I

106TH CONGRESS

2D SESSION H. R. 4770

To amend title XVIII of the Social Security Act to provide a prescription

medicine benefit under the Medicare Program, to enhance the preventive

benefits covered under such program, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 27, 2000

Mr. GEPHARDT (for himself, Mr. HOEFFEL, Mr. BONIOR, Mr. RANGEL, Mr.

DINGELL, Mr. STARK, Mr. BROWN of Ohio, Mr. MATSUI, Mr. COYNE,

Mr. LEVIN, Mr. CARDIN, Mr. MCDERMOTT, Mr. KLECZKA, Mr. LEWIS

of Georgia, Mr. NEAL of Massachusetts, Mr. MCNULTY, Mr. JEFFERSON,

Mr. TANNER, Mr. BECERRA, Mrs. THURMAN, Mr. DOGGETT, Mr. WAXMAN, Mr. MARKEY, Mr. BOUCHER, Mr. PALLONE, Mr. STUPAK, Mr.

ENGEL, Mr. GREEN of Texas, Mr. ALLEN, Mr. BACA, Mr. BENTSEN, Ms.

BERKLEY, Mr. BISHOP, Mrs. CAPPS, Mr. BLAGOJEVICH, Mr.

BLUMENAUER, Mr. BRADY of Pennsylvania, Ms. BROWN of Florida, Mr.

CAPUANO, Mr. CLAY, Mrs. CLAYTON, Mr. CLEMENT, Mr. CONYERS, Mr.

COSTELLO, Mr. CUMMINGS, Ms. DANNER, Mr. DAVIS of Illinois, Ms.

DEGETTE, Mr. DELAHUNT, Ms. DELAURO, Mr. DIXON, Mr. DOYLE, Mr.

EDWARDS, Mr. EVANS, Mr. FARR of California, Mr. FORBES, Mr. FRANK

of Massachusetts, Mr. FROST, Mr. GONZALEZ, Mr. GUTIERREZ, Mr.

HILLIARD, Ms. NORTON, Mr. HOYER, Mr. INSLEE, Mr. JACKSON of Illinois, Ms. JACKSON-LEE of Texas, Ms. EDDIE BERNICE JOHNSON of

Texas, Mr. KENNEDY of Rhode Island, Mr. KILDEE, Ms. KILPATRICK,

Mr. KUCINICH, Mr. LAMPSON, Mr. LANTOS, Ms. LEE, Mrs. LOWEY, Mr.

MCGOVERN, Mrs. MALONEY of New York, Mr. MEEHAN, Mr. MENENDEZ, Ms. MILLENDER-MCDONALD, Mr. MOAKLEY, Mrs. NAPOLITANO,

Mr. OBERSTAR, Mr. OLVER, Mr. ORTIZ, Mr. PASCRELL, Mr. PASTOR,

Ms. PELOSI, Mr. PHELPS, Mr. POMEROY, Mr. REYES, Mr. RODRIGUEZ,

Ms. ROYBAL-ALLARD, Ms. SANCHEZ, Mr. SANDLIN, Mr. SKELTON, Ms.

SLAUGHTER, Mr. SNYDER, Mr. SPRATT, Ms. STABENOW, Mrs. JONES of

Ohio, Mr. TURNER, Mr. UDALL of New Mexico, Mr. UNDERWOOD, Mr.

WEYGAND, Mr. WEXLER, and Ms. WOOLSEY) introduced the following

bill; which was referred to the Committee on Ways and Means, and in

addition to the Committee on Commerce, 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
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A BILL

To amend title XVIII of the Social Security Act to provide

a prescription medicine benefit under the Medicare Program, to enhance the preventive benefits covered under

such program, and for other purposes.

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 Guaranteed and Defined Rx Benefit and

6 Health Provider Relief Act of 2000’’.

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

8 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

TITLE I—MEDICARE PRESCRIPTION MEDICINE BENEFIT

PROGRAM

Sec. 101. Prescription medicine benefit program.

‘‘PART D—PRESCRIPTION MEDICINE BENEFIT FOR THE AGED AND

DISABLED

‘‘Sec. 1860. Establishment of defined prescription medicine benefit program for the aged and disabled under the medicare program.

‘‘Sec. 1860A. Scope of defined benefits; coverage of all medically necessary

prescription medicines.

‘‘Sec. 1860B. Payment of defined basic and catastrophic benefits.

‘‘Sec. 1860C. Eligibility and enrollment.

‘‘Sec. 1860D. Monthly premium; initial $25 premium.

‘‘Sec. 1860F. Prescription medicine insurance account.

‘‘Sec. 1860G. Administration of benefits .

‘‘Sec. 1860H. Incentive program to encourage employers to continue coverage .

‘‘Sec. 1860I. Appropriations to cover government contributions.

‘‘Sec. 1860J. Definitions.’’.

Sec. 102. Medicaid buy-in of medicare prescription drug coverage for certain

low-income individuals.
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‘‘Sec. 1860E. Special eligibility, enrollment, and copayment rules for lowincome individuals.’’.

Sec. 103. Offset for catastrophic prescription medicine benefit.

Sec. 104. GAO ongoing studies and reports on program; miscellaneous studies

and reports.

TITLE II—IMPROVEMENT IN BENEFICIARY SERVICES

Subtitle A—Improvement of Medicare Coverage and Appeals Process

Sec. 201. Revisions to medicare appeals process.

Sec. 202. Provisions with respect to limitations on liability of beneficiaries.

Sec. 203. Waivers of liability for cost sharing amounts.

Subtitle B—Establishment of Medicare Ombudsman

Sec. 211. Establishment of Medicare Ombudsman for Beneficiary Assistance

and Advocacy.

TITLE III—MEDICARE+CHOICE REFORMS; PRESERVATION OF

MEDICARE PART B DRUG BENEFIT

Subtitle A—Medicare+Choice Reforms

Sec. 301. Increase in national per capita Medicare+Choice growth percentage

in 2001 and 2002.

Sec. 302. Permanently removing application of budget neutrality beginning in

2002.

Sec. 303. Increasing minimum payment amount.

Sec. 304. Allowing movement to 50:50 percent blend in 2002.

Sec. 305. Increased update for payment areas with only one or no

Medicare+Choice contracts.

Sec. 306. Permitting higher negotiated rates in certain Medicare+Choice payment areas below national average.

Sec. 307. 10-year phase in of risk adjustment based on data from all settings.

Subtitle B—Preservation of Medicare Coverage of Drugs and Biologicals

Sec. 311. Preservation of coverage of drugs and biologicals under part B of the

medicare program.

Sec. 312. Comprehensive immunosuppressive medicine coverage for transplant

patients.

Subtitle C—Improvement of Certain Preventive Benefits

Sec. 321. Coverage of annual screening pap smear and pelvic exams.

TITLE IV—ADJUSTMENTS TO PAYMENT PROVISIONS OF THE

BALANCED BUDGET ACT

Subtitle A—Payments for Inpatient Hospital Services

Sec. 401. Eliminating reduction in hospital market basket update for fiscal year

2001.

Sec. 402. Eliminating further reductions in indirect medical education (IME)

for fiscal year 2001.

Sec. 403. Eliminating further reductions in disproportionate share hospital

(DSH) payments.
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Sec. 404. Increase base payment to Puerto Rico hospitals.

Subtitle B—Payments for Skilled Nursing Services

Sec. 411. Eliminating reduction in SNF market basket update for fiscal year

2001.

Sec. 412. Extension of moratorium on therapy caps.

Subtitle C—Payments for Home Health Services

Sec. 421. 1-year additional delay in application of 15 percent reduction on payment limits for home health services.

Sec. 422. Provision of full market basket update for home health services for

fiscal year 2001.

Subtitle D—Rural Provider Provisions

Sec. 431. Elimination of reduction in hospital outpatient market basket increase.

Subtitle E—Other Providers

Sec. 441. Update in renal dialysis composite rate.

Subtitle F—Provision for Additional Adjustments

Sec. 451. Guarantee of additional adjustments to payments for providers from

budget surplus.

1 SEC. 2. FINDINGS.

2 Congress makes the following findings:

3 (1) Prescription medicine coverage was not a

4 standard part of health insurance when the medicare

5 program under title XVIII of the Social Security Act

6 was enacted in 1965. Since 1965, however, medicine

7 coverage has become a key component of most pri8 vate and public health insurance coverage, except for

9 the medicare program.

(2) At least 2 10 ⁄3 of medicare beneficiaries have

11 unreliable, inadequate, or no medicine coverage at

12 all.
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1 (3) Seniors who do not have medicine coverage

2 typically pay, at a minimum, 15 percent more than

3 people with coverage.

4 (4) Medicare beneficiaries at all income levels

5 lack prescription medicine coverage, with more than

1 6 ⁄2 of such beneficiaries having incomes greater than

7 150 percent of the poverty line.

8 (5) The number of private firms offering retiree

9 health coverage is declining.

10 (6) Medigap premiums for medicines are too ex11 pensive for most beneficiaries and are highest for

12 older senior citizens, who need prescription medicine

13 coverage the most and typically have the lowest in14 comes.

15 (7) While the management of a medicare pre16 scription medicine benefit program should mirror the

17 practices employed by benefit administrators in de18 livering prescription medicines, the Secretary of

19 Health and Human Services should oversee that pro20 gram to assure that a guaranteed and defined pre21 scription drug benefit is provided to all medicare

22 beneficiaries.

23 (8) All medicare beneficiaries should have ac24 cess to a voluntary, reliable, affordable, dependable,

25 and defined outpatient medicine benefit as part of
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1 the medicare program that assists with the high cost

2 of prescription medicines and protects them against

3 excessive out-of-pocket costs.

4 TITLE I—MEDICARE PRESCRIP5 TION MEDICINE BENEFIT

6 PROGRAM

7 SEC. 101. ESTABLISHMENT OF THE MEDICARE PRESCRIP8 TION MEDICINE BENEFIT PROGRAM.

9 (a) IN GENERAL.—Title XVIII of the Social Security

10 Act (42 U.S.C. 1395 et seq.) is amended—

11 (1) by redesignating part D as part E; and

12 (2) by inserting after part C the following new

13 part:

14 ‘‘PART D—PRESCRIPTION MEDICINE BENEFIT FOR THE

15 AGED AND DISABLED

16 ‘‘ESTABLISHMENT OF DEFINED PRESCRIPTION MEDICINE

17 BENEFIT PROGRAM FOR THE AGED AND DISABLED

18 UNDER THE MEDICARE PROGRAM

19 ‘‘SEC. 1860. (a) IN GENERAL.—There is established

20 as a part of the medicare program under this title a vol21 untary insurance program to provide defined prescription

22 medicine benefits, including pharmacy services, in accord23 ance with the provisions of this part for individuals who

24 are aged or disabled or have end-stage renal disease and

25 who voluntarily elect to enroll under such program, to be
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1 financed from premium payments by enrollees together

2 with contributions from funds appropriated by the Federal

3 Government.

4 ‘‘(b) NONINTERFERENCE BY THE SECRETARY.—In

5 administering the prescription medicine benefit program

6 established under this part, the Secretary may not—

7 ‘‘(1) require a particular formulary, institute a

8 price structure for benefits, or in any way ration

9 benefits;

10 ‘‘(2) interfere in any way with negotiations be11 tween benefit administrators and medicine manufac12 turers, or wholesalers; or

13 ‘‘(3) otherwise interfere with the competitive

14 nature of providing a prescription medicine benefit

15 using private benefit administrators, except as is re16 quired to guarantee coverage of the defined benefit.

17 ‘‘SCOPE OF DEFINED BENEFITS; COVERAGE OF ALL

18 MEDICALLY NECESSARY PRESCRIPTION MEDICINES

19 ‘‘SEC. 1860A. (a) IN GENERAL.—The benefits pro20 vided to an individual enrolled in the insurance program

21 under this part shall consist of—

22 ‘‘(1) payments made, in accordance with the

23 provisions of this part, for covered prescription

24 medicines (as specified in subsection (b)) dispensed

25 by any pharmacy participating in the program under

26 this part (and, in circumstances designated by the
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1 benefit administrator, by a nonparticipating phar2 macy), including any specifically named medicine

3 prescribed for the individual by a qualified health

4 care professional regardless of whether the medicine

5 is included in a formulary established by the benefit

6 administrator if such medicine is certified as medi7 cally necessary by such health care professional (ex8 cept that to the maximum extent possible the substi9 tution and use of lower-cost generics shall be encour10 aged); and

11 ‘‘(2) charging by pharmacies of the negotiated

12 discount price—

13 ‘‘(A) for all covered prescription medicines,

14 without regard to such basic benefit limitation;

15 and

16 ‘‘(B) established with respect to any drugs

17 or classes of drugs described in subparagraphs

18 (A), (B), (D), (E), or (F) of section 1927(d)(2)

19 that are available to individuals receiving bene20 fits under this title.

21 ‘‘(b) COVERED PRESCRIPTION MEDICINES.—

22 ‘‘(1) IN GENERAL.—Covered prescription medi23 cines, for purposes of this part, include all prescrip24 tion medicines (as defined in section 1860J(1)), in-
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1 cluding smoking cessation agents, except as other2 wise provided in this subsection.

3 ‘‘(2) EXCLUSIONS FROM COVERAGE.—Covered

4 prescription medicines shall not include drugs or

5 classes of drugs described in subparagraphs (A)

6 through (D) and (F) through (H) of section

7 1927(d)(2) unless—

8 ‘‘(A) specifically provided otherwise by the

9 Secretary with respect to a drug in any of such

10 classes; or

11 ‘‘(B) a drug in any of such classes is cer12 tified to be medically necessary by a health care

13 professional.

14 ‘‘(3) NONDUPLICATION OF PRESCRIPTION

15 MEDICINES COVERED UNDER PART A OR B.—A med16 icine prescribed for an individual that would other17 wise be a covered prescription medicine under this

18 part shall not be so considered to the extent that

19 payment for such medicine is available under part A

20 or B (including all injectable drugs and biologicals

21 for which payment was made or should have been

22 made by a carrier under section 1861(s)(2) (A) or

23 (B) as of the date of enactment of the Medicare

24 Guaranteed and Defined Rx Benefit and Health

25 Provider Relief Act of 2000). Medicines otherwise
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1 covered under part A or B shall be covered under

2 this part to the extent that benefits under part A or

3 B are exhausted.

4 ‘‘(4) STUDY ON INCLUSION OF HOME INFUSION

5 THERAPY SERVICES.—Not later than one year after

6 the date of the enactment of the Medicare Guaran7 teed and Defined Rx Benefit and Health Provider

8 Relief Act of 2000, the Secretary shall submit to

9 Congress a legislative proposal for the delivery of

10 home infusion therapy services under this title and

11 for a system of payment for such a benefit that co12 ordinates items and services furnished under part B

13 and under this part.

14 ‘‘PAYMENT OF DEFINED BASIC AND CATASTROPHIC

15 BENEFITS

16 ‘‘SEC. 1860B. (a) PAYMENT OF BENEFITS.—There

17 shall be paid from the Prescription Medicine Insurance

18 Account within the Supplementary Medical Insurance

19 Trust Fund, in the case of each individual who is enrolled

20 in the insurance program under this part and who pur21 chases covered prescription medicines in a calendar year,

22 the sum of the benefit amounts under subsections (b) and

23 (c).

24 ‘‘(b) BASIC BENEFIT.—

25 ‘‘(1) IN GENERAL.—An amount (not exceeding

26 50 percent of the annual limitation under paragraph
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1 (3)) equal to the applicable government percentage

2 (specified in paragraph (2)) of the negotiated price

3 for each such covered prescription medicine or such

4 higher percentage as is proposed under section

5 1860G(d)(9).

6 ‘‘(2) APPLICABLE GOVERNMENT PERCENT7 AGE.—The applicable government percentage speci8 fied in this paragraph is 50 percent or such higher

9 percentage as may be proposed under section

10 1860G(d)(9), if the Secretary finds that such higher

11 percentage will not increase aggregate costs to the

12 Prescription Medicine Insurance Account.

13 ‘‘(3) ANNUAL LIMITATION IN BASIC BENEFIT.—

14 ‘‘(A) FOR 2003 THROUGH 2009.—For pur15 poses of the basic benefit described in para16 graph (1), the annual limitation under this

17 paragraph is—

18 ‘‘(i) $2,000 for each of 2003 and

19 2004;

20 ‘‘(ii) $3,000 for each of 2005 and

21 2006;

22 ‘‘(iii) $4,000 for each of 2007 and

23 2008; and

24 ‘‘(iv) $5,000 for 2009.
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1 ‘‘(B) FOR 2010 AND SUBSEQUENT

2 YEARS.—For purposes of paragraph (1), the

3 annual limitation under this paragraph for

4 2010 and each subsequent year is equal to the

5 limitation for the preceding year adjusted by

6 the annual percentage increase in average per

7 capita aggregate expenditures for covered out8 patient medicines in the United States for

9 medicare beneficiaries, as estimated by the Sec10 retary. Any amount determined under this sub11 paragraph that is not a multiple of $10 shall be

12 rounded to the nearest multiple of $10.

13 ‘‘(c) CATASTROPHIC BENEFIT.—

14 ‘‘(1) FOR 2003.—In the case of and with respect

15 to out-of-pocket expenditures, the amount of such

16 expenditures that exceeds the catastrophic benefit

17 level established by the Secretary under paragraph

18 (2) and increased in subsequent years by the annual

19 percentage increase under paragraph (3).

20 ‘‘(2) ESTABLISHMENT OF CATASTROPHIC BEN21 EFIT LEVEL.—The Chief Actuary shall estimate,

22 over each five-year period, beginning with 2003, the

23 amount of savings to the program under this title

24 attributable to the operation of section 103 of the

25 Medicare Guaranteed and Defined Rx Benefit and
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1 Health Provider Relief Act of 2000. Based on such

2 estimates, the Secretary shall establish the cata3 strophic benefit level in a manner so that the aggre4 gate amount of expenditures under this paragraph

5 does not exceed the aggregate amount of such sav6 ings, except that in 2003 and each year thereafter,

7 the catastrophic benefit level may not be greater

8 than $4,000, as adjusted under paragraph (3).

9 ‘‘(3) INDEXING FOR OUTYEARS.—For a year

10 beginning after 2003, the catastrophic benefit level

11 shall be increased by annual percentage increase de12 termined for the year involved under subsection

13 (b)(3)(B).

14 ‘‘ELIGIBILITY AND ENROLLMENT

15 ‘‘SEC. 1860C. (a) ELIGIBILITY.—Every individual

16 who, in or after 2003, is entitled to hospital insurance ben17 efits under part A or enrolled in the medical insurance

18 program under part B is eligible to enroll in the insurance

19 program under this part, during an enrollment period pre20 scribed in or under this section, in such manner and form

21 as may be prescribed by regulations.

