I

106TH CONGRESS

2D SESSION H. R. 5151

To amend the Social Security Act to establish an outpatient prescription

drug assistance program for low-income Medicare beneficiaries and Medicare beneficiaries with high drug costs.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 12, 2000

Mr. BILIRAKIS (for himself and Mr. PETERSON of Minnesota) introduced the

following bill; which was referred to the Committee on Commerce, and

in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of

such provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend the Social Security Act to establish an outpatient

prescription drug assistance program for low-income

Medicare beneficiaries and Medicare beneficiaries with

high drug costs.

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.

4 This Act may be cited as the ‘‘Medicare Beneficiary

5 Prescription Drug Assistance and Stop-Loss Protection

6 Act of 2000’’.
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1 SEC. 2. OUTPATIENT PRESCRIPTION DRUG ASSISTANCE

2 PROGRAM.

3 (a) ESTABLISHMENT.—The Social Security Act (42

4 U.S.C. 301 et seq.) is amended by adding at the end the

5 following new title:

6 ‘‘TITLE XXII—OUTPATIENT PRESCRIPTION

7 DRUG ASSISTANCE PROGRAM

8 ‘‘SEC. 2201. PURPOSE; OUTPATIENT PRESCRIPTION DRUG

9 ASSISTANCE PLANS.

10 ‘‘(a) PURPOSE.—The purpose of this title is to pro11 vide funds to States to enable States, individually or in

12 a group, to establish a program, separate from the med13 icaid program under title XIX, to provide assistance to

14 low-income medicare beneficiaries (as defined in section

15 2202(b)) and, at State option, medicare beneficiaries with

16 high drug costs (as defined in section 2202(c)) to obtain

17 coverage for outpatient prescription drugs.

18 ‘‘(b) OUTPATIENT PRESCRIPTION DRUG ASSISTANCE

19 PLAN REQUIRED.—A State may not receive payments

20 under section 2205 unless the State, individually or as

21 part of a group of States, submits in writing to the Sec22 retary an outpatient prescription drug assistance plan

23 under section 2206(a)(1) that—

24 ‘‘(1) describes how the State or group of States

25 intends to use the funds provided under this title to

26 provide outpatient prescription drug assistance to
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1 low-income medicare beneficiaries and, if applicable,

2 medicare beneficiaries with high drug costs con3 sistent with the provisions of this title;

4 ‘‘(2) includes a description of the budget for the

5 plan (updated periodically as necessary) and details

6 on the planned use of funds, the sources of the non7 Federal share of plan expenditures, and any require8 ments for cost-sharing by beneficiaries;

9 ‘‘(3) describes the procedures to be used to en10 sure that the outpatient prescription drug assistance

11 provided to low-income medicare beneficiaries and, if

12 applicable, medicare beneficiaries with high drug

13 costs under the plan does not supplant privately fi14 nanced coverage for outpatient prescription drugs

15 available to such beneficiaries under group health

16 plans; and

17 ‘‘(4) has been approved by the Secretary under

18 section 2206(a)(2).

19 ‘‘(c) ENTITLEMENT.—Subject to subsection (d)(2),

20 this title constitutes budget authority in advance of appro21 priations Acts and represents the obligation of the Federal

22 Government to provide for the payment to States, groups

23 of States, and contractors described in section

24 2209(a)(2)(A), of amounts provided under section 2204.

25 ‘‘(d) PERIOD OF APPLICABILITY.—
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1 ‘‘(1) IN GENERAL.—No State, group of States,

2 or contractor described in section 2209(a)(2)(A),

3 may receive payments under section 2205 for out4 patient prescription drug assistance provided for pe5 riods beginning before October 1, 2000, or after

6 September 30, 2004.

7 ‘‘(2) MEDICARE REFORM.—If medicare reform

8 legislation that includes coverage for outpatient pre9 scription drugs is enacted during the period that be10 gins on October 1, 2000, and ends on September 30,

11 2004, this title shall be repealed upon the effective

12 date of such legislation, and no State, group of

13 States, or contractor described in section

14 2209(a)(2)(A) shall be entitled to receive payments

15 for any outpatient prescription drug assistance pro16 vided on or after such date.

17 ‘‘SEC. 2202. BENEFICIARY ELIGIBILITY.

18 ‘‘(a) ELIGIBILITY.—

19 ‘‘(1) IN GENERAL.—In order for a State (indi20 vidually or as part of a group of States) to receive

21 payments under section 2205 with respect to an out22 patient prescription drug assistance program, the

23 program must provide, subject to the availability of

24 funds, outpatient prescription drug assistance to

25 each individual who—
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1 ‘‘(A) resides in the State;

2 ‘‘(B) applies for such assistance; and

3 ‘‘(C) establishes that the individual is—

4 ‘‘(i) a low-income medicare beneficiary

5 (as defined in subsection (b)); or

6 ‘‘(ii) at the option of the State, a

7 medicare beneficiary with high drug costs

8 (as defined in subsection (c)).

9 ‘‘(2) RESIDENCY RULES.—In applying para10 graph (1), residency rules similar to the residency

11 rules applicable to the State plan under title XIX

12 shall apply.

13 ‘‘(b) LOW-INCOME MEDICARE BENEFICIARY DE14 FINED.—

15 ‘‘(1) IN GENERAL.—In this title, except as pro16 vided in section 2209(a)(2)(B), the term ‘low-income

17 medicare beneficiary’ means an individual who—

18 ‘‘(A) is entitled to benefits under part A of

19 title XVIII or enrolled under part B of such

20 title, including an individual enrolled in a

21 Medicare+Choice plan under part C of such

22 title;

23 ‘‘(B) subject to subsection (d), is not enti24 tled to medical assistance with respect to pre25 scribed drugs under title XIX or under a waiver
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1 under section 1115 of the requirements of such

2 title;

3 ‘‘(C) is determined to have family income

4 that does not exceed a percentage of the pov5 erty line for a family of the size involved speci6 fied by the State that, subject to paragraph (2),

7 may not exceed 175 percent; and

8 ‘‘(D) at the option of the State, is deter9 mined to have resources that do not exceed a

10 level specified by the State.

11 ‘‘(2) STATE-ONLY DRUG ASSISTANCE PRO12 GRAMS.—

13 ‘‘(A) IN GENERAL.—In the case of a State

14 that has a State-based drug assistance program

15 described in section 2203(e) that provides out16 patient prescription drug coverage for individ17 uals described in paragraph (1)(A) who have

18 family income up to or exceeding 175 percent

19 of the poverty line, the State may specify a per20 centage of the poverty line under paragraph

21 (1)(C) that exceeds the income eligibility level

22 specified by the State for such program but

23 does not exceed 50 percentage points above

24 such income eligibility level.
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1 ‘‘(B) ELIGIBILITY OF PROGRAM PARTICI2 PANTS.—Individuals participating in such a

3 State-based drug assistance program (with in4 come below 175 percent of the poverty line or,

5 if higher, the level specified under subpara6 graph (A)) are eligible to be treated as low-in7 come medicare beneficiaries under this title, re8 gardless of their participation in such a pro9 gram. Funds provided under this title may be

10 used to supplant funds otherwise expended by

11 the State under such a program.

