```

[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3332 Introduced in House (IH)]

108th CONGRESS
  1st Session
                                H. R. 3332

 To amend title XVIII of the Social Security Act to establish a safety 
    net Medicare outpatient prescription drug program for indigent 
   beneficiaries without other outpatient prescription drug coverage.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            October 17, 2003

Mr. Burton of Indiana introduced the following bill; which was referred 
    to the Committee on Energy and Commerce, and in addition to the 
Committee on Ways and Means, for a period to be subsequently determined 
 by the Speaker, in each case for consideration of such provisions as 
        fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
 To amend title XVIII of the Social Security Act to establish a safety 
    net Medicare outpatient prescription drug program for indigent 
   beneficiaries without other outpatient prescription drug coverage.

    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 Safety 
Net Prescription Drug Coverage Act of 2003''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Safety net medicare outpatient prescription drug program for 
                            indigent, uncovered beneficiaries.
``Part D--Safety Net Medicare Outpatient Prescription Drug Program for 
                   Indigent, Uncovered Beneficiaries

        ``Sec. 1860D-1. Establishment of program.
        ``Sec. 1860D-2. Enrollment.
        ``Sec. 1860D-3. Enrollee protections.
        ``Sec. 1860D-4. Benefits under the program.
        ``Sec. 1860D-5. Prescription drug accounts.
        ``Sec. 1860D-6. Safety Net Prescription Drug Account in the 
                            Federal Supplementary Medical Insurance 
                            Trust Fund.
        ``Sec. 1860D-7. Definitions.
Sec. 3. Exclusion of part D costs from determination of part B monthly 
                            premium.
Sec. 4. Medicaid amendments.
Sec. 5. Importation of prescription drugs.

SEC. 2. SAFETY NET MEDICARE OUTPATIENT PRESCRIPTION DRUG PROGRAM FOR 
              INDIGENT, UNCOVERED BENEFICIARIES.

    (a) Establishment of Program.--Title XVIII of the Social Security 
Act (42 U.S.C. 1395 et seq.) is amended by redesignating part D as part 
E and by inserting after part C the following new part:

``Part D--Safety Net Medicare Outpatient Prescription Drug Program for 
                   Indigent, Uncovered Beneficiaries

                       ``establishment of program

    ``Sec. 1860D-1. (a) Provision of Benefit.--The Secretary shall 
establish a Medicare Safety Net Outpatient Prescription Drug Program 
under this part under which an eligible beneficiary who voluntarily 
enrolls under this part is provided--
            ``(1) access to negotiated prices for costs before 
        catastrophic threshold;
            ``(2) catastrophic coverage under this part; and
            ``(3) a prescription drug account and a public contribution 
        into such an account.
    ``(b) Eligible Beneficiary; Eligible Entity; Prescription Drug 
Account.--For purposes of this part:
            ``(1) Eligible beneficiary.--The term `eligible 
        beneficiary' means an individual who--
                    ``(A) is eligible for benefits under part A or 
                enrolled under part B, regardless of whether or not the 
                individual is enrolled with a plan under part C;
                    ``(B) does not have, and is not eligible for, any 
                prescription drug coverage under title XIX, under a 
                group health plan, under part C, under individual 
                health insurance coverage, under a medicare 
                supplemental policy, under a State pharmaceutical 
                assistance program, or under chapter 17 of title 38, 
                United States Code (relating to Veterans benefits); and
                    ``(C) has current income (as defined and determined 
                by the Secretary) to be less than 250 percent of the 
                official poverty line.
            ``(2) Prescription drug account.--The term `prescription 
        drug account' means, with respect to an eligible beneficiary, 
        an account established for the benefit of that beneficiary 
        under section 1860D-5.
    ``(c) Implementation of Program.--
            ``(1) Deadline for implementation.--The Secretary shall 
        establish the program under this part in a manner so that 
        benefits with respect to contributions to a prescription drug 
        account and catastrophic coverage shall begin with the month of 
        January 2005.
            ``(2) Administration through new division within hhs.--The 
        Secretary shall provide for establishment of a separate 
        division within the Department of Health and Human Services 
        that shall be responsible for the administration of this part.
    ``(d) Voluntary Nature of Program.--Nothing in this part shall be 
construed as requiring an eligible beneficiary to enroll in the program 
under this part.
    ``(e) Financing.--The costs of providing benefits under this part 
shall be payable from the Safety Net Prescription Drug Account 
established within the Federal Supplementary Medical Insurance Trust 
Fund under section 1860D-6.

