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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2665 Introduced in Senate (IS)]

109th CONGRESS
  2d Session
                                S. 2665

To amend title XVIII of the Social Security Act to simplify and improve 
                the Medicare prescription drug program.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             April 27, 2006

 Mr. Baucus (for himself, Mr. Wyden, Mrs. Lincoln, Mr. Conrad, and Mr. 
   Jeffords) introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
To amend title XVIII of the Social Security Act to simplify and improve 
                the Medicare prescription drug program.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare 
Prescription Drug Simplification Act of 2006''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
            TITLE I--BENEFITS SIMPLIFICATION AND IMPROVEMENT

                       Subtitle A--Simplification

Sec. 101. Establishment of national uniform part D benefit packages.
          Subtitle B--Formulary Requirements and Improvements

Sec. 111. Limitation on removal or change of coverage of covered part D 
                            drugs under a formulary under a 
                            prescription drug plan or an MA-PD plan.
Sec. 112. Formulary requirement with respect to certain categories and 
                            classes of drugs.
Sec. 113. Certainty regarding excluded drugs.
Sec. 114. Pharmacy and therapeutic committee improvements.
   Subtitle C--Funding Certain Costs for Administrative Improvements

Sec. 121. Additional funding for enrollment assistance.
             TITLE II--BENEFICIARY PROTECTION IMPROVEMENTS

Sec. 201. Improved plan information.
Sec. 202. Standardized definition for cost and utilization management 
                            tools and nomenclature for distinguishing 
                            between excluded and nonformulary drugs.
Sec. 203. Standardized enrollee notice regarding coverage 
                            determinations.
Sec. 204. Standardized and simplified processes for reconsiderations, 
                            exceptions, and appeals.
Sec. 205. Standardized marketing and licensing protections; State 
                            certification prior to waiver of licensure 
                            requirements.
Sec. 206. Authority to waive late enrollment penalty in certain 
                            circumstances.
Sec. 207. Integrated application and enrollment process for certain 
                            subsidy-eligible individuals.
Sec. 208. GAO study and report on cost and utilization management tools 
                            used under prescription drug plans and MA-
                            PD plans.
                   TITLE III--PERFORMANCE AND QUALITY

Sec. 301. Requirements for comparative information regarding 
                            performance of plans under Medicare part D.
Sec. 302. Required quality for approval of plan.
Sec. 303. MedPAC study and report regarding a value-based purchasing 
                            program for plans offering part D 
                            prescription drug coverage.

            TITLE I--BENEFITS SIMPLIFICATION AND IMPROVEMENT

                       Subtitle A--Simplification

SEC. 101. ESTABLISHMENT OF NATIONAL UNIFORM PART D BENEFIT PACKAGES.

