II 

116TH CONGRESS 

1ST SESSION S. 3 

To bring stability to the individual insurance market, make insurance coverage 

more affordable, lower prescription drug prices, and improve Medicaid. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 3, 2019 

Mr. CARDIN introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To bring stability to the individual insurance market, make 

insurance coverage more affordable, lower prescription 

drug prices, and improve Medicaid. 

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 ‘‘Keeping Health Insurance Affordable Act of 2019’’. 

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

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—MARKETPLACE STABILITY AND SECURITY 

Sec. 101. Public health insurance option. 


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TITLE II—HEALTH CARE FINANCIAL ASSISTANCE 

Sec. 201. Increase in eligibility for premium assistance tax credits. 

TITLE III—DRUG PRICING 

Sec. 301. Requiring drug manufacturers to provide drug rebates for drugs dispensed to low-income individuals. 

Sec. 302. Negotiation of prices for Medicare prescription drugs. 

Sec. 303. Guaranteed prescription drug benefits. 

Sec. 304. Full reimbursement for qualified retiree prescription drug plans. 

1 TITLE I—MARKETPLACE 

2 STABILITY AND SECURITY 

3 SEC. 101. PUBLIC HEALTH INSURANCE OPTION. 

4 (a) IN GENERAL.—Part 3 of subtitle D of title I of 

5 the Patient Protection and Affordable Care Act (Public 

6 Law 111–148) is amended by adding at the end the fol7 lowing new section: 

8 ‘‘SEC. 1325. PUBLIC HEALTH INSURANCE OPTION. 

9 ‘‘(a) ESTABLISHMENT AND ADMINISTRATION OF A

10 PUBLIC HEALTH INSURANCE OPTION.— 

11 ‘‘(1) ESTABLISHMENT.—For years beginning 

12 with 2020, the Secretary of Health and Human 

13 Services (in this section referred to as the ‘Sec14 retary’) shall provide for the offering through Ex15 changes established under this title of a health bene16 fits plan (in this Act referred to as the ‘public health 

17 insurance option’) that ensures choice, competition, 

18 and stability of affordable, high-quality coverage 

19 throughout the United States in accordance with 

20 this section. In designing the option, the Secretary’s 


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1 primary responsibility is to create a low-cost plan 

2 without compromising quality or access to care. 

3 ‘‘(2) OFFERING THROUGH EXCHANGES.— 

4 ‘‘(A) EXCLUSIVE TO EXCHANGES.—The 

5 public health insurance option shall be made 

6 available only through Exchanges established 

7 under this title. 

8 ‘‘(B) ENSURING A LEVEL PLAYING

9 FIELD.—Consistent with this section, the public 

10 health insurance option shall comply with re11 quirements that are applicable under this title 

12 to health benefits plans offered through such 

13 Exchanges, including requirements related to 

14 benefits, benefit levels, provider networks, no15 tices, consumer protections, and cost sharing. 

16 ‘‘(C) PROVISION OF BENEFIT LEVELS.— 

17 The public health insurance option— 

18 ‘‘(i) shall offer bronze, silver, and gold 

19 plans; and 

20 ‘‘(ii) may offer platinum plans. 

21 ‘‘(3) ADMINISTRATIVE CONTRACTING.—The 

22 Secretary may enter into contracts for the purpose 

23 of performing administrative functions (including 

24 functions described in subsection (a)(4) of section 

25 1874A of the Social Security Act) with respect to 


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1 the public health insurance option in the same man2 ner as the Secretary may enter into contracts under 

3 subsection (a)(1) of such section. The Secretary has 

4 the same authority with respect to the public health 

5 insurance option as the Secretary has under sub6 sections (a)(1) and (b) of section 1874A of the So7 cial Security Act with respect to title XVIII of such 

8 Act. Contracts under this subsection shall not in9 volve the transfer of insurance risk to such entity. 

10 ‘‘(4) OMBUDSMAN.—The Secretary shall estab11 lish an office of the ombudsman for the public 

12 health insurance option which shall have duties with 

13 respect to the public health insurance option similar 

14 to the duties of the Medicare Beneficiary Ombuds15 man under section 1808(c)(2) of the Social Security 

16 Act. In addition, such office shall work with States 

17 to ensure that information and notice is provided 

18 that the public health insurance option is one of the 

19 health plans available through an Exchange. 

20 ‘‘(5) DATA COLLECTION.—The Secretary shall 

21 collect such data as may be required to establish 

22 premiums and payment rates for the public health 

23 insurance option and for other purposes under this 

24 section, including to improve quality and to reduce 


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1 racial, ethnic, and other disparities in health and 

2 health care. 

3 ‘‘(6) ACCESS TO FEDERAL COURTS.—The provi4 sions of Medicare (and related provisions of title II 

5 of the Social Security Act) relating to access of 

6 Medicare beneficiaries to Federal courts for the en7 forcement of rights under Medicare, including with 

8 respect to amounts in controversy, shall apply to the 

9 public health insurance option and individuals en10 rolled under such option under this title in the same 

11 manner as such provisions apply to Medicare and 

12 Medicare beneficiaries. 

13 ‘‘(b) PREMIUMS AND FINANCING.— 

14 ‘‘(1) ESTABLISHMENT OF PREMIUMS.— 

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

16 establish geographically adjusted premium rates 

17 for the public health insurance option— 

18 ‘‘(i) in a manner that complies with 

19 the premium rules under paragraph (3); 

20 and 

21 ‘‘(ii) at a level sufficient to fully fi22 nance the costs of— 

23 ‘‘(I) health benefits provided by 

24 the public health insurance option; 

25 and 


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1 ‘‘(II) administrative costs related 

2 to operating the public health insur3 ance option. 