               ``enrollment; selection of eligible entity

    ``Sec. 1860D-2. (a) Enrollment Under Part D.--
            ``(1) Establishment of process.--
                    ``(A) In general.--The Secretary shall establish a 
                process through which an eligible beneficiary may make 
                an election to enroll under this part. Under such 
                process--
                            ``(i) a beneficiary may enroll at any time 
                        during a year (or during an initial enrollment 
                        period beginning on October 1, 2004, for 2005);
                            ``(ii) once first enrolled with respect to 
                        a year, a beneficiary is eligible for benefits 
                        for the remainder of the year; and
                            ``(iii) for succeeding years, a beneficiary 
                        must recertify eligibility on an annual basis 
                        (as specified by the Secretary) to remain 
                        eligible for benefits under this part.
                    ``(B) Requirement of enrollment.--An eligible 
                beneficiary must be enrolled under this part for a year 
                in order to be eligible to receive the benefits under 
                this part for that year.
                    ``(C) Termination of enrollment.--An enrollee under 
                this part shall be disenrolled--
                            ``(i) upon termination of coverage under 
                        part A or part B;
                            ``(ii) upon notice submitted to the 
                        Secretary in such form, manner, and time as the 
                        Secretary shall provide; and
                            ``(iii) upon failure to have eligibility 
                        recertified in accordance with subparagraph 
                        (A)(iii).
                Terminations of enrollment under this subparagraph 
                shall be effective as specified by the Secretary in 
                regulations.
            ``(2) Period of coverage.--Individuals enrolled under this 
        part after the beginning of a year, are eligible for benefits 
        beginning on the first day of the month following the month in 
        which such enrollment occurs.
    ``(b) Providing Enrollment and Coverage Information to 
Beneficiaries.--The Secretary shall provide for activities under this 
part to broadly disseminate information to eligible beneficiaries (and 
prospective eligible beneficiaries) regarding enrollment under this 
part and the prescription drug coverage made available under this part.
    ``(c) No Enrollment Fee.--There shall be no fee for enrollment 
under this part.
    ``(d) Issuance of Card and Coordination.--The Secretary shall--
            ``(1) issue to each enrolled beneficiary a card and an 
        enrollment number that establishes proof of enrollment and that 
        can be used in a coordinated manner--
                    ``(A) to identify the beneficiary for purposes of 
                this part, including tracking expenditures that count 
                against the catastrophic coverage threshold; and
                    ``(B) to make deposits to and withdrawals from a 
                prescription drug account under section 1860D-5; and
            ``(2) provide for electronic methods to coordinate with 
        such prescription drug accounts.

                         ``enrollee protections

    ``Sec. 1860D-3. (a) Dissemination of Information.--
            ``(1) General information.--The Secretary shall disclose, 
        in a clear, accurate, and standardized manner to eligible 
        beneficiaries enrolled under this part, information relating to 
        prescription drug coverage under this part.
            ``(2) Disclosure upon request of general coverage, 
        utilization, and grievance information.--Upon request of an 
        eligible beneficiary, the Secretary shall provide the 
        information described in section 1852(c)(2) (other than 
        subparagraph (D)) to such beneficiary.
            ``(3) Response to beneficiary questions.--The Secretary 
        shall have a mechanism (including a toll-free telephone number) 
        for providing upon request specific information (such as 
        negotiated prices, including discounts) to beneficiaries 
        enrolled under this part.
            ``(4) Coordination with catastrophic coverage and 
        prescription drug account benefits.--The Secretary shall 
        provide for coordination of such information as the Secretary 
        may specify to carry out sections 1860D-4(b) and 1860D-5.
    ``(b) Access to Covered Benefits.--
            ``(1) Ensuring pharmacy access.--
                    ``(A) Participation of any willing pharmacy.--The 
                Secretary shall permit the participation of any 
                pharmacy that meets terms and conditions that the 
                Secretary has established.
                    ``(B) Negotiation of prices.--The Secretary may 
                negotiate with different vendors different prices to be 
                paid for outpatient prescription drugs.
            ``(2) Access to negotiated prices for prescription drugs.--
        For requirements relating to the access of an eligible 
        beneficiary to negotiated prices (including applicable 
        discounts), see section 1860D-4(a).
