I

107TH CONGRESS

1ST SESSION H. R. 828

To amend title XVIII of the Social Security Act to expand coverage of

preventive services under the Medicare Program and to provide coverage

of outpatient prescription drugs under that program.

IN THE HOUSE OF REPRESENTATIVES

MARCH 1, 2001

Mr. GRUCCI introduced the following bill; which was referred to the Committee

on Energy and Commerce, and in addition to the Committee on Ways

and Means, for a period to be subseqently determined by the Speaker,

in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend title XVIII of the Social Security Act to expand

coverage of preventive services under the Medicare Program and to provide coverage of outpatient prescription

drugs under that program.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Senior’s Health Care Choice Act of 2001’’.

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

7 this Act is as follows:
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Sec. 1. Short title; table of contents.

TITLE I—MEDICARE COVERAGE OF PREVENTIVE SERVICES

Sec. 101. Counseling for cessation of tobacco use.

Sec. 102. Screening for hypertension.

Sec. 103. Counseling for hormone replacement therapy.

Sec. 104. Screening for diminished visual acuity.

Sec. 105. Screening for hearing impairment.

Sec. 106. Screening and counseling for osteoporosis.

Sec. 107. Screening for cholesterol.

Sec. 108. Expansion of coverage of medical nutrition therapy services.

Sec. 109. Expansion of coverage of glaucoma screening.

Sec. 110. Routine annual physical checkups.

Sec. 111. Routine annual dental examinations and cleaning.

Sec. 112. Routine annual eye examinations.

TITLE II—MEDICARE PRESCRIPTION DRUG AND SUPPLEMENTAL

BENEFIT PROGRAM

Sec. 201. Establishment of program.

‘‘TITLE XXII—MEDICARE PRESCRIPTION DRUG BENEFIT

PROGRAM

‘‘Sec. 2201. Establishment of prescription drug and supplemental benefit

program.

‘‘Sec. 2202. Enrollment under program.

‘‘Sec. 2203. Election of a medicare prescription plus plan.

‘‘Sec. 2204. Beneficiary information.

‘‘Sec. 2205. Outpatient prescription drug and other supplemental benefits.

‘‘Sec. 2206. Beneficiary protections.

‘‘Sec. 2207. Requirements for entities offering medicare prescription plus

plans.

‘‘Sec. 2208. Submission of medicare prescription plus plans.

‘‘Sec. 2209. Approval of medicare prescription plus plans.

‘‘Sec. 2210. Payments to medicare prescription plus plans for benefits.

‘‘Sec. 2211. Computation and collection of beneficiary share of premium.

‘‘Sec. 2212. Additional prescription drug subsidies through reinsurance.

‘‘Sec. 2213. Plan fees for administrative costs.

‘‘Sec. 2214. Medicare prescription drug account.

‘‘Sec. 2215. Secondary payer provisions.

‘‘Sec. 2216. Definitions; treatment of references to provisions in

medicare+choice program.

Sec. 202. Amendments to Federal Supplementary Medical Insurance Trust

Fund.

Sec. 203. Prescription drug coverage under the Medicare+Choice program.

Sec. 205. Medigap provisions.
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1 TITLE I—MEDICARE COVERAGE

2 OF PREVENTIVE SERVICES

3 SEC. 101. COUNSELING FOR CESSATION OF TOBACCO USE.

4 (a) COVERAGE.—Section 1861(s)(2) of the Social Se5 curity Act (42 U.S.C. 1395x(s)(2)), as amended by 102(a)

6 and 105(a) of the Medicare, Medicaid, and SCHIP Bene7 fits Improvement and Protection Act of 2000 (as enacted

8 into law by section 1(a)(6) of Public Law 106–554), is

9 amended—

10 (1) in subparagraph (U), by striking ‘‘and’’ at

11 the end;

12 (2) in subparagraph (V), by inserting ‘‘and’’ at

13 the end; and

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

16 ‘‘(W) counseling for cessation of tobacco use (as

17 defined in subsection (vv)) for individuals who have

18 a history of tobacco use;’’.

19 (b) SERVICES DESCRIBED.—Section 1861 of such

20 Act (42 U.S.C. 1395x), as amended by section 102(b) of

21 the Medicare, Medicaid, and SCHIP Benefits Improve22 ment and Protection Act of 2000 (as enacted into law by

23 section 1(a)(6) of Public Law 106–554), is amended by

24 adding at the end the following new subsection:
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1 ‘‘Counseling for Cessation of Tobacco Use

2 ‘‘(vv)(1) Except as provided in paragraph (2), the

3 term ‘counseling for cessation of tobacco use’ means diag4 nostic, therapy, and counseling services for cessation of

5 tobacco use which are furnished—

6 ‘‘(A) by or under the supervision of a physician;

7 or

8 ‘‘(B) by any other health care professional who

9 is legally authorized to furnish such services under

10 State law (or the State regulatory mechanism pro11 vided by State law) of the State in which the serv12 ices are furnished, as would otherwise be covered if

13 furnished by a physician or as an incident to a phy14 sician’s professional service.

15 ‘‘(2) The term ‘counseling for cessation of tobacco

16 use’ does not include coverage for drugs or biologicals that

17 are not otherwise covered under this title.’’.

18 (c) ELIMINATION OF COST-SHARING.—

19 (1) ELIMINATION OF COINSURANCE.—Section

20 1833(a)(1) of such Act (42 U.S.C. 1395l(a)(1)), as

21 amended by section 105(c) and 223(c) of the Medi22 care, Medicaid, and SCHIP Benefits Improvement

23 and Protection Act of 2000 (as enacted into law by

24 section 1(a)(6) of Public Law 106–554), is

25 amended—
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1 (A) by striking ‘‘and’’ before ‘‘(U)’’; and

2 (B) by inserting before the semicolon at

3 the end the following: ‘‘, and (V) with respect

4 to counseling for cessation of tobacco use (as

5 defined in section 1861(vv)), the amount paid

6 shall be 100 percent of the lesser of the actual

7 charge for the services or the amount deter8 mined by a fee schedule established by the Sec9 retary for the purposes of this subparagraph’’.

10 (2) ELIMINATION OF DEDUCTIBLE.—The first

11 sentence of section 1833(b) of such Act (42 U.S.C.

12 1395l(b)) is amended—

13 (A) by striking ‘‘and’’ before ‘‘(6)’’; and

14 (B) by inserting before the period the fol15 lowing: ‘‘, and (7) such deductible shall not

16 apply with respect to counseling for cessation of

17 tobacco use (as defined in section 1861(vv))’’.

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

19 this section shall apply to services furnished on or after

20 January 1, 2002.

21 SEC. 102. SCREENING FOR HYPERTENSION.

22 (a) COVERAGE.—Section 1861(s)(2) of the Social Se23 curity Act (42 U.S.C. 1395x(s)(2)) (as amended by sec24 tion 101(a)) is amended—
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1 (1) in subparagraph (V), by striking ‘‘and’’ at

2 the end;

3 (2) in subparagraph (W), by inserting ‘‘and’’ at

4 the end; and

5 (3) by adding at the end the following new sub6 paragraph:

7 ‘‘(X) screening for hypertension (as defined in

8 subsection (ww)) not more frequently than once

9 every 2 years for individuals with normotensive

10 blood pressure measurements and annually for indi11 viduals with blood pressure measurements that are

12 not normotensive;’’.

13 (b) SERVICES DESCRIBED.—Section 1861 of such

14 Act (42 U.S.C. 1395x) (as amended by section 101(b))

15 is amended by adding at the end the following new sub16 section:

17 ‘‘Screening for Hypertension

18 ‘‘(ww) The term ‘screening for hypertension’ means

19 diagnostic services for hypertension which are furnished—

20 ‘‘(1) by or under the supervision of a physician;

21 or

22 ‘‘(2) by any other health care professional who

23 is legally authorized to furnish such services under

24 State law (or the State regulatory mechanism pro25 vided by State law) of the State in which the serv-
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1 ices are furnished, as would otherwise be covered if

2 furnished by a physician or as an incident to a phy3 sician’s professional service.’’.

4 (c) ELIMINATION OF COST-SHARING.—

5 (1) ELIMINATION OF COINSURANCE.—Section

6 1833(a)(1) of such Act (42 U.S.C. 1395l(a)(1)) (as

7 amended by section 101(c)(1)) is amended—

8 (A) by striking ‘‘and’’ before ‘‘(V)’’; and

9 (B) by inserting before the semicolon at

10 the end the following: ‘‘, and (W) with respect

11 to screening for hypertension (as defined in sec12 tion 1861(ww)), the amount paid shall be 100

13 percent of the lesser of the actual charge for

14 the services or the amount determined by a fee

15 schedule established by the Secretary for the

16 purposes of this subparagraph;’’.

17 (2) ELIMINATION OF DEDUCTIBLE.—The first

18 sentence of section 1833(b) of such Act (42 U.S.C.

19 1395l(b)) (as amended by section 101(c)(2)) is

20 amended—

21 (A) by striking ‘‘and’’ before ‘‘(7)’’; and

22 (B) by inserting before the period the fol23 lowing: ‘‘, and (8) such deductible shall not

24 apply with respect to screening for hypertension

25 (as defined in section 1861(ww))’’.
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1 (d) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to services furnished on or after

3 January 1, 2002.

4 SEC. 103. COUNSELING FOR HORMONE REPLACEMENT

5 THERAPY.

6 (a) COVERAGE.—Section 1861(s)(2) of the Social Se7 curity Act (42 U.S.C. 1395x(s)(2)) (as amended by sec8 tion 102(a)) is amended—

9 (1) in subparagraph (W), by striking ‘‘and’’ at

10 the end;

11 (2) in subparagraph (X), by inserting ‘‘and’’ at

12 the end; and

13 (3) by adding at the end the following new sub14 paragraph:

15 ‘‘(Y) counseling for hormone replacement ther16 apy (as defined in subsection (xx));’’.

17 (b) SERVICES DESCRIBED.—Section 1861 of such

18 Act (42 U.S.C. 1395x) (as amended by section 102(b))

19 is amended by adding at the end the following new sub20 section:

21 ‘‘Counseling for Hormone Replacement Therapy

22 ‘‘(xx)(1) Except as provided in paragraph (2), the

23 term ‘counseling for hormone replacement therapy’ means

24 diagnostic, therapy, and counseling services for hormone

25 replacement which are furnished—
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1 ‘‘(A) by or under the supervision of a physician;

2 or

3 ‘‘(B) by any other health care professional who

4 is legally authorized to furnish such services under

5 State law (or the State regulatory mechanism pro6 vided by State law) of the State in which the serv7 ices are furnished, as would otherwise be covered if

8 furnished by a physician or as an incident to a phy9 sician’s professional service.

10 ‘‘(2) The term ‘counseling for hormone replacement

11 therapy’ does not include coverage for drugs or biologicals

12 that are not otherwise covered under this title.’’.

13 (c) ELIMINATION OF COST-SHARING.—

14 (1) ELIMINATION OF COINSURANCE.—Section

15 1833(a)(1) of such Act (42 U.S.C. 1395l(a)(1)) (as

16 amended by section 102(c)(1)) is amended—

17 (A) by striking ‘‘and’’ before ‘‘(W)’’; and

18 (B) by inserting before the semicolon at

19 the end the following: ‘‘, and (X) with respect

20 to counseling for hormone replacement therapy

21 (as defined in section 1861(xx)), the amount

22 paid shall be 100 percent of the lesser of the

23 actual charge for the services or the amount de24 termined by a fee schedule established by the
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1 Secretary for the purposes of this subpara2 graph;’’.

