin Islands is 2.6 percent;
       ``(D) American Samoa is 1.2 percent; and
       ``(E) the Northern Mariana Islands is 1.1 percent.
       ``(3) Commonwealths and territories.--A commonwealth or 
     territory described in this paragraph is any of the following 
     if it has an outpatient prescription drug assistance plan 
     approved under this title:
       ``(A) Puerto Rico.
       ``(B) Guam.
       ``(C) The United States Virgin Islands.
       ``(D) American Samoa.
       ``(E) The Northern Mariana Islands.
       ``(d) Transfer of Certain Allotments and Portions of 
     Allotments.--
       ``(1) Transfer and redistribution.--
       ``(A) In general.--Subject to subparagraph (B), not later 
     than 30 days after the date described in paragraph (2)--
       ``(i) 90 percent of the allotment determined for a fiscal 
     year under subsection (b) or (c) for a State shall be 
     transferred and made available in such fiscal year to the 
     Secretary, acting through the Administrator of the Health 
     Care Financing Administration, for purposes of carrying out 
     the default program established under section 2209; and
       ``(ii) 10 percent of such allotment shall be redistributed 
     in accordance with subsection (e).
       ``(B) Applicability.--Subparagraph (A) shall not apply if, 
     not later than the date described in paragraph (2) for such 
     fiscal year, a State submits a plan or is part of a group of 
     States that submits a plan to the Secretary that the 
     Secretary finds meets the requirements of section 2201(b).
       ``(2) Date described.--The date described in this paragraph 
     is--
       ``(A) in the case of fiscal year 2001, December 31, 2000; 
     and

[[Page 17391]]

       ``(B) in the case of fiscal year 2002, 2003, or 2004, 
     September 1 of the fiscal year preceding such fiscal year.
       ``(e) Redistribution of Portion of Allotments.--With 
     respect to a fiscal year, not later than 30 days after the 
     date described in subsection (d)(2) for such fiscal year, the 
     Secretary shall redistribute the total amount made available 
     for redistribution for such fiscal year under subsection 
     (d)(1)(A)(ii) to each State that submits a plan or is part of 
     a group of States that submits a plan to the Secretary that 
     the Secretary finds meets the requirements of this title. 
     Such amount shall be redistributed in the same manner as 
     allotments are determined under subsections (b) and (c) and 
     shall be available only to the extent consistent with 
     subsection (a)(2).

     ``SEC. 2205. PAYMENTS TO STATES.

       ``(a) In General.--Subject to the succeeding provisions of 
     this section, the Secretary shall pay to each State with a 
     plan approved under section 2206(a)(2) (individually or as 
     part of a group of States) from the State's allotment under 
     section 2204, an amount for each quarter equal to the 
     applicable percentage of expenditures in the quarter--
       ``(1) for outpatient prescription drug assistance under the 
     plan for low-income medicare beneficiaries and, if 
     applicable, medicare beneficiaries with high drug costs in 
     the form of providing coverage for outpatient prescription 
     drugs that meets the requirements of section 2203; and
       ``(2) only to the extent permitted consistent with 
     subsection (c), for reasonable costs incurred to administer 
     the plan.
       ``(b) Applicable Percentage.--For purposes of subsection 
     (a), the applicable percentage is--
       ``(1) for low-income medicare beneficiaries with family 
     incomes that do not exceed 135 percent of the poverty line, 
     100 percent; and
       ``(2) for all other low-income medicare beneficiaries and 
     for medicare beneficiaries with high drug costs, the enhanced 
     FMAP (as defined in section 2105(b)).
       ``(c) Limitation on Payments for Certain Expenditures.--
       ``(1) General limitations.--Funds provided to a State or 
     group of States under this title shall only be used to carry 
     out the purposes of this title.
       ``(2) Administrative expenditures.--
       ``(A) In general.--Subject to subparagraph (B), payment 
     shall not be made under subsection (a) for expenditures 
     described in subsection (a)(2) for a fiscal year to the 
     extent the total of such expenditures (for which payment is 
     made under such subsection) exceeds 10 percent of the total 
     expenditures described in subsection (a)(1) made by--
       ``(i) in the case of a State that is not part of a group of 
     States, the State for such fiscal year; and
       ``(ii) in the case of a group of States, the group for such 
     fiscal year.
       ``(B) Special rule.--With respect to the first fiscal year 
     that a State or group of States provides outpatient 
     prescription drug assistance under a plan approved under this 
     title, the 10 percent limitation described in subparagraph 
     (A) shall be applied--
       ``(i) in the case of a State that is not part of a group of 
     States, to the allotment available for such State for such 
     fiscal year; and
       ``(ii) in the case of a group of States, to the aggregate 
     of the State allotments available for all the States in such 
     group for such fiscal year.
       ``(3) Use of non-federal funds for state matching 
     requirement.--Amounts provided by the Federal Government, or 
     services assisted or subsidized to any significant extent by 
     the Federal Government, may not be included in determining 
     the amount of the non-Federal share of plan expenditures 
     required under the plan.
       ``(4) Offset of receipts attributable to premiums or cost-
     sharing.--For purposes of subsection (a), the amount of the 
     expenditures under the plan shall be reduced by the amount of 
     any premiums or cost-sharing received by a State.
       ``(5) Prevention of duplicative payments.--
       ``(A) Other health plans.--No payment shall be made under 
     this section for expenditures for outpatient prescription 
     drug assistance provided under an outpatient prescription 
     drug assistance plan to the extent that a private insurer (as 
     defined by the Secretary by regulation and including a group 
     health plan, a service benefit plan, and a health maintenance 
     organization) would have been obligated to provide such 
     assistance but for a provision of its insurance contract 
     which has the effect of limiting or excluding such obligation 
     because the beneficiary is eligible for or is provided 
     outpatient prescription drug assistance under the plan.
       ``(B) Other federal governmental programs.--Except as 
     otherwise provided by law, no payment shall be made under 
     this section for expenditures for outpatient prescription 
     drug assistance provided under an outpatient prescription 
     drug assistance plan to the extent that payment has been made 
     or can reasonably be expected to be made promptly (as 
     determined in accordance with regulations) under any other 
     federally operated or financed health care insurance program 
     identified by the Secretary. For purposes of this paragraph, 
     rules similar to the rules for overpayments under section 
     1903(d)(2) shall apply.
       ``(d) Advance Payment; Retrospective Adjustment.--The 
     Secretary may make payments under this section for each 
     quarter on the basis of advance estimates of expenditures 
     submitted by a State or group of States and such other 
     investigation as the Secretary may find necessary, and may 
     reduce or increase the payments as necessary to adjust for 
     any overpayment or underpayment for prior quarters.
       ``(e) Flexibility in Submittal of Claims.--Nothing in this 
     section shall be construed as preventing a State or group of 
     States from claiming as expenditures in any quarter of a 
     fiscal year expenditures that were incurred in a previous 
     quarter of such fiscal year.

     ``SEC. 2206. PROCESS FOR SUBMISSION, APPROVAL, AND AMENDMENT 
                   OF OUTPATIENT PRESCRIPTION DRUG ASSISTANCE 
                   PLANS.

       ``(a) Initial Plan.--
       ``(1) Submission.--A State may receive payments under 
     section 2205 with respect to a fiscal year if the State, 
     individually or as part of a group of States, has submitted 
     to the Secretary, not later than the date described in 
     section 2204(d)(2), an outpatient prescription drug 
     assistance plan that the Secretary has found meets the 
     applicable requirements of this title.
       ``(2) Approval.--Except as the Secretary may provide under 
     subsection (e), a plan submitted under paragraph (1)--
       ``(A) shall be approved for purposes of this title; and
       ``(B) shall be effective beginning with a calendar quarter 
     that is specified in the plan, but in no case earlier than 
     October 1, 2000.
       ``(b) Plan Amendments.--Within 30 days after a State or 
     group of States amends an outpatient prescription drug 
     assistance plan submitted pursuant to subsection (a), the 
     State or group shall notify the Secretary of the amendment.
       ``(c) Disapproval of Plans and Plan Amendments.--
       ``(1) Prompt review of plan submittals.--The Secretary 
     shall promptly review plans and plan amendments submitted 
     under this section to determine if they substantially comply 
     with the requirements of this title.
       ``(2) 45-day approval deadlines.--A plan or plan amendment 
     is considered approved unless the Secretary notifies the 
     State or group of States in writing, within 45 days after 
     receipt of the plan or amendment, that the plan or amendment 
     is disapproved (and the reasons for the disapproval) or that 
     specified additional information is needed.
       ``(3) Correction.--In the case of a disapproval of a plan 
     or plan amendment, the Secretary shall provide a State or 
     group of States with a reasonable opportunity for correction 
     before taking financial sanctions against the State or group 
     on the basis of such disapproval.
       ``(d) Program Operation.--
       ``(1) In general.--A State or group of States shall conduct 
     the program in accordance with the plan (and any amendments) 
     approved under this section and with the requirements of this 
     title.
       ``(2) Violations.--The Secretary shall establish a process 
     for enforcing requirements under this title. Such process 
     shall provide for the withholding of funds in the case of 
     substantial noncompliance with such requirements. In the case 
     of an enforcement action against a State or group of States 
     under this paragraph, the Secretary shall provide a State or 
     group of States with a reasonable opportunity for correction 
     and for administrative and judicial appeal of the Secretary's 
     action before taking financial sanctions against the State or 
     group of States on the basis of such an action.
       ``(e) Continued Approval.--Subject to section 2201(d), an 
     approved outpatient prescription drug assistance plan shall 
     continue in effect unless and until the State or group of 
     States amends the plan under subsection (b) or the Secretary 
     finds, under subsection (d), substantial noncompliance of the 
     plan with the requirements of this title.

     ``SEC. 2207. PLAN ADMINISTRATION; APPLICATION OF CERTAIN 
                   GENERAL PROVISIONS.

       ``(a) Plan Administration.--An outpatient prescription drug 
     assistance plan shall include an assurance that the State or 
     group of States administering the plan will collect the data, 
     maintain the records, afford the Secretary access to any 
     records or information relating to the plan for the purposes 
     of review or audit, and furnish reports to the Secretary, at 
     the times and in the standardized format the Secretary may 
     require in order to enable the Secretary to monitor program 
     administration and compliance and to evaluate and compare the 
     effectiveness of plans under this title.
       ``(b) Application of Certain General Provisions.--The 
     following sections of this Act shall apply to the program 
     established under this title in the same manner as they apply 
     to a State under title XIX:
       ``(1) Title xix provisions.--
       ``(A) Section 1902(a)(4)(C) (relating to conflict of 
     interest standards).
       ``(B) Paragraphs (2), (16), and (17) of section 1903(i) 
     (relating to limitations on payment).
       ``(C) Section 1903(w) (relating to limitations on provider 
     taxes and donations).
       ``(2) Title xi provisions.--

[[Page 17392]]

       ``(A) Section 1115 (relating to waiver authority).
       ``(B) Section 1116 (relating to administrative and judicial 
     review), but only insofar as consistent with this title.
       ``(C) Section 1124 (relating to disclosure of ownership and 
     related information).
       ``(D) Section 1126 (relating to disclosure of information 
     about certain convicted individuals).
       ``(E) Section 1128A (relating to civil monetary penalties).
       ``(F) Section 1128B(d) (relating to criminal penalties for 
     certain additional charges).

     ``SEC. 2208. REPORTS.

       ``(a) In General.--Each State or group of States 
     administering a plan under this title shall annually--
       ``(1) assess the operation of the outpatient prescription 
     drug assistance plan under this title in each fiscal year; 
     and
       ``(2) report to the Secretary on the result of the 
     assessment.
       ``(b) Required Information.--The annual report required 
     under subsection (a) shall include the following:
       ``(1) An assessment of the effectiveness of the plan in 
     providing outpatient prescription drug assistance to low-
     income medicare beneficiaries and, if applicable, medicare 
     beneficiaries with high drug costs.
       ``(2) A description and analysis of the effectiveness of 
     elements of the plan, including--
       ``(A) the characteristics of the low-income medicare 
     beneficiaries and, if applicable, medicare beneficiaries with 
     high drug costs assisted under the plan, including family 
     income and access to, or coverage by, other health insurance 
     prior to the plan and after eligibility for the plan ends;
       ``(B) the amount and level of assistance provided under the 
     plan; and
       ``(C) the sources of the non-Federal share of plan 
     expenditures.
       ``(c) Annual Report of the Secretary.--The Secretary shall 
     submit to Congress and make available to the public an annual 
     report based on the reports required under subsection (a) and 
     section 2209(b)(5), containing any conclusions and 
     recommendations the Secretary considers appropriate.

     ``SEC. 2209. ESTABLISHMENT OF DEFAULT PROGRAM.