4 ‘‘(B) CONTINGENCY MARGIN.—In estab5 lishing premium rates under subparagraph (A), 

6 the Secretary shall include an appropriate 

7 amount for a contingency margin. 

8 ‘‘(2) ACCOUNT.— 

9 ‘‘(A) ESTABLISHMENT.—There is estab10 lished in the Treasury of the United States an 

11 account for the receipts and disbursements at12 tributable to the operation of the public health 

13 insurance option, including the start-up funding 

14 under subparagraph (B). Section 1854(g) of 

15 the Social Security Act shall apply to receipts 

16 described in the previous sentence in the same 

17 manner as such section applies to payments or 

18 premiums described in such section. 

19 ‘‘(B) START-UP FUNDING.— 

20 ‘‘(i) IN GENERAL.—In order to pro21 vide for the establishment of the public 

22 health insurance option there is hereby ap23 propriated to the Secretary, out of any 

24 funds in the Treasury not otherwise appro25 priated, $2,000,000,000. In order to proVerDate Sep 11 2014 01:22 Jan 04, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3.IS S3

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1 vide for initial claims reserves before the 

2 collection of premiums, there is hereby ap3 propriated to the Secretary, out of any 

4 funds in the Treasury not otherwise appro5 priated, such sums as necessary to cover 

6 90 days worth of claims reserves based on 

7 projected enrollment. 

8 ‘‘(ii) AMORTIZATION OF START-UP

9 FUNDING.—The Secretary shall provide for 

10 the repayment of the startup funding pro11 vided under clause (i) to the Treasury in 

12 an amortized manner over the 10-year pe13 riod beginning with 2020. 

14 ‘‘(iii) LIMITATION ON FUNDING.— 

15 Nothing in this subsection shall be con16 strued as authorizing any additional appro17 priations to the account, other than such 

18 amounts as are otherwise provided with re19 spect to other health benefits plans partici20 pating under the Exchange involved. 

21 ‘‘(3) INSURANCE RATING RULES.—The pre22 mium rate charged for the public health insurance 

23 option may not vary except as provided under sec24 tion 2701 of the Public Health Service Act. 

25 ‘‘(c) PAYMENT RATES FOR ITEMS AND SERVICES.— 


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1 ‘‘(1) RATES ESTABLISHED BY SECRETARY.— 

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

3 establish payment rates for the public health in4 surance option for services and health care pro5 viders consistent with this subsection and may 

6 change such payment rates in accordance with 

7 subsection (d). 

8 ‘‘(B) INITIAL PAYMENT RULES.— 

9 ‘‘(i) IN GENERAL.—During 2020, 

10 2021, and 2022, the Secretary shall set 

11 the payment rates under this subsection 

12 for services and providers described in sub13 paragraph (A) equal to the payment rates 

14 for equivalent services and providers under 

15 parts A and B of Medicare, subject to 

16 clause (ii), paragraph (4), and subsection 

17 (d). 

18 ‘‘(ii) EXCEPTIONS.—The Secretary 

19 may determine the extent to which Medi20 care adjustments applicable to base pay21 ment rates under parts A and B of Medi22 care for graduate medical education and 

23 disproportionate share hospitals shall apply 

24 under this section. 


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1 ‘‘(C) FOR NEW SERVICES.—The Secretary 

2 shall modify payment rates described in sub3 paragraph (B) in order to accommodate pay4 ments for services, such as well-child visits, that 

5 are not otherwise covered under Medicare. 

6 ‘‘(D) PRESCRIPTION DRUGS.—Payment 

7 rates under this subsection for prescription 

8 drugs that are not paid for under part A or 

9 part B of Medicare shall be at rates negotiated 

10 by the Secretary. 

11 ‘‘(2) SUBSEQUENT PERIODS; PROVIDER NET12 WORK.— 

13 ‘‘(A) SUBSEQUENT PERIODS.—Beginning 

14 with 2023 and for subsequent years, the Sec15 retary shall continue to use an administrative 

16 process to set such rates in order to promote 

17 payment accuracy, to ensure adequate bene18 ficiary access to providers, and to promote af19 fordability and the efficient delivery of medical 

20 care consistent with subsection (a)(1). Such 

21 rates shall not be set at levels expected to in22 crease average medical costs per enrollee cov23 ered under the public health insurance option 

24 beyond what would be expected if the process 

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1 tified by the Office of the Actuary of the Cen2 ters for Medicare & Medicaid Services. 

3 ‘‘(B) ESTABLISHMENT OF A PROVIDER

4 NETWORK.—Health care providers participating 

5 under Medicare are participating providers in 

6 the public health insurance option unless they 

7 opt out in a process established by the Sec8 retary. 

9 ‘‘(3) ADMINISTRATIVE PROCESS FOR SETTING

10 RATES.—Chapter 5 of title 5, United States Code 

11 shall apply to the process for the initial establish12 ment of payment rates under this subsection but not 

13 to the specific methodology for establishing such 

14 rates or the calculation of such rates. 