22 ‘‘(b) ENROLLMENT.—

23 ‘‘(1) IN GENERAL.—Each individual who satis24 fies subsection (a) shall be enrolled (or eligible to en25 roll) in the program under this part in accordance

26 with the provisions of section 1837, as if that section
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1 applied to this part, except as otherwise explicitly

2 provided in this part.

3 ‘‘(2) SINGLE ENROLLMENT PERIOD.—Except as

4 provided in section 1837(i) (as such section applies

5 to this part), 1860E (relating to loss of coverage

6 under the medicaid program), or 1860H(e) (relating

7 to loss of employer or union coverage), or as other8 wise explicitly provided, no individual shall be enti9 tled to enroll in the program under this part at any

10 time after the initial enrollment period without pen11 alty, and in the case of all other late enrollments,

12 the Secretary shall develop a late enrollment penalty

13 for the individual that fully recovers the additional

14 actuarial risk involved in providing coverage for the

15 individual.

16 ‘‘(3) SPECIAL ENROLLMENT PERIOD IN 2003.—

17 ‘‘(A) IN GENERAL.—An individual who

18 first satisfies subsection (a) in 2003 may, at

19 any time on or before December 31, 2003—

20 ‘‘(i) enroll in the program under this

21 part; and

22 ‘‘(ii) enroll or reenroll in such pro23 gram after having previously declined or

24 terminated enrollment in such program.
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1 ‘‘(B) EFFECTIVE DATE OF COVERAGE.—

2 An individual who enrolls under the program

3 under this part pursuant to subparagraph (A)

4 shall be entitled to benefits under this part be5 ginning on the first day of the month following

6 the month in which such enrollment occurs.

7 ‘‘(c) PERIOD OF COVERAGE.—

8 ‘‘(1) IN GENERAL.—Except as otherwise pro9 vided in this part, an individual’s coverage under the

10 program under this part shall be effective for the pe11 riod provided in section 1838, as if that section ap12 plied to the program under this part.

13 ‘‘(2) PART D COVERAGE TERMINATED BY TER14 MINATION OF COVERAGE UNDER PARTS A AND B.—

15 In addition to the causes of termination specified in

16 section 1838, an individual’s coverage under this

17 part shall be terminated when the individual retains

18 coverage under neither the program under part A

19 nor the program under part B, effective on the effec20 tive date of termination of coverage under part A or

21 (if later) under part B.

22 ‘‘MONTHLY PREMIUM; INITIAL $25 PREMIUM

23 ‘‘SEC. 1860D. (a) ANNUAL ESTABLISHMENT OF

24 GUARANTEED SINGLE RATE FOR ALL PARTICIPATING

25 BENEFICIARIES.—
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1 ‘‘(1) $25 MONTHLY PREMIUM RATE IN 2003.—

2 The monthly premium rate in 2003 for prescription

3 medicine benefits under this part is $25.

4 ‘‘(2) PREMIUM RATES IN SUBSEQUENT

5 YEARS.—

6 ‘‘(A) IN GENERAL.—The Secretary shall,

7 during September of 2003 and of each suc8 ceeding year, determine and promulgate a

9 monthly premium rate for the succeeding year

10 in accordance with the provisions of this para11 graph.

12 ‘‘(B) DETERMINATION OF ANNUAL BEN13 EFIT COSTS.—The Secretary shall estimate an14 nually for the succeeding year the amount equal

15 to the total of the benefits (but not including

16 catastrophic benefits under section 1860B(c))

17 that will be payable from the Prescription Medi18 cine Insurance Account for prescription medi19 cines dispensed in such calendar year with re20 spect to enrollees in the program under this

21 part. In calculating such amount, the Secretary

22 shall include an appropriate amount for a con23 tingency margin.

24 ‘‘(C) DETERMINATION OF MONTHLY PRE25 MIUM RATES.—
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1 ‘‘(i) IN GENERAL.—The Secretary

2 shall determine the monthly premium rate

3 with respect to such enrollees for such succeeding year, which shall be 1 4 ⁄12 of the

5 share specified in clause (ii) of the amount

6 determined under subparagraph (B), di7 vided by the total number of such enroll8 ees, and rounded (if such rate is not a

9 multiple of 10 cents) to the nearest mul10 tiple of 10 cents.

11 ‘‘(ii) ENROLLEE AND EMPLOYER PER12 CENTAGE SHARES.—The share specified in

13 this clause, for purposes of clause (i), shall

14 be—

15 ‘‘(I) one-half, in the case of pre16 miums paid by an individual enrolled

17 in the program under this part; and

18 ‘‘(II) two-thirds, in the case of

19 premiums paid for such an individual

20 by a former employer (as defined in

21 section 1860H(f)(2)).

22 ‘‘(D) PUBLICATION OF ASSUMPTIONS.—

23 The Secretary shall publish, together with the

24 promulgation of the monthly premium rates for

25 the succeeding year, a statement setting forth
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1 the actuarial assumptions and bases employed

2 in arriving at the amounts and rates deter3 mined under this paragraph.

4 ‘‘(b) PAYMENT OF PREMIUMS.—

5 ‘‘(1) GENERALLY THROUGH DEDUCTION FROM

6 SOCIAL SECURITY, RAILROAD RETIREMENT BENE7 FITS, OR BENEFITS ADMINISTERED BY OPM.—

8 ‘‘(A) IN GENERAL.—In the case of an indi9 vidual who is entitled to or receiving benefits as

10 described in subsection (a), (b), or (d) of sec11 tion 1840, premiums payable under this part

12 shall be collected by deduction from such bene13 fits at the same time and in the same manner

14 as premiums payable under part B are collected

15 pursuant to section 1840.

16 ‘‘(B) TRANSFERS OF DEDUCTION TO AC17 COUNT.—The Secretary of the Treasury shall,

18 from time to time, but not less often than quar19 terly, transfer premiums collected pursuant to

20 subparagraph (A) to the Prescription Medicine

21 Insurance Account from the appropriate funds

22 and accounts described in subsections (a)(2),

23 (b)(2), and (d)(2) of section 1840, on the basis

24 of the certifications described in such sub25 sections. The amounts of such transfers shall be
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1 appropriately adjusted to the extent that prior

2 transfers were too great or too small.

3 ‘‘(2) OTHERWISE THROUGH DIRECT PAYMENTS

4 BY ENROLLEE TO SECRETARY.—

5 ‘‘(A) IN THE CASE OF INADEQUATE DE6 DUCTION.—An individual to whom paragraph

7 (1) applies (other than an individual receiving

8 benefits as described in section 1840(d)) and

9 who estimates that the amount that will be

10 available for deduction under such paragraph

11 for any premium payment period will be less

12 than the amount of the monthly premiums for

13 such period may (under regulations) pay to the

14 Secretary the estimated balance, or such great15 er portion of the monthly premium as the indi16 vidual chooses.

17 ‘‘(B) OTHER CASES.—An individual en18 rolled in the insurance program under this part

19 with respect to whom none of the preceding

20 provisions of this subsection applies (or to

21 whom section 1840(c) applies) shall pay pre22 miums to the Secretary at such times and in

23 such manner as the Secretary shall by regula24 tions prescribe.
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1 ‘‘(C) DEPOSIT OF PREMIUMS IN AC2 COUNT.—Amounts paid to the Secretary under

3 this paragraph shall be deposited in the Treas4 ury to the credit of the Prescription Medicine

5 Insurance Account in the Supplementary Med6 ical Insurance Trust Fund.

7 ‘‘(c) CERTAIN LOW-INCOME INDIVIDUALS.—For

8 rules concerning premiums for certain low-income individ9 uals, see section 1860E.

10 ‘‘PRESCRIPTION MEDICINE INSURANCE ACCOUNT

11 ‘‘SEC. 1860F. (a) ESTABLISHMENT.—There is cre12 ated within the Federal Supplemental Medical Insurance

13 Trust Fund established by section 1841 an account to be

14 known as the ‘Prescription Medicine Insurance Account’

15 (in this section referred to as the ‘Account’).

16 ‘‘(b) AMOUNTS IN ACCOUNT.—

17 ‘‘(1) IN GENERAL.—The Account shall consist

18 of—

19 ‘‘(A) such amounts as may be deposited in,

20 or appropriated to, such fund as provided in

21 this part; and

22 ‘‘(B) such gifts and bequests as may be

23 made as provided in section 201(i)(1).

24 ‘‘(2) SEPARATION OF FUNDS.—Funds provided

25 under this part to the Account shall be kept sepa-
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1 rate from all other funds within the Federal Supple2 mental Medical Insurance Trust Fund.

3 ‘‘(c) PAYMENTS FROM ACCOUNT.—

4 ‘‘(1) IN GENERAL.—The Managing Trustee

5 shall pay from time to time from the Account such

6 amounts as the Secretary certifies are necessary to

7 make the payments provided for by this part, and

8 the payments with respect to administrative ex9 penses in accordance with section 201(g).

10 ‘‘(2) TREATMENT IN RELATION TO PART B PRE11 MIUM.—Amounts payable from the Account shall not

12 be taken into account in computing actuarial rates

13 or premium amounts under section 1839.

14 ‘‘ADMINISTRATION OF BENEFITS

15 ‘‘SEC. 1860G. (a) ADMINISTRATION.—

16 ‘‘(1) USE OF PRIVATE BENEFIT ADMINISTRA17 TORS AS PROVIDED FOR UNDER PARTS A AND B.—

18 The Secretary shall provide for administration of the

19 benefits under this part through a contract with a

20 private benefit administrator designated in accord21 ance with subsection (c), for enrolled individuals re22 siding in each service area designated pursuant to

23 subsection (b) (other than such individuals enrolled

24 in a Medicare+Choice program under part C), in ac25 cordance with the provisions of this section.
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1 ‘‘(2) GUARANTEE OF PROGRAM ADMINISTRA2 TION.—In the case of a service area in which no pri3 vate benefit administrator has entered into a con4 tract with the Secretary under paragraph (1) for the

5 administration of this part, the Secretary shall seek

6 to enter into a contract with a fiscal intermediary

7 under part A (with a contract under section 1816)

8 or a carrier under part B (with a contract under

9 section 1842) to administer this part in that service

10 area in accordance with the provisions of subsection

11 (d). If the Secretary is unable to enter into such a

12 contract for that service area, the Secretary shall

13 provide for the administration of this part in that

14 service area in accordance with the provisions of

15 subsection (d) through another benefit adminis16 trator.

17 ‘‘(b) DESIGNATION OF GEOGRAPHIC SERVICE

18 AREAS.—

19 ‘‘(1) IN GENERAL.—The Secretary shall divide

20 the total geographic area served by the programs

21 under this title into an appropriate number of serv22 ice areas for purposes of administration of benefits

23 under this part.

24 ‘‘(2) CONSIDERATIONS IN DETERMINING SERV25 ICE AREAS.—In determining or adjusting the num-
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1 ber and boundaries of service areas under this sub2 section, the Secretary shall seek to ensure that—

3 ‘‘(A) there is a reasonable level of competi4 tion among entities eligible to contract to ad5 minister the benefit program under this section

6 for each area; and

7 ‘‘(B) the designation of areas is consistent

8 with the goal of securing contracts under this

9 section that use the volume purchasing power of

10 enrollees to obtain the same or similar type of

11 prescription medicine discounts as are afforded

12 favored, large purchasers.

13 ‘‘(c) DESIGNATION OF BENEFIT ADMINISTRATOR.—

14 ‘‘(1) AWARD AND DURATION OF CONTRACT.—

15 ‘‘(A) COMPETITIVE AWARD.—Each con16 tract for a service area shall be awarded com17 petitively in accordance with section 5 of title

18 41, United States Code, for a period (subject to

19 subparagraph (B)) of not less than 2 nor more

20 than 5 years.

21 ‘‘(B) REVIEW.—A contract for a service

22 area shall be subject to an evaluation after a

23 year and termination for cause.

24 ‘‘(2) ELIGIBLE BENEFIT ADMINISTRATORS.—

25 An entity shall not be eligible for consideration as a
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1 benefit administrator responsible for administering

2 the prescription medicine benefit program under this

3 part in a service area unless it meets at least the fol4 lowing criteria:

5 ‘‘(A) TYPE OF ENTITY.—The entity shall

6 be capable of administering a prescription medi7 cine benefit program, and may be a prescription

8 medicine vendor, wholesale and retail pharmacy

9 delivery system, health care provider or insurer,

10 any other type of entity as the Secretary may

11 specify, or a consortium of such entities.

12 ‘‘(B) PERFORMANCE CAPABILITY.—The

13 entity shall have sufficient expertise, personnel,

14 and resources to perform effectively the benefit

15 administration functions for such area.

16 ‘‘(C) FINANCIAL INTEGRITY.—The entity

17 and its officers, directors, agents, and man18 aging employees shall have a satisfactory record

19 of professional competence and professional and

20 financial integrity, and the entity shall have

21 adequate financial resources to perform services

22 under the contract without risk of insolvency.

23 ‘‘(3) PROPOSAL REQUIREMENTS.—

24 ‘‘(A) IN GENERAL.—An entity’s proposal

25 for award or renewal of a contract under this
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•HR 4770 IH

1 section shall include such material and informa2 tion as the Secretary may require.

3 ‘‘(B) SPECIFIC INFORMATION.—A proposal

4 described in subparagraph (A) shall—

5 ‘‘(i) include a detailed description of—

6 ‘‘(I) the schedule of negotiated

7 prices that will be charged to enroll8 ees;

9 ‘‘(II) how the entity will deter

10 medical errors that are related to pre11 scription medicines; and

12 ‘‘(III) proposed contracts with

13 local pharmacy providers designed to

14 ensure access, including compensation

15 for local pharmacists’ services;

16 ‘‘(ii) be accompanied by such informa17 tion as the Secretary may require on the

18 entity’s past performance; and

19 ‘‘(iii) disclose ownership and shared

20 financial interests with other entities in21 volved in the delivery of the benefit as pro22 posed.

23 ‘‘(4) CRITERIA FOR COMPETITIVE SELEC24 TION.—In awarding a contract competitively, the

25 Secretary shall consider the comparative merits of
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•HR 4770 IH

1 each of the applications by eligible entities, as deter2 mined on the basis of the entities’ past performance

3 and other relevant factors, with respect to the fol4 lowing:

5 ‘‘(A) the estimated total cost of the con6 tract, taking into consideration the entity’s pro7 posed fees and price and cost estimates, as eval8 uated and adjusted by the Secretary in accord9 ance with the provisions of the Federal Acquisi10 tion Regulation concerning contracting by nego11 tiation;

12 ‘‘(B) prior experience in administering a

13 type of health insurance program;

14 ‘‘(C) effectiveness in containing costs

15 through obtaining discounts from manufactur16 ers, pricing incentives, utilization management,

17 and drug utilization review;

18 ‘‘(D) the quality and efficiency of benefit

19 management services with respect to such mat20 ters as claims processing and benefits coordina21 tion; record-keeping and reporting; maintenance

22 of medical records confidentiality; and drug uti23 lization review, patient information, customer

24 satisfaction, and other activities supporting

25 quality of care; and
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•HR 4770 IH

1 ‘‘(E) such other factors as the Secretary

2 deems necessary to evaluate the merits of each

3 application.

4 ‘‘(5) FLEXIBILITY IN SECURING BEST BENEFIT

5 ADMINISTRATOR.—In awarding contracts under this

6 subsection, the Secretary may waive conflict of inter7 est rules generally applicable to Federal acquisitions

8 (subject to such safeguards as the Secretary may

9 find necessary to impose) in circumstances where the

10 Secretary finds that such waiver—

11 ‘‘(A) is not inconsistent with the purposes

12 of the programs under this title and the best in13 terests of enrolled individuals; and

14 ‘‘(B) will permit a sufficient level of com15 petition for such contracts, promote efficiency

16 of benefits administration, or otherwise serve

17 the objectives of the program under this part.

18 If the Secretary waives such rules, the Secretary

19 shall establish a special monitoring program to en20 sure that beneficiaries served by the benefit adminis21 trator have access to all necessary pharmaceuticals

22 as prescribed.

23 ‘‘(6) MAXIMIZING COMPETITION AND SAV24 INGS.—In awarding contracts under this section, the

25 Secretary shall give consideration to the need to
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•HR 4770 IH

1 maintain sufficient numbers of entities eligible and

2 willing to administer benefits under this part to en3 sure vigorous competition for such contracts, while

4 also giving consideration to the need for a benefit

5 administrator to have sufficient purchasing power to

6 obtain appropriate cost savings.

7 ‘‘(d) FUNCTIONS OF BENEFIT ADMINISTRATOR.—A

8 benefit administrator for a service area shall (or in the

9 case of the function described in paragraph (9), may) per10 form the following functions:

11 ‘‘(1) PARTICIPATION AGREEMENTS, PRICES,

12 AND FEES.—

13 ‘‘(A) PRIVATELY NEGOTIATED PRICES.—

14 Each benefit administrator shall establish,

15 through negotiations with medicine manufactur16 ers and wholesalers and pharmacies, a schedule

17 of prices for covered prescription medicines.

18 ‘‘(B) AGREEMENTS WITH ANY WILLING

19 PHARMACY.—Each benefit administrator shall

20 enter into participation agreements under sub21 section (e) with any willing pharmacy, that in22 clude terms that—

23 ‘‘(i) secure the participation of suffi24 cient numbers of pharmacies to ensure
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•HR 4770 IH

1 convenient access (including adequate

2 emergency access);

3 ‘‘(ii) permit the participation of any

4 willing pharmacy in the service area that

5 meets the participation requirements de6 scribed in subsection (e); and

7 ‘‘(iii) allow for reasonable dispensing

8 and consultation fees for pharmacies.

9 ‘‘(C) LISTS OF PRICES AND PARTICIPATING

10 PHARMACIES.—Each benefit administrator shall

11 ensure that the negotiated prices established

12 under subparagraph (A) and the list of phar13 macies with agreements under subsection (e)

14 are regularly updated and readily available in

15 the service area to health care professionals au16 thorized to prescribe medicines, participating

17 pharmacies, and enrolled individuals.

18 ‘‘(2) TRACKING OF COVERED ENROLLED INDI19 VIDUALS.—In coordination with the Secretary, each

20 benefit administrator shall maintain accurate, up21 dated records of all enrolled individuals residing in

22 the service area (other than individuals enrolled in

23 a plan under part C).