       ``(a) Program Authority.--
       ``(1) In general.--With respect to a fiscal year, in the 
     case of a State that fails to submit (individually or as part 
     of a group of States) an approved outpatient prescription 
     drug assistance plan to the Secretary by the date described 
     in section 2204(d)(2) for such fiscal year, outpatient 
     prescription drug assistance to low-income medicare 
     beneficiaries and, subject to the availability of funds, 
     medicare beneficiaries with high drug costs, who reside in 
     such State shall be provided during such fiscal year by the 
     Secretary, through the Administrator of the Health Care 
     Financing Administration, in accordance with this section.
       ``(2) Definitions.--In this section:
       ``(A) Contractor.--The term `contractor' means a 
     pharmaceutical benefit manager or other entity that meets 
     standards established by the Administrator of the Health Care 
     Financing Administration for the provision of outpatient 
     prescription drug assistance under a contract entered into 
     under this section.
       ``(B) Low-income medicare beneficiary.--The term `low-
     income medicare beneficiary' means an individual who--
       ``(i) satisfies the requirements of subparagraphs (A) and 
     (B) of section 2202(b)(1);
       ``(ii) is determined to have family income that does not 
     exceed a percentage of the poverty line for a family of the 
     size involved specified by the Administrator of the Health 
     Care Financing Administration that may not exceed 135 
     percent; and
       ``(iii) at the option of the Administrator of the Health 
     Care Financing Administration, is determined to have 
     resources that do not exceed a level specified by such 
     Administrator.
       ``(C) Medicare beneficiary with high drug costs.--The term 
     `medicare beneficiary with high drug costs' means an 
     individual--
       ``(i) who satisfies the requirements of subparagraphs (A) 
     and (B) of section 2202(b)(1);
       ``(ii) whose family income exceeds the percentage of the 
     poverty line specified by the Administrator of the Health 
     Care Financing Administration under subparagraph (B)(ii) for 
     a low-income medicare beneficiary residing in the same State;
       ``(iii) whose resources exceed a level (if any) specified 
     by the Administrator of the Health Care Financing 
     Administration under subparagraph (B)(iii) for a low-income 
     medicare beneficiary residing in the same State; and
       ``(iv) with respect to any 3-month period, who has out-of-
     pocket expenses for outpatient prescription drugs and 
     biologicals (including insulin and insulin supplies) for 
     which outpatient prescription drug assistance is available 
     under this title that exceed a level specified by such 
     Administrator (consistent with the availability of funds for 
     the operation of the program established under this section 
     in the State where the beneficiary resides).
       ``(b) Administration.--In administering the default program 
     established under this section, the Administrator of the 
     Health Care Financing Administration shall--
       ``(1) establish procedures to determine the eligibility of 
     the low-income medicare beneficiaries and medicare 
     beneficiaries with high drug costs described in subsection 
     (a) for outpatient prescription drug assistance;
       ``(2) establish a process for accepting bids to provide 
     outpatient prescription drug assistance to such 
     beneficiaries, awarding contracts under such bids, and making 
     payments under such contracts;
       ``(3) establish policies and procedures for overseeing the 
     provision of outpatient prescription drug assistance under 
     such contracts;
       ``(4) develop and implement quality and service assessment 
     measures that include beneficiary quality surveys and annual 
     quality and service rankings for contractors awarded a 
     contract under this section;
       ``(5) annually assess the program established under this 
     section and submit a report to the Secretary containing the 
     information required under section 2208(b); and
       ``(6) carry out such other responsibilities as are 
     necessary for the administration of the provision of 
     outpatient prescription drug assistance under this section.
       ``(c) Contract Requirements.--
       ``(1) Authority; term.--
       ``(A) Use of competitive procedures.--
       ``(i) Fiscal year 2001.--With respect to fiscal year 2001, 
     the Administrator of the Health Care Financing Administration 
     may enter into contracts under this section without using 
     competitive procedures, as defined in section 4(5) of the 
     Office of Federal Procurement Policy Act (41 U.S.C. 403(5)), 
     or any other provision of law requiring competitive bidding.
       ``(ii) Fiscal years 2002, 2003, and 2004.--With respect to 
     fiscal years 2002, 2003, and 2004, the Administrator of the 
     Health Care Financing Administration shall award contracts 
     under this section using competitive procedures (as so 
     defined).
       ``(B) Term.--Each contract shall be for a uniform term of 
     at least 1 year, but may be made automatically renewable from 
     term to term in the absence of notice of termination by 
     either party.
       ``(2) Benefit.--The contract shall require the contractor 
     to provide a low-income medicare beneficiary and, if 
     applicable, a medicare beneficiary with high drug costs, 
     outpatient prescription drug assistance that is equivalent to 
     the FEHBP-equivalent benchmark benefit package described in 
     section 2203(b)(2) in a manner that is consistent with the 
     provisions of this title as such provisions apply to a State 
     that provides such assistance.
       ``(3) Quality and service assessment.--The contract shall 
     require the contractor to cooperate with the quality and 
     service assessment measures implemented in accordance with 
     subsection (b)(4).
       ``(4) Payments.--The contract shall specify the amount and 
     manner by which payments (including any administrative fees) 
     shall be made to the contractor for the provision of 
     outpatient prescription drug assistance to low-income 
     medicare beneficiaries and, if applicable, medicare 
     beneficiaries with high drug costs.
       ``(d) Funding.--
       ``(1) Aggregate of transferred amounts.--The Secretary, 
     through the Administrator of the Health Care Financing 
     Administration, shall use the aggregate of the amounts 
     transferred and made available under section 2204(d)(1)(A)(i) 
     for purposes of carrying out the default program established 
     under this section. Such aggregate may be used to provide 
     outpatient prescription drug assistance to any low-income 
     medicare beneficiary, and, subject to the availability of 
     funds, medicare beneficiary with high drug costs, who resides 
     in a State described in subsection (a)(1).
       ``(2) Limitation on administrative costs.--Administrative 
     expenditures incurred by the Secretary or the Administrator 
     of the Health Care Financing Administration for a fiscal year 
     to carry out this section (other than administrative fees 
     paid to a contractor under a contract meeting the 
     requirements of subsection (c))--
       ``(A) shall be paid out of the aggregate amounts described 
     in paragraph (1); and
       ``(B) may not exceed an amount equal to 1 percent of all 
     premiums imposed for such fiscal year to provide outpatient 
     prescription drug assistance to low-income medicare 
     beneficiaries and medicare beneficiaries with high drug costs 
     under this section.
       ``(e) Termination.--Except as provided in section 
     2201(d)(2), the program established under this section shall 
     terminate on December 31, 2003.

     ``SEC. 2210. DEFINITIONS.

       ``In this title:
       ``(1) Cost-sharing.--The term `cost-sharing' means a 
     deductible, coinsurance, copayment, or similar charge, and 
     includes an enrollment fee.
       ``(2) Outpatient prescription drug assistance.--
       ``(A) In general.--The term `outpatient prescription drug 
     assistance' means, subject to subparagraph (B), payment for 
     part or all of the cost of coverage of self-administered 
     outpatient prescription drugs and biologicals (including 
     insulin and insulin supplies) for low-income medicare 
     beneficiaries and, if applicable, medicare beneficiaries with 
     high drug costs.
       ``(B) Exclusions.--Such term does not include payment or 
     coverage with respect to--

[[Page 17393]]

       ``(i) items covered under title XVIII; or
       ``(ii) items for which coverage is not available under a 
     State plan under title XIX.
       ``(3) Outpatient prescription drug assistance plan; plan.--
     Unless the context otherwise requires, the terms `outpatient 
     prescription drug assistance plan' and `plan' mean an 
     outpatient prescription drug assistance plan approved under 
     section 2206.
       ``(4) Group health plan; group health insurance coverage; 
     etc.--The terms `group health plan', `group health insurance 
     coverage', and `health insurance coverage' have the meanings 
     given such terms in section 2791 of the Public Health Service 
     Act (42 U.S.C. 300gg-91).
       ``(5) Poverty line.--The term `poverty line' has the 
     meaning given such term in section 673(2) of the Community 
     Services Block Grant Act (42 U.S.C. 9902(2)), including any 
     revision required by such section.
       ``(6) Preexisting condition exclusion.--The term 
     `preexisting condition exclusion' has the meaning given such 
     term in section 2701(b)(1)(A) of the Public Health Service 
     Act (42 U.S.C. 300gg(b)(1)(A)).
       ``(7) State.--The term `State' has the meaning given such 
     term for purposes of title XIX.''.
       (b) Conforming Amendments.--
       (1) Definition of state.--Section 1101(a)(1) of the Social 
     Security Act (42 U.S.C. 1301(a)(1)) is amended in the first 
     and fourth sentences, by striking ``and XXI'' each place it 
     appears and inserting ``XXI, and XXII''.
       (2) Treatment as state health care program.--Section 
     1128(h) of such Act (42 U.S.C. 1320a-7(h)) is amended--
       (A) in paragraph (3), by striking ``or'' at the end;
       (B) in paragraph (4), by striking the period at the end and 
     inserting ``, or''; and
       (C) by adding at the end the following new paragraph:
       ``(5) an outpatient prescription drug assistance plan 
     approved under title XXII.''.

     SEC. 3. ELECTION BY LOW-INCOME MEDICARE BENEFICIARIES AND 
                   MEDICARE BENEFICIARIES WITH HIGH DRUG COSTS TO 
                   SUSPEND MEDIGAP INSURANCE.

       Section 1882(q) of the Social Security Act (42 U.S.C. 
     1395ss(q)) is amended--
       (1) in paragraph (5)(C), by striking ``this paragraph or 
     paragraph (6)'' and inserting ``this paragraph, or paragraph 
     (6) or (7)''; and
       (2) by adding at the end the following new paragraph:
       ``(7) Each medicare supplemental policy shall provide that 
     benefits and premiums under the policy shall be suspended at 
     the request of the policyholder if the policyholder is 
     entitled to benefits under section 226 and is covered under 
     an outpatient prescription drug assistance plan (as defined 
     in section 2210(3)) or provided outpatient prescription drug 
     assistance under the program established under section 2209. 
     If such suspension occurs and if the policyholder or 
     certificate holder loses coverage under such plan or program, 
     such policy shall be automatically reinstituted (effective as 
     of the date of such loss of coverage) under terms described 
     in subsection (n)(6)(A)(ii) as of the loss of such coverage 
     if the policyholder provides notice of loss of such coverage 
     within 90 days after the date of such loss.''.

  Mr. JEFFORDS. Mr. President, today I am announcing my support for the 
Medicare Temporary Drug Assistance Act, introduced by Senator Roth. The 
Act will immediately provide funding for prescription drugs for 
Medicare beneficiaries who are having difficulty paying for the 
medicines that they need to live longer, happier lives.
  Mr. President, we all know that as the baby boomers become eligible 
for Medicare the program needs to be reformed due to the increased 
population. As a part of Medicare reform, we must have a broad 
prescription drug benefit that ensures that all Medicare beneficiaries 
have access to affordable medications. It doesn't make any sense for 
Medicare to pay for the cost of hospital stays, but not cover the drugs 
that can keep patients out of the hospital. The best medicines in the 
world will not help a patient who can't afford to take them. That is 
why I will continue to do all that I can, as the Chairman of the 
Committee on Health, Education, Labor and Pensions and member of the 
Finance Committee, to assure that Medicare beneficiaries have access to 
affordable prescription drugs this year.
  Today Chairman Roth has introduced two bills--one version that stays 
within the Budget Resolution, and one that exceeds our budget 
restraints--and I am proud to be an original cosponsor of this 
legislation, because I am convinced that it will immediately help 
millions of Americans who need but can't afford their medications. My 
own state of Vermont, which has already acted responsibly by extending 
prescription drug coverage to many low-income seniors through the 
Vermont Health Access Plan and the Vscript pharmacy program, will be 
rewarded with millions of federal dollars to extend its coverage to 
even larger numbers of Medicare beneficiaries. Under this bill, federal 
dollars will begin paying for prescription drugs for Vermonters on 
October 1 of this year--that's only about three weeks from now.
  Mr. President, I commend Chairman Roth for his outstanding leadership 
on this issue. Chairman Roth has worked tirelessly with me and the 
other members of the Finance Committee, clearly demonstrating that he 
supports Medicare reform, including coverage of prescription drugs, and 
that he believes that this can only be achieved through a bipartisan 
process. I have strongly supported his efforts to build a bipartisan 
consensus on this issue through the Committee process.
  Several weeks ago, Chairman Roth acknowledged the difficulty in 
finding a bipartisan consensus during this election year, and announced 
that if the Finance Committee is unable to report out a bipartisan 
Medicare reform bill, he would propose a plan to cover prescription 
drugs for the most needy Medicare beneficiaries, through grants to the 
states, as a stop-gap measure until Congress is able to pass larger-
scale Medicare reform. He also acknowledged that even if we were able 
to enact a prescription drug benefit this year, it would be almost 
impossible to implement such a plan for at least two years. The bill he 
has introduced today addresses both of these problems.
  Mr. President, let me be clear. This proposal is a stop-gap measure 
that will be put into place only until we are able to achieve broad 
Medicare reform, including prescription drug coverage that benefits all 
Medicare beneficiaries. This is not a substitute for Medicare reform, 
and it does not mean that we have given up on enacting Medicare reform 
this year. We must also attack the problem of affordability by passing 
my bill, the Medicine Equity and Drug Safety Act (S. 2520), which 
already passed the Senate by a vote of 74-21 as a part of the 
Agriculture Appropriations bill. These efforts will be undertaken 
simultaneously. I consider this bill to be emergency aid for 
prescription drugs that will be the bridge to a comprehensive plan. It 
is a very important down payment that will benefit Vermonters and all 
Americans immediately. That is why I am an original cosponsor of 
Chairman Roth's proposal, I urge my colleagues support.
  Thank you, Mr. President. I yield the floor.
                                 ______
                                 
      By Mr. ROTH (for himself, Mr. Jeffords, Mr. Murkowski, Mr. 
        Campbell, Mr. Stevens, and Mr. Frist):
  S. 3017. A bill to amend the Social Security Act to establish an 
outpatient prescription drug assistance program for low-income Medicare 
beneficiaries and Medicare beneficiaries with high drug costs; to the 
Committee on Finance.


                 Medicare Temporary Drug Assistance Act

  Mr. ROTH. Mr. President, I ask unanimous consent that the text of the 
bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 3017

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medicare Temporary Drug 
     Assistance Act''.

     SEC. 2. OUTPATIENT PRESCRIPTION DRUG ASSISTANCE PROGRAM.

       (a) Establishment.--The Social Security Act (42 U.S.C. 301 
     et seq.) is amended by adding at the end the following new 
     title:

     ``TITLE XXII--OUTPATIENT PRESCRIPTION DRUG ASSISTANCE PROGRAM

     ``SEC. 2201. PURPOSE; OUTPATIENT PRESCRIPTION DRUG ASSISTANCE 
                   PLANS.

