Medicare Benefit Equity and Emergency Access to Prescription Drugs Act of 1999

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Benefit Equity and 
Emergency Access to Prescription Drugs Act of 1999''.

SEC. 2. FINDINGS.

    Congress finds as follows:
            (1) American taxpayers should receive equal Medicare 
        services regardless of place of residence.
            (2) Medicare managed care plans play a fundamental role in 
        the health of our Nation's seniors, often providing coordinated 
        care and access to pharmaceuticals. The loss of Medicare 
        managed care plans and their services can be devastating to our 
        Nation's Medicare-eligible seniors.
            (3) For the second consecutive year, Medicare managed care 
        plans are abandoning hundreds of thousands of medicare 
        beneficiaries. The most recent announcement of plan 
        cancellations means that within the past two years, 734,000 of 
        the Nation's 6,200,000 Medicare beneficiaries enrolled in 
        managed care plans will have been dropped from those plans.
            (4) In 1999, Medicare managed care plan withdrawals 
        affected nearly 407,000 Medicare beneficiaries, and 51,276 
        beneficiaries in 79 counties were left with no other Medicare 
        managed care option.
            (5) Beginning January 2000, another 327,000 enrollees will 
        need to find alternative coverage, and 79,000 of these Medicare 
        managed care participants will have no other Medicare+Choice 
        plan available.
            (6) Medicare beneficiaries who have lost their managed care 
        option can enroll in Medicare fee-for-service; however, 
        Medicare fee-for-service does not currently provide 
        comprehensive outpatient pharmaceutical coverage.
            (7) While all beneficiaries pay the same medicare part B 
        premium as other program participants, Medicare beneficiaries 
        regularly pay managed care plans varied amounts and receive 
        very unequal services and benefits.
            (8) A growing body of data suggests that medical practice 
        and Medicare spending vary substantially among the Nation's 
        hospital referral regions, even after adjustments for 
        differences in regional prices and illness rates, but there is 
        little evidence that greater spending brings better health.
            (9) By adjusting Medicare reimbursement payment rates 
        (adjusted for age, sex, severity of illness, etc.,) and 
        lowering Medicare reimbursement payment to providers and 
        regions where there are more costly patterns of practice 
        without better health outcomes, Congress can provide more 
        equitable and efficient health care for our Nation's 39,000,000 
        Medicare beneficiaries.
            (10) Such a strategy will encourage a more responsible 
        practice of medicine at the lowest cost to the taxpayer and 
        Medicare beneficiary, and will free resources for improvements 
        to the medicare program.

SEC. 3. MEDICARE CLINICAL PRACTICE AND PAYMENT PATTERN ADJUSTMENT.

    (a) Establishment of Practice Profiles.--
            (1) In general.--By not later than January 1, 2002, the 
        Secretary of Health and Human Services shall establish clinical 
        profiles of the practice and payment patterns of health care 
        providers (including both institutional providers and health 
        care professionals) furnishing items and services under the 
        medicare program under title XVIII of the Social Security Act 
        in order to determine how their practice and payment patterns 
        compare to each other on a local, State, and national basis. In 
        establishing such profiles, the Secretary shall take into 
        account differences in the case mix and severity of patients 
        served by such providers and shall take into account, to the 
        extent practicable, the medical outcomes resulting from such 
        practices.
            (2) Dissemination of information.--The Secretary shall 
        establish a method for disseminating summary information to the 
        public on the clinical profiles established under paragraph 
        (1). No information that identifies (or permits the 
        identification of) an individual patient shall be disseminated.
    (b) Authority To Make Payment Adjustments.--For items and services 
furnished on or after January 1, 2003, the Secretary of Health and 
Human Services may adjust the amount of the payments made under the 
medicare program to such health care providers in order to encourage 
their provision of services in a medically appropriate manner and to 
discourage significant deviations in underservice or overservice from 
generally accepted norms of medical practice. Such adjustments shall be 
made on the basis of provider profiles established under subsection (a) 
and shall be made only after--
            (1) taking into account variations among providers in the 
        case mix and severity of patients served; and
            (2) the Secretary determines that discouraging particular 
        patterns of overservice will not adversely affect outcomes or 
        quality of care.
    (c) Schedule To Reduce Overpayments.--
            (1) In general.--For items and services furnished on or 
        after January 1, 2004, the Secretary shall annually reduce 
        overpayments to providers by five percent of the overpayment 
        amount (as defined in paragraph (2)). Such reduction shall be 
        administered through a percentage reduction in the providers' 
        applicable payment methodology.
            (2) Overpayment amount defined.--In this subsection, the 
        term ``overpayment amount'' means a health care provider's 
        payment profile minus the median national payment profiles for 
        similar health care providers, adjusted for variations in case 
        mix and severity of patients served.