12 ‘‘(c) MEDICARE BENEFICIARY WITH HIGH DRUG

13 COSTS DEFINED.—

14 ‘‘(1) IN GENERAL.—In this title, except as pro15 vided in section 2209(a)(2)(C), the term ‘medicare

16 beneficiary with high drug costs’ means an

17 individual—

18 ‘‘(A) who satisfies the requirements of sub19 paragraphs (A) and (B) of subsection (b)(1);

20 ‘‘(B) whose family income exceeds the per21 centage of the poverty line specified by the

22 State in accordance with subsection (b)(1)(C);

23 ‘‘(C) at the option of the State, whose re24 sources exceed a level (if any) specified by the
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1 State in accordance with subsection (b)(1)(D);

2 and

3 ‘‘(D) who has out-of-pocket expenses for

4 outpatient prescription drugs and biologicals

5 (including insulin and insulin supplies) for

6 which outpatient prescription drug assistance is

7 available under this title that exceed such

8 amount as the State specifies in accordance

9 with paragraph (2).

10 ‘‘(2) DETERMINATION OF OUT-OF-POCKET EX11 PENSES.—A State that elects to provide outpatient

12 prescription drug assistance to an individual de13 scribed in paragraph (1) shall provide the Secretary

14 with the methodology and standards used to deter15 mine the individual’s eligibility under subparagraph

16 (D) of such paragraph.

17 ‘‘(d) ACCESS FOR MEDICAID EXPANSION STATES.—

18 ‘‘(1) IN GENERAL.—Notwithstanding any other

19 provision of this title, with respect to any State that,

20 as of the date of enactment of this title, has made

21 outpatient prescription drug coverage for individuals

22 described in paragraph (2) available through the

23 State medicaid program under title XIX under a

24 section 1115 waiver, the Secretary, in consultation

25 with such State, shall establish procedures under
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1 which the State shall be able to receive payments

2 from the allotment made available under section

3 2204 for such State for a fiscal year for purposes

4 of offsetting the costs of making such coverage avail5 able to such individuals.

6 ‘‘(2) INDIVIDUALS DESCRIBED.—Individuals de7 scribed in this paragraph are individuals who are—

8 ‘‘(A) entitled to benefits under part A of

9 title XVIII or enrolled under part B of such

10 title, including an individual enrolled in a

11 Medicare+Choice plan under part C of such

12 title; and

13 ‘‘(B) eligible for outpatient prescription

14 drug coverage only, under a State medicaid pro15 gram under title XIX as a result of a section

16 1115 waiver.

17 ‘‘(e) INDIVIDUAL NONENTITLEMENT.—Nothing in

18 this title shall be construed as providing an individual with

19 an entitlement to outpatient prescription drug assistance

20 provided under this title.

21 ‘‘SEC. 2203. COVERAGE REQUIREMENTS.

22 ‘‘(a) REQUIRED SCOPE OF COVERAGE.—

23 ‘‘(1) IN GENERAL.—The outpatient prescription

24 drug assistance provided under the plan may consist

25 of any of the following:
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1 ‘‘(A) BENCHMARK COVERAGE.—Outpatient

2 prescription drug coverage that is equivalent to

3 the outpatient prescription drug coverage in a

4 benchmark benefit package described in sub5 section (b).

6 ‘‘(B) AGGREGATE ACTUARIAL VALUE

7 EQUIVALENT TO BENCHMARK PACKAGE.—Out8 patient prescription drug coverage that has an

9 aggregate actuarial value that is at least equiv10 alent to one of the benchmark benefit packages.

11 ‘‘(C) EXISTING COMPREHENSIVE STATE12 BASED COVERAGE.—Outpatient prescription

13 drug coverage under an existing State-based

14 program, described in subsection (e).

15 ‘‘(D) SECRETARY-APPROVED COVERAGE.—

16 Any other outpatient prescription drug coverage

17 that the Secretary determines, upon application

18 by a State or group of States, provides appro19 priate outpatient prescription drug coverage for

20 the population of medicare beneficiaries pro21 posed to be provided such coverage.

22 ‘‘(2) CONSISTENT DESIGN.—A State or group

23 of States may only select one of the options de24 scribed in paragraph (1) (and, if the State or group

25 chooses to provide outpatient prescription drug cov-
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1 erage that is equivalent to the outpatient prescrip2 tion drug coverage in a benchmark benefit package,

3 only one of the benchmark benefit package options

4 described in subsection (b)) in order to provide out5 patient prescription drug assistance in a uniform

6 manner for the population of medicare beneficiaries

7 provided such coverage.

8 ‘‘(3) MEDICATION THERAPY MANAGEMENT.—

9 ‘‘(A) IN GENERAL.—The outpatient pre10 scription drug assistance provided by the plan

11 shall provide medication therapy management

12 benefits.

13 ‘‘(B) MEDICATION THERAPY MANAGEMENT

14 DEFINED.—For purposes of this title, the term

15 ‘medication therapy management’—

16 ‘‘(i) means a program designed—

17 ‘‘(I) to assure that medications

18 are used appropriately by patients;

19 ‘‘(II) to enhance patients’ under20 standing of the appropriate use of

21 medications;

22 ‘‘(III) to increase patients’ adher23 ence with prescription medication

24 regimens;
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1 ‘‘(IV) to reduce the risk of poten2 tial adverse events associated with

3 medications; and

4 ‘‘(V) to reduce the need for other

5 costly medical services through better

6 management of medication therapy;

7 and

8 ‘‘(ii) includes services provided or co9 ordinated by pharmacy providers (in co10 operation with physicians when necessary),

11 involving case management, disease man12 agement, drug therapy management, pa13 tient training and education, counseling,

14 medication refill reminders, drug therapy

15 problem resolution, medication administra16 tion, the provision of special packaging, or

17 other services that enhance the use of pre18 scription medications.

19 ‘‘(C) PROGRAM OPERATION.—A medication

20 therapy management program should—

21 ‘‘(i) identify and provide medication

22 therapy management services to those at

23 risk for potential medication problems,

24 such as those taking multiple medications,
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1 or those with complex or chronic medical

2 conditions;

3 ‘‘(ii) be developed and structured in

4 cooperation with organizations rep5 resenting pharmacy providers, including

6 identifying those medication therapy man7 agement services that will be provided, as

8 well as payment mechanisms for these

9 services;

10 ‘‘(iii) structure and update payments

11 to pharmacy providers to reflect the re12 sources and time involved in the provision

13 of these services; and

14 ‘‘(iv) provide for ongoing evaluation

15 and documentation of these services in im16 proving quality of care and reducing health

17 care costs.