    (a) In General.--Section 1860D-2 of the Social Security Act (42 
U.S.C. 1395w-102) is amended by adding at the end the following new 
subsection:
    ``(f) Simplification of Coverage.--
            ``(1) Requirement.--Beginning January 1, 2008, qualified 
        prescription drug coverage (other than coverage that is 
        standard prescription drug coverage (as defined in subsection 
        (b)) may only be offered by a prescription drug plan or an MA-
        PD plan through the benefit packages established by the 
        Secretary under paragraph (2).
            ``(2) Establishment of national uniform benefit packages.--
        The Secretary, in consultation with the entities and 
        individuals described in paragraph (5), shall establish 5 
        national uniform benefit packages (that are in addition to 
        standard prescription drug coverage) as follows:
                    ``(A) Three basic packages.--
                            ``(i) In general.--Three of the benefit 
                        packages shall only provide basic prescription 
                        drug coverage described in subsection 
                        (a)(3)(B).
                            ``(ii) Specification.--Of the benefit 
                        packages described in clause (i)--
                                    ``(I) one package shall have no 
                                annual deductible and coinsurance, 
                                specified by the Secretary, for costs 
                                up to the initial coverage limit;
                                    ``(II) one package, other than the 
                                package described in subclause (I), 
                                shall include a deductible that is 
                                equal to the amount determined under 
                                section 1860D-2(b)(1)(A)(ii) and 
                                provide for copayment amounts, 
                                specified by the Secretary, rather than 
                                coinsurance, for costs above the annual 
                                deductible and up to the initial 
                                coverage limit; and
                                    ``(III) one package, other than the 
                                packages described in subclauses (I) 
                                and (II), shall have no deductible and 
                                provide for copayment amounts, 
                                specified by the Secretary, rather than 
                                coinsurance, for costs up to the 
                                initial coverage limit.
                    ``(B) Two supplemental packages.--
                            ``(i) In general.--Two of the benefit 
                        packages shall include supplemental 
                        prescription drug coverage described in 
                        subsection (a)(2)(A).
                            ``(ii) Specification.--Of the benefit 
                        packages described in clause (i)--
                                    ``(I) one package shall include a 
                                meaningful level of coverage of costs 
                                incurred with respect to covered part D 
                                drugs after the initial coverage limit 
                                has been reached but before the annual 
                                out-of-pocket threshold has been 
                                reached; and
                                    ``(II) one package, other than the 
                                package described in subclause (I), 
                                shall include an increase in the 
                                initial coverage limit with respect to 
                                covered part D drugs so that such limit 
                                is equal to the annual out-of-pocket 
                                threshold.
            ``(3) Requirement for actuarial value of packages.--
                    ``(A) Basic packages.--The Secretary shall ensure 
                that the 3 packages described in paragraph (2)(A) meet 
                the following requirements:
                            ``(i) Assuring equivalent value of total 
                        coverage.--The actuarial value of the total 
                        coverage is equal to the actuarial value of 
                        standard prescription drug coverage, as 
                        estimated by the Chief Actuary of the Centers 
                        for Medicare & Medicaid Services.
                            ``(ii) Assuring equivalent unsubsidized 
                        value of coverage.--The unsubsidized value of 
                        the coverage is equal to the unsubsidized value 
                        of standard prescription drug coverage, as 
                        estimated by the Chief Actuary of the Centers 
                        for Medicare & Medicaid Services. For purposes 
                        of this subparagraph, the unsubsidized value of 
                        coverage is the amount by which the actuarial 
                        value of the coverage exceeds the actuarial 
                        value of the subsidy payments under section 
                        1860D-15 with respect to such coverage.
                            ``(iii) Assuring standard payment for costs 
                        at initial coverage limit.--The coverage is 
                        designed, based upon an actuarially 
                        representative pattern of utilization, to 
                        provide for the payment, with respect to costs 
                        incurred that are equal to the initial coverage 
                        limit under subsection (b)(3) for the year, of 
                        an amount equal to the product of--
                                    ``(I) the amount by which the 
                                initial coverage limit described in 
                                subsection (b)(3) for the year exceeds 
                                the deductible described in subsection 
                                (b)(1) for the year; and
                                    ``(II) 100 percent minus the 
                                coinsurance percentage specified in 
                                subsection (b)(2)(B).
                    ``(B) Supplemental packages.--The Secretary shall 
                ensure that the 2 packages described in paragraph 
                (2)(B) have actuarial values that are progressively 
                greater than the actuarial value of standard 
                prescription drug coverage, as estimated by the Chief 
                Actuary of the Centers for Medicare & Medicaid 
                Services.
            ``(4) Restriction on number of tiers or levels of cost-
        sharing.--
                    ``(A) In general.--Subject to clause (ii), a 
                package described in paragraph (2) may not include more 
                than 3 distinct tiers or levels of cost-sharing.
                    ``(B) Exception.--A package described in paragraph 
                (2) may include a fourth distinct tier or level of 
                cost-sharing that may only be used for specialty or 
                high cost covered part D drugs (as determined by the 
                Secretary) if the PDP sponsor of the prescription drug 
                plan or the Medicare Advantage organization offering 
                the MA-PD plan has an exceptions process under 
                subsection (g) with respect to the 4th tier or level.
            ``(5) Balancing of objectives.--In establishing the benefit 
        packages under paragraph (2), the Secretary shall balance the 
        objectives of--
                    ``(A) simplifying the benefit structures to 
                facilitate comparisons among plans;
                    ``(B) avoiding adverse selection;
                    ``(C) ensuring meaningful differences between 
                benefit packages;
                    ``(D) providing program stability; and
                    ``(E) promoting competition among plans.
            ``(6) Standardized language, nomenclature, definitions, and 
        format.--
                    ``(A) In general.--In establishing the benefit 
                packages under paragraph (2), the Secretary shall 
                develop--
                            ``(i) standardized language, nomenclature, 
                        and definitions to be used by the Secretary and 
                        PDP sponsors and MA-PD organizations with 
                        respect to such benefit packages; and
                            ``(ii) a standardized format to be used by 
                        PDP sponsors and MA-PD organizations with 
                        respect to such benefit packages.
                    ``(B) Requirement.--In developing standardized 
                language, nomenclature, and definitions and a 
                standardized format under subparagraph (A), the 
                Secretary shall ensure that such language, 
                nomenclature, definitions, and format clearly 
                distinguishes between--
                            ``(i) a plan that offers only basic 
                        prescription drug coverage (as described in 
                        subsection (a)(3)) and a plan that offers 
                        supplemental prescription drug coverage (as 
                        described in subsection (a)(2)(A));
                            ``(ii) a plan that offers coinsurance and a 
                        plan that offers flat copayments;
                            ``(iii) a plan that covers all covered part 
                        D drugs and a plan that covers less than all 
                        such drugs; and
                            ``(iv) prescription drug plans and MA-PDs, 
                        especially on terms of how enrollment in those 
                        plans would affect access to items and services 
                        under the original medicare fee-for-service 
                        program under parts A and B.
            ``(7) Advisory committee.--
                    ``(A) Establishment.--The Secretary shall establish 
                a Benefit Advisory Committee (in this paragraph 
                referred to as the Committee).
                    ``(B) Membership.--The Committee shall be composed 
                of 15 members to be appointed by the Secretary. The 
                Secretary shall ensure that the following individuals 
                are appointed to the Committee:
                            ``(i) Two representatives appointed upon 
                        recommendation of the National Association of 
                        Insurance Commissioners.
                            ``(ii) The Chief Actuary of the Centers for 
                        Medicare & Medicaid Services.
                            ``(iii) Two individuals with expertise in 
                        consumer choice.
                            ``(iv) Two individuals with expertise in 
                        health economics.
                            ``(v) Two individuals with expertise in 
                        actuarial sciences.
                            ``(vi) Two individuals with expertise in 
                        pharmacy benefit management.
                            ``(vii) Two representatives of health 
                        insurers, health care providers, and consumers.
                            ``(viii) Two other individuals or entities 
                        determined appropriate by the Secretary.
                    ``(C) Consultation.--In establishing the benefit 
                packages under paragraph (2) (including determinations 
                under paragraph (3)), the Secretary shall consult with 
                the Committee.
            ``(8) Updating of benefit packages.--Not less than once 
        every 3 years, the Secretary shall review the benefit packages 
        established under this subsection, and, subject to the 
        requirements under paragraph (2), shall update the content of 
        such packages as appropriate.
            ``(9) No effect on requirement to offer a plan that only 
        provides basic prescription drug coverage.--Nothing in this 
        subsection shall be construed to effect the requirement under 
        subsection (a)(2)(B).''.
    (b) Conforming Amendments.--Section 1860D-2 of the Social Security 
Act (42 U.S.C. 1395w-102) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)--
                            (i) in the matter preceding subparagraph 
                        (A), by striking ``For purposes'' and inserting 
                        ``Subject to subsection (f), for purposes'';
                            (ii) in subparagraph (B), by striking 
                        ``which meets the alternative'' and all that 
                        follows through the period at the end and 
                        inserting the following: ``which--
                            ``(i) with respect to plan years beginning 
                        prior to January 1, 2008, meets the alternative 
                        prescription drug requirements of subsection 
                        (c) and access to negotiated prices under 
                        subsection (d), but only if the benefit design 
                        of such coverage is approved by the Secretary, 
                        as provided under subsection (c); or
                            ``(ii) with respect to plan years beginning 
                        on or after January 1, 2008, meets the 
                        requirements of subsection (f) and access to 
                        negotiated prices under subsection (d), but 
                        only if the benefit design of such coverage is 
                        approved by the Secretary, in accordance with 
                        subsection (f).''.
                    (B) in paragraph (2)(A), in the matter preceding 
                clause (i), by inserting ``and subsection (f)'' after 
                ``subparagraph (B)'';
            (2) in subsection (b), by striking paragraph (2) and 
        inserting the following:
            ``(2) 25 percent coinsurance.--The coverage has coinsurance 
        (for costs above the annual deductible specified in paragraph 
        (1) and up to the initial coverage limit under paragraph (3)) 
        that is--
                    ``(A) prior to January 1, 2008--
                            ``(i) equal to 25 percent; or
                            ``(ii) actuarially equivalent (using 
                        processes and methods established under section 
                        1860D-11(c)) to an average expected payment of 
                        25 percent of such costs; or
                    ``(B) beginning on January 1, 2008, is equal to 25 
                percent.''.