    ``(c) Cost and Utilization Management; Quality Assurance; 
Medication Therapy Management Program.--
            ``(1) In general.--For purposes of providing access to 
        negotiated benefits under section 1860D-4(a) and the 
        catastrophic benefit described in section 1860D-4(b), the 
        Secretary may establish--
                    ``(A) an effective cost and drug utilization 
                management program, including appropriate incentives to 
                use generic drugs, when appropriate;
                    ``(B) quality assurance measures and systems to 
                reduce medical errors and adverse drug interactions, 
                including a medication therapy management program 
                described in paragraph (2); and
                    ``(C) a program to control fraud, abuse, and waste.
            ``(2) Medication therapy management program.--
                    ``(A) In general.--A medication therapy management 
                program described in this paragraph is a program of 
                drug therapy management and medication administration 
                that may be furnished by a pharmacy provider and that 
                is designed to assure, with respect to beneficiaries at 
                risk for potential medication problems, such as 
                beneficiaries with complex or chronic diseases (such as 
                diabetes, asthma, hypertension, and congestive heart 
                failure) or multiple prescriptions, that covered 
                outpatient drugs are appropriately used to optimize 
                therapeutic outcomes through improved medication use 
and reduce the risk of adverse events, including adverse drug 
interactions. Such programs may distinguish between services in 
ambulatory and institutional settings.
                    ``(B) Elements.--Such program may include--
                            ``(i) enhanced beneficiary understanding to 
                        promote the appropriate use of medications by 
                        beneficiaries and to reduce the risk of 
                        potential adverse events associated with 
                        medications, through beneficiary education, 
                        counseling, case management, disease state 
                        management programs, and other appropriate 
                        means;
                            ``(ii) increased beneficiary adherence with 
                        prescription medication regimens through 
                        medication refill reminders, special packaging, 
                        and other compliance programs and other 
                        appropriate means; and
                            ``(iii) detection of patterns of overuse 
                        and underuse of prescription drugs.
                    ``(C) Development of program in cooperation with 
                licensed pharmacists.--The program shall be developed 
                in cooperation with licensed and practicing pharmacists 
                and physicians.
                    ``(D) Considerations in pharmacy fees.--The 
                Secretary may take into account, in establishing fees 
                for pharmacists and others providing services under the 
                medication therapy management program, the resources 
                and time used in implementing the program.
    ``(d) Grievance Mechanism, Coverage Determinations, and 
Reconsiderations.--Subsections (f) and (g) of section 1852 shall apply 
with respect to benefits for drugs through the Secretary under this 
part in the same manner as such requirements apply to an organization 
with respect to benefits it offers under a plan under part C.

                      ``benefits under the program

    ``Sec. 1860D-4. (a) Savings to Enrollees Through Negotiated 
Prices.--
            ``(1) Access to negotiated prices.--
                    ``(A) In general.--Subject to paragraph (2), the 
                Secretary shall provide each eligible beneficiary 
                enrolled under this part with access to negotiated 
                prices (including applicable discounts) for 
                prescription drugs.
                    ``(B) Scope of access.--For purposes of this 
                paragraph, the term `prescription drugs' is not limited 
                to covered outpatient drugs, but does not include any 
                over-the-counter drug that is not a covered outpatient 
                drug.
                    ``(C) Exemption from computation of best price 
                under medicaid program.--The prices negotiated by the 
                Secretary under this paragraph shall (notwithstanding 
                any other provision of law) not be taken into account 
                for the purposes of establishing the best price under 
                section 1927(c)(1)(C).
            ``(2) Prohibition on charges for required services.--The 
        Secretary (and any pharmacy contracting with the Secretary for 
        the provision of a discount under this part) may not charge a 
        beneficiary any amount for any services required to be provided 
        under this part.
    ``(b) Catastrophic Coverage.--
            ``(1) Scope of coverage.--
                    ``(A) Scope.--
                            ``(i) In general.--Subject to paragraph 
                        (4), the catastrophic coverage under this 
                        section shall consist of payment under this 
                        part for incurred expenses for covered 
                        outpatient drugs for an enrollee after the 
                        enrollee has incurred in a year expenses that 
                        equal the catastrophic coverage threshold 
                        specified in subparagraph (C) or (D) for the 
                        enrollee and year involved.
                            ``(ii) Payment rate.--The rate of payment 
                        negotiated by the Secretary with the 
                        manufacturer for a covered outpatient drug 
                        shall be the amount paid under this part on 
                        behalf of the individual for the drug.