       ``(a) Purpose.--The purpose of this title is to provide 
     funds to States to enable States, individually or in a group, 
     to establish a program, separate from the medicaid program 
     under title XIX, to provide assistance to low-income medicare 
     beneficiaries (as defined in section 2202(b)) and, at State 
     option, medicare beneficiaries with high drug costs (as 
     defined in section 2202(c)) to obtain coverage for outpatient 
     prescription drugs.

[[Page 17394]]

       ``(b) Outpatient Prescription Drug Assistance Plan 
     Required.--A State may not receive payments under section 
     2205 unless the State, individually or as part of a group of 
     States, submits in writing to the Secretary an outpatient 
     prescription drug assistance plan under section 2206(a)(1) 
     that--
       ``(1) describes how the State or group of States intends to 
     use the funds provided under this title to provide outpatient 
     prescription drug assistance to low-income medicare 
     beneficiaries and, if applicable, medicare beneficiaries with 
     high drug costs consistent with the provisions of this title;
       ``(2) includes a description of the budget for the plan 
     (updated periodically as necessary) and details on the 
     planned use of funds, the sources of the non-Federal share of 
     plan expenditures, and any requirements for cost-sharing by 
     beneficiaries;
       ``(3) describes the procedures to be used to ensure that 
     the outpatient prescription drug assistance provided to low-
     income medicare beneficiaries and, if applicable, medicare 
     beneficiaries with high drug costs under the plan does not 
     supplant coverage for outpatient prescription drugs available 
     to such beneficiaries under group health plans; and
       ``(4) has been approved by the Secretary under section 
     2206(a)(2).
       ``(c) Entitlement.--Subject to subsection (d)(2), this 
     title constitutes budget authority in advance of 
     appropriations Acts and represents the obligation of the 
     Federal Government to provide for the payment to States, 
     groups of States, and contractors described in section 
     2209(a)(2)(A), of amounts provided under section 2204.
       ``(d) Period of Applicability.--
       ``(1) In general.--No State, group of States, or contractor 
     described in section 2209(a)(2)(A), may receive payments 
     under section 2205 for outpatient prescription drug 
     assistance provided for periods beginning before October 1, 
     2000, or after September 30, 2004.
       ``(2) Medicare reform.--If medicare reform legislation that 
     includes coverage for outpatient prescription drugs is 
     enacted during the period that begins on October 1, 2000, and 
     ends on September 30, 2004, this title shall be repealed upon 
     the effective date of such legislation, and no State, group 
     of States, or contractor described in section 2209(a)(2)(A) 
     shall be entitled to receive payments for any outpatient 
     prescription drug assistance provided on or after such date.

     ``SEC. 2202. BENEFICIARY ELIGIBILITY.

       ``(a) Eligibility.--
       ``(1) In general.--In order for a State (individually or as 
     part of a group of States) to receive payments under section 
     2205 with respect to an outpatient prescription drug 
     assistance program, the program must provide, subject to the 
     availability of funds, outpatient prescription drug 
     assistance to each individual who--
       ``(A) resides in the State;
       ``(B) applies for such assistance; and
       ``(C) establishes that the individual is--
       ``(i) a low-income medicare beneficiary (as defined in 
     subsection (b)); or
       ``(ii) at the option of the State, a medicare beneficiary 
     with high drug costs (as defined in subsection (c)).
       ``(2) Residency rules.--In applying paragraph (1), 
     residency rules similar to the residency rules applicable to 
     the State plan under title XIX shall apply.
       ``(b) Low-Income Medicare Beneficiary Defined.--
       ``(1) In general.--In this title, except as provided in 
     section 2209(a)(2)(B), the term `low-income medicare 
     beneficiary' means an individual who--
       ``(A) is entitled to benefits under part A of title XVIII 
     or enrolled under part B of such title, including an 
     individual enrolled in a Medicare+Choice plan under part C of 
     such title;
       ``(B) subject to subsection (d), is not entitled to medical 
     assistance with respect to prescribed drugs under title XIX 
     or under a waiver under section 1115 of the requirements of 
     such title;
       ``(C) is determined to have family income that does not 
     exceed a percentage of the poverty line for a family of the 
     size involved specified by the State that, subject to 
     paragraph (2), may not exceed 175 percent; and
       ``(D) at the option of the State, is determined to have 
     resources that do not exceed a level specified by the State.
       ``(2) State-only drug assistance programs.--In the case of 
     a State that has a State-based drug assistance program 
     described in section 2203(e) that provides outpatient 
     prescription drug coverage for individuals described in 
     paragraph (1)(A) who have family income up to or exceeding 
     175 percent of the poverty line, the State may specify a 
     percentage of the poverty line under paragraph (1)(C) that 
     exceeds the income eligibility level specified by the State 
     for such program but does not exceed 50 percentage points 
     above such income eligibility level.
       ``(c) Medicare Beneficiary With High Drug Costs Defined.--
       ``(1) In general.--In this title, except as provided in 
     section 2209(a)(2)(C), the term `medicare beneficiary with 
     high drug costs' means an individual--
       ``(A) who satisfies the requirements of subparagraphs (A) 
     and (B) of subsection (b)(1);
       ``(B) whose family income exceeds the percentage of the 
     poverty line specified by the State in accordance with 
     subsection (b)(1)(C);
       ``(C) at the option of the State, whose resources exceed a 
     level (if any) specified by the State in accordance with 
     subsection (b)(1)(D); and
       ``(D) who has out-of-pocket expenses for outpatient 
     prescription drugs and biologicals (including insulin and 
     insulin supplies) for which outpatient prescription drug 
     assistance is available under this title that exceed such 
     amount as the State specifies in accordance with paragraph 
     (2).
       ``(2) Determination of out-of-pocket expenses.--A State 
     that elects to provide outpatient prescription drug 
     assistance to an individual described in paragraph (1) shall 
     provide the Secretary with the methodology and standards used 
     to determine the individual's eligibility under subparagraph 
     (D) of such paragraph.
       ``(d) Access for Medicaid Expansion States.--
       ``(1) In general.--Notwithstanding any other provision of 
     this title, with respect to any State that, as of the date of 
     enactment of this title, has made outpatient prescription 
     drug coverage for individuals described in paragraph (2) 
     available through the State medicaid program under title XIX 
     under a section 1115 waiver, the Secretary, in consultation 
     with such State, shall establish procedures under which the 
     State shall be able to receive payments from the allotment 
     made available under section 2204 for such State for a fiscal 
     year for purposes of offsetting the costs of making such 
     coverage available to such individuals.
       ``(2) Individuals described.--Individuals described in this 
     paragraph are individuals who are--
       ``(A) entitled to benefits under part A of title XVIII or 
     enrolled under part B of such title, including an individual 
     enrolled in a Medicare+Choice plan under part C of such 
     title; and
       ``(B) eligible for outpatient prescription drug coverage 
     only, under a State medicaid program under title XIX as a 
     result of a section 1115 waiver.
       ``(e) Individual Nonentitlement.--Nothing in this title 
     shall be construed as providing an individual with an 
     entitlement to outpatient prescription drug assistance 
     provided under this title.

     ``SEC. 2203. COVERAGE REQUIREMENTS.

       ``(a) Required Scope of Coverage.--
       ``(1) In general.--The outpatient prescription drug 
     assistance provided under the plan may consist of any of the 
     following:
       ``(A) Benchmark coverage.--Outpatient prescription drug 
     coverage that is equivalent to the outpatient prescription 
     drug coverage in a benchmark benefit package described in 
     subsection (b).
       ``(B) Aggregate actuarial value equivalent to benchmark 
     package.--Outpatient prescription drug coverage that has an 
     aggregate actuarial value that is at least equivalent to one 
     of the benchmark benefit packages.
       ``(C) Existing comprehensive state-based coverage.--
     Outpatient prescription drug coverage under an existing 
     State-based program, described in subsection (e).
       ``(D) Secretary-approved coverage.--Any other outpatient 
     prescription drug coverage that the Secretary determines, 
     upon application by a State or group of States, provides 
     appropriate outpatient prescription drug coverage for the 
     population of medicare beneficiaries proposed to be provided 
     such coverage.
       ``(2) Consistent design.--A State or group of States may 
     only select one of the options described in paragraph (1) 
     (and, if the State or group chooses to provide outpatient 
     prescription drug coverage that is equivalent to the 
     outpatient prescription drug coverage in a benchmark benefit 
     package, only one of the benchmark benefit package options 
     described in subsection (b)) in order to provide outpatient 
     prescription drug assistance in a uniform manner for the 
     population of medicare beneficiaries provided such coverage.
       ``(b) Benchmark Benefit Packages.--The benchmark benefit 
     packages are as follows:
       ``(1) Medicaid outpatient prescription drug coverage.--In 
     the case of--
       ``(A) a State, the outpatient prescription drug coverage 
     provided under the State medicaid plan under title XIX; or
       ``(B) a group of States, the outpatient prescription drug 
     coverage provided under the State medicaid plan under such 
     title of one of the States in the group, as identified in the 
     outpatient prescription drug assistance plan.
       ``(2) FEHBP-equivalent outpatient prescription drug 
     coverage.--The outpatient prescription drug coverage provided 
     under the Standard Option Blue Cross and Blue Shield Service 
     Benefit Plan described in and offered under section 8903(1) 
     of title 5, United States Code.
       ``(3) State employee outpatient prescription drug 
     coverage.--In the case of--
       ``(A) a State, the outpatient prescription drug coverage 
     provided under a health benefits coverage plan that is 
     offered and generally available to State employees in the 
     State involved; or
       ``(B) a group of States, the outpatient prescription drug 
     coverage provided under a health benefits coverage plan that 
     is offered and generally available to State employees

[[Page 17395]]

     in one of the States in the group, as identified in the 
     outpatient prescription drug assistance plan.
       ``(4) Outpatient prescription drug coverage offered through 
     largest hmo.--In the case of--
       ``(A) a State, the outpatient prescription drug coverage 
     provided under a health insurance coverage plan that is 
     offered by a health maintenance organization (as defined in 
     section 2791(b)(3) of the Public Health Service Act) and has 
     the largest insured commercial, nonmedicaid enrollment of 
     covered lives of such coverage plans offered by such a health 
     maintenance organization in the State involved; or
       ``(B) a group of States, the outpatient prescription drug 
     coverage provided under a health insurance coverage plan that 
     is offered by a health maintenance organization (as defined 
     in section 2791(b)(3) of the Public Health Service Act) and 
     has the largest insured commercial, nonmedicaid enrollment of 
     covered lives of such coverage plans offered by such a health 
     maintenance organization in one of the States involved.
       ``(c) Determination of Actuarial Value of Coverage.--
       ``(1) In general.--The actuarial value of outpatient 
     prescription drug coverage offered under benchmark benefit 
     packages and the outpatient prescription drug assistance plan 
     shall be set forth in an opinion in a report that has been 
     prepared--
       ``(A) by an individual who is a member of the American 
     Academy of Actuaries;
       ``(B) using generally accepted actuarial principles and 
     methodologies;
       ``(C) using a standardized set of utilization and price 
     factors;
       ``(D) using a standardized population that is 
     representative of the population to be covered under the 
     outpatient prescription drug assistance plan;
       ``(E) applying the same principles and factors in comparing 
     the value of different coverage;
       ``(F) without taking into account any differences in 
     coverage based on the method of delivery or means of cost 
     control or utilization used; and
       ``(G) taking into account the ability of a State or group 
     of States to reduce benefits by taking into account the 
     increase in actuarial value of benefits coverage offered 
     under the outpatient prescription drug assistance plan that 
     results from the limitations on cost-sharing under such 
     coverage.
       ``(2) Requirement.--The actuary preparing the opinion shall 
     select and specify in the report the standardized set and 
     population to be used under subparagraphs (C) and (D) of 
     paragraph (1).
       ``(d) Prohibited Coverage.--Nothing in this section shall 
     be construed as requiring any outpatient prescription drug 
     coverage offered under the plan to provide coverage for an 
     outpatient prescription drug for which payment is prohibited 
     under this title, notwithstanding that any benchmark benefit 
     package includes coverage for such an outpatient prescription 
     drug.
       ``(e) Description of Existing Comprehensive State-Based 
     Coverage.--
       ``(1) In general.--A program described in this paragraph is 
     an outpatient prescription drug coverage program for 
     individuals who are entitled to benefits under part A of 
     title XVIII or enrolled under part B of such title, including 
     an individual enrolled in a Medicare+Choice plan under part C 
     of such title, that--
       ``(A) is administered or overseen by the State and receives 
     funds from the State;
       ``(B) was offered as of the date of the enactment of this 
     title;
       ``(C) does not receive or use any Federal funds; and
       ``(D) is certified by the Secretary as providing outpatient 
     prescription drug coverage that satisfies the scope of 
     coverage required under subparagraph (A), (B), or (D) of 
     subsection (a)(1).
       ``(2) Modifications.--A State may modify a program 
     described in paragraph (1) from time to time so long as it 
     does not reduce the actuarial value (evaluated as of the time 
     of the modification) of the outpatient prescription drug 
     coverage under the program below the lower of--
       ``(A) the actuarial value of the coverage under the program 
     as of the date of enactment of this title; or
       ``(B) the actuarial value described in subsection 
     (a)(1)(B).
       ``(f) Beneficiary Premiums and Cost-Sharing.--
       ``(1) Description; general conditions.--
       ``(A) Description.--
       ``(i) In general.--An outpatient prescription drug 
     assistance plan shall include a description, consistent with 
     this subsection, of the amount of any premiums or cost-
     sharing imposed under the plan.
       ``(ii) Public schedule of charges.--Any premium or cost-
     sharing described under clause (i) shall be imposed under the 
     plan pursuant to a public schedule.
       ``(B) Protection for beneficiaries.--The outpatient 
     prescription drug assistance plan may only vary premiums and 
     cost-sharing based on the family income of low-income 
     medicare beneficiaries and, if applicable, medicare 
     beneficiaries with high drug costs, in a manner that does not 
     favor such beneficiaries with higher income over 
     beneficiaries with low-income.
       ``(2) Limitations on premiums and cost-sharing.--
       ``(A) No premiums or cost-sharing for beneficiaries with 
     income below 100 percent of poverty line.--In the case of a 
     low-income medicare beneficiary whose family income does not 
     exceed 100 percent of the poverty line, the outpatient 
     prescription drug assistance plan may not impose any premium 
     or cost-sharing.
       ``(B) Other beneficiaries.--For low-income medicare 
     beneficiaries not described in subparagraph (A) and, if 
     applicable, medicare beneficiaries with high drug costs, any 
     premiums or cost-sharing imposed under the outpatient 
     prescription drug assistance plan may be imposed, subject to 
     paragraph (1)(B), on a sliding scale related to income, 
     except that the total annual aggregate of such premiums and 
     cost-sharing with respect to all such beneficiaries in a 
     family under this title may not exceed 5 percent of such 
     family's income for the year involved.
       ``(g) Restriction on Application of Preexisting Condition 
     Exclusions.--The outpatient prescription drug assistance plan 
     shall not permit the imposition of any preexisting condition 
     exclusion for covered benefits under the plan and may not 
     discriminate in the pricing of premiums under such plan 
     because of health status, claims experience, receipt of 
     health care, or medical condition.