          Subtitle B--Formulary Requirements and Improvements

SEC. 111. LIMITATION ON REMOVAL OR CHANGE OF COVERAGE OF COVERED PART D 
              DRUGS UNDER A FORMULARY UNDER A PRESCRIPTION DRUG PLAN OR 
              AN MA-PD PLAN.

    (a) Limitation on Removal or Change.--Section 1860D-4(b)(3)(E) of 
the Social Security Act (42 U.S.C. 1395w-104(b)(3)(E)) is amended to 
read as follows:
                    ``(E) Removing or changing a drug on a formulary.--
                            ``(i) Limitation.--Subject to clause (ii), 
                        with respect to plan years beginning on or 
                        after January 1, 2007, the PDP sponsor of a 
                        prescription drug plan may not remove a covered 
                        part D drug from the plan formulary, apply a 
                        cost or utilization management tool that 
                        imposes a restriction or limitation on the 
                        coverage of such a drug (such as through the 
                        application of a preferred status, usage 
                        restriction, step therapy, prior authorization, 
                        or quantity limitation), or increase the cost-
                        sharing of such a drug (such as through 
                        placement of a drug on a tier that would result 
                        in higher cost-sharing for a beneficiary) other 
                        than the date on which PDP sponsors may begin 
                        marketing their plans with respect to the 
                        immediately succeeding plan year, as determined 
                        by the Secretary.
                            ``(ii) Exceptions to limitation on 
                        removal.--Subject to clause (iii), clause (i) 
                        shall not apply with respect to a covered part 
                        D drug that--
                                    ``(I) is a brand name drug for 
                                which there is a generic drug approved 
                                under section 505(j) of the Food and 
                                Drug Cosmetic Act that is placed on the 
                                market during the period in which there 
                                are limitations on removal or change in 
                                the formulary under clause (i);
                                    ``(II) is a drug for which the 
                                Commissioner of Food and Drugs issues a 
                                safety warning that would impose a 
                                restriction on the drug or require a 
                                drug label warning during the plan 
                                year;
                                    ``(III) is a drug that the Pharmacy 
                                and Therapeutic Committee of the plan 
                                determines, based directly on evidence 
                                from peer-reviewed research, has a 
                                lower safety profile than is 
                                appropriate or is ineffective; or
                                    ``(IV) for which the Secretary 
                                establishes a specific exception 
                                through the promulgation of regulations 
                                relating to plan formularies.
                            ``(iii) Limited application of exceptions 
                        to drugs in certain categories and classes.--
                        For 2007 and 2008, subclauses (I), (II), (IV), 
                        and (V) of clause (ii) shall not apply to a 
                        drug in a category or class described in 
                        section 1860D-4(b)(3)(H)(i).
                            ``(iv) Notice of removal under application 
                        of exception to limitation.--The PDP sponsor of 
                        a prescription drug plan shall provide 
                        appropriate notice (such as under subsection 
                        (a)(3) and includes the annual notice under 
                        subsection (a)(5)) of any removal or change 
                        under clause (ii) to the Secretary, affected 
                        enrollees, physicians, pharmacies, and 
                        pharmacists.''.
    (b) Notice for Change in Formulary and Other Restrictions or 
Limitations on Coverage.--
            (1) In general.--Section 1860D-4(a) of such Act (42 U.S.C. 
        1395w-104(a)) is amended by adding at the end the following new 
        paragraph:
            ``(5) Annual notice of changes in formulary and other 
        restrictions or limitations on coverage.--Each PDP sponsor 
        offering a prescription drug plan shall furnish to each 
        enrollee at the time of each annual coordinated election period 
        (referred to in section 1860D-1(b)(1)(B)(iii)) for a plan year 
        a notice of any changes in the formulary or other restrictions 
        or limitations on coverage of any covered part D drug under the 
        plan that will take effect for the plan year.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to annual coordinated election periods beginning on 
        or after November 15, 2006.

SEC. 112. FORMULARY REQUIREMENT WITH RESPECT TO CERTAIN CATEGORIES AND 
              CLASSES OF DRUGS.

    (a) Required Inclusion.--Section 1860D-4(b)(3) of the Social 
Security Act (42 U.S.C. 1395w-104(b)(3)) is amended--
            (1) in subparagraph (C)(i), by striking ``The formulary'' 
        and inserting ``Subject to subparagraph (G), the formulary''; 
        and
            (2) by inserting after subparagraph (F) the following new 
        subparagraph:
                    ``(G) Required inclusion of drugs in certain 
                categories and classes.--
                            ``(i) For 2007 and 2008.--For 2007 and 
                        2008, the formulary must include all or 
                        substantially all drugs in the following 6 
                        categories that are available as of June 1 of 
                        the prior year:
                                    ``(I) Immunosuppressant.
                                    ``(II) Antidepressant.
                                    ``(III) Antipsychotic.
                                    ``(IV) Anticonvulsant.
                                    ``(V) Antiretroviral.
                                    ``(VI) Antineoplastic.
                        A PDP sponsor of a prescription drug plan may 
                        not apply a utilization management tool, such 
                        as prior authorization or step therapy, to a 
                        drug required to be included on the formulary 
                        pursuant to the preceding sentence with respect 
                        to an enrollee if the enrollee was taking such 
                        drug prior to the application of such tool.
                            ``(ii) Substantially all defined.--For 
                        purposes of clause (i), the term `substantially 
                        all' means all drugs and unique dosage forms in 
                        the categories described in such clause except 
                        for--
                                    ``(I) multi-source brands of the 
                                identical molecular structure;
                                    ``(II) extended release products 
                                when the immediate-release product is 
                                included on the formulary;
                                    ``(III) products that have the same 
                                active ingredient; and
                                    ``(IV) multiple dosage forms that 
                                do not provide a unique route of 
                                administration, such as tablets and 
                                capsules.
                            ``(iii) For 2009 and subsequent years.--
                                    ``(I) Authority.--Beginning with 
                                the plan year beginning on January 1, 
                                2009, the Secretary, taking into 
                                account the results of the study 
                                conducted under section 113(b) of the 
                                Medicare Prescription Drug 
                                Simplification Act of 2006, may require 
                                that the formulary include coverage of 
                                covered part D drugs within certain 
                                categories or classes of drugs.
                                    ``(II) Requirement for use of 
                                authority.--The Secretary shall 
                                promulgate regulations to exercise the 
                                authority under subclause (I) and may 
                                not exercise such authority through 
                                program guidance.''.
    (b) Institute of Medicine Study and Report on Protected Categories 
and Classes of Drugs.--
            (1) Study.--
                    (A) In general.--Not later than the date that is 2 
                months after the date of the enactment of this Act, the 
                Secretary of Health and Human Services (in this 
                subsection referred to as the ``Secretary'') shall 
                enter into an arrangement under which the Institute of 
                Medicine of the National Academy of Sciences (in this 
                subsection referred to as the ``Institute'') shall 
                conduct a study on issues related to requiring any 
                formulary used under prescription drug plans under part 
                D of title XVIII of the Social Security Act or under 
                MA-PD plans under part C of such title to cover drugs 
                within certain categories or classes.
                    (B) Required items to be evaluated.--The study 
                conducted under subparagraph (A) shall include an 
                evaluation of--
                            (i) whether all or substantially all drugs 
                        within certain drug categories or classes of 
                        drugs should be required by the Secretary on 
                        any formulary used under a prescription drug 
                        plan or an MA-PD plan in order to protect 
                        enrollees from undue medical risk and 
                        complication, including life threatening 
                        interruptions in, or lack of access to, 
                        medication therapy, and if so, what the 
                        protected categories or classes should be; and
                            (ii) options for processes by which the 
                        Secretary could reevaluate requirements with 
                        respect to the matters described in clause (i) 
                        on an ongoing basis.
            (2) Report.--Not later than the date that is 12 months 
        after the Secretary enters into the arrangement with the 
        Institute under paragraph (1), the Institute shall submit to 
        the Secretary and to Congress a report on the study conducted 
        under such paragraph.
            (3) Factors for iom to consider.--In conducting the study 
        required by this subsection, the Institute shall consider--
                    (A) the existing regulatory and statutory framework 
                for beneficiary protections under part D of title XVIII 
                of the Social Security Act, including the coverage 
                determination and appeals processes under such part;
                    (B) the role of Pharmacy and Therapeutic Committees 
                in selecting drugs to be included on the formulary of a 
                prescription drug plan or an MA-PD plan; and
                    (C) the implications of the presence or absence of 
                such drug/drug category or class protections on 
                spending under the Medicare program, including spending 
                on non-drug services, such as hospital and physician 
                care.
            (4) Committee.--The committee appointed by the Institute to 
        conduct the study and prepare the report required by this 
        subsection shall include individuals with expertise in 
        economics, clinical pharmacology, actuarial sciences, pharmacy 
        benefit design, and medicine.
            (5) Authorization of appropriations.--There are authorized 
        to be appropriated such sums as may be necessary for purposes 
        of conducting the study and preparing the report required by 
        this subsection.