3 (2) ELIMINATION OF DEDUCTIBLE.—The first

4 sentence of section 1833(b) of such Act (42 U.S.C.

5 1395l(b)) (as amended by section 102(c)(2)) is

6 amended—

7 (A) by striking ‘‘and’’ before ‘‘(8)’’; and

8 (B) by inserting before the period the fol9 lowing: ‘‘, and (9) such deductible shall not

10 apply with respect to counseling for hormone

11 replacement therapy (as defined in section

12 1861(xx))’’.

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

14 this section shall apply to services furnished on or after

15 January 1, 2002.

16 SEC. 104. SCREENING FOR DIMINISHED VISUAL ACUITY.

17 (a) COVERAGE.—Section 1861(s)(2) of the Social Se18 curity Act (42 U.S.C. 1395x(s)(2)) (as amended by sec19 tion 103(a)) is amended—

20 (1) in subparagraph (X), by striking ‘‘and’’ at

21 the end;

22 (2) in subparagraph (Y), by inserting ‘‘and’’ at

23 the end; and

24 (3) by adding at the end the following new sub25 paragraph:
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1 ‘‘(Z) screening for diminished visual acuity (as

2 defined in subsection (yy));’’.

3 (b) SERVICES DESCRIBED.—Section 1861 of such

4 Act (42 U.S.C. 1395x) (as amended by section 103(b))

5 is amended by adding at the end the following new sub6 section:

7 ‘‘Screening for Diminished Visual Acuity

8 ‘‘(yy) The term ‘screening for diminished visual acu9 ity’ means diagnostic services for screening for diminished

10 visual acuity which are furnished by or under the super11 vision of an optometrist or ophthalmologist who is legally

12 authorized to furnish such services under State law (or

13 the State regulatory mechanism provided by State law) of

14 the State in which the services are furnished, as would

15 otherwise be covered if furnished by a physician or as an

16 incident to a physician’s professional service.’’.

17 (c) ELIMINATION OF COST-SHARING.—

18 (1) ELIMINATION OF COINSURANCE.—Section

19 1833(a)(1) of such Act (42 U.S.C. 1395l(a)(1)) (as

20 amended by section 103(c)(1)) is amended—

21 (A) by striking ‘‘and’’ before ‘‘(X)’’; and

22 (B) by inserting before the semicolon at

23 the end the following: ‘‘, and (Y) with respect

24 to screening for diminished visual acuity (as de25 fined in section 1861(yy)), the amount paid
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1 shall be 100 percent of the lesser of the actual

2 charge for the services or the amount deter3 mined by a fee schedule established by the Sec4 retary for the purposes of this subparagraph;’’.

5 (2) ELIMINATION OF DEDUCTIBLE.—The first

6 sentence of section 1833(b) of such Act (42 U.S.C.

7 1395l(b)) (as amended by section 103(c)(2)) is

8 amended—

9 (A) by striking ‘‘and’’ before ‘‘(9)’’; and

10 (B) by inserting before the period the fol11 lowing: ‘‘, and (10) such deductible shall not

12 apply with respect to screening for diminished

13 visual acuity (as defined in section 1861(yy))’’.

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

15 this section shall apply to services furnished on or after

16 January 1, 2002.

17 SEC. 105. SCREENING FOR HEARING IMPAIRMENT.

18 (a) COVERAGE.—Section 1861(s)(2) of the Social Se19 curity Act (42 U.S.C. 1395x(s)(2)) (as amended by sec20 tion 104(a)) is amended—

21 (1) in subparagraph (Y), by striking ‘‘and’’ at

22 the end;

23 (2) in subparagraph (Z), by inserting ‘‘and’’ at

24 the end; and
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1 (3) by adding at the end the following new sub2 paragraph:

3 ‘‘(AA) screening for hearing impairment (as de4 fined in subsection (zz));’’.

5 (b) SERVICES DESCRIBED.—Section 1861 of such

6 Act (42 U.S.C. 1395x) (as amended by section 104(b))

7 is amended by adding at the end the following new sub8 section:

9 ‘‘Screening for Hearing Impairment

10 ‘‘(zz) The term ‘screening for hearing impairment’

11 means diagnostic services for hearing impairment by use

12 of periodic questions, otoscopic examination and audio

13 metric testing if such questions indicate potential hearing

14 impairment, and counseling about hearing aid devices

15 which are furnished—

16 ‘‘(1) by or under the supervision of a physician;

17 or

18 ‘‘(2) by any other health care professional who

19 is legally authorized to furnish such services under

20 State law (or the State regulatory mechanism pro21 vided by State law) of the State in which the serv22 ices are furnished, as would otherwise be covered if

23 furnished by a physician or as an incident to a phy24 sician’s professional service.’’.

25 (c) ELIMINATION OF COST-SHARING.—
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1 (1) ELIMINATION OF COINSURANCE.—Section

2 1833(a)(1) of such Act (42 U.S.C. 1395l(a)(1)) (as

3 amended by section 104(c)(1)) is amended—

4 (A) by striking ‘‘and’’ before ‘‘(Y)’’; and

5 (B) by inserting before the semicolon at

6 the end the following: ‘‘, and (Z) with respect

7 to screening for hearing impairment (as defined

8 in section 1861(zz)), the amount paid shall be

9 100 percent of the lesser of the actual charge

10 for the services or the amount determined by a

11 fee schedule established by the Secretary for the

12 purposes of this subparagraph;’’.

13 (2) ELIMINATION OF DEDUCTIBLE.—The first

14 sentence of section 1833(b) of such Act (42 U.S.C.

15 1395l(b)) (as amended by section 104(c)(2)) is

16 amended—

17 (A) by striking ‘‘and’’ before ‘‘(10)’’; and

18 (B) by inserting before the period the fol19 lowing: ‘‘, and (11) such deductible shall not

20 apply with respect to screening for hearing im21 pairment (as defined in section 1861(zz))’’.

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

23 this section shall apply to services furnished on or after

24 January 1, 2002.
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1 SEC. 106. SCREENING AND COUNSELING FOR

2 OSTEOPOROSIS.

3 (a) COVERAGE.—Section 1861(s)(2) of the Social Se4 curity Act (42 U.S.C. 1395x(s)(2)) (as amended by sec5 tion 105(a)) is amended—

6 (1) in subparagraph (Z), by striking ‘‘and’’ at

7 the end;

8 (2) in subparagraph (AA), by inserting ‘‘and’’

9 at the end; and

10 (3) by adding at the end the following new sub11 paragraph:

12 ‘‘(BB) screening and counseling for

13 osteoporosis (as defined in subsection (aaa)) for—

14 ‘‘(i) women; and

15 ‘‘(ii) men with fractures;’’.

16 (b) SERVICES DESCRIBED.—Section 1861 of such

17 Act (42 U.S.C. 1395x) (as amended by section 105(b))

18 is amended by adding at the end the following new sub19 section:

20 ‘‘Screening and Counseling for Osteoporosis

21 ‘‘(aaa) The term ‘screening and counseling for

22 osteoporosis’ means diagnostic and counseling services for

23 osteoporosis in addition to a bone mass measurement (as

24 defined in subsection (rr)) which are furnished in accord25 ance with methods approved by the Food and Drug

26 Administration—
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1 ‘‘(1) by or under the supervision of a physician;

2 or

3 ‘‘(2) by any other health care professional who

4 is legally authorized to furnish such services under

5 State law (or the State regulatory mechanism pro6 vided by State law) of the State in which the serv7 ices are furnished, as would otherwise be covered if

8 furnished by a physician or as an incident to a phy9 sician’s professional service.’’.

10 (c) ELIMINATION OF COST-SHARING.—

11 (1) ELIMINATION OF COINSURANCE.—Section

12 1833(a)(1) of such Act (42 U.S.C. 1395l(a)(1)) (as

13 amended by section 105(c)(1)) is amended—

14 (A) by striking ‘‘and’’ before ‘‘(Z)’’; and

15 (B) by inserting before the semicolon at

16 the end and inserting the following: ‘‘, and

17 (AA) with respect to screening and counseling

18 for osteoporosis (as defined in section

19 1861(aaa)), the amount paid shall be 100 per20 cent of the lesser of the actual charge for the

21 services or the amount determined by a fee

22 schedule established by the Secretary for the

23 purposes of this subparagraph;’’.

24 (2) ELIMINATION OF DEDUCTIBLE.—The first

25 sentence of section 1833(b) of such Act (42 U.S.C.
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1 1395l(b)) (as amended by section 105(c)(2)) is

2 amended—

3 (A) by striking ‘‘and’’ before ‘‘(11)’’; and

4 (B) by inserting before the period the fol5 lowing: ‘‘, and (12) such deductible shall not

6 apply with respect to screening and counseling

7 for osteoporosis (as defined in section

8 1861(aaa))’’.

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

10 this section shall apply to services furnished on or after

11 January 1, 2002.

12 SEC. 107. SCREENING FOR CHOLESTEROL.

13 (a) COVERAGE.—Section 1861(s)(2) of the Social Se14 curity Act (42 U.S.C. 1395x(s)(2)) (as amended by sec15 tion 106(a)) is amended—

16 (1) in subparagraph (AA), by striking ‘‘and’’ at

17 the end;

18 (2) in subparagraph (BB), by inserting ‘‘and’’

19 at the end; and

20 (3) by adding at the end the following new sub21 paragraph:

22 ‘‘(CC) screening for cholesterol (as defined in

23 subsection (bbb)) for individuals between the ages of

24 65 and 75 that exhibit major risk factors for coro-
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1 nary heart disease, including smoking, hypertension,

2 and diabetes;’’.

3 (b) SERVICES DESCRIBED.—Section 1861 of such

4 Act (42 U.S.C. 1395x) (as amended by section 106(b))

5 is amended by adding at the end the following new sub6 section:

7 ‘‘Screening for Cholesterol

8 ‘‘(bbb) The term ‘screening for cholesterol’ means di9 agnostic services for cholesterol that are furnished—

10 ‘‘(1) by or under the supervision of a physician;

11 or

12 ‘‘(2) by any other health care professional who

13 is legally authorized to furnish such services under

14 State law (or the State regulatory mechanism pro15 vided by State law) of the State in which the serv16 ices are furnished, as would otherwise be covered if

17 furnished by a physician or as an incident to a phy18 sician’s professional service.’’.

19 (c) ELIMINATION OF COST-SHARING.—

20 (1) ELIMINATION OF COINSURANCE.—Section

21 1833(a)(1) of such Act (42 U.S.C. 1395l(a)(1)) (as

22 amended by section 106(c)(1)) is amended—

23 (A) by striking ‘‘and’’ before ‘‘(AA)’’; and

24 (B) by inserting before the semicolon at

25 the end the following: ‘‘, and (BB) with respect
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1 to screening for cholesterol (as defined in sec2 tion 1861(bbb)), the amount paid shall be 100

3 percent of the lesser of the actual charge for

4 the services or the amount determined by a fee

5 schedule established by the Secretary for the

6 purposes of this subparagraph;’’.

7 (2) ELIMINATION OF DEDUCTIBLE.—The first

8 sentence of section 1833(b) of such Act (42 U.S.C.

9 1395l(b)) (as amended by section 106(c)(2)) is

10 amended—

11 (A) by striking ‘‘and’’ before ‘‘(12)’’; and

12 (B) by inserting before the period the fol13 lowing: ‘‘, and (13) such deductible shall not

14 apply with respect to screening and counseling

15 for osteoporosis (as defined in section

16 1861(bbb))’’.