15 ‘‘(4) CONSTRUCTION.—Nothing in this section 

16 shall be construed as limiting the Secretary’s author17 ity to correct for payments that are excessive or defi18 cient, taking into account the provisions of sub19 section (a)(1) and any appropriate adjustments 

20 based on the demographic characteristics of enrollees 

21 covered under the public health insurance option, 

22 but in no case shall the correction of payments 

23 under this paragraph result in a level of expendi24 tures per enrollee that exceeds the level of expendi25 tures that would have occurred under paragraph 


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1 (1)(B), as certified by the Office of the Actuary of 

2 the Centers for Medicare & Medicaid Services. 

3 ‘‘(5) CONSTRUCTION.—Nothing in this section 

4 shall be construed as affecting the authority of the 

5 Secretary to establish payment rates, including pay6 ments to provide for the more efficient delivery of 

7 services, such as the initiatives provided for under 

8 subsection (d). 

9 ‘‘(6) LIMITATIONS ON REVIEW.—There shall be 

10 no administrative or judicial review of a payment 

11 rate or methodology established under this sub12 section or under subsection (d). 

13 ‘‘(d) MODERNIZED PAYMENT INITIATIVES AND DE14 LIVERY SYSTEM REFORM.— 

15 ‘‘(1) IN GENERAL.—For plan years beginning 

16 with 2020, the Secretary may utilize innovative pay17 ment mechanisms and policies to determine pay18 ments for items and services under the public health 

19 insurance option. The payment mechanisms and 

20 policies under this subsection may include patient21 centered medical home and other care management 

22 payments, accountable care organizations, value23 based purchasing, bundling of services, differential 

24 payment rates, performance or utilization based pay25 ments, partial capitation, and direct contracting with 


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1 providers. Payment rates under such payment mech2 anisms and policies shall not be set at levels ex3 pected to increase average medical costs per enrollee 

4 covered under the public health insurance option be5 yond what would be expected if the process under 

6 subsection (c)(1)(B) were continued, as certified by 

7 the Office of the Actuary of the Centers for Medi8 care & Medicaid Services. 

9 ‘‘(2) REQUIREMENTS FOR INNOVATIVE PAY10 MENTS.—The Secretary shall design and implement 

11 the payment mechanisms and policies under this 

12 subsection in a manner that— 

13 ‘‘(A) seeks to— 

14 ‘‘(i) improve health outcomes; 

15 ‘‘(ii) reduce health disparities (includ16 ing racial, ethnic, and other disparities); 

17 ‘‘(iii) provide efficient and affordable 

18 care; 

19 ‘‘(iv) address geographic variation in 

20 the provision of health services; or 

21 ‘‘(v) prevent or manage chronic ill22 ness; and 

23 ‘‘(B) promotes care that is integrated, pa24 tient-centered, high-quality, and efficient. 


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1 ‘‘(3) ENCOURAGING THE USE OF HIGH VALUE

2 SERVICES.—To the extent allowed by the benefit 

3 standards applied to all health benefits plans partici4 pating under the Exchange involved, the public 

5 health insurance option may modify cost sharing and 

6 payment rates to encourage the use of services that 

7 promote health and value. 

8 ‘‘(4) NON-UNIFORMITY PERMITTED.—Nothing 

9 in this section shall prevent the Secretary from vary10 ing payments based on different payment structure 

11 models (such as accountable care organizations and 

12 medical homes) under the public health insurance 

13 option for different geographic areas. 

14 ‘‘(e) PROVIDER PARTICIPATION.— 

15 ‘‘(1) IN GENERAL.—The Secretary shall estab16 lish conditions of participation for health care pro17 viders under the public health insurance option. 

18 ‘‘(2) LICENSURE OR CERTIFICATION.—The Sec19 retary shall not allow a health care provider to par20 ticipate in the public health insurance option unless 

21 such provider is appropriately licensed or certified 

22 under State law. 

23 ‘‘(3) PAYMENT TERMS FOR PROVIDERS.— 

24 ‘‘(A) PHYSICIANS.—The Secretary shall 

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1 cians under the public health insurance option, 

2 for which payment may be made for services 

3 furnished during the year, in one of 2 classes: 

4 ‘‘(i) PREFERRED PHYSICIANS.—Those 

5 physicians who agree to accept the pay6 ment rate established under this section 

7 (without regard to cost-sharing) as the 

8 payment in full. 

9 ‘‘(ii) PARTICIPATING, NON-PRE10 FERRED PHYSICIANS.—Those physicians 

11 who agree not to impose charges (in rela12 tion to the payment rate described in sub13 section (c) for such physicians) that exceed 

14 the ratio permitted under section 

15 1848(g)(2)(C) of the Social Security Act. 

16 ‘‘(B) OTHER PROVIDERS.—The Secretary 

17 shall provide for the participation (on an annual 

18 or other basis specified by the Secretary) of 

19 health care providers (other than physicians) 

20 under the public health insurance option under 

21 which payment shall only be available if the 

22 provider agrees to accept the payment rate es23 tablished under subsection (c) (without regard 

24 to cost-sharing) as the payment in full. 


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1 ‘‘(4) EXCLUSION OF CERTAIN PROVIDERS.— 

2 The Secretary shall exclude from participation under 

3 the public health insurance option a health care pro4 vider that is excluded from participation in a Fed5 eral health care program (as defined in section 

6 1128B(f) of the Social Security Act). 