18 ‘‘(b) BENCHMARK BENEFIT PACKAGES.—The bench19 mark benefit packages are as follows:

20 ‘‘(1) MEDICAID OUTPATIENT PRESCRIPTION

21 DRUG COVERAGE.—In the case of—

22 ‘‘(A) a State, the outpatient prescription

23 drug coverage provided under the State med24 icaid plan under title XIX; or
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1 ‘‘(B) a group of States, the outpatient pre2 scription drug coverage provided under the

3 State medicaid plan under such title of one of

4 the States in the group, as identified in the out5 patient prescription drug assistance plan.

6 ‘‘(2) FEHBP-EQUIVALENT OUTPATIENT PRE7 SCRIPTION DRUG COVERAGE.—The outpatient pre8 scription drug coverage provided under the Standard

9 Option Blue Cross and Blue Shield Service Benefit

10 Plan described in and offered under section 8903(1)

11 of title 5, United States Code.

12 ‘‘(3) STATE EMPLOYEE OUTPATIENT PRESCRIP13 TION DRUG COVERAGE.—In the case of—

14 ‘‘(A) a State, the outpatient prescription

15 drug coverage provided under a health benefits

16 coverage plan that is offered and generally

17 available to State employees in the State in18 volved; or

19 ‘‘(B) a group of States, the outpatient pre20 scription drug coverage provided under a health

21 benefits coverage plan that is offered and gen22 erally available to State employees in one of the

23 States in the group, as identified in the out24 patient prescription drug assistance plan.
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1 ‘‘(4) OUTPATIENT PRESCRIPTION DRUG COV2 ERAGE OFFERED THROUGH LARGEST HMO.—In the

3 case of—

4 ‘‘(A) a State, the outpatient prescription

5 drug coverage provided under a health insur6 ance coverage plan that is offered by a health

7 maintenance organization (as defined in section

8 2791(b)(3) of the Public Health Service Act)

9 and has the largest insured commercial, non10 medicaid enrollment of covered lives of such

11 coverage plans offered by such a health mainte12 nance organization in the State involved; or

13 ‘‘(B) a group of States, the outpatient pre14 scription drug coverage provided under a health

15 insurance coverage plan that is offered by a

16 health maintenance organization (as defined in

17 section 2791(b)(3) of the Public Health Service

18 Act) and has the largest insured commercial,

19 nonmedicaid enrollment of covered lives of such

20 coverage plans offered by such a health mainte21 nance organization in one of the States in22 volved.

23 ‘‘(c) DETERMINATION OF ACTUARIAL VALUE OF

24 COVERAGE.—
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1 ‘‘(1) IN GENERAL.—The actuarial value of out2 patient prescription drug coverage offered under

3 benchmark benefit packages and the outpatient pre4 scription drug assistance plan shall be set forth in

5 an opinion in a report that has been prepared—

6 ‘‘(A) by an individual who is a member of

7 the American Academy of Actuaries;

8 ‘‘(B) using generally accepted actuarial

9 principles and methodologies;

10 ‘‘(C) using a standardized set of utilization

11 and price factors;

12 ‘‘(D) using a standardized population that

13 is representative of the population to be covered

14 under the outpatient prescription drug assist15 ance plan;

16 ‘‘(E) applying the same principles and fac17 tors in comparing the value of different cov18 erage;

19 ‘‘(F) without taking into account any dif20 ferences in coverage based on the method of de21 livery or means of cost control or utilization

22 used; and

23 ‘‘(G) taking into account the ability of a

24 State or group of States to reduce benefits by

25 taking into account the increase in actuarial
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1 value of benefits coverage offered under the

2 outpatient prescription drug assistance plan

3 that results from the limitations on cost-sharing

4 under such coverage.

5 ‘‘(2) REQUIREMENT.—The actuary preparing

6 the opinion shall select and specify in the report the

7 standardized set and population to be used under

8 subparagraphs (C) and (D) of paragraph (1).

9 ‘‘(d) PROHIBITED COVERAGE.—Nothing in this sec10 tion shall be construed as requiring any outpatient pre11 scription drug coverage offered under the plan to provide

12 coverage for an outpatient prescription drug for which

13 payment is prohibited under this title, notwithstanding

14 that any benchmark benefit package includes coverage for

15 such an outpatient prescription drug.

16 ‘‘(e) DESCRIPTION OF EXISTING COMPREHENSIVE

17 STATE-BASED COVERAGE.—

18 ‘‘(1) IN GENERAL.—A program described in

19 this paragraph is an outpatient prescription drug

20 coverage program for individuals who are entitled to

21 benefits under part A of title XVIII or enrolled

22 under part B of such title, including an individual

23 enrolled in a Medicare+Choice plan under part C of

24 such title, that—
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1 ‘‘(A) is administered or overseen by the

2 State and receives funds from the State;

3 ‘‘(B) was offered as of the date of the en4 actment of this title;

5 ‘‘(C) does not receive or use any Federal

6 funds;

7 ‘‘(D) is certified by the Secretary as pro8 viding outpatient prescription drug coverage

9 that satisfies the scope of coverage required

10 under subparagraph (A), (B), or (D) of sub11 section (a)(1); and

12 ‘‘(E) provides medication therapy manage13 ment programs described in subsection (a)(3).

14 ‘‘(2) MODIFICATIONS.—A State may modify a

15 program described in paragraph (1) from time to

16 time so long as it does not reduce the actuarial value

17 (evaluated as of the time of the modification) of the

18 outpatient prescription drug coverage under the pro19 gram below the lower of—

20 ‘‘(A) the actuarial value of the coverage

21 under the program as of the date of enactment

22 of this title; or

23 ‘‘(B) the actuarial value described in sub24 section (a)(1)(B).
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1 ‘‘(f) BENEFICIARY PREMIUMS AND COST-SHAR2 ING.—

3 ‘‘(1) DESCRIPTION; GENERAL CONDITIONS.—

4 ‘‘(A) DESCRIPTION.—

5 ‘‘(i) IN GENERAL.—An outpatient pre6 scription drug assistance plan shall include

7 a description, consistent with this sub8 section, of the amount of any premiums or

9 cost-sharing imposed under the plan.

10 ‘‘(ii) PUBLIC SCHEDULE OF

11 CHARGES.—Any premium or cost-sharing

12 described under clause (i) shall be imposed

13 under the plan pursuant to a public sched14 ule.

15 ‘‘(B) PROTECTION FOR BENEFICIARIES.—

16 The outpatient prescription drug assistance

17 plan may only vary premiums and cost-sharing

18 based on the family income of low-income medi19 care beneficiaries and, if applicable, medicare

20 beneficiaries with high drug costs, in a manner

21 that does not favor such beneficiaries with high22 er income over beneficiaries with low-income.

23 ‘‘(2) LIMITATIONS ON PREMIUMS AND COST24 SHARING.—
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1 ‘‘(A) NO PREMIUMS OR COST-SHARING FOR

2 BENEFICIARIES WITH INCOME BELOW 100 PER3 CENT OF POVERTY LINE.—In the case of a low4 income medicare beneficiary whose family in5 come does not exceed 100 percent of the pov6 erty line, the outpatient prescription drug as7 sistance plan may not impose any premium or

8 cost-sharing.