24 ‘‘(3) PAYMENT AND COORDINATION OF BENE25 FITS.—
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•HR 4770 IH

1 ‘‘(A) PAYMENT.—Each benefit adminis2 trator shall—

3 ‘‘(i) administer claims for payment of

4 benefits under this part and encourage, to

5 the maximum extent possible, use of elec6 tronic means for the submissions of claims;

7 ‘‘(ii) determine amounts of benefit

8 payments to be made; and

9 ‘‘(iii) receive, disburse, and account

10 for funds used in making such payments,

11 including through the activities specified in

12 the provisions of this paragraph.

13 ‘‘(B) COORDINATION.—Each benefit ad14 ministrator shall coordinate with the Secretary,

15 other benefit administrators, pharmacies, and

16 other relevant entities as necessary to ensure

17 appropriate coordination of benefits with re18 spect to enrolled individuals, including coordina19 tion of access to and payment for covered pre20 scription medicines according to an individual’s

21 in-service area plan provisions, when such indi22 vidual is traveling outside the home service

23 area, and under such other circumstances as

24 the Secretary may specify.
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•HR 4770 IH

1 ‘‘(C) EXPLANATION OF BENEFITS.—Each

2 benefit administrator shall furnish to enrolled

3 individuals an explanation of benefits in accord4 ance with section 1806(a), and a notice of the

5 balance of benefits remaining for the current

6 year, whenever prescription medicine benefits

7 are provided under this part (except that such

8 notice need not be provided more often than

9 monthly).

10 ‘‘(4) REQUIREMENTS WITH RESPECT TO

11 FORMULARIES.—If a benefit administrator uses a

12 formulary to contain costs under this part, the ben13 efit administrator shall—

14 ‘‘(A) use a pharmacy and therapeutics

15 committee comprised of licensed practicing phy16 sicians, pharmacists, and other health care

17 practitioners to develop and manage the for18 mulary;

19 ‘‘(B) include in the formulary at least 1

20 medicine from each therapeutic class and, if

21 available, a generic equivalent thereof; and

22 ‘‘(C) disclose to current and prospective

23 enrollees and to participating providers and

24 pharmacies in the service area, the nature of

25 the formulary restrictions, including informa-
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•HR 4770 IH

1 tion regarding the medicines included in the

2 formulary and any difference in cost-sharing

3 amounts.

4 ‘‘(5) COST AND UTILIZATION MANAGEMENT;

5 QUALITY ASSURANCE.—Each benefit administrator

6 shall have in place effective cost and utilization man7 agement, drug utilization review, quality assurance

8 measures, and systems to reduce medical errors, in9 cluding at least the following, together with such ad10 ditional measures as the Secretary may specify:

11 ‘‘(A) DRUG UTILIZATION REVIEW.—A drug

12 utilization review program conforming to the

13 standards provided in section 1927(g)(2) (with

14 such modifications as the Secretary finds ap15 propriate).

16 ‘‘(B) FRAUD AND ABUSE CONTROL.—Ac17 tivities to control fraud, abuse, and waste, in18 cluding prevention of diversion of pharma19 ceuticals to the illegal market.

20 ‘‘(C) MEDICATION THERAPY MANAGE21 MENT.—

22 ‘‘(i) IN GENERAL.—A program of

23 medicine therapy management and medica24 tion administration that is designed to as25 sure that covered outpatient medicines are
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•HR 4770 IH

1 appropriately used to achieve therapeutic

2 goals and reduce the risk of adverse

3 events, including adverse drug interactions.

4 ‘‘(ii) ELEMENTS OF MEDICATION

5 THERAPY MANAGEMENT.—Such program

6 may include—

7 ‘‘(I) enhanced beneficiary under8 standing of such appropriate use

9 through beneficiary education, coun10 seling, and other appropriate means;

11 and

12 ‘‘(II) increased beneficiary adher13 ence with prescription medication

14 regimens through medication refill re15 minders, special packaging, and other

16 appropriate means.

17 ‘‘(iii) DEVELOPMENT OF PROGRAM IN

18 COOPERATION WITH LICENSED PHAR19 MACISTS.—The program shall be developed

20 in cooperation with licensed pharmacists

21 and physicians.

22 ‘‘(iv) CONSIDERATIONS IN PHARMACY

23 FEES.—The benefit administrators shall

24 take into account, in establishing fees for

25 pharmacists and others providing services
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1 under the medication therapy management

2 program, the resources and time used in

3 implementing the program.

4 ‘‘(6) EDUCATION AND INFORMATION ACTIVI5 TIES.—Each benefit administrator shall have in

6 place mechanisms for disseminating educational and

7 informational materials to enrolled individuals and

8 health care providers designed to encourage effective

9 and cost-effective use of prescription medicine bene10 fits and to ensure that enrolled individuals under11 stand their rights and obligations under the pro12 gram.

13 ‘‘(7) BENEFICIARY PROTECTIONS.—

14 ‘‘(A) CONFIDENTIALITY OF HEALTH IN15 FORMATION.—Each benefit administrator shall

16 have in effect systems to safeguard the con17 fidentiality of health care information on en18 rolled individuals, which comply with section

19 1106 and with section 552a of title 5, United

20 States Code, and meet such additional stand21 ards as the Secretary may prescribe.

22 ‘‘(B) GRIEVANCE AND APPEAL PROCE23 DURES.—Each benefit administrator shall have

24 in place such procedures as the Secretary may

25 specify for hearing and resolving grievances and
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•HR 4770 IH

1 appeals, including expedited appeals, brought

2 by enrolled individuals against the benefit ad3 ministrator or a pharmacy concerning benefits

4 under this part, which shall include procedures

5 equivalent to those specified in subsections (f)

6 and (g) of section 1852.

7 ‘‘(8) RECORDS, REPORTS, AND AUDITS OF BEN8 EFIT ADMINISTRATORS.—

9 ‘‘(A) RECORDS AND AUDITS.—Each ben10 efit administrator shall maintain adequate

11 records, and afford the Secretary access to such

12 records (including for audit purposes).

13 ‘‘(B) REPORTS.—Each benefit adminis14 trator shall make such reports and submissions

15 of financial and utilization data as the Sec16 retary may require taking into account stand17 ard commercial practices.

18 ‘‘(9) PROPOSAL FOR ALTERNATIVE COINSUR19 ANCE AMOUNT.—

20 ‘‘(A) SUBMISSION.—Each benefit adminis21 trator may submit a proposal for decreased

22 beneficiary cost-sharing for generic prescription

23 medicines, prescription medicines on the benefit

24 administrator’s formulary, or prescription medi25 cines obtained through mail order pharmacies.
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•HR 4770 IH

1 ‘‘(B) CONTENTS.—The proposal submitted

2 under subparagraph (A) shall contain evidence

3 that such decreased cost-sharing would not re4 sult in an increase in aggregate costs to the Ac5 count, including an analysis of differences in

6 projected drug utilization patterns by bene7 ficiaries whose cost-sharing would be reduced

8 under the proposal and those making the cost9 sharing payments that would otherwise apply.

10 ‘‘(10) OTHER REQUIREMENTS.—Each benefit

11 administrator shall meet such other requirements as

12 the Secretary may specify.

13 ‘‘(e) PHARMACY PARTICIPATION AGREEMENTS.—

14 ‘‘(1) IN GENERAL.—A pharmacy that meets the

15 requirements of this subsection shall be eligible to

16 enter an agreement with a benefit administrator to

17 furnish covered prescription medicines and phar18 macists’ services to enrolled individuals residing in

19 the service area.

20 ‘‘(2) TERMS OF AGREEMENT.—An agreement

21 under this subsection shall include the following

22 terms and requirements:

23 ‘‘(A) LICENSING.—The pharmacy and

24 pharmacists shall meet (and throughout the
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•HR 4770 IH

1 contract period will continue to meet) all appli2 cable State and local licensing requirements.

3 ‘‘(B) LIMITATION ON CHARGES.—Phar4 macies participating under this part shall not

5 charge an enrolled individual more than the ne6 gotiated price for an individual medicine as es7 tablished under subsection (d)(1), regardless of

8 whether such individual has attained the basic

9 benefit limitation under section 1860B(b)(3),

10 and shall not charge an enrolled individual

11 more than the individual’s share of the nego12 tiated price as determined under the provisions

13 of this part.

14 ‘‘(C) PERFORMANCE STANDARDS.—The

15 pharmacy and the pharmacist shall comply with

16 performance standards relating to—

17 ‘‘(i) measures for quality assurance,

18 reduction of medical errors, and participa19 tion in the drug utilization review program

20 described in subsection (d)(3)(A);

21 ‘‘(ii) systems to ensure compliance

22 with the confidentiality standards applica23 ble under subsection (d)(5)(A); and
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•HR 4770 IH

1 ‘‘(iii) other requirements as the Sec2 retary may impose to ensure integrity, effi3 ciency, and the quality of the program.

4 ‘‘(D) DISCLOSURE OF PRICE OF GENERIC

5 MEDICINE.—A pharmacy participating under

6 this part that dispenses a prescription medicine

7 to a medicare beneficiary enrolled under this

8 part shall inform the beneficiary at the time of

9 purchase of the drug of any differential between

10 the price of the prescribed drug to the enrollee

11 and the price of the lowest cost generic drug

12 that is therapeutically and pharmaceutically

13 equivalent and bioequivalent.

14 ‘‘(f) FLEXIBILITY IN ASSIGNING WORKLOAD AMONG

15 BENEFIT ADMINISTRATORS.—During the period after the

16 Secretary has given notice of intent to terminate a con17 tract with a benefit administrator, the Secretary may

18 transfer responsibilities of the benefit administrator under

19 such contract to another benefit administrator.

20 ‘‘(g) GUARANTEED ACCESS TO MEDICINES IN RURAL

21 AND HARD-TO-SERVE AREAS.—

22 ‘‘(1) IN GENERAL.—The Secretary shall ensure

23 that all beneficiaries have guaranteed access to the

24 full range of pharmaceuticals under this part, and

25 shall give special attention to access, pharmacist
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1 counseling, and delivery in rural and hard-to-serve

2 areas, including through the use of incentives such

3 as bonus payments to retail pharmacists in rural

4 areas and extra payments to the benefit adminis5 trator for the cost of rapid delivery of pharma6 ceuticals, and any other actions necessary.

7 ‘‘(2) GAO REPORT.—Not later than 2 years

8 after the implementation of this part the Comp9 troller General of the United States shall submit to

10 Congress a report on the access of medicare bene11 ficiaries to pharmaceuticals and pharmacists’ serv12 ices in rural and hard-to-serve areas under this part

13 together with any recommendations of the Comp14 troller General regarding any additional steps the

15 Secretary may need to take to ensure the access of

16 medicare beneficiaries to pharmaceuticals and phar17 macists’ services in such areas under this part.

18 ‘‘(h) INCENTIVES FOR COST AND UTILIZATION MAN19 AGEMENT AND QUALITY IMPROVEMENT.—The Secretary

20 is authorized to include in a contract awarded under sub21 section (c) such incentives for cost and utilization manage22 ment and quality improvement as the Secretary may deem

23 appropriate, including—

24 ‘‘(1) bonus and penalty incentives to encourage

25 administrative efficiency;
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•HR 4770 IH

1 ‘‘(2) incentives under which benefit administra2 tors share in any benefit savings achieved;

3 ‘‘(3) financial incentives under which savings

4 derived from the substitution of generic medicines in

5 lieu of non-generic medicines are made available to

6 beneficiaries enrolled under this part, benefit admin7 istrators, pharmacies, and the Prescription Medicine

8 Insurance Account; and

9 ‘‘(4) any other incentive that the Secretary

10 deems appropriate and likely to be effective in man11 aging costs or utilization.

12 ‘‘INCENTIVE PROGRAM TO ENCOURAGE EMPLOYERS TO

13 CONTINUE COVERAGE

14 ‘‘SEC. 1860H. (a) PROGRAM AUTHORITY.—The Sec15 retary shall develop and implement a program under this

16 section called the ‘Employer Incentive Program’ that en17 courages employers and other sponsors of employment18 based health care coverage to provide adequate prescrip19 tion medicine benefits to retired individuals and to main20 tain such existing benefit programs, by subsidizing, in

21 part, the cost of providing coverage under qualifying

22 plans.

23 ‘‘(b) SPONSOR REQUIREMENTS.—In order to be eligi24 ble to receive an incentive payment under this section with

25 respect to coverage of an individual under a qualified re-
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1 tiree prescription medicine plan (as defined in subsection

2 (f)(3)), a sponsor shall meet the following requirements:

3 ‘‘(1) ASSURANCES.—The sponsor shall—

4 ‘‘(A) annually attest, and provide such as5 surances as the Secretary may require, that the

6 coverage offered by the sponsor is a qualified

7 retiree prescription medicine plan, and will re8 main such a plan for the duration of the spon9 sor’s participation in the program under this

10 section; and

11 ‘‘(B) guarantee that it will give notice to

12 the Secretary and covered retirees—

13 ‘‘(i) at least 120 days before termi14 nating its plan; and

15 ‘‘(ii) immediately upon determining

16 that the actuarial value of the prescription

17 medicine benefit under the plan falls below

18 the actuarial value of the insurance benefit

19 under this part.

20 ‘‘(2) OTHER REQUIREMENTS.—The sponsor

21 shall provide such information, and comply with

22 such requirements, including information require23 ments to ensure the integrity of the program, as the

24 Secretary may find necessary to administer the pro25 gram under this section.
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1 ‘‘(c) INCENTIVE PAYMENT.—

2 ‘‘(1) IN GENERAL.—A sponsor that meets the

3 requirements of subsection (b) with respect to a

4 quarter in a calendar year shall have payment made

5 by the Secretary on a quarterly basis to the appro6 priate employment-based health plan of an incentive

7 payment, in the amount determined as described in

8 paragraph (2), for each retired individual (or

9 spouse) who—

10 ‘‘(A) was covered under the sponsor’s

11 qualified retiree prescription medicine plan dur12 ing such quarter; and

13 ‘‘(B) was eligible for but was not enrolled

14 in the insurance program under this part.

15 ‘‘(2) AMOUNT OF INCENTIVE.—The payment

16 under this section with respect to each individual de17 scribed in paragraph (1) for a month shall be equal

to 2 18 ⁄3 of the monthly premium amount payable from

19 the Prescription Medicine Insurance Account for an

20 enrolled individual, as set for the calendar year pur21 suant to section 1860D(a)(2).

22 ‘‘(3) PAYMENT DATE.—The incentive under

23 this section with respect to a calendar quarter shall

24 be payable as of the end of the next succeeding cal25 endar quarter.
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1 ‘‘(d) CIVIL MONEY PENALTIES.—A sponsor, health

2 plan, or other entity that the Secretary determines has,

3 directly or through its agent, provided information in con4 nection with a request for an incentive payment under this

5 section that the entity knew or should have known to be

6 false shall be subject to a civil monetary penalty in an

7 amount up to 3 times the total incentive amounts under

8 subsection (c) that were paid (or would have been payable)

9 on the basis of such information.

10 ‘‘(e) PART D ENROLLMENT FOR INDIVIDUALS

11 WHOSE EMPLOYMENT-BASED RETIREE HEALTH COV12 ERAGE ENDS.—

13 ‘‘(1) ELIGIBLE INDIVIDUALS.—An individual

14 shall be given the opportunity to enroll in the pro15 gram under this part during the period specified in

16 paragraph (2) if—

17 ‘‘(A) the individual declined enrollment in

18 the program under this part at the time the in19 dividual first satisfied section 1860C(a);

20 ‘‘(B) at that time, the individual was cov21 ered under a qualified retiree prescription medi22 cine plan for which an incentive payment was

23 paid under this section; and

24 ‘‘(C)(i) the sponsor subsequently ceased to

25 offer such plan; or
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1 ‘‘(ii) the value of prescription medicine cov2 erage under such plan became less than the

3 value of the coverage under the program under

4 this part.

5 ‘‘(2) SPECIAL ENROLLMENT PERIOD.—An indi6 vidual described in paragraph (1) shall be eligible to

7 enroll in the program under this part during the 6-

8 month period beginning on the first day of the

9 month in which—

10 ‘‘(A) the individual receives a notice that

11 coverage under such plan has terminated (in

12 the circumstance described in paragraph

13 (1)(C)(i)) or notice that a claim has been de14 nied because of such a termination; or

15 ‘‘(B) the individual received notice of the

16 change in benefits (in the circumstance de17 scribed in paragraph (1)(C)(ii)).

18 ‘‘(f) DEFINITIONS.—In this section:

19 ‘‘(1) EMPLOYMENT-BASED RETIREE HEALTH

20 COVERAGE.—The term ‘employment-based retiree

21 health coverage’ means health insurance or other

22 coverage of health care costs for retired individuals

23 (or for such individuals and their spouses and de24 pendents) based on their status as former employees

25 or labor union members.
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1 ‘‘(2) EMPLOYER.—The term ‘employer’ has the

2 meaning given to such term by section 3(5) of the

3 Employee Retirement Income Security Act of 1974

4 (except that such term shall include only employers

5 of 2 or more employees).

6 ‘‘(3) QUALIFIED RETIREE PRESCRIPTION MEDI7 CINE PLAN.—The term ‘qualified retiree prescription

8 medicine plan’ means health insurance coverage in9 cluded in employment-based retiree health coverage

10 that—

11 ‘‘(A) provides coverage of the cost of pre12 scription medicines whose actuarial value to

13 each retired beneficiary equals or exceeds the

14 actuarial value of the benefits provided to an in15 dividual enrolled in the program under this

16 part; and

17 ‘‘(B) does not deny, limit, or condition the

18 coverage or provision of prescription medicine

19 benefits for retired individuals based on age or

20 any health status-related factor described in

21 section 2702(a)(1) of the Public Health Service

22 Act.

23 ‘‘(4) SPONSOR.—The term ‘sponsor’ has the

24 meaning given the term ‘plan sponsor’ by section
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1 3(16)(B) of the Employee Retirement Income Secu2 rity Act of 1974.

3 ‘‘APPROPRIATIONS TO COVER GOVERNMENT

4 CONTRIBUTIONS

5 ‘‘SEC. 1860I. (a) IN GENERAL.—There are author6 ized to be appropriated from time to time, out of any mon7 eys in the Treasury not otherwise appropriated, to the

8 Prescription Medicine Insurance Account, a Government

9 contribution equal to—

10 ‘‘(1) the aggregate premiums payable for a

11 month pursuant to section 1860D(a)(2) by individ12 uals enrolled in the program under this part; plus

13 ‘‘(2) one-half the aggregate premiums payable

14 for a month pursuant to such section for such indi15 viduals by former employers; plus

16 ‘‘(3) the benefits payable by reason of the appli17 cation of section 1860B(c) (relating to catastrophic

18 benefits).

