II 

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. 

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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Medicare Prescription Drug Simplification Act of 2006’’. 

6 (b) TABLE OF CONTENTS.—The table of contents of 

7 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. 


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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. 

1 TITLE I—BENEFITS SIMPLIFICA2 TION AND IMPROVEMENT 

3 Subtitle A—Simplification 

4 SEC. 101. ESTABLISHMENT OF NATIONAL UNIFORM PART D 

5 BENEFIT PACKAGES. 

6 (a) IN GENERAL.—Section 1860D–2 of the Social 

7 Security Act (42 U.S.C. 1395w–102) is amended by add8 ing at the end the following new subsection: 


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1 ‘‘(f) SIMPLIFICATION OF COVERAGE.— 

2 ‘‘(1) REQUIREMENT.—Beginning January 1, 

3 2008, qualified prescription drug coverage (other 

4 than coverage that is standard prescription drug 

5 coverage (as defined in subsection (b)) may only be 

6 offered by a prescription drug plan or an MA–PD 

7 plan through the benefit packages established by the 

8 Secretary under paragraph (2). 

9 ‘‘(2) ESTABLISHMENT OF NATIONAL UNIFORM

10 BENEFIT PACKAGES.—The Secretary, in consultation 

11 with the entities and individuals described in para12 graph (5), shall establish 5 national uniform benefit 

13 packages (that are in addition to standard prescrip14 tion drug coverage) as follows: 

15 ‘‘(A) THREE BASIC PACKAGES.— 

16 ‘‘(i) IN GENERAL.—Three of the ben17 efit packages shall only provide basic pre18 scription drug coverage described in sub19 section (a)(3)(B). 

20 ‘‘(ii) SPECIFICATION.—Of the benefit 

21 packages described in clause (i)— 

22 ‘‘(I) one package shall have no 

23 annual deductible and coinsurance, 

24 specified by the Secretary, for costs 

25 up to the initial coverage limit; 


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1 ‘‘(II) one package, other than the 

2 package described in subclause (I), 

3 shall include a deductible that is equal 

4 to the amount determined under sec5 tion 1860D–2(b)(1)(A)(ii) and provide 

6 for copayment amounts, specified by 

7 the Secretary, rather than coinsur8 ance, for costs above the annual de9 ductible and up to the initial coverage 

10 limit; and 

11 ‘‘(III) one package, other than 

12 the packages described in subclauses 

13 (I) and (II), shall have no deductible 

14 and provide for copayment amounts, 

15 specified by the Secretary, rather than 

16 coinsurance, for costs up to the initial 

17 coverage limit. 

18 ‘‘(B) TWO SUPPLEMENTAL PACKAGES.— 

19 ‘‘(i) IN GENERAL.—Two of the benefit 

20 packages shall include supplemental pre21 scription drug coverage described in sub22 section (a)(2)(A). 

23 ‘‘(ii) SPECIFICATION.—Of the benefit 

24 packages described in clause (i)— 


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1 ‘‘(I) one package shall include a 

2 meaningful level of coverage of costs 

3 incurred with respect to covered part 

4 D drugs after the initial coverage 

5 limit has been reached but before the 

6 annual out-of-pocket threshold has 

7 been reached; and 

8 ‘‘(II) one package, other than the 

9 package described in subclause (I), 

10 shall include an increase in the initial 

11 coverage limit with respect to covered 

12 part D drugs so that such limit is 

13 equal to the annual out-of-pocket 

14 threshold. 

15 ‘‘(3) REQUIREMENT FOR ACTUARIAL VALUE OF

16 PACKAGES.— 

17 ‘‘(A) BASIC PACKAGES.—The Secretary 

18 shall ensure that the 3 packages described in 

19 paragraph (2)(A) meet the following require20 ments: 

21 ‘‘(i) ASSURING EQUIVALENT VALUE

22 OF TOTAL COVERAGE.—The actuarial value 

23 of the total coverage is equal to the actu24 arial value of standard prescription drug 

25 coverage, as estimated by the Chief ActuVerDate Aug 31 2005 23:52 May 02, 2006 Jkt 049196 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2665.IS S2665

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1 ary of the Centers for Medicare & Med2 icaid Services. 

3 ‘‘(ii) ASSURING EQUIVALENT UNSUB4 SIDIZED VALUE OF COVERAGE.—The un5 subsidized value of the coverage is equal to 

6 the unsubsidized value of standard pre7 scription drug coverage, as estimated by 

8 the Chief Actuary of the Centers for Medi9 care & Medicaid Services. For purposes of 

10 this subparagraph, the unsubsidized value 

11 of coverage is the amount by which the ac12 tuarial value of the coverage exceeds the 

13 actuarial value of the subsidy payments 

14 under section 1860D–15 with respect to 

15 such coverage. 

16 ‘‘(iii) ASSURING STANDARD PAYMENT

17 FOR COSTS AT INITIAL COVERAGE LIMIT.— 

18 The coverage is designed, based upon an 

19 actuarially representative pattern of utili20 zation, to provide for the payment, with re21 spect to costs incurred that are equal to 

22 the initial coverage limit under subsection 

23 (b)(3) for the year, of an amount equal to 

24 the product of— 


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1 ‘‘(I) the amount by which the ini2 tial coverage limit described in sub3 section (b)(3) for the year exceeds the 

4 deductible described in subsection 

5 (b)(1) for the year; and 

6 ‘‘(II) 100 percent minus the coin7 surance percentage specified in sub8 section (b)(2)(B). 

9 ‘‘(B) SUPPLEMENTAL PACKAGES.—The 

10 Secretary shall ensure that the 2 packages de11 scribed in paragraph (2)(B) have actuarial val12 ues that are progressively greater than the ac13 tuarial value of standard prescription drug cov14 erage, as estimated by the Chief Actuary of the 

15 Centers for Medicare & Medicaid Services. 

16 ‘‘(4) RESTRICTION ON NUMBER OF TIERS OR

17 LEVELS OF COST-SHARING.— 

18 ‘‘(A) IN GENERAL.—Subject to clause (ii), 

19 a package described in paragraph (2) may not 

20 include more than 3 distinct tiers or levels of 

21 cost-sharing. 

22 ‘‘(B) EXCEPTION.—A package described in 

23 paragraph (2) may include a fourth distinct tier 

24 or level of cost-sharing that may only be used 

25 for specialty or high cost covered part D drugs 


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1 (as determined by the Secretary) if the PDP 

2 sponsor of the prescription drug plan or the 

3 Medicare Advantage organization offering the 

4 MA–PD plan has an exceptions process under 

5 subsection (g) with respect to the 4th tier or 

6 level. 

7 ‘‘(5) BALANCING OF OBJECTIVES.—In estab8 lishing the benefit packages under paragraph (2), 

9 the Secretary shall balance the objectives of— 

10 ‘‘(A) simplifying the benefit structures to 

11 facilitate comparisons among plans; 

12 ‘‘(B) avoiding adverse selection; 

13 ‘‘(C) ensuring meaningful differences be14 tween benefit packages; 

15 ‘‘(D) providing program stability; and 

16 ‘‘(E) promoting competition among plans. 

17 ‘‘(6) STANDARDIZED LANGUAGE, NOMEN18 CLATURE, DEFINITIONS, AND FORMAT.— 

19 ‘‘(A) IN GENERAL.—In establishing the 

20 benefit packages under paragraph (2), the Sec21 retary shall develop— 

22 ‘‘(i) standardized language, nomen23 clature, and definitions to be used by the 

24 Secretary and PDP sponsors and MA–PD 


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1 organizations with respect to such benefit 

2 packages; and 

3 ‘‘(ii) a standardized format to be used 

4 by PDP sponsors and MA–PD organiza5 tions with respect to such benefit packages. 