9 ‘‘(B) OTHER BENEFICIARIES.—For low-in10 come medicare beneficiaries not described in

11 subparagraph (A) and, if applicable, medicare

12 beneficiaries with high drug costs, any pre13 miums or cost-sharing imposed under the out14 patient prescription drug assistance plan may

15 be imposed, subject to paragraph (1)(B), on a

16 sliding scale related to income, except that the

17 total annual aggregate of such premiums and

18 cost-sharing with respect to all such bene19 ficiaries in a family under this title may not ex20 ceed 5 percent of such family’s income for the

21 year involved.

22 ‘‘(g) RESTRICTION ON APPLICATION OF PRE23 EXISTING CONDITION EXCLUSIONS.—The outpatient pre24 scription drug assistance plan shall not permit the imposi25 tion of any preexisting condition exclusion for covered ben-
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1 efits under the plan and may not discriminate in the pric2 ing of premiums under such plan because of health status,

3 claims experience, receipt of health care, or medical condi4 tion.

5 ‘‘SEC. 2204. ALLOTMENTS.

6 ‘‘(a) APPROPRIATION.—

7 ‘‘(1) IN GENERAL.—For the purpose of pro8 viding allotments under this section to States, there

9 is appropriated, out of any money in the Treasury

10 not otherwise appropriated—

11 ‘‘(A) for fiscal year 2001, $2,600,000,000;

12 ‘‘(B) for fiscal year 2002, $6,100,000,000;

13 ‘‘(C) for fiscal year 2003,

14 $12,200,000,000; and

15 ‘‘(D) for fiscal year 2004,

16 $16,000,000,000.

17 ‘‘(2) AVAILABILITY.—Amounts appropriated

18 under paragraph (1) shall only be available for pro19 viding the allotments described in such paragraph

20 during the fiscal year for which such amounts are

21 appropriated. Any amounts that have not been obli22 gated by the Secretary for the purposes of making

23 payments from such allotments under section 2205,

24 or under contracts entered into under section

25 2209(b)(2)(B), on or before September 30 of fiscal
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1 year 2001, 2002, 2003, or 2004 (as applicable),

2 shall be returned to the Treasury.

3 ‘‘(b) ALLOTMENTS TO 50 STATES AND DISTRICT OF

4 COLUMBIA.—

5 ‘‘(1) IN GENERAL.—Subject to paragraph (3),

6 of the amount available for allotment under sub7 section (a) for a fiscal year, reduced by the amount

8 of allotments made under subsection (c) for the fis9 cal year, the Secretary shall allot to each State

10 (other than a State described in such subsection)

11 with an outpatient prescription drug assistance plan

12 approved under this title the same proportion as the

13 ratio of—

14 ‘‘(A) the number of medicare beneficiaries

15 with family income that does not exceed 175

16 percent of the poverty line residing in the State

17 for the fiscal year; to

18 ‘‘(B) the total number of such beneficiaries

19 residing in all such States.

20 ‘‘(2) DETERMINATION OF NUMBER OF MEDI21 CARE BENEFICIARIES WITH INCOME THAT DOES NOT

22 EXCEED 175 PERCENT OF POVERTY.—For purposes

23 of paragraph (1), a determination of the number of

24 medicare beneficiaries with family income that does

25 not exceed 175 percent of the poverty line residing
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1 in a State for the calendar year in which such fiscal

2 year begins shall be made on the basis of the arith3 metic average of the number of such medicare bene4 ficiaries, as reported and defined in the 5 most re5 cent March supplements to the Current Population

6 Survey of the Bureau of the Census before the be7 ginning of the fiscal year.

8 ‘‘(3) MINIMUM ALLOTMENT.—In no case shall

9 the amount of the allotment under this subsection

10 for one of the 50 States or the District of Columbia

11 for a fiscal year be less than an amount equal to 0.5

12 percent of the amount provided for allotments under

13 subsection (a) for that fiscal year (reduced by the

14 amount of allotments made under subsection (c) for

15 the fiscal year). To the extent that the application

16 of the previous sentence results in an increase in the

17 allotment to a State or the District of Columbia

18 above the amount otherwise provided, the allotments

19 for the other States and the District of Columbia

20 under this subsection shall be reduced in a pro rata

21 manner (but not below the minimum allotment de22 scribed in such preceding sentence) so that the total

23 of such allotments in a fiscal year does not exceed

24 the amount otherwise provided for allotment under

25 subsection (a) for that fiscal year (as so reduced).
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1 ‘‘(c) ALLOTMENTS TO TERRITORIES.—

2 ‘‘(1) IN GENERAL.—Of the amount available for

3 allotment under subsection (a) for a fiscal year, the

4 Secretary shall allot 0.25 percent among each of the

5 commonwealths and territories described in para6 graph (3) in the same proportion as the percentage

7 specified in paragraph (2) for such commonwealth or

8 territory bears to the sum of such percentages for all

9 such commonwealths or territories so described.

10 ‘‘(2) PERCENTAGE.—The percentage specified

11 in this paragraph for—

12 ‘‘(A) Puerto Rico is 91.6 percent;

13 ‘‘(B) Guam is 3.5 percent;

14 ‘‘(C) the United States Virgin Islands is

15 2.6 percent;

16 ‘‘(D) American Samoa is 1.2 percent; and

17 ‘‘(E) the Northern Mariana Islands is 1.1

18 percent.

19 ‘‘(3) COMMONWEALTHS AND TERRITORIES.—A

20 commonwealth or territory described in this para21 graph is any of the following if it has an outpatient

22 prescription drug assistance plan approved under

23 this title:

24 ‘‘(A) Puerto Rico.

25 ‘‘(B) Guam.
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1 ‘‘(C) The United States Virgin Islands.

2 ‘‘(D) American Samoa.

3 ‘‘(E) The Northern Mariana Islands.

4 ‘‘(d) TRANSFER OF CERTAIN ALLOTMENTS AND

5 PORTIONS OF ALLOTMENTS.—

6 ‘‘(1) TRANSFER AND REDISTRIBUTION.—

7 ‘‘(A) IN GENERAL.—Subject to subpara8 graph (B), not later than 30 days after the date

9 described in paragraph (2)—

10 ‘‘(i) 90 percent of the allotment deter11 mined for a fiscal year under subsection

12 (b) or (c) for a State shall be transferred

13 and made available in such fiscal year to

14 the Secretary, acting through the Adminis15 trator of the Health Care Financing Ad16 ministration, for purposes of carrying out

17 the default program established under sec18 tion 2209; and

19 ‘‘(ii) 10 percent of such allotment

20 shall be redistributed in accordance with

21 subsection (e).

22 ‘‘(B) APPLICABILITY.—Subparagraph (A)

23 shall not apply if, not later than the date de24 scribed in paragraph (2) for such fiscal year, a

25 State submits a plan or is part of a group of
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1 States that submits a plan to the Secretary that

2 the Secretary finds meets the requirements of

3 section 2201(b).