SEC. 113. CERTAINTY REGARDING EXCLUDED DRUGS.

    Section 1860D-2(e) of the Social Security Act (42 U.S.C. 1395w-
102(e)) is amended by adding at the end the following new paragraphs:
            ``(4) Annual publication.--By not later than April 1 of 
        each year (beginning with 2007), the Secretary shall identify 
        and cause to have published in the Federal Register the list of 
        drugs that are excluded under paragraph (2)(A) for the 
        subsequent year. Such list shall describe the drugs by National 
        Drug Code Directory level.
            ``(5) Beneficiary notice.--With respect to activities 
        conducted under section 1860D-1(c)(1) for each plan year 
        (beginning with plan year 2007), the Secretary shall inform 
        eligible part D individuals (and prospective part D eligible 
        individuals) of the types of drugs excluded under paragraph 
        (2)(A) in conducting such activities.''.

SEC. 114. PHARMACY AND THERAPEUTIC COMMITTEE IMPROVEMENTS.

    (a) Disclosure of Conflicts of Interest for Members of Pharmacy and 
Therapeutic Committee.--Section 1860D-4(b)(3)(A) of the Social Security 
Act (42 U.S.C. 1395w-104(b)(3)(A)) is amended by adding at the end the 
following new clause:
                            ``(iii) Disclosure.--Beginning November 1, 
                        2006, such committee shall annually disclose to 
                        the Secretary, and, upon request, to the 
                        public, any conflict of interest members have 
                        with a pharmaceutical company, an insurer, a 
                        PDP sponsor or an MA organization, or any other 
                        relevant entity.''.
    (b) Disclosure of Decisions and Bases for Decisions.--Section 
1860D-4(b)(3)(B) of the Social Security Act (42 U.S.C. 1395w-
104(b)(3)(B)) is amended by adding at the end the following flush 
sentence:
                ``With respect to decisions made by such Committee 
                regarding the formulary for plan years beginning on or 
                after January 1, 2007, the committee shall disclose 
                such decisions (and the bases for such decisions) to 
                the Secretary, and, upon request, to the public.''.

   Subtitle C--Funding Certain Costs for Administrative Improvements

SEC. 121. ADDITIONAL FUNDING FOR ENROLLMENT ASSISTANCE.

    (a) In General.--There are appropriated, to be transferred from the 
Federal Supplementary Medical Insurance Trust Fund, not to exceed 
$120,000,000 for the Centers for Medicare & Medicaid Services, for the 
purpose of ensuring that individuals have adequate access to impartial 
advice and assistance in enrolling in the prescription drug program 
under part D of title XVIII of the Social Security Act.
    (b) Use of Funds.--Amounts provided under subsection (a) shall be 
used for the following purposes:
            (1) Grants to state health insurance assistance programs.--
        To provide additional grants to State health insurance 
        counseling programs (receiving assistance under section 4360 of 
        the Omnibus Reconciliation Act of 1990) to broaden their 
        capacity to--
                    (A) provide personal and impartial assistance to 
                individuals seeking to enroll in a prescription drug 
                plan or an MA-PD plan under such program;
                    (B) educate and assist individuals in applying for 
                a low-income subsidy under section 1860D-14 of such Act 
                (42 U.S.C. 1395w-114); and
                    (C) assist individuals in accessing benefits under 
                such a prescription drug plan or such an MA-PD plan 
                once they are enrolled in a plan.
            (2) Grants for innovative programs.--To provide grants to 
        eligible States to conduct innovative programs that provide any 
        of the services described in subparagraphs (A), (B), and (C) of 
        paragraph (1). A State is eligible for a grant under this 
        paragraph if the level of enrollment in the State in the 
        prescription drug program under such part is below the national 
        average.
            (3) Promotion.--To widely promote and disseminate 
        information about the existence of, and services provided by, 
        State health insurance counseling programs.
    (c) Priority.--In awarding grants under paragraphs (1) and (2) of 
subsection (b), priority shall be given to States, and State health 
insurance counseling programs located in States, with the lowest 
percentage of part D eligible individuals enrolled in such prescription 
drug program.
    (d) Availability.--Amounts provided under subsection (a) shall 
remain available until December 31, 2010.

             TITLE II--BENEFICIARY PROTECTION IMPROVEMENTS

SEC. 201. IMPROVED PLAN INFORMATION.