7 ‘‘(f) APPLICATION OF FRAUD AND ABUSE PROVI8 SIONS.—Provisions of law (other than criminal law provi9 sions) identified by the Secretary by regulation, in con10 sultation with the Inspector General of the Department 

11 of Health and Human Services, that impose sanctions 

12 with respect to waste, fraud, and abuse under Medicare, 

13 such as the False Claims Act (31 U.S.C. 3729 et seq.), 

14 shall also apply to the public health insurance option. 

15 ‘‘(g) MEDICARE DEFINED.—For purposes of this sec16 tion, the term ‘Medicare’ means the health insurance pro17 grams under title XVIII of the Social Security Act.’’. 

18 (b) CONFORMING AMENDMENTS.— 

19 (1) TREATMENT AS QUALIFIED HEALTH

20 PLAN.—Section 1301(a)(2) of the Patient Protection 

21 and Affordable Care Act is amended— 

22 (A) in the heading, by inserting ‘‘, THE

23 PUBLIC HEALTH INSURANCE OPTION,’’ before 

24 ‘‘AND’’; and 


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1 (B) by inserting ‘‘the public health insur2 ance option under section 1325,’’ before ‘‘and a 

3 multi-State plan’’. 

4 (2) LEVEL PLAYING FIELD.—Section 1324(a) 

5 of such Act is amended by inserting ‘‘the public 

6 health insurance option under section 1325,’’ before 

7 ‘‘or a multi-State qualified health plan’’. 

8 TITLE II—HEALTH CARE 

9 FINANCIAL ASSISTANCE 

10 SEC. 201. INCREASE IN ELIGIBILITY FOR PREMIUM ASSIST11 ANCE TAX CREDITS. 

12 (a) IN GENERAL.—Subparagraph (A) of section 

13 36B(c)(1) of the Internal Revenue Code of 1986 is amend14 ed by striking ‘‘400 percent’’ and inserting ‘‘600 percent’’. 

15 (b) CONFORMING AMENDMENT.—The table con16 tained in clause (i) of section 36B(b)(3)(A)(i) of the Inter17 nal Revenue Code of 1986 is amended by striking ‘‘400%’’ 

18 and inserting ‘‘600%’’. 

19 (c) RECONCILIATION OF CREDIT AND ADVANCE

20 CREDIT.—Clause (i) of section 36B(f)(2)(B) of the Inter21 nal Revenue Code of 1986 is amended— 

22 (1) by striking ‘‘In the case of’’ and all that fol23 lows through ‘‘the amount of’’ and inserting ‘‘The 

24 amount of’’; and 


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1 (2) by striking ‘‘but less than 400%’’ in the 

2 table. 

3 (d) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years beginning after 

5 December 31, 2018. 

6 TITLE III—DRUG PRICING 

7 SEC. 301. REQUIRING DRUG MANUFACTURERS TO PROVIDE 

8 DRUG REBATES FOR DRUGS DISPENSED TO 

9 LOW-INCOME INDIVIDUALS. 

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

11 Security Act (42 U.S.C. 1395w–102) is amended— 

12 (1) in subsection (e)(1), in the matter preceding 

13 subparagraph (A), by inserting ‘‘and subsection (f)’’ 

14 after ‘‘this subsection’’; and 

15 (2) by adding at the end the following new sub16 section: 

17 ‘‘(f) PRESCRIPTION DRUG REBATE AGREEMENT FOR

18 REBATE ELIGIBLE INDIVIDUALS.— 

19 ‘‘(1) REQUIREMENT.— 

20 ‘‘(A) IN GENERAL.—For plan years begin21 ning on or after January 1, 2021, in this part, 

22 the term ‘covered part D drug’ does not include 

23 any drug or biological product that is manufac24 tured by a manufacturer that has not entered 


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1 into and have in effect a rebate agreement de2 scribed in paragraph (2). 

3 ‘‘(B) 2020 PLAN YEAR REQUIREMENT.— 

4 Any drug or biological product manufactured by 

5 a manufacturer that declines to enter into a re6 bate agreement described in paragraph (2) for 

7 the period beginning on January 1, 2020, and 

8 ending on December 31, 2020, shall not be in9 cluded as a ‘covered part D drug’ for the subse10 quent plan year. 

11 ‘‘(2) REBATE AGREEMENT.—A rebate agree12 ment under this subsection shall require the manu13 facturer to provide to the Secretary a rebate for 

14 each rebate period (as defined in paragraph (6)(B)) 

15 ending after December 31, 2019, in the amount 

16 specified in paragraph (3) for any covered part D 

17 drug of the manufacturer dispensed after December 

18 31, 2019, to any rebate eligible individual (as de19 fined in paragraph (6)(A)) for which payment was 

20 made by a PDP sponsor or MA organization under 

21 this part for such period, including payments passed 

22 through the low-income and reinsurance subsidies 

23 under sections 1860D–14 and 1860D–15(b), respec24 tively. Such rebate shall be paid by the manufac25 turer to the Secretary not later than 30 days after 


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1 the date of receipt of the information described in 

2 section 1860D–12(b)(8), including as such section is 

3 applied under section 1857(f)(3), or 30 days after 

4 the receipt of information under subparagraph (D) 

5 of paragraph (3), as determined by the Secretary. 