SEC. 4. ADJUSTMENT IN MEDICARE+CHOICE PAYMENT RATES TO OVERPAID 
              COUNTIES.

    (a) In General.--Section 1853(c)(1)(C) of the Social Security Act 
(42 U.S.C. 1395w-23(c)(1)(C)) is amended--
            (1) in clause (ii), by striking ``For a subsequent year,'' 
        and inserting ``Subject to clause (iii), for a subsequent 
        year,''; and
            (2) by adding at the end the following new clause:
                            ``(iii) In the case of a year beginning 
                        after 1999 for which the Secretary determines 
                        there is an overpaid payment area (as defined 
                        in paragraph (8)), the following:
                                    ``(I) In the case of such overpaid 
                                payment area, 100.5 percent of the 
                                annual Medicare+Choice capitation rate 
                                under this paragraph for the area for 
                                the previous year.
                                    ``(II) In the case of a payment 
                                area that is not an overpaid payment 
                                area, 102 percent of the annual 
                                Medicare+Choice capitation rate under 
                                this paragraph for the area for the 
                                previous year.''.
    (b) Overpaid Payment Area Defined.--Section 1853(c) of such Act (42 
U.S.C. 1395w-23(c)) is amended by adding at the end the following new 
paragraph:
            ``(8) Overpaid payment area defined.--For purposes of 
        paragraph (1)(C)(iii), the term `overpaid payment area' means a 
        Medicare+Choice payment area for a year for which the annual 
        per capita rate of payment for such area exceeds the mean of 
        the annual per capita rates of payments for all Medicare+Choice 
        payment areas for that year by more than two standard 
        deviations, such mean determined without regard to the number 
        of Medicare beneficiaries in such payment areas.''.
    (c) Allocation of Savings to Underpaid Counties.--For a contract 
year consisting of a calendar year beginning on or after January 1, 
2000, for which the Secretary of Health and Human Services has 
determined there is an overpaid payment area (as defined in section 
1853(c)(8)), as added by subsection (b), the Secretary shall adjust the 
annual per capita rate of payment for Medicare+Choice payment areas 
described in section 1853(c)(1)(C)(iii)(II), as added by subsection 
(a), to increase the blended capitation rate applicable to such areas 
under section 1853(c)(1)(A) (in such pro rata manner as the Secretary 
determines appropriate) by an aggregate amount equal to the aggregate 
amount of reductions in payments attributable to section 
1853(c)(1)(C)(iii)(I), as added by subsection (a).

SEC. 5. PROVISION OF EMERGENCY OUTPATIENT PRESCRIPTION DRUG COVERAGE 
              FOR MEDICARE BENEFICIARIES LOSING DRUG COVERAGE UNDER 
              MEDICARE+CHOICE PLANS.