    (a) Comparative Information Provided by the Secretary.--
            (1) In general.--Section 1860D-1(c)(3) of the Social 
        Security Act (42 U.S.C. 1395w-101(c)(3)) is amended--
                    (A) in subparagraph (A), by adding at the end the 
                following new clause:
                            ``(vi) Cost and utilization management 
                        tools.--A clear and prominent display of the 
                        cost and utilization management tools used 
                        under the plan to impose a restriction or 
                        limitation on the coverage of a drug on the 
                        formulary of the plan.''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(C) Requirements.--In disseminating comparative 
                information under paragraph (2)(A), the Secretary 
                shall--
                            ``(i) ensure that such information clearly 
                        distinguishes between--
                                    ``(I) plans that offer only basic 
                                prescription drug coverage and plans 
                                that offer supplemental prescription 
                                drug coverage;
                                    ``(II) plans that offer coinsurance 
                                and plans that offer flat copayments; 
                                and
                                    ``(III) plans that cover all 
                                covered part D drugs and plans that 
                                cover less than all such drugs;
                            ``(ii) to the extent that comparative 
                        information is linked on the Internet to an 
                        Internet website of a prescription drug plan or 
                        an MA-PD plan, ensure that the information, 
                        including information relating to the formulary 
                        of the plan, is directly linked to the relevant 
                        page of the plan Internet website and not the 
                        homepage of such website; and
                            ``(iii) use the standardized definitions, 
                        nomenclature, language, and format developed 
                        under sections 1860D-2(f)(4) and 1860D-4(l).''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply with respect to comparative information 
        disseminated with respect to plan years beginning on or after 
        January 1, 2007.
    (b) Information Provided by Plans.--
            (1) Drug specific information.--Section 1860D-4(a)(1) of 
        the Social Security Act (42 U.S.C. 1395w-104(a)(1)) is 
        amended--
                    (A) in subparagraph (A), by striking ``subparagraph 
                (B)'' and inserting ``subparagraphs (B), (C), (D), and 
                (E)'';
                    (B) in subparagraph (B), by striking clauses (ii) 
                and (iii) and inserting the following new clauses:
                            ``(ii) How any formulary used by the 
                        sponsor functions, including, using the 
                        standard definitions developed under subsection 
                        (l), how any cost and utilization management 
                        tools used to impose a restriction or 
                        limitation on the coverage of a drug on the 
                        formulary (such as through the application of 
                        the tools described in such subsection) 
                        functions.
                            ``(iii) Beneficiary cost-sharing 
                        requirements, including the tiered or other 
                        copayment level applicable for each drug (or 
                        class of drugs).''; and
                    (C) by adding at the end the following new 
                subparagraphs:
                    ``(C) Benefit process information.--The information 
                described in this subparagraph is information 
                concerning the benefit process under the plan, 
                including an explanation of what a coverage 
                determination is and how to file a grievance, 
                reconsideration, exception, and appeal.
                    ``(D) Contact information.--The information 
                described in this subparagraph is the plan's toll-free 
                customer call line and Internet website and the name, 
                address, and phone number of the plan administrator.
                    ``(E) Specific information.--The information 
                described in this subparagraph is a description of--
                            ``(i) the specific information, including 
                        the information described in paragraph (2)(A), 
                        an enrollee can request of the PDP sponsor 
                        under the mechanism described in paragraph 
                        (3)(A); and
                            ``(ii) how the enrollee can make such a 
                        request.''.
            (2) Disclosure upon request of certain information.--
        Section 1860D-4(a)(2) of the Social Security Act (42 U.S.C. 
        1395w-104(a)(2)) is amended to read as follows:
            ``(2) Disclosure upon request of certain information.--Upon 
        request of a part D eligible individual who is eligible to 
        enroll in a prescription drug plan, the PDP sponsor offering 
        such plan shall provide such individual with--
                    ``(A) information similar (as determined by the 
                Secretary) to the information described in 
                subparagraphs (A) and (C) of section 1852(c)(2); and
                    ``(B) information disclosed to enrollees under 
                paragraphs (1) and (5).''.
            (3) Standardized format for information.--Section 1860D-
        4(a) of the Social Security Act (42 U.S.C. 1395w-104(a)), as 
        amended by section 111(b), is amended by adding at the end the 
        following new paragraph:
            ``(6) Standardized information.--
                    ``(A) In general.--The Secretary shall standardize 
                the format of the presentation of information by PDP 
                sponsors of a prescription drug plan to enrollees 
                pursuant to this subsection, including the covered part 
                D drugs covered under the plan's formulary and the cost 
                and utilization management tools used under the plan.
                    ``(B) Written and electronic information.--Such 
                standardized format shall apply to information 
                presented in writing and electronically.''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply with respect to information provided with respect 
        to plan years beginning on or after January 1, 2007.

SEC. 202. STANDARDIZED DEFINITION FOR COST AND UTILIZATION MANAGEMENT 
              TOOLS AND NOMENCLATURE FOR DISTINGUISHING BETWEEN 
              EXCLUDED AND NONFORMULARY DRUGS.

    (a) In General.--Section 1860D-4 of the Social Security Act (42 
U.S.C. 1395w-104) is amended by adding at the end the following new 
subsection:
    ``(l) Standardized Definitions and Nomenclature.--The Secretary 
shall develop, and require PDP sponsors offering a prescription drug 
plan to use, the following:
            ``(1) Definition of cost and utilization management 
        tools.--A standard definition for any cost and utilization 
        management tools used under the plan to impose a restriction or 
        limitation on the coverage of a drug on the formulary (such as 
        through the application of a preferred status or tiered 
        formulary structure, usage restriction, step therapy, prior 
        authorization, or quantity limitation).
            ``(2) Nomenclature for excluded and nonformulary drugs.--A 
        standard nomenclature for referring to, and distinguishing 
        between--
                    ``(A) drugs excluded from the definition of a 
                covered part D drug pursuant to section 1860D-2(e)(2); 
                and
                    ``(B) drugs not included on the formulary under the 
                plan.''.
    (b) Effective Date.--The Secretary of Health and Human Services 
shall provide for the standard definitions and nomenclature, and the 
required use of such definitions and nomenclature, under the amendment 
made by subsection (a) by not later than January 1, 2007.

SEC. 203. STANDARDIZED ENROLLEE NOTICE REGARDING COVERAGE 
              DETERMINATIONS.