                    ``(B) Application.--In applying subparagraph (A)--
                            ``(i) incurred expenses shall only include 
                        costs incurred for the catastrophic coverage 
                        threshold; and
                            ``(ii) expenses that are not paid directly 
                        from a prescription drug account shall be 
                        counted under clause (i) only if, under such 
                        process as the Secretary shall recognize, the 
                        account number of the individual's prescription 
                        drug account is part of the transaction 
                        involved.
                    ``(C) Catastrophic coverage thresholds.--
                            ``(i) Initial catastrophic coverage 
                        threshold.--Subject to clause (ii) and 
                        subsection (e)(3), the catastrophic coverage 
                        threshold is $3,000.
                            ``(ii) Inflation adjustment.--The 
                        provisions of subsection (c)(2)(B) shall apply 
                        with respect to the catastrophic coverage 
                        threshold under clause (i) for a year after 
                        2004 in the same manner as it applied to the 
                        annual Federal contribution amount for that 
                        year, except that, for purposes of this 
                        subparagraph, any reference in subsection 
                        (c)(2)(B)(ii) to `$1' is deemed a reference to 
                        `$100'.
            ``(2) Administration.--Insofar as the Secretary does not 
        provide for the catastrophic coverage under this subsection 
        through a contract with a qualifying private entity, the 
        Secretary is authorized to enter into such agreements with 
        entities as may be required to provide for the benefits under 
        this subsection. Such entities may be eligible entities, 
        carriers under part B, fiscal intermediaries under part A, or 
        other qualified entities.
    ``(c) Contribution Into Prescription Drug Account.--
            ``(1) In general.--In the case of an individual enrolled 
        under this part, the Secretary shall--
                    ``(A) establish a prescription drug account for the 
                individual under section 1860D-5; and
                    ``(B) make deposits into such account in accordance 
                with subsection (c) of such section.
        Amounts so deposited shall not be treated as income to the 
        accountholder for purposes of the Internal Revenue Code of 
        1986.
            ``(2) Annual federal contribution amount.--
                    ``(A) Initial amount.--Subject to subparagraph (B) 
                and subsections (d) and (e)(3), in the case of an 
                accountholder whose modified adjusted gross income is--
                            ``(i) not more than 100 percent of the 
                        poverty line, the annual Federal contribution 
                        amount is $2,500;
                            ``(ii) more than 100 percent, but less than 
                        125 percent, of the poverty line, the annual 
                        Federal contribution amount is $1,500;
                            ``(iii) more than 125 percent, but less 
                        than 175 percent, of the poverty line, the 
                        annual Federal contribution amount is $1,100; 
                        and
                            ``(iv) at least 175 percent, but less than 
                        250 percent, of the poverty line, the annual 
                        Federal contribution amount is $600.
                    ``(B) Inflation adjustment.--
                            ``(i) In general.--For a year after 2004, 
                        the annual Federal contribution amount shall be 
                        the amount specified in subparagraph (A) 
                        increased by the percentage (if any) by which--
                                    ``(I) the average per capita 
                                aggregate expenditures for covered 
                                outpatient drugs in the United States 
                                for medicare beneficiaries, as 
                                determined by the Secretary for the 12-
                                month period ending in July of the 
                                previous year; exceeds
                                    ``(II) such aggregate expenditures 
                                for the 12-month period ending with 
                                July 2004.
                            ``(ii) Rounding.--If an annual Federal 
                        contribution amount determined under clause (i) 
                        is not a multiple of $1, such increase shall be 
                        rounded to the nearest multiple of $1.
    ``(d) Requirement for Verification of Eligibility.--
            ``(1) In general.--An individual shall not be treated as an 
        eligible beneficiary for purposes of benefits under this part 
        unless the individual--
                    ``(A) provides such information as the Secretary 
                may require in order to determine eligibility under 
                section 1860D-1(b) and the appropriate category of 
                benefits under subsection (c)(2)(A); and
                    ``(B) authorizes in a form and manner specified by 
                the Secretary the verification of the individual's 
                income and prescription drug coverage status by the 
                Secretary through arrangements with States or 
                otherwise.
        An arrangement with a State under subparagraph (B) shall 
        provide for the payment by the Secretary under this part of the 
        State's reasonable costs of conducting verifications under such 
        arrangement.
            ``(2) Penalties for provision of false information.--The 
        provision of false information under paragraph (1)(A) is 
        subject to criminal penalties under section 1128B.
            ``(3) Procedures for determining income.--The Secretary 
        shall establish procedures for determining the income of 
        individuals seeking enrollment under this part.