     ``SEC. 2204. ALLOTMENTS.

       ``(a) Appropriation.--
       ``(1) In general.--For the purpose of providing allotments 
     under this section to States, there is appropriated, out of 
     any money in the Treasury not otherwise appropriated--
       ``(A) for fiscal year 2001, $1,300,000,000;
       ``(B) for fiscal year 2002, $4,600,000,000;
       ``(C) for fiscal year 2003, $9,700,000,000; and
       ``(D) for fiscal year 2004, $13,000,000,000.
       ``(2) Availability.--Amounts appropriated under paragraph 
     (1) shall only be available for providing the allotments 
     described in such paragraph during the fiscal year for which 
     such amounts are appropriated. Any amounts that have not been 
     obligated by the Secretary for the purposes of making 
     payments from such allotments under section 2205, or under 
     contracts entered into under section 2209(b)(2)(B), on or 
     before September 30 of fiscal year 2001, 2002, 2003, or 2004 
     (as applicable), shall be returned to the Treasury.
       ``(b) Allotments to 50 States and District of Columbia.--
       ``(1) In general.--Subject to paragraph (3), of the amount 
     available for allotment under subsection (a) for a fiscal 
     year, reduced by the amount of allotments made under 
     subsection (c) for the fiscal year, the Secretary shall allot 
     to each State (other than a State described in such 
     subsection) with an outpatient prescription drug assistance 
     plan approved under this title the same proportion as the 
     ratio of--
       ``(A) the number of medicare beneficiaries with family 
     income that does not exceed 175 percent of the poverty line 
     residing in the State for the fiscal year; to
       ``(B) the total number of such beneficiaries residing in 
     all such States.
       ``(2) Determination of number of medicare beneficiaries 
     with income that does not exceed 175 percent of poverty.--For 
     purposes of paragraph (1), a determination of the number of 
     medicare beneficiaries with family income that does not 
     exceed 175 percent of the poverty line residing in a State 
     for the calendar year in which such fiscal year begins shall 
     be made on the basis of the arithmetic average of the number 
     of such medicare beneficiaries, as reported and defined in 
     the 5 most recent March supplements to the Current Population 
     Survey of the Bureau of the Census before the beginning of 
     the fiscal year.
       ``(3) Minimum allotment.--In no case shall the amount of 
     the allotment under this subsection for one of the 50 States 
     or the District of Columbia for a fiscal year be less than an 
     amount equal to 0.5 percent of the amount provided for 
     allotments under subsection (a) for that fiscal year (reduced 
     by the amount of allotments made under subsection (c) for the 
     fiscal year). To the extent that the application of the 
     previous sentence results in an increase in the allotment to 
     a State or the District of Columbia above the amount 
     otherwise provided, the allotments for the other States and 
     the District of Columbia under this subsection shall be 
     reduced in a pro rata manner (but not below the minimum 
     allotment described in such preceding sentence) so that the 
     total of such allotments in a fiscal year does not exceed the 
     amount otherwise provided for allotment under subsection (a) 
     for that fiscal year (as so reduced).
       ``(c) Allotments to Territories.--
       ``(1) In general.--Of the amount available for allotment 
     under subsection (a) for a fiscal year, the Secretary shall 
     allot 0.25 percent among each of the commonwealths and 
     territories described in paragraph (3) in the same proportion 
     as the percentage specified in paragraph (2) for such 
     commonwealth or territory bears to the sum of such 
     percentages for all such commonwealths or territories so 
     described.
       ``(2) Percentage.--The percentage specified in this 
     paragraph for--
       ``(A) Puerto Rico is 91.6 percent;

[[Page 17396]]

       ``(B) Guam is 3.5 percent;
       ``(C) the United States Virgin Islands is 2.6 percent;
       ``(D) American Samoa is 1.2 percent; and
       ``(E) the Northern Mariana Islands is 1.1 percent.
       ``(3) Commonwealths and territories.--A commonwealth or 
     territory described in this paragraph is any of the following 
     if it has an outpatient prescription drug assistance plan 
     approved under this title:
       ``(A) Puerto Rico.
       ``(B) Guam.
       ``(C) The United States Virgin Islands.
       ``(D) American Samoa.
       ``(E) The Northern Mariana Islands.
       ``(d) Transfer of Certain Allotments and Portions of 
     Allotments.--
       ``(1) Transfer and redistribution.--
       ``(A) In general.--Subject to subparagraph (B), not later 
     than 30 days after the date described in paragraph (2)--
       ``(i) 90 percent of the allotment determined for a fiscal 
     year under subsection (b) or (c) for a State shall be 
     transferred and made available in such fiscal year to the 
     Secretary, acting through the Administrator of the Health 
     Care Financing Administration, for purposes of carrying out 
     the default program established under section 2209; and
       ``(ii) 10 percent of such allotment shall be redistributed 
     in accordance with subsection (e).
       ``(B) Applicability.--Subparagraph (A) shall not apply if, 
     not later than the date described in paragraph (2) for such 
     fiscal year, a State submits a plan or is part of a group of 
     States that submits a plan to the Secretary that the 
     Secretary finds meets the requirements of section 2201(b).
       ``(2) Date described.--The date described in this paragraph 
     is--
       ``(A) in the case of fiscal year 2001, December 31, 2000; 
     and
       ``(B) in the case of fiscal year 2002, 2003, or 2004, 
     September 1 of the fiscal year preceding such fiscal year.
       ``(e) Redistribution of Portion of Allotments.--With 
     respect to a fiscal year, not later than 30 days after the 
     date described in subsection (d)(2) for such fiscal year, the 
     Secretary shall redistribute the total amount made available 
     for redistribution for such fiscal year under subsection 
     (d)(1)(A)(ii) to each State that submits a plan or is part of 
     a group of States that submits a plan to the Secretary that 
     the Secretary finds meets the requirements of this title. 
     Such amount shall be redistributed in the same manner as 
     allotments are determined under subsections (b) and (c) and 
     shall be available only to the extent consistent with 
     subsection (a)(2).

     ``SEC. 2205. PAYMENTS TO STATES.

       ``(a) In General.--Subject to the succeeding provisions of 
     this section, the Secretary shall pay to each State with a 
     plan approved under section 2206(a)(2) (individually or as 
     part of a group of States) from the State's allotment under 
     section 2204, an amount for each quarter equal to the 
     applicable percentage of expenditures in the quarter--
       ``(1) for outpatient prescription drug assistance under the 
     plan for low-income medicare beneficiaries and, if 
     applicable, medicare beneficiaries with high drug costs in 
     the form of providing coverage for outpatient prescription 
     drugs that meets the requirements of section 2203; and
       ``(2) only to the extent permitted consistent with 
     subsection (c), for reasonable costs incurred to administer 
     the plan.
       ``(b) Applicable Percentage.--For purposes of subsection 
     (a), the applicable percentage is--
       ``(1) for low-income medicare beneficiaries with family 
     incomes that do not exceed 135 percent of the poverty line, 
     100 percent; and
       ``(2) for all other low-income medicare beneficiaries and 
     for medicare beneficiaries with high drug costs, the enhanced 
     FMAP (as defined in section 2105(b)).
       ``(c) Limitation on Payments for Certain Expenditures.--
       ``(1) General limitations.--Funds provided to a State or 
     group of States under this title shall only be used to carry 
     out the purposes of this title.
       ``(2) Administrative expenditures.--
       ``(A) In general.--Subject to subparagraph (B), payment 
     shall not be made under subsection (a) for expenditures 
     described in subsection (a)(2) for a fiscal year to the 
     extent the total of such expenditures (for which payment is 
     made under such subsection) exceeds 10 percent of the total 
     expenditures described in subsection (a)(1) made by--
       ``(i) in the case of a State that is not part of a group of 
     States, the State for such fiscal year; and
       ``(ii) in the case of a group of States, the group for such 
     fiscal year.
       ``(B) Special rule.--With respect to the first fiscal year 
     that a State or group of States provides outpatient 
     prescription drug assistance under a plan approved under this 
     title, the 10 percent limitation described in subparagraph 
     (A) shall be applied--
       ``(i) in the case of a State that is not part of a group of 
     States, to the allotment available for such State for such 
     fiscal year; and
       ``(ii) in the case of a group of States, to the aggregate 
     of the State allotments available for all the States in such 
     group for such fiscal year.
       ``(3) Use of non-federal funds for state matching 
     requirement.--Amounts provided by the Federal Government, or 
     services assisted or subsidized to any significant extent by 
     the Federal Government, may not be included in determining 
     the amount of the non-Federal share of plan expenditures 
     required under the plan.
       ``(4) Offset of receipts attributable to premiums or cost-
     sharing.--For purposes of subsection (a), the amount of the 
     expenditures under the plan shall be reduced by the amount of 
     any premiums or cost-sharing received by a State.
       ``(5) Prevention of duplicative payments.--
       ``(A) Other health plans.--No payment shall be made under 
     this section for expenditures for outpatient prescription 
     drug assistance provided under an outpatient prescription 
     drug assistance plan to the extent that a private insurer (as 
     defined by the Secretary by regulation and including a group 
     health plan, a service benefit plan, and a health maintenance 
     organization) would have been obligated to provide such 
     assistance but for a provision of its insurance contract 
     which has the effect of limiting or excluding such obligation 
     because the beneficiary is eligible for or is provided 
     outpatient prescription drug assistance under the plan.
       ``(B) Other federal governmental programs.--Except as 
     otherwise provided by law, no payment shall be made under 
     this section for expenditures for outpatient prescription 
     drug assistance provided under an outpatient prescription 
     drug assistance plan to the extent that payment has been made 
     or can reasonably be expected to be made promptly (as 
     determined in accordance with regulations) under any other 
     federally operated or financed health care insurance program 
     identified by the Secretary. For purposes of this paragraph, 
     rules similar to the rules for overpayments under section 
     1903(d)(2) shall apply.
       ``(d) Advance Payment; Retrospective Adjustment.--The 
     Secretary may make payments under this section for each 
     quarter on the basis of advance estimates of expenditures 
     submitted by a State or group of States and such other 
     investigation as the Secretary may find necessary, and may 
     reduce or increase the payments as necessary to adjust for 
     any overpayment or underpayment for prior quarters.
       ``(e) Flexibility in Submittal of Claims.--Nothing in this 
     section shall be construed as preventing a State or group of 
     States from claiming as expenditures in any quarter of a 
     fiscal year expenditures that were incurred in a previous 
     quarter of such fiscal year.

     ``SEC. 2206. PROCESS FOR SUBMISSION, APPROVAL, AND AMENDMENT 
                   OF OUTPATIENT PRESCRIPTION DRUG ASSISTANCE 
                   PLANS.

       ``(a) Initial Plan.--
       ``(1) Submission.--A State may receive payments under 
     section 2205 with respect to a fiscal year if the State, 
     individually or as part of a group of States, has submitted 
     to the Secretary, not later than the date described in 
     section 2204(d)(2), an outpatient prescription drug 
     assistance plan that the Secretary has found meets the 
     applicable requirements of this title.
       ``(2) Approval.--Except as the Secretary may provide under 
     subsection (e), a plan submitted under paragraph (1)--
       ``(A) shall be approved for purposes of this title; and
       ``(B) shall be effective beginning with a calendar quarter 
     that is specified in the plan, but in no case earlier than 
     October 1, 2000.
       ``(b) Plan Amendments.--Within 30 days after a State or 
     group of States amends an outpatient prescription drug 
     assistance plan submitted pursuant to subsection (a), the 
     State or group shall notify the Secretary of the amendment.
       ``(c) Disapproval of Plans and Plan Amendments.--
       ``(1) Prompt review of plan submittals.--The Secretary 
     shall promptly review plans and plan amendments submitted 
     under this section to determine if they substantially comply 
     with the requirements of this title.
       ``(2) 45-day approval deadlines.--A plan or plan amendment 
     is considered approved unless the Secretary notifies the 
     State or group of States in writing, within 45 days after 
     receipt of the plan or amendment, that the plan or amendment 
     is disapproved (and the reasons for the disapproval) or that 
     specified additional information is needed.
       ``(3) Correction.--In the case of a disapproval of a plan 
     or plan amendment, the Secretary shall provide a State or 
     group of States with a reasonable opportunity for correction 
     before taking financial sanctions against the State or group 
     on the basis of such disapproval.
       ``(d) Program Operation.--
       ``(1) In general.--A State or group of States shall conduct 
     the program in accordance with the plan (and any amendments) 
     approved under this section and with the requirements of this 
     title.
       ``(2) Violations.--The Secretary shall establish a process 
     for enforcing requirements under this title. Such process 
     shall provide for the withholding of funds in the case of 
     substantial noncompliance with such requirements. In the case 
     of an enforcement action against a State or group of States 
     under this paragraph, the Secretary shall provide a State or 
     group of States with a

[[Page 17397]]

     reasonable opportunity for correction and for administrative 
     and judicial appeal of the Secretary's action before taking 
     financial sanctions against the State or group of States on 
     the basis of such an action.
       ``(e) Continued Approval.--Subject to section 2201(d), an 
     approved outpatient prescription drug assistance plan shall 
     continue in effect unless and until the State or group of 
     States amends the plan under subsection (b) or the Secretary 
     finds, under subsection (d), substantial noncompliance of the 
     plan with the requirements of this title.