19 ‘‘(b) APPROPRIATIONS TO COVER INCENTIVES FOR

20 EMPLOYMENT-BASED RETIREE MEDICINE COVERAGE.—

21 There are authorized to be appropriated to the Prescrip22 tion Medicine Insurance Account from time to time, out

23 of any moneys in the Treasury not otherwise appropriated

24 such sums as may be necessary for payment of incentive

25 payments under section 1860H(c).
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1 ‘‘DEFINITIONS

2 ‘‘SEC. 1860J. As used in this part—

3 ‘‘(1) the term ‘prescription medicine’ means—

4 ‘‘(A) a drug that may be dispensed only

5 upon a prescription, and that is described in

6 subparagraph (A)(i), (A)(ii), or (B) of section

7 1927(k)(2); and

8 ‘‘(B) insulin certified under section 506 of

9 the Federal Food, Drug, and Cosmetic Act, and

10 needles, syringes, and disposable pumps for the

11 administration of such insulin; and

12 ‘‘(2) the term ‘benefit administrator’ means an

13 entity which is providing for the administration of

14 benefits under this part pursuant to 1860G.’’.

15 (b) CONFORMING AMENDMENTS.—

16 (1) AMENDMENTS TO FEDERAL SUPPLE17 MENTARY HEALTH INSURANCE TRUST FUND.—Sec18 tion 1841 of the Social Security Act (42 U.S.C.

19 1395t) is amended—

20 (A) in the last sentence of subsection (a)—

21 (i) by striking ‘‘and’’ after ‘‘section

22 201(i)(1)’’; and

23 (ii) by inserting before the period the

24 following: ‘‘, and such amounts as may be

25 deposited in, or appropriated to, the Pre-
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1 scription Medicine Insurance Account es2 tablished by section 1860F’’;

3 (B) in subsection (g), by inserting after

4 ‘‘by this part,’’ the following: ‘‘the payments

5 provided for under part D (in which case the

6 payments shall come from the Prescription

7 Medicine Insurance Account in the Supple8 mentary Medical Insurance Trust Fund),’’;

9 (C) in the first sentence of subsection (h),

10 by inserting before the period the following:

11 ‘‘and section 1860D(b)(4) (in which case the

12 payments shall come from the Prescription

13 Medicine Insurance Account in the Supple14 mentary Medical Insurance Trust Fund)’’; and

15 (D) in the first sentence of subsection

16 (i)—

17 (i) by striking ‘‘and’’ after ‘‘section

18 1840(b)(1)’’; and

19 (ii) by inserting before the period the

20 following: ‘‘, section 1860D(b)(2) (in which

21 case the payments shall come from the

22 Prescription Medicine Insurance Account

23 in the Supplementary Medical Insurance

24 Trust Fund)’’.
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1 (2) PRESCRIPTION MEDICINE OPTION UNDER

2 MEDICARE+CHOICE PLANS.—

3 (A) ELIGIBILITY, ELECTION, AND ENROLL4 MENT.—Section 1851 of the Social Security Act

5 (42 U.S.C. 1395w–21) is amended—

6 (i) in subsection (a)(1)(A), by striking

7 ‘‘parts A and B’’ inserting ‘‘parts A, B,

8 and D’’; and

9 (ii) in subsection (i)(1), by striking

10 ‘‘parts A and B’’ and inserting ‘‘parts A,

11 B, and D’’.

12 (B) VOLUNTARY BENEFICIARY ENROLL13 MENT FOR MEDICINE COVERAGE.—Section

14 1852(a)(1)(A) of such Act (42 U.S.C. 1395w–

15 22(a)(1)(A)) is amended by inserting ‘‘(and

16 under part D to individuals also enrolled under

17 that part)’’ after ‘‘parts A and B’’.

18 (C) ACCESS TO SERVICES.—Section

19 1852(d)(1) of such Act (42 U.S.C. 1395w–

20 22(d)(1)) is amended—

21 (i) in subparagraph (D), by striking

22 ‘‘and’’ at the end;

23 (ii) in subparagraph (E), by striking

24 the period at the end and inserting ‘‘;

25 and’’; and
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1 (iii) by adding at the end the fol2 lowing new subparagraph:

3 ‘‘(F) the plan for prescription medicine

4 benefits under part D guarantees coverage of

5 any specifically named covered prescription

6 medicine for an enrollee, when prescribed by a

7 physician in accordance with the provisions of

8 such part, regardless of whether such medicine

9 would otherwise be covered under an applicable

10 formulary or discount arrangement.’’.

11 (D) PAYMENTS TO ORGANIZATIONS.—Sec12 tion 1853(a)(1)(A) of such Act (42 U.S.C.

13 1395w–23(a)(1)(A)) is amended—

14 (i) by inserting ‘‘determined sepa15 rately for benefits under parts A and B

16 and under part D (for individuals enrolled

17 under that part)’’ after ‘‘as calculated

18 under subsection (c)’’;

19 (ii) by striking ‘‘that area, adjusted

20 for such risk factors’’ and inserting ‘‘that

21 area. In the case of payment for benefits

22 under parts A and B, such payment shall

23 be adjusted for such risk factors as’’; and

24 (iii) by inserting before the last sen25 tence the following: ‘‘In the case of the
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•HR 4770 IH

1 payments for benefits under part D, such

2 payment shall initially be adjusted for the

3 risk factors of each enrollee as the Sec4 retary determines to be feasible and appro5 priate. By 2006, the adjustments would be

6 for the same risk factors applicable for

7 benefits under parts A and B.’’.

8 (E) CALCULATION OF ANNUAL MEDICARE

9 +CHOICE CAPITATION RATES.—Section 1853(c)

10 of such Act (42 U.S.C. 1395w–23(c)) is

11 amended—

12 (i) in paragraph (1), in the matter

13 preceding subparagraph (A), by inserting

14 ‘‘for benefits under parts A and B’’ after

15 ‘‘capitation rate’’;

16 (ii) in paragraph (6)(A), by striking

17 ‘‘rate of growth in expenditures under this

18 title’’ and inserting ‘‘rate of growth in ex19 penditures for benefits available under

20 parts A and B’’; and

21 (iii) by adding at the end the fol22 lowing new paragraph:

23 ‘‘(8) PAYMENT FOR PRESCRIPTION MEDI24 CINES.—The Secretary shall determine a capitation

25 rate for prescription medicines—
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1 ‘‘(A) dispensed in 2003, which is based on

2 the projected national per capita costs for pre3 scription medicine benefits under part D and

4 associated claims processing costs for bene5 ficiaries under the original medicare fee-for6 service program; and

7 ‘‘(B) dispensed in each subsequent year,

8 which shall be equal to the rate for the previous

9 year updated by the Secretary’s estimate of the

10 projected per capita rate of growth in expendi11 tures under this title for prescription medicines

12 for an individual enrolled under part D.’’.

13 (F) LIMITATION ON ENROLLEE LIABIL14 ITY.—Section 1854(e) of such Act (42 U.S.C.

15 1395w–24(e)) is amended by adding at the end

16 the following new paragraph:

17 ‘‘(5) SPECIAL RULE FOR PROVISION OF PART D

18 BENEFITS.—In no event may a Medicare+Choice or19 ganization include as part of a plan for prescription

20 medicine benefits under part D the following re21 quirements:

22 ‘‘(A) NO DEDUCTIBLE; NO COINSURANCE

23 GREATER THAN 50 PERCENT.—A requirement

24 that an enrollee pay a deductible, or a coinsur25 ance percentage that exceeds 50 percent.
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1 ‘‘(B) MANDATORY INCLUSION OF CATA2 STROPHIC BENEFIT.—A requirement that the

3 catastrophic benefit level under the plan be

4 greater than such level established under sec5 tion 1860B(c).’’.

6 (G) REQUIREMENT FOR ADDITIONAL BEN7 EFITS.—Section 1854(f)(1) of such Act (42

8 U.S.C. 1395w–24(f)(1)) is amended by adding

9 at the end the following new sentence: ‘‘Such

10 determination shall be made separately for ben11 efits under parts A and B and for prescription

12 medicine benefits under part D.’’.

13 (H) PROTECTIONS AGAINST FRAUD AND

14 BENEFICIARY PROTECTIONS.—Section 1857(d)

15 of such Act (42 U.S.C. 1395w–27(d)) is amend16 ed by adding at the end the following new para17 graph:

18 ‘‘(6) AVAILABILITY OF NEGOTIATED PRICES.—

19 Each contract under this section shall provide that

20 enrollees who exhaust prescription medicine benefits

21 under the plan will continue to have access to pre22 scription medicines at negotiated prices equivalent to

23 the total combined cost of such medicines to the

24 plan and the enrollee prior to such exhaustion of

25 benefits.’’.
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1 (3) EXCLUSIONS FROM COVERAGE.—

2 (A) APPLICATION TO PART D.—Section

3 1862(a) of the Social Security Act (42 U.S.C.

4 1395y(a)) is amended in the matter preceding

5 paragraph (1) by striking ‘‘part A or part B’’

6 and inserting ‘‘part A, B, or D’’.

7 (B) PRESCRIPTION MEDICINES NOT EX8 CLUDED FROM COVERAGE IF APPROPRIATELY

9 PRESCRIBED.—Section 1862(a)(1) of such Act

10 (42 U.S.C. 1395y(a)(1)) is amended—

11 (i) in subparagraph (H), by striking

12 ‘‘and’’ at the end;

13 (ii) in subparagraph (I), by striking

14 the semicolon at the end and inserting ‘‘,

15 and’’; and

16 (iii) by adding at the end the fol17 lowing new subparagraph:

18 ‘‘(J) in the case of prescription medicines

19 covered under part D, which are not prescribed

20 in accordance with such part;’’.

21 SEC. 102. MEDICAID BUY-IN OF MEDICARE PRESCRIPTION

22 MEDICINE COVERAGE FOR CERTAIN LOW-IN23 COME INDIVIDUALS.

24 (a) STATE OPTION TO BUY-IN DUALLY ELIGIBLE

25 INDIVIDUALS.—
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1 (1) COVERAGE OF PREMIUMS AS MEDICAL AS2 SISTANCE.—Section 1905(a) of the Social Security

3 Act (42 U.S.C. 1396d) is amended in the second

4 sentence of the flush matter at the end by striking

5 ‘‘premiums under part B’’ the first place it appears

6 and inserting ‘‘premiums under parts B and D’’.

7 (2) STATE COMMITMENT TO CONTINUE PAR8 TICIPATION IN PART D AFTER BENEFIT LIMIT EX9 CEEDED.—Section 1902(a) of such Act (42 U.S.C.

10 1396a) is amended—

11 (A) by striking ‘‘and’’ at the end of para12 graph (64);

13 (B) by striking the period at the end of

14 paragraph (65)(B) and inserting ‘‘; and’’; and

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

16 paragraph:

17 ‘‘(66) provide that in the case of any individual

18 whose eligibility for medical assistance is not limited

19 to medicare or medicare medicine cost-sharing and

20 for whom the State elects to pay premiums under

21 part D of title XVIII pursuant to section 1860E, the

22 State will purchase all prescription medicines for

23 such individual in accordance with the provisions of

24 such part D, without regard to whether the basic
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1 benefit limitation for such individual under section

2 1860B(b)(3) has been reached.’’.

3 (b) GOVERNMENT PAYMENT OF MEDICARE MEDI4 CINE COST-SHARING REQUIRED FOR QUALIFIED MEDI5 CARE BENEFICIARIES.—Section 1905(p)(3) of the Social

6 Security Act (42 U.S.C. 1396d(p)(3)) is amended—

7 (1) in subparagraph (A)—

8 (A) in clause (i), by striking ‘‘and’’ at the

9 end;

10 (B) in clause (ii), by inserting ‘‘and’’ at

11 the end; and

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

13 clause:

14 ‘‘(iii) premiums under section

15 1860D.’’; and

16 (2) in subparagraph (D)—

17 (A) by inserting ‘‘(i)’’ after ‘‘(D)’’; and

18 (B) by adding at the end the following:

19 ‘‘(ii) PART D COST-SHARING.—The dif20 ference between the amount that is paid under

21 section 1860B and the amount that would be

22 paid under such section if any reference to ‘50

23 percent’ therein were deemed a reference to

24 ‘100 percent’ (or, if the Secretary approves a
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1 higher percentage under such section, if such

2 percentage were deemed to be 100 percent).’’.

3 (c) GOVERNMENT PAYMENT OF MEDICARE MEDI4 CINE COST-SHARING REQUIRED FOR MEDICARE BENE5 FICIARIES WITH INCOMES BETWEEN 100 AND 150 PER6 CENT OF POVERTY LINE.—

7 (1) STATE PLAN REQUIREMENT.—Section

8 1902(a)(10)(E) of the Social Security Act (42

9 U.S.C. 1396a(a)(10)(E)) is amended—

10 (A) in clause (iii), by striking ‘‘and’’ at the

11 end; and

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

13 clause:

14 ‘‘(v) for making medical assistance avail15 able for medicare medicine cost-sharing (as de16 fined in section 1905(x)(2)) for qualified medi17 care medicine beneficiaries described in section

18 1905(x)(1); and’’.

19 (2) 100 PERCENT FEDERAL MATCHING OF

20 STATE MEDICAL ASSISTANCE COSTS FOR MEDICARE

21 MEDICINE COST-SHARING.—Section 1903(a) of the

22 Social Security Act (42 U.S.C. 1396b(a)) is

23 amended—

24 (A) by redesignating paragraph (7) as

25 paragraph (8); and
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1 (B) by inserting after paragraph (6) the

2 following new paragraph:

3 ‘‘(7) except in the case of amounts expended for

4 an individual whose eligibility for medical assistance

5 is not limited to medicare or medicare medicine cost6 sharing, an amount equal to 100 percent of amounts

7 as expended as medicare medicine cost-sharing for

8 qualified medicare medicine beneficiaries (as defined

9 in section 1905(x)); plus’’.

10 (3) ADDITIONAL FUNDS FOR MEDICARE MEDI11 CINE COST-SHARING IN TERRITORIES.—Section

12 1108 of the Social Security Act (42 U.S.C. 1308) is

13 amended—

14 (A) in subsection (f), by striking ‘‘sub15 section (g),’’ and inserting ‘‘subsections (g) and

16 (h)’’; and

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

18 subsection:

19 ‘‘(h) ADDITIONAL MEDICAID PAYMENTS TO TERRI20 TORIES FOR MEDICARE MEDICINE COST-SHARING.—

21 ‘‘(1) IN GENERAL.—In the case of a territory

22 that develops and implements a plan described in

23 paragraph (2) (for providing medical assistance with

24 respect to the provision of prescription drugs to

25 medicare beneficiaries), the amount otherwise deter-
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1 mined under subsection (f) (as increased under sub2 section (g)) for the State shall be increased by the

3 amount specified in paragraph (3).

4 ‘‘(2) PLAN.—The plan described in this para5 graph is a plan that—

6 ‘‘(A) provides medical assistance with re7 spect to the provision of some or all medicare

8 medicine cost sharing (as defined in section

9 1905(x)(2)) to low-income medicare bene10 ficiaries; and

11 ‘‘(B) assures that additional amounts re12 ceived by the State that are attributable to the

13 operation of this subsection are used only for

14 such assistance.

15 ‘‘(3) INCREASED AMOUNT.—

16 ‘‘(A) IN GENERAL.—The amount specified

17 in this paragraph for a State for a year is equal

18 to the product of—

19 ‘‘(i) the aggregate amount specified in

20 subparagraph (B); and

21 ‘‘(ii) the amount specified in sub22 section (g)(1) for that State, divided by the

23 sum of the amounts specified in such sec24 tion for all such States.
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1 ‘‘(B) AGGREGATE AMOUNT.—The aggre2 gate amount specified in this subparagraph

3 for—

4 ‘‘(i) 2003, is equal to $25,000,000; or

5 ‘‘(ii) a subsequent year, is equal to the

6 aggregate amount specified in this sub7 paragraph for the previous year increased

8 by annual percentage increase specified in

9 section 1860B(b)(3)(B) for the year in10 volved.’’.

11 (4) DEFINITIONS OF ELIGIBLE BENEFICIARIES

12 AND COVERAGE.—Section 1905 of the Social Secu13 rity Act (42 U.S.C. 1396d) is amended by adding

14 at the end the following new subsection:

15 ‘‘(x)(1) The term ‘qualified medicare medicine bene16 ficiary’ means an individual—

17 ‘‘(A) who is enrolled or enrolling under part D

18 of title XVIII;

19 ‘‘(B) whose income (as determined under sec20 tion 1612 for purposes of the supplemental security

21 income program, except as provided in subsection

22 (p)(2)(D)) is above 100 percent but below 150 per23 cent of the official poverty line (as referred to in

24 subsection (p)(2)) applicable to a family of the size

25 involved; and
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1 ‘‘(C) whose resources (as determined under sec2 tion 1613 for purposes of the supplemental security

3 income program) do not exceed twice the maximum

4 amount of resources that an individual may have

5 and obtain benefits under that program.

6 ‘‘(2) The term ‘medicare medicine cost-sharing’

7 means the following costs incurred with respect to a quali8 fied medicare medicine beneficiary, without regard to

9 whether the costs incurred were for items and services for

10 which medical assistance is otherwise available under the

11 plan:

12 ‘‘(A) In the case of a qualified medicare medi13 cine beneficiary whose income (as determined under

14 paragraph (1)) is less than 135 percent of the offi15 cial poverty line—

16 ‘‘(i) premiums under section 1860D; and

17 ‘‘(ii) the difference between the amount

18 that is paid under section 1860B and the

19 amount that would be paid under such section

20 if any reference to ‘50 percent’ therein were

21 deemed a reference to ‘100 percent’ (or, if the

22 Secretary approves a higher percentage under

23 such section, if such percentage were deemed to

24 be 100 percent).
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1 ‘‘(B) In the case of a qualified medicare medi2 cine beneficiary whose income (as determined under

3 paragraph (1)) is at least 135 percent but less than

4 150 percent of the official poverty line, a percentage

5 of premiums under section 1860D, determined on a

6 linear sliding scale ranging from 100 percent for in7 dividuals with incomes at 135 percent of such line

8 to 0 percent for individuals with incomes at 150 per9 cent of such line.

10 ‘‘(3) In the case of any State which is providing med11 ical assistance to its residents under a waiver granted

12 under section 1115, the Secretary shall require the State

13 to meet the requirement of section 1902(a)(10)(E) in the

14 same manner as the State would be required to meet such

15 requirement if the State had in effect a plan approved

16 under this title.’’.