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

18 this section shall apply to services furnished on or after

19 January 1, 2002.

20 SEC. 108. EXPANSION OF COVERAGE OF MEDICAL NUTRI21 TION THERAPY SERVICES.

22 (a) EXPANSION OF MEDICAL NUTRITION THERAPY

23 SERVICES TO BENEFICIARIES WITH A CARDIOVASCULAR

24 DISEASE.—Section 1861(s)(2)(V) of the Social Security

25 Act, as added by section 105(a) of the Medicare, Medicaid,
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1 and SCHIP Benefits Improvement and Protection Act of

2 2000 (as enacted into law by section 1(a)(6) of Public Law

3 106–554), is amended by inserting ‘‘, a cardiovascular dis4 ease (including congestive heart failure, arteriosclerosis,

5 hyperlipidemia, hypertension, and hypercholesterolemia),’’

6 after ‘‘diabetes’’.

7 (b) ELIMINATION OF COST-SHARING.—

8 (1) ELIMINATION OF COINSURANCE.—Section

9 1833(a)(1) of such Act (42 U.S.C. 1395l(a)(1)) (as

10 amended by section 107(c)(1)) is amended—

11 (A) by striking ‘‘and’’ before ‘‘(BB)’’; and

12 (B) by inserting before the semicolon at

13 the end the following: ‘‘, and (CC) with respect

14 to medical nutrition therapy services (as defined

15 in section 1861(vv)(1)), the amount paid shall

16 be 85 percent of the lesser of the actual charge

17 for the services or the amount determined

18 under the fee schedule established under section

19 1848(b) for the same services if furnished by a

20 physician’’.

21 (2) ELIMINATION OF DEDUCTIBLE.—The first

22 sentence of section 1833(b) of such Act (42 U.S.C.

23 1395l(b)) (as amended by section 107(c)(2)) is

24 amended—

25 (A) by striking ‘‘and’’ before ‘‘(13)’’; and
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1 (B) by inserting before the period the fol2 lowing: ‘‘, and (14) such deductible shall not

3 apply with respect to nutrition therapy services

4 (as defined in section 1861(vv)(1))’’.

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

6 this section apply to services furnished on or after Janu7 ary 1, 2002.

8 SEC. 109. EXPANSION OF COVERAGE OF GLAUCOMA

9 SCREENING.

10 (a) EXPANSION OF GLAUCOMA SCREENING TO

11 COVER INDIVIDUALS WITH MYOPIA.—Section

12 1861(s)(2)(U) of the Social Security Act, as added by sec13 tion 101(a) of the Medicare, Medicaid, and SCHIP Bene14 fits Improvement and Protection Act of 2000 (as enacted

15 into law by section 1(a)(6) of Public Law 106–554), is

16 amended by inserting ‘‘or myopia’’ after ‘‘diabetes’’.

17 (b) ELIMINATION OF COST-SHARING.—

18 (1) ELIMINATION OF COINSURANCE.—Section

19 1833(a)(1) of such Act (42 U.S.C. 1395l(a)(1)) (as

20 amended by section 108(b)(1) is amended—

21 (A) by striking ‘‘and’’ before ‘‘(BB)’’; and

22 (B) by inserting before the semicolon at

23 the end the following: ‘‘, and (CC) with respect

24 to screening for glaucoma (as defined in section

25 1861(uu)), the amount paid shall be 100 per-
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1 cent of the lesser of the actual charge for the

2 services or amount determined by a fee schedule

3 established by the Secretary for the purposes of

4 this subparagraph;’’.

5 (2) ELIMINATION OF DEDUCTIBLE.—The first

6 sentence of section 1833(b) of such Act (42 U.S.C.

7 1395l(b)) (as amended by section 108(b)(2)) is

8 amended—

9 (A) by striking ‘‘and’’ before ‘‘(14)’’; and

10 (B) by inserting before the period the fol11 lowing: ‘‘, and (15) such deductible shall not

12 apply with respect to screening for glaucoma

13 (as defined in section 1861(uu))’’.

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

15 this section apply to services furnished on or after Janu16 ary 1, 2002.

17 SEC. 110. ROUTINE ANNUAL PHYSICAL CHECKUPS.

18 (a) IN GENERAL.—Section 1862 of the Social Secu19 rity Act (42 U.S.C. 1395y) is amended—

20 (1) in subsection (a)(7), by inserting ‘‘subject

21 to subsection (h),’’ after ‘‘(7)’’; and

22 (2) by inserting after subsection (g) the fol23 lowing new subsection:
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1 ‘‘(h)(1) The exclusion under subsection (a)(7) shall

2 not include coverage of a routine annual physical checkup,

3 including coverage of related laboratory tests.’’.

4 (b) ELIMINATION OF COST-SHARING.—

5 (1) ELIMINATION OF COINSURANCE.—Section

6 1833(a)(1) of such Act (42 U.S.C. 1395l(a)(1)) (as

7 amended by section 109(b)(1)) is amended—

8 (A) by striking ‘‘and’’ before ‘‘(CC)’’; and

9 (B) by inserting before the semicolon at

10 the end the following: ‘‘, and (DD) with respect

11 to routine annual physical checkups described

12 in section 1862(h)(1), the amount paid shall be

13 100 percent of the lesser of the actual charge

14 for the services or amount determined by a fee

15 schedule established by the Secretary for the

16 purposes of this subparagraph;’’.

17 (2) ELIMINATION OF DEDUCTIBLE.—The first

18 sentence of section 1833(b) of such Act (42 U.S.C.

19 1395l(b)) (as amended by section 109(b)(2)) is

20 amended—

21 (A) by striking ‘‘and’’ before ‘‘(15)’’; and

22 (B) by inserting before the period the fol23 lowing: ‘‘, and (16) such deductible shall not

24 apply with respect to routine annual physical

25 checkups described in section 1862(h)(1)’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section apply to services furnished on or after Janu3 ary 1, 2002.

4 SEC. 111. ROUTINE ANNUAL DENTAL EXAMINATIONS AND

5 CLEANING.

6 (a) IN GENERAL.—Section 1862 of the Social Secu7 rity Act (42 U.S.C. 1395y), as amended by section 110(a),

8 is amended—

9 (1) in subsection (a)(2), by inserting ‘‘subject

10 to subsection (h),’’ after ‘‘(7)’’; and

11 (2) by adding at the end of subsection (h) the

12 following new paragraph:

13 ‘‘(2) The exclusion subsection (a)(12) shall not in14 clude coverage of a routine annual dental examination and

15 cleaning, including coverage of oral gum disease screen16 ing.’’.

17 (b) ELIMINATION OF COST-SHARING.—

18 (1) ELIMINATION OF COINSURANCE.—Section

19 1833(a)(1) of such Act (42 U.S.C. 1395l(a)(1)) (as

20 amended by section 110(b)(1)) is amended—

21 (A) by striking ‘‘and’’ before ‘‘(DD)’’; and

22 (B) by inserting before the semicolon at

23 the end the following: ‘‘, and (EE) with respect

24 to routine annual dental examination and clean25 ing described in section 1862(h)(2), the amount
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1 paid shall be 100 percent of the lesser of the

2 actual charge for the services or amount deter3 mined by a fee schedule established by the Sec4 retary for the purposes of this subparagraph;’’.

5 (2) ELIMINATION OF DEDUCTIBLE.—The first

6 sentence of section 1833(b) of such Act (42 U.S.C.

7 1395l(b)) (as amended by section 110(b)(2)) is

8 amended—

9 (A) by striking ‘‘and’’ before ‘‘(16)’’; and

10 (B) by inserting before the period the fol11 lowing: ‘‘, and (17) such deductible shall not

12 apply with respect to routine annual dental ex13 amination and cleaning described in section

14 1862(h)(2)’’.

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

16 this section apply to services furnished on or after Janu17 ary 1, 2002.

18 SEC. 112. ROUTINE ANNUAL EYE EXAMINATIONS.

19 (a) IN GENERAL.—Section 1862(h) of the Social Se20 curity Act (42 U.S.C. 1395y(h)), as inserted by section

21 111(a), is amended by adding at the end the following new

22 paragraph:

23 ‘‘(3) The exclusion under subsection (a)(7) shall not

24 include coverage of a routine annual eye examination, in25 cluding a refraction, and of coverage per year of 1 pair
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1 of glasses (or coverage of contract or other correctible

2 lenses, up to the financial equivalence of a pair of glass3 es).’’.

4 (b) ELIMINATION OF COST-SHARING.—

5 (1) ELIMINATION OF COINSURANCE.—Section

6 1833(a)(1) of such Act (42 U.S.C. 1395l(a)(1)) (as

7 amended by section 111(b)(1)) is amended—

8 (A) by striking ‘‘and’’ before ‘‘(EE)’’; and

9 (B) by inserting before the semicolon at

10 the end the following: ‘‘, and (FF) with respect

11 to routine annual eye examinations and cov12 erage of eyeglasses (or other lense equivalents)

13 described in section 1862(h)(3), the amount

14 paid shall be 100 percent of the lesser of the

15 actual charge for the services or amount deter16 mined by a fee schedule established by the Sec17 retary for the purposes of this subparagraph;’’.

18 (2) ELIMINATION OF DEDUCTIBLE.—The first

19 sentence of section 1833(b) of such Act (42 U.S.C.

20 1395l(b)) (as amended by section 111(b)(2)) is

21 amended—

22 (A) by striking ‘‘and’’ before ‘‘(17)’’; and

23 (B) by inserting before the period the fol24 lowing: ‘‘, and (18) such deductible shall not

25 apply with respect to routine annual eye exami-
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1 nations and coverage of eyeglasses and other

2 lenses described in section 1862(h)(3)’’.

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

4 this section apply to services furnished on or after Janu5 ary 1, 2002.

6 TITLE II—MEDICARE PRESCRIP7 TION DRUG AND SUPPLE8 MENTAL BENEFIT PROGRAM

9 SEC. 201. ESTABLISHMENT OF PROGRAM.

10 (a) IN GENERAL.—The Social Security Act is amend11 ed by adding at the end the following new title:

12 ‘‘TITLE XXII—MEDICARE PRESCRIPTION DRUG

13 BENEFIT PROGRAM

14 ‘‘ESTABLISHMENT OF PRESCRIPTION DRUG AND

15 SUPPLEMENTAL BENEFIT PROGRAM

16 ‘‘SEC. 2201. (a) PROVISION OF BENEFIT.—The Sec17 retary shall establish a Prescription Drug and Supple18 mental Benefit Program under which an eligible bene19 ficiary may voluntarily enroll and receive access to covered

20 outpatient prescription drugs and other benefits through

21 enrollment in a Medicare Prescription Plus plan offered

22 by a private entity or a Medicare+Choice plan offered by

23 a Medicare+Choice organization.

24 ‘‘(b) PROGRAM TO BEGIN IN 2003.—The Secretary

25 shall establish the program under this part in a manner
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1 so that benefits are first provided for months beginning

2 with January 2003.

3 ‘‘(c) VOLUNTARY NATURE OF PROGRAM.—Nothing

4 in this part shall be construed as requiring an eligible ben5 eficiary to enroll in the program under this part.

6 ‘‘(d) FINANCING.—The costs of providing benefits

7 under this part shall be payable from the Medicare Pre8 scription Drug Account.

9 ‘‘(e) NO EFFECT ON TITLE XVIII BENEFITS.—The

10 program under this part shall have no effect on the entitle11 ment to benefits under title XVIII.