6 ‘‘(B) REQUIREMENT.—In developing 

7 standardized language, nomenclature, and defi8 nitions and a standardized format under sub9 paragraph (A), the Secretary shall ensure that 

10 such language, nomenclature, definitions, and 

11 format clearly distinguishes between— 

12 ‘‘(i) a plan that offers only basic pre13 scription drug coverage (as described in 

14 subsection (a)(3)) and a plan that offers 

15 supplemental prescription drug coverage 

16 (as described in subsection (a)(2)(A)); 

17 ‘‘(ii) a plan that offers coinsurance 

18 and a plan that offers flat copayments; 

19 ‘‘(iii) a plan that covers all covered 

20 part D drugs and a plan that covers less 

21 than all such drugs; and 

22 ‘‘(iv) prescription drug plans and 

23 MA–PDs, especially on terms of how en24 rollment in those plans would affect access 

25 to items and services under the original 


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1 medicare fee-for-service program under 

2 parts A and B. 

3 ‘‘(7) ADVISORY COMMITTEE.— 

4 ‘‘(A) ESTABLISHMENT.—The Secretary 

5 shall establish a Benefit Advisory Committee 

6 (in this paragraph referred to as the Com7 mittee). 

8 ‘‘(B) MEMBERSHIP.—The Committee shall 

9 be composed of 15 members to be appointed by 

10 the Secretary. The Secretary shall ensure that 

11 the following individuals are appointed to the 

12 Committee: 

13 ‘‘(i) Two representatives appointed 

14 upon recommendation of the National As15 sociation of Insurance Commissioners. 

16 ‘‘(ii) The Chief Actuary of the Centers 

17 for Medicare & Medicaid Services. 

18 ‘‘(iii) Two individuals with expertise 

19 in consumer choice. 

20 ‘‘(iv) Two individuals with expertise in 

21 health economics. 

22 ‘‘(v) Two individuals with expertise in 

23 actuarial sciences. 

24 ‘‘(vi) Two individuals with expertise in 

25 pharmacy benefit management. 


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1 ‘‘(vii) Two representatives of health 

2 insurers, health care providers, and con3 sumers. 

4 ‘‘(viii) Two other individuals or enti5 ties determined appropriate by the Sec6 retary. 

7 ‘‘(C) CONSULTATION.—In establishing the 

8 benefit packages under paragraph (2) (includ9 ing determinations under paragraph (3)), the 

10 Secretary shall consult with the Committee. 

11 ‘‘(8) UPDATING OF BENEFIT PACKAGES.—Not 

12 less than once every 3 years, the Secretary shall re13 view the benefit packages established under this sub14 section, and, subject to the requirements under 

15 paragraph (2), shall update the content of such 

16 packages as appropriate. 

17 ‘‘(9) NO EFFECT ON REQUIREMENT TO OFFER

18 A PLAN THAT ONLY PROVIDES BASIC PRESCRIPTION

19 DRUG COVERAGE.—Nothing in this subsection shall 

20 be construed to effect the requirement under sub21 section (a)(2)(B).’’. 

22 (b) CONFORMING AMENDMENTS.—Section 1860D–2 

23 of the Social Security Act (42 U.S.C. 1395w–102) is 

24 amended— 

25 (1) in subsection (a)— 


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1 (A) in paragraph (1)— 

2 (i) in the matter preceding subpara3 graph (A), by striking ‘‘For purposes’’ and 

4 inserting ‘‘Subject to subsection (f), for 

5 purposes’’; 

6 (ii) in subparagraph (B), by striking 

7 ‘‘which meets the alternative’’ and all that 

8 follows through the period at the end and 

9 inserting the following: ‘‘which— 

10 ‘‘(i) with respect to plan years begin11 ning prior to January 1, 2008, meets the 

12 alternative prescription drug requirements 

13 of subsection (c) and access to negotiated 

14 prices under subsection (d), but only if the 

15 benefit design of such coverage is approved 

16 by the Secretary, as provided under sub17 section (c); or 

18 ‘‘(ii) with respect to plan years begin19 ning on or after January 1, 2008, meets 

20 the requirements of subsection (f) and ac21 cess to negotiated prices under subsection 

22 (d), but only if the benefit design of such 

23 coverage is approved by the Secretary, in 

24 accordance with subsection (f).’’. 


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1 (B) in paragraph (2)(A), in the matter 

2 preceding clause (i), by inserting ‘‘and sub3 section (f)’’ after ‘‘subparagraph (B)’’; 

4 (2) in subsection (b), by striking paragraph (2) 

5 and inserting the following: 

6 ‘‘(2) 25 PERCENT COINSURANCE.—The cov7 erage has coinsurance (for costs above the annual 

8 deductible specified in paragraph (1) and up to the 

9 initial coverage limit under paragraph (3)) that is— 

10 ‘‘(A) prior to January 1, 2008— 

11 ‘‘(i) equal to 25 percent; or 

12 ‘‘(ii) actuarially equivalent (using 

13 processes and methods established under 

14 section 1860D–11(c)) to an average ex15 pected payment of 25 percent of such 

16 costs; or 

17 ‘‘(B) beginning on January 1, 2008, is 

18 equal to 25 percent.’’. 


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1 Subtitle B—Formulary 

2 Requirements and Improvements 

3 SEC. 111. LIMITATION ON REMOVAL OR CHANGE OF COV4 ERAGE OF COVERED PART D DRUGS UNDER 

5 A FORMULARY UNDER A PRESCRIPTION 

6 DRUG PLAN OR AN MA–PD PLAN. 

7 (a) LIMITATION ON REMOVAL OR CHANGE.—Section 

8 1860D–4(b)(3)(E) of the Social Security Act (42 U.S.C. 

9 1395w–104(b)(3)(E)) is amended to read as follows: 

10 ‘‘(E) REMOVING OR CHANGING A DRUG ON

11 A FORMULARY.— 

12 ‘‘(i) LIMITATION.—Subject to clause 

13 (ii), with respect to plan years beginning 

14 on or after January 1, 2007, the PDP 

15 sponsor of a prescription drug plan may 

16 not remove a covered part D drug from the 

17 plan formulary, apply a cost or utilization 

18 management tool that imposes a restriction 

19 or limitation on the coverage of such a 

20 drug (such as through the application of a 

21 preferred status, usage restriction, step 

22 therapy, prior authorization, or quantity 

23 limitation), or increase the cost-sharing of 

24 such a drug (such as through placement of 

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1 er cost-sharing for a beneficiary) other 

2 than the date on which PDP sponsors may 

3 begin marketing their plans with respect to 

4 the immediately succeeding plan year, as 

5 determined by the Secretary. 

6 ‘‘(ii) EXCEPTIONS TO LIMITATION ON

7 REMOVAL.—Subject to clause (iii), clause 

8 (i) shall not apply with respect to a cov9 ered part D drug that— 

10 ‘‘(I) is a brand name drug for 

11 which there is a generic drug ap12 proved under section 505(j) of the 

13 Food and Drug Cosmetic Act that is 

14 placed on the market during the pe15 riod in which there are limitations on 

16 removal or change in the formulary 

17 under clause (i); 

18 ‘‘(II) is a drug for which the 

19 Commissioner of Food and Drugs 

20 issues a safety warning that would im21 pose a restriction on the drug or re22 quire a drug label warning during the 

23 plan year; 

24 ‘‘(III) is a drug that the Phar25 macy and Therapeutic Committee of 


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1 the plan determines, based directly on 

2 evidence from peer-reviewed research, 

3 has a lower safety profile than is ap4 propriate or is ineffective; or 

5 ‘‘(IV) for which the Secretary es6 tablishes a specific exception through 

7 the promulgation of regulations relat8 ing to plan formularies. 