6 Insofar as not inconsistent with this subsection, the 

7 Secretary shall establish terms and conditions of 

8 such agreement relating to compliance, penalties, 

9 and program evaluations, investigations, and audits 

10 that are similar to the terms and conditions for re11 bate agreements under paragraphs (3) and (4) of 

12 section 1927(b). 

13 ‘‘(3) REBATE FOR REBATE ELIGIBLE MEDICARE

14 DRUG PLAN ENROLLEES.— 

15 ‘‘(A) IN GENERAL.—The amount of the re16 bate specified under this paragraph for a manu17 facturer for a rebate period, with respect to 

18 each dosage form and strength of any covered 

19 part D drug provided by such manufacturer 

20 and dispensed to a rebate eligible individual, 

21 shall be equal to the product of— 

22 ‘‘(i) the total number of units of such 

23 dosage form and strength of the drug so 

24 provided and dispensed for which payment 

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1 ganization under this part for the rebate 

2 period, including payments passed through 

3 the low-income and reinsurance subsidies 

4 under sections 1860D–14 and 1860D– 

5 15(b), respectively; and 

6 ‘‘(ii) the amount (if any) by which— 

7 ‘‘(I) the Medicaid rebate amount 

8 (as defined in subparagraph (B)) for 

9 such form, strength, and period, ex10 ceeds 

11 ‘‘(II) the average Medicare drug 

12 program rebate eligible rebate amount 

13 (as defined in subparagraph (C)) for 

14 such form, strength, and period. 

15 ‘‘(B) MEDICAID REBATE AMOUNT.—For 

16 purposes of this paragraph, the term ‘Medicaid 

17 rebate amount’ means, with respect to each 

18 dosage form and strength of a covered part D 

19 drug provided by the manufacturer for a rebate 

20 period— 

21 ‘‘(i) in the case of a single source 

22 drug or an innovator multiple source drug, 

23 the amount specified in paragraph 

24 (1)(A)(ii)(II) or (2)(C) of section 1927(c) 

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1 paragraph (A)(ii) of paragraph (2) of such 

2 section, for such form, strength, and pe3 riod; or 

4 ‘‘(ii) in the case of any other covered 

5 outpatient drug, the amount specified in 

6 paragraph (3)(A)(i) of such section for 

7 such form, strength, and period. 

8 ‘‘(C) AVERAGE MEDICARE DRUG PROGRAM

9 REBATE ELIGIBLE REBATE AMOUNT.—For pur10 poses of this subsection, the term ‘average 

11 Medicare drug program rebate eligible rebate 

12 amount’ means, with respect to each dosage 

13 form and strength of a covered part D drug 

14 provided by a manufacturer for a rebate period, 

15 the sum, for all PDP sponsors under part D 

16 and MA organizations administering an MA– 

17 PD plan under part C, of— 

18 ‘‘(i) the product, for each such spon19 sor or organization, of— 

20 ‘‘(I) the sum of all rebates, dis21 counts, or other price concessions (not 

22 taking into account any rebate pro23 vided under paragraph (2) or any dis24 counts under the program under sec25 tion 1860D–14A) for such dosage 


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1 form and strength of the drug dis2 pensed, calculated on a per-unit basis, 

3 but only to the extent that any such 

4 rebate, discount, or other price con5 cession applies equally to drugs dis6 pensed to rebate eligible Medicare 

7 drug plan enrollees and drugs dis8 pensed to PDP and MA–PD enrollees 

9 who are not rebate eligible individuals; 

10 and 

11 ‘‘(II) the number of the units of 

12 such dosage and strength of the drug 

13 dispensed during the rebate period to 

14 rebate eligible individuals enrolled in 

15 the prescription drug plans adminis16 tered by the PDP sponsor or the MA– 

17 PD plans administered by the MA or18 ganization; divided by 

19 ‘‘(ii) the total number of units of such 

20 dosage and strength of the drug dispensed 

21 during the rebate period to rebate eligible 

22 individuals enrolled in all prescription drug 

23 plans administered by PDP sponsors and 

24 all MA–PD plans administered by MA or25 ganizations. 


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1 ‘‘(D) USE OF ESTIMATES.—The Secretary 

2 may establish a methodology for estimating the 

3 average Medicare drug program rebate eligible 

4 rebate amounts for each rebate period based on 

5 bid and utilization information under this part 

6 and may use these estimates as the basis for 

7 determining the rebates under this section. If 

8 the Secretary elects to estimate the average 

9 Medicare drug program rebate eligible rebate 

10 amounts, the Secretary shall establish a rec11 onciliation process for adjusting manufacturer 

12 rebate payments not later than 3 months after 

13 the date that manufacturers receive the infor14 mation collected under section 1860D– 

15 12(b)(8)(B). 

16 ‘‘(4) LENGTH OF AGREEMENT.—The provisions 

17 of paragraph (4) of section 1927(b) (other than 

18 clauses (iv) and (v) of subparagraph (B)) shall apply 

19 to rebate agreements under this subsection in the 

20 same manner as such paragraph applies to a rebate 

21 agreement under such section. 

22 ‘‘(5) OTHER TERMS AND CONDITIONS.—The 

23 Secretary shall establish other terms and conditions 

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1 cluding terms and conditions related to compliance, 

2 that are consistent with this subsection. 