12 ‘‘ENROLLMENT UNDER PROGRAM

13 ‘‘SEC. 2202. (a) ESTABLISHMENT OF PROCESS.—

14 ‘‘(1) IN GENERAL.—The Secretary shall estab15 lish a process through which an eligible beneficiary

16 (including an eligible beneficiary enrolled in a

17 Medicare+Choice plan offered by a

18 Medicare+Choice organization) may make an elec19 tion to enroll under the program under this part.

20 Except as otherwise provided in this section, such

21 process shall be similar to the process for enrollment

22 in part B under section 1837.

23 ‘‘(2) REQUIREMENT OF ENROLLMENT.—An eli24 gible beneficiary must enroll under this part in order

25 to be eligible to receive benefits under this part.

26 ‘‘(b) ENROLLMENT PERIOD.—
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1 ‘‘(1) IN GENERAL.—Except as provided in para2 graph (2) or (3), an eligible beneficiary may not en3 roll in the program under this part during any pe4 riod after the beneficiary’s initial enrollment period.

5 ‘‘(2) OPEN ENROLLMENT PERIOD FOR BENE6 FICIARIES CURRENTLY COVERED.—In the case of an

7 individual who is entitled to part A of title XVIII

8 and enrolled under part B of such title as of Novem9 ber 1, 2002, there shall be an open enrollment pe10 riod of 6 months beginning on that date.

11 ‘‘(3) SPECIAL ENROLLMENT PERIOD FOR BENE12 FICIARIES THAT LOSE OTHER DRUG COVERAGE.—

13 ‘‘(A) IN GENERAL.—Subject to subpara14 graph (D), in the case of an applicable eligible

15 beneficiary, the Secretary shall establish proce16 dures for permitting such beneficiary to enroll

17 under the program under this part.

18 ‘‘(B) APPLICABLE ELIGIBLE BENE19 FICIARY.—For purposes of this paragraph, the

20 term ‘applicable eligible beneficiary’ means an

21 eligible beneficiary who—

22 ‘‘(i) had applicable drug coverage; and

23 ‘‘(ii) involuntarily lost such coverage.

24 ‘‘(C) APPLICABLE DRUG COVERAGE DE25 FINED.—For purposes of subparagraph (B),
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1 the term ‘applicable drug coverage’ means any

2 of the following prescription drug coverage:

3 ‘‘(i) MEDICAID PRESCRIPTION DRUG

4 COVERAGE.—Prescription drug coverage

5 under a medicaid plan under title XIX, in6 cluding through the Program of All-inclu7 sive Care for the Elderly (PACE) under

8 section 1934, through a social health main9 tenance organization (referred to in section

10 4104(c) of the Balanced Budget Act of

11 1997), or through a Medicare+Choice

12 project that demonstrates the application

13 of capitation payment rates for frail elderly

14 medicare beneficiaries through the use of a

15 interdisciplinary team and through the

16 provision of primary care services to such

17 beneficiaries by means of such a team at

18 the nursing facility involved.

19 ‘‘(ii) PRESCRIPTION DRUG COVERAGE

20 UNDER GROUP HEALTH PLAN.—Any out21 patient prescription drug coverage under a

22 group health plan, including a health bene23 fits plan under the Federal Employees

24 Health Benefit Plan under chapter 89 of

25 title 5, United States Code, and a qualified
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1 retiree prescription drug plan (as defined

2 in section 2212(e)(1)).

3 ‘‘(iii) PRESCRIPTION DRUG COVERAGE

4 UNDER CERTAIN MEDIGAP POLICIES.—

5 Coverage under a medicare supplemental

6 policy under section 1882 that provides

7 benefits for prescription drugs (whether or

8 not such coverage conforms to the stand9 ards for packages of benefits under section

10 1882(p)(1)), but only if the policy was in

11 effect on January 1, 2003.

12 ‘‘(iv) STATE PHARMACEUTICAL AS13 SISTANCE PROGRAM.—Coverage of pre14 scription drugs under a State pharma15 ceutical assistance program.

16 ‘‘(v) VETERANS’ COVERAGE OF PRE17 SCRIPTION DRUGS.—Coverage of prescrip18 tion drugs for veterans under chapter 17

19 of title 38, United States Code.

20 ‘‘(D) REQUIREMENTS.—The procedures

21 established under subparagraph (A) shall re22 quire that an applicable eligible beneficiary—

23 ‘‘(i) seek to enroll under the program

24 not later than 63 days after the date that
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1 the beneficiary lost applicable drug cov2 erage; and

3 ‘‘(ii) submit evidence of the date that

4 the beneficiary lost such coverage along

5 with the application for enrollment in the

6 program under this part.

7 ‘‘(4) STUDY AND REPORT ON PERMITTING PART

8 B ONLY INDIVIDUALS TO ENROLL IN PROGRAM.—

9 ‘‘(A) STUDY.—The Secretary shall conduct

10 a study on the need for rules relating to permit11 ting individuals who are enrolled under part B

12 of title XVIII but are not entitled to benefits

13 under part A to buy into the program under

14 this part.

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

16 2002, the Secretary shall submit a report to

17 Congress on the study conducted under sub18 paragraph (A), together with any recommenda19 tions for legislation that the Secretary deter20 mines to be appropriate as a result of such

21 study.

22 ‘‘(c) PERIOD OF COVERAGE.—

23 ‘‘(1) IN GENERAL.—Except as provided in para24 graph (2) and subject to paragraph (3), an eligible

25 beneficiary’s coverage under the program under this
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1 part shall be effective for the period provided in sec2 tion 1838, as if that section applied to the program

3 under this part.

4 ‘‘(2) ENROLLMENT DURING OPEN AND SPECIAL

5 ENROLLMENT.—Subject to paragraph (3), an eligi6 ble beneficiary who enrolls under the program under

7 this part pursuant to paragraph (2) or (3) of sub8 section (b) shall be entitled to the benefits under

9 this part beginning on the first day of the month fol10 lowing the month in which such enrollment occurs.

11 ‘‘(3) LIMITATION.—Coverage under this part

12 shall not begin prior to January 1, 2003.

13 ‘‘(d) PROGRAM COVERAGE TERMINATED BY TERMI14 NATION OF COVERAGE UNDER PARTS A AND B OF TITLE

15 XVIII.—

16 ‘‘(1) IN GENERAL.—In addition to the causes of

17 termination specified in section 1838, the Secretary

18 shall terminate an individual’s coverage under the

19 program under this part if the individual is no

20 longer enrolled in both parts A and B of title XVIII.

21 ‘‘(2) EFFECTIVE DATE.—The termination de22 scribed in paragraph (1) shall be effective on the ef23 fective date of termination of coverage under part A

24 of title XVIII or (if earlier) under part B of such

25 title.
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1 ‘‘(e) FIRST ENROLLMENT PERIOD.—The Secretary

2 shall ensure that eligible beneficiaries are permitted to en3 roll under this part prior to January 1, 2003, in order

4 to ensure that coverage under this part is effective as of

5 such date.

6 ‘‘ELECTION OF A MEDICARE PRESCRIPTION PLUS PLAN

7 ‘‘SEC. 2203. (a) IN GENERAL.—

8 ‘‘(1) PROCESS.—

9 ‘‘(A) IN GENERAL.—Subject to paragraph

10 (2), the Secretary shall establish a process

11 through which an eligible beneficiary who is en12 rolled under this part shall make an annual

13 election to enroll in a Medicare Prescription

14 Plus plan offered by an eligible entity that

15 serves the geographic area in which the bene16 ficiary resides.

17 ‘‘(B) RULES.—In establishing the process

18 under subparagraph (A), the Secretary shall

19 use rules that are consistent with the rules for

20 enrollment and disenrollment with a

21 Medicare+Choice plan under section 1851,

22 including—

23 ‘‘(i) annual, coordinated election peri24 ods, which shall be coordinated with such

25 periods under part C of title XVIII;
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1 ‘‘(ii) special election periods under

2 subsection (e)(4) of section 1851; and

3 ‘‘(iii) the guaranteed issue require4 ments under subsection (g) of such section.

5 ‘‘(2) MEDICARE+CHOICE ENROLLEES.—An eli6 gible beneficiary who is enrolled under this part and

7 enrolled in a Medicare+Choice plan offered by a

8 Medicare+Choice organization shall receive coverage

9 of benefits under this part through such plan if such

10 plan provides qualified prescription drug coverage. If

11 the Medicare+Choice plan in which the beneficiary

12 is enrolled does not provide such coverage, the bene13 ficiary shall receive such coverage through the elec14 tion of a Medicare Prescription Plus plan offered by

15 an eligible entity under this part.

16 ‘‘(b) ASSURING ACCESS TO PRESCRIPTION DRUG

17 COVERAGE IN AREAS WITH NO MEDICARE PRESCRIPTION

18 PLUS PLAN OR MEDICARE+CHOICE PLAN PROVIDING

19 DRUG COVERAGE AVAILABLE.—The Secretary shall de20 velop procedures for the provision of the benefits required

21 under section 2205(a) to each eligible beneficiary that re22 sides in an area where there are no Medicare Prescription

23 Plus plans or Medicare+Choice plans available that pro24 vide qualified prescription drug coverage.
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1 ‘‘BENEFICIARY INFORMATION

2 ‘‘SEC. 2204. (a) IN GENERAL.—The Secretary shall

3 conduct activities that are designed to broadly disseminate

4 information to eligible beneficiaries (and prospective eligi5 ble beneficiaries) regarding the coverage provided under

6 this part.

7 ‘‘(b) REQUIREMENTS.—The activities conducted

8 under this subsection shall be—

9 ‘‘(1) similar to the activities performed by the

10 Secretary under section 1851(d), including the dis11 semination of comparative information; and

12 ‘‘(2) coordinated with the activities performed

13 by the Secretary under such section and under sec14 tion 1804.

15 ‘‘OUTPATIENT PRESCRIPTION DRUG AND OTHER

16 SUPPLEMENTAL BENEFITS

17 ‘‘SEC. 2205. (a) REQUIREMENTS.—

18 ‘‘(1) IN GENERAL.—For purposes of this part

19 and part C of title XVIII, the term ‘qualified pre20 scription drug coverage’ means either of the fol21 lowing:

22 ‘‘(A) STANDARD COVERAGE WITH ACCESS

23 TO NEGOTIATED PRICES.—Standard coverage

24 (as defined in subsection (d)) and access to ne25 gotiated prices under subsection (f).
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1 ‘‘(B) ACTUARIALLY EQUIVALENT COV2 ERAGE WITH ACCESS TO NEGOTIATED

3 PRICES.—Coverage of covered outpatient drugs

4 which meets the alternative coverage require5 ments of subsection (e) and access to negotiated

6 prices under subsection (f).

7 ‘‘(2) PERMITTING ADDITIONAL OUTPATIENT

8 PRESCRIPTION DRUG COVERAGE.—

9 ‘‘(A) IN GENERAL.—Subject to subpara10 graph (B) and section 2209(c)(2), nothing in

11 this part shall be construed as preventing quali12 fied prescription drug coverage from including

13 coverage of covered outpatient drugs that ex14 ceeds the coverage required under paragraph

15 (1).

16 ‘‘(B) REQUIREMENT.—An eligible entity

17 may not offer a Medicare Prescription Plus

18 plan that provides additional benefits pursuant

19 to subparagraph (A) in an area unless the eligi20 ble entity offering such plan also offers a Medi21 care Prescription Plus plan in the area that

22 only provides the coverage of prescription drugs

23 that is required under subsection (a)(1).

