I 

108TH CONGRESS 

1ST SESSION H. R. 2461

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. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 12, 2003

Ms. LORETTA SANCHEZ of California introduced the following bill; which was 

referred to the Committee on Energy and Commerce, and in addition to 

the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions 

as fall within the jurisdiction of the committee concerned 

A BILL

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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Equal Access to Pre5 scription Drugs for All Seniors Act’’. 
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1 SEC. 2. MEDICARE PRESCRIPTION DRUG BENEFIT PRO2 GRAM FOR CATASTROPHIC EXPENSES. 

3 Part B of title XVIII of the Social Security Act is 

4 amended by adding at the end the following new section: 

5 ‘‘ESTABLISHMENT OF OUTPATIENT PRESCRIPTION DRUG

6 BENEFIT PROGRAM

7 ‘‘SEC. 1849. (a) IN GENERAL.—The Secretary shall 

8 establish a program that provides outpatient prescription 

9 drug benefits for individuals who are enrolled under this 

10 part and entitled to benefits under part A. 

11 ‘‘(b) DESIGN OF BENEFIT.—The outpatient prescrip12 tion drug benefit program shall be established under sub13 section (a) consistent with the following: 

14 ‘‘(1) PERIOD OF BENEFITS.—Benefits under 

15 the program are first available for prescription drugs 

16 dispensed on or after January 1, 2005, and shall not 

17 be available for drugs dispensed after September 30, 

18 2013. 

19 ‘‘(2) FISCAL LIMITATIONS.—

20 ‘‘(A) IN GENERAL.—During the 10-fiscal21 year period beginning with fiscal year 2004, the 

22 program shall be designed to result in addi23 tional, net expenditures under this title equal to 

24 $400,000,000,000, and expenditures consistent 

25 with the amounts specified in subparagraph 

26 (B). In order to do this, the Secretary shall es-
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1 tablish an appropriate deductible under para2 graph (3), incentives for efficient use of generic 

3 drugs and other management techniques de4 scribed in paragraph (8), and efficient methods 

5 for payment for covered benefits. 

6 ‘‘(B) FUNDING STREAM.—The following 

7 shall be the amounts available for start-up and 

8 administrative costs and payment of benefits 

9 under this section: 

10 ‘‘(i) For start-up and administrative 

11 costs, without fiscal year limitation, 

12 $22,811,420,000. 

13 ‘‘(ii) For payments for benefits in fis14 cal year 2005, $25,756,250,000. 

15 ‘‘(iii) For payments for benefits in fis16 cal year 2006, $28,859,150,000. 

17 ‘‘(iv) For payments for benefits in fis18 cal year 2007, $32,219,690,000. 

19 ‘‘(v) For payments for benefits in fis20 cal year 2008, $36,021,300,000. 

21 ‘‘(vi) For payments for benefits in fis22 cal year 2009, $40,164,610,000. 

23 ‘‘(vii) For payments for benefits in 

24 fiscal year 2010, $44,746,360,000. 
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1 ‘‘(viii) For payments for benefits in 

2 fiscal year 2011, $49,904,730,000. 

3 ‘‘(ix) For payments for benefits in fis4 cal year 2012, $55,974,380,000. 

5 ‘‘(x) For payments for benefits in fis6 cal year 2013, $63,542,120,000. 

7 ‘‘(3) CATASTROPHIC NATURE OF BENEFIT.—

8 ‘‘(A) IN GENERAL.—The program is de9 signed to provide benefits in a calendar year for 

10 a beneficiary after the beneficiary has incurred 

11 out-of-pocket costs (as defined under the pro12 gram) for covered outpatient prescription drugs 

13 that exceeds such percentage of income (such as 

14 5 percent) as the Secretary shall specify for 

15 each year (beginning with 2005) consistent with 

16 paragraph (2). Such percentage shall vary from 

17 year to year [and may vary based on the in18 come of beneficiaries]. 