3 ‘‘(6) DEFINITIONS.—In this subsection and sec4 tion 1860D–12(b)(8): 

5 ‘‘(A) REBATE ELIGIBLE INDIVIDUAL.—The 

6 term ‘rebate eligible individual’ means— 

7 ‘‘(i) a subsidy eligible individual (as 

8 defined in section 1860D–14(a)(3)(A)); 

9 ‘‘(ii) a Medicaid beneficiary treated as 

10 a subsidy eligible individual under clause 

11 (v) of section 1860D–14(a)(3)(B); and 

12 ‘‘(iii) any part D eligible individual 

13 not described in clause (i) or (ii) who is de14 termined for purposes of the State plan 

15 under title XIX to be eligible for medical 

16 assistance under clause (i), (iii), or (iv) of 

17 section 1902(a)(10)(E). 

18 ‘‘(B) REBATE PERIOD.—The term ‘rebate 

19 period’ has the meaning given such term in sec20 tion 1927(k)(8).’’. 

21 (b) REPORTING REQUIREMENT FOR THE DETER22 MINATION AND PAYMENT OF REBATES BY MANUFACTUR23 ERS RELATED TO REBATE FOR REBATE ELIGIBLE MEDI24 CARE DRUG PLAN ENROLLEES.— 


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1 (1) REQUIREMENTS FOR PDP SPONSORS.—Sec2 tion 1860D–12(b) of the Social Security Act (42 

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

4 end the following new paragraph: 

5 ‘‘(8) REPORTING REQUIREMENT FOR THE DE6 TERMINATION AND PAYMENT OF REBATES BY MANU7 FACTURERS RELATED TO REBATE FOR REBATE ELI8 GIBLE MEDICARE DRUG PLAN ENROLLEES.— 

9 ‘‘(A) IN GENERAL.—For purposes of the 

10 rebate under section 1860D–2(f) for contract 

11 years beginning on or after January 1, 2021, 

12 each contract entered into with a PDP sponsor 

13 under this part with respect to a prescription 

14 drug plan shall require that the sponsor comply 

15 with subparagraphs (B) and (C). 

16 ‘‘(B) REPORT FORM AND CONTENTS.—Not 

17 later than a date specified by the Secretary, a 

18 PDP sponsor of a prescription drug plan under 

19 this part shall report to each manufacturer— 

20 ‘‘(i) information (by National Drug 

21 Code number) on the total number of units 

22 of each dosage, form, and strength of each 

23 drug of such manufacturer dispensed to re24 bate eligible Medicare drug plan enrollees 

25 under any prescription drug plan operated 


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1 by the PDP sponsor during the rebate pe2 riod; 

3 ‘‘(ii) information on the price dis4 counts, price concessions, and rebates for 

5 such drugs for such form, strength, and 

6 period; 

7 ‘‘(iii) information on the extent to 

8 which such price discounts, price conces9 sions, and rebates apply equally to rebate 

10 eligible Medicare drug plan enrollees and 

11 PDP enrollees who are not rebate eligible 

12 Medicare drug plan enrollees; and 

13 ‘‘(iv) any additional information that 

14 the Secretary determines is necessary to 

15 enable the Secretary to calculate the aver16 age Medicare drug program rebate eligible 

17 rebate amount (as defined in paragraph 

18 (3)(C) of such section), and to determine 

19 the amount of the rebate required under 

20 this section, for such form, strength, and 

21 period. 

22 Such report shall be in a form consistent with 

23 a standard reporting format established by the 

24 Secretary. 


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1 ‘‘(C) SUBMISSION TO SECRETARY.—Each 

2 PDP sponsor shall promptly transmit a copy of 

3 the information reported under subparagraph 

4 (B) to the Secretary for the purpose of audit 

5 oversight and evaluation. 

6 ‘‘(D) CONFIDENTIALITY OF INFORMA7 TION.—The provisions of subparagraph (D) of 

8 section 1927(b)(3), relating to confidentiality of 

9 information, shall apply to information reported 

10 by PDP sponsors under this paragraph in the 

11 same manner that such provisions apply to in12 formation disclosed by manufacturers or whole13 salers under such section, except— 

14 ‘‘(i) that any reference to ‘this sec15 tion’ in clause (i) of such subparagraph 

16 shall be treated as being a reference to this 

17 section; 

18 ‘‘(ii) the reference to the Director of 

19 the Congressional Budget Office in clause 

20 (iii) of such subparagraph shall be treated 

21 as including a reference to the Medicare 

22 Payment Advisory Commission; and 

23 ‘‘(iii) clause (iv) of such subparagraph 

24 shall not apply. 


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1 ‘‘(E) OVERSIGHT.—Information reported 

2 under this paragraph may be used by the In3 spector General of the Department of Health 

4 and Human Services for the statutorily author5 ized purposes of audit, investigation, and eval6 uations. 

7 ‘‘(F) PENALTIES FOR FAILURE TO PRO8 VIDE TIMELY INFORMATION AND PROVISION OF

9 FALSE INFORMATION.—In the case of a PDP 

10 sponsor— 

11 ‘‘(i) that fails to provide information 

12 required under subparagraph (B) on a 

13 timely basis, the sponsor is subject to a 

14 civil money penalty in the amount of 

15 $10,000 for each day in which such infor16 mation has not been provided; or 

17 ‘‘(ii) that knowingly (as defined in 

18 section 1128A(i)) provides false informa19 tion under such subparagraph, the sponsor 

20 is subject to a civil money penalty in an 

21 amount not to exceed $100,000 for each 

22 item of false information. 