    (a) Temporary Coverage of Outpatient Prescription Drugs for 
Medicare Beneficiaries Losing Prescription Drug Coverage Under 
Medicare+Choice Plans.--
            (1) In general.--The Secretary of Health and Human Services 
        shall provide for coverage of outpatient prescription drugs to 
        eligible Medicare beneficiaries under this section. The 
        Secretary shall provide for such coverage by entering into 
        agreements with eligible organizations to furnish such 
        coverage.
            (2) Term of emergency coverage.--The Secretary shall 
        provide coverage of outpatient prescription drugs to an 
        eligible Medicare beneficiary under this section for the 18-
        month period beginning on the date the eligible Medicare 
        beneficiary loses coverage of outpatient prescription drugs 
        under the Medicare+Choice plan in which the beneficiary is 
        enrolled.
            (3) Cost-sharing.--The Secretary shall impose the following 
        cost-sharing requirements under coverage of outpatient 
        prescription drugs furnished under this section:
                    (A) Benefits under this section shall not begin 
                until the eligible medicare beneficiary has met a $50 
                deductible.
                    (B) The eligible Medicare beneficiary shall pay 
                coinsurance in the amount of 10 percent.
            (4) Payment.--The Secretary shall provide for payment for 
        such coverage under this section from the Emergency Reserve 
        Outpatient Prescription Drug Account established under 
        subsection (b).
    (b) Account for Emergency Outpatient Prescription Drug Benefit in 
SMI Trust Fund.--
            (1) Establishment.--There is hereby established in the 
        Federal Supplementary Medical Insurance Trust Fund under 
        section 1841 of the Social Security Act (42 U.S.C. 1395t) an 
        expenditure account to be known as the ``Emergency Reserve 
        Outpatient Prescription Drug Account''.
            (2) Crediting of funds.--The Managing Trustee shall credit 
        to the Emergency Reserve Outpatient Prescription Drug Account 
        such amounts as may be deposited in the Federal Supplementary 
        Medical Insurance Trust Fund as follows:
                    (A) Amounts appropriated to the account.
                    (B) Amounts equal to the annual outstanding balance 
                of the Health Care Fraud and Abuse Control Account 
under section 1817(k) of the Social Security Act (42 U.S.C. 1395i(k)) 
at the end of each fiscal year that the Secretary determines may be 
made available to the Emergency Reserve Outpatient Prescription Drug 
Account.
                    (C) Amounts attributable to reductions in payments 
                to providers under section 3(c) of this Act.
            (3) Use of funds.--Funds credited to the Outpatient 
        Prescription Drug Account may only be used to pay for 
        outpatient prescription drugs furnished under this section.
    (c) Definitions.--In this section:
            (1) Eligible medicare beneficiary.--The term ``eligible 
        Medicare beneficiary'' means an individual--
                    (A) who is enrolled in a Medicare+Choice plan under 
                part C of title XVIII of the Social Security Act;
                    (B) who requires outpatient prescription drugs for 
                an extended period of time for the treatment of a 
                condition, as determined by a physician; and
                    (C)(i) whose enrollment in such plan is terminated 
                or may not be renewed for the next contract year 
                because the plan has been terminated or will not be 
                offered in such contract year; or
                    (ii) whose coverage of outpatient prescription 
                drugs under such plan has been terminated, 
                significantly reduced, or no longer provides for the 
                coverage of a particular outpatient prescription drug 
                required as specified under subparagraph (B).
            (2) Covered outpatient drug.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the term ``covered outpatient drug'' means any of 
                the following products:
                            (i) A drug which may be dispensed only upon 
                        prescription, and--
                                    (I) which is approved for safety 
                                and effectiveness as a prescription 
                                drug under section 505 of the Federal 
                                Food, Drug, and Cosmetic Act;
                                    (II)(aa) which was commercially 
                                used or sold in the United States 
                                before the date of enactment of the 
                                Drug Amendments of 1962 or which is 
                                identical, similar, or related (within 
                                the meaning of section 310.6(b)(1) of 
                                title 21 of the Code of Federal 
                                Regulations) to such a drug, and (bb) 
                                which has not been the subject of a 
                                final determination by the Secretary 
                                that it is a ``new drug'' (within the 
                                meaning of section 201(p) of the 
                                Federal Food, Drug, and Cosmetic Act) 
                                or an action brought by the Secretary 
                                under section 301, 302(a), or 304(a) of 
                                such Act to enforce section 502(f) or 
                                505(a) of such Act; or
                                    (III)(aa) which is described in 
                                section 107(c)(3) of the Drug 
                                Amendments of 1962 and for which the 
                                Secretary has determined there is a 
                                compelling justification for its 
                                medical need, or is identical, similar, 
                                or related (within the meaning of 
                                section 310.6(b)(1) of title 21 of the 
                                Code of Federal Regulations) to such a 
                                drug, and (bb) for which the Secretary 
                                has not issued a notice of an 
                                opportunity for a hearing under section 
                                505(e) of the Federal Food, Drug, and 
                                Cosmetic Act on a proposed order of the 
                                Secretary to withdraw approval of an 
                                application for such drug under such 
                                section because the Secretary has 
                                determined that the drug is less than 
                                effective for all conditions of use 
                                prescribed, recommended, or suggested 
                                in its labeling.
                            (ii) A biological product which--
                                    (I) may only be dispensed upon 
                                prescription;
                                    (II) is licensed under section 351 
                                of the Public Health Service Act; and
                                    (III) is produced at an 
                                establishment licensed under such 
                                section to produce such product.
                            (iii) Insulin approved under appropriate 
                        Federal law.
                            (iv) A prescribed drug or biological 
                        product that would meet the requirements of 
                        clause (i) or (ii) but that is available over-
                        the-counter in addition to being available upon 
                        prescription.
                    (B) Exclusion.--The term ``covered outpatient 
                drug'' does not include any product--
                            (i) except as provided in subparagraph 
                        (A)(iv), which may be distributed to 
                        individuals without a prescription;
                            (ii) when furnished as part of, or as 
                        incident to, a diagnostic service or any other 
                        item or service for which payment may be made 
                        under title XVIII of the Social Security Act; 
                        or
                            (iii) that is a therapeutically equivalent 
                        replacement for a product described in clause 
                        (i) or (ii), as determined by the Secretary.
            (3) Eligible organization.--The term ``eligible 
        organization'' means any organization that the Secretary 
        determines to be appropriate, including--
                    (A) pharmaceutical benefit management companies;
                    (B) wholesale and retail pharmacist delivery 
                systems;
                    (C) insurers;
                    (D) other organizations; or
                    (E) any combination of the entities described in 
                subparagraphs (A) through (D).
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.