9 ‘‘(iii) LIMITED APPLICATION OF EX10 CEPTIONS TO DRUGS IN CERTAIN CAT11 EGORIES AND CLASSES.—For 2007 and 

12 2008, subclauses (I), (II), (IV), and (V) of 

13 clause (ii) shall not apply to a drug in a 

14 category or class described in section 

15 1860D–4(b)(3)(H)(i). 

16 ‘‘(iv) NOTICE OF REMOVAL UNDER

17 APPLICATION OF EXCEPTION TO LIMITA18 TION.—The PDP sponsor of a prescription 

19 drug plan shall provide appropriate notice 

20 (such as under subsection (a)(3) and in21 cludes the annual notice under subsection 

22 (a)(5)) of any removal or change under 

23 clause (ii) to the Secretary, affected enroll24 ees, physicians, pharmacies, and phar25 macists.’’. 


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1 (b) NOTICE FOR CHANGE IN FORMULARY AND

2 OTHER RESTRICTIONS OR LIMITATIONS ON COVERAGE.— 

3 (1) IN GENERAL.—Section 1860D–4(a) of such 

4 Act (42 U.S.C. 1395w–104(a)) is amended by add5 ing at the end the following new paragraph: 

6 ‘‘(5) ANNUAL NOTICE OF CHANGES IN FOR7 MULARY AND OTHER RESTRICTIONS OR LIMITATIONS

8 ON COVERAGE.—Each PDP sponsor offering a pre9 scription drug plan shall furnish to each enrollee at 

10 the time of each annual coordinated election period 

11 (referred to in section 1860D–1(b)(1)(B)(iii)) for a 

12 plan year a notice of any changes in the formulary 

13 or other restrictions or limitations on coverage of 

14 any covered part D drug under the plan that will 

15 take effect for the plan year.’’. 

16 (2) EFFECTIVE DATE.—The amendment made 

17 by paragraph (1) shall apply to annual coordinated 

18 election periods beginning on or after November 15, 

19 2006. 

20 SEC. 112. FORMULARY REQUIREMENT WITH RESPECT TO 

21 CERTAIN CATEGORIES AND CLASSES OF 

22 DRUGS. 

23 (a) REQUIRED INCLUSION.—Section 1860D–4(b)(3) 

24 of the Social Security Act (42 U.S.C. 1395w–104(b)(3)) 

25 is amended— 


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1 (1) in subparagraph (C)(i), by striking ‘‘The 

2 formulary’’ and inserting ‘‘Subject to subparagraph 

3 (G), the formulary’’; and 

4 (2) by inserting after subparagraph (F) the fol5 lowing new subparagraph: 

6 ‘‘(G) REQUIRED INCLUSION OF DRUGS IN

7 CERTAIN CATEGORIES AND CLASSES.— 

8 ‘‘(i) FOR 2007 AND 2008.—For 2007 

9 and 2008, the formulary must include all 

10 or substantially all drugs in the following 

11 6 categories that are available as of June 

12 1 of the prior year: 

13 ‘‘(I) Immunosuppressant. 

14 ‘‘(II) Antidepressant. 

15 ‘‘(III) Antipsychotic. 

16 ‘‘(IV) Anticonvulsant. 

17 ‘‘(V) Antiretroviral. 

18 ‘‘(VI) Antineoplastic. 

19 A PDP sponsor of a prescription drug plan 

20 may not apply a utilization management 

21 tool, such as prior authorization or step 

22 therapy, to a drug required to be included 

23 on the formulary pursuant to the preceding 

24 sentence with respect to an enrollee if the 


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1 enrollee was taking such drug prior to the 

2 application of such tool. 

3 ‘‘(ii) SUBSTANTIALLY ALL DE4 FINED.—For purposes of clause (i), the 

5 term ‘substantially all’ means all drugs 

6 and unique dosage forms in the categories 

7 described in such clause except for— 

8 ‘‘(I) multi-source brands of the 

9 identical molecular structure; 

10 ‘‘(II) extended release products 

11 when the immediate-release product is 

12 included on the formulary; 

13 ‘‘(III) products that have the 

14 same active ingredient; and 

15 ‘‘(IV) multiple dosage forms that 

16 do not provide a unique route of ad17 ministration, such as tablets and cap18 sules. 

19 ‘‘(iii) FOR 2009 AND SUBSEQUENT

20 YEARS.— 

21 ‘‘(I) AUTHORITY.—Beginning 

22 with the plan year beginning on Janu23 ary 1, 2009, the Secretary, taking 

24 into account the results of the study 

25 conducted under section 113(b) of the 


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1 Medicare Prescription Drug Sim2 plification Act of 2006, may require 

3 that the formulary include coverage of 

4 covered part D drugs within certain 

5 categories or classes of drugs. 

6 ‘‘(II) REQUIREMENT FOR USE OF

7 AUTHORITY.—The Secretary shall 

8 promulgate regulations to exercise the 

9 authority under subclause (I) and 

10 may not exercise such authority 

11 through program guidance.’’. 

12 (b) INSTITUTE OF MEDICINE STUDY AND REPORT

13 ON PROTECTED CATEGORIES AND CLASSES OF DRUGS.— 

14 (1) STUDY.— 

15 (A) IN GENERAL.—Not later than the date 

16 that is 2 months after the date of the enact17 ment of this Act, the Secretary of Health and 

18 Human Services (in this subsection referred to 

19 as the ‘‘Secretary’’) shall enter into an arrange20 ment under which the Institute of Medicine of 

21 the National Academy of Sciences (in this sub22 section referred to as the ‘‘Institute’’) shall con23 duct a study on issues related to requiring any 

24 formulary used under prescription drug plans 

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1 rity Act or under MA–PD plans under part C 

2 of such title to cover drugs within certain cat3 egories or classes. 

4 (B) REQUIRED ITEMS TO BE EVALU5 ATED.—The study conducted under subpara6 graph (A) shall include an evaluation of— 

7 (i) whether all or substantially all 

8 drugs within certain drug categories or 

9 classes of drugs should be required by the 

10 Secretary on any formulary used under a 

11 prescription drug plan or an MA–PD plan 

12 in order to protect enrollees from undue 

13 medical risk and complication, including 

14 life threatening interruptions in, or lack of 

15 access to, medication therapy, and if so, 

16 what the protected categories or classes 

17 should be; and 

18 (ii) options for processes by which the 

19 Secretary could reevaluate requirements 

20 with respect to the matters described in 

21 clause (i) on an ongoing basis. 

22 (2) REPORT.—Not later than the date that is 

23 12 months after the Secretary enters into the ar24 rangement with the Institute under paragraph (1), 

25 the Institute shall submit to the Secretary and to 


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1 Congress a report on the study conducted under 

2 such paragraph. 

3 (3) FACTORS FOR IOM TO CONSIDER.—In con4 ducting the study required by this subsection, the 

5 Institute shall consider— 

6 (A) the existing regulatory and statutory 

7 framework for beneficiary protections under 

8 part D of title XVIII of the Social Security Act, 

9 including the coverage determination and ap10 peals processes under such part; 

11 (B) the role of Pharmacy and Therapeutic 

12 Committees in selecting drugs to be included on 

13 the formulary of a prescription drug plan or an 

14 MA–PD plan; and 

15 (C) the implications of the presence or ab16 sence of such drug/drug category or class pro17 tections on spending under the Medicare pro18 gram, including spending on non-drug services, 

19 such as hospital and physician care. 

20 (4) COMMITTEE.—The committee appointed by 

21 the Institute to conduct the study and prepare the 

22 report required by this subsection shall include indi23 viduals with expertise in economics, clinical pharma24 cology, actuarial sciences, pharmacy benefit design, 

25 and medicine. 