24 ‘‘(3) COST CONTROL MECHANISMS.—In pro25 viding qualified prescription drug coverage, the enti-
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1 ty offering the Medicare Prescription Plus plan or

2 the Medicare+Choice plan may use cost control

3 mechanisms that are customarily used in employer4 sponsored health care plans that offer coverage for

5 outpatient prescription drugs, including the use of

6 formularies, tiered copayments, selective contracting

7 with providers of outpatient prescription drugs, and

8 mail order pharmacies.

9 ‘‘(b) PERMITTING BENEFITS IN ADDITION TO OUT10 PATIENT PRESCRIPTION DRUG COVERAGE.—

11 ‘‘(1) IN GENERAL.—Subject to paragraph (2)

12 and section 2209(c)(2), nothing in this part shall be

13 construed as preventing a Medicare Prescription

14 Plus plan from including coverage of benefits that

15 are in addition to the benefits available under title

16 XVIII, including coverage of beneficiary cost-sharing

17 for benefits under such title.

18 ‘‘(2) REQUIREMENTS.—An eligible entity may

19 not offer a Medicare Prescription Plus plan that

20 provides additional benefits pursuant to paragraph

21 (1) in an area unless—

22 ‘‘(A) the eligible entity offering such plan

23 also offers a Medicare Prescription Plus plan in

24 the area that only provides the coverage of pre-
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1 scription drugs that is required under sub2 section (a)(1); and

3 ‘‘(B) if the additional benefits include any

4 of the core group of basic benefits described in

5 section 1882(p)(2)(B), the Medicare Prescrip6 tion Plus plan provides all of such core group

7 of basic benefits.

8 ‘‘(c) APPLICATION OF SECONDARY PAYOR PROVI9 SIONS.—The provisions of section 1852(a)(4) shall apply

10 under this part in the same manner as they apply under

11 part C of title XVIII.

12 ‘‘(d) STANDARD COVERAGE.—For purposes of this

13 part and part C of title XVIII, the ‘standard coverage’

14 is coverage of covered outpatient drugs that meets the fol15 lowing requirements:

16 ‘‘(1) DEDUCTIBLE.—The coverage has an an17 nual deductible—

18 ‘‘(A) for 2003, that is equal to $250; or

19 ‘‘(B) for a subsequent year, that is equal

20 to the amount specified under this paragraph

21 for the previous year increased by the percent22 age specified in paragraph (5) for the year in23 volved.
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1 Any amount determined under subparagraph (B)

2 that is not a multiple of $5 shall be rounded to the

3 nearest multiple of $5.

4 ‘‘(2) LIMITS ON COST-SHARING.—The coverage

5 has cost-sharing (for costs above the annual deduct6 ible specified in paragraph (1) and up to the initial

7 coverage limit under paragraph (3)) that is equal to

8 50 percent or that is actuarially consistent (using

9 processes established under subsection (g)) with an

10 average expected payment of 50 percent of such

11 costs.

12 ‘‘(3) INITIAL COVERAGE LIMIT.—Subject to

13 paragraph (4), the coverage has an initial coverage

14 limit on the maximum costs that may be recognized

15 for payment purposes (above the annual deduct16 ible)—

17 ‘‘(A) for 2003, that is equal to $2,100; or

18 ‘‘(B) for a subsequent year, that is equal

19 to the amount specified in this paragraph for

20 the previous year, increased by the annual per21 centage increase described in paragraph (5) for

22 the year involved.

23 Any amount determined under subparagraph (B)

24 that is not a multiple of $25 shall be rounded to the

25 nearest multiple of $25.
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1 ‘‘(4) LIMITATION ON OUT-OF-POCKET EXPENDI2 TURES BY BENEFICIARY.—

3 ‘‘(A) IN GENERAL.—Notwithstanding para4 graph (3), the coverage provides benefits with5 out any cost-sharing after the individual has in6 curred costs (as described in subparagraph (C))

7 for covered outpatient drugs in a year equal to

8 the annual out-of-pocket limit specified in sub9 paragraph (B).

10 ‘‘(B) ANNUAL OUT-OF-POCKET LIMIT.—

11 For purposes of this part, the ‘annual out-of12 pocket limit’ specified in this subparagraph—

13 ‘‘(i) for 2003, is equal to $6,000; or

14 ‘‘(ii) for a subsequent year, is equal to

15 the amount specified in the subparagraph

16 for the previous year, increased by the an17 nual percentage increase described in para18 graph (5) for the year involved.

19 Any amount determined under clause (ii) that

20 is not a multiple of $100 shall be rounded to

21 the nearest multiple of $100.

22 ‘‘(C) APPLICATION.—In applying subpara23 graph (A)—

24 ‘‘(i) incurred costs shall only include

25 costs incurred for the annual deductible
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1 (described in paragraph (1)), cost-sharing

2 (described in paragraph (2)), and amounts

3 for which benefits are not provided because

4 of the application of the initial coverage

5 limit described in paragraph (3); but

6 ‘‘(ii) costs shall be treated as incurred

7 without regard to whether the individual or

8 another person, including a State program,

9 has paid for such costs, but shall not be

10 counted insofar as such costs are covered

11 as benefits under a Medicare Prescription

12 Plus plan, a Medicare+Choice plan, or

13 other third-party coverage.

14 ‘‘(5) ANNUAL PERCENTAGE INCREASE.—For

15 purposes of this part, the annual percentage increase

16 specified in this paragraph for a year is equal to the

17 annual percentage increase in average per capita ag18 gregate expenditures for covered outpatient drugs in

19 the United States for medicare beneficiaries, as de20 termined by the Secretary for the 12-month period

21 ending in July of the previous year.

22 ‘‘(e) ALTERNATIVE COVERAGE REQUIREMENTS.—A

23 Medicare Prescription Plus plan or Medicare+Choice plan

24 may provide a different prescription drug benefit design
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1 from the standard coverage described in subsection (d) so

2 long as the following requirements are met:

3 ‘‘(1) ASSURING AT LEAST ACTUARIALLY EQUIV4 ALENT COVERAGE.—

5 ‘‘(A) ASSURING EQUIVALENT VALUE OF

6 TOTAL COVERAGE.—The actuarial value of the

7 total coverage (as determined under subsection

8 (g)) is at least equal to the actuarial value (as

9 so determined) of standard coverage.

10 ‘‘(B) ASSURING EQUIVALENT UNSUB11 SIDIZED VALUE OF COVERAGE.—The unsub12 sidized value of the coverage is at least equal to

13 the unsubsidized value of standard coverage.

14 For purposes of this subparagraph, the unsub15 sidized value of coverage is the amount by

16 which the actuarial value of the coverage (as

17 determined under subsection (g)) exceeds the

18 actuarial value of the reinsurance subsidy pay19 ments under section 2212 with respect to such

20 coverage.

21 ‘‘(C) ASSURING STANDARD PAYMENT FOR

22 COSTS AT INITIAL COVERAGE LIMIT.—The cov23 erage is designed, based upon an actuarially

24 representative pattern of utilization (as deter25 mined under subsection (g)), to provide for the
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1 payment, with respect to costs incurred that are

2 equal to the sum of the deductible under sub3 section (d)(1) and the initial coverage limit

4 under subsection (d)(3), of an amount equal to

5 at least such initial coverage limit multiplied by

6 the percentage specified in subsection (d)(2).

7 Benefits other than qualified prescription drug cov8 erage shall not be taken into account for purposes

9 of this paragraph.

10 ‘‘(2) LIMITATION ON OUT-OF-POCKET EXPENDI11 TURES BY BENEFICIARIES.—The coverage provides

12 the limitation on out-of-pocket expenditures by bene13 ficiaries described in subsection (d)(4).

14 ‘‘(f) ACCESS TO NEGOTIATED PRICES.—Under quali15 fied prescription drug coverage offered by an eligible entity

16 or a Medicare+Choice organization, the entity or organi17 zation shall provide beneficiaries with access to negotiated

18 prices (including applicable discounts) used for payment

19 for covered outpatient drugs, regardless of the fact that

20 no benefits may be payable under the coverage with re21 spect to such drugs because of the application of cost-shar22 ing or an initial coverage limit (described in subsection

23 (d)(3)). In providing such access, the eligible entity or

24 Medicare+Choice organization shall issue a card pursuant

25 to section 2206(b)(1).
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1 ‘‘(g) ACTUARIAL VALUATION; DETERMINATION OF

2 ANNUAL PERCENTAGE INCREASES.—

3 ‘‘(1) PROCESSES.—For purposes of this section,

4 the Secretary shall establish processes and

5 methods—

6 ‘‘(A) for determining the actuarial valu7 ation of prescription drug coverage, including—

8 ‘‘(i) an actuarial valuation of standard

9 coverage and of the reinsurance subsidy

10 payments under section 2212;

11 ‘‘(ii) the use of generally accepted ac12 tuarial principles and methodologies; and

13 ‘‘(iii) applying the same methodology

14 for determinations of alternative coverage

15 under subsection (e) as is used with re16 spect to determinations of standard cov17 erage under subsection (d); and

18 ‘‘(B) for determining annual percentage in19 creases described in subsection (d)(5).

20 ‘‘(2) USE OF OUTSIDE ACTUARIES.—Under the

21 processes under paragraph (1)(A), eligible entities

22 and Medicare+Choice organizations may use actu23 arial opinions certified by independent, qualified ac24 tuaries to establish actuarial values.
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1 ‘‘BENEFICIARY PROTECTIONS

2 ‘‘SEC. 2206. (a) DISSEMINATION OF INFORMA3 TION.—

4 ‘‘(1) GENERAL INFORMATION.—An eligible enti5 ty offering a Medicare Prescription Plus plan shall

6 disclose, in a clear, accurate, and standardized form

7 to each enrollee at the time of enrollment and at

8 least annually thereafter, the information described

9 in section 1852(c)(1) relating to such plan. Such in10 formation includes the following:

11 ‘‘(A) Access to covered outpatient drugs.

12 ‘‘(B) How any formulary used by the enti13 ty functions.

14 ‘‘(C) Co-payments, coinsurance, and de15 ductible requirements.

16 ‘‘(D) Grievance and appeals procedures.

17 ‘‘(2) DISCLOSURE UPON REQUEST OF GENERAL

18 COVERAGE, UTILIZATION, AND GRIEVANCE INFORMA19 TION.—Upon request of an individual eligible to en20 roll in a Medicare Prescription Plus plan, the eligible

21 entity offering such plan shall provide the informa22 tion described in section 1852(c)(2) to such indi23 vidual.

24 ‘‘(3) RESPONSE TO BENEFICIARY QUESTIONS.—

25 An eligible entity offering a Medicare Prescription
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1 Plus plan shall have a mechanism for providing spe2 cific information to enrollees upon request, including

3 information on specific changes in its formulary.

4 ‘‘(4) CLAIMS INFORMATION.—An eligible entity

5 offering a Medicare Prescription Plus plan must fur6 nish to enrolled individuals in a form easily under7 standable to such individuals an explanation of bene8 fits (in accordance with section 1806(a) or in a com9 parable manner) and a notice of the benefits in rela10 tion to initial coverage limit and annual out-of-pock11 et limit for the current year, whenever prescription

12 drug benefits are provided under this part (except

13 that such notice need not be provided more often

14 than monthly).