4 ‘‘(2) DATE DESCRIBED.—The date described in

5 this paragraph is—

6 ‘‘(A) in the case of fiscal year 2001, De7 cember 31, 2000; and

8 ‘‘(B) in the case of fiscal year 2002, 2003,

9 or 2004, September 1 of the fiscal year pre10 ceding such fiscal year.

11 ‘‘(e) REDISTRIBUTION OF PORTION OF ALLOT12 MENTS.—With respect to a fiscal year, not later than 30

13 days after the date described in subsection (d)(2) for such

14 fiscal year, the Secretary shall redistribute the total

15 amount made available for redistribution for such fiscal

16 year under subsection (d)(1)(A)(ii) to each State that sub17 mits a plan or is part of a group of States that submits

18 a plan to the Secretary that the Secretary finds meets the

19 requirements of this title. Such amount shall be redistrib20 uted in the same manner as allotments are determined

21 under subsections (b) and (c) and shall be available only

22 to the extent consistent with subsection (a)(2).

23 ‘‘SEC. 2205. PAYMENTS TO STATES.

24 ‘‘(a) IN GENERAL.—Subject to the succeeding provi25 sions of this section, the Secretary shall pay to each State
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1 with a plan approved under section 2206(a)(2) (individ2 ually or as part of a group of States) from the State’s

3 allotment under section 2204, an amount for each quarter

4 equal to the applicable percentage of expenditures in the

5 quarter—

6 ‘‘(1) for outpatient prescription drug assistance

7 under the plan for low-income medicare beneficiaries

8 and, if applicable, medicare beneficiaries with high

9 drug costs in the form of providing coverage for out10 patient prescription drugs that meets the require11 ments of section 2203; and

12 ‘‘(2) only to the extent permitted consistent

13 with subsection (c), for reasonable costs incurred to

14 administer the plan.

15 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of

16 subsection (a), the applicable percentage is—

17 ‘‘(1) for low-income medicare beneficiaries with

18 family incomes that do not exceed 135 percent of

19 the poverty line, 100 percent; and

20 ‘‘(2) for all other low-income medicare bene21 ficiaries and for medicare beneficiaries with high

22 drug costs, the enhanced FMAP (as defined in sec23 tion 2105(b)).

24 ‘‘(c) LIMITATION ON PAYMENTS FOR CERTAIN EX25 PENDITURES.—
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1 ‘‘(1) GENERAL LIMITATIONS.—Funds provided

2 to a State or group of States under this title shall

3 only be used to carry out the purposes of this title.

4 ‘‘(2) ADMINISTRATIVE EXPENDITURES.—

5 ‘‘(A) IN GENERAL.—Subject to subpara6 graph (B), payment shall not be made under

7 subsection (a) for expenditures described in

8 subsection (a)(2) for a fiscal year to the extent

9 the total of such expenditures (for which pay10 ment is made under such subsection) exceeds

11 10 percent of the total expenditures described

12 in subsection (a)(1) made by—

13 ‘‘(i) in the case of a State that is not

14 part of a group of States, the State for

15 such fiscal year; and

16 ‘‘(ii) in the case of a group of States,

17 the group for such fiscal year.

18 ‘‘(B) SPECIAL RULE.—With respect to the

19 first fiscal year that a State or group of States

20 provides outpatient prescription drug assistance

21 under a plan approved under this title, the 10

22 percent limitation described in subparagraph

23 (A) shall be applied—

24 ‘‘(i) in the case of a State that is not

25 part of a group of States, to the allotment
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1 available for such State for such fiscal

2 year; and

3 ‘‘(ii) in the case of a group of States,

4 to the aggregate of the State allotments

5 available for all the States in such group

6 for such fiscal year.

7 ‘‘(3) USE OF NON-FEDERAL FUNDS FOR STATE

8 MATCHING REQUIREMENT.—Amounts provided by

9 the Federal Government, or services assisted or sub10 sidized to any significant extent by the Federal Gov11 ernment, may not be included in determining the

12 amount of the non-Federal share of plan expendi13 tures required under the plan.

14 ‘‘(4) OFFSET OF RECEIPTS ATTRIBUTABLE TO

15 PREMIUMS OR COST-SHARING.—For purposes of sub16 section (a), the amount of the expenditures under

17 the plan shall be reduced by the amount of any pre18 miums or cost-sharing received by a State.

19 ‘‘(5) PREVENTION OF DUPLICATIVE PAY20 MENTS.—

21 ‘‘(A) OTHER HEALTH PLANS.—No pay22 ment shall be made under this section for ex23 penditures for outpatient prescription drug as24 sistance provided under an outpatient prescrip25 tion drug assistance plan to the extent that a
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1 private insurer (as defined by the Secretary by

2 regulation and including a group health plan, a

3 service benefit plan, and a health maintenance

4 organization) would have been obligated to pro5 vide such assistance but for a provision of its

6 insurance contract which has the effect of lim7 iting or excluding such obligation because the

8 beneficiary is eligible for or is provided out9 patient prescription drug assistance under the

10 plan.

11 ‘‘(B) OTHER FEDERAL GOVERNMENTAL

12 PROGRAMS.—Except as otherwise provided by

13 law (including section 2202(b)(2)(B) and

14 2202(d)(1)), no payment shall be made under

15 this section for expenditures for outpatient pre16 scription drug assistance provided under an

17 outpatient prescription drug assistance plan to

18 the extent that payment has been made or can

19 reasonably be expected to be made promptly (as

20 determined in accordance with regulations)

21 under any other federally operated or financed

22 health care insurance program identified by the

23 Secretary. For purposes of this paragraph,

24 rules similar to the rules for overpayments

25 under section 1903(d)(2) shall apply.
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1 ‘‘(6) MEDICATION THERAPY MANAGEMENT.—A

2 State shall allocate a reasonable percentage of total

3 program expenditures allocated under subsection

4 (a)(1) for the purpose of establishing and compen5 sating pharmacy providers for medication therapy

6 management services described in section

7 2203(a)(3).

8 ‘‘(d) ADVANCE PAYMENT; RETROSPECTIVE ADJUST9 MENT.—The Secretary may make payments under this

10 section for each quarter on the basis of advance estimates

11 of expenditures submitted by a State or group of States

12 and such other investigation as the Secretary may find

13 necessary, and may reduce or increase the payments as

14 necessary to adjust for any overpayment or underpayment

15 for prior quarters.

16 ‘‘(e) FLEXIBILITY IN SUBMITTAL OF CLAIMS.—

17 Nothing in this section shall be construed as preventing

18 a State or group of States from claiming as expenditures

19 in any quarter of a fiscal year expenditures that were in20 curred in a previous quarter of such fiscal year.

