A bill to amend title XVIII of the Social Security Act to provide coverage of outpatient prescription drugs under the medicare program.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Prescription Drug Benefit Act of 
2002''.

SEC. 105. MEDICARE COVERAGE OF OUTPATIENT PRESCRIPTION DRUGS.

    (a) Coverage.--Section 1861(s)(2) of the Social Security Act (42 
U.S.C. 1395x(s)(2)) is amended--
            (1) in subparagraph (U), by striking ``and'' at the end;
            (2) in subparagraph (V), by adding ``and'' after the 
        semicolon at the end; and
            (3) by adding at the end the following new subparagraph:
            ``(W) outpatient prescription drugs (as defined in 
        subsection (ww)(1));''.
    (b) Services Described.--Section 1861 of the Social Security Act 
(42 U.S.C. 1395x) is amended by adding at the end the following:

              ``Outpatient Prescription Drugs; Pharmacist

    ``(ww)(1) The term `outpatient prescription drugs' means any drug 
or biological (as those terms are defined in subsection (t)) that may 
be dispensed only upon prescription and that is dispensed by a 
pharmacist.
    ``(2) The term `pharmacist' means an individual who meets such 
licensure, certification, and practice requirements as the Secretary 
may establish.''.
    (c) Payment.--Section 1833(a)(1) of the Social Security Act (42 
U.S.C. 1395l(a)(1)) is amended--
            (1) by striking ``and'' before ``(U)''; and
            (2) by inserting before the semicolon at the end the 
        following: ``, and (V) with respect to outpatient prescription 
        drugs (as defined in section 1861(ww)(1)), the amount paid 
        shall be 80 percent of the actual charge for the drug, or, if a 
        beneficiary has incurred out-of-pocket expenses (as defined by 
        the Secretary) with respect to outpatient prescription drugs 
        during a year equal to at least $4,000, 100 percent of the 
        actual charge for the drug''.
    (d) Application of Limits on Billing.--Section 1842(b)(18)(C) of 
the Social Security Act (42 U.S.C. 1395u(b)(18)(C)) is amended by 
adding at the end the following new clause:
            ``(vii) In the case of outpatient prescription drugs (as 
        defined in section 1861(ww)(1)), a pharmacist.''.
    (e) Exclusion of Outpatient Prescription Drug Costs From 
Determination of Part B Monthly Premium.--Section 1839(g) of the Social 
Security Act (42 U.S.C. 1395r(g)) is amended--
            (1) by striking ``attributable to the application of 
        section'' and inserting ``attributable to--
            ``(1) the application of section'';
            (2) by striking the period and inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(2) the coverage of outpatient prescription drugs under 
        section 1861(s)(2)(W).''.
    (f) Use of Carriers for Administration of Benefit.--Section 1842 of 
the Social Security Act (42 U.S.C. 1395u) is amended by adding at the 
end the following new subsection:
    ``(u)(1) The Secretary shall enter into a contract (separate from 
any other contract entered into under this section) with 1 carrier for 
each region of the United States to administer the benefits under this 
part that relate to the coverage of outpatient prescription drugs under 
section 1861(s)(2)(W).
    ``(2) In addition to the other contract provisions required by this 
section, the contract described in paragraph (1) shall contain 
provisions that relate to payment, cost controls, formularies, 
disposition of rebates, distribution networks, and such other 
provisions as the Secretary determines necessary that relate to the 
coverage or outpatient prescription drugs under this part.
    ``(3) The Secretary shall ensure that carriers with a contract 
described in paragraph (1) offer maximum ease of availability of 
outpatient prescription drugs to individuals entitled to benefits under 
this part through local pharmacies and through other means.''.
    (g) Revision of Medigap Policies To Avoid Duplicate Coverage.--
Section 1882 of the Social Security Act (42 U.S.C. 1395ss) is amended 
by adding at the end the following new subsection:
    ``(v) Modernized Benefit Packages for Medicare Supplemental 
Policies.--
            ``(1) Revision of benefit packages.--
                    ``(A) In general.--Notwithstanding subsection (p), 
                the benefit packages classified as `H', `I', and `J' 
                under the standards established by subsection (p)(2) 
                (including the benefit package classified as `J' with a 
                high deductible feature, as described in subsection 
                (p)(11)) shall be revised so that the coverage of 
                outpatient prescription drugs available under such 
                benefit packages is replaced with coverage of 
                outpatient prescription drugs that complements but does 
                not duplicate the coverage of outpatient prescription 
                drugs that is otherwise available under this title.
                    ``(B) Manner of revision.--The benefit packages 
                revised under this section shall be revised in the 
                manner described in subparagraph (E) of subsection 
                (p)(1), except that for purposes of subparagraph (C) of 
                such subsection, the standards established under this 
                subsection shall take effect not later than January 1, 
                2003.''.
    (h) Effective Date.--The amendments made by this section shall 
apply to services furnished on or after January 1, 2003.

Summary: Prescription Drug Benefit Act of 2002 - Amends title XVIII (Medicare) of the Social Security Act (SSA) to: (1) provide for Medicare coverage of outpatient prescription drugs. And (2) require the revision of Medicare supplemental health insurance (Medigap) policy benefit packages to replace the currently available outpatient prescription drug coverage with coverage that complements but does not duplicate the coverage otherwise available under Medicare.