15 ‘‘(b) ACCESS TO COVERED OUTPATIENT DRUGS.—

16 ‘‘(1) ACCESS TO NEGOTIATED PRICES FOR PRE17 SCRIPTION DRUGS.—An eligible entity offering a

18 Medicare Prescription Plus plan shall issue such a

19 card that may be used by an enrolled beneficiary to

20 assure access to negotiated prices under section

21 2205(f) for the purchase of prescription drugs for

22 which coverage is not otherwise provided under the

23 Medicare Prescription Plus plan.

24 ‘‘(2) REQUIREMENTS ON DEVELOPMENT AND

25 APPLICATION OF FORMULARIES.—Insofar as an eli-
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1 gible entity offering a Medicare Prescription Plus

2 plan uses a formulary with respect to qualified pre3 scription drug coverage, the following requirements

4 must be met:

5 ‘‘(A) INCLUSION OF DRUGS IN ALL THERA6 PEUTIC CATEGORIES.—The formulary must in7 clude drugs within all therapeutic categories

8 and classes of covered outpatient drugs (al9 though not necessarily for all drugs within such

10 categories and classes).

11 ‘‘(B) APPEALS AND EXCEPTIONS TO AP12 PLICATION.—The eligible entity must have, as

13 part of the appeals process under subsection

14 (e)(2), a process for appeals for denials of cov15 erage based on such application of the for16 mulary.

17 ‘‘(c) COST AND UTILIZATION MANAGEMENT.—

18 ‘‘(1) IN GENERAL.—An eligible entity shall have

19 in place—

20 ‘‘(A) an effective cost and drug utilization

21 management program, including appropriate in22 centives to use generic drugs, when appropriate;

23 ‘‘(B) quality assurance measures to reduce

24 medical errors and adverse drug interactions,
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•HR 828 IH

1 which may include the measures described in

2 paragraph (2); and

3 ‘‘(C) a program to control fraud, abuse,

4 and waste.

5 ‘‘(2) MEASURES.—The measures described in

6 this paragraph are beneficiary education programs,

7 counseling, medication refill reminders, and special

8 packaging.

9 ‘‘(d) GRIEVANCE MECHANISM.—An eligible entity

10 shall provide meaningful procedures for hearing and re11 solving grievances between the eligible entity (including

12 any entity or individual through which the eligible entity

13 provides covered benefits) and enrollees in a Medicare Pre14 scription Plus plan offered by the eligible entity in accord15 ance with section 1852(f).

16 ‘‘(e) COVERAGE DETERMINATIONS, RECONSIDER17 ATIONS, AND APPEALS.—

18 ‘‘(1) IN GENERAL.—An eligible entity shall

19 meet the requirements of section 1852(g) with re20 spect to covered benefits under the Medicare Pre21 scription Plus plan it offers under this part in the

22 same manner as such requirements apply to a

23 Medicare+Choice organization with respect to bene24 fits it offers under a Medicare+Choice plan under

25 part C of title XVIII.
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1 ‘‘(2) APPEALS OF FORMULARY DETERMINA2 TIONS.—Consistent with the requirements of section

3 1852(g), an eligible entity shall establish a process

4 for appeals of formulary determinations.

5 ‘‘(f) CONFIDENTIALITY AND ACCURACY OF EN6 ROLLEE RECORDS.—An eligible entity shall meet the re7 quirements of section 1852(h) with respect to enrollees

8 under this part in the same manner as such requirements

9 apply to a Medicare+Choice organization with respect to

10 enrollees under part C of title XVIII.

11 ‘‘(g) UNIFORM PREMIUM.—An eligible entity shall

12 ensure that the premium for a Medicare Prescription Plus

13 plan charged under this section is the same for all individ14 uals enrolled in the plan in the same service area.

15 ‘‘REQUIREMENTS FOR ENTITIES OFFERING MEDICARE

16 PRESCRIPTION PLUS PLANS

17 ‘‘SEC. 2207. (a) GENERAL REQUIREMENTS.—An eli18 gible entity offering a Medicare Prescription Plus plan

19 shall meet the following requirements:

20 ‘‘(1) LICENSURE.—Subject to subsection (c),

21 the entity is organized and licensed under State law

22 as a risk-bearing entity eligible to offer health insur23 ance or health benefits coverage in each State in

24 which it offers a Medicare Prescription Plus plan.

25 ‘‘(2) ASSUMPTION OF FULL FINANCIAL RISK.—
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•HR 828 IH

1 ‘‘(A) IN GENERAL.—Subject to subpara2 graph (B), the entity assumes full financial risk

3 on a prospective basis for the benefits that it

4 offers under a Medicare Prescription Plus plan

5 and that is not covered under reinsurance

6 under section 2212.

7 ‘‘(B) REINSURANCE PERMITTED.—The en8 tity may obtain insurance or make other ar9 rangements for the cost of coverage provided to

10 any enrolled member under this part.

11 ‘‘(3) SOLVENCY FOR UNLICENSED ENTITIES.—

12 In the case of an eligible entity that is not described

13 in paragraph (1), the entity shall meet solvency

14 standards established by the Secretary under sub15 section (d).

16 ‘‘(b) CONTRACT REQUIREMENTS.—The Secretary

17 shall not permit an eligible beneficiary to elect a Medicare

18 Prescription Plus plan offered by an eligible entity under

19 this part, and the entity shall not be eligible for payments

20 under section 2210, 2211(e), or 2212, unless the Sec21 retary has entered into a contract under this subsection

22 with the entity with respect to the offering of such plan.

23 Such a contract with an entity may cover more than 1

24 Medicare Prescription Plus plan. Such contract shall pro25 vide that the entity agrees to comply with the applicable
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1 requirements and standards of this part and the terms

2 and conditions of payment as provided for in this part.

3 ‘‘(c) WAIVER OF CERTAIN REQUIREMENTS TO EX4 PAND CHOICE.—

5 ‘‘(1) IN GENERAL.—In the case of an eligible

6 entity that seeks to offer a Medicare Prescription

7 Plus plan in a State, the Secretary shall waive the

8 requirement of subsection (a)(1) that the entity be

9 licensed in that State if the Secretary determines,

10 based on the application and other evidence pre11 sented to the Secretary, that any of the grounds for

12 approval of the application described in paragraph

13 (2) have been met.

14 ‘‘(2) GROUNDS FOR APPROVAL.—The grounds

15 for approval under this paragraph are the grounds

16 for approval described in subparagraphs (B), (C),

17 and (D) of section 1855(a)(2), and also include the

18 application by a State of any grounds other than

19 those required under Federal law.

20 ‘‘(3) APPLICATION OF MEDICARE+CHOICE PSO

21 WAIVER PROCEDURES.—With respect to an applica22 tion for a waiver (or a waiver granted) under this

23 subsection, the provisions of subparagraphs (E), (F),

24 and (G) of section 1855(a)(2) shall apply.
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1 ‘‘(4) LICENSURE DOES NOT SUBSTITUTE FOR

2 OR CONSTITUTE CERTIFICATION.—The fact that an

3 entity is licensed in accordance with subsection

4 (a)(1) does not deem the eligible entity to meet other

5 requirements imposed under this part for an eligible

6 entity.

7 ‘‘(5) REFERENCES TO CERTAIN PROVISIONS.—

8 For purposes of this subsection, in applying the pro9 visions of section 1855(a)(2) under this subsection

10 to Medicare Prescription Plus plans and eligible

11 entities—

12 ‘‘(A) any reference to a waiver application

13 under section 1855 shall be treated as a ref14 erence to a waiver application under paragraph

15 (1); and

16 ‘‘(B) any reference to solvency standards

17 were treated as a reference to solvency stand18 ards established under subsection (d).

19 ‘‘(d) SOLVENCY STANDARDS FOR NON-LICENSED

20 ENTITIES.—

21 ‘‘(1) ESTABLISHMENT.—The Secretary shall es22 tablish, by not later than October 1, 2001, financial

23 solvency and capital adequacy standards that an en24 tity that does not meet the requirements of sub-
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1 section (a)(1) must meet to qualify as an eligible en2 tity under this part.

3 ‘‘(2) COMPLIANCE WITH STANDARDS.—An eligi4 ble entity that is not licensed by a State under sub5 section (a)(1) and for which a waiver application has

6 been approved under subsection (c) shall meet sol7 vency and capital adequacy standards established

8 under paragraph (1). The Secretary shall establish

9 certification procedures for such eligible entities with

10 respect to such solvency standards in the manner de11 scribed in section 1855(c)(2).

12 ‘‘(e) OTHER STANDARDS.—The Secretary shall es13 tablish by regulation other standards (not described in

14 subsection (d)) for eligible entities and Medicare Prescrip15 tion Plus plans consistent with, and to carry out, this part.

16 The Secretary shall publish such regulations by October

17 1, 2001.

18 ‘‘(f) RELATION TO STATE LAWS.—

19 ‘‘(1) IN GENERAL.—The standards established

20 under this section shall supersede any State law or

21 regulation (including standards described in para22 graph (2)) with respect to Medicare Prescription

23 Plus plans which are offered by eligible entities

24 under this part to the extent such law or regulation

25 is inconsistent with such standards, in the same
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1 manner as such laws and regulations are superseded

2 under section 1856(b)(3).

3 ‘‘(2) STANDARDS SPECIFICALLY SUPER4 SEDED.—State standards relating to the following

5 are superseded under this section:

6 ‘‘(A) Benefit requirements.

7 ‘‘(B) Requirements relating to inclusion or

8 treatment of providers.

9 ‘‘(C) Coverage determinations (including

10 related appeals and grievance processes).

11 ‘‘(3) PROHIBITION OF STATE IMPOSITION OF

12 PREMIUM TAXES.—No State may impose a premium

13 tax or similar tax with respect to premiums paid to

14 eligible entities for Medicare Prescription Plus plans

15 under this part, or with respect to any payments

16 made to such an entity by the Secretary under this

17 part.

18 ‘‘SUBMISSION OF MEDICARE PRESCRIPTION PLUS PLANS

19 ‘‘SEC. 2208. (a) IN GENERAL.—Each eligible entity

20 that intends to offer a Medicare Prescription Plus plan

21 in a year (beginning with 2003) shall submit to the Sec22 retary, at such time and in such manner as the Secretary

23 may specify, such information as the Secretary may re24 quire, including the information described in subsection

25 (b).
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1 ‘‘(b) INFORMATION DESCRIBED.—The information

2 described in this subsection includes information on each

3 of the following:

4 ‘‘(1) A description of the benefits under the

5 plan, including any supplemental benefits pursuant

6 to section 2205(b).

7 ‘‘(2) Information on the actuarial value of the

8 qualified prescription drug coverage.

9 ‘‘(3) Information on the monthly premium to be

10 charged for all benefits, including an actuarial cer11 tification of—

12 ‘‘(A) the actuarial basis for such premium;

13 ‘‘(B) the portion of such premium attrib14 utable to benefits in excess of standard cov15 erage; and

16 ‘‘(C) the reduction in such premium result17 ing from the reinsurance subsidy payments pro18 vided under section 2212.

19 ‘‘(4) The service area for the plan.

20 ‘‘(5) Such other information as the Secretary

21 may require to carry out this part.

22 ‘‘APPROVAL OF MEDICARE PRESCRIPTION PLUS PLANS

23 ‘‘SEC. 2209. (a) IN GENERAL.—The Secretary shall

24 review the information filed under section 2208 and shall

25 approve or disapprove the Medicare Prescription Plus

26 plan.
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•HR 828 IH

1 ‘‘(b) NEGOTIATION.—In exercising such authority,

2 the Secretary shall have the same authority to negotiate

3 the terms and conditions of the premiums submitted and

4 other terms and conditions of plans as the Director of the

5 Office of Personnel Management has with respect to

6 health benefits plans under chapter 89 of title 5, United

7 States Code.

8 ‘‘(c) SPECIAL RULES FOR APPROVAL.—

9 ‘‘(1) SERVICE AREA.—The Secretary may ap10 prove a service area submitted under section

11 2208(b)(4) only if the Secretary finds that—

12 ‘‘(A) the use of such an area is consistent

13 with the purposes of this part; and

14 ‘‘(B) the service area for the plan is not

15 designed so as to discriminate based on the

16 health status, economic status, or prior receipt

17 of health care of eligible beneficiaries.