21 ‘‘(f) NO MAINTENANCE OF EFFORT REQUIRED.—

22 Nothing in this title shall be construed as requiring a

23 State that has a medicare pharmaceutical assistance pro24 gram in effect before the effective date of this title to

25 maintain such a program or to maintain the level of effort
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1 or expenditure made under such program before this title

2 was enacted.

3 ‘‘SEC. 2206. PROCESS FOR SUBMISSION, APPROVAL, AND

4 AMENDMENT OF OUTPATIENT PRESCRIP5 TION DRUG ASSISTANCE PLANS.

6 ‘‘(a) INITIAL PLAN.—

7 ‘‘(1) SUBMISSION.—A State may receive pay8 ments under section 2205 with respect to a fiscal

9 year if the State, individually or as part of a group

10 of States, has submitted to the Secretary, not later

11 than the date described in section 2204(d)(2), an

12 outpatient prescription drug assistance plan that the

13 Secretary has found meets the applicable require14 ments of this title.

15 ‘‘(2) APPROVAL.—Except as the Secretary may

16 provide under subsection (c), a plan submitted under

17 paragraph (1)—

18 ‘‘(A) shall be approved for purposes of this

19 title; and

20 ‘‘(B) shall be effective beginning with a

21 calendar quarter that is specified in the plan,

22 but in no case earlier than October 1, 2000.

23 ‘‘(3) STREAMLINED TREATMENT OF CURRENT

24 STATE-BASED PROGRAMS.—In the case of such a

25 plan that is based on an existing state-based com-
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1 prehensive prescription drug program, the Secretary

2 shall provide for the expediting review of the plan

3 under this section.

4 ‘‘(b) PLAN AMENDMENTS.—Within 30 days after a

5 State or group of States amends an outpatient prescrip6 tion drug assistance plan submitted pursuant to sub7 section (a), the State or group shall notify the Secretary

8 of the amendment.

9 ‘‘(c) DISAPPROVAL OF PLANS AND PLAN AMEND10 MENTS.—

11 ‘‘(1) PROMPT REVIEW OF PLAN SUBMITTALS.—

12 The Secretary shall promptly review plans and plan

13 amendments submitted under this section to deter14 mine if they substantially comply with the require15 ments of this title.

16 ‘‘(2) 45-DAY APPROVAL DEADLINES.—A plan or

17 plan amendment is considered approved unless the

18 Secretary notifies the State or group of States in

19 writing, within 45 days after receipt of the plan or

20 amendment, that the plan or amendment is dis21 approved (and the reasons for the disapproval) or

22 that specified additional information is needed.

23 ‘‘(3) CORRECTION.—In the case of a dis24 approval of a plan or plan amendment, the Secretary

25 shall provide a State or group of States with a rea-
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1 sonable opportunity for correction before taking fi2 nancial sanctions against the State or group on the

3 basis of such disapproval.

4 ‘‘(d) PROGRAM OPERATION.—

5 ‘‘(1) IN GENERAL.—A State or group of States

6 shall conduct the program in accordance with the

7 plan (and any amendments) approved under this

8 section and with the requirements of this title.

9 ‘‘(2) VIOLATIONS.—The Secretary shall estab10 lish a process for enforcing requirements under this

11 title. Such process shall provide for the withholding

12 of funds in the case of substantial noncompliance

13 with such requirements. In the case of an enforce14 ment action against a State or group of States

15 under this paragraph, the Secretary shall provide a

16 State or group of States with a reasonable oppor17 tunity for correction and for administrative and judi18 cial appeal of the Secretary’s action before taking fi19 nancial sanctions against the State or group of

20 States on the basis of such an action.

21 ‘‘(e) CONTINUED APPROVAL.—Subject to section

22 2201(d), an approved outpatient prescription drug assist23 ance plan shall continue in effect unless and until the

24 State or group of States amends the plan under subsection

25 (b) or the Secretary finds, under subsection (d), substan-
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1 tial noncompliance of the plan with the requirements of

2 this title.

3 ‘‘SEC. 2207. PLAN ADMINISTRATION; APPLICATION OF CER4 TAIN GENERAL PROVISIONS.

5 ‘‘(a) PLAN ADMINISTRATION.—An outpatient pre6 scription drug assistance plan shall include an assurance

7 that the State or group of States administering the plan

8 will collect the data, maintain the records, afford the Sec9 retary access to any records or information relating to the

10 plan for the purposes of review or audit, and furnish re11 ports to the Secretary, at the times and in the standard12 ized format the Secretary may require in order to enable

13 the Secretary to monitor program administration and

14 compliance and to evaluate and compare the effectiveness

15 of plans under this title.

16 ‘‘(b) APPLICATION OF CERTAIN GENERAL PROVI17 SIONS.—The following sections of this Act shall apply to

18 the program established under this title in the same man19 ner as they apply to a State under title XIX:

20 ‘‘(1) TITLE XIX PROVISIONS.—

21 ‘‘(A) Section 1902(a)(4)(C) (relating to

22 conflict of interest standards).

23 ‘‘(B) Paragraphs (2), (16), and (17) of

24 section 1903(i) (relating to limitations on pay25 ment).
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1 ‘‘(C) Section 1903(w) (relating to limita2 tions on provider taxes and donations).

3 ‘‘(2) TITLE XI PROVISIONS.—

4 ‘‘(A) Section 1115 (relating to waiver au5 thority).

6 ‘‘(B) Section 1116 (relating to administra7 tive and judicial review), but only insofar as

8 consistent with this title.

9 ‘‘(C) Section 1124 (relating to disclosure

10 of ownership and related information).

11 ‘‘(D) Section 1126 (relating to disclosure

12 of information about certain convicted individ13 uals).

14 ‘‘(E) Section 1128A (relating to civil mon15 etary penalties).

16 ‘‘(F) Section 1128B(d) (relating to crimi17 nal penalties for certain additional charges).

18 ‘‘SEC. 2208. REPORTS.

19 ‘‘(a) IN GENERAL.—Each State or group of States

20 administering a plan under this title shall annually—

21 ‘‘(1) assess the operation of the outpatient pre22 scription drug assistance plan under this title in

23 each fiscal year; and

24 ‘‘(2) report to the Secretary on the result of the

25 assessment.
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1 ‘‘(b) REQUIRED INFORMATION.—The annual report

2 required under subsection (a) shall include the following:

3 ‘‘(1) An assessment of the effectiveness of the

4 plan in providing outpatient prescription drug assist5 ance to low-income medicare beneficiaries and, if ap6 plicable, medicare beneficiaries with high drug costs.

7 ‘‘(2) A description and analysis of the effective8 ness of elements of the plan, including—

9 ‘‘(A) the characteristics of the low-income

10 medicare beneficiaries and, if applicable, medi11 care beneficiaries with high drug costs assisted

12 under the plan, including family income and ac13 cess to, or coverage by, other health insurance

14 prior to the plan and after eligibility for the

15 plan ends;

16 ‘‘(B) the amount and level of assistance

17 provided under the plan; and

18 ‘‘(C) the sources of the non-Federal share

19 of plan expenditures.