    (a) In General.--Section 1860D-4 of the Social Security Act (42 
U.S.C. 1395w-104), as amended by section 202(a), is amended by adding 
at the end the following new subsection:
    ``(m) Standardized Enrollee Notice.--
            ``(1) In general.--The Secretary shall develop a standard 
        notice that PDP sponsors and Medicare Advantage organizations 
        shall ensure is distributed by each pharmacy that dispenses a 
        covered part D drug to an enrollee in a prescription drug plan 
        or an MA-PD plan when--
                    ``(A) a covered part D drug prescribed for the 
                enrollee is not covered, or the coverage of such drug 
                is otherwise restricted, by the plan; or
                    ``(B) if the plan uses a tiered formulary 
                structure, a covered part D drug prescribed for the 
                enrollee is on a nonpreferred or specialty tier.
            ``(2) Requirement for notice.--The standard notice required 
        under paragraph (1) shall include--
                    ``(A) an explanation of the coverage decision;
                    ``(B) information on how to request a 
                reconsideration and an exception under subsection (g) 
                and how to file an appeal under subsection (h); and
                    ``(C) the contact name, address, and phone number 
                for the PDP sponsor of the plan or the Medicare 
                Advantage organization offering the plan.
            ``(3) Required information to pharmacies.--A PDP sponsor of 
        a prescription drug plan shall have in place procedures to 
        provide pharmacies with the information necessary for the 
        pharmacy to distribute the appropriate notice required under 
        paragraph (1).
            ``(4) Reimbursement of pharmacy costs.--A PDP sponsor of a 
        prescription drug plan shall provide appropriate reimbursement 
        to pharmacies for the costs of the pharmacy in distributing the 
        appropriate notice required under paragraph (1)''.
    (b) Effective Date.--The Secretary of Health and Human Services 
shall provide for the standard notice, and the use of such notice, 
under the amendment made by subsection (a) by not later than January 1, 
2007.

SEC. 204. STANDARDIZED AND SIMPLIFIED PROCESSES FOR RECONSIDERATIONS, 
              EXCEPTIONS, AND APPEALS.

    (a) Standardized Forms and Processes for Reconsiderations and 
Exceptions.--Section 1860D-4 of the Social Security Act (42 U.S.C. 
1395w-104), as amended by section 203, is amended by adding at the end 
the following new subsection:
    ``(n) Standardized Forms and Processes for Reconsiderations and 
Exceptions.--
            ``(1) Standardized forms.--
                    ``(A) In general.--The Secretary shall develop 
                standardized forms to be used under a prescription drug 
                plan to request a reconsideration or an exception under 
                subsection (g), with the goal of making such 
                reconsideration and exceptions process more simple, 
                transparent, and efficient for enrollees and providers.
                    ``(B) Required use by plans.--If a PDP sponsor of a 
                prescription drug plan requires a request for a 
                reconsideration or an exception to be in writing, the 
                sponsor shall use the standardized forms developed 
                under subparagraph (A).
            ``(2) Standardized processes for reconsiderations and 
        exceptions.--
                    ``(A) In general.--The Secretary shall develop, and 
                require PDP sponsors of prescription drug plans to use, 
                a standardized process for reconsiderations and 
                exceptions under subsection (g).
                    ``(B) Requirement.--The process developed in 
                subparagraph (A)--
                            ``(i) shall require that determinations 
                        regarding medical necessity are based on 
                        professional medical judgement, the medical 
                        condition of the enrollee, the treating 
                        provider's recommendation, and other medical 
                        evidence; and
                            ``(ii) may not require an enrollee or a 
                        provider to submit extraneous information 
                        beyond the standardized form described in 
                        paragraph (1) as a condition for the plan to 
                        make a reconsideration or exception but shall 
                        permit the enrollee or provider to provide 
                        additional information to the request if they 
                        so choose.''.
    (b) Improved Appeals Process for Nonformulary Drugs.--Section 
1860D-4(h)(2) of the Social Security Act (42 U.S.C. 1395w-104(h)(2)) is 
amended by striking ``only if'' and all that follows through the period 
and inserting the following: ``only if the prescribing physician 
determines at least one of the following applies:
                    ``(A) That all covered part D drugs on any tier of 
                the formulary for treatment of the same condition would 
                not be as effective for the individual.
                    ``(B) That all covered part D drugs on any tier of 
                the formulary for treatment of the same condition would 
                have adverse effects for the individual.
                    ``(C) That the covered part D drug that is not on 
                the formulary under the plan is the most effective drug 
                for the individual and that the individual would 
                destabilize if coverage of the drug is not provided.''.
    (c) Effective Date.--(1) The Secretary of Health and Human Services 
shall provide for the standard notice and the standardized process, and 
the use of such notice and process, under the amendment made by 
paragraph (1) by not later than January 1, 2007.
    (2) The amendment made by subsection (b) shall apply to drugs 
dispensed on or after January 1, 2007.

SEC. 205. STANDARDIZED MARKETING AND LICENSING PROTECTIONS; STATE 
              CERTIFICATION PRIOR TO WAIVER OF LICENSURE REQUIREMENTS.