18 ‘‘(2) AVOIDANCE OF FAVORABLE SELECTION.—

19 The Secretary may approve a Medicare Prescription

20 Plus plan submitted under section 2208 only if the

21 benefits under such plan—

22 ‘‘(A) include the required benefits under

23 section 2205(a)(1); and
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1 ‘‘(B) are not designed in such a manner

2 that the Secretary finds is likely to result in fa3 vorable selection of eligible beneficiaries.

4 ‘‘PAYMENTS TO MEDICARE PRESCRIPTION PLUS PLANS

5 FOR BENEFITS

6 ‘‘SEC. 2210. (a) IN GENERAL.—Subject to subsection

7 (b), for each year (beginning with 2003), the Secretary

8 shall pay to each eligible entity offering a Medicare Pre9 scription Plus plan in which an eligible beneficiary is en10 rolled an amount equal to—

11 ‘‘(1) the full amount of the premium approved

12 under section 2209 on behalf of each eligible bene13 ficiary enrolled in such plan for the year; minus

14 ‘‘(2) the amount of any fees imposed on the en15 tity pursuant to section 2213).

16 ‘‘(b) PAYMENT TERMS.—Payment under this section

17 to an eligible entity offering a Medicare Prescription Plus

18 plan shall be made in a manner determined by the Sec19 retary and based upon the manner in which payments are

20 made under section 1853(a) (relating to payments to

21 Medicare+Choice organizations).

22 ‘‘COMPUTATION AND COLLECTION OF BENEFICIARY

23 SHARE OF PREMIUM

24 ‘‘SEC. 2211. (a) COMPUTATION.—

25 ‘‘(1) AMOUNT.—The annual beneficiary pre26 mium for enrollment in a Medicare Prescription Plus
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1 plan providing coverage under this part for a year

2 shall be an amount equal to—

3 ‘‘(A) an amount equal to the full amount

4 of the premium approved under section 2209

5 for the plan in which the beneficiary is enrolled;

6 minus

7 ‘‘(B) the amount of the discount deter8 mined under subsection (b).

9 ‘‘(2) COLLECTION OF PREMIUM AMOUNT IN

10 SAME MANNER AS PART B PREMIUM.—

11 ‘‘(A) IN GENERAL.—The amount of the

12 annual beneficiary premium determined under

13 paragraph (1) shall be collected and credited to

14 the Medicare Prescription Drug Account in the

15 same manner as the monthly premium deter16 mined under section 1839 is collected and cred17 ited to the Federal Supplementary Medical In18 surance Trust Fund under section 1840.

19 ‘‘(B) INFORMATION NECESSARY FOR COL20 LECTION.—In order to carry out subparagraph

21 (A), the Secretary shall transmit to the Sec22 retary of Social Security—

23 ‘‘(i) at the beginning of each year, the

24 name, social security account number, and

25 annual beneficiary premium owed by each
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1 individual enrolled in a Medicare Prescrip2 tion Plus plan for each month during the

3 year; and

4 ‘‘(ii) periodically throughout the year,

5 information to update the information pre6 viously transmitted under this paragraph

7 for the year.

8 ‘‘(b) DISCOUNTS FOR REQUIRED DRUG PORTION OF

9 PREMIUM.—

10 ‘‘(1) FULL PREMIUM DISCOUNT AND REDUC11 TION OF COST-SHARING FOR INDIVIDUALS WITH IN12 COME BELOW 135 PERCENT OF FEDERAL POVERTY

13 LEVEL.—In the case of a low-income individual (as

14 defined in paragraph (5)(A)) who is determined to

15 have income that does not exceed 135 percent of the

16 Federal poverty level, the individual is entitled under

17 this section—

18 ‘‘(A) to a premium discount equal to 100

19 percent of the amount described in subsection

20 (c); and

21 ‘‘(B) subject to subsection (d), to the sub22 stitution for the beneficiary cost-sharing de23 scribed in paragraphs (1) and (2) of section

24 2205(d) (up to the initial coverage limit speci-
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1 fied in paragraph (3) of such section) of

2 amounts that are nominal.

3 ‘‘(2) SLIDING SCALE PREMIUM DISCOUNT FOR

4 INDIVIDUALS WITH INCOME ABOVE 135, BUT BELOW

5 150 PERCENT, OF FEDERAL POVERTY LEVEL.—In

6 the case of a low-income individual who is deter7 mined to have income that exceeds 135 percent, but

8 does not exceed 150 percent, of the Federal poverty

9 level, the individual is entitled under this section to

10 a premium discount determined on a linear sliding

11 scale ranging from 100 percent of the amount de12 scribed in subsection (c) for individuals with incomes

13 at 135 percent of such level to 25 percent of such

14 amount for individuals with incomes at 150 percent

15 of such level.

16 ‘‘(3) PARTIAL PREMIUM DISCOUNT FOR INDI17 VIDUALS WITH INCOME ABOVE 150 PERCENT OF

18 FEDERAL POVERTY LEVEL.—In the case of an eligi19 ble beneficiary who is not a low-income individual,

20 the beneficiary is entitled under this section to a

21 premium discount equal to 25 percent of the amount

22 described in subsection (c).

23 ‘‘(4) TAX TREATMENT OF PREMIUM DIS24 COUNT.—
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1 ‘‘(A) IN GENERAL.—For purposes of the

2 Internal Revenue Code of 1986, the premium

3 discount determined under this subsection for

4 an eligible beneficiary for a year shall be in5 cluded in the gross income of the beneficiary for

6 the year.

7 ‘‘(B) STATEMENT OF TAXABLE AMOUNT.—

8 Not later than January 31 of each year (begin9 ning with 2004), the Secretary shall provide—

10 ‘‘(i) each eligible beneficiary enrolled

11 under this part with a statement that de12 scribes the amount of the discount that is

13 required to be included in the gross income

14 of the beneficiary for the previous year

15 pursuant to subparagraph (A); and

16 ‘‘(ii) the Secretary of the Treasury

17 with the information described in clause

18 (i).

19 ‘‘(5) DETERMINATION OF ELIGIBILITY.—

20 ‘‘(A) LOW-INCOME INDIVIDUAL DE21 FINED.—For purposes of this section, subject

22 to subparagraph (D), the term ‘low-income indi23 vidual’ means an individual who—

24 ‘‘(i) is eligible to enroll, and has en25 rolled, under this part;
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1 ‘‘(ii) has income below 150 percent of

2 the Federal poverty line; and

3 ‘‘(iii) meets the resources requirement

4 described in section 1905(p)(1)(C).

5 ‘‘(B) DETERMINATIONS.—The determina6 tion of whether an individual residing in a State

7 is a low-income individual and the amount of

8 such individual’s income shall be determined

9 under the State medicaid plan for the State

10 under section 1935(a). In the case of a State

11 that does not operate such a medicaid plan (ei12 ther under title XIX or under a statewide waiv13 er granted under section 1115), such deter14 mination shall be made under arrangements

15 made by the Secretary.

16 ‘‘(C) INCOME DETERMINATIONS.—For pur17 poses of applying this section—

18 ‘‘(i) income shall be determined in the

19 manner described in section

20 1905(p)(1)(B); and

21 ‘‘(ii) the term ‘Federal poverty line’

22 means the official poverty line (as defined

23 by the Office of Management and Budget,

24 and revised annually in accordance with

25 section 673(2) of the Omnibus Budget
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1 Reconciliation Act of 1981) applicable to a

2 family of the size involved.

3 ‘‘(D) TREATMENT OF TERRITORIAL RESI4 DENTS.—In the case of an individual who is not

5 a resident of the 50 States or the District of

6 Columbia, the individual is not eligible to be a

7 low-income individual but may be eligible for fi8 nancial assistance with prescription drug ex9 penses under section 1935(e).

10 ‘‘(c) PREMIUM DISCOUNT AMOUNT.—The premium

11 discount amount described in this subsection for an eligi12 ble beneficiary residing in an area is an amount equal to—

13 ‘‘(1) in the case of an individual enrolled in a

14 Medicare Prescription Plus plan, the actuarial value

15 of the standard drug coverage provided under the

16 plan (determined without regard to any premium

17 discount under this section); and

18 ‘‘(2) in the case of an individual enrolled in a

19 Medicare+Choice plan that provides qualified pre20 scription drug coverage, the standard premium com21 puted under section 1851(j)(5)(A)(iii).

22 ‘‘(d) RULES IN APPLYING COST-SHARING SUB23 SIDIES.—

24 ‘‘(1) IN GENERAL.—In applying subsection

25 (b)(1)(B)—
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1 ‘‘(A) the maximum amount of subsidy that

2 may be provided with respect to an enrollee for

3 a year may not exceed 95 percent of the max4 imum cost-sharing described in such subsection

5 that may be incurred for standard coverage;

6 ‘‘(B) the Secretary shall determine what is

7 ‘nominal’ taking into account the rules applied

8 under section 1916(a)(3); and

9 ‘‘(C) nothing in this part shall be con10 strued as preventing a plan or provider from

11 waiving or reducing the amount of cost-sharing

12 otherwise applicable.

13 ‘‘(2) LIMITATION ON CHARGES.—In the case of

14 a low-income individual receiving cost-sharing sub15 sidies under subsection (b)(1)(B), the eligible entity

16 may not charge more than a nominal amount in

17 cases in which the cost-sharing subsidy is provided

18 under such subsection.

19 ‘‘(e) ADMINISTRATION OF COST-SHARING PRO20 GRAM.—The Secretary shall provide a process whereby, in

21 the case of a low-income individual who is eligible for re22 duced cost-sharing under subsection (b)(1)(B) and is en23 rolled in a Medicare Prescription Plus plan or a

24 Medicare+Choice plan under which qualified prescription

25 drug coverage is provided—
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1 ‘‘(1) the Secretary provides for a notification of

2 the eligible entity or Medicare+Choice organization

3 involved that the individual is eligible for such re4 duced cost-sharing;

5 ‘‘(2) the entity or organization involved reduces

6 the cost-sharing pursuant to this section and sub7 mits to the Secretary information on the amount of

8 such reduction; and

9 ‘‘(3) the Secretary periodically and on a timely

10 basis reimburses the entity or organization for the

11 amount of such reductions.

12 The reimbursement under paragraph (3) may be com13 puted on a capitated basis, taking into account the actu14 arial value of the reductions and with appropriate adjust15 ments to reflect differences in the risks actually involved.

16 ‘‘(f) RELATION TO MEDICAID PROGRAM.—

17 ‘‘(1) IN GENERAL.—For provisions providing

18 for eligibility determinations, and additional financ19 ing, under the medicaid program, see section 1935.