20 ‘‘(c) ANNUAL REPORT OF THE SECRETARY.—The

21 Secretary shall submit to Congress and make available to

22 the public an annual report based on the reports required

23 under subsection (a) and section 2209(b)(5), containing

24 any conclusions and recommendations the Secretary con25 siders appropriate.
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1 ‘‘SEC. 2209. ESTABLISHMENT OF DEFAULT PROGRAM.

2 ‘‘(a) PROGRAM AUTHORITY.—

3 ‘‘(1) IN GENERAL.—With respect to a fiscal

4 year, in the case of a State that fails to submit (in5 dividually or as part of a group of States) an ap6 proved outpatient prescription drug assistance plan

7 to the Secretary by the date described in section

8 2204(d)(2) for such fiscal year, outpatient prescrip9 tion drug assistance to low-income medicare bene10 ficiaries and, subject to the availability of funds,

11 medicare beneficiaries with high drug costs, who re12 side in such State shall be provided during such fis13 cal year by the Secretary, through the Administrator

14 of the Health Care Financing Administration, in ac15 cordance with this section.

16 ‘‘(2) DEFINITIONS.—In this section:

17 ‘‘(A) CONTRACTOR.—The term ‘contractor’

18 means a pharmaceutical benefit manager or

19 other entity that meets standards established by

20 the Administrator of the Health Care Financing

21 Administration for the provision of outpatient

22 prescription drug assistance under a contract

23 entered into under this section.

24 ‘‘(B) LOW-INCOME MEDICARE BENE25 FICIARY.—The term ‘low-income medicare bene26 ficiary’ means an individual who—
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1 ‘‘(i) satisfies the requirements of sub2 paragraphs (A) and (B) of section

3 2202(b)(1);

4 ‘‘(ii) is determined to have family in5 come that does not exceed a percentage of

6 the poverty line for a family of the size in7 volved specified by the Administrator of

8 the Health Care Financing Administration

9 that may not exceed 135 percent; and

10 ‘‘(iii) at the option of the Adminis11 trator of the Health Care Financing Ad12 ministration, is determined to have re13 sources that do not exceed a level specified

14 by such Administrator.

15 ‘‘(C) MEDICARE BENEFICIARY WITH HIGH

16 DRUG COSTS.—The term ‘medicare beneficiary

17 with high drug costs’ means an individual—

18 ‘‘(i) who satisfies the requirements of

19 subparagraphs (A) and (B) of section

20 2202(b)(1);

21 ‘‘(ii) whose family income exceeds the

22 percentage of the poverty line specified by

23 the Administrator of the Health Care Fi24 nancing Administration under subpara-
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1 graph (B)(ii) for a low-income medicare

2 beneficiary residing in the same State;

3 ‘‘(iii) whose resources exceed a level

4 (if any) specified by the Administrator of

5 the Health Care Financing Administration

6 under subparagraph (B)(iii) for a low-in7 come medicare beneficiary residing in the

8 same State; and

9 ‘‘(iv) with respect to any 3-month pe10 riod, who has out-of-pocket expenses for

11 outpatient prescription drugs and

12 biologicals (including insulin and insulin

13 supplies) for which outpatient prescription

14 drug assistance is available under this title

15 that exceed a level specified by such Ad16 ministrator (consistent with the availability

17 of funds for the operation of the program

18 established under this section in the State

19 where the beneficiary resides).

20 ‘‘(b) ADMINISTRATION.—In administering the default

21 program established under this section, the Administrator

22 of the Health Care Financing Administration shall—

23 ‘‘(1) establish procedures to determine the eligi24 bility of the low-income medicare beneficiaries and

25 medicare beneficiaries with high drug costs described
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1 in subsection (a) for outpatient prescription drug as2 sistance;

3 ‘‘(2) establish a process for accepting bids to

4 provide outpatient prescription drug assistance to

5 such beneficiaries, awarding contracts under such

6 bids, and making payments under such contracts;

7 ‘‘(3) establish policies and procedures for over8 seeing the provision of outpatient prescription drug

9 assistance under such contracts;

10 ‘‘(4) develop and implement quality and service

11 assessment measures that include beneficiary quality

12 surveys and annual quality and service rankings for

13 contractors awarded a contract under this section;

14 ‘‘(5) annually assess the program established

15 under this section and submit a report to the Sec16 retary containing the information required under

17 section 2208(b); and

18 ‘‘(6) carry out such other responsibilities as are

19 necessary for the administration of the provision of

20 outpatient prescription drug assistance under this

21 section.

22 ‘‘(c) CONTRACT REQUIREMENTS.—

23 ‘‘(1) AUTHORITY; TERM.—

24 ‘‘(A) USE OF COMPETITIVE PROCE25 DURES.—
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1 ‘‘(i) FISCAL YEAR 2001.—With respect

2 to fiscal year 2001, the Administrator of

3 the Health Care Financing Administration

4 may enter into contracts under this section

5 without using competitive procedures, as

6 defined in section 4(5) of the Office of

7 Federal Procurement Policy Act (41

8 U.S.C. 403(5)), or any other provision of

9 law requiring competitive bidding.

10 ‘‘(ii) FISCAL YEARS 2002, 2003, AND

11 2004.—With respect to fiscal years 2002,

12 2003, and 2004, the Administrator of the

13 Health Care Financing Administration

14 shall award contracts under this section

15 using competitive procedures (as so de16 fined).

17 ‘‘(B) TERM.—Each contract shall be for a

18 uniform term of at least 1 year, but may be

19 made automatically renewable from term to

20 term in the absence of notice of termination by

21 either party.

22 ‘‘(2) BENEFIT.—The contract shall require the

23 contractor to provide a low-income medicare bene24 ficiary and, if applicable, a medicare beneficiary with

25 high drug costs, outpatient prescription drug assist-
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1 ance that is equivalent to the FEHBP-equivalent

2 benchmark benefit package described in section

3 2203(b)(2) and provide medication therapy manage4 ment benefits as described in section 2203(a)(3) in

5 a manner that is consistent with the provisions of

6 this title as such provisions apply to a State that

7 provides such assistance. Net aggregate expenditures

8 for medication therapy management services shall be

9 consistent with required allocations for such services

10 under section 2205(c)(6).

11 ‘‘(3) QUALITY AND SERVICE ASSESSMENT.—

12 The contract shall require the contractor to cooper13 ate with the quality and service assessment meas14 ures implemented in accordance with subsection

15 (b)(4).

16 ‘‘(4) PAYMENTS.—The contract shall specify

17 the amount and manner by which payments (includ18 ing any administrative fees) shall be made to the

19 contractor for the provision of outpatient prescrip20 tion drug assistance to low-income medicare bene21 ficiaries and, if applicable, medicare beneficiaries

22 with high drug costs.