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1 (5) AUTHORIZATION OF APPROPRIATIONS.— 

2 There are authorized to be appropriated such sums 

3 as may be necessary for purposes of conducting the 

4 study and preparing the report required by this sub5 section. 

6 SEC. 113. CERTAINTY REGARDING EXCLUDED DRUGS. 

7 Section 1860D–2(e) of the Social Security Act (42 

8 U.S.C. 1395w–102(e)) is amended by adding at the end 

9 the following new paragraphs: 

10 ‘‘(4) ANNUAL PUBLICATION.—By not later than 

11 April 1 of each year (beginning with 2007), the Sec12 retary shall identify and cause to have published in 

13 the Federal Register the list of drugs that are ex14 cluded under paragraph (2)(A) for the subsequent 

15 year. Such list shall describe the drugs by National 

16 Drug Code Directory level. 

17 ‘‘(5) BENEFICIARY NOTICE.—With respect to 

18 activities conducted under section 1860D–1(c)(1) for 

19 each plan year (beginning with plan year 2007), the 

20 Secretary shall inform eligible part D individuals 

21 (and prospective part D eligible individuals) of the 

22 types of drugs excluded under paragraph (2)(A) in 

23 conducting such activities.’’. 


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1 SEC. 114. PHARMACY AND THERAPEUTIC COMMITTEE IM2 PROVEMENTS. 

3 (a) DISCLOSURE OF CONFLICTS OF INTEREST FOR

4 MEMBERS OF PHARMACY AND THERAPEUTIC COM5 MITTEE.—Section 1860D–4(b)(3)(A) of the Social Secu6 rity Act (42 U.S.C. 1395w–104(b)(3)(A)) is amended by 

7 adding at the end the following new clause: 

8 ‘‘(iii) DISCLOSURE.—Beginning No9 vember 1, 2006, such committee shall an10 nually disclose to the Secretary, and, upon 

11 request, to the public, any conflict of inter12 est members have with a pharmaceutical 

13 company, an insurer, a PDP sponsor or an 

14 MA organization, or any other relevant en15 tity.’’. 

16 (b) DISCLOSURE OF DECISIONS AND BASES FOR DE17 CISIONS.—Section 1860D–4(b)(3)(B) of the Social Secu18 rity Act (42 U.S.C. 1395w–104(b)(3)(B)) is amended by 

19 adding at the end the following flush sentence: 

20 ‘‘With respect to decisions made by such Com21 mittee regarding the formulary for plan years 

22 beginning on or after January 1, 2007, the 

23 committee shall disclose such decisions (and the 

24 bases for such decisions) to the Secretary, and, 

25 upon request, to the public.’’. 


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1 Subtitle C—Funding Certain Costs 

2 for Administrative Improvements 

3 SEC. 121. ADDITIONAL FUNDING FOR ENROLLMENT ASSIST4 ANCE. 

5 (a) IN GENERAL.—There are appropriated, to be 

6 transferred from the Federal Supplementary Medical In7 surance Trust Fund, not to exceed $120,000,000 for the 

8 Centers for Medicare & Medicaid Services, for the purpose 

9 of ensuring that individuals have adequate access to im10 partial advice and assistance in enrolling in the prescrip11 tion drug program under part D of title XVIII of the So12 cial Security Act. 

13 (b) USE OF FUNDS.—Amounts provided under sub14 section (a) shall be used for the following purposes: 

15 (1) GRANTS TO STATE HEALTH INSURANCE AS16 SISTANCE PROGRAMS.—To provide additional grants 

17 to State health insurance counseling programs (re18 ceiving assistance under section 4360 of the Omni19 bus Reconciliation Act of 1990) to broaden their ca20 pacity to— 

21 (A) provide personal and impartial assist22 ance to individuals seeking to enroll in a pre23 scription drug plan or an MA–PD plan under 

24 such program; 


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1 (B) educate and assist individuals in ap2 plying for a low-income subsidy under section 

3 1860D–14 of such Act (42 U.S.C. 1395w–114); 

4 and 

5 (C) assist individuals in accessing benefits 

6 under such a prescription drug plan or such an 

7 MA–PD plan once they are enrolled in a plan. 

8 (2) GRANTS FOR INNOVATIVE PROGRAMS.—To 

9 provide grants to eligible States to conduct innova10 tive programs that provide any of the services de11 scribed in subparagraphs (A), (B), and (C) of para12 graph (1). A State is eligible for a grant under this 

13 paragraph if the level of enrollment in the State in 

14 the prescription drug program under such part is 

15 below the national average. 

16 (3) PROMOTION.—To widely promote and dis17 seminate information about the existence of, and 

18 services provided by, State health insurance coun19 seling programs. 

20 (c) PRIORITY.—In awarding grants under para21 graphs (1) and (2) of subsection (b), priority shall be given 

22 to States, and State health insurance counseling programs 

23 located in States, with the lowest percentage of part D 

24 eligible individuals enrolled in such prescription drug pro25 gram. 


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1 (d) AVAILABILITY.—Amounts provided under sub2 section (a) shall remain available until December 31, 

3 2010. 

4 TITLE II—BENEFICIARY 

5 PROTECTION IMPROVEMENTS 

6 SEC. 201. IMPROVED PLAN INFORMATION. 

7 (a) COMPARATIVE INFORMATION PROVIDED BY THE

8 SECRETARY.— 

9 (1) IN GENERAL.—Section 1860D–1(c)(3) of 

10 the Social Security Act (42 U.S.C. 1395w– 

11 101(c)(3)) is amended— 

12 (A) in subparagraph (A), by adding at the 

13 end the following new clause: 

14 ‘‘(vi) COST AND UTILIZATION MAN15 AGEMENT TOOLS.—A clear and prominent 

16 display of the cost and utilization manage17 ment tools used under the plan to impose 

18 a restriction or limitation on the coverage 

19 of a drug on the formulary of the plan.’’; 

20 and 

21 (B) by adding at the end the following new 

22 subparagraph: 

23 ‘‘(C) REQUIREMENTS.—In disseminating 

24 comparative information under paragraph 

25 (2)(A), the Secretary shall— 


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1 ‘‘(i) ensure that such information 

2 clearly distinguishes between— 

3 ‘‘(I) plans that offer only basic 

4 prescription drug coverage and plans 

5 that offer supplemental prescription 

6 drug coverage; 

7 ‘‘(II) plans that offer coinsurance 

8 and plans that offer flat copayments; 

9 and 

10 ‘‘(III) plans that cover all cov11 ered part D drugs and plans that 

12 cover less than all such drugs; 

13 ‘‘(ii) to the extent that comparative 

14 information is linked on the Internet to an 

15 Internet website of a prescription drug 

16 plan or an MA–PD plan, ensure that the 

17 information, including information relating 

18 to the formulary of the plan, is directly 

19 linked to the relevant page of the plan 

20 Internet website and not the homepage of 

21 such website; and 

22 ‘‘(iii) use the standardized definitions, 

23 nomenclature, language, and format devel24 oped under sections 1860D–2(f)(4) and 

25 1860D–4(l).’’. 


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1 (2) EFFECTIVE DATE.—The amendments made 

2 by this subsection shall apply with respect to com3 parative information disseminated with respect to 

4 plan years beginning on or after January 1, 2007. 

5 (b) INFORMATION PROVIDED BY PLANS.— 

6 (1) DRUG SPECIFIC INFORMATION.—Section 

7 1860D–4(a)(1) of the Social Security Act (42 

8 U.S.C. 1395w–104(a)(1)) is amended— 

9 (A) in subparagraph (A), by striking ‘‘sub10 paragraph (B)’’ and inserting ‘‘subparagraphs 

11 (B), (C), (D), and (E)’’; 

12 (B) in subparagraph (B), by striking 

13 clauses (ii) and (iii) and inserting the following 

14 new clauses: 

15 ‘‘(ii) How any formulary used by the 

16 sponsor functions, including, using the 

17 standard definitions developed under sub18 section (l), how any cost and utilization 

19 management tools used to impose a restric20 tion or limitation on the coverage of a drug 

21 on the formulary (such as through the ap22 plication of the tools described in such sub23 section) functions. 

