To amend title XVIII of the Social Security Act to provide for establishment of a Medicare prescription drug benefit covering costs that exceed a percentage of a beneficiary's income.

Summary: Equal Access to Prescription Drugs for All Seniors Act - Amends part B (Supplementary Medical Insurance) of title XVIII (Medicare) of the Social Security Act to direct the Secretary of Health and Human Services to establish a program that provides outpatient prescription drug benefits for individuals who are enrolled under this part and entitled to benefits under Medicare part A (Hospital Insurance). State that the program is designed to provide benefits in a calendar year for a beneficiary after the beneficiary has incurred out-of-pocket costs for covered outpatient prescription drugs that exceeds such percentage of income as the Secretary shall specify for each year. Requires the percentage to vary from year to year and allows it to vary based on the income of beneficiaries.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Equal Access to Prescription Drugs 
for All Seniors Act''.

SEC. 2. MEDICARE PRESCRIPTION DRUG BENEFIT PROGRAM FOR CATASTROPHIC 
              EXPENSES.

    Part B of title XVIII of the Social Security Act is amended by 
adding at the end the following new section:

    ``establishment of outpatient prescription drug benefit program

    ``Sec. 1849. (a) In General.--The Secretary shall establish a 
program that provides outpatient prescription drug benefits for 
individuals who are enrolled under this part and entitled to benefits 
under part A.
    ``(b) Design of Benefit.--The outpatient prescription drug benefit 
program shall be established under subsection (a) consistent with the 
following:
            ``(1) Period of benefits.--Benefits under the program are 
        first available for prescription drugs dispensed on or after 
        January 1, 2005, and shall not be available for drugs dispensed 
        after September 30, 2013.
            ``(2) Fiscal limitations.--
                    ``(A) In general.--During the 10-fiscal-year period 
                beginning with fiscal year 2004, the program shall be 
                designed to result in additional, net expenditures 
                under this title equal to $400,000,000,000, and 
                expenditures consistent with the amounts specified in 
                subparagraph (B). In order to do this, the Secretary 
                shall establish an appropriate deductible under 
                paragraph (3), incentives for efficient use of generic 
                drugs and other management techniques described in 
                paragraph (8), and efficient methods for payment for 
                covered benefits.
                    ``(B) Funding stream.--The following shall be the 
                amounts available for start-up and administrative costs 
                and payment of benefits under this section:
                            ``(i) For start-up and administrative 
                        costs, without fiscal year limitation, 
                        $22,811,420,000.
                            ``(ii) For payments for benefits in fiscal 
                        year 2005, $25,756,250,000.
                            ``(iii) For payments for benefits in fiscal 
                        year 2006, $28,859,150,000.
                            ``(iv) For payments for benefits in fiscal 
                        year 2007, $32,219,690,000.
                            ``(v) For payments for benefits in fiscal 
                        year 2008, $36,021,300,000.
                            ``(vi) For payments for benefits in fiscal 
                        year 2009, $40,164,610,000.
                            ``(vii) For payments for benefits in fiscal 
                        year 2010, $44,746,360,000.
                            ``(viii) For payments for benefits in 
                        fiscal year 2011, $49,904,730,000.
                            ``(ix) For payments for benefits in fiscal 
                        year 2012, $55,974,380,000.
                            ``(x) For payments for benefits in fiscal 
                        year 2013, $63,542,120,000.
            ``(3) Catastrophic nature of benefit.--
                    ``(A) In general.--The program is designed to 
                provide benefits in a calendar year for a beneficiary 
                after the beneficiary has incurred out-of-pocket costs 
                (as defined under the program) for covered outpatient 
                prescription drugs that exceeds such percentage of 
                income (such as 5 percent) as the Secretary shall 
                specify for each year (beginning with 2005) consistent 
                with paragraph (2). Such percentage shall vary from 
                year to year [and may vary based on the income of 
                beneficiaries].
                    ``(B) Income determination.--Under the program, 
                income shall be based on the previous year's income tax 
                return of, in the absence of such a return, on such 
                income eligibility statement as the Secretary shall 
                provide for. The Secretary shall provide for a 
                verification of the income on such a statement 
through the income eligibility verification system used for purposes of 
the medicaid and SSI programs or other comparable system approved by 
the Secretary.
                    ``(C) Utilization of benefits.--The program shall 
                be designed to permit access to benefits in 2 different 
                ways:
                            ``(i) Monthly payment of \1/12\ of 
                        deductible.--In the case of a beneficiary who 
                        is expected to have prescription drug costs 
                        over the catastrophic threshold under 
                        subparagraph (A) for a year, the Secretary 
                        shall permit the beneficiary to elect to obtain 
                        benefits immediately at the beginning of the 
                        year and to pay to the Secretary, on a monthly 
                        basis, \1/12\ of the applicable amount of the 
                        threshold under such subparagraph for the year.
                            ``(ii) Benefits upon satisfaction of 
                        deductible.--Access to benefits would be 
                        available once prescription drug expenditures, 
                        as documented through a smart card or similar 
                        method, have met the applicable annual 
                        deductible.
                    ``(D) Use of electronic systems for tracking 
                expenditures.--In any case the monitoring of 
                expenditures under the program, both before and after 
                the annual deductible has been met, shall be done 
                electronically through the submittal of claims 
                information and, if applicable, the use of an 
                appropriate electronic transaction card system.
            ``(4) Defined terms.--The Secretary shall define for 
        purposes of the benefit `covered outpatient prescription 
        drugs', `out-of-pocket costs', and `income' consistent with the 
        following:
                    ``(A) `Income' shall be based on adjusted gross 
                income for the most recent previous year and shall take 
                into account, in an appropriate manner in the case of a 
                married couple, the income of the spouses, and shall 
                also income income derived from tax exempt sources, 
                including social security benefits and municipal bond 
                interest.
                    ``(B) `Covered outpatient prescription drugs' shall 
                not include prescription drugs for which any benefits 
                are otherwise available under this part.
            ``(5) Application of secondary payor provisions.--The 
        secondary payor provisions of section 1862(b) shall apply to 
        this benefits under this program.
            ``(6) No premium; no impact on part b premium.--There shall 
        be no additional premium charged for the benefits under the 
        program and the amount of the monthly premiums under section 
        1839 and under section 1818 shall not be changed or affected as 
        a result of the implementation of the program.
            ``(7) Payment from smi trust fund.--Benefits under the 
        program shall be payable from the Federal Supplementary Medical 
        Insurance Trust Fund under section 1841.
            ``(8) Use of utilization mechanisms.--In implementing the 
        program, the Secretary shall establish appropriate mechanisms 
        to encourage the substitution of generic drugs and appropriate 
        techniques for the management of prescription drugs.
            ``(9) Pharmacy access.--The program shall be designed in a 
        manner so that beneficiaries are provided timely access to 
        prescription drugs and may choose among the broadest range of 
        qualified, participating pharmacies so as to result in the 
        least disruption on current methods for the delivery of 
        outpatient prescription drugs.
            ``(10) Use of contractual arrangements.--The program may be 
        implemented through contracts with pharmaceutical benefit 
        managers and other qualified entities, including carriers under 
        this part.''.