23 ‘‘(5) ENSURING PATIENT ACCESS AND CHOICE

24 OF PHARMACY PROVIDERS.—The contract shall re25 quire the contractor—
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1 ‘‘(A) to allow any licensed pharmacy or

2 pharmacist to participate as a pharmacy pro3 vider in providing benefits under this section so

4 long as the pharmacy or pharmacist is willing

5 to abide by the terms and conditions the con6 tractor establishes to participate;

7 ‘‘(B) to establish reimbursement rates to

8 pharmacy providers that are reasonable and

9 adequate to cover the costs of items and related

10 pharmacy services, including the costs of the

11 product, all costs associated with the dispensing

12 of the product, and the costs of providing medi13 cation therapy management services described

14 in section 2203(a)(3);

15 ‘‘(C) not to vary pharmacy payment

16 amounts based upon the size of the entity dis17 pensing the prescription or factors commonly

18 associated with the size of the entity such as

19 annual prescription volume; and

20 ‘‘(D) not to vary beneficiary cost-sharing

21 amounts based upon the source of dispensing or

22 method of distribution of the prescription.

23 ‘‘(d) FUNDING.—

24 ‘‘(1) AGGREGATE OF TRANSFERRED

25 AMOUNTS.—The Secretary, through the Adminis-
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1 trator of the Health Care Financing Administration,

2 shall use the aggregate of the amounts transferred

3 and made available under section 2204(d)(1)(A)(i)

4 for purposes of carrying out the default program es5 tablished under this section. Such aggregate may be

6 used to provide outpatient prescription drug assist7 ance to any low-income medicare beneficiary, and,

8 subject to the availability of funds, medicare bene9 ficiary with high drug costs, who resides in a State

10 described in subsection (a)(1).

11 ‘‘(2) LIMITATION ON ADMINISTRATIVE COSTS.—

12 Administrative expenditures incurred by the Sec13 retary or the Administrator of the Health Care Fi14 nancing Administration for a fiscal year to carry out

15 this section (other than administrative fees paid to

16 a contractor under a contract meeting the require17 ments of subsection (c))—

18 ‘‘(A) shall be paid out of the aggregate

19 amounts described in paragraph (1); and

20 ‘‘(B) may not exceed an amount equal to

21 1 percent of all premiums imposed for such fis22 cal year to provide outpatient prescription drug

23 assistance to low-income medicare beneficiaries

24 and medicare beneficiaries with high drug costs

25 under this section.
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1 ‘‘(e) TERMINATION.—Except as provided in section

2 2201(d)(2), the program established under this section

3 shall terminate on September 30, 2004.

4 ‘‘SEC. 2210. DEFINITIONS.

5 ‘‘In this title:

6 ‘‘(1) COST-SHARING.—The term ‘cost-sharing’

7 means a deductible, coinsurance, copayment, or simi8 lar charge, and includes an enrollment fee.

9 ‘‘(2) OUTPATIENT PRESCRIPTION DRUG ASSIST10 ANCE.—

11 ‘‘(A) IN GENERAL.—The term ‘outpatient

12 prescription drug assistance’ means, subject to

13 subparagraph (B), payment for part or all of

14 the cost of coverage of self-administered out15 patient prescription drugs and biologicals (in16 cluding insulin and insulin supplies) for low-in17 come medicare beneficiaries and, if applicable,

18 medicare beneficiaries with high drug costs.

19 ‘‘(B) EXCLUSIONS.—Such term does not

20 include payment or coverage with respect to—

21 ‘‘(i) items covered under title XVIII;

22 or

23 ‘‘(ii) items for which coverage is not

24 available under a State plan under title

25 XIX.
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1 ‘‘(3) OUTPATIENT PRESCRIPTION DRUG ASSIST2 ANCE PLAN; PLAN.—Unless the context otherwise re3 quires, the terms ‘outpatient prescription drug as4 sistance plan’ and ‘plan’ mean an outpatient pre5 scription drug assistance plan approved under sec6 tion 2206.

7 ‘‘(4) GROUP HEALTH PLAN; GROUP HEALTH IN8 SURANCE COVERAGE; ETC.—The terms ‘group health

9 plan’, ‘group health insurance coverage’, and ‘health

10 insurance coverage’ have the meanings given such

11 terms in section 2791 of the Public Health Service

12 Act (42 U.S.C. 300gg–91).

13 ‘‘(5) POVERTY LINE.—The term ‘poverty line’

14 has the meaning given such term in section 673(2)

15 of the Community Services Block Grant Act (42

16 U.S.C. 9902(2)), including any revision required by

17 such section.

18 ‘‘(6) PREEXISTING CONDITION EXCLUSION.—

19 The term ‘preexisting condition exclusion’ has the

20 meaning given such term in section 2701(b)(1)(A) of

21 the Public Health Service Act (42 U.S.C.

22 300gg(b)(1)(A)).

23 ‘‘(7) STATE.—The term ‘State’ has the mean24 ing given such term for purposes of title XIX.’’.

25 (b) CONFORMING AMENDMENTS.—
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1 (1) DEFINITION OF STATE.—Section

2 1101(a)(1) of the Social Security Act (42 U.S.C.

3 1301(a)(1)) is amended in the first and fourth sen4 tences, by striking ‘‘and XXI’’ each place it appears

5 and inserting ‘‘XXI, and XXII’’.

6 (2) TREATMENT AS STATE HEALTH CARE PRO7 GRAM.—Section 1128(h) of such Act (42 U.S.C.

8 1320a–7(h)) is amended—

9 (A) in paragraph (3), by striking ‘‘or’’ at

10 the end;

11 (B) in paragraph (4), by striking the pe12 riod at the end and inserting ‘‘, or’’; and

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

14 paragraph:

15 ‘‘(5) an outpatient prescription drug assistance

16 plan approved under title XXII.’’.

17 SEC. 3. ELECTION BY LOW-INCOME MEDICARE BENE18 FICIARIES AND MEDICARE BENEFICIARIES

19 WITH HIGH DRUG COSTS TO SUSPEND

20 MEDIGAP INSURANCE.

21 Section 1882(q) of the Social Security Act (42 U.S.C.

22 1395ss(q)) is amended—

23 (1) in paragraph (5)(C), by striking ‘‘this para24 graph or paragraph (6)’’ and inserting ‘‘this para25 graph, or paragraph (6) or (7)’’; and
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1 (2) by adding at the end the following new

2 paragraph:

3 ‘‘(7) Each medicare supplemental policy shall

4 provide that benefits and premiums under the policy

5 shall be suspended at the request of the policyholder

6 if the policyholder is entitled to benefits under sec7 tion 226 and is covered under an outpatient pre8 scription drug assistance plan (as defined in section

9 2210(3)) or provided outpatient prescription drug

10 assistance under the program established under sec11 tion 2209. If such suspension occurs and if the pol12 icyholder or certificate holder loses coverage under

13 such plan or program, such policy shall be automati14 cally reinstituted (effective as of the date of such

15 loss of coverage) under terms described in subsection

16 (n)(6)(A)(ii) as of the loss of such coverage if the

17 policyholder provides notice of loss of such coverage

18 within 90 days after the date of such loss.’’.

Æ