17 (d) MEDICAID MEDICINE PRICE REBATES UNAVAIL18 ABLE WITH RESPECT TO MEDICINES PURCHASED

19 THROUGH MEDICARE BUY-IN.—Section 1927 of the So20 cial Security Act (42 U.S.C. 1396r–8) is amended by add21 ing at the end the following new subsection:

22 ‘‘(l) MEDICINES PURCHASED THROUGH MEDICARE

23 BUY-IN.—The provisions of this section shall not apply

24 to prescription medicines purchased under part D of title

25 XVIII pursuant to an agreement with the Secretary under
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1 section 1860E (including any medicines so purchased

2 after the limit under section 1860B(b)(3) has been exceed3 ed).’’.

4 (e) AMENDMENTS TO MEDICARE PART D.—Part D

5 of title XVIII of the Social Security Act (as added by sec6 tion 2) is amended by inserting after section 1860D the

7 following new section:

8 ‘‘SPECIAL ELIGIBILITY, ENROLLMENT, AND COPAYMENT

9 RULES FOR LOW-INCOME INDIVIDUALS

10 ‘‘SEC. 1860E. (a) STATE OPTIONS FOR COVERAGE:

11 CONTINUATION OF MEDICAID COVERAGE OR ENROLL12 MENT UNDER THIS PART.—

13 ‘‘(1) IN GENERAL.—The Secretary shall, at the

14 request of a State, enter into an agreement with the

15 State under which all individuals described in para16 graph (2) are enrolled in the program under this

17 part, without regard to whether any such individual

18 has previously declined the opportunity to enroll in

19 such program.

20 ‘‘(2) ELIGIBILITY GROUPS.—The individuals de21 scribed in this paragraph, for purposes of paragraph

22 (1), are individuals who satisfy section 1860C(a)

23 and who are—

24 ‘‘(A) in a coverage group or groups per25 mitted under section 1843 (as selected by the

26 State and specified in the agreement); or
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1 ‘‘(B) qualified medicare medicine bene2 ficiaries (as defined in section 1905(x)(1)).

3 ‘‘(3) COVERAGE PERIOD.—The period of cov4 erage under this part of an individual enrolled under

5 an agreement under this subsection shall be as fol6 lows:

7 ‘‘(A) INDIVIDUALS ELIGIBLE (AT STATE

8 OPTION) FOR PART B BUY-IN.—In the case of

9 an individual described in subsection (a)(2)(A),

10 the coverage period shall be the same period

11 that applies (or would apply) pursuant to sec12 tion 1843(d).

13 ‘‘(B) QUALIFIED MEDICARE MEDICINE

14 BENEFICIARIES.—In the case of an individual

15 described in subsection (a)(2)(B)—

16 ‘‘(i) the coverage period shall begin on

17 the latest of—

18 ‘‘(I) January 1, 2003;

19 ‘‘(II) the first day of the third

20 month following the month in which

21 the State agreement is entered into;

22 or

23 ‘‘(III) the first day of the first

24 month following the month in which
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1 the individual satisfies section

2 1860C(a); and

3 ‘‘(ii) the coverage period shall end on

4 the last day of the month in which the in5 dividual is determined by the State to have

6 become ineligible for medicare medicine

7 cost-sharing.

8 ‘‘(4) ENROLLMENT FOR LOW-INCOME SUBSIDY

9 THROUGH OTHER MEANS.—

10 ‘‘(A) FLEXIBILITY IN ENROLLMENT PROC11 ESS.—With respect to low-income individuals

12 residing in a State enrolling under this part on

13 or after January 1, 2003, the Secretary shall

14 provide for determinations of whether the indi15 vidual is eligible for a subsidy and the amount

16 of such individual’s income to be made under

17 arrangements with appropriate entities other

18 than State medicaid agencies.

19 ‘‘(B) USE OF CERTAIN INFORMATION.—

20 Arrangements with entities under subparagraph

21 (A) shall provide for —

22 ‘‘(i) the use of existing Federal gov23 ernment databases to identify eligibility;

24 and
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1 ‘‘(ii) the use of information obtained

2 under section 154 of the Social Security

3 Act Amendments of 1994 for newly eligible

4 medicare beneficiaries, and the application

5 of such information with respect to other

6 medicare beneficiaries.

7 ‘‘(b) SPECIAL PART D ENROLLMENT OPPORTUNITY

8 FOR INDIVIDUALS LOSING MEDICAID ELIGIBILITY.—In

9 the case of an individual who—

10 ‘‘(1) satisfies section 1860C(a); and

11 ‘‘(2) loses eligibility for benefits under the State

12 plan under title XIX after having been enrolled

13 under such plan or having been determined eligible

14 for such benefits;

15 the Secretary shall provide an opportunity for enrollment

16 under the program under this part during the period that

17 begins on the date that such individual loses such eligi18 bility and ends on the date specified by the Secretary.

19 ‘‘(c) DEFINITION.—For purposes of this section, the

20 term ‘State’ has the meaning given such term under sec21 tion 1101(a) for purposes of title XIX.’’.

22 (f) REMOVAL OF SUNSET DATE FOR COST-SHARING

23 IN MEDICARE PART B PREMIUMS FOR CERTAIN QUALI24 FYING INDIVIDUALS.—
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1 (1) IN GENERAL.—Section 1902(a)(10)(E)(iv)

2 of the Social Security Act (42 U.S.C.

3 1396a(a)(10)(E)(iv)) is amended to read as

4 follows—

5 ‘‘(iv) subject to section 1905(p)(4),

6 for making medical assistance available for

7 medicare cost-sharing described in section

8 1905(p)(3)(A)(ii) for individuals who

9 would be qualified medicare beneficiaries

10 described in section 1905(p)(1) but for the

11 fact that their income exceeds the income

12 level established by the State under section

13 1905(p)(2) and is at least 120 percent, but

14 less than 135 percent, of the official pov15 erty line (referred to in such section) for a

16 family of the size involved and who are not

17 otherwise eligible for medical assistance

18 under the State plan;’’.

19 (2) RELOCATION OF PROVISION REQUIRING 100

20 PERCENT FEDERAL MATCHING OF STATE MEDICAL

21 ASSISTANCE COSTS FOR CERTAIN QUALIFYING INDI22 VIDUALS.—Section 1903(a) of the Social Security

23 Act (42 U.S.C. 1396b(a)), as amended by subsection

24 (c)(3), is amended—
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1 (A) by redesignating paragraph (8) as

2 paragraph (9); and

3 (B) by inserting after paragraph (7) the

4 following new paragraph:

5 ‘‘(8) an amount equal to 100 percent of

6 amounts expended as medicare cost-sharing de7 scribed in section 1903(a)(10)(E)(iv) for individuals

8 described in such section; plus’’.

9 (3) REPEAL OF SECTION 1933.—Section 1933 is

10 repealed.

11 (4) EFFECTIVE DATE.—The amendments made

12 by this subsection shall take effect on January 1,

13 2003.

14 SEC. 103. OFFSET FOR CATASTROPHIC PRESCRIPTION

15 MEDICINE BENEFIT.

16 If the mid-summer 2000 budget estimate prepared by

17 the Director of the Congressional Budget Office results

18 in a higher level of projected on-budget surplus over the

19 ten fiscal year period beginning with fiscal year 2001 than

20 the projected on-budget surplus in the estimate prepared

21 by the Director in March, 2000, there shall be transferred

22 out of any moneys in the Treasury not otherwise appro23 priated in a fiscal year (beginning with fiscal year 2003)

24 to the Prescription Medicine Insurance Account (created

25 in the Federal Supplemental Medical Insurance Trust
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1 Fund established by section 1841 of the Social Security

2 Act (42 U.S.C. 1395t)) such sums as are necessary to off3 set the costs attributable to the operation of section

4 1860B(a)(2) of the Social Security Act (as added by sec5 tion 3) (relating to catastrophic benefit payment amounts)

6 in that fiscal year.

7 SEC. 104. GAO ONGOING STUDIES AND REPORTS ON PRO8 GRAM; MISCELLANEOUS REPORTS.

9 (a) ONGOING STUDY.—The Comptroller General of

10 the United States shall conduct an ongoing study and

11 analysis of the prescription medicine benefit program

12 under part D of the Medicare program under title XVIII

13 of the Social Security Act (as added by section 3 of this

14 Act), including an analysis of each of the following:

15 (1) The extent to which the administering enti16 ties have –achieved volume-based discounts similar

17 to the favored –price paid by other large purchasers.

18 (2) Whether access to the benefits under such

19 program are in fact available to all beneficiaries,

20 with special attention given to access for bene21 ficiaries living in rural and hard-to-serve areas.

22 (3) The success of such program in reducing

23 medication error and adverse medicine reactions and

24 improving quality of care, and whether it is probable

25 that the program has resulted in savings through re-
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1 duced hospitalizations and morbidity due to medica2 tion errors and adverse medicine reactions.

3 (4) Whether patient medical record confiden4 tiality is being maintained and safe-guarded.

5 (5) Such other issues as the Comptroller Gen6 eral may consider.

7 (b) REPORTS.—The Comptroller General shall issue

8 such reports on the results of the ongoing study described

9 in (a) as the Comptroller General shall deem appropriate

10 and shall notify Congress on a timely basis of significant

11 problems in the operation of the part D prescription medi12 cine program and the need for legislative adjustments and

13 improvements.

14 (c) MISCELLANEOUS STUDIES AND REPORTS.—

15 (1) STUDY ON METHODS TO ENCOURAGE ADDI16 TIONAL RESEARCH ON BREAKTHROUGH PHARMA17 CEUTICALS.—

18 (A) IN GENERAL.—The Secretary of

19 Health and Human Services shall seek the ad20 vice of the Secretary of the Treasury on pos21 sible tax and trade law changes to encourage

22 increased original research on new pharma23 ceutical breakthrough products designed to ad24 dress disease and illness.
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1 (B) REPORT.—Not later than January 1,

2 2003, the Secretary shall submit to Congress a

3 report on such study. The report shall include

4 recommended methods to encourage the phar5 maceutical industry to devote more resources to

6 research and development of new covered prod7 ucts than it devotes to overhead expenses.

8 (2) STUDY ON PHARMACEUTICAL SALES PRAC9 TICES AND IMPACT ON COSTS AND QUALITY OF

10 CARE.—

11 (A) IN GENERAL.—The Secretary of

12 Health and Human Services shall conduct a

13 study on the methods used by the pharma14 ceutical industry to advertise and sell to con15 sumers and educate and sell to providers.

16 (B) REPORT.—Not later than January 1,

17 2003, the Secretary shall submit to Congress a

18 report on such study. The report shall include

19 the estimated direct and indirect costs of the

20 sales methods used, the quality of the informa21 tion conveyed, and whether such sales efforts

22 leads (or could lead) to inappropriate pre23 scribing. Such report may include legislative

24 and regulatory recommendations to encourage
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1 more appropriate education and prescribing

2 practices.

3 (3) STUDY ON COST OF PHARMACEUTICAL RE4 SEARCH.—

5 (A) IN GENERAL.—The Secretary of

6 Health and Human Services shall conduct a

7 study on the costs of, and needs for, the phar8 maceutical research and the role that the tax9 payer provides in encouraging such research.

10 (B) REPORT.—Not later than January 1,

11 2003, the Secretary shall submit to Congress a

12 report on such study. The report shall include

13 a description of the full-range of taxpayer-as14 sisted programs impacting pharmaceutical re15 search, including tax, trade, government re16 search, and regulatory assistance. The report

17 may also include legislative and regulatory rec18 ommendations that are designed to ensure that

19 the taxpayer’s investment in pharmaceutical re20 search results in the availability of pharma21 ceuticals at reasonable prices.

22 (4) REPORT ON PHARMACEUTICAL PRICES IN

23 MAJOR FOREIGN NATIONS.—Not later than January

24 1, 2003, the Secretary of Health and Human Serv25 ices shall submit to Congress a report on the retail
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1 price of major pharmaceutical products in various

2 developed nations, compared to prices for the same

3 or similar products in the United States. The report

4 shall include a description of the principal reasons

5 for any price differences that may exist.

6 TITLE II—IMPROVEMENT IN

7 BENEFICIARY SERVICES

8 Subtitle A—Improvement of Medi9 care Coverage and Appeals

10 Process

11 SEC. 201. REVISIONS TO MEDICARE APPEALS PROCESS.

12 (a) CONDUCT OF RECONSIDERATIONS OF DETER13 MINATIONS BY INDEPENDENT CONTRACTORS.—Section

14 1869 of the Social Security Act (42 U.S.C. 1395ff) is

15 amended to read as follows:

16 ‘‘DETERMINATIONS; APPEALS

17 ‘‘SEC. 1869. (a) INITIAL DETERMINATIONS.—The

18 Secretary shall promulgate regulations and make initial

19 determinations with respect to benefits under part A or

20 part B in accordance with those regulations for the fol21 lowing:

22 ‘‘(1) The initial determination of whether an in23 dividual is entitled to benefits under such parts.

24 ‘‘(2) The initial determination of the amount of

25 benefits available to the individual under such parts.
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1 ‘‘(3) Any other initial determination with re2 spect to a claim for benefits under such parts, in3 cluding an initial determination by the Secretary

4 that payment may not be made, or may no longer

5 be made, for an item or service under such parts, an

6 initial determination made by a utilization and qual7 ity control peer review organization under section

8 1154(a)(2), and an initial determination made by an

9 entity pursuant to a contract with the Secretary to

10 administer provisions of this title or title XI.

11 ‘‘(b) APPEAL RIGHTS.—

12 ‘‘(1) IN GENERAL.—

13 ‘‘(A) RECONSIDERATION OF INITIAL DE14 TERMINATION.—Subject to subparagraph (D),

15 any individual dissatisfied with any initial de16 termination under subsection (a) shall be enti17 tled to reconsideration of the determination,

18 and, subject to subparagraphs (D) and (E), a

19 hearing thereon by the Secretary to the same

20 extent as is provided in section 205(b) and to

21 judicial review of the Secretary’s final decision

22 after such hearing as is provided in section

23 205(g).

24 ‘‘(B) REPRESENTATION BY PROVIDER OR

25 SUPPLIER.—
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1 ‘‘(i) IN GENERAL.—Sections 206(a),

2 1102, and 1871 shall not be construed as

3 authorizing the Secretary to prohibit an in4 dividual from being represented under this

5 section by a person that furnishes or sup6 plies the individual, directly or indirectly,

7 with services or items, solely on the basis

8 that the person furnishes or supplies the

9 individual with such a service or item.

10 ‘‘(ii) MANDATORY WAIVER OF RIGHT

11 TO PAYMENT FROM BENEFICIARY.—Any

12 person that furnishes services or items to

13 an individual may not represent an indi14 vidual under this section with respect to

15 the issue described in section 1879(a)(2)

16 unless the person has waived any rights for

17 payment from the beneficiary with respect

18 to the services or items involved in the ap19 peal.

20 ‘‘(iii) PROHIBITION ON PAYMENT FOR

21 REPRESENTATION.—If a person furnishes

22 services or items to an individual and rep23 resents the individual under this section,

24 the person may not impose any financial li-
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1 ability on such individual in connection

2 with such representation.

3 ‘‘(iv) REQUIREMENTS FOR REP4 RESENTATIVES OF A BENEFICIARY.—The

5 provisions of section 205(j) and section

6 206 (regarding representation of claim7 ants) shall apply to representation of an

8 individual with respect to appeals under

9 this section in the same manner as they

10 apply to representation of an individual

11 under those sections.

12 ‘‘(C) SUCCESSION OF RIGHTS IN CASES OF

13 ASSIGNMENT.—The right of an individual to an

14 appeal under this section with respect to an

15 item or service may be assigned to the provider

16 of services or supplier of the item or service

17 upon the written consent of such individual

18 using a standard form established by the Sec19 retary for such an assignment.

20 ‘‘(D) TIME LIMITS FOR APPEALS.—

21 ‘‘(i) RECONSIDERATIONS.—Reconsid22 eration under subparagraph (A) shall be

23 available only if the individual described in

24 subparagraph (A) files notice with the Sec25 retary to request reconsideration by not
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1 later than 180 days after the individual re2 ceives notice of the initial determination

3 under subsection (a) or within such addi4 tional time as the Secretary may allow.

5 ‘‘(ii) HEARINGS CONDUCTED BY THE

6 SECRETARY.—The Secretary shall establish

7 in regulations time limits for the filing of

8 a request for a hearing by the Secretary in

9 accordance with provisions in sections 205

10 and 206.

11 ‘‘(E) AMOUNTS IN CONTROVERSY.—

12 ‘‘(i) IN GENERAL.—A hearing (by the

13 Secretary) shall not be available to an indi14 vidual under this section if the amount in

15 controversy is less than $100, and judicial

16 review shall not be available to the indi17 vidual if the amount in controversy is less

18 than $1,000.

19 ‘‘(ii) AGGREGATION OF CLAIMS.—In

20 determining the amount in controversy, the

21 Secretary, under regulations, shall allow 2

22 or more appeals to be aggregated if the ap23 peals involve—

24 ‘‘(I) the delivery of similar or re25 lated services to the same individual
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1 by one or more providers of services

2 or suppliers, or

3 ‘‘(II) common issues of law and

4 fact arising from services furnished to

5 2 or more individuals by one or more

6 providers of services or suppliers.

7 ‘‘(F) EXPEDITED PROCEEDINGS.—

8 ‘‘(i) EXPEDITED DETERMINATION.—

9 In the case of an individual who—

10 ‘‘(I) has received notice by a pro11 vider of services that the provider of

12 services plans to terminate services

13 provided to an individual and a physi14 cian certifies that failure to continue

15 the provision of such services is likely

16 to place the individual’s health at sig17 nificant risk, or

18 ‘‘(II) has received notice by a

19 provider of services that the provider

20 of services plans to discharge the indi21 vidual from the provider of services,

22 the individual may request, in writing or

23 orally, an expedited determination or an

24 expedited reconsideration of an initial de25 termination made under subsection (a), as
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1 the case may be, and the Secretary shall

2 provide such expedited determination or

3 expedited reconsideration.

4 ‘‘(ii) EXPEDITED HEARING.—In a

5 hearing by the Secretary under this sec6 tion, in which the moving party alleges

7 that no material issues of fact are in dis8 pute, the Secretary shall make an expe9 dited determination as to whether any such

10 facts are in dispute and, if not, shall

11 render a decision expeditiously.