24 ‘‘(iii) Beneficiary cost-sharing require25 ments, including the tiered or other copayVerDate Aug 31 2005 23:52 May 02, 2006 Jkt 049196 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\S2665.IS S2665

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1 ment level applicable for each drug (or 

2 class of drugs).’’; and 

3 (C) by adding at the end the following new 

4 subparagraphs: 

5 ‘‘(C) BENEFIT PROCESS INFORMATION.— 

6 The information described in this subparagraph 

7 is information concerning the benefit process 

8 under the plan, including an explanation of 

9 what a coverage determination is and how to 

10 file a grievance, reconsideration, exception, and 

11 appeal. 

12 ‘‘(D) CONTACT INFORMATION.—The infor13 mation described in this subparagraph is the 

14 plan’s toll-free customer call line and Internet 

15 website and the name, address, and phone num16 ber of the plan administrator. 

17 ‘‘(E) SPECIFIC INFORMATION.—The infor18 mation described in this subparagraph is a de19 scription of— 

20 ‘‘(i) the specific information, including 

21 the information described in paragraph 

22 (2)(A), an enrollee can request of the PDP 

23 sponsor under the mechanism described in 

24 paragraph (3)(A); and 


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1 ‘‘(ii) how the enrollee can make such 

2 a request.’’. 

3 (2) DISCLOSURE UPON REQUEST OF CERTAIN

4 INFORMATION.—Section 1860D–4(a)(2) of the So5 cial Security Act (42 U.S.C. 1395w–104(a)(2)) is 

6 amended to read as follows: 

7 ‘‘(2) DISCLOSURE UPON REQUEST OF CERTAIN

8 INFORMATION.—Upon request of a part D eligible 

9 individual who is eligible to enroll in a prescription 

10 drug plan, the PDP sponsor offering such plan shall 

11 provide such individual with— 

12 ‘‘(A) information similar (as determined by 

13 the Secretary) to the information described in 

14 subparagraphs (A) and (C) of section 

15 1852(c)(2); and 

16 ‘‘(B) information disclosed to enrollees 

17 under paragraphs (1) and (5).’’. 

18 (3) STANDARDIZED FORMAT FOR INFORMA19 TION.—Section 1860D–4(a) of the Social Security 

20 Act (42 U.S.C. 1395w–104(a)), as amended by sec21 tion 111(b), is amended by adding at the end the 

22 following new paragraph: 

23 ‘‘(6) STANDARDIZED INFORMATION.— 

24 ‘‘(A) IN GENERAL.—The Secretary shall 

25 standardize the format of the presentation of 


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1 information by PDP sponsors of a prescription 

2 drug plan to enrollees pursuant to this sub3 section, including the covered part D drugs cov4 ered under the plan’s formulary and the cost 

5 and utilization management tools used under 

6 the plan. 

7 ‘‘(B) WRITTEN AND ELECTRONIC INFOR8 MATION.—Such standardized format shall apply 

9 to information presented in writing and elec10 tronically.’’. 

11 (4) EFFECTIVE DATE.—The amendments made 

12 by this subsection shall apply with respect to infor13 mation provided with respect to plan years beginning 

14 on or after January 1, 2007. 

15 SEC. 202. STANDARDIZED DEFINITION FOR COST AND UTI16 LIZATION MANAGEMENT TOOLS AND NOMEN17 CLATURE FOR DISTINGUISHING BETWEEN 

18 EXCLUDED AND NONFORMULARY DRUGS. 

19 (a) IN GENERAL.—Section 1860D–4 of the Social 

20 Security Act (42 U.S.C. 1395w–104) is amended by add21 ing at the end the following new subsection: 

22 ‘‘(l) STANDARDIZED DEFINITIONS AND NOMEN23 CLATURE.—The Secretary shall develop, and require PDP 

24 sponsors offering a prescription drug plan to use, the fol25 lowing: 


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1 ‘‘(1) DEFINITION OF COST AND UTILIZATION

2 MANAGEMENT TOOLS.—A standard definition for 

3 any cost and utilization management tools used 

4 under the plan to impose a restriction or limitation 

5 on the coverage of a drug on the formulary (such as 

6 through the application of a preferred status or 

7 tiered formulary structure, usage restriction, step 

8 therapy, prior authorization, or quantity limitation). 

9 ‘‘(2) NOMENCLATURE FOR EXCLUDED AND

10 NONFORMULARY DRUGS.—A standard nomenclature 

11 for referring to, and distinguishing between— 

12 ‘‘(A) drugs excluded from the definition of 

13 a covered part D drug pursuant to section 

14 1860D–2(e)(2); and 

15 ‘‘(B) drugs not included on the formulary 

16 under the plan.’’. 

17 (b) EFFECTIVE DATE.—The Secretary of Health and 

18 Human Services shall provide for the standard definitions 

19 and nomenclature, and the required use of such definitions 

20 and nomenclature, under the amendment made by sub21 section (a) by not later than January 1, 2007. 

22 SEC. 203. STANDARDIZED ENROLLEE NOTICE REGARDING 

23 COVERAGE DETERMINATIONS. 

24 (a) IN GENERAL.—Section 1860D–4 of the Social 

25 Security Act (42 U.S.C. 1395w–104), as amended by secVerDate Aug 31 2005 23:52 May 02, 2006 Jkt 049196 PO 00000 Frm 00033 Fmt 6652 Sfmt 6201 E:\BILLS\S2665.IS S2665

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1 tion 202(a), is amended by adding at the end the following 

2 new subsection: 

3 ‘‘(m) STANDARDIZED ENROLLEE NOTICE.— 

4 ‘‘(1) IN GENERAL.—The Secretary shall develop 

5 a standard notice that PDP sponsors and Medicare 

6 Advantage organizations shall ensure is distributed 

7 by each pharmacy that dispenses a covered part D 

8 drug to an enrollee in a prescription drug plan or an 

9 MA–PD plan when— 

10 ‘‘(A) a covered part D drug prescribed for 

11 the enrollee is not covered, or the coverage of 

12 such drug is otherwise restricted, by the plan; 

13 or 

14 ‘‘(B) if the plan uses a tiered formulary 

15 structure, a covered part D drug prescribed for 

16 the enrollee is on a nonpreferred or specialty 

17 tier. 

18 ‘‘(2) REQUIREMENT FOR NOTICE.—The stand19 ard notice required under paragraph (1) shall in20 clude— 

21 ‘‘(A) an explanation of the coverage deci22 sion; 

23 ‘‘(B) information on how to request a re24 consideration and an exception under subsection 


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1 (g) and how to file an appeal under subsection 

2 (h); and 

3 ‘‘(C) the contact name, address, and phone 

4 number for the PDP sponsor of the plan or the 

5 Medicare Advantage organization offering the 

6 plan. 

7 ‘‘(3) REQUIRED INFORMATION TO PHAR8 MACIES.—A PDP sponsor of a prescription drug 

9 plan shall have in place procedures to provide phar10 macies with the information necessary for the phar11 macy to distribute the appropriate notice required 

12 under paragraph (1). 

13 ‘‘(4) REIMBURSEMENT OF PHARMACY COSTS.— 

14 A PDP sponsor of a prescription drug plan shall 

15 provide appropriate reimbursement to pharmacies 

16 for the costs of the pharmacy in distributing the ap17 propriate notice required under paragraph (1)’’. 

