SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Prescription Drug Patient Choice Act 
of 1998''.

SEC. 2. EQUITY IN PROVISION OF PRESCRIPTION DRUG COVERAGE.

    (a) Group Health Plans.--
            (1) Public health service act amendments.--(A) Subpart 2 of 
        part A of title XXVII of the Public Health Service Act is 
        amended by adding at the end the following new section:

``SEC. 2706. EQUITY IN PROVISION OF PRESCRIPTION DRUG COVERAGE.

    ``(a) Equity in Provision of Prescription Drug Coverage.--
            ``(1) In general.--If a group health plan or a health 
        insurance issuer offering group health insurance coverage 
        provides for prescription drug coverage only if such drugs are 
        furnished through providers who are members of a network of 
        providers who have entered into a contract with the plan or 
        issuer to provide such drugs, the issuer shall also offer to 
        enrollees the option of health insurance coverage which 
        provides for coverage of such drugs which are not furnished 
        through providers who are members of such network.
            ``(2) Premiums.--A group health plan or a health insurance 
        issuer offering group health insurance coverage may not charge 
        a higher premium, co-payment, or deductible for coverage of 
        drugs which are furnished through providers who are not members 
        of a network of providers who have entered into a contract with 
        the plan or issuer.
            ``(3) Cost sharing.--Under the option described in 
        paragraph (1), the health insurance coverage shall provide for 
        reimbursement rates for prescription coverage offered by 
        nonparticipating providers that are not less than the 
        reimbursement rates for prescription coverage offered by 
        participating pharmacies.
    ``(b) Construction.--Nothing in this section shall be construed as 
preventing a plan or issuer from--
            ``(1) restricting the drugs for which benefits are provided 
        under the plan or health insurance coverage, or
            ``(2) imposing a limitation on the amount of benefits 
        provided with respect to such coverage or the cost sharing that 
        may be imposed with respect to such coverage,
so long as such restrictions and limitations are consistent with 
subsection (a).
    ``(c) Notice.--A group health plan under this part shall comply 
with the notice requirement under section 713(d) of the Employee 
Retirement Income Security Act of 1974 with respect to the requirements 
of this section as if such section applied to such plan.''.
            (B) Section 2723(c) of such Act (42 U.S.C. 300gg-23(c)) is 
        amended by striking ``section 2704'' and inserting ``sections 
        2704 and 2706''.
            (2) ERISA amendments.--(A) Subpart B of part 7 of subtitle 
        B of title I of the Employee Retirement Income Security Act of 
        1974 is amended by adding at the end the following new section:

``SEC. 713. EQUITY IN PROVISION OF PRESCRIPTION DRUG COVERAGE.

    ``(a) Equity in Provision of Prescription Drug Coverage.--
            ``(1) In general.--If a group health plan or a health 
        insurance issuer offering group health insurance coverage 
        provides for prescription drug coverage only if such drugs are 
        furnished through providers who are members of a network of 
        providers who have entered into a contract with the issuer to 
        provide such drugs, the issuer shall also offer to such 
        enrollees the option of health insurance coverage which 
        provides for coverage of such drugs which are not furnished 
        through providers who are members of such network.
            ``(2) Premiums.--A group health plan or a health insurance 
        issuer offering group health insurance coverage may not charge 
        a higher premium, co-payment, or deductible for coverage of 
        drugs which are furnished through providers who are not members 
        of a network of providers who have entered into a contract with 
        the plan or issuer.
            ``(3) Cost sharing.--Under the option described in 
        paragraph (1), the health insurance coverage shall provide for 
        reimbursement rates for prescription coverage offered by non 
        participating providers that are not less than the 
        reimbursement rates for prescription coverage offered by 
        participating pharmacies.
    ``(b) Construction.--Nothing in this section shall be construed as 
preventing a plan or issuer from--
            ``(1) restricting the drugs for which benefits are provided 
        under the plan or health insurance coverage, or
            ``(2) imposing a limitation on the amount of benefits 
        provided with respect to such coverage or the cost sharing that 
        may be imposed with respect to such coverage,
so long as such restrictions and limitations are consistent with 
subsection (a).
    ``(c) Notice Under Group Health Plan.--The imposition of the 
requirements of this section shall be treated as a material 
modification in the terms of the plan described in section 102(a)(1), 
for purposes of assuring notice of such requirements under the plan; 
except that the summary description required to be provided under the 
last sentence of section 104(b)(1) with respect to such modification 
shall be provided by not later than 60 days after the first day of the 
first plan year in which such requirements apply.''.
            (B) Section 731(c) of such Act (29 U.S.C. 1191(c)) is 
        amended by striking ``section 711'' and inserting ``sections 
        711 and 713''.
            (C) Section 732(a) of such Act (29 U.S.C. 1191a(a)) is 
        amended by striking ``section 711'' and inserting ``sections 
        711 and 713''.
            (D) The table of contents in section 1 of such Act is 
        amended by inserting after the item relating to section 712 the 
        following new item:

``Sec. 713. Equity in provision of prescription drug coverage.''.
    (b) Individual Health Insurance.--(1) Part B of title XXVII of the 
Public Health Service Act is amended by inserting after section 2751 
the following new section:

``SEC. 2752. EQUITY IN PROVISION OF PRESCRIPTION DRUG COVERAGE.