12 ‘‘(G) REOPENING AND REVISION OF DE13 TERMINATIONS.—The Secretary may reopen or

14 revise any initial determination or reconsidered

15 determination described in this subsection

16 under guidelines established by the Secretary in

17 regulations.

18 ‘‘(2) REVIEW OF COVERAGE DETERMINA19 TIONS.—

20 ‘‘(A) NATIONAL COVERAGE DETERMINA21 TIONS.—

22 ‘‘(i) IN GENERAL.—Review of any na23 tional coverage determination shall be sub24 ject to the following limitations:
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1 ‘‘(I) Such a determination shall

2 not be reviewed by any administrative

3 law judge.

4 ‘‘(II) Such a determination shall

5 not be held unlawful or set aside on

6 the ground that a requirement of sec7 tion 553 of title 5, United States

8 Code, or section 1871(b) of this title,

9 relating to publication in the Federal

10 Register or opportunity for public

11 comment, was not satisfied.

12 ‘‘(III) Upon the filing of a com13 plaint by an aggrieved party, such a

14 determination shall be reviewed by the

15 Departmental Appeals Board of the

16 Department of Health and Human

17 Services. In conducting such a review,

18 the Departmental Appeals Board shall

19 review the record and shall permit dis20 covery and the taking of evidence to

21 evaluate the reasonableness of the de22 termination. In reviewing such a de23 termination, the Departmental Ap24 peals Board shall defer only to the

25 reasonable findings of fact, reasonable
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1 interpretations of law, and reasonable

2 applications of fact to law by the Sec3 retary.

4 ‘‘(IV) A decision of the Depart5 mental Appeals Board constitutes a

6 final agency action and is subject to

7 judicial review.

8 ‘‘(ii) DEFINITION OF NATIONAL COV9 ERAGE DETERMINATION.—For purposes of

10 this section, the term ‘national coverage

11 determination’ means a determination by

12 the Secretary respecting whether or not a

13 particular item or service is covered na14 tionally under this title, including such a

15 determination under 1862(a)(1).

16 ‘‘(B) LOCAL COVERAGE DETERMINATION.—In

17 the case of a local coverage determination made by

18 a fiscal intermediary or a carrier under part A or

19 part B respecting whether a particular type or class

20 of items or services is covered under such parts, the

21 following limitations apply:

22 ‘‘(i) Upon the filing of a complaint by an

23 aggrieved party, such a determination shall be

24 reviewed by an administrative law judge of the

25 Social Security Administration. The administra-
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•HR 4770 IH

1 tive law judge shall review the record and shall

2 permit discovery and the taking of evidence to

3 evaluate the reasonableness of the determina4 tion. In reviewing such a determination, the ad5 ministrative law judge shall defer only to the

6 reasonable findings of fact, reasonable interpre7 tations of law, and reasonable applications of

8 fact to law by the Secretary.

9 ‘‘(ii) Such a determination may be re10 viewed by the Departmental Appeals Board of

11 the Department of Health and Human Services.

12 ‘‘(iii) A decision of the Departmental Ap13 peals Board constitutes a final agency action

14 and is subject to judicial review.

15 ‘‘(C) NO MATERIAL ISSUES OF FACT IN DIS16 PUTE.—In the case of review of a determination

17 under subparagraph (A)(i)(III) or (B)(i) where the

18 moving party alleges that there are no material

19 issues of fact in dispute, and alleges that the only

20 issue is the constitutionality of a provision of this

21 title, or that a regulation, determination, or ruling

22 by the Secretary is invalid, the moving party may

23 seek review by a court of competent jurisdiction.

24 ‘‘(D) PENDING NATIONAL COVERAGE DETER25 MINATIONS.—
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1 ‘‘(i) IN GENERAL.—In the event the Sec2 retary has not issued a national coverage or

3 noncoverage determination with respect to a

4 particular type or class of items or services, an

5 affected party may submit to the Secretary a

6 request to make such a determination with re7 spect to such items or services. By not later

8 than the end of the 90-day period beginning on

9 the date the Secretary receives such a request,

10 the Secretary shall take one of the following ac11 tions:

12 ‘‘(I) Issue a national coverage deter13 mination, with or without limitations.

14 ‘‘(II) Issue a national noncoverage de15 termination.

16 ‘‘(III) Issue a determination that no

17 national coverage or noncoverage deter18 mination is appropriate as of the end of

19 such 90-day period with respect to national

20 coverage of such items or services.

21 ‘‘(IV) Issue a notice that states that

22 the Secretary has not completed a review

23 of the request for a national coverage de24 termination and that includes an identi25 fication of the remaining steps in the Sec-
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•HR 4770 IH

1 retary’s review process and a deadline by

2 which the Secretary will complete the re3 view and take an action described in sub4 clause (I), (II), or (III).

5 ‘‘(ii) In the case of an action described in

6 clause (i)(IV), if the Secretary fails to take an

7 action referred to in such clause by the deadline

8 specified by the Secretary under such clause,

9 then the Secretary is deemed to have taken an

10 action described in clause (i)(III) as of the

11 deadline.

12 ‘‘(iii) When issuing a determination under

13 clause (i), the Secretary shall include an expla14 nation of the basis for the determination. An

15 action taken under clause (i) (other than sub16 clause (IV)) is deemed to be a national coverage

17 determination for purposes of review under sub18 paragraph (A).

19 ‘‘(E) ANNUAL REPORT ON NATIONAL COVERAGE

20 DETERMINATIONS.—

21 ‘‘(i) IN GENERAL.—Not later than Decem22 ber 1 of each year, beginning in 2001, the Sec23 retary shall submit to Congress a report that

24 sets forth a detailed compilation of the actual

25 time periods that were necessary to complete
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1 and fully implement national coverage deter2 minations that were made in the previous fiscal

3 year for items, services, or medical devices not

4 previously covered as a benefit under this title,

5 including, with respect to each new item, serv6 ice, or medical device, a statement of the time

7 taken by the Secretary to make the necessary

8 coverage, coding, and payment determinations,

9 including the time taken to complete each sig10 nificant step in the process of making such de11 terminations.

12 ‘‘(ii) PUBLICATION OF REPORTS ON THE

13 INTERNET.—The Secretary shall publish each

14 report submitted under clause (i) on the medi15 care Internet site of the Department of Health

16 and Human Services.

17 ‘‘(3) PUBLICATION ON THE INTERNET OF DECI18 SIONS OF HEARINGS OF THE SECRETARY.—Each de19 cision of a hearing by the Secretary shall be made

20 public, and the Secretary shall publish each decision

21 on the Medicare Internet site of the Department of

22 Health and Human Services. The Secretary shall re23 move from such decision any information that would

24 identify any individual, provider of services, or sup25 plier.
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1 ‘‘(4) LIMITATION ON REVIEW OF CERTAIN REG2 ULATIONS.—A regulation or instruction which re3 lates to a method for determining the amount of

4 payment under part B and which was initially issued

5 before January 1, 1981, shall not be subject to judi6 cial review.

7 ‘‘(5) STANDING.—An action under this section

8 seeking review of a coverage determination (with re9 spect to items and services under this title) may be

10 initiated only by one (or more) of the following ag11 grieved persons, or classes of persons:

12 ‘‘(A) Individuals entitled to benefits under

13 part A, or enrolled under part B, or both, who

14 are in need of the items or services that are the

15 subject of the coverage determination.

16 ‘‘(B) Persons, or classes of persons, who

17 make, manufacture, offer, supply, make avail18 able, or provide such items and services.

19 ‘‘(c) CONDUCT OF RECONSIDERATIONS BY INDE20 PENDENT CONTRACTORS.—

21 ‘‘(1) IN GENERAL.—The Secretary shall enter

22 into contracts with qualified independent contractors

23 to conduct reconsiderations of initial determinations

24 made under paragraphs (2) and (3) of subsection

25 (a). Contracts shall be for an initial term of three
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1 years and shall be renewable on a triennial basis

2 thereafter.

3 ‘‘(2) QUALIFIED INDEPENDENT CON4 TRACTOR.—For purposes of this subsection, the

5 term ‘qualified independent contractor’ means an en6 tity or organization that is independent of any orga7 nization under contract with the Secretary that

8 makes initial determinations under subsection (a),

9 and that meets the requirements established by the

10 Secretary consistent with paragraph (3).

11 ‘‘(3) REQUIREMENTS.—Any qualified inde12 pendent contractor entering into a contract with the

13 Secretary under this subsection shall meet the fol14 lowing requirements:

15 ‘‘(A) IN GENERAL.—The qualified inde16 pendent contractor shall perform such duties

17 and functions and assume such responsibilities

18 as may be required under regulations of the

19 Secretary promulgated to carry out the provi20 sions of this subsection, and such additional du21 ties, functions, and responsibilities as provided

22 under the contract.

23 ‘‘(B) DETERMINATIONS.—The qualified

24 independent contractor shall determine, on the

25 basis of such criteria, guidelines, and policies
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1 established by the Secretary and published

2 under subsection (d)(2)(D), whether payment

3 shall be made for items or services under part

4 A or part B and the amount of such payment.

5 Such determination shall constitute the conclu6 sive determination on those issues for purposes

7 of payment under such parts for fiscal inter8 mediaries, carriers, and other entities whose de9 terminations are subject to review by the con10 tractor; except that payment may be made if—

11 ‘‘(i) such payment is allowed by rea12 son of section 1879;

13 ‘‘(ii) in the case of inpatient hospital

14 services or extended care services, the

15 qualified independent contractor deter16 mines that additional time is required in

17 order to arrange for postdischarge care,

18 but payment may be continued under this

19 clause for not more than 2 days, and only

20 in the case in which the provider of such

21 services did not know and could not rea22 sonably have been expected to know (as de23 termined under section 1879) that pay24 ment would not otherwise be made for

25 such services under part A or part B prior
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1 to notification by the qualified independent

2 contractor under this subsection;

3 ‘‘(iii) such determination is changed

4 as the result of any hearing by the Sec5 retary or judicial review of the decision

6 under this section; or

7 ‘‘(iv) such payment is authorized

8 under section 1861(v)(1)(G).

9 ‘‘(C) DEADLINES FOR DECISIONS.—

10 ‘‘(i) DETERMINATIONS.—The quali11 fied independent contractor shall conduct

12 and conclude a determination under sub13 paragraph (B) or an appeal of an initial

14 determination, and mail the notice of the

15 decision by not later than the end of the

16 45-day period beginning on the date a re17 quest for reconsideration has been timely

18 filed.

19 ‘‘(ii) CONSEQUENCES OF FAILURE TO

20 MEET DEADLINE.—In the case of a failure

21 by the qualified independent contractor to

22 mail the notice of the decision by the end

23 of the period described in clause (i), the

24 party requesting the reconsideration or ap25 peal may request a hearing before an ad-
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1 ministrative law judge, notwithstanding

2 any requirements for a reconsidered deter3 mination for purposes of the party’s right

4 to such hearing.

5 ‘‘(iii) EXPEDITED RECONSIDER6 ATIONS.—The qualified independent con7 tractor shall perform an expedited recon8 sideration under subsection (b)(1)(F) of a

9 notice from a provider of services or sup10 plier that payment may not be made for an

11 item or service furnished by the provider of

12 services or supplier, of a decision by a pro13 vider of services to terminate services fur14 nished to an individual, or in accordance

15 with the following:

16 ‘‘(I) DEADLINE FOR DECISION.—

17 Notwithstanding section 216(j), not

18 later than 1 day after the date the

19 qualified independent contractor has

20 received a request for such reconsider21 ation and has received such medical

22 or other records needed for such re23 consideration, the qualified inde24 pendent contractor shall provide no25 tice (by telephone and in writing) to
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1 the individual and the provider of

2 services and attending physician of

3 the individual of the results of the re4 consideration. Such reconsideration

5 shall be conducted regardless of

6 whether the provider of services or

7 supplier will charge the individual for

8 continued services or whether the indi9 vidual will be liable for payment for

10 such continued services.

11 ‘‘(II) CONSULTATION WITH BEN12 EFICIARY.—In such reconsideration,

13 the qualified independent contractor

14 shall solicit the views of the individual

15 involved.

16 ‘‘(D) LIMITATION ON INDIVIDUAL REVIEW17 ING DETERMINATIONS.—

18 ‘‘(i) PHYSICIANS.—No physician

19 under the employ of a qualified inde20 pendent contractor may review—

21 ‘‘(I) determinations regarding

22 health care services furnished to a pa23 tient if the physician was directly re24 sponsible for furnishing such services;

25 or
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1 ‘‘(II) determinations regarding

2 health care services provided in or by

3 an institution, organization, or agen4 cy, if the physician or any member of

5 the physician’s family has, directly or

6 indirectly, a significant financial inter7 est in such institution, organization,

8 or agency.

9 ‘‘(ii) PHYSICIAN’S FAMILY DE10 SCRIBED.—For purposes of this para11 graph, a physician’s family includes the

12 physician’s spouse (other than a spouse

13 who is legally separated from the physician

14 under a decree of divorce or separate

15 maintenance), children (including step16 children and legally adopted children),

17 grandchildren, parents, and grandparents.

18 ‘‘(E) EXPLANATION OF DETERMINA19 TIONS.—Any determination of a qualified inde20 pendent contractor shall be in writing, and shall

21 include a detailed explanation of the determina22 tion as well as a discussion of the pertinent

23 facts and applicable regulations applied in mak24 ing such determination.
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1 ‘‘(F) NOTICE REQUIREMENTS.—Whenever

2 a qualified independent contractor makes a de3 termination under this subsection, the qualified

4 independent contractor shall promptly notify

5 such individual and the entity responsible for

6 the payment of claims under part A or part B

7 of such determination.

8 ‘‘(G) DISSEMINATION OF INFORMATION.—

9 Each qualified independent contractor shall,

10 using the methodology established by the Sec11 retary under subsection (d)(4), make available

12 all determinations of such qualified independent

13 contractors to fiscal intermediaries (under sec14 tion 1816), carriers (under section 1842), peer

15 review organizations (under part B of title XI),

16 Medicare+Choice organizations offering

17 Medicare+Choice plans under part C, and

18 other entities under contract with the Secretary

19 to make initial determinations under part A or

20 part B or title XI.

21 ‘‘(H) ENSURING CONSISTENCY IN DETER22 MINATIONS.—Each qualified independent con23 tractor shall monitor its determinations to en24 sure the consistency of its determinations with
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1 respect to requests for reconsideration of simi2 lar or related matters.

3 ‘‘(I) DATA COLLECTION.—

4 ‘‘(i) IN GENERAL.—Consistent with

5 the requirements of clause (ii), a qualified

6 independent contractor shall collect such

7 information relevant to its functions, and

8 keep and maintain such records in such

9 form and manner as the Secretary may re10 quire to carry out the purposes of this sec11 tion and shall permit access to and use of

12 any such information and records as the

13 Secretary may require for such purposes.

14 ‘‘(ii) TYPE OF DATA COLLECTED.—

15 Each qualified independent contractor

16 shall keep accurate records of each deci17 sion made, consistent with standards es18 tablished by the Secretary for such pur19 pose. Such records shall be maintained in

20 an electronic database in a manner that

21 provides for identification of the following:

22 ‘‘(I) Specific claims that give rise

23 to appeals.

24 ‘‘(II) Situations suggesting the

25 need for increased education for pro-
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1 viders of services, physicians, or sup2 pliers.

3 ‘‘(III) Situations suggesting the

4 need for changes in national or local

5 coverage policy.

6 ‘‘(IV) Situations suggesting the

7 need for changes in local medical re8 view policies.

9 ‘‘(iii) ANNUAL REPORTING.—Each

10 qualified independent contractor shall sub11 mit annually to the Secretary (or otherwise

12 as the Secretary may request) records

13 maintained under this paragraph for the

14 previous year.

15 ‘‘(J) HEARINGS BY THE SECRETARY.—The

16 qualified independent contractor shall (i) pre17 pare such information as is required for an ap18 peal of its reconsidered determination to the

19 Secretary for a hearing, including as necessary,

20 explanations of issues involved in the deter21 mination and relevant policies, and (ii) partici22 pate in such hearings as required by the Sec23 retary.

24 ‘‘(4) NUMBER OF QUALIFIED INDEPENDENT

25 CONTRACTORS.—The Secretary shall enter into con-
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1 tracts with not fewer than 12 qualified independent

2 contractors under this subsection.

3 ‘‘(5) LIMITATION ON QUALIFIED INDEPENDENT

4 CONTRACTOR LIABILITY.—No qualified independent

5 contractor having a contract with the Secretary

6 under this subsection and no person who is em7 ployed by, or who has a fiduciary relationship with,

8 any such qualified independent contractor or who

9 furnishes professional services to such qualified inde10 pendent contractor, shall be held by reason of the

11 performance of any duty, function, or activity re12 quired or authorized pursuant to this subsection or

13 to a valid contract entered into under this sub14 section, to have violated any criminal law, or to be

15 civilly liable under any law of the United States or

16 of any State (or political subdivision thereof) pro17 vided due care was exercised in the performance of

18 such duty, function, or activity.

19 ‘‘(d) ADMINISTRATIVE PROVISIONS.—

20 ‘‘(1) OUTREACH.—The Secretary shall perform

21 such outreach activities as are necessary to inform

22 individuals entitled to benefits under this title and

23 providers of services and suppliers with respect to

24 their rights of, and the process for, appeals made

25 under this section. The Secretary shall use the toll-
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1 free telephone number maintained by the Secretary

2 (1–800–MEDICAR(E)) (1–800–633–4227) to pro3 vide information regarding appeal rights and re4 spond to inquiries regarding the status of appeals.

5 ‘‘(2) GUIDANCE FOR RECONSIDERATIONS AND

6 HEARINGS.—

7 ‘‘(A) REGULATIONS.—Not later than 1

8 year after the date of the enactment of this sec9 tion, the Secretary shall promulgate regulations

10 governing the processes of reconsiderations of

11 determinations by the Secretary and qualified

12 independent contractors and of hearings by the

13 Secretary. Such regulations shall include such

14 specific criteria and provide such guidance as

15 required to ensure the adequate functioning of

16 the reconsiderations and hearings processes and

17 to ensure consistency in such processes.

18 ‘‘(B) DEADLINES FOR ADMINISTRATIVE

19 ACTION.—

20 ‘‘(i) HEARING BY ADMINISTRATIVE

21 LAW JUDGE.—

22 ‘‘(I) IN GENERAL.—Except as

23 provided in subclause (II), an admin24 istrative law judge shall conduct and

25 conclude a hearing on a decision of a
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1 qualified independent contractor

2 under subsection (c) and render a de3 cision on such hearing by not later

4 than the end of the 90-day period be5 ginning on the date a request for

6 hearing has been timely filed.