    (a) Standardized Marketing Requirements.--
            (1) In general.--Section 1860D-1 of the Social Security Act 
        (42 U.S.C. 1395w-101) is amended--
                    (A) in subsection (b)(1)(B)(vi), by striking 
                ``Section'' and inserting ``Subject to subsection (d), 
                section''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(d) Standardized Marketing Requirements.--
            ``(1) Development by the naic.--
                    ``(A) Requirements.--The Secretary shall request 
                the National Association of Insurance Commissioners (in 
                this subsection referred to as the `NAIC') to--
                            ``(i) develop standardized marketing 
                        requirements for prescription drug plans and 
                        MA-PD plans; and
                            ``(ii) submit a report on such requirements 
                        to the Secretary by not later than April 1, 
                        2007.
                    ``(B) Prohibited activities.--Such requirements 
                shall prohibit the following:
                            ``(i) Cross-selling of non-Medicare 
                        products or services with products or services 
                        offered by a prescription drug plan under this 
                        part or an MA-PD plan under part C.
                            ``(ii) Up-selling from prescription drug 
                        plans to MA-PD plans.
                            ``(iii) Telemarketing (including cold 
                        calling) conducted by a prescription drug plan 
                        or MA-PD plan (or agent of such plan).
                    ``(C) Other activities to address.--Such 
                requirements shall address the conduct of agents 
                engaged in on-site promotion at a facility of an 
                organization with which the PDP sponsor or Medicare 
                Advantage organization has a cobranding relationship 
                and any other marketing practices that are determined 
                to be inappropriate for the eligible part D individual 
                population.
            ``(2) Implementation of requirements.--
                    ``(A) Requirements based on naic recommendations.--
                If the NAIC develops standardized marketing 
                requirements and submits the report pursuant to 
                paragraph (1), the Secretary shall promulgate 
                regulations for standardized marketing requirements for 
                prescription drug plans and MA-PD plans that are based 
                on the NAIC recommendations contained in such report. 
                The Secretary shall ensure that such regulations take 
                effect not later than July 31, 2007.
                    ``(B) Requirements if naic does not submit 
                report.--If the NAIC does not develop standardized 
                marketing requirements and submit the report pursuant 
                to paragraph (1), the Secretary shall promulgate 
                regulations for standardized marketing requirements for 
                prescription drug plans and MA-PD plans. Such 
                regulations shall prohibit the conduct described in 
                paragraph (1)(B) and address the conduct described in 
                paragraph (1)(C). The Secretary shall ensure that such 
                regulations take effect not later than July 31, 2007.
            ``(3) State authority to enforce standardized marketing 
        requirements.--
                    ``(A) State enforcement against agents of 
                prescription drug plans.--Notwithstanding any other 
                provision of law, if a State provides for the adoption 
                of the standardized marketing requirements under the 
                regulations under subparagraph (A) or (B) of paragraph 
                (2), the State may provide for the enforcement of such 
                requirements with respect to agents of prescription 
                drug plans or MA-PD plans that are licensed within the 
                State.
                    ``(B) Memorandum of understanding providing 
                enforcement against prescription drug plans.--
                Notwithstanding any other provision of law, the 
                Secretary may enter into a memorandum of understanding 
                with a State that provides for State enforcement of 
                such standardized marketing requirements with respect 
                to prescription drug plans and MA-PD plans that are 
                licensed within the State.
                    ``(C) State reporting of violations of standardized 
                marketing requirements.--The Secretary shall request 
                that States report any violations of such standardized 
                marketing requirements to national and regional offices 
                of the Centers for Medicare & Medicaid Services.
                    ``(D) Report.--The Secretary shall submit an annual 
                report to Congress on the enforcement of such 
                standardized marketing requirements, together with such 
                recommendations as the Secretary determines 
                appropriate. Such report shall include--
                            ``(i) a list of any alleged violations of 
                        such requirements reported to the Secretary by 
                        a State, a PDP sponsor, or a Medicare Advantage 
                        organization; and
                            ``(ii) the disposition of such reported 
                        violations.''.
            (2) Required compliance with standardized marketing 
        requirements for prescription drug plans and ma-pd plans.--
                    (A) Prescription drug plans.--Section 1860D-12(b) 
                of the Social Security Act (42 U.S.C. 1395w-112(b)) is 
                amended by adding at the end the following new 
                paragraph:
            ``(4) Standardized marketing requirements.--With respect to 
        plan years beginning on or after January 1, 2008, each contract 
        entered into with a PDP sponsor under this section with respect 
        to a prescription drug plan offered by such sponsor shall 
        provide that the plan (or agents of such plan) shall comply 
        with the standardized marketing requirements under section 
        1860D-1(d)(2).''.
                    (B) MA-pd plans.--Section 1857(f) of the Social 
                Security Act (42 U.S.C. 1395w-27) is amended by adding 
                at the end the following new paragraph:
            ``(3) Incorporation of prescription drug plan contract 
        requirement regarding marketing.--The provisions of section 
        1860D-12(b)(4) shall apply to a contract with a Medicare 
        Advantage organization offering an MA-PD plan in the same 
        manner as they apply to a contract with a PDP sponsor offering 
        a prescription drug plan under part D.''.
    (b) State Certification Prior to Waiver of Licensure 
Requirements.--
            (1) In general.--Section 1860D-12(c) of the Social Security 
        Act (42 U.S.C. 1395w-112(c)) is amended--
                    (A) in paragraph (1)(A), by striking ``In the 
                case'' and inserting ``Subject to paragraph (5), in the 
                case''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(5) State certification required.--
                    ``(A) In general.--The Secretary may only grant a 
                waiver under paragraph (1)(A) if the Secretary has 
                received a certification from the State insurance 
                commissioner that the prescription drug plan has a 
                substantially complete application pending in the 
                State.
                    ``(B) Revocation of waiver upon finding of fraud 
                and abuse.--The Secretary shall revoke a waiver granted 
                under paragraph (1)(A) if the State insurance 
                commissioner submits a certification to the Secretary 
                that the recipient of such a waiver has--
                            ``(i) committed fraud or abuse with respect 
                        to such waiver;
                            ``(ii) failed to make a good faith effort 
                        to satisfy State licensing requirements; or
                            ``(iii) was determined ineligible for 
                        licensure by the State''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply with respect to plan years beginning on or after 
        January 1, 2007.

SEC. 206. AUTHORITY TO WAIVE LATE ENROLLMENT PENALTY IN CERTAIN 
              CIRCUMSTANCES.

    (a) In General.--Section 1860D-13(b) of the Social Security Act (42 
U.S.C. 1395w-113(b)) is amended by adding at the end the following new 
paragraph:
            ``(8) Authority to waive penalty.--If the Secretary finds 
        that a part D eligible individual's nonenrollment in a 
        prescription drug plan, an MA-PD plan, or another plan with 
        creditable prescription drug coverage is based on exceptional 
        circumstances, such as an individual receiving erroneous 
        information regarding the program under this part, the 
        Secretary may waive the application of this subsection with 
        respect to the individual (or a category of individuals) as may 
        be necessary to eliminate the effects of such nonenrollment.''.
    (b) Conforming Amendment to Special Enrollment Periods.--Section 
1860D-1(b)(3)(C) of the Social Security Act (42 U.S.C. 1395w-
101(b)(3)(C)) is amended by inserting ``, including the circumstances 
described in section 1860D-13(b)(8)'' before the period at the end.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of enactment of this Act.

SEC. 207. INTEGRATED APPLICATION AND ENROLLMENT PROCESS FOR CERTAIN 
              SUBSIDY-ELIGIBLE INDIVIDUALS.

    (a) In General.--Section 1860D-14(a)(3) of the Social Security Act 
(42 U.S.C. 1395w-114(a)(3)) is amended by adding at the end the 
following new subparagraph:
                    ``(G) Integrated application and enrollment 
                process.--The Secretary, jointly with the Commissioner 
                of Social Security, shall work to integrate processes 
                and beneficiary information for applying for a subsidy 
                under this section and enrolling in a prescription drug 
                plan or an MA-PD plan under section 1860D-1(b) in order 
                to simplify steps for part D eligible individuals who 
                wish to participate in both.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of enactment of this Act.

SEC. 208. GAO STUDY AND REPORT ON COST AND UTILIZATION MANAGEMENT TOOLS 
              USED UNDER PRESCRIPTION DRUG PLANS AND MA-PD PLANS.