     ``SEC. 2207. PLAN ADMINISTRATION; APPLICATION OF CERTAIN 
                   GENERAL PROVISIONS.

       ``(a) Plan Administration.--An outpatient prescription drug 
     assistance plan shall include an assurance that the State or 
     group of States administering the plan will collect the data, 
     maintain the records, afford the Secretary access to any 
     records or information relating to the plan for the purposes 
     of review or audit, and furnish reports to the Secretary, at 
     the times and in the standardized format the Secretary may 
     require in order to enable the Secretary to monitor program 
     administration and compliance and to evaluate and compare the 
     effectiveness of plans under this title.
       ``(b) Application of Certain General Provisions.--The 
     following sections of this Act shall apply to the program 
     established under this title in the same manner as they apply 
     to a State under title XIX:
       ``(1) Title xix provisions.--
       ``(A) Section 1902(a)(4)(C) (relating to conflict of 
     interest standards).
       ``(B) Paragraphs (2), (16), and (17) of section 1903(i) 
     (relating to limitations on payment).
       ``(C) Section 1903(w) (relating to limitations on provider 
     taxes and donations).
       ``(2) Title xi provisions.--
       ``(A) Section 1115 (relating to waiver authority).
       ``(B) Section 1116 (relating to administrative and judicial 
     review), but only insofar as consistent with this title.
       ``(C) Section 1124 (relating to disclosure of ownership and 
     related information).
       ``(D) Section 1126 (relating to disclosure of information 
     about certain convicted individuals).
       ``(E) Section 1128A (relating to civil monetary penalties).
       ``(F) Section 1128B(d) (relating to criminal penalties for 
     certain additional charges).

     ``SEC. 2208. REPORTS.

       ``(a) In General.--Each State or group of States 
     administering a plan under this title shall annually--
       ``(1) assess the operation of the outpatient prescription 
     drug assistance plan under this title in each fiscal year; 
     and
       ``(2) report to the Secretary on the result of the 
     assessment.
       ``(b) Required Information.--The annual report required 
     under subsection (a) shall include the following:
       ``(1) An assessment of the effectiveness of the plan in 
     providing outpatient prescription drug assistance to low-
     income medicare beneficiaries and, if applicable, medicare 
     beneficiaries with high drug costs.
       ``(2) A description and analysis of the effectiveness of 
     elements of the plan, including--
       ``(A) the characteristics of the low-income medicare 
     beneficiaries and, if applicable, medicare beneficiaries with 
     high drug costs assisted under the plan, including family 
     income and access to, or coverage by, other health insurance 
     prior to the plan and after eligibility for the plan ends;
       ``(B) the amount and level of assistance provided under the 
     plan; and
       ``(C) the sources of the non-Federal share of plan 
     expenditures.
       ``(c) Annual Report of the Secretary.--The Secretary shall 
     submit to Congress and make available to the public an annual 
     report based on the reports required under subsection (a) and 
     section 2209(b)(5), containing any conclusions and 
     recommendations the Secretary considers appropriate.

     ``SEC. 2209. ESTABLISHMENT OF DEFAULT PROGRAM.

       ``(a) Program Authority.--
       ``(1) In general.--With respect to a fiscal year, in the 
     case of a State that fails to submit (individually or as part 
     of a group of States) an approved outpatient prescription 
     drug assistance plan to the Secretary by the date described 
     in section 2204(d)(2) for such fiscal year, outpatient 
     prescription drug assistance to low-income medicare 
     beneficiaries and, subject to the availability of funds, 
     medicare beneficiaries with high drug costs, who reside in 
     such State shall be provided during such fiscal year by the 
     Secretary, through the Administrator of the Health Care 
     Financing Administration, in accordance with this section.
       ``(2) Definitions.--In this section:
       ``(A) Contractor.--The term `contractor' means a 
     pharmaceutical benefit manager or other entity that meets 
     standards established by the Administrator of the Health Care 
     Financing Administration for the provision of outpatient 
     prescription drug assistance under a contract entered into 
     under this section.
       ``(B) Low-income medicare beneficiary.--The term `low-
     income medicare beneficiary' means an individual who--
       ``(i) satisfies the requirements of subparagraphs (A) and 
     (B) of section 2202(b)(1);
       ``(ii) is determined to have family income that does not 
     exceed a percentage of the poverty line for a family of the 
     size involved specified by the Administrator of the Health 
     Care Financing Administration that may not exceed 135 
     percent; and
       ``(iii) at the option of the Administrator of the Health 
     Care Financing Administration, is determined to have 
     resources that do not exceed a level specified by such 
     Administrator.
       ``(C) Medicare beneficiary with high drug costs.--The term 
     `medicare beneficiary with high drug costs' means an 
     individual--
       ``(i) who satisfies the requirements of subparagraphs (A) 
     and (B) of section 2202(b)(1);
       ``(ii) whose family income exceeds the percentage of the 
     poverty line specified by the Administrator of the Health 
     Care Financing Administration under subparagraph (B)(ii) for 
     a low-income medicare beneficiary residing in the same State;
       ``(iii) whose resources exceed a level (if any) specified 
     by the Administrator of the Health Care Financing 
     Administration under subparagraph (B)(iii) for a low-income 
     medicare beneficiary residing in the same State; and
       ``(iv) with respect to any 3-month period, who has out-of-
     pocket expenses for outpatient prescription drugs and 
     biologicals (including insulin and insulin supplies) for 
     which outpatient prescription drug assistance is available 
     under this title that exceed a level specified by such 
     Administrator (consistent with the availability of funds for 
     the operation of the program established under this section 
     in the State where the beneficiary resides).
       ``(b) Administration.--In administering the default program 
     established under this section, the Administrator of the 
     Health Care Financing Administration shall--
       ``(1) establish procedures to determine the eligibility of 
     the low-income medicare beneficiaries and medicare 
     beneficiaries with high drug costs described in subsection 
     (a) for outpatient prescription drug assistance;
       ``(2) establish a process for accepting bids to provide 
     outpatient prescription drug assistance to such 
     beneficiaries, awarding contracts under such bids, and making 
     payments under such contracts;
       ``(3) establish policies and procedures for overseeing the 
     provision of outpatient prescription drug assistance under 
     such contracts;
       ``(4) develop and implement quality and service assessment 
     measures that include beneficiary quality surveys and annual 
     quality and service rankings for contractors awarded a 
     contract under this section;
       ``(5) annually assess the program established under this 
     section and submit a report to the Secretary containing the 
     information required under section 2208(b); and
       ``(6) carry out such other responsibilities as are 
     necessary for the administration of the provision of 
     outpatient prescription drug assistance under this section.
       ``(c) Contract Requirements.--
       ``(1) Authority; term.--
       ``(A) Use of competitive procedures.--
       ``(i) Fiscal year 2001.--With respect to fiscal year 2001, 
     the Administrator of the Health Care Financing Administration 
     may enter into contracts under this section without using 
     competitive procedures, as defined in section 4(5) of the 
     Office of Federal Procurement Policy Act (41 U.S.C. 403(5)), 
     or any other provision of law requiring competitive bidding.
       ``(ii) Fiscal years 2002, 2003, and 2004.--With respect to 
     fiscal years 2002, 2003, and 2004, the Administrator of the 
     Health Care Financing Administration shall award contracts 
     under this section using competitive procedures (as so 
     defined).
       ``(B) Term.--Each contract shall be for a uniform term of 
     at least 1 year, but may be made automatically renewable from 
     term to term in the absence of notice of termination by 
     either party.
       ``(2) Benefit.--The contract shall require the contractor 
     to provide a low-income medicare beneficiary and, if 
     applicable, a medicare beneficiary with high drug costs, 
     outpatient prescription drug assistance that is equivalent to 
     the FEHBP-equivalent benchmark benefit package described in 
     section 2203(b)(2) in a manner that is consistent with the 
     provisions of this title as such provisions apply to a State 
     that provides such assistance.
       ``(3) Quality and service assessment.--The contract shall 
     require the contractor to cooperate with the quality and 
     service assessment measures implemented in accordance with 
     subsection (b)(4).
       ``(4) Payments.--The contract shall specify the amount and 
     manner by which payments (including any administrative fees) 
     shall be made to the contractor for the provision of 
     outpatient prescription drug assistance to low-income 
     medicare beneficiaries and, if applicable, medicare 
     beneficiaries with high drug costs.
       ``(d) Funding.--
       ``(1) Aggregate of transferred amounts.--The Secretary, 
     through the Administrator of the Health Care Financing 
     Administration, shall use the aggregate of the amounts 
     transferred and made available under section 2204(d)(1)(A)(i) 
     for purposes of carrying out the default program established 
     under this section. Such aggregate may be used to provide 
     outpatient prescription drug

[[Page 17398]]

     assistance to any low-income medicare beneficiary, and, 
     subject to the availability of funds, medicare beneficiary 
     with high drug costs, who resides in a State described in 
     subsection (a)(1).
       ``(2) Limitation on administrative costs.--Administrative 
     expenditures incurred by the Secretary or the Administrator 
     of the Health Care Financing Administration for a fiscal year 
     to carry out this section (other than administrative fees 
     paid to a contractor under a contract meeting the 
     requirements of subsection (c))--
       ``(A) shall be paid out of the aggregate amounts described 
     in paragraph (1); and
       ``(B) may not exceed an amount equal to 1 percent of all 
     premiums imposed for such fiscal year to provide outpatient 
     prescription drug assistance to low-income medicare 
     beneficiaries and medicare beneficiaries with high drug costs 
     under this section.
       ``(e) Termination.--Except as provided in section 
     2201(d)(2), the program established under this section shall 
     terminate on September 30, 2004.

     ``SEC. 2210. DEFINITIONS.

       ``In this title:
       ``(1) Cost-sharing.--The term `cost-sharing' means a 
     deductible, coinsurance, copayment, or similar charge, and 
     includes an enrollment fee.
       ``(2) Outpatient prescription drug assistance.--
       ``(A) In general.--The term `outpatient prescription drug 
     assistance' means, subject to subparagraph (B), payment for 
     part or all of the cost of coverage of self-administered 
     outpatient prescription drugs and biologicals (including 
     insulin and insulin supplies) for low-income medicare 
     beneficiaries and, if applicable, medicare beneficiaries with 
     high drug costs.
       ``(B) Exclusions.--Such term does not include payment or 
     coverage with respect to--
       ``(i) items covered under title XVIII; or
       ``(ii) items for which coverage is not available under a 
     State plan under title XIX.
       ``(3) Outpatient prescription drug assistance plan; plan.--
     Unless the context otherwise requires, the terms `outpatient 
     prescription drug assistance plan' and `plan' mean an 
     outpatient prescription drug assistance plan approved under 
     section 2206.
       ``(4) Group health plan; group health insurance coverage; 
     etc.--The terms `group health plan', `group health insurance 
     coverage', and `health insurance coverage' have the meanings 
     given such terms in section 2791 of the Public Health Service 
     Act (42 U.S.C. 300gg-91).
       ``(5) Poverty line.--The term `poverty line' has the 
     meaning given such term in section 673(2) of the Community 
     Services Block Grant Act (42 U.S.C. 9902(2)), including any 
     revision required by such section.
       ``(6) Preexisting condition exclusion.--The term 
     `preexisting condition exclusion' has the meaning given such 
     term in section 2701(b)(1)(A) of the Public Health Service 
     Act (42 U.S.C. 300gg(b)(1)(A)).
       ``(7) State.--The term `State' has the meaning given such 
     term for purposes of title XIX.''.
       (b) Conforming Amendments.--
       (1) Definition of state.--Section 1101(a)(1) of the Social 
     Security Act (42 U.S.C. 1301(a)(1)) is amended in the first 
     and fourth sentences, by striking ``and XXI'' each place it 
     appears and inserting ``XXI, and XXII''.
       (2) Treatment as state health care program.--Section 
     1128(h) of such Act (42 U.S.C. 1320a-7(h)) is amended--
       (A) in paragraph (3), by striking ``or'' at the end;
       (B) in paragraph (4), by striking the period at the end and 
     inserting ``, or''; and
       (C) by adding at the end the following new paragraph:
       ``(5) an outpatient prescription drug assistance plan 
     approved under title XXII.''.

     SEC. 3. ELECTION BY LOW-INCOME MEDICARE BENEFICIARIES AND 
                   MEDICARE BENEFICIARIES WITH HIGH DRUG COSTS TO 
                   SUSPEND MEDIGAP INSURANCE.