            ``(4) Disclosure of information.--Notwithstanding section 
        6103(a) of the Internal Revenue Code of 1986, the Secretary of 
        the Treasury may, upon written request from the Secretary, 
        disclose to the Secretary such return information as is 
        necessary to make the determinations described in subparagraph 
        (A). Return information disclosed under the preceding sentence 
        may be used by the Secretary only for the purposes of, and to 
        the extent necessary in, making such determinations.
            ``(5) Information regarding prescription drug coverage.--In 
        order to verify compliance with the eligibility requirement of 
        section 1860D-1(b)(1)(B), the Secretary is authorized to 
        establish procedures, in coordination with the Secretary of 
        Treasury and the Secretary of Labor, for determining whether 
        eligible beneficiaries have prescription drug coverage through 
        insurance or otherwise, or under a group health plan or other 
        third-party payment arrangement, and for alerting the Secretary 
        about such coverage or arrangements. The Secretary may also 
        periodically ask eligible beneficiaries enrolled under this 
        part whether the beneficiaries are eligible or have such 
        coverage. A material misrepresentation of the information 
        described in the preceding sentence by a beneficiary (as 
        defined in standards set by the Secretary and determined 
        through a process established by the Secretary) shall 
        constitute grounds for termination of enrollment under section 
        1860D-2(a)(1)(C).
    ``(e) Capped Appropriations To Cover Program Expenditures.--
            ``(1) In general.--For the purpose of carrying out this 
        part, there is appropriated, out of any money in the Treasury 
        not otherwise appropriated to the Medicare Safety Net 
        Prescription Drug Account in the Federal Supplementary Medical 
        Insurance Trust Fund established under section 1841 the 
        following amounts:
                    ``(A) $18,000,000,000 for fiscal year 2005.
                    ``(B) $19,000,000,000 for fiscal year 2006.
                    ``(C) $20,000,000,000 for fiscal year 2007.
                    ``(D) $21,000,000,000 for fiscal year 2008.
                    ``(E) $22,000,000,000 for fiscal year 2009.
                    ``(F) $23,000,000,000 for fiscal year 2010.
                    ``(G) $24,000,000,000 for fiscal year 2011.
                    ``(H) $25,000,000,000 for fiscal year 2012.
                    ``(I) $28,000,000,000 for fiscal year 2013.
            ``(2) Availability on a calendar year basis.--The amounts 
        appropriated under paragraph (1) for a fiscal year are 
        authorized for obligation during the calendar year beginning in 
        such fiscal year.
            ``(3) Assurance of maintenance of program within funding 
        limitations.--
                    ``(A) Annual estimation.--Before the beginning of 
                each year beginning with 2005), the Secretary shall 
                estimate--
                            ``(i) the aggregate expenditures that will 
                        be made under this part for that year (without 
                        regard to any adjustment under this paragraph); 
                        and
                            ``(ii) the cumulative aggregate 
                        expenditures that were made under this part for 
                        previous years (beginning with 2005).
                    ``(B) Adjustment.--If the Secretary estimates under 
                subparagraph (A)(i) for a year that such estimated 
                aggregate expenditures will exceed the amount 
                authorized for obligation during the year under 
                paragraph (2) (as reduced by the amount by which the 
                cumulative aggregate expenditures for previous years 
                under subparagraph (A)(ii) are less than the amounts 
                authorized for obligations during the respective years 
                under paragraph (2)), the Secretary shall take such of 
                the following actions for that year (or, at the 
                Secretary's discretion, for the period, not to exceed 4 
                years, including that year) as will eliminate any such 
                excess:
                            ``(i) An increase in the catastrophic 
                        coverage threshold under subsection (b)(1)(C).
                            ``(ii) A decrease in the Federal 
                        contribution amounts under subsection (c)(2).

                      ``prescription drug accounts

    ``Sec. 1860D-5. (a) Establishment of Accounts.--
            ``(1) In general.--The Secretary shall establish and 
        maintain for each eligible beneficiary who is enrolled under 
        this part at the time of enrollment a prescription drug account 
        (in this section referred to as an `account').
            ``(2) Accountholder defined.--In this section, the term 
        `accountholder' means an individual for whom an account or 
        reserve account has been established under this section.
            ``(3) Expenditures from account.--Nothing in this section 
        shall be construed as requiring the Federal Government to 
        obligate funds for amounts in any account until such time as a 
        withdrawal from such account is authorized under this section.