    (a) Study.--
            (1) In general.--The Comptroller General of the United 
        States shall conduct a study on the cost and utilization 
        management tools used under prescription drug plans under part 
        D of title XVIII of the Social Security Act and MA-PD plans 
        under part C of such title to impose a restriction or 
        limitation on the coverage of a drug on the formulary (such as 
        through the application of a preferred status or tiered 
        formulary structure, usage restriction, step therapy, prior 
        authorization, or quantity limitation).
            (2) Requirements.--The study conducted under paragraph (1) 
        shall include--
                    (A) a comparison of such prescription drug plans 
                and MA-PD plans regarding the range and extent of cost 
                and utilization management tools used under such plans;
                    (B) a comparison of cost and utilization management 
                tools used under such plans with the cost and 
                utilization tools used by private insurance plans in 
                the commercial market and by plans under the Federal 
                Employees Health Benefits Program under chapter 89 of 
                title 5, United States Code;
                    (C) an assessment of the impact of the cost and 
                utilization management tools used under such 
                prescription drug plans and MA-PD plans on--
                            (i) enrollee access to recommended 
                        medications;
                            (ii) enrollee health;
                            (iii) providers; and
                            (iv) pharmacists;
                    (D) an assessment of the cost-effectiveness of the 
                cost and utilization management tools used under such 
                plans in general, as well as the relative cost-savings 
                and burden of specific tools; and
                    (E) an assessment of the feasibility, advantages, 
                and disadvantages of implementing standardized cost and 
                utilization management tools under such plans and 
                standardized criteria for the use of such tools.
    (b) Report.--Not later than September 1, 2007, the Comptroller 
General shall submit a report to Congress on the study conducted under 
subsection (a) together with such recommendations for legislation as 
the Comptroller General considers appropriate.

                   TITLE III--PERFORMANCE AND QUALITY

SEC. 301. REQUIREMENTS FOR COMPARATIVE INFORMATION REGARDING 
              PERFORMANCE OF PLANS UNDER MEDICARE PART D.

    (a) In General.--Section 1860D-1(c)(3) of the Social Security Act 
(42 U.S.C. 1395w-101(c)(3)), as amended by section 201(a), is amended--
            (1) in subparagraph (A), in the matter preceding clause 
        (i), by striking ``subparagraph (B)'' and inserting 
        ``subparagraphs (B) and (D)''; and
            (2) by adding at the end the following new subparagraph:
                    ``(D) Requirements for comparative information 
                regarding performance under the plan.--The comparative 
                information regarding performance under the plan under 
                subparagraph (A)(iii) shall include a comparison of the 
                following:
                            ``(i) The number of enrollees in the plan 
                        as of September 1 of the year prior to the plan 
                        year for which the information under this 
                        paragraph applies.
                            ``(ii) The percentage of all drugs 
                        dispensed under the plan that were generic 
                        drugs.
                            ``(iii) The total number of grievances 
                        received under the plan.
                            ``(iv) The total number of appeals received 
                        under the plan and the percentage of such 
                        appeals in which the appeal was successful.
                            ``(v) The total number of calls received at 
                        customer service call centers.
                            ``(vi) The average time on hold at customer 
                        service call centers under the plan.
                            ``(vii) The percentage of drugs dispensed 
                        under the plan that required prior 
                        authorization.
                            ``(viii) The percentage of drugs dispensed 
                        under the plan that required step therapy.
                            ``(ix) Any additional information regarding 
                        performance under the plan determined 
                        appropriate by the Secretary.
                With respect to the information described in clauses 
                (ii) through (viii), the Secretary shall specify the 
                time period to be used for compiling the 
                information.''.
    (b) Requirement That Enrollment and Appeals Information Be Included 
in Comparative Information Beginning With the Second Plan Year.--
Section 1860D-1(c)(3)(B)(ii) of the Social Security Act (42 U.S.C. 
1395w-101(c)(3)(B)(ii)) is amended by striking ``for'' and inserting 
``except with respect to the comparative information under clauses (i), 
(v), (vi), (vii), and (viii) of subparagraph (D), for''.
    (c) Effective Date.--The amendments made by this section shall 
apply to comparative information disseminated with respect to plan 
years beginning on or after January 1, 2007.

SEC. 302. REQUIRED QUALITY FOR APPROVAL OF PLAN.

    Section 1860D-11(e)(2) of the Social Security Act (42 U.S.C. 1395W-
111(e)(2)) is amended by adding at the end the following new 
subparagraph:
                    ``(E) Quality performance.--
                            ``(i) In general.--With respect to plan 
                        years beginning on or after January 1, 2007, 
                        the plan and the PDP sponsor demonstrate 
                        satisfactory quality of performance, as 
                        determined by the Secretary.
                            ``(ii) Determination.--In making the 
                        determination under clause (i), the Secretary 
                        shall consider--
                                    ``(I) indicators of consumer 
                                service (including grievances and 
                                appeals, calls to customer service call 
                                centers, errors in transition plans, 
                                and errors in charges to enrollees) in 
                                the prior year;
                                    ``(II) indicators of compliance 
                                with pharmacy service (including delays 
                                in payment) in the prior year;
                                    ``(III) incorporation by the plan 
                                of reports on treatment effectiveness 
                                developed by the Agency for Healthcare 
                                Research and Quality;
                                    ``(IV) adverse consequences to the 
                                health of enrollees as a consequence of 
                                formulary, utilization management, or 
                                transition policies in the prior year;
                                    ``(V) indicators resulting from the 
                                study conducted under section 303 of 
                                the Medicare Prescription Drug 
                                Simplification Act of 2006;
                                    ``(VI) the negligent provision to 
                                the Secretary of inaccurate formulary 
                                information for inclusion in the 
                                comparative information disseminated 
                                under section 1860D-1(c); and
                                    ``(VII) clinical quality indicators 
                                determined appropriate by the 
                                Secretary.''.

SEC. 303. MEDPAC STUDY AND REPORT REGARDING A VALUE-BASED PURCHASING 
              PROGRAM FOR PLANS OFFERING PART D PRESCRIPTION DRUG 
              COVERAGE.

    (a) Study.--The Medicare Payment Advisory Commission shall conduct 
a study on the establishment and implementation of a value-based 
purchasing program under the Medicare program under title XVIII of the 
Social Security Act with respect to the provision of prescription drug 
coverage under part D of such title under prescription drug plans and 
fallback prescription drug plans under such part D, under Medicare 
Advantage plans under part C of such title, and under reasonable cost 
contracts under section 1876(h) of such Act (42 U.S.C. 1395mm). Such 
study shall include an analysis of potential clinical quality 
indicators and options for aligning payments to such plans with 
performance with respect to the provision of prescription drug coverage 
under such part D.
    (b) Report.--Not later than June 1, 2007, the Commission shall 
submit a report to Congress and the Secretary on the study conducted 
under subsection (a) together with recommendations for such legislation 
and administrative actions as the Commission considers appropriate.
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