       Section 1882(q) of the Social Security Act (42 U.S.C. 
     1395ss(q)) is amended--
       (1) in paragraph (5)(C), by striking ``this paragraph or 
     paragraph (6)'' and inserting ``this paragraph, or paragraph 
     (6) or (7)''; and
       (2) by adding at the end the following new paragraph:
       ``(7) Each medicare supplemental policy shall provide that 
     benefits and premiums under the policy shall be suspended at 
     the request of the policyholder if the policyholder is 
     entitled to benefits under section 226 and is covered under 
     an outpatient prescription drug assistance plan (as defined 
     in section 2210(3)) or provided outpatient prescription drug 
     assistance under the program established under section 2209. 
     If such suspension occurs and if the policyholder or 
     certificate holder loses coverage under such plan or program, 
     such policy shall be automatically reinstituted (effective as 
     of the date of such loss of coverage) under terms described 
     in subsection (n)(6)(A)(ii) as of the loss of such coverage 
     if the policyholder provides notice of loss of such coverage 
     within 90 days after the date of such loss.''.
                                 ______
                                 
      Mr. TORRICELLI (for himself and Mr. Johnson):
  S. 3018. A bill to amend the Federal Deposit Insurance Act with 
respect to municipal deposits.


           MUNICIPAL DEPOSIT INSURANCE PROTECTION ACT OF 2000

  Mr. TORRICELLI. Mr. President, I rise with my colleague Senator 
Johnson to introduce ``The Municipal Deposit Insurance Protection Act 
of 2000.'' This legislation provides municipal deposits with one-
hundred percent federal deposit insurance coverage by the Federal 
Deposit Insurance Corporation (FDIC). The lack of one-hundred percent 
coverage for municipal deposits has stifled the ability of community 
banks to invest in local families and businesses. By providing this 
much-needed coverage, this legislation ensures that local banks have 
the resources they need to grow their communities.
  Municipal deposits are taxpayer funds deposited by state and local 
governments, school districts, water authorities and other public 
entities. Due to the fact that the FDIC does not provide insurance 
coverage to municipal deposits, many states require banks to provide 
collateral for municipal deposits. Full deposit insurance coverage of 
municipal deposits could free up bank resources currently used for 
collateral. These resources could be used to keep local public funds at 
work in the communities in which they are generated.
  Moreover, FDIC coverage helps build consumer confidence in their bank 
and helps attract the core deposits that are needed for community 
lending and a bank's survival. Without FDIC coverage, many independent, 
local banks are losing substantial deposits to large, corporate banks 
because of the perception that larger banks are safer. Providing 
municipal deposits with complete insurance coverage will strengthen 
community banks by placing these banks in a more competitive position 
to attract municipal deposits. Our nation's independently-operated 
banks are a valued part of our communities. It is important that these 
banks are able to maintain their competitiveness and continue providing 
their communities with their characteristic attention to customer 
service and investments in local farms and small businesses.
  Finally, numerous taxpayers may be at risk municipal funds are placed 
in a failed bank. Recently, a bank failure in Carlisle, Iowa resulted 
in the loss of nearly $12 million in uninsured municipal deposits. Even 
though the state of Iowa has a fund that guarantees the deposits of 
state and local governments, there was an $8.4 billion shortfall in the 
fund. Consequently, this shortfall in funds will have to be made up by 
other Iowa banks.
  This is why Senator's Johnson and I are introducing ``The Municipal 
Deposit Insurance Protection Act of 2000.'' The legislation will 
provide one-hundred percent coverage for municipal deposits will free 
up bank resources currently used as collateral, enable local, 
independent banks to attract municipal deposits, and will protect 
municipal taxpayers from losing uninsured public money. Senator Johnson 
and I look forward to working with our colleagues on this much-need 
legislation.
                                 ______
                                 
      By Mr. INHOFE:
  S. 3019. A bill to clarify the Federal relationship to the Shawnee 
Tribe as a distinct Indian tribe, to clarify the status of the members 
of the Shawnee Tribe, and for other purposes; to the Committee on 
Indian Affairs.


                    SHAWNEE TRIBE STATUS ACT OF 2000

  Mr. INHOFE. Mr. President, today I introduce a bill that will modify 
the relationship between the Cherokee Nation in Oklahoma and the 
Shawnee Tribe in Oklahoma. These two tribes were joined together by an 
Agreement entered into between them on June 7, 1869. This bill will 
allow the Shawnee Tribe to have an independent government, elect its 
own officials and do those things it believes necessary to protect its 
language, culture and traditions. Since the two tribes will continue to 
operate in the same territory, the bill sets forth the conditions which 
shall govern those operations.
  This legislation will have the effect of modifying the Cherokee-
Shawnee agreement by allowing the Shawnee tribe to operate 
independently of the Cherokee Nation. The Shawnee Tribe

[[Page 17399]]

will be governed by a separate constitution currently in existence. 
Membership of Shawnee Indians will continue to be permitted within the 
Cherokee Nation, although Shawnee Indians who so elect will become 
members of the Shawnee Tribe exclusively.
  The bill also sets forth the manner in which the Shawnee Tribe will 
conduct its business within the Cherokee Nation and both Tribes have 
concurred in this legislation through tribal resolutions of their 
respective governing bodies. Although the Shawnee Tribe will be 
operating within the jurisdictional territory of the Cherokee Nation, 
the Shawnee people believe it is in their best interest to have a 
separate tribal governance to protect and enhance their culture, 
language and history and to pursue the goal of self-sufficiency for 
their own Tribe.
  It is important to note that in changing the agreement between these 
two tribes there is no new tribal territory created nor is it proposed 
that any additional land be taken into trust for either Tribe as a 
result of the changes. The jurisdictional area of the tribes remains as 
before so that there are no impacts on communities within the Cherokee 
Nation. The proposal is also revenue neutral as to the United States. 
Tribal members of either tribe now receiving services will continue to 
receive those services as they have in the past.
  The Shawnee Tribe was never terminated nor can the Bureau of Indian 
Affairs cause the Tribes to be separated through the Federal 
Acknowledgment Process. The Agreement of 1869 between the two tribes 
was ratified by the President and can only be amended by this proposed 
action of Congress.
  In summary, this bill would recognize the long standing policy of the 
United States to respect the sovereignty of every tribe and to respect 
the desire of the Shawnee people to be governed independently of the 
Cherokee Nation so that Shawnee people can identify with their own 
Tribe and work to maintain their culture, language, heritage and 
traditions.
                                 ______
                                 
      By Mr. GRAMS (for himself, Mr. Baucus, Mr. Inhofe, Mr. Gregg, and 
        Mrs. Hutchison):
  S. 3020. A bill to require the Federal Communications Commission to 
revise its regulations authorizing the operation of new, low-power FM 
radio stations; to the Committee on Commerce, Science, and 
Transportation.


              radio broadcasting preservation act of 2000

  Mr. GRAMS. Mr. President, I rise today to introduce legislation to 
address the ongoing dispute between advocates of low power FM radio and 
full power FM radio broadcasters. I am pleased to be joined in this 
bipartisan effort by Senators Baucus, Inhofe, Gregg, and Hutchison. Our 
legislation, the ``Radio Broadcasting Preservation Act of 2000,'' was 
overwhelmingly passed by the House of Representatives on April 13th by 
a vote of 274-110.
  On January 20th, the Federal Communications Commission narrowly 
adopted a proposal that would establish a new radio service known as 
low power FM radio (LPFM). Under this program, the Commission would 
license hundreds of new low power FM radio stations in two classes. The 
new service would license stations with a maximum power level of 10 
watts that would reach an area with a radius of between 1 and 2 miles, 
and a second class of stations with a maximum power level of 100 watts 
that would reach an area with a radius of three and a half miles. 
Although the commission adopted first- and second-adjacent channel 
interference protections as part of its rulemaking, it chose to allow 
LPFM stations to be licensed on third-adjacent channels. The FCC began 
accepting applications for this new service on May 30th.
  Over the last several months, I have carefully listened to 
Minnesotans who care deeply about the issues involved in the debate 
over LPFM. In the absence of third-adjacent channel protection, 
incumbent FM broadcasters believe that low power FM radio stations 
would cause interference to existing radio services. LPFM advocates 
argue that the Federal Communications Commission has conducted adequate 
testing for interference and that requiring third adjacent channel 
protections would unnecessarily limit the number of licensed low power 
FM radio stations. Further, they suggest that the 1996 
Telecommunications Act has resulted in unprecedented concentration 
within the telecommunications industry.
  Although I have many concerns about the impact of LPFM service upon 
current FM radio broadcasting, I share the commission's stated goal of 
increasing diversity in radio and television broadcasting. Earlier this 
Congress, I supported the enactment of the Community Broadcasters Act, 
which preserves the unique community television broadcasting provided 
by low power television stations that are operated by diverse groups 
such as high schools, churches, local government and individual 
citizens. I also look forward to reviewing the findings and 
recommendations from the ongoing survey of minority broadcast owners 
being conducted by the National Telecommunications and Information 
Administration that will be used to analyze the impact of the 1996 
Telecommunications Act upon minority broadcast ownership in the United 
States.
  Mr. President, I am also very mindful of the concerns about LPFM 
raised by radio reading service programs. In my home state, the State 
Services for the Blind sponsors the ``Radio Talking Book'' program. 
Radio Talking Book is a closed-circuit broadcast system which uses FM 
subcarrier frequencies from radio stations in Minnesota and South 
Dakota to deliver readings from newspapers, magazines and books on a 
daily basis to more than 10,000 blind and visually impaired persons. 
Sub-carrier signals are the most vulnerable to low power FM radio 
interference because they are located at the outer edge of the 
frequency space.
  I am troubled by the Federal Communications Commission's decision to 
adopt LPFM without conducting field testing of subcarrier receivers. 
Nearly eight months after the Commission approved LPFM, engineering 
studies and field testing of these receivers have not yet been 
completed by the Commission, and it remains unclear as to how the FCC 
intends to address interference that may be caused to radio reading 
services. The agency's inaction underscores the haste in which the LPFM 
plan was developed and gives credence to the view that the adoption of 
the FCC rules was a rush to judgment. I ask unanimous consent that 
letters from Minnesota Public Radio, the Minnesota State Services for 
the Blind and the International Association of Audio Information 
Services be inserted into the Record at this time.
  For these reasons, I am pleased to introduce the ``Radio Broadcasting 
Preservation Act of 2000.'' I believe this legislation represents the 
interests of LPFM advocates, full power FM broadcasters, and most 
importantly--radio listeners. This compromise bill will allow the 
Federal Communications Commission to license lower power FM radio 
stations while requiring additional third adjacent channel protections 
for full power FM broadcasters.
  Among its other provisions, the Radio Broadcasting Preservation Act 
of 2000 would require that an independent party conduct testing in nine 
FM radio markets to determine whether LPFM without third adjacent 
channel protections would cause harmful interference to existing FM 
radio services. The legislation would require the FCC to submit a 
report to Congress which analyzes the experimental test program 
results; and evaluates the impact of LPFM on listening audiences, 
incumbent FM radio broadcasters, minority and small market 
broadcasters, and radio stations that provide radio reading services to 
the blind.
  Mr. President, some advocates of the low power FM plan adopted by the 
Commission argue that the Congress should simply allow the agency to 
move forward on LPFM without any input or modifications from Congress. 
Those individuals apparently favor granting legislative authority to 
federal regulatory agencies. Since the establishment of the Federal 
Communications Commission through an Act

[[Page 17400]]

of Congress in 1934, members of the House and Senate have consistently 
exercised appropriate oversight of FCC rules and proposals.
  As a member of the Senate, I have carefully monitored the 
Commission's activities to ensure responsible public policy and the 
wisest use of taxpayer dollars. Over the last few years, I have 
expressed my concern over a number of issues considered by the 
Commission, including satellite television, rights-of-way management, 
universal service, the impact of digital television rules upon low 
power television and translator stations, and most recently low power 
FM radio. Congress should not abdicate its oversight responsibilities 
when considering the LPFM issue.
  Mr. President, I firmly believe that the ``Radio Broadcasting 
Preservation Act of 2000'' will strengthen community broadcasting 
without sacrificing existing radio services. I ask unanimous consent 
that the full text of this bill and additional material be printed in 
the Record and I yield the floor.
  There being no objection, the material was ordered to be printed in 
the Record,  as follows:

                                S. 3020

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Radio Broadcasting 
     Preservation Act of 2000''.

     SEC. 2. MODIFICATIONS TO LOW-POWER FM REGULATIONS REQUIRED.