7 ‘‘(II) WAIVER OF DEADLINE BY

8 PARTY SEEKING HEARING.—The 90-

9 day period under subclause (i) shall

10 not apply in the case of a motion or

11 stipulation by the party requesting the

12 hearing to waive such period.

13 ‘‘(ii) DEPARTMENTAL APPEALS BOARD

14 REVIEW.—The Departmental Appeals

15 Board of the Department of Health and

16 Human Services shall conduct and con17 clude a review of the decision on a hearing

18 described in subparagraph (B) and make a

19 decision or remand the case to the admin20 istrative law judge for reconsideration by

21 not later than the end of the 90-day period

22 beginning on the date a request for review

23 has been timely filed.

24 ‘‘(iii) CONSEQUENCES OF FAILURE TO

25 MEET DEADLINES.—In the case of a fail-
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1 ure by an administrative law judge to

2 render a decision by the end of the period

3 described in clause (ii), the party request4 ing the hearing may request a review by

5 the Departmental Appeals Board of the

6 Department of Health and Human Serv7 ices, notwithstanding any requirements for

8 a hearing for purposes of the party’s right

9 to such a review.

10 ‘‘(iv) DAB HEARING PROCEDURE.—In

11 the case of a request described in clause

12 (iii), the Departmental Appeals Board

13 shall review the case de novo.

14 ‘‘(C) POLICIES.—The Secretary shall pro15 vide such specific criteria and guidance, includ16 ing all applicable national and local coverage

17 policies and rationale for such policies, as is

18 necessary to assist the qualified independent

19 contractors to make informed decisions in con20 sidering appeals under this section. The Sec21 retary shall furnish to the qualified independent

22 contractors the criteria and guidance described

23 in this paragraph in a published format, which

24 may be an electronic format.
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1 ‘‘(D) PUBLICATION OF MEDICARE COV2 ERAGE POLICIES ON THE INTERNET.—The Sec3 retary shall publish national and local coverage

4 policies under this title on an Internet site

5 maintained by the Secretary.

6 ‘‘(E) EFFECT OF FAILURE TO PUBLISH

7 POLICIES.—

8 ‘‘(i) NATIONAL AND LOCAL COVERAGE

9 POLICIES.—Qualified independent contrac10 tors shall not be bound by any national or

11 local medicare coverage policy established

12 by the Secretary that is not published on

13 the Internet site under subparagraph (D).

14 ‘‘(ii) OTHER POLICIES.—With respect

15 to policies established by the Secretary

16 other than the policies described in clause

17 (i), qualified independent contractors shall

18 not be bound by such policies if the Sec19 retary does not furnish to the qualified

20 independent contractor the policies in a

21 published format consistent with subpara22 graph (C).

23 ‘‘(3) CONTINUING EDUCATION REQUIREMENT

24 FOR QUALIFIED INDEPENDENT CONTRACTORS AND

25 ADMINISTRATIVE LAW JUDGES.—
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1 ‘‘(A) IN GENERAL.—The Secretary shall

2 provide to each qualified independent con3 tractor, and, in consultation with the Commis4 sioner of Social Security, to administrative law

5 judges that decide appeals of reconsiderations

6 of initial determinations or other decisions or

7 determinations under this section, such con8 tinuing education with respect to policies of the

9 Secretary under this title or part B of title XI

10 as is necessary for such qualified independent

11 contractors and administrative law judges to

12 make informed decisions with respect to ap13 peals.

14 ‘‘(B) MONITORING OF DECISIONS BY

15 QUALIFIED INDEPENDENT CONTRACTORS AND

16 ADMINISTRATIVE LAW JUDGES.—The Secretary

17 shall monitor determinations made by all quali18 fied independent contractors and administrative

19 law judges under this section and shall provide

20 continuing education and training to such quali21 fied independent contractors and administrative

22 law judges to ensure consistency of determina23 tions with respect to appeals on similar or re24 lated matters. To ensure such consistency, the

25 Secretary shall provide for administration and
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1 oversight of qualified independent contractors

2 and, in consultation with the Commissioner of

3 Social Security, administrative law judges

4 through a central office of the Department of

5 Health and Human Services. Such administra6 tion and oversight may not be delegated to re7 gional offices of the Department.

8 ‘‘(4) DISSEMINATION OF DETERMINATIONS.—

9 The Secretary shall establish a methodology under

10 which qualified independent contractors shall carry

11 out subsection (c)(3)(G).

12 ‘‘(5) SURVEY.—Not less frequently than every 5

13 years, the Secretary shall conduct a survey of a valid

14 sample of individuals entitled to benefits under this

15 title, providers of services, and suppliers to deter16 mine the satisfaction of such individuals or entities

17 with the process for appeals of determinations pro18 vided for under this section and education and train19 ing provided by the Secretary with respect to that

20 process. The Secretary shall submit to Congress a

21 report describing the results of the survey, and shall

22 include any recommendations for administrative or

23 legislative actions that the Secretary determines ap24 propriate.
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1 ‘‘(6) REPORT TO CONGRESS.—The Secretary

2 shall submit to Congress an annual report describing

3 the number of appeals for the previous year, identi4 fying issues that require administrative or legislative

5 actions, and including any recommendations of the

6 Secretary with respect to such actions. The Sec7 retary shall include in such report an analysis of de8 terminations by qualified independent contractors

9 with respect to inconsistent decisions and an anal10 ysis of the causes of any such inconsistencies.’’.

11 (b) APPLICABILITY OF REQUIREMENTS AND LIMITA12 TIONS ON LIABILITY OF QUALIFIED INDEPENDENT CON13 TRACTORS TO MEDICARE+CHOICE INDEPENDENT AP14 PEALS CONTRACTORS.—Section 1852(g)(4) of the Social

15 Security Act (42 U.S.C. 1395w–22(e)(3)) is amended by

16 adding at the end the following: ‘‘The provisions of section

17 1869(c)(5) shall apply to independent outside entities

18 under contract with the Secretary under this paragraph.’’.

19 (c) CONFORMING AMENDMENT TO REVIEW BY THE

20 PROVIDER REIMBURSEMENT REVIEW BOARD.—Section

21 1878(g) of the Social Security Act (42 U.S.C. 1395oo(g))

22 is amended by adding at the end the following new para23 graph:
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1 ‘‘(3) Findings described in paragraph (1) and deter2 minations and other decisions described in paragraph (2)

3 may be reviewed or appealed under section 1869.’’.

4 SEC. 202. PROVISIONS WITH RESPECT TO LIMITATIONS ON

5 LIABILITY OF BENEFICIARIES.

6 (a) EXPANSION OF LIMITATION OF LIABILITY PRO7 TECTION FOR BENEFICIARIES WITH RESPECT TO MEDI8 CARE CLAIMS NOT PAID OR PAID INCORRECTLY.—

9 (1) IN GENERAL.—Section 1879 of the Social

10 Security Act (42 U.S.C. 1395pp) is amended by

11 adding at the end the following new subsections:

12 ‘‘(i) Notwithstanding any other provision of this Act,

13 an individual who is entitled to benefits under this title

14 and is furnished a service or item is not liable for repay15 ment to the Secretary of amounts with respect to such

16 benefits—

17 ‘‘(1) subject to paragraph (2), in the case of a

18 claim for such item or service that is incorrectly paid

19 by the Secretary; and

20 ‘‘(2) in the case of payments made to the indi21 vidual by the Secretary with respect to any claim

22 under paragraph (1), the individual shall be liable

23 for repayment of such amount only up to the

24 amount of payment received by the individual from

25 the Secretary.
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1 ‘‘(j)(1) An individual who is entitled to benefits under

2 this title and is furnished a service or item is not liable

3 for payment of amounts with respect to such benefits in

4 the following cases:

5 ‘‘(A) In the case of a benefit for which an ini6 tial determination has not been made by the Sec7 retary under subsection (a) whether payment may be

8 made under this title for such benefit.

9 ‘‘(B) In the case of a claim for such item or

10 service that is—

11 ‘‘(i) improperly submitted by the provider

12 of services or supplier; or

13 ‘‘(ii) rejected by an entity under contract

14 with the Secretary to review or pay claims for

15 services and items furnished under this title, in16 cluding an entity under contract with the Sec17 retary under section 1857.

18 ‘‘(2) The limitation on liability under paragraph (1)

19 shall not apply if the individual signs a waiver provided

20 by the Secretary under subsection (l) of protections under

21 this paragraph, except that any such waiver shall not

22 apply in the case of a denial of a claim for noncompliance

23 with applicable regulations or procedures under this title

24 or title XI.
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1 ‘‘(k) An individual who is entitled to benefits under

2 this title and is furnished services by a provider of services

3 is not liable for payment of amounts with respect to such

4 services prior to noon of the first working day after the

5 date the individual receives the notice of determination to

6 discharge and notice of appeal rights under paragraph (1),

7 unless the following conditions are met:

8 ‘‘(1) The provider of services shall furnish a no9 tice of discharge and appeal rights established by the

10 Secretary under subsection (l) to each individual en11 titled to benefits under this title to whom such pro12 vider of services furnishes services, upon admission

13 of the individual to the provider of services and upon

14 notice of determination to discharge the individual

15 from the provider of services, of the individual’s limi16 tations of liability under this section and rights of

17 appeal under section 1869.

18 ‘‘(2) If the individual, prior to discharge from

19 the provider of services, appeals the determination to

20 discharge under section 1869 not later than noon of

21 the first working day after the date the individual

22 receives the notice of determination to discharge and

23 notice of appeal rights under paragraph (1), the pro24 vider of services shall, by the close of business of

25 such first working day, provide to the Secretary (or
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1 qualified independent contractor under section 1869,

2 as determined by the Secretary) the records required

3 to review the determination.

4 ‘‘(l) The Secretary shall develop appropriate standard

5 forms for individuals entitled to benefits under this title

6 to waive limitation of liability protections under subsection

7 (j) and to receive notice of discharge and appeal rights

8 under subsection (k). The forms developed by the Sec9 retary under this subsection shall clearly and in plain lan10 guage inform such individuals of their limitations on liabil11 ity, their rights under section 1869(a) to obtain an initial

12 determination by the Secretary of whether payment may

13 be made under part A or part B for such benefit, and

14 their rights of appeal under section 1869(b), and shall in15 form such individuals that they may obtain further infor16 mation or file an appeal of the determination by use of

17 the toll-free telephone number (1–800–MEDICAR(E))

18 (1–800–633–4227) maintained by the Secretary. The

19 forms developed by the Secretary under this subsection

20 shall be the only manner in which such individuals may

21 waive such protections under this title or title XI.

22 ‘‘(m) An individual who is entitled to benefits under

23 this title and is furnished an item or service is not liable

24 for payment of cost sharing amounts of more than $50

25 with respect to such benefits unless the individual has
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1 been informed in advance of being furnished the item or

2 service of the estimated amount of the cost sharing for

3 the item or service using a standard form established by

4 the Secretary.’’.

5 (2) CONFORMING AMENDMENT.—Section

6 1870(a) of the Social Security Act (42 U.S.C.

7 1395gg(a)) is amended by striking ‘‘Any payment

8 under this title’’ and inserting ‘‘Except as provided

9 in section 1879(i), any payment under this title’’.

10 (b) INCLUSION OF BENEFICIARY LIABILITY INFOR11 MATION IN EXPLANATION OF MEDICARE BENEFITS.—

12 Section 1806(a) of the Social Security Act (42 U.S.C.

13 1395b–7(a)) is amended—

14 (1) in paragraph (1), by striking ‘‘and’’ at the

15 end;

16 (2) by redesignating paragraph (2) as para17 graph (3); and

18 (3) by inserting after paragraph (1) the fol19 lowing new paragraph:

20 ‘‘(2) lists with respect to each item or service

21 furnished the amount of the individual’s liability for

22 payment;’’;

23 (4) in paragraph (3), as so redesignated, by

24 striking the period at the end and inserting ‘‘; and’’;

25 and
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1 (5) by adding at the end the following new

2 paragraph:

3 ‘‘(4) includes the toll-free telephone number (1–

4 800–MEDICAR(E)) (1–800–633–4227) for infor5 mation and questions concerning the statement, li6 ability of the individual for payment, and appeal

7 rights.’’.

8 SEC. 203. WAIVERS OF LIABILITY FOR COST SHARING

9 AMOUNTS.

10 (a) IN GENERAL.—Section 1128A(i)(6)(A) of the So11 cial Security Act (42 U.S.C. 1320a–7a(i)(6)(A)) is amend12 ed by striking clauses (i) through (iii) and inserting the

13 following:

14 ‘‘(i) the waiver is offered as a part of

15 a supplemental insurance policy or retiree

16 health plan;

17 ‘‘(ii) the waiver is not offered as part

18 of any advertisement or solicitation, other

19 than in conjunction with a policy or plan

20 described in clause (i);

21 ‘‘(iii) the person waives the coinsur22 ance and deductible amount after the bene23 ficiary informs the person that payment of

24 the coinsurance or deductible amount
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1 would pose a financial hardship for the in2 dividual; or

3 ‘‘(iv) the person determines that the

4 coinsurance and deductible amount would

5 not justify the costs of collection.’’.

6 (b) CONFORMING AMENDMENT.—Section 1128B(b)

7 of the Social Security Act (42 U.S.C. 1320a–7b(b)) is

8 amended by adding at the end the following new para9 graph:

10 ‘‘(4) In this section, the term ‘remuneration’ in11 cludes the meaning given such term in section

12 1128A(i)(6).’’.

13 Subtitle B—Establishment of

14 Medicare Ombudsman

15 SEC. 211. ESTABLISHMENT OF MEDICARE OMBUDSMAN

16 FOR BENEFICIARY ASSISTANCE AND ADVO17 CACY.

18 (a) IN GENERAL.—Within the Health Care Financ19 ing Administration of the Department of Health and

20 Human Services, there shall be a Medicare Ombudsman,

21 appointed by the Secretary of Health and Human Services

22 from among individuals with expertise and experience in

23 the fields of health care and advocacy, to carry out the

24 duties described in subsection (b).

25 (b) DUTIES.—The Medicare Ombudsman shall—
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1 (1) receive complaints, grievances, and requests

2 for information submitted by a medicare beneficiary,

3 with respect to any aspect of the medicare program;

4 (2) provide assistance with respect to com5 plaints, grievances, and requests referred to in

6 clause (i), including—

7 (A) assistance in collecting relevant infor8 mation for such beneficiaries, to seek an appeal

9 of a decision or determination made by a fiscal

10 intermediary, carrier, Medicare+Choice organi11 zation, a benefit administrator responsible for

12 administering the prescription medicine benefit

13 program under part D of title XVIII of the So14 cial Security Act, or the Secretary;

15 (B) assistance to such beneficiaries with

16 any problems arising from disenrollment from a

17 Medicare+Choice plan under part C of title

18 XVIII of such Act or a benefit administrator

19 responsible for administering such prescription

20 medicine benefit program; and

21 (C) submit annual reports to Congress and

22 the Secretary, and include in such reports rec23 ommendations for improvement in the adminis24 tration of this title as the Medicare Ombuds25 man determines appropriate.
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1 (c) COORDINATION WITH STATE OMBUDSMAN PRO2 GRAMS AND CONSUMER ORGANIZATIONS.—The Medicare

3 Ombudsman shall, to the extent appropriate, coordinate

4 with State medical Ombudsman programs, and with

5 State- and community-based consumer organizations, to—

6 (1) provide information about the medicare pro7 gram; and

8 (2) conduct outreach to educate medicare bene9 ficiaries with respect to manners in which problems

10 under the medicare program may be resolved or

11 avoided.

12 (d) DEFINITIONS.—In this section:

13 (1) The term ‘‘medicare beneficiary’’ means an

14 individual entitled to benefits under part A of title

15 XVIII of the Social Security Act, or enrolled under

16 part B of such title, or both.

17 (2) The term ‘‘medicare program’’ means the

18 insurance program established under title XVIII of

19 the Social Security Act.

20 (3) The term ‘‘fiscal intermediary’’ has the

21 meaning given such term under section 1816(a) of

22 the Social Security Act (42 U.S.C. 1395h(a)).

23 (4) The term ‘‘carrier’’ has the meaning given

24 such term under section 1842(f) of the Social Secu25 rity Act (42 U.S.C. 1395u(f)).
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1 (5) The term ‘‘Medicare+Choice organization’’

2 has the meaning given such term under section

3 1859(a)(1) of the Social Security Act (42 U.S.C.

4 1395w–29(a)(1)).

5 (6) The term ‘‘Secretary’’ means the Secretary

6 of Health and Human Services.

7 TITLE III—MEDICARE+CHOICE

8 REFORMS; PRESERVATION OF

9 MEDICARE PART B DRUG

10 BENEFIT

11 Subtitle A—Medicare+Choice

12 Reforms

13 SEC. 301. INCREASE IN NATIONAL PER CAPITA

14 MEDICARE+CHOICE GROWTH PERCENTAGE

15 IN 2001 AND 2002.

16 Section 1853(c)(6)(B) of the Social Security Act (42

17 U.S.C. 1395w–23(c)(6)(B)) is amended—

18 (1) in clause (iv), by striking ‘‘for 2001, 0.5

19 percentage points’’ and inserting ‘‘for 2001, 0 per20 centage points’’; and

21 (2) in clause (v), by striking ‘‘for 2002, 0.3 per22 centage points’’ and inserting ‘‘for 2002, 0 percent23 age points’’.
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1 SEC. 302. PERMANENTLY REMOVING APPLICATION OF

2 BUDGET NEUTRALITY BEGINNING IN 2002.

3 Section 1853(c) of the Social Security Act (42 U.S.C.

4 1395w–23(c)) is amended—

5 (1) in paragraph (1)(A), in the matter following

6 clause (ii), by inserting ‘‘(for years before 2002)’’

7 after ‘‘multiplied’’; and

8 (2) in paragraph (5), by inserting ‘‘(before

9 2002)’’ after ‘‘for each year’’.

10 SEC. 303. INCREASING MINIMUM PAYMENT AMOUNT.

11 (a) IN GENERAL.—Section 1853(c)(1)(B)(ii) of the

12 Social Security Act (42 U.S.C. 1395w–23(c)(1)(B)(ii)) is

13 amended—

14 (1) by striking ‘‘(ii) For a succeeding year’’ and

15 inserting ‘‘(ii)(I) Subject to subclause (II), for a suc16 ceeding year’’; and

17 (2) by adding at the end the following new sub18 clause:

19 ‘‘(II) For 2002 for any of the 50

20 States and the District of Columbia,

21 $450.’’.