20 ‘‘(2) MEDICAID PROVIDING WRAP AROUND BEN21 EFITS.—The coverage provided under this part is

22 primary payor to benefits for prescribed drugs pro23 vided under the medicaid program under title XIX.
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1 ‘‘ADDITIONAL PRESCRIPTION DRUG SUBSIDIES THROUGH

2 REINSURANCE

3 ‘‘SEC. 2212. (a) REINSURANCE SUBSIDY PAY4 MENT.—In order to reduce premium levels applicable to

5 qualified prescription drug coverage for all medicare bene6 ficiaries, to reduce adverse selection among Medicare Pre7 scription Plus plans and Medicare+Choice plans that pro8 vide qualified prescription drug coverage, and to promote

9 the participation of eligible entities under this part, the

10 Secretary shall provide in accordance with this section for

11 payment to a qualifying entity (as defined in subsection

12 (b)) of the reinsurance payment amount (as defined in

13 subsection (c)) for excess costs incurred in providing quali14 fied prescription drug coverage—

15 ‘‘(1) for individuals enrolled with a Medicare

16 Prescription Plus plan under this part;

17 ‘‘(2) for individuals enrolled with a

18 Medicare+Choice plan that provides qualified pre19 scription drug coverage under part C of title XVIII;

20 and

21 ‘‘(3) for medicare secondary payer eligible indi22 viduals (described in subsection (e)(3)(D)) who are

23 enrolled in a qualified retiree prescription drug plan.

24 This section constitutes budget authority in advance of ap25 propriations Acts and represents the obligation of the Sec-
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1 retary to provide for the payment of amounts provided

2 under this section.

3 ‘‘(b) QUALIFYING ENTITY DEFINED.—For purposes

4 of this section, the term ‘qualifying entity’ means any of

5 the following that has entered into an agreement with the

6 Secretary to provide the Secretary with such information

7 as may be required to carry out this section:

8 ‘‘(1) An eligible entity offering a Medicare Pre9 scription Plus plan under this part.

10 ‘‘(2) A Medicare+Choice organization that pro11 vides qualified prescription drug coverage under a

12 Medicare+Choice plan under part C of title XVIII.

13 ‘‘(3) The sponsor of a qualified retiree prescrip14 tion drug plan (as defined in subsection (e)).

15 ‘‘(c) REINSURANCE PAYMENT AMOUNT.—

16 ‘‘(1) IN GENERAL.—Subject to subsection (e)(2)

17 and paragraph (4), the reinsurance payment amount

18 under this subsection for a qualified beneficiary (as

19 defined in subsection (f)(1)) for a coverage year (as

20 defined in subsection (f)(2)) is an amount equal to

21 80 percent of the allowable costs attributable to the

22 portion of the individual’s gross covered prescription

23 drug costs for the year that exceeds $7,050.

24 ‘‘(2) ALLOWABLE COSTS.—For purposes of this

25 section, the term ‘allowable costs’ means, with re-
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1 spect to gross covered prescription drug costs under

2 a plan described in subsection (b) offered by a quali3 fying entity, the part of such costs that are actually

4 paid under the plan, but in no case more than the

5 part of such costs that would have been paid under

6 the plan if the prescription drug coverage under the

7 plan were standard coverage.

8 ‘‘(3) GROSS COVERED PRESCRIPTION DRUG

9 COSTS.—For purposes of this section, the term

10 ‘gross covered prescription drug costs’ means, with

11 respect to an enrollee with a qualifying entity under

12 a plan described in subsection (b) during a coverage

13 year, the costs incurred under the plan for covered

14 prescription drugs dispensed during the year, includ15 ing costs relating to the deductible, whether paid by

16 the enrollee or under the plan, regardless of whether

17 the coverage under the plan exceeds standard cov18 erage and regardless of when the payment for such

19 drugs is made.

20 ‘‘(4) INDEXING DOLLAR AMOUNT.—

21 ‘‘(A) AMOUNT FOR 2003.—The dollar

22 amount applied under paragraph (1) for 2003

23 shall be the dollar amount specified in such

24 paragraph.
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1 ‘‘(B) FOR 2004.—The dollar amount ap2 plied under paragraph (1) for 2004 shall be the

3 dollar amount specified in such paragraph in4 creased by the annual percentage increase de5 scribed in section 2205(d)(5) for 2004.

6 ‘‘(C) FOR SUBSEQUENT YEARS.—The dol7 lar amount applied under paragraph (1) for a

8 year after 2004 shall be the dollar amount

9 (under this paragraph) applied under para10 graph (1) for the preceding year increased by

11 the annual percentage increase described in sec12 tion 2205(d)(5) for the year involved.

13 ‘‘(D) ROUNDING.—Any amount, deter14 mined under the preceding provisions of this

15 paragraph for a year, which is not a multiple of

16 $5 shall be rounded to the nearest multiple of

17 $5.

18 ‘‘(d) PAYMENT METHODS.—

19 ‘‘(1) IN GENERAL.—Payments under this sec20 tion shall be based on such a method as the Sec21 retary determines. The Secretary may establish a

22 payment method by which interim payments of

23 amounts under this section are made during a year

24 based on the Secretary’s best estimate of amounts
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1 that will be payable after obtaining all of the infor2 mation.

3 ‘‘(2) SOURCE OF PAYMENTS.—Payments under

4 this section shall be made from the Medicare Pre5 scription Drug Account.

6 ‘‘(e) QUALIFIED RETIREE PRESCRIPTION DRUG

7 PLAN DEFINED.—

8 ‘‘(1) IN GENERAL.—For purposes of this sec9 tion, the term ‘qualified retiree prescription drug

10 plan’ means employment-based retiree health cov11 erage (as defined in paragraph (3)(A)) if, with re12 spect to an individual enrolled (or eligible to be en13 rolled) under this part who is covered under the

14 plan, the following requirements are met:

15 ‘‘(A) ASSURANCE.—The sponsor of the

16 plan shall annually attest, and provide such as17 surances as the Secretary may require, that the

18 coverage meets the requirements for qualified

19 prescription drug coverage.

20 ‘‘(B) AUDITS.—The sponsor (and the plan)

21 shall maintain, and afford the Secretary access

22 to, such records as the Secretary may require

23 for purposes of audits and other oversight ac24 tivities necessary to ensure the adequacy of pre25 scription drug coverage, the accuracy of pay-
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1 ments made, and such other matters as may be

2 appropriate.

3 ‘‘(C) OTHER REQUIREMENTS.—The spon4 sor of the plan shall comply with such other re5 quirements as the Secretary finds necessary to

6 administer the program under this section.

7 ‘‘(2) LIMITATION ON BENEFIT ELIGIBILITY.—

8 No payment shall be provided under this section

9 with respect to an individual who is enrolled under

10 a qualified retiree prescription drug plan unless the

11 individual is a medicare secondary payer eligible in12 dividual who—

13 ‘‘(A) is covered under the plan; and

14 ‘‘(B) is eligible to obtain qualified prescrip15 tion drug coverage under this part but did not

16 elect such coverage (either through a Medicare

17 Prescription Plus plan or through a

18 Medicare+Choice plan).

19 ‘‘(3) DEFINITIONS.—As used in this section:

20 ‘‘(A) EMPLOYMENT-BASED RETIREE

21 HEALTH COVERAGE.—The term ‘employment22 based retiree health coverage’ means health in23 surance or other coverage of health care costs

24 for medicare secondary payer eligible individ25 uals (or for such individuals and their spouses
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1 and dependents) based on their status as

2 former employees or labor union members.

3 ‘‘(B) EMPLOYER.—The term ‘employer’

4 has the meaning given such term by section

5 3(5) of the Employee Retirement Income Secu6 rity Act of 1974 (except that such term shall

7 include only employers of 2 or more employees).

8 ‘‘(C) SPONSOR.—The term ‘sponsor’

9 means a plan sponsor, as defined in section

10 3(16)(B) of the Employee Retirement Income

11 Security Act of 1974.

12 ‘‘(D) MEDICARE SECONDARY PAYER INDI13 VIDUAL.—The term ‘medicare secondary payer

14 eligible individual’ means, with respect to a

15 plan, an individual who is covered under the

16 plan and with respect to whom the plan is not

17 a primary plan (as defined in section

18 1862(b)(2)(A)).

19 ‘‘(f) GENERAL DEFINITIONS.—For purposes of this

20 section:

21 ‘‘(1) QUALIFIED BENEFICIARY.—The term

22 ‘qualified beneficiary’ means an individual who—

23 ‘‘(A) is enrolled with a Medicare Prescrip24 tion Plus plan under this part;
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1 ‘‘(B) is enrolled with a Medicare+Choice

2 plan that provides qualified prescription drug

3 coverage under part C of title XVIII; or

4 ‘‘(C) is covered as a medicare secondary

5 payer eligible individual under a qualified re6 tiree prescription drug plan.

7 ‘‘(2) COVERAGE YEAR.—The term ‘coverage

8 year’ means a calendar year in which covered out9 patient drugs are dispensed if a claim for payment

10 is made under the plan for such drugs, regardless of

11 when the claim is paid.

12 ‘‘PLAN FEES FOR ADMINISTRATIVE COSTS

13 ‘‘SEC. 2213. (a) IN GENERAL.—The Secretary may

14 levy on Medicare Prescription Plus plans and

15 Medicare+Choice plans that provide drug coverage pursu16 ant to this part an assessment sufficient to pay the esti17 mated expenses of the Secretary for administering the pro18 gram under this part.

19 ‘‘(b) DEPOSITS AND USE.—The assessments de20 scribed in subsection (a) shall be—

21 ‘‘(1) deposited into the Medicare Prescription

22 Drug Account; and

23 ‘‘(2) available for administering the program

24 under this part without regard to amounts provided

25 for in advance by appropriations Acts.
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1 ‘‘MEDICARE PRESCRIPTION DRUG ACCOUNT

2 ‘‘SEC. 2214. (a) ESTABLISHMENT.—There is created

3 within the Federal Supplementary Medical Insurance

4 Trust Fund established under section 1841 an account to

5 be known as the ‘Medicare Prescription Drug Account’.

6 ‘‘(b) AMOUNTS IN ACCOUNT.—

7 ‘‘(1) IN GENERAL.—The Medicare Prescription

8 Drug Account shall consist of—

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

10 or appropriated to, such account as provided in

11 this part; and

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

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

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

15 under this part to the Medicare Prescription Drug

16 Account shall be kept separate from all other funds

17 within the Federal Supplemental Medical Insurance

18 Trust Fund.

19 ‘‘(c) PAYMENTS FROM ACCOUNT.—

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

21 shall pay from time to time from the Medicare Pre22 scription Drug Account such amounts as the Sec23 retary certifies are necessary to make the payments

24 provided for by this part, and the payments with re-
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1 spect to administrative expenses in accordance with

2 section 201(g).

3 ‘‘(2) TRANSFERS TO MEDICAID ACCOUNT FOR

4 INCREASED ADMINISTRATIVE COSTS.—The Man5 aging Trustee shall transfer from time to time from

6 the Account to the Grants to States for Medicaid ac7 count amounts the Secretary certifies are attrib8 utable to increases in payment resulting from the

9 application of a higher Federal matching percentage

10 under section 1935(b).

11 ‘‘(d) DEPOSITS INTO ACCOUNT.—

12 ‘‘(1) MEDICAID TRANSFER.—There is hereby

13 transferred to the Account, from amounts appro14 priated for Grants to States for Medicaid, amounts

15 equivalent to the aggregate amount of the reductions

16 in payments under section 1903(a)(1) attributable to

17 the application of section 1935(c).

18 ‘‘(2) APPROPRIATIONS TO COVER GOVERNMENT

19 CONTRIBUTIONS.—There are authorized to be appro20 priated from time to time, out of any moneys in the

21 Treasury not otherwise appropriated, to the Ac22 count, an amount equivalent to the amount of pay23 ments made from the Account, reduced by—

24 ‘‘(1) the amount transferred to the Ac25 count under paragraph (1);
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1 ‘‘(2) the beneficiary premiums collected

2 and credited to the account under section

3 2211(b)(2); and

4 ‘‘(3) fees collected and credited to the ac5