18 (b) EFFECTIVE DATE.—The Secretary of Health and 

19 Human Services shall provide for the standard notice, and 

20 the use of such notice, under the amendment made by sub21 section (a) by not later than January 1, 2007. 


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1 SEC. 204. STANDARDIZED AND SIMPLIFIED PROCESSES 

2 FOR RECONSIDERATIONS, EXCEPTIONS, AND 

3 APPEALS. 

4 (a) STANDARDIZED FORMS AND PROCESSES FOR RE5 CONSIDERATIONS AND EXCEPTIONS.—Section 1860D–4 

6 of the Social Security Act (42 U.S.C. 1395w–104), as 

7 amended by section 203, is amended by adding at the end 

8 the following new subsection: 

9 ‘‘(n) STANDARDIZED FORMS AND PROCESSES FOR

10 RECONSIDERATIONS AND EXCEPTIONS.— 

11 ‘‘(1) STANDARDIZED FORMS.— 

12 ‘‘(A) IN GENERAL.—The Secretary shall 

13 develop standardized forms to be used under a 

14 prescription drug plan to request a reconsider15 ation or an exception under subsection (g), with 

16 the goal of making such reconsideration and ex17 ceptions process more simple, transparent, and 

18 efficient for enrollees and providers. 

19 ‘‘(B) REQUIRED USE BY PLANS.—If a 

20 PDP sponsor of a prescription drug plan re21 quires a request for a reconsideration or an ex22 ception to be in writing, the sponsor shall use 

23 the standardized forms developed under sub24 paragraph (A). 

25 ‘‘(2) STANDARDIZED PROCESSES FOR RECON26 SIDERATIONS AND EXCEPTIONS.— 


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1 ‘‘(A) IN GENERAL.—The Secretary shall 

2 develop, and require PDP sponsors of prescrip3 tion drug plans to use, a standardized process 

4 for reconsiderations and exceptions under sub5 section (g). 

6 ‘‘(B) REQUIREMENT.—The process devel7 oped in subparagraph (A)— 

8 ‘‘(i) shall require that determinations 

9 regarding medical necessity are based on 

10 professional medical judgement, the med11 ical condition of the enrollee, the treating 

12 provider’s recommendation, and other med13 ical evidence; and 

14 ‘‘(ii) may not require an enrollee or a 

15 provider to submit extraneous information 

16 beyond the standardized form described in 

17 paragraph (1) as a condition for the plan 

18 to make a reconsideration or exception but 

19 shall permit the enrollee or provider to pro20 vide additional information to the request 

21 if they so choose.’’. 

22 (b) IMPROVED APPEALS PROCESS FOR NONFOR23 MULARY DRUGS.—Section 1860D–4(h)(2) of the Social 

24 Security Act (42 U.S.C. 1395w–104(h)(2)) is amended by 

25 striking ‘‘only if’’ and all that follows through the period 


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1 and inserting the following: ‘‘only if the prescribing physi2 cian determines at least one of the following applies: 

3 ‘‘(A) That all covered part D drugs on any 

4 tier of the formulary for treatment of the same 

5 condition would not be as effective for the indi6 vidual. 

7 ‘‘(B) That all covered part D drugs on any 

8 tier of the formulary for treatment of the same 

9 condition would have adverse effects for the in10 dividual. 

11 ‘‘(C) That the covered part D drug that is 

12 not on the formulary under the plan is the most 

13 effective drug for the individual and that the in14 dividual would destabilize if coverage of the 

15 drug is not provided.’’. 

16 (c) EFFECTIVE DATE.—(1) The Secretary of Health 

17 and Human Services shall provide for the standard notice 

18 and the standardized process, and the use of such notice 

19 and process, under the amendment made by paragraph (1) 

20 by not later than January 1, 2007. 

21 (2) The amendment made by subsection (b) shall 

22 apply to drugs dispensed on or after January 1, 2007. 


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1 SEC. 205. STANDARDIZED MARKETING AND LICENSING 

2 PROTECTIONS; STATE CERTIFICATION PRIOR 

3 TO WAIVER OF LICENSURE REQUIREMENTS. 

4 (a) STANDARDIZED MARKETING REQUIREMENTS.— 

5 (1) IN GENERAL.—Section 1860D–1 of the So6 cial Security Act (42 U.S.C. 1395w–101) is amend7 ed— 

8 (A) in subsection (b)(1)(B)(vi), by striking 

9 ‘‘Section’’ and inserting ‘‘Subject to subsection 

10 (d), section’’; and 

11 (B) by adding at the end the following new 

12 subsection: 

13 ‘‘(d) STANDARDIZED MARKETING REQUIREMENTS.— 

14 ‘‘(1) DEVELOPMENT BY THE NAIC.— 

15 ‘‘(A) REQUIREMENTS.—The Secretary 

16 shall request the National Association of Insur17 ance Commissioners (in this subsection referred 

18 to as the ‘NAIC’) to— 

19 ‘‘(i) develop standardized marketing 

20 requirements for prescription drug plans 

21 and MA–PD plans; and 

22 ‘‘(ii) submit a report on such require23 ments to the Secretary by not later than 

24 April 1, 2007. 

25 ‘‘(B) PROHIBITED ACTIVITIES.—Such re26 quirements shall prohibit the following: 


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1 ‘‘(i) Cross-selling of non-Medicare 

2 products or services with products or serv3 ices offered by a prescription drug plan 

4 under this part or an MA–PD plan under 

5 part C. 

6 ‘‘(ii) Up-selling from prescription drug 

7 plans to MA–PD plans. 

8 ‘‘(iii) Telemarketing (including cold 

9 calling) conducted by a prescription drug 

10 plan or MA–PD plan (or agent of such 

11 plan). 

12 ‘‘(C) OTHER ACTIVITIES TO ADDRESS.— 

13 Such requirements shall address the conduct of 

14 agents engaged in on-site promotion at a facil15 ity of an organization with which the PDP 

16 sponsor or Medicare Advantage organization 

17 has a cobranding relationship and any other 

18 marketing practices that are determined to be 

19 inappropriate for the eligible part D individual 

20 population. 

21 ‘‘(2) IMPLEMENTATION OF REQUIREMENTS.— 

22 ‘‘(A) REQUIREMENTS BASED ON NAIC REC23 OMMENDATIONS.—If the NAIC develops stand24 ardized marketing requirements and submits 

25 the report pursuant to paragraph (1), the SecVerDate Aug 31 2005 23:52 May 02, 2006 Jkt 049196 PO 00000 Frm 00040 Fmt 6652 Sfmt 6201 E:\BILLS\S2665.IS S2665

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1 retary shall promulgate regulations for stand2 ardized marketing requirements for prescription 

3 drug plans and MA–PD plans that are based 

4 on the NAIC recommendations contained in 

5 such report. The Secretary shall ensure that 

6 such regulations take effect not later than July 

7 31, 2007. 

8 ‘‘(B) REQUIREMENTS IF NAIC DOES NOT

9 SUBMIT REPORT.—If the NAIC does not de10 velop standardized marketing requirements and 

11 submit the report pursuant to paragraph (1), 

12 the Secretary shall promulgate regulations for 

13 standardized marketing requirements for pre14 scription drug plans and MA–PD plans. Such 

15 regulations shall prohibit the conduct described 

16 in paragraph (1)(B) and address the conduct 

17 described in paragraph (1)(C). The Secretary 

18 shall ensure that such regulations take effect 

19 not later than July 31, 2007. 

20 ‘‘(3) STATE AUTHORITY TO ENFORCE STAND21 ARDIZED MARKETING REQUIREMENTS.— 

22 ‘‘(A) STATE ENFORCEMENT AGAINST

23 AGENTS OF PRESCRIPTION DRUG PLANS.—Not24 withstanding any other provision of law, if a 

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1 ized marketing requirements under the regula2 tions under subparagraph (A) or (B) of para3 graph (2), the State may provide for the en4 forcement of such requirements with respect to 

5 agents of prescription drug plans or MA–PD 

6 plans that are licensed within the State. 