       (a) Third-Adjacent Channel Protections Required.--
       (1) Modifications required.--The Federal Communications 
     Commission shall modify the rules authorizing the operation 
     of low-power FM radio stations, as proposed in MM Docket No. 
     99-25, to--
       (A) prescribe minimum distance separations for third-
     adjacent channels (as well as for co-channels and first- and 
     second-adjacent channels); and
       (B) prohibit any applicant from obtaining a low-power FM 
     license if the applicant has engaged in any manner in the 
     unlicensed operation of any station in violation of section 
     301 of the Communications Act of 1934 (47 U.S.C. 301).
       (2) Congressional authority required for further changes.--
     The Federal Communications Commission may not--
       (A) eliminate or reduce the minimum distance separations 
     for third-adjacent channels required by paragraph (1)(A); or
       (B) extend the eligibility for application for low-power FM 
     stations beyond the organizations and entities as proposed in 
     MM Docket No. 99-25 (47 CFR 73.853),
     except as expressly authorized by Act of Congress enacted 
     after the date of the enactment of this Act.
       (3) Validity of prior actions.--Any license that was issued 
     by the Commission to a low-power FM station prior to the date 
     on which the Commission modify its rules as required by 
     paragraph (1) and that does not comply with such 
     modifications shall be invalid.
       (b) Further Evaluation of Need for Third-Adjacent Channel 
     Protections.--
       (1) Pilot program required.--The Federal Communications 
     Commission shall conduct an experimental program to test 
     whether low-power FM radio stations will result in harmful 
     interference to existing FM radio stations if such stations 
     are not subject to the minimum distance separations for 
     third-adjacent channels required by subsection (a). The 
     Commission shall conduct such test in no more than nine FM 
     radio markets, including urban, suburban, and rural markets, 
     by waiving the minimum distance separations for third-
     adjacent channels for the stations that are the subject of 
     the experimental program. At least one of the stations shall 
     be selected for the purpose of evaluating whether minimum 
     distance separations for third-adjacent channels are needed 
     for FM translator stations. The Commission may, consistent 
     with the public interest, continue after the conclusion of 
     the experimental program to waive the minimum distance 
     separations for third-adjacent channels for the stations that 
     are the subject of the experimental program.
       (2) Conduct of testing.--The Commission shall select an 
     independent testing entity to conduct field tests in the 
     markets of the stations in the experimental program under 
     paragraph (1). Such field tests shall include--
       (A) an opportunity for the public to comment on 
     interference; and
       (B) independent audience listening tests to determine what 
     is objectionable and harmful interference to the average 
     radio listener.
       (3) Report to congress.--The Commission shall publish the 
     results of the experimental program and field tests and 
     afford an opportunity for the public to comment on such 
     results. The Federal Communications Commission shall submit a 
     report on the experimental program and field tests to the 
     Committee on Commerce of the House of Representatives and the 
     Committee on Commerce, Science, and Transportation of the 
     Senate not later than February 1, 2001. Such report shall 
     include--
       (A) an analysis of the experimental program and field tests 
     and of the public comment received by the Commission;
       (B) an evaluation of the impact of the modification or 
     elimination of minimum distance separations for third-
     adjacent channels on--
       (i) listening audiences;
       (ii) incumbent FM radio broadcasters in general, and on 
     minority and small market broadcasters in particular, 
     including an analysis of the economic impact on such 
     broadcasters;
       (iii) the transition to digital radio for terrestrial radio 
     broadcasters;
       (iv) stations that provide a reading service for the blind 
     to the public; and
       (v) FM radio translator stations;
       (C) the Commission's recommendations to the Congress to 
     reduce or eliminate the minimum distance separations for 
     third-adjacent channels required by subsection (a); and
       (D) such other information and recommendations as the 
     Commission considers appropriate.
                                  ____

                                             Communication Center,


                                 State Services for the Blind,

                                  St. Paul, MN, February 11, 2000.
       To Whom It May Concern: The Communication Center of 
     Minnesota State Services for the Blind, SSB, has provided 
     blind and visually impaired persons with access to the 
     printed word since 1953. The most popular and well-known way 
     we provide our customers with this access is via the Radio 
     Talking Book, RTB. The RTB is a closed-circuit broadcast 
     system which uses FM sub-carriers, or SCA's, to bring people 
     readings from newspapers, magazines and books, 24 hours a 
     day, seven days a week. We loan our customers special SCA 
     receivers, which only pick up the RTB signal.
       The RTB, this nation's oldest and largest radio reading 
     service for the blind, was founded in 1969 and has over 
     10,000 users in Minnesota alone. It is also picked up by 
     other radio reading services around the country, for 
     rebroadcast, via satellite.
       We rely on the SCA frequencies of approximately 40 radio 
     stations in Minnesota and South Dakota, to distribute our 
     programming to local listeners. Approximately 20 stations 
     used by us are operated by Minnesota Public Radio, MPR. 
     Further, the MPR stations we use are our main outlets. The 
     other stations we use are smaller and/or cover sparsely 
     populated areas. Consequently, the Radio Talking Book lives 
     and dies via the technical integrity and success of MPR.
       While we support the principles of diversity and community 
     access for all, we cannot support these goals at the expense 
     of existing services. As you know, the Federal Communications 
     Commission, FCC, intends to create at least 1000 low-power FM 
     stations across the country. However, it is my understanding 
     that they have not tested the effects and implications of 
     these new services on existing FM SCA signals. This does not 
     seem right to us. Prior to authorizing a new set of services, 
     it seems to us, that you should know all the implications to 
     existing services.
       Since the sub-carrier signal of an FM station is located on 
     the outside edge of its frequency space, it seems logical to 
     us that these are the signals which will receive the first, 
     and most harmful interference from new, untested signals. We 
     strongly urge the FCC to do more testing prior to proceeding 
     with the creation of new low-power FM services. Further, it 
     seems even more advisable to use to not create such a new 
     service at all prior to making long-term decisions about 
     digital broadcasting. The FCC may be creating a new service 
     that will be obsolete in a few years.
       While we understand that the FCC must respond to a variety 
     of constituencies, their decision which doesn't adequately 
     consider the needs of SCA users, the majority of whom are 
     users of radio reading services, seems to be highly 
     disrespectful to blind and visually impaired persons. We urge 
     the FCC to reconsider its low-power FM policy. Thank you very 
     much for your consideration of our concerns.
           Respectfully yours,
                                                    David Andrews,
     Director, Communication Center.
                                  ____



                                       Minnesota Public Radio,

                                  St. Paul, MN, September 6, 2000.
     Senator Rod Grams,
     Dirksen Senate Office Building,
     Washington, DC.
       Dear Senator Grams: Minnesota Public Radio supports your 
     efforts to protect high quality signal integrity for 
     America's radio listening public. Recent action by the 
     Federal Communications Commission will cause harm to the 
     broadcast signal of existing stations and interfere with 
     their ability to serve their listeners. Your legislation, a 
     bipartisan compromise, will protect the rights of the 
     listening public to receive the highest quality signal 
     available.
       In addition to protecting the general listening public, 
     your legislation will protect a particularly vulnerable 
     segment of the radio listening public, the blind and visually 
     impaired.

[[Page 17401]]

       More than 1 million blind and visually impaired people in 
     the United States are served by the joint efforts of radio 
     reading services and public radio stations. This service is 
     now threatened by a well meaning but highly politicized 
     action of the FCC.
       Started in Minnesota in 1969 as Radio Talking Book (RTB) by 
     the joint effort of Minnesota Public Radio and the Minnesota 
     Services for the Blind, radio reading services have grown to 
     more than 100 locally controlled and operated reading 
     services around the country. They bring newspapers, magazines 
     and books into the lives of those who can't see by the use of 
     an FM radio subcarrier, or SCA. The SCA uses a sliver of the 
     FM signal, and basically ``piggybacks'' onto the regular FM 
     frequency. Reading service customers receive a special radio 
     receiver, which picks up only the SCA broadcast.
       The FCC in January approved rules to add more local public 
     service broadcasting to America's airwaves. Unfortunately, it 
     rescinded decades-old protections given existing broadcasters 
     and the listening public. The removal of those protections 
     will, most certainly, cause interference to the broadcast 
     signal that are currently being delivered by the nation's 
     radio reading services.
       Many in this country, including Minnesota Public Radio, 
     support the goal of licensing more locally owned low-power FM 
     stations. They would be a welcome addition to the voices and 
     opinions heard on the air. However, when government deals 
     with trying to solve problems, it should learn from the 
     medical profession's Hippocratic Oath: First do no harm. Your 
     legislation helps solve the problem of additional voices and 
     does no harm to America's general listening public and 
     specifically the services of Radio Reading Services.
       Attached is an Opinion piece from the Fergus Falls Daily 
     Journal as well as a letter in opposition to the FCC decision 
     by the Minnesota Services for the Blind.
       Congratulations to taking on this important issue for the 
     benefit of the people of Minnesota.
           Sincerely yours,
                                                   Will Haddeland,
     Senior Vice President.
                                  ____

                                      International Association of


                                   Audio Information Services,

                                     Pittsburgh, PA, May 20, 2000.
     Senator Rod Grams,
     Dirksen Senate Office Building, Washington, DC.
       Dear Senator Grams: We are writing to ask for your help in 
     the urgent matter of Low Power FM service that is being 
     rushed into place by the FCC. There are millions of Americans 
     that may be dramatically and negatively impacted by these new 
     stations. They are blind, visually impaired, or have a 
     disability that prevents them from reading. Our association 
     members serve them with reading services on the radio, and 
     other print-to-audio services.
       A reading service on the radio is the daily newspaper for 
     these men and women. It's where they learn what is on sale at 
     the local grocery store, what bus stops have changed in their 
     town, and who passed away. Without this valuable link to 
     their community, they are at grave risk of being isolated and 
     become very dependent.
       Our association of these reading services, IAAIS, has asked 
     the FCC to ensure that reading services for the blind not 
     suffer interference from the coming new Low Power FM 
     stations. IAAIS is very concerned that the fragile sub-
     carrier services will not be heard clearly when a low power 
     FM station is allowed in the 2nd adjacent space on the FM 
     dial. The radios we have to use to give blind listeners 
     access to the signals have very fragile reception 
     characteristics. The FCC's plan for low power stations brings 
     a potential of interference that never existed before.
       We've taken radios from our members and supplied them to 
     the FCC for testing. These are the same special radios blind 
     listeners must use to hear the services. This entire class of 
     radio was not tested before the FCC authorized LPFM--so no 
     one knows if an LPFM station will impair the blind listeners 
     ability to hear their reading service. That's what really 
     concerns us.
       The FCC does not know if Low Power stations will harm our 
     services, yet it is proceeding with the plans for 
     implementation. We think that's wrong and have asked them to 
     wait until the tests are done. In spite of our request and 
     others' at the end of this month, the FCC plans to begin the 
     application process to create Low Power stations. There need 
     be no rush. We think the FCC should at least wait for the 
     results of receiver tests before starting something that 
     might have devastating consequences.
       We've also asked the FCC for a description of the procedure 
     they will use to resolve interference that occurs after Low 
     Power FM is implemented. They have given no indication that 
     they have such a procedure. We find this alarming to say the 
     least.
       For all these reasons, we've endorsed the measures outlined 
     in the compromise legislation passed by the House in April, 
     HR3439. With the slow down in implementation and test roll-
     out of low power sites that the bill affords, we feel there 
     will be a better chance that Low Power FM can be implemented 
     without damage to reading services for the blind.
       We hope you'll help by supporting a Senate measure that 
     will echo the intentions of House Bill 3439. The Bill will 
     buy time while tests are completed. These test results, and 
     the procedure for resolving problems must be published before 
     adding new radio stations. It would help to ensure that the 
     listeners to reading services do not suffer the loss of their 
     ability to read a newspaper . . . for the second time.
           Sincerely,
                                                   David W. Noble,
                                                        President.
                                 ______
                                 
      By Mrs. HUTCHISON (for herself, Mr. Domenici, Mr. Dodd, and Mrs. 
        Feinstein):
  S. 3021. A bill to provide that a certification of the cooperation of 
Mexico with United States counterdrug efforts not be required in fiscal 
year 2001 for the limitation on assistance for Mexico under section 490 
of the Foreign Assistance Act of 1961 not to go into effect in that 
fiscal year.


                   mexican decertification moratorium

  Mrs. HUTCHISON. Mr. President, I send a bill to the desk. I submit 
this bill on behalf of myself, Senator Domenici, Senator Dodd, and 
Senator Feinstein.
  The purpose of the bill is to put a 1-year moratorium on the 
decertification process for Mexico as it relates to the illegal drug 
trafficking issue that we have been dealing with for so long. The 
reason we are introducing this bill and hope for expedited procedures 
is that we have just seen a huge election in Mexico in which, for the 
first time in 71 years, there is a president from the opposition party, 
from the PRI, which has been the ruling party in Mexico all this time.
  Democracy is beginning to be real in Mexico, and we want to do 
everything we can to encourage this democracy. We want to do everything 
we can to have good relations, better relations, with our sister 
country to the south, Mexico.
  Vicente Fox has visited the United States. He has opened the door for 
better relations. I know our next President, whoever he may be, will 
also want to do the same thing.
  It is a very simple bill. It is a bill that says for 1 year we are 
not going to go through the certification-decertification process, and 
hopefully our two new Presidents will begin a new era of cooperation in 
this very tough issue that plagues both of our countries. Having a 
criminal element in Mexico and a criminal element in the United States 
certainly is a cancer on both of our countries, and we want to do 
everything we can to improve the cooperation in combating this issue.
  The inauguration of Vicente Fox as President of Mexico on December 
1st should usher in a sea change in Mexican politics as well as the 
U.S.-Mexico relationship. Not only will 71 years of rule by the 
Institutional Revolutionary Party (PRI) come to an end, but hopefully 
so too will come an end to the flood of illegal drugs from Mexico into 
the U.S.
  Despite the promise of a new day in our relationship with Mexico, a 
dark cloud looms on the horizon--the annual drug certification ritual 
in which Congress requires the President to ``grade'' drug-producing 
and drug-transit countries each March 1 on their progress in the war on 
drugs.
  The facts have remained essentially unchanged over the past several 
years. Mexico is the source of about 20-30% of the heroin, up to 70% of 
the foreign grown marijuana, and the transit point for 50-60% of the 
cocaine shipped into the United States.
  Mexico has never been decertified, but the thought of being in the 
company of Iran, Iraq, and Afghanistan on this list, has done little 
except to antagonize their political leadership and thwart expanded 
cooperation. There is no reason to go through this exercise next March 
and grade President Fox after fewer than 120 days in office. Further, 
with a new U.S. President taking office on January 20, there is no 
reason to set up a major confrontation between the two before they have 
even had an opportunity to work together cooperatively.
  I am proud to introduce legislation with Senators Pete Domenici, 
Christopher Dodd, and Dianne Feinstein