    ``(a) In General.--The provisions of section 2706 (other than 
subsection (c)) shall apply to health insurance coverage offered by a 
health insurance issuer in the individual market in the same manner as 
it applies to health insurance coverage offered by a health insurance 
issuer in connection with a group health plan in the small or large 
group market.
    ``(b) Notice.--A health insurance issuer under this part shall 
comply with the notice requirement under section 713(c) of the Employee 
Retirement Income Security Act of 1974 with respect to the requirements 
referred to in subsection (a) as if such section applied to such issuer 
and such issuer were a group health plan.''.
    (2) Section 2762(b)(2) of such Act (42 U.S.C. 300gg-62(b)(2)) is 
amended by striking ``section 2751'' and inserting ``sections 2751 and 
2752''.
    (c) Application to Medicare Managed Care Plans.--Subparagraph (B) 
of section 1876(c)(4) of the Social Security Act (42 U.S.C. 
1395mm(c)(4)) is amended to read as follows:
            ``(B) meets the requirements of section 2752 of the Public 
        Health Service Act with respect to individuals enrolled with 
        the organization under this section.''.
    (d) Application to Medicaid Managed Care Plans.--Title XIX of such 
Act (42 U.S.C. 1396 et seq.) is amended by inserting after section 1908 
the following new section:

          ``equity in provision of prescription drug coverage

    ``Sec. 1909. (a) In General.--A State plan may not be approved 
under this title, and Federal financial participation not available 
under section 1903(a) with respect to such a plan, unless the plan 
requires each health insurance issuer or other entity with a contract 
with such plan to provide coverage or benefits to individuals eligible 
for medical assistance under the plan to comply with the provisions of 
section 2752 of the Public Health Service Act with respect to such 
coverage or benefits.
    ``(b) Waivers Prohibited.--The requirement of subsection (a) may 
not be waived under section 1115 or section 1915(b) of the Social 
Security Act.''.
    (e) Medigap and Medicare Select Policies.--Section 1882 of such Act 
(42 U.S.C. 1395ss) is amended--
            (1) in subsection (s)(2), by adding at the end the 
        following new subparagraph:
    ``(E) An issuer of a medicare supplemental policy (as defined in 
section 1882(g)) shall comply with the requirements of section 2752 of 
the Public Health Service Act with respect to benefits offered under 
such policy.''; and
            (2) in subsection (t)(1)--
                    (A) in subparagraph (B), by inserting ``subject to 
                subparagraph (G),'' after ``(B)'',
                    (B) by striking ``and'' at the end of subparagraph 
                (E),
                    (C) by striking the period at the end of 
                subparagraph (F) and inserting ``; and'', and
                    (D) by adding at the end the following new 
                subparagraph:
            ``(G) the issuer of the policy complies with the 
        requirements of section 2752 of the Public Health Service Act 
        with respect to enrollees under this subsection .''.
    (f) FEHBP.--Section 8902 of title 5, United States Code, is amended 
by adding at the end the following the following new subsection:
    ``(o) A contract may not be made or a plan approved which excludes 
does not comply with the requirements of section 2752 of the Public 
Health Service Act.''.
    (g) Effective Dates.--(1)(A) Subject to subparagraph (B), the 
amendments made by subsection (a) shall apply with respect to group 
health plans for plan years beginning on or after January 1, 1998.
    (B) In the case of a group health plan maintained pursuant to 1 or 
more collective bargaining agreements between employee representatives 
and 1 or more employers that is ratified before the date of enactment 
of this Act, the amendments made by subsection (a) shall not apply to 
plan years beginning before the later of--
            (i) the date on which the last collective bargaining 
        agreements relating to the plan terminates (determined without 
        regard to any extension thereof agreed to after the date of 
        enactment of this Act), or
            (ii) January 1, 1998.
For purposes of clause (i), any plan amendment made pursuant to a 
collective bargaining agreement relating to the plan which amends the 
plan solely to conform to any requirement added by subsection (a) shall 
not be treated as a termination of such collective bargaining 
agreement.
    (2) The amendments made by subsection (b) shall apply with respect 
to health insurance coverage offered, sold, issued, renewed, in effect, 
or operated in the individual market on or after January 1, 1998.
    (3) The amendment made by subsection (c) shall apply to contracts 
for contract periods beginning on or after January 1, 1998.
    (4) The amendment made by subsection (d) shall apply to Federal 
financial participation for State plan expenditures made on or after 
January 1, 1998.
    (5) The amendments made by subsection (e) shall apply with respect 
to medicare supplemental policies and medicare select policies offered, 
sold, issued, renewed, in effect, or operated on and after January 1, 
1998.
    (6) The amendment made by subsection (f) shall apply with respect 
to contracts for periods beginning on and after January 1, 1998.
    (h) Coordinated Regulations.--Section 104(1) of Health Insurance 
Portability and Accountability Act of 1996 is amended by striking 
``this subtitle (and the amendments made by this subtitle and section 
401)'' and inserting ``the provisions of part 7 of subtitle B of title 
I of the Employee Retirement Income Security Act of 1974, and the 
provisions of parts A and C of title XXVII of the Public Health Service 
Act''.
Prescription Drug Patient Choice Act of 1998 - Amends the Public Health Service Act and the Employee Retirement Income Security Act of 1974 (ERISA) to require a group health plan (and a health insurance issuer offering group coverage) that covers prescription drugs when the drugs are furnished through network providers to also offer the option of coverage of prescription drugs when furnished through non-network providers.  Prohibits higher premiums, copayments, or deductibles or lower reimbursement for drugs through non-network providers. 
Amends the Public Health Service Act to apply the above requirements to issuers in the individual market. 
Amends titles XVIII (Medicare) and XIX (Medicaid) of the Social Security Act to require health maintenance organizations, competitive medical plans, State Medicaid plans, issuers of Medicare supplemental policies, and Medicare select policies to meet the requirements of this Act. 
Amends Federal law relating to health benefits for Federal employees to require compliance with this Act.
Prescription Drug Patient Choice Act of 1998