7 ‘‘(B) MEMORANDUM OF UNDERSTANDING

8 PROVIDING ENFORCEMENT AGAINST PRESCRIP9 TION DRUG PLANS.—Notwithstanding any other 

10 provision of law, the Secretary may enter into 

11 a memorandum of understanding with a State 

12 that provides for State enforcement of such 

13 standardized marketing requirements with re14 spect to prescription drug plans and MA–PD 

15 plans that are licensed within the State. 

16 ‘‘(C) STATE REPORTING OF VIOLATIONS

17 OF STANDARDIZED MARKETING REQUIRE18 MENTS.—The Secretary shall request that 

19 States report any violations of such standard20 ized marketing requirements to national and re21 gional offices of the Centers for Medicare & 

22 Medicaid Services. 

23 ‘‘(D) REPORT.—The Secretary shall sub24 mit an annual report to Congress on the en25 forcement of such standardized marketing reVerDate Aug 31 2005 23:52 May 02, 2006 Jkt 049196 PO 00000 Frm 00042 Fmt 6652 Sfmt 6201 E:\BILLS\S2665.IS S2665

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1 quirements, together with such recommenda2 tions as the Secretary determines appropriate. 

3 Such report shall include— 

4 ‘‘(i) a list of any alleged violations of 

5 such requirements reported to the Sec6 retary by a State, a PDP sponsor, or a 

7 Medicare Advantage organization; and 

8 ‘‘(ii) the disposition of such reported 

9 violations.’’. 

10 (2) REQUIRED COMPLIANCE WITH STANDARD11 IZED MARKETING REQUIREMENTS FOR PRESCRIP12 TION DRUG PLANS AND MA–PD PLANS.— 

13 (A) PRESCRIPTION DRUG PLANS.—Section 

14 1860D–12(b) of the Social Security Act (42 

15 U.S.C. 1395w–112(b)) is amended by adding at 

16 the end the following new paragraph: 

17 ‘‘(4) STANDARDIZED MARKETING REQUIRE18 MENTS.—With respect to plan years beginning on or 

19 after January 1, 2008, each contract entered into 

20 with a PDP sponsor under this section with respect 

21 to a prescription drug plan offered by such sponsor 

22 shall provide that the plan (or agents of such plan) 

23 shall comply with the standardized marketing re24 quirements under section 1860D–1(d)(2).’’. 


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1 (B) MA–PD PLANS.—Section 1857(f) of 

2 the Social Security Act (42 U.S.C. 1395w–27) 

3 is amended by adding at the end the following 

4 new paragraph: 

5 ‘‘(3) INCORPORATION OF PRESCRIPTION DRUG

6 PLAN CONTRACT REQUIREMENT REGARDING MAR7 KETING.—The provisions of section 1860D–12(b)(4) 

8 shall apply to a contract with a Medicare Advantage 

9 organization offering an MA–PD plan in the same 

10 manner as they apply to a contract with a PDP 

11 sponsor offering a prescription drug plan under part 

12 D.’’. 

13 (b) STATE CERTIFICATION PRIOR TO WAIVER OF LI14 CENSURE REQUIREMENTS.— 

15 (1) IN GENERAL.—Section 1860D–12(c) of the 

16 Social Security Act (42 U.S.C. 1395w–112(c)) is 

17 amended— 

18 (A) in paragraph (1)(A), by striking ‘‘In 

19 the case’’ and inserting ‘‘Subject to paragraph 

20 (5), in the case’’; and 

21 (B) by adding at the end the following new 

22 paragraph: 

23 ‘‘(5) STATE CERTIFICATION REQUIRED.— 

24 ‘‘(A) IN GENERAL.—The Secretary may 

25 only grant a waiver under paragraph (1)(A) if 


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1 the Secretary has received a certification from 

2 the State insurance commissioner that the pre3 scription drug plan has a substantially complete 

4 application pending in the State. 

5 ‘‘(B) REVOCATION OF WAIVER UPON FIND6 ING OF FRAUD AND ABUSE.—The Secretary 

7 shall revoke a waiver granted under paragraph 

8 (1)(A) if the State insurance commissioner sub9 mits a certification to the Secretary that the re10 cipient of such a waiver has— 

11 ‘‘(i) committed fraud or abuse with 

12 respect to such waiver; 

13 ‘‘(ii) failed to make a good faith effort 

14 to satisfy State licensing requirements; or 

15 ‘‘(iii) was determined ineligible for li16 censure by the State’’. 

17 (2) EFFECTIVE DATE.—The amendments made 

18 by paragraph (1) shall apply with respect to plan 

19 years beginning on or after January 1, 2007. 

20 SEC. 206. AUTHORITY TO WAIVE LATE ENROLLMENT PEN21 ALTY IN CERTAIN CIRCUMSTANCES. 

22 (a) IN GENERAL.—Section 1860D–13(b) of the So23 cial Security Act (42 U.S.C. 1395w–113(b)) is amended 

24 by adding at the end the following new paragraph: 


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1 ‘‘(8) AUTHORITY TO WAIVE PENALTY.—If the 

2 Secretary finds that a part D eligible individual’s 

3 nonenrollment in a prescription drug plan, an MA– 

4 PD plan, or another plan with creditable prescrip5 tion drug coverage is based on exceptional cir6 cumstances, such as an individual receiving erro7 neous information regarding the program under this 

8 part, the Secretary may waive the application of this 

9 subsection with respect to the individual (or a cat10 egory of individuals) as may be necessary to elimi11 nate the effects of such nonenrollment.’’. 

12 (b) CONFORMING AMENDMENT TO SPECIAL ENROLL13 MENT PERIODS.—Section 1860D–1(b)(3)(C) of the Social 

14 Security Act (42 U.S.C. 1395w–101(b)(3)(C)) is amended 

15 by inserting ‘‘, including the circumstances described in 

16 section 1860D–13(b)(8)’’ before the period at the end. 

17 (c) EFFECTIVE DATE.—The amendments made by 

18 this section shall take effect on the date of enactment of 

19 this Act. 

20 SEC. 207. INTEGRATED APPLICATION AND ENROLLMENT 

21 PROCESS FOR CERTAIN SUBSIDY-ELIGIBLE 

22 INDIVIDUALS. 

23 (a) IN GENERAL.—Section 1860D–14(a)(3) of the 

24 Social Security Act (42 U.S.C. 1395w–114(a)(3)) is 


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1 amended by adding at the end the following new subpara2 graph: 

3 ‘‘(G) INTEGRATED APPLICATION AND EN4 ROLLMENT PROCESS.—The Secretary, jointly 

5 with the Commissioner of Social Security, shall 

6 work to integrate processes and beneficiary in7 formation for applying for a subsidy under this 

8 section and enrolling in a prescription drug 

9 plan or an MA–PD plan under section 1860D– 

10 1(b) in order to simplify steps for part D eligi11 ble individuals who wish to participate in 

12 both.’’. 

13 (b) EFFECTIVE DATE.—The amendments made by 

14 this section shall take effect on the date of enactment of 

15 this Act. 

16 SEC. 208. GAO STUDY AND REPORT ON COST AND UTILIZA17 TION MANAGEMENT TOOLS USED UNDER 

18 PRESCRIPTION DRUG PLANS AND MA–PD 

19 PLANS. 

20 (a) STUDY.— 

21 (1) IN GENERAL.—The Comptroller General of 

22 the United States shall conduct a study on the cost 

23 and utilization management tools used under pre24 scription drug plans under part D of title XVIII of 

25 the Social Security Act and MA–PD plans under 


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1 part C of such title to impose a restriction or limita2 tion on the coverage of a drug on the formulary 

3 (such as through the application of a preferred sta4 tus or tiered formulary structure, usage restriction, 

5 step therapy, prior authorization, or quantity limita6 tion). 