[[Page 17402]]

which will grant Mexico a 1-year waiver from the annual certification 
process. I hope the Congress will pass this waiver legislation before 
we adjourn.
  This 1-year waiver will give President Fox the time he needs to 
develop and implement a new drug-fighting strategy in Mexico. And it 
will give the United States the time we need to work with President Fox 
in the creation of this new strategy, and to finally put in place the 
law enforcement needed to stop the flow of drugs across our 2000-mile 
shared border.
  The United States has enjoyed a long-term partnership with Mexico 
that has grown closer and more cooperative over time. The North 
American Free Trade Agreement cemented and strengthened our 
relationship--and our interdependence. Just last year, Mexico surged 
past Japan as our nation's second largest trade partner.
  But partnership is a two-way exchange, and in recent years we have 
drifted into tolerance of unacceptable conditions in the arena of drug 
trafficking and the endemic corruption it causes in communities on both 
sides of the border. The border has been a sieve for drugs, and it has 
resulted in a degree of lawlessness in Texas and along the U.S.-Mexico 
border that we have not seen since the days of the frontier. Even 
worse, the war on drugs plays out daily on nearly every schoolyard 
across our nation.
  I am more optimistic than ever, though, by the election of Vicente 
Fox, that Mexico is prepared to make the sacrifices necessary to 
contain the drug threat. And as he seeks to make progress on this 
almost overwhelming issue, we do not need to poison the spirit of early 
cooperation by injecting drug certification.
  Specifically, this bill waives for one-year only the requirement that 
the President certify Mexico's cooperation with the United States in 
the war on drugs. This waiver does not exempt Mexico from any of the 
reports or other activities associated with the certification process. 
It simply says the President does not need to ``grade'' Mexico by 
choosing between certification, decertification, or decertification 
with a national interest waiver.
  This 1-year drug certification waiver will give both the United 
States and Mexico time to develop a process that will make us partners 
rather than adversaries in addressing the one issue that can make moot 
all of the promising opportunities between our two nations.
  Still, President-elect Fox and the Government of Mexico should make 
no mistake about the priority the United States places on winning the 
war on drugs. We will expect this to be a top priority of our new 
President, and we hope that this will be a priority of President Fox.
  The Mexican government must take effective, good-faith steps to stop 
the narco-corruption that infects and demoralizes both of our 
countries. We ask them to take effective action to destroy the major 
drug cartels and imprison their kingpins, implement laws to curtail 
money laundering, comply with U.S. extradition requests, increase 
interdiction efforts and cooperate with U.S. law enforcement agencies.
  President-elect Fox has shown every willingness to work with the 
United States in developing these objectives. He knows the challenges 
ahead, and especially the ones that will come as Mexico's democracy 
continues to evolve and be tested. The United States should not add the 
pressures of the certification process next year to a situation so full 
of risks and opportunities.
  Mr. DOMENICI. Mr. President, I commend Senator Hutchison, along with 
Senators Dodd and Feinstein for introducing this bill today. I am 
pleased to join in this effort.
  The election of Vicente Fox as President of Mexico is a remarkable 
event in the history of our neighbor to the south.
  After 71 years of rule by the Institutional Revolutionary Party, 
Mexico is about to embark on an important test of its new democracy.
  Mr. Fox has spoken very eloquently and persuasively in recent weeks 
and he has offered some interesting new ideas on critical issues which 
affect both of our countries, like immigration, trade and controlling 
illegal drugs.
  Some of his ideas are quite impressive, and they certainly will spur 
debate both in the United States and in Mexico.
  I think it is important for our leaders in the United States, 
particularly those in the border region, to engage Mr. Fox, talk with 
him, listen to his ideas and offer our own thoughts to him.
  In this spirit of cooperation and acceptance, I think it is critical 
for the United States to suspend the drug certification process for 
Mexico this coming year.
  Mr. Fox needs time to build his administration, and to develop his 
own plan for dealing with the drug cartels.
  As we all know, the history of drug cooperation between the United 
States and Mexico has not been great.
  Mexico remains the source of 70 percent of the foreign grown 
marijuana in the U.S., 50-60 percent of the cocaine and 25-30 percent 
of the heroin.
  In recent months, our federal law enforcement authorities have 
dismantled a major heroin ring operating out of Nayarit, Mexico, which 
was responsible for much of the black tar heroin in the Southwest.
  It is this heroin which has torn apart the northern New Mexico county 
of Rio Arriba, which has the highest per capita heroin overdose rate in 
the Nation.
  President-elect Fox has said that he will redouble his country's 
efforts to fight the drug cartels, and will increase the number of 
criminals extradited to the United States to stand trial.
  I have fought for years for more extraditions, and I am pleased that 
President Fox shares my goal.
  I want to give Mr. Fox time to prove that he means what he says. 
Engaging in the certification process in March of 2001, within only 120 
days of Mr. Fox's first day in office, will only serve as a hindrance 
to developing mutual cooperation between the two new administrations.
  The bill we have introduced today merely waives for one year the 
requirement that the President make a certification decision about 
Mexico.
  This waiver would not exempt Mexico from any of the annual reports or 
other activities associated with the certification process, including 
review by the State Department in its annual report to Congress.
  It simply says that the next United States President need not grade 
Mexico and its new President in his first four months in office by 
choosing between certification, decertification or certification 
through a national interest waiver.
  Mr. Fox should make no mistake--Senators from the Southwest care 
deeply about the drug problem, which affects our communities, courts, 
jails, hospitals and border region like no other issue.
  We expect Mr. Fox to set concrete, measurable goals and timetables 
for crippling the drug cartels and ending narco-corruption.
  This is a fair bill, one that respects the new democracy in Mexico, 
and recognizes that the new administration needs time to set its own 
agenda.
  I look forward to working with my colleagues in the Senate and the 
new President of Mexico on this and other important issues of mutual 
interest between our two countries.
  Mr. DODD. Mr. President, I commend my friend from Texas for this 
proposal. I am pleased to be a cosponsor of it, along with the Senator 
from New Mexico, Senator Domenici, and Senator Feinstein from 
California. We hope others will join us and will soon be circulating a 
dear colleague letter inviting them to do so.
  We believe that this is a very sensible and timely proposal in light 
of the dramatic changes that have occurred this past July 2 with the 
election of Vincente Fox, candidate for the National Action Party, as 
the next President of Mexico. His inauguration later this year will 
bring to an end 71 years of the office of the Mexican President being 
held by a representative of the Institutional Revolutionary Party. 
Clearly President-elect Fox has an enormous task before him to put in 
place his new administration and to

[[Page 17403]]

formulate policies and programs that he believes are consistent with 
his campaign promises and priorities. Among the many issues that he has 
suggested will be priorities of his administration is enhanced counter 
narcotics cooperation with the United States.
  I have made no secret of the fact that I believe that the annual 
unilateral drug certification procedures have been an obstacle to 
furthering cooperation between U.S. and Mexican law enforcement 
authorities. Rather than encouraging them to work closely together to 
thwart the corrupting impact of the drug kingpins in the United States 
and Mexico, the certification process degenerates annually to a 
shouting match across our southern border with respect to whether the 
Mexican government has done enough to warrant a passing grade from us 
on the counter narcotics front. Needless to say, Mexican officials 
resent the fact the they are being unilaterally graded on their 
performance by us while U.S. policies and programs are never subject to 
similar review or criticism.
  Frankly, Mr. President, this year elections on both sides of the 
border give us an opportunity to start afresh with respect to counter 
narcotics cooperation next year. By suspending the certification 
process for FY 2001, the climate for working more closely on these 
important programs will not be soured right off the bat by the March 1 
grading of Mexico. It is my hope that the new U.S. and Mexican 
administrations will make it a high priority in the early days of their 
administrations to put forward a joint plan for ensuring enhanced 
cooperation on counter narcotics issues that will replace the existing 
and counterproductive unilateral annual certification process with a 
multilateral mechanism to monitor progress in combating drug 
trafficking and related crimes in all affected countries. I would 
certainly be prepared to support an additional suspension of the 
certification process for a second year if additional time is needed to 
put in place a multilateral mechanism to ensure that international 
cooperation on such matters is working.
  Mr President, this is an extremely important issue for not only 
Mexico and the United States both for countries throughout this 
hemisphere. Certainly we need to address the problem of consumption 
here at home. Our neighbors in this hemisphere, that are either 
involved in the production, in the chemical transformation of these 
products, or the transportation or the money laundering have a 
different set of issues to address in our joint efforts to reduce both 
production and consumption of illicit drugs. It is vital that there be 
a high level of cooperation if we are going to be successful in 
stemming the tide and flow of narcotics that pour into this country, 
that result in the deaths of 50,000 Americans every year in drug-
related deaths in this country. I believe that the certification 
procedures are impeding that kind of cooperation. We believe that the 
legislation we have introduced this evening will improve the prospects 
that this will be done. I would hope that all of our colleagues will 
join us in endorsing this approach.
  Mrs. FEINSTEIN. Mr. President, I rise today to offer my support to 
the legislation introduced by my distinguished colleague from Texas, 
Senator Hutchison.
  Essentially, this bill would--for 1 year only--suspend the 
certification process with respect to Mexico.
  It is my hope that this one-year hiatus will be viewed as a sign of 
good faith between our nations, and that our two countries will 
dramatically increase the level of our cooperation in the coming year. 
The problem of drugs is as serious as any we face, and only with a true 
partnership with Mexico and other source countries can we hope to 
succeed in the battle against illegal narcotics.
  Mr. President, let me be very clear--my support for this legislation 
this year should not be taken as a sign that I am any less concerned 
with the rampant corruption and increasingly serious problem of illegal 
narcotics flowing from Mexico into the United States. I sincerely hope 
that President-elect Fox and the government of Mexico will with 
innovation and commitment launch a new and effective war against the 
cartels that are currently of unparalleled strength and viciousness.
  The Zedillo administration has made some progress in cooperating with 
the United States in this fight.
  For instance, the Zedillo administration:
  Allowed, for the first time, the extradition of two Mexican Nationals 
on drug charges--although these were lower level participants in the 
drug trade. This is a beginning, but just that--there is still a long 
way to go.
  Fired more than 1400 of 3500 federal police officers for corruption; 
and so far, more than 350 officers have been prosecuted.
  Cooperated with the FBI late last year in an investigation on Mexican 
soil.
  And greatly increased seizures of illegal narcotics.
  On the other hand, not nearly enough has been done:
  Mexico is still the conduit to as much as 70% of the cocaine consumed 
in the United States (much of it originating in Colombia);
  Mexico supplies the majority of marijuana to the U.S., and, according 
to the United States Forest Service, Mexican cartels are now sending 
people across the border to grow marijuana in our national forests and 
on other federal lands;
  Despite recent successes in disrupting methamphetamine production in 
Mexico, the meth cartels are now increasingly setting up meth labs in 
the United States;
  To date, not one major drug kingpin of Mexican nationality has yet 
been extradited to this country, nor has a major kingpin even been 
arrested, with the exception of the Amezcua brothers, currently in 
jail, while the Mexican government decides whether to extradite. Until 
the cartel leaders are arrested, tried, convicted and imprisoned, there 
can be no real improvement.
  In the meantime, Mexican drug cartels are becoming ever more vicious. 
Tijuana, for instance recently saw its second police chief gunned down 
in less than 6 years, as dozens of judges, prosecutors and drug agents 
have been killed in Tijuana alone in recent years.
  Last April, the bodies of two Mexican drug agents and a special 
prosecutor for the Mexican Attorney General's anti-narcotics unit were 
found in such a mangled state that identification--even by the spouse 
of one of the agents--was impossible. According to press accounts, one 
investigator who saw the photographs of the crime scene said ``They 
told me it was a body. I've never seen anything like that.''
  The Arellano Felix organization is responsible for many of these 
crimes. They hold such a strong grip over their community that former 
DEA Administrator Thomas Constantine recently said that ``in Tijuana 
and Baja, they have become more powerful than the instruments of 
government in Mexico.''
  The Arellano Felix cartel operates with an estimated one million 
dollars in bribe money every day. With that money they pay law 
enforcement to look the other way, prosecutors to leave them alone, 
judges to let them go free, and for information about their enemies.
  This leads to the largest single threat in this war against drugs--
the level of corruption within Mexican law enforcement and even 
extending into this country. Honest law enforcement officers cannot 
know who to trust. Anyone who gets too close to capturing cartel 
members is subject to exposure and assassination. And the cycle of 
corruption and failure continues.
  The corruption is evident at all levels of Mexican law enforcement, 
and this is a problem that can only be solved through a concerted, 
comprehensive effort on the part of the Fox administration.
  Until the history of corruption is reversed and the drug cartels are 
brought to justice, this nation will have no respite from the scourge 
of drugs flowing across our borders.
  I cosponsor this legislation today as an experiment to see that, if 
by putting aside the contentiousness of a certification debate next 
March, there can be a new, more productive process. I will

[[Page 17404]]

follow this closely. If reports do not reflect substantial, positive 
change, we will know clearly that decertification may be the only 
course.
  I thank the Chair, and I yield the floor.
  Mrs. HUTCHISON. Mr. President, if Senator Domenici would yield for 1 
more minute, I would like to, first of all, thank him for allowing us 
the time to introduce this bill. If we are going to be able to pass 
this by the end of the session, it is imperative that we get the bill 
into the process. I also thank the Senator from New Mexico, the Senator 
from Connecticut, and the Senator from California for being prime 
cosponsors because this will show the Mexican people and the new 
President-elect of Mexico that we do want cooperation.
  I believe it is in our long-term best interests that we develop trade 
relationships with our neighbor to the south, that we work with them on 
investments because as we increase the standard of living in Mexico, I 
think many of the immigration problems and the problems dealing with 
illegal drugs will also be wiped away.
  So this is a new era. I think this bill will signal that we do want 
cooperation and friendship. I have high hopes for President-elect 
Vincente Fox. I have high hopes that our new President will focus on 
this issue as well, to try to come up with a whole new process beyond 
certification and decertification, which certainly has not worked very 
well in the past.
  I yield the floor.

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