    ``(b) Use of Accounts.--
            ``(1) In general.--Amounts credited to an account shall 
        only be used for the purchase of covered outpatient drugs for 
        the accountholder. Any amounts remaining at the end of a year 
        remain available for expenditures in succeeding years so long 
        as the eligible beneficiary remains enrolled under this part.
            ``(2) Treatment of withdrawals.--The withdrawal of any 
        amounts from an account in accordance with this section shall 
        not be subject to income or other tax.
    ``(c) Amounts Credited in Account.--
            ``(1) In general.--The Secretary shall credit to a 
        prescription drug account of an eligible beneficiary Federal 
        contributions described in section 1860D-4(c) in accordance 
        with paragraph (2).
            ``(2) Timing and amount of deposit.--In the case of an 
        eligible beneficiary who is enrolled under this part at the 
        beginning of a year, the entire annual Federal contribution 
        amount under section 1860D-4(c)(2) shall be made into the 
        beneficiary's account at the beginning of the year. In the case 
        of an eligible beneficiary who is enrolled under this part 
        after the beginning of a year, the amount of such contribution 
        shall be pro-rated by the Secretary and deposited into the 
        beneficiary's account at the time of enrollment.
            ``(3) Treatment of contributions.--Such contributions shall 
        not be treated as income for purposes of chapter 1 of the 
        Internal Revenue Code of 1986.

  ``safety net prescription drug account in the federal supplementary 
                      medical insurance trust fund

    ``Sec. 1860D-6. (a) Establishment.--
            ``(1) In general.--There is created within the Federal 
        Supplementary Medical Insurance Trust Fund established by 
        section 1841 an account to be known as the `Safety Net 
        Prescription Drug Account' (in this section referred to as the 
        `Account').
            ``(2) Funds.--The Account shall consist of such gifts and 
        bequests as may be made as provided in section 201(i)(1), and 
        such amounts as may be deposited in, or appropriated to, the 
        Account as provided in this part.
            ``(3) Separate from rest of trust fund.--Funds provided 
        under this part to the Account shall be kept separate from all 
        other funds within the Federal Supplementary Medical Insurance 
        Trust Fund.
    ``(b) Payments From Account.--
            ``(1) In general.--The Managing Trustee shall pay from time 
        to time from the Account such amounts as the Secretary 
        certifies are necessary to make payments to operate the program 
        under this part, including payments with respect to 
        administrative expenses under this part in accordance with 
        section 201(g).
            ``(2) Treatment in relation to part b premium.--Amounts 
        payable from the Account shall not be taken into account in 
        computing actuarial rates or premium amounts under section 
        1839.
    ``(c) Appropriations To Cover Benefits and Administrative Costs.--
There are appropriated to the Account in a fiscal year, out of any 
moneys in the Treasury not otherwise appropriated, an amount equal to 
the payments and transfers made from the Account in the year.

                             ``definitions

    ``Sec. 1860D-7. In this part:
            ``(1) Covered outpatient drug.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `covered outpatient drug' 
                means--
                            ``(i) a drug that may be dispensed only 
                        upon a prescription and that is described in 
                        clause (i) or (ii) of subparagraph (A) of 
                        section 1927(k)(2); or
                            ``(ii) a biological product or insulin 
                        described in subparagraph (B) or (C) of such 
                        section.
                    ``(B) Exclusions.--
                            ``(i) In general.--The term `covered 
                        outpatient drug' does not include drugs or 
                        classes of drugs, or their medical uses, which 
                        may be excluded from coverage or otherwise 
                        restricted under section 1927(d)(2), other than 
                        those restricted under subparagraph (E) of such 
                        section (relating to smoking cessation agents).
                            ``(ii) Avoidance of duplicate coverage.--A 
                        drug prescribed for an individual that would 
                        otherwise be a covered outpatient drug under 
                        this part shall not be considered to be such a 
                        drug if payment for the drug is available under 
                        part A or B (but such drug shall be so 
                        considered if such payment is not available 
                        because the eligible beneficiary has exhausted 
                        benefits under part A or B), without regard to 
                        whether the individual is entitled to benefits 
                        under part A or enrolled under part B.
            ``(2) Poverty line.--The term `poverty line' means the 
        income official poverty line (as defined by the Office of 
        Management and Budget, and revised annually in accordance with 
        section 673(2) of the Omnibus Budget Reconciliation Act of 
        1981) applicable to a family of the size involved.''.
    (b) Conforming References to Previous Part D.--
            (1) In general.--Any reference in law (in effect before the 
        date of enactment of this Act) to part D of title XVIII of the 
        Social Security Act is deemed a reference to part F of such 
        title (as in effect after such date).