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

23 subsection (a) apply to years beginning with 2002.
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1 SEC. 304. ALLOWING MOVEMENT TO 50:50 PERCENT BLEND

2 IN 2002.

3 Section 1853(c)(2) of the Social Security Act (42

4 U.S.C. 1395w–23(c)(2)) is amended—

5 (1) by striking the period at the end of sub6 paragraph (F) and inserting a semicolon; and

7 (2) by adding after and below subparagraph

8 (F) the following:

9 ‘‘except that a Medicare+Choice organization may

10 elect to apply subparagraph (F) (rather than sub11 paragraph (E)) for 2002.’’.

12 SEC. 305. INCREASED UPDATE FOR PAYMENT AREAS WITH

13 ONLY ONE OR NO MEDICARE+CHOICE CON14 TRACTS.

15 (a) IN GENERAL.—Section 1853(c)(1)(C)(ii) of the

16 Social Security Act (42 U.S.C. 1395w–23(c)(1)(C)(ii)) is

17 amended—

18 (1) by striking ‘‘(ii) For a subsequent year’’

19 and inserting ‘‘(ii)(I) Subject to subclause (II), for

20 a subsequent year’’; and

21 (2) by adding at the end the following new sub22 clause:

23 ‘‘(II) During 2002, 2003, 2004, and

24 2005, in the case of a Medicare+Choice

25 payment area in which there is no more

26 than 1 contract entered into under this
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1 part as of July 1 before the beginning of

2 the year, 102.5 percent of the annual

3 Medicare+Choice capitation rate under

4 this paragraph for the area for the pre5 vious year.’’.

6 (b) CONSTRUCTION.—The amendments made by sub7 section (a) do not affect the payment of a first time bonus

8 under section 1853(i) of the Social Security Act (42

9 U.S.C. 1395w–23(i)).

10 SEC. 306. PERMITTING HIGHER NEGOTIATED RATES IN

11 CERTAIN MEDICARE+CHOICE PAYMENT

12 AREAS BELOW NATIONAL AVERAGE.

13 Section 1853(c)(1) of the Social Security Act (42

14 U.S.C. 1395w–23(c)(1)) is amended—

15 (1) in the matter before subparagraph (A), by

16 striking ‘‘or (C)’’ and inserting ‘‘(C), or (D)’’; and

17 (2) by adding at the end the following new sub18 paragraph:

19 ‘‘(D) PERMITTING HIGHER RATES

20 THROUGH NEGOTIATION.—

21 ‘‘(i) IN GENERAL.—For each year be22 ginning with 2004, in the case of a

23 Medicare+Choice payment area for which

24 the Medicare+Choice capitation rate under

25 this paragraph would otherwise be less
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1 than the United States per capita cost

2 (USPCC), as calculated by the Secretary,

3 a Medicare+Choice organization may ne4 gotiate with the Medicare Benefits Admin5 istrator an annual per capita rate that—

6 ‘‘(I) reflects an annual rate of in7 crease up to the rate of increase speci8 fied in clause (ii);

9 ‘‘(II) takes into account audited

10 current data supplied by the organiza11 tion on its adjusted community rate

12 (as defined in section 1854(f)(3)); and

13 ‘‘(III) does not exceed the United

14 States per capita cost, as projected by

15 the Secretary for the year involved.

16 ‘‘(ii) MAXIMUM RATE DESCRIBED.—

17 The rate of increase specified in this clause

18 for a year is the rate of inflation in private

19 health insurance for the year involved, as

20 projected by the Medicare Benefits Admin21 istrator, and includes such adjustments as

22 may be necessary—

23 ‘‘(I) to reflect the demographic

24 characteristics in the population under

25 this title; and
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1 ‘‘(II) to eliminate the costs of

2 prescription drugs.

3 ‘‘(iii) ADJUSTMENTS FOR OVER OR

4 UNDER PROJECTIONS.—If subparagraph is

5 applied to an organization and payment

6 area for a year, in applying this subpara7 graph for a subsequent year the provisions

8 of paragraph (6)(C) shall apply in the

9 same manner as such provisions apply

10 under this paragraph.’’.

11 SEC. 307. 10-YEAR PHASE IN OF RISK ADJUSTMENT BASED

12 ON DATA FROM ALL SETTINGS.

13 Section 1853(a)(3)(C)(ii) of the Social Security Act

14 (42 U.S.C. 1395w–23(c)(1)(C)(ii)) is amended—

15 (1) by striking the period at the end of sub16 clause (II) and inserting a semicolon; and

17 (2) by adding after and below subclause (II) the

18 following:

19 ‘‘and, beginning in 2004, insofar as such

20 risk adjustment is based on data from all

21 settings, the methodology shall be phased

22 in equal increments over a 10 year period,

23 beginning with 2004 or (if later) the first

24 year in which such data is used.’’.
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1 Subtitle B—Preservation of Medi2 care Coverage of Drugs and

3 Biologicals

4 SEC. 311. PRESERVATION OF COVERAGE OF DRUGS AND

5 BIOLOGICALS UNDER PART B OF THE MEDI6 CARE PROGRAM.

7 (a) IN GENERAL.—Section 1861(s)(2) of the Social

8 Security Act (42 U.S.C. 1395x(s)(2)) is amended, in each

9 of subparagraphs (A) and (B), by striking ‘‘(including

10 drugs and biologicals which cannot, as determined in ac11 cordance with regulations, be self-administered)’’ and in12 serting ‘‘(including injectable and infusable drugs and

13 biologicals which are not usually self-administered by the

14 patient)’’.

15 (b) EFFECTIVE DATE.—The amendment made by

16 subsection (a) applies to drugs and biologicals adminis17 tered on or after October 1, 2000.

18 SEC. 312. COMPREHENSIVE IMMUNOSUPPRESSIVE DRUG

19 COVERAGE FOR TRANSPLANT PATIENTS.

20 (a) REVISION OF MEDICARE COVERAGE FOR IM21 MUNOSUPPRESSIVE DRUGS.—

22 (1) IN GENERAL.—Section 1861(s)(2)(J) of the

23 Social Security Act (42 U.S.C. 1395x(s)(2)(J)) (as

24 amended by section 227(a) of the Medicare, Med25 icaid, and SCHIP Balanced Budget Refinement Act
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1 of 1999 (113 Stat. 1501A–354), as enacted into law

2 by section 1000(a)(6) of Public Law 106–113) is

3 amended by striking ‘‘, to an individual who re4 ceives’’ and all that follows before the semicolon at

5 the end and inserting ‘‘to an individual who has re6 ceived an organ transplant’’.

7 (2) CONFORMING AMENDMENTS.—

8 (A) Section 1832 of the Social Security

9 Act (42 U.S.C. 1395k) (as amended by section

10 227(b) of the Medicare, Medicaid, and SCHIP

11 Balanced Budget Refinement Act of 1999 (113

12 Stat. 1501A–354), as enacted into law by sec13 tion 1000(a)(6) of Public Law 106–113) is

14 amended—

15 (i) by striking subsection (b); and

16 (ii) by redesignating subsection (c) as

17 subsection (b).

18 (B) Subsections (c) and (d) of section 227

19 of the Medicare, Medicaid, and SCHIP Bal20 anced Budget Refinement Act of 1999 (113

21 Stat. 1501A–355), as enacted into law by sec22 tion 1000(a)(6) of Public Law 106–113, are re23 pealed.
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1 (3) EFFECTIVE DATE.—The amendments made

2 by this subsection shall apply to drugs furnished on

3 or after the date of enactment of this Act.

4 (b) EXTENSION OF CERTAIN SECONDARY PAYER RE5 QUIREMENTS.—Section 1862(b)(1)(C) of the Social Secu6 rity Act (42 U.S.C. 1395y(b)(1)(C)) is amended by adding

7 at the end the following: ‘‘With regard to immuno8 suppressive drugs furnished on or after the date of enact9 ment of the Medicare Guaranteed and Defined Rx Benefit

10 and Health Provider Relief Act of 2000, this subpara11 graph shall be applied without regard to any time limita12 tion.’’.

13 (c) ESTABLISHMENT OF PART D CATASTROPHIC

14 LIMIT ON PART B COPAYMENTS FOR IMMUNO15 SUPPRESSIVE DRUGS.—Section 1833 of the Social Secu16 rity Act (42 U.S.C. 1395l) is amended by inserting after

17 subsection (o) the following new subsection:

18 ‘‘(p) LIMITATION ON AMOUNT OF DEDUCTIBLES AND

19 COINSURANCE FOR IMMUNOSUPPRESSIVE DRUGS FOR

20 CERTAIN BENEFICIARIES.—With respect to 2003 and

21 each subsequent year, no deductibles and coinsurance ap22 plicable to immunosuppresive drugs (as described in sec23 tion 1861(s)(2)(J)) in a year under this part shall be im24 posed to the extent that the individual has incurred ex25 penditures in that year for out-of-pocket expenditures for
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1 immunosuppressive drugs in excess of the catastrophic

2 benefit level provided for under section 1860B(c).’’.

3 Subtitle C—Improvement of

4 Certain Preventive Benefits

5 SEC. 321. COVERAGE OF ANNUAL SCREENING PAP SMEAR

6 AND PELVIC EXAMS.

7 (a) IN GENERAL.—

8 (1) ANNUAL SCREENING PAP SMEAR.—Section

9 1861(nn)(1) of the Social Security Act (42 U.S.C.

10 1395x(nn)(1)) is amended by striking ‘‘if the indi11 vidual involved has not had such a test during the

12 preceding 3 years, or during the preceding year in

13 the case of a woman described in paragraph (3).’’

14 and inserting ‘‘if the woman involved has not had

15 such a test during the preceding year.’’.

16 (2) ANNUAL SCREENING PELVIC EXAM.—Sec17 tion 1861(nn)(2) of such Act (42 U.S.C.

18 1395x(nn)(2)) is amended by striking ‘‘during the

19 preceding 3 years, or during the preceding year in

20 the case of a woman described in paragraph (3),’’

21 and inserting ‘‘during the preceding year,’’.

22 (3) CONFORMING AMENDMENT.—Section

23 1861(nn) of such Act (42 U.S.C. 1395x(nn)) is

24 amended by striking paragraph (3).
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1 (b) EFFECTIVE DATE.—The amendments made by

2 subsection (a) apply to items and services furnished on

3 or after January 1, 2001.

4 TITLE IV—ADJUSTMENTS TO

5 PAYMENT PROVISIONS OF

6 THE BALANCED BUDGET ACT

7 Subtitle A—Payments for Inpatient

8 Hospital Services

9 SEC. 401. ELIMINATING REDUCTION IN HOSPITAL MARKET

10 BASKET UPDATE FOR FISCAL YEAR 2001.

11 Section 1886(b)(3)(B)(i)(XVI) of the Social Security

12 Act (42 U.S.C. 1395ww(b)(3)(B)(i)(XVI)) is amended by

13 striking ‘‘minus 1.1 percentage points for hospitals (other

14 than sole community hospitals) in all areas, and the mar15 ket basket percentage increase for sole community hos16 pitals,’’ and inserting ‘‘for hospitals in all areas,’’.

17 SEC. 402. ELIMINATING FURTHER REDUCTIONS IN INDI18 RECT MEDICAL EDUCATION (IME) FOR FIS19 CAL YEAR 2001.

20 Section 1886(d)(5)(B)(ii) of the Social Security Act

21 (42 U.S.C. 1395ww(d)(5)(B)(ii)(V)) is amended—

22 (1) in subclause (IV)—

23 (A) by striking ‘‘fiscal year 2000’’ and in24 serting ‘‘each of fiscal years 2000 and 2001’’;

25 and
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1 (B) by adding ‘‘and’’ at the end;

2 (2) by striking subclause (V); and

3 (3) by redesignating subclause (VI) as sub4 clause (V).

5 SEC. 403. ELIMINATING FURTHER REDUCTIONS IN DIS6 PROPORTIONATE SHARE HOSPITAL (DSH)

7 PAYMENTS.

8 (a) MEDICARE PAYMENTS.—Section

9 1886(d)(5)(F)(ix) of the Social Security Act (42 U.S.C.

10 1395ww(d)(5)(F)(ix)) is amended—

11 (1) in subclause (III), by striking ‘‘and 2001’’;

12 (2) by redesignating subclauses (IV) and (V) as

13 subclauses (V) and (VI), respectively; and

14 (3) by inserting after subclause (III) the fol15 lowing new subclause:

16 ‘‘(IV) during fiscal year 2001, such additional

17 payment amount shall be reduced by 0 percent;’’.

18 (b) FREEZE IN MEDICAID DSH ALLOTMENTS FOR

19 FISCAL YEAR 2001.—Notwithstanding section 1923(f)(2)

20 of the Social Security Act (42 U.S.C. 1396r–4(f)(2)), the

21 DSH allotment under such section for a State for fiscal

22 year 2001 shall be the same as the DSH allotment under

23 such section for fiscal year 2000.
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1 SEC. 404. INCREASE BASE PAYMENT TO PUERTO RICO HOS2 PITALS.

3 Section 1886(d)(9)(A) of the Social Security Act (42

4 U.S.C. 1395ww(d)(9)(A)) is amended—

5 (1) in clause (i), by striking ‘‘October 1, 1997,

6 50 percent (’’ and inserting ‘‘October 1, 2000, 25

7 percent (for discharges between October 1, 1997 and

8 September 30, 2000, 50 percent,’’; and

9 (2) in clause (ii), in the matter preceding sub10 clause (I), by striking ‘‘after October 1, 1997, 50

11 percent (’’ and inserting ‘‘after October 1, 2000, 75

12 percent (for discharges between October 1, 1997,

13 and September 30, 2000, 50 percent,’’.

14 Subtitle B—Payments for Skilled

15 Nursing Services

16 SEC. 411. ELIMINATING REDUCTION IN SNF MARKET BAS17 KET UPDATE FOR FISCAL YEAR 2001.

18 Section 1888(e)(4)(E) of the Social Security Act (42

19 U.S.C. 1395yy(e)(4)(E)) is amended—

20 (1) by redesignating subclauses (II) and (III)

21 as subclauses (III) and (IV) respectively;

22 (2) in subclause (III) as redesignated, by strik23 ing ‘‘for each of fiscal years 2001 and 2002,’’ and

24 inserting ‘‘for fiscal year 2002,’’; and

25 (3) by inserting after subclause (I) the fol26 lowing new subclause:
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1 ‘‘(II) for fiscal year 2001, the

2 rate computed for fiscal year 2000 in3 creased by the skilled nursing facility

4 market basket percentage increase for

5 fiscal year 2000.’’.

6 SEC. 412. EXTENSION OF MORATORIUM ON THERAPY CAPS.

7 Section 1833(g) of the Social Security Act (42 U.S.C.

8 1395l(g)) is amended in paragraph (4) by striking ‘‘2000

9 and 2001.’’ and inserting ‘‘2000 through 2002.’’.

10 Subtitle C—Payments for Home

11 Health Services

12 SEC. 421. 1-YEAR ADDITIONAL DELAY IN APPLICATION OF

13 15 PERCENT REDUCTION ON PAYMENT LIM14 ITS FOR HOME HEALTH SERVICES.

15 Section 1895(b)(3)(A)(i) of the Social Security Act

16 (42 U.S.C. 1395fff(b)(3)(A)(i)) is amended—

17 (1) by redesignating subparagraph (II) as sub18 paragraph (III);

19 (2) by inserting in subparagraph (III), as redes20 ignated, ‘‘24 months’’ following ‘‘periods beginning’’;

21 and

22 (3) by inserting after subclause (I) the fol23 lowing new subclause:

24 ‘‘(II) For the 12-month period

25 beginning after the period described
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1 in subclause (I), such amount (or

2 amounts) shall be equal to the amount

3 (or amounts) determined under sub4 clause (I), updated under subpara5 graph (B).’’.

6 SEC. 422. PROVISION OF FULL MARKET BASKET UPDATE

7 FOR HOME HEALTH SERVICES FOR FISCAL

8 YEAR 2001.

9 Section 1861(v)(1)(L)(x) of the Social Security Act

10 (42 U.S.C. 1395x(v)(1)(L)(x)) is amended—

11 (1) by striking ‘‘2001,’’; and

12 (2) by adding at the end the following: ‘‘With

13 respect to cost reporting periods beginning during

14 fiscal year 2001, the update to any limit under this

15 subparagraph shall be the home health market bas16 ket.’’.

17 Subtitle D—Rural Provider

18 Provisions

19 SEC. 431. ELIMINATION OF REDUCTION IN HOSPITAL OUT20 PATIENT MARKET BASKET INCREASE.

21 Section 1833(t)(3)(C)(iii) of the Social Security Act

22 (42 U.S.C. 1395l(t)(3)(C)(iii)) is amended by striking ‘‘re23 duced by 1 percentage point for such factor for services

24 furnished in each of 2000, 2001, and 2002’’ and inserting

25 ‘‘reduced by 1 percentage point for such factor for services
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1 furnished in 2000 and reduced (except in the case of hos2 pitals located in a rural area, as defined for purposes of

3 section 1886(d)) by 1 percentage point for such factor for

4 services furnished in each of 2001 and 2002.’’

5 Subtitle E—Other Providers

6 SEC. 441. UPDATE IN RENAL DIALYSIS COMPOSITE RATE.

7 The last sentence of section 1881(b)(7) of the Social

8 Security Act (42 U.S.C. 1395rr(b)(7)) is amended by

9 striking ‘‘for such services furnished on or after January

10 1, 2001, by 1.2 percent’’ and inserting ‘‘for such services

11 furnished on or after January 1, 2001, by 2.4 percent’’.

12 Subtitle F—Provision for

13 Additional Adjustments

14 SEC. 451. GUARANTEE OF ADDITIONAL ADJUSTMENTS TO

15 PAYMENTS FOR PROVIDERS FROM BUDGET

16 SURPLUS.

17 Notwithstanding any other provision of law, from

18 amounts estimated to be in excess social security surpluses

19 estimated under the Balanced Budget and Emergency

20 Deficit Control Act of 1985 for the 5 fiscal year and 10

21 fiscal year periods beginning in fiscal year 2001, there

22 shall be made available for further adjustments to pay23 ment policies established by the Balanced Budget Act of

24 1997, amounts that would provide for additional improve25 ments to the medicare and medicaid programs carried out
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1 under titles XVIII and XIX of the Social Security Act and

2 payments to providers of services and suppliers furnishing

3 items and services for which payments is made under

4 those programs in the aggregate amounts over such 5 fis5 cal year and 10 fiscal year periods of $11,000,000, and

6 $21,000,000, respectively.

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