7 (2) REQUIREMENTS.—The study conducted 

8 under paragraph (1) shall include— 

9 (A) a comparison of such prescription drug 

10 plans and MA–PD plans regarding the range 

11 and extent of cost and utilization management 

12 tools used under such plans; 

13 (B) a comparison of cost and utilization 

14 management tools used under such plans with 

15 the cost and utilization tools used by private in16 surance plans in the commercial market and by 

17 plans under the Federal Employees Health 

18 Benefits Program under chapter 89 of title 5, 

19 United States Code; 

20 (C) an assessment of the impact of the 

21 cost and utilization management tools used 

22 under such prescription drug plans and MA– 

23 PD plans on— 

24 (i) enrollee access to recommended 

25 medications; 


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1 (ii) enrollee health; 

2 (iii) providers; and 

3 (iv) pharmacists; 

4 (D) an assessment of the cost-effectiveness 

5 of the cost and utilization management tools 

6 used under such plans in general, as well as the 

7 relative cost-savings and burden of specific 

8 tools; and 

9 (E) an assessment of the feasibility, advan10 tages, and disadvantages of implementing 

11 standardized cost and utilization management 

12 tools under such plans and standardized criteria 

13 for the use of such tools. 

14 (b) REPORT.—Not later than September 1, 2007, the 

15 Comptroller General shall submit a report to Congress on 

16 the study conducted under subsection (a) together with 

17 such recommendations for legislation as the Comptroller 

18 General considers appropriate. 


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1 TITLE III—PERFORMANCE AND 

2 QUALITY 

3 SEC. 301. REQUIREMENTS FOR COMPARATIVE INFORMA4 TION REGARDING PERFORMANCE OF PLANS 

5 UNDER MEDICARE PART D. 

6 (a) IN GENERAL.—Section 1860D–1(c)(3) of the So7 cial Security Act (42 U.S.C. 1395w–101(c)(3)), as amend8 ed by section 201(a), is amended— 

9 (1) in subparagraph (A), in the matter pre10 ceding clause (i), by striking ‘‘subparagraph (B)’’ 

11 and inserting ‘‘subparagraphs (B) and (D)’’; and 

12 (2) by adding at the end the following new sub13 paragraph: 

14 ‘‘(D) REQUIREMENTS FOR COMPARATIVE

15 INFORMATION REGARDING PERFORMANCE

16 UNDER THE PLAN.—The comparative informa17 tion regarding performance under the plan 

18 under subparagraph (A)(iii) shall include a 

19 comparison of the following: 

20 ‘‘(i) The number of enrollees in the 

21 plan as of September 1 of the year prior 

22 to the plan year for which the information 

23 under this paragraph applies. 


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1 ‘‘(ii) The percentage of all drugs dis2 pensed under the plan that were generic 

3 drugs. 

4 ‘‘(iii) The total number of grievances 

5 received under the plan. 

6 ‘‘(iv) The total number of appeals re7 ceived under the plan and the percentage 

8 of such appeals in which the appeal was 

9 successful. 

10 ‘‘(v) The total number of calls re11 ceived at customer service call centers. 

12 ‘‘(vi) The average time on hold at cus13 tomer service call centers under the plan. 

14 ‘‘(vii) The percentage of drugs dis15 pensed under the plan that required prior 

16 authorization. 

17 ‘‘(viii) The percentage of drugs dis18 pensed under the plan that required step 

19 therapy. 

20 ‘‘(ix) Any additional information re21 garding performance under the plan deter22 mined appropriate by the Secretary. 

23 With respect to the information described in 

24 clauses (ii) through (viii), the Secretary shall 


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1 specify the time period to be used for compiling 

2 the information.’’. 

3 (b) REQUIREMENT THAT ENROLLMENT AND AP4 PEALS INFORMATION BE INCLUDED IN COMPARATIVE IN5 FORMATION BEGINNING WITH THE SECOND PLAN

6 YEAR.—Section 1860D–1(c)(3)(B)(ii) of the Social Secu7 rity Act (42 U.S.C. 1395w–101(c)(3)(B)(ii)) is amended 

8 by striking ‘‘for’’ and inserting ‘‘except with respect to the 

9 comparative information under clauses (i), (v), (vi), (vii), 

10 and (viii) of subparagraph (D), for’’. 

11 (c) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to comparative information dis13 seminated with respect to plan years beginning on or after 

14 January 1, 2007. 

15 SEC. 302. REQUIRED QUALITY FOR APPROVAL OF PLAN. 

16 Section 1860D–11(e)(2) of the Social Security Act 

17 (42 U.S.C. 1395W–111(e)(2)) is amended by adding at 

18 the end the following new subparagraph: 

19 ‘‘(E) QUALITY PERFORMANCE.— 

20 ‘‘(i) IN GENERAL.—With respect to 

21 plan years beginning on or after January 

22 1, 2007, the plan and the PDP sponsor 

23 demonstrate satisfactory quality of per24 formance, as determined by the Secretary. 


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1 ‘‘(ii) DETERMINATION.—In making 

2 the determination under clause (i), the 

3 Secretary shall consider— 

4 ‘‘(I) indicators of consumer serv5 ice (including grievances and appeals, 

6 calls to customer service call centers, 

7 errors in transition plans, and errors 

8 in charges to enrollees) in the prior 

9 year; 

10 ‘‘(II) indicators of compliance 

11 with pharmacy service (including 

12 delays in payment) in the prior year; 

13 ‘‘(III) incorporation by the plan 

14 of reports on treatment effectiveness 

15 developed by the Agency for 

16 Healthcare Research and Quality; 

17 ‘‘(IV) adverse consequences to 

18 the health of enrollees as a con19 sequence of formulary, utilization 

20 management, or transition policies in 

21 the prior year; 

22 ‘‘(V) indicators resulting from 

23 the study conducted under section 

24 303 of the Medicare Prescription 

25 Drug Simplification Act of 2006; 


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1 ‘‘(VI) the negligent provision to 

2 the Secretary of inaccurate formulary 

3 information for inclusion in the com4 parative information disseminated 

5 under section 1860D–1(c); and 

6 ‘‘(VII) clinical quality indicators 

7 determined appropriate by the Sec8 retary.’’. 

9 SEC. 303. MEDPAC STUDY AND REPORT REGARDING A 

10 VALUE-BASED PURCHASING PROGRAM FOR 

11 PLANS OFFERING PART D PRESCRIPTION 

12 DRUG COVERAGE. 

13 (a) STUDY.—The Medicare Payment Advisory Com14 mission shall conduct a study on the establishment and 

15 implementation of a value-based purchasing program 

16 under the Medicare program under title XVIII of the So17 cial Security Act with respect to the provision of prescrip18 tion drug coverage under part D of such title under pre19 scription drug plans and fallback prescription drug plans 

20 under such part D, under Medicare Advantage plans 

21 under part C of such title, and under reasonable cost con22 tracts under section 1876(h) of such Act (42 U.S.C. 

23 1395mm). Such study shall include an analysis of poten24 tial clinical quality indicators and options for aligning pay25 ments to such plans with performance with respect to the 


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1 provision of prescription drug coverage under such part 

2 D. 

3 (b) REPORT.—Not later than June 1, 2007, the Com4 mission shall submit a report to Congress and the Sec5 retary on the study conducted under subsection (a) to6 gether with recommendations for such legislation and ad7 ministrative actions as the Commission considers appro8 priate. 

Æ 


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