23 Such civil money penalties are in addition to 

24 other penalties as may be prescribed by law. 

25 The provisions of section 1128A (other than 


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1 subsections (a) and (b)) shall apply to a civil 

2 money penalty under this subparagraph in the 

3 same manner as such provisions apply to a pen4 alty or proceeding under section 1128A(a).’’. 

5 (2) APPLICATION TO MA ORGANIZATIONS.—Sec6 tion 1857(f)(3) of the Social Security Act (42 

7 U.S.C. 1395w–27(f)(3)) is amended by adding at 

8 the end the following: 

9 ‘‘(E) REPORTING REQUIREMENT RELATED

10 TO REBATE FOR REBATE ELIGIBLE MEDICARE

11 DRUG PLAN ENROLLEES.—Section 1860D– 

12 12(b)(8).’’. 

13 (c) DEPOSIT OF REBATES INTO MEDICARE PRE14 SCRIPTION DRUG ACCOUNT.—Section 1860D–16(c) of the 

15 Social Security Act (42 U.S.C. 1395w–116(c)) is amended 

16 by adding at the end the following new paragraph: 

17 ‘‘(6) REBATE FOR REBATE ELIGIBLE MEDICARE

18 DRUG PLAN ENROLLEES.—Amounts paid under a re19 bate agreement under section 1860D–2(f) shall be 

20 deposited into the Account.’’. 

21 (d) EXCLUSION FROM DETERMINATION OF BEST

22 PRICE AND AVERAGE MANUFACTURER PRICE UNDER

23 MEDICAID.— 

24 (1) EXCLUSION FROM BEST PRICE DETERMINA25 TION.—Section 1927(c)(1)(C)(ii)(I) of the Social SeVerDate Sep 11 2014 01:22 Jan 04, 2019 Jkt 089200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\S3.IS S3

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1 curity Act (42 U.S.C. 1396r–8(c)(1)(C)(ii)(I)) is 

2 amended by inserting ‘‘and amounts paid under a 

3 rebate agreement under section 1860D–2(f)’’ after 

4 ‘‘this section’’. 

5 (2) EXCLUSION FROM AVERAGE MANUFAC6 TURER PRICE DETERMINATION.—Section 

7 1927(k)(1)(B)(i) of the Social Security Act (42 

8 U.S.C. 1396r–8(k)(1)(B)(i)) is amended— 

9 (A) in subclause (IV), by striking ‘‘and’’ 

10 after the semicolon; 

11 (B) in subclause (V), by striking the period 

12 at the end and inserting ‘‘; and’’; and 

13 (C) by adding at the end the following: 

14 ‘‘(VI) amounts paid under a re15 bate agreement under section 1860D– 

16 2(f).’’. 

17 SEC. 302. NEGOTIATION OF PRICES FOR MEDICARE PRE18 SCRIPTION DRUGS. 

19 Section 1860D–11 of the Social Security Act (42 

20 U.S.C. 1395w–111) is amended by striking subsection (i) 

21 (relating to noninterference) and inserting the following: 

22 ‘‘(i) NEGOTIATION; NO NATIONAL FORMULARY OR

23 PRICE STRUCTURE.— 

24 ‘‘(1) NEGOTIATION OF PRICES WITH MANUFAC25 TURERS.—In order to ensure that beneficiaries enVerDate Sep 11 2014 01:22 Jan 04, 2019 Jkt 089200 PO 00000 Frm 00030 Fmt 6652 Sfmt 6201 E:\BILLS\S3.IS S3

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1 rolled under prescription drug plans and MA–PD 

2 plans pay the lowest possible price, the Secretary 

3 shall have and exercise authority similar to that of 

4 other Federal entities that purchase prescription 

5 drugs in bulk to negotiate contracts with manufac6 turers of covered part D drugs, consistent with the 

7 requirements and in furtherance of the goals of pro8 viding quality care and containing costs under this 

9 part. 

10 ‘‘(2) NO NATIONAL FORMULARY OR PRICE

11 STRUCTURE.—In order to promote competition 

12 under this part and in carrying out this part, the 

13 Secretary may not require a particular formulary or 

14 institute a price structure for the reimbursement of 

15 covered part D drugs.’’. 

16 SEC. 303. GUARANTEED PRESCRIPTION DRUG BENEFITS. 

17 (a) IN GENERAL.—Section 1860D–3 of the Social 

18 Security Act (42 U.S.C. 1395w–103) is amended to read 

19 as follows: 

20 ‘‘ACCESS TO A CHOICE OF QUALIFIED PRESCRIPTION

21 DRUG COVERAGE

22 ‘‘SEC. 1860D–3. (a) ASSURING ACCESS TO A CHOICE

23 OF COVERAGE.— 

24 ‘‘(1) CHOICE OF AT LEAST THREE PLANS IN

25 EACH AREA.—Beginning on January 1, 2021, the 

26 Secretary shall ensure that each part D eligible indiVerDate Sep 11 2014 01:22 Jan 04, 2019 Jkt 089200 PO 00000 Frm 00031 Fmt 6652 Sfmt 6201 E:\BILLS\S3.IS S3

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1 vidual has available, consistent with paragraph (2), 

2 a choice of enrollment in— 

3 ‘‘(A) a nationwide prescription drug plan 

4 offered by the Secretary in accordance with 

5 subsection (b); and 

6 ‘‘(B) at least 2 qualifying plans (as defined 

7 in paragraph (3)) in the area in which the indi8 vidual resides, at least one of which is a pre9 scription drug plan. 