            (2) Secretarial submission of legislative proposal.--Not 
        later than 6 months after the date of enactment of this 
        section, the Secretary of Health and Human Services shall 
        submit to the appropriate committees of Congress a legislative 
        proposal providing for such technical and conforming amendments 
        in the law as are required by the provisions of this section.

SEC. 3. EXCLUSION OF PART D COSTS FROM DETERMINATION OF PART B MONTHLY 
              PREMIUM.

    Section 1839(g) of the Social Security Act (42 U.S.C. 1395r(g)) is 
amended--
            (1) by striking ``attributable to the application of 
        section'' and inserting ``attributable to--
            ``(1) the application of section'';
            (2) by striking the period and inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(2) the Medicare Safety Net Outpatient Prescription Drug 
        Program under part D.''.

SEC. 4. MEDICAID AMENDMENTS.

    (a) Verification of Eligibility for Part D Benefits.--
            (1) Requirement.--Section 1902(a) (42 U.S.C. 1396a(a)) is 
        amended--
                    (A) by striking ``and'' at the end of paragraph 
                (64);
                    (B) by striking the period at the end of paragraph 
                (65) and inserting ``; and''; and
                    (C) by inserting after paragraph (65) the following 
                new paragraph:
            ``(66) provide for verification of income under section 
        1860D-4(d)(1)(B).''.
            (2) New section.--Title XIX is further amended--
                    (A) by redesignating section 1935 as section 1936; 
                and
                    (B) by inserting after section 1934 the following 
                new section:

       ``special provisions relating to medicare part d benefits

    ``Sec. 1935. (a) Requirement for Verification of Eligibility 
Determinations for Improved Part D Benefits.--As a condition of its 
State plan under this title under section 1902(a)(66) and receipt of 
any Federal financial assistance under section 1903(a), a State shall 
provide for verification of income statements in accordance with 
arrangements under section 1860D-4(d)(1).
    ``(b) Payments for Additional Administrative Costs.--
            ``(1) In general.--The amounts expended by a State in 
        carrying out subsection (a) are, subject to paragraph (2), 
        expenditures reimbursable under the appropriate paragraph of 
        section 1903(a); except that, notwithstanding any other 
        provision of such section, the applicable Federal matching 
        rates with respect to such expenditures under such section 
        shall be increased as follows (but in no case shall the rate as 
        so increased exceed 100 percent):
                    ``(A) For expenditures attributable to costs 
                incurred during 2004, the otherwise applicable Federal 
                matching rate shall be increased by 10 percent of the 
                percentage otherwise payable (but for this subsection) 
                by the State.
                    ``(B)(i) For expenditures attributable to costs 
                incurred during 2005 and each subsequent year through 
                2011, the otherwise applicable Federal matching rate 
                shall be increased by the applicable percent (as 
                defined in clause (ii)) of the percentage otherwise 
                payable (but for this subsection) by the State.
                    ``(ii) For purposes of clause (i), the `applicable 
                percent' for--
                            ``(I) 2005 is 20 percent; or
                            ``(II) a subsequent year is the applicable 
                        percent under this clause for the previous year 
                        increased by 10 percentage points.
                    ``(C) For expenditures attributable to costs 
                incurred after 2011, the otherwise applicable Federal 
                matching rate shall be increased to 100 percent.
            ``(2) Coordination.--The State shall provide the Secretary 
        with such information as may be necessary to properly allocate 
        administrative expenditures described in paragraph (1) that may 
        otherwise be made for eligibility determinations.''.
    (b) Amendment to Best Price.--Section 1927(c)(1)(C)(i) (42 U.S.C. 
1396r-8(c)(1)(C)(i)) is amended--
            (1) by striking ``and'' at the end of subclause (III);
            (2) by striking the period at the end of subclause (IV) and 
        inserting ``; and''; and
            (3) by adding at the end the following new subclause:
                                    ``(V) any prices charged which are 
                                negotiated by the Secretary under part 
                                D of title XVIII on behalf of eligible 
                                beneficiaries enrolled under such 
                                part.''.

SEC. 5. IMPORTATION OF PRESCRIPTION DRUGS.