19 ‘‘(B) INCOME DETERMINATION.—Under 

20 the program, income shall be based on the pre21 vious year’s income tax return of, in the ab22 sence of such a return, on such income eligi23 bility statement as the Secretary shall provide 

24 for. The Secretary shall provide for a 

25 verification of the income on such a statement 
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1 through the income eligibility verification sys2 tem used for purposes of the medicaid and SSI 

3 programs or other comparable system approved 

4 by the Secretary. 

5 ‘‘(C) UTILIZATION OF BENEFITS.—The 

6 program shall be designed to permit access to 

7 benefits in 2 different ways: 

‘‘(i) MONTHLY PAYMENT OF 1 8 ⁄12 OF

9 DEDUCTIBLE.—In the case of a beneficiary 

10 who is expected to have prescription drug 

11 costs over the catastrophic threshold under 

12 subparagraph (A) for a year, the Secretary 

13 shall permit the beneficiary to elect to ob14 tain benefits immediately at the beginning 

15 of the year and to pay to the Secretary, on 

a monthly basis, 1 16 ⁄12 of the applicable 

17 amount of the threshold under such sub18 paragraph for the year. 

19 ‘‘(ii) BENEFITS UPON SATISFACTION

20 OF DEDUCTIBLE.—Access to benefits 

21 would be available once prescription drug 

22 expenditures, as documented through a 

23 smart card or similar method, have met 

24 the applicable annual deductible. 
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1 ‘‘(D) USE OF ELECTRONIC SYSTEMS FOR

2 TRACKING EXPENDITURES.—In any case the 

3 monitoring of expenditures under the program, 

4 both before and after the annual deductible has 

5 been met, shall be done electronically through 

6 the submittal of claims information and, if ap7 plicable, the use of an appropriate electronic 

8 transaction card system. 

9 ‘‘(4) DEFINED TERMS.—The Secretary shall de10 fine for purposes of the benefit ‘covered outpatient 

11 prescription drugs’, ‘out-of-pocket costs’, and ‘in12 come’ consistent with the following: 

13 ‘‘(A) ‘Income’ shall be based on adjusted 

14 gross income for the most recent previous year 

15 and shall take into account, in an appropriate 

16 manner in the case of a married couple, the in17 come of the spouses, and shall also income in18 come derived from tax exempt sources, includ19 ing social security benefits and municipal bond 

20 interest. 

21 ‘‘(B) ‘Covered outpatient prescription 

22 drugs’ shall not include prescription drugs for 

23 which any benefits are otherwise available 

24 under this part. 
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1 ‘‘(5) APPLICATION OF SECONDARY PAYOR PRO2 VISIONS.—The secondary payor provisions of section 

3 1862(b) shall apply to this benefits under this pro4 gram. 

5 ‘‘(6) NO PREMIUM; NO IMPACT ON PART B PRE6 MIUM.—There shall be no additional premium 

7 charged for the benefits under the program and the 

8 amount of the monthly premiums under section 

9 1839 and under section 1818 shall not be changed 

10 or affected as a result of the implementation of the 

11 program. 

12 ‘‘(7) PAYMENT FROM SMI TRUST FUND.—Bene13 fits under the program shall be payable from the 

14 Federal Supplementary Medical Insurance Trust 

15 Fund under section 1841. 

16 ‘‘(8) USE OF UTILIZATION MECHANISMS.—In 

17 implementing the program, the Secretary shall es18 tablish appropriate mechanisms to encourage the 

19 substitution of generic drugs and appropriate tech20 niques for the management of prescription drugs. 

21 ‘‘(9) PHARMACY ACCESS.—The program shall 

22 be designed in a manner so that beneficiaries are 

23 provided timely access to prescription drugs and 

24 may choose among the broadest range of qualified, 

25 participating pharmacies so as to result in the least 
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1 disruption on current methods for the delivery of 

2 outpatient prescription drugs. 

3 ‘‘(10) USE OF CONTRACTUAL ARRANGE4 MENTS.—The program may be implemented through 

5 contracts with pharmaceutical benefit managers and 

6 other qualified entities, including carriers under this 

7 part.’’.

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