10 ‘‘(2) REQUIREMENT FOR DIFFERENT PLAN

11 SPONSORS.—The requirement in paragraph (1)(B) is 

12 not satisfied with respect to an area if only one enti13 ty offers all the qualifying plans in the area. 

14 ‘‘(3) QUALIFYING PLAN DEFINED.—For pur15 poses of this section, the term ‘qualifying plan’ 

16 means— 

17 ‘‘(A) a prescription drug plan; 

18 ‘‘(B) an MA–PD plan described in section 

19 1851(a)(2)(A)(i) that provides— 

20 ‘‘(i) basic prescription drug coverage; 

21 or 

22 ‘‘(ii) qualified prescription drug cov23 erage that provides supplemental prescrip24 tion drug coverage so long as there is no 

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1 mium applied under the plan, due to the 

2 application of a credit against such pre3 mium of a rebate under section 

4 1854(b)(1)(C); or 

5 ‘‘(C) a nationwide prescription drug plan 

6 offered by the Secretary in accordance with 

7 subsection (b). 

8 ‘‘(b) HHS AS PDP SPONSOR FOR A NATIONWIDE

9 PRESCRIPTION DRUG PLAN.— 

10 ‘‘(1) IN GENERAL.—The Secretary, acting 

11 through the Administrator of the Centers for Medi12 care & Medicaid Services, shall take such steps as 

13 may be necessary to qualify and serve as a PDP 

14 sponsor and to offer a prescription drug plan that 

15 offers basic prescription drug coverage throughout 

16 the United States. Such a plan shall be in addition 

17 to, and not in lieu of, other prescription drug plans 

18 offered under this part. 

19 ‘‘(2) PREMIUM; SOLVENCY; AUTHORITIES.—In 

20 carrying out paragraph (1), the Secretary— 

21 ‘‘(A) shall establish a premium in the 

22 amount of $37 for months in 2021 and, for 

23 months in subsequent years, in the amount 

24 specified in this paragraph for months in the 

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1 age increase described in section 1860D– 

2 2(b)(6) (relating to growth in Medicare pre3 scription drug costs per beneficiary) for the 

4 year involved; 

5 ‘‘(B) is deemed to have met any applicable 

6 solvency and capital adequacy standards; and 

7 ‘‘(C) shall exercise such authorities (includ8 ing the use of regional or other pharmaceutical 

9 benefit managers) as the Secretary determines 

10 necessary to offer the prescription drug plan in 

11 the same or a comparable manner as is the case 

12 for prescription drug plans offered by private 

13 PDP sponsors. 

14 ‘‘(c) FLEXIBILITY IN RISK ASSUMED.—In order to 

15 ensure access pursuant to subsection (a) in an area the 

16 Secretary may approve limited risk plans under section 

17 1860D–11(f) for the area.’’. 

18 (b) CONFORMING AMENDMENT.—Section 1860D– 

19 11(g) of the Social Security Act (42 U.S.C. 1395w– 

20 111(g)) is amended by adding at the end the following 

21 new paragraph: 

22 ‘‘(8) APPLICATION.—This subsection shall not 

23 apply on or after January 1, 2021.’’. 


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

2 this section shall apply to plan years beginning on or after 

3 January 1, 2021. 

4 SEC. 304. FULL REIMBURSEMENT FOR QUALIFIED RETIREE 

5 PRESCRIPTION DRUG PLANS. 

6 (a) ELIMINATION OF TRUE OUT-OF-POCKET LIMITA7 TION.—Section 1860D–2(b)(4)(C)(iii) of the Social Secu8 rity Act (42 U.S.C. 1395w–102(b)(4)(C)(iii)) is amend9 ed— 

10 (1) in subclause (III), by striking ‘‘or’’ at the 

11 end; 

12 (2) in subclause (IV), by striking the period at 

13 the end and inserting ‘‘; or’’; and 

14 (3) by adding at the end the following new sub15 clause: 

16 ‘‘(V) under a qualified retiree 

17 prescription drug plan (as defined in 

18 section 1860D–22(a)(2)).’’. 

19 (b) EQUALIZATION OF SUBSIDIES.—Notwithstanding 

20 any other provision of law, the Secretary of Health and 

21 Human Services shall provide for such increase in the spe22 cial subsidy payment amounts under section 1860D– 

23 22(a)(3) of the Social Security Act (42 U.S.C. 1395w– 

24 132(a)(3)) as may be appropriate to provide for payments 

25 in the aggregate equivalent to the payments that would 


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1 have been made under section 1860D–15 of such Act (42 

2 U.S.C. 1395w–115) if the individuals were not enrolled 

3 in a qualified retiree prescription drug plan. In making 

4 such computation, the Secretary shall not take into ac5 count the application of the amendments made by section 

6 1202 of the Medicare Prescription Drug, Improvement, 

7 and Modernization Act of 2003 (Public Law 108–173; 117 

8 Stat. 2480). 

9 (c) EFFECTIVE DATE.—This section, and the amend10 ments made by this section, shall take effect on January 

11 1, 2021. 

Æ 


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