    Section 804 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
384) is amended--
            (1) in subsection (a)--
                    (A) by striking ``The Secretary'' and inserting 
                ``Not later than 180 days after the date of the 
                enactment of the Pharmaceutical Market Access Act of 
                2003, the Secretary''; and
                    (B) by striking ``pharmacists and wholesalers'' and 
                inserting ``pharmacists, wholesalers, and qualifying 
                individuals'';
            (2) in subsection (b)--
                    (A) by amending paragraph (1) to read as follows:
            ``(1) require that each covered product imported pursuant 
        to such subsection complies with sections 501, 502, and 505, 
        and other applicable requirements of this Act; and'';
                    (B) in paragraph (2), by striking ``, including 
                subsection (d); and'' and inserting a period; and
                    (C) by striking paragraph (3);
            (3) in subsection (c), by inserting ``by pharmacists and 
        wholesalers (but not qualifying individuals)'' after 
        ``importation of covered products'';
            (4) in subsection (d)--
                    (A) by striking paragraphs (3) and (10);
                    (B) in paragraph (5), by striking ``, including the 
                professional license number of the importer, if any'';
                    (C) in paragraph (6)--
                            (i) in subparagraph (C), by inserting ``(if 
                        required under subsection (e))'' before the 
                        period;
                            (ii) in subparagraph (D), by inserting 
                        ``(if required under subsection (e))'' before 
                        the period; and
                            (iii) in subparagraph (E), by striking 
                        ``labeling'';
                    (D) in paragraph (7)--
                            (i) in subparagraph (A), by inserting ``(if 
                        required under subsection (e))'' before the 
                        period; and
                            (ii) by amending subparagraph (B) to read 
                        as follows:
                    ``(B) Certification from the importer or 
                manufacturer of such product that the product meets all 
                requirements of this Act.''; and
                    (E) by redesignating paragraphs (4) through (9) as 
                paragraphs (3) through (8), respectively;
            (5) by amending subsection (e) to read as follows:
    ``(e) Testing.--
            ``(1) In general.--Subject to paragraph (2), regulations 
        under subsection (a) shall require that testing referred to in 
        paragraphs (5) through (7) of subsection (d) be conducted by 
        the importer of the covered product, unless the covered product 
        is a prescription drug subject to the requirements of section 
        505B for counterfeit-resistant technologies.
            ``(2) Exception.--The testing requirements of paragraphs 
        (5) through (7) of subsection (d) shall not apply to an 
        importer unless the importer is a wholesaler.'';
            (6) in subsection (f), by striking ``or designated by the 
        Secretary, subject to such limitations as the Secretary 
        determines to be appropriate to protect the public health'';
            (7) in subsection (g)--
                    (A) by striking ``counterfeit or''; and
                    (B) by striking ``and the Secretary determines that 
                the public is adequately protected from counterfeit and 
                violative covered products being imported pursuant to 
                subsection (a)'';
            (8) in subsection (i)(1)--
                    (A) by amending subparagraph (A) to read as 
                follows:
                    ``(A) In general.--The Secretary shall conduct, or 
                contract with an entity to conduct, a study on the 
                imports permitted pursuant to subsection (a), including 
                consideration of the information received under 
                subsection (d). In conducting such study, the Secretary 
                or entity shall evaluate the compliance of importers 
                with regulations under subsection (a), and the 
                incidence of shipments pursuant to such subsection, if 
                any, that have been determined to be misbranded or 
                adulterated, and determine how such compliance 
                contrasts with the incidence of shipments of 
                prescription drugs transported within the United States 
                that have been determined to be misbranded or 
                adulterated.''; and
                    (B) in subparagraph (B), by striking ``Not later 
                than 2 years after the effective date of final 
                regulations under subsection (a),'' and inserting ``Not 
                later than 18 months after the date of the enactment of 
                the Pharmaceutical Market Access Act of 2003,'';
            (9) in subsection (k)--
                    (A) in subparagraph (A) of paragraph (1)--
                            (i) by striking ``or a biological'' and 
                        inserting ``, a biological''; and
                            (ii) by striking the period at the end and 
                        inserting ``, or any drug or biological product 
                        approved by the Secretary for use in connection 
                        with abortion, sex transformation, sexual 
                        dysfunction, or sexual inadequacy.''; and
                    (B) in paragraph (2)--
                            (i) by redesignating subparagraphs (D) and 
                        (E) as subparagraphs (E) and (F), respectively; 
                        and
                            (ii) by inserting after subparagraph (C) 
                        the following:
                    ``(D) The term `qualifying individual' means an 
                individual who is not a pharmacist or a wholesaler. ''; 
                and
            (10) by striking subsections (l) and (m).
                                 <all>
```