Summary: Authorizes the Secretary, for items and services furnished on or after January 1, 2003, to adjust the amount of the payments made under Medicare to such health care providers in order to encourage their provision of services in a medically appropriate manner and to discourage significant deviations in underservice or overservice from generally accepted norms of medical practice. Amends Medicare part C (MedicareChoice) to provide for adjustment in MedicareChoice payment rates to overpaid counties. Provides that for a contract year consisting of a calendar year beginning on or after January 1, 2000, for which the Secretary has determined there is an overpaid payment area, the Secretary shall adjust the annual per capita rate of payment for specified MedicareChoice payment areas to increase the blended capitation rate applicable to such areas under MedicareChoice blended capitation rates by the aggregate amount of reductions in payments attributable to this Act. Directs the Secretary to: (1) provide for coverage of outpatient prescription drugs to eligible Medicare beneficiaries and to provide for such coverage by entering into agreements with eligible organizations to furnish such coverage. (2) provide coverage of outpatient prescription drugs to such a beneficiary for a specified period beginning when such beneficiary loses coverage of outpatient prescription drugs under the MedicareChoice plan in which they are enrolled. And (3) impose specified cost-sharing requirements under coverage of outpatient prescription drugs. Establishes in the Federal Supplementary Medical Insurance Trust Fund under Medicare the Emergency Reserve Outpatient Prescription Drug Account, consisting of specified amounts deposited in the Trust Fund, including amounts attributable to reductions in provider overpayments, to pay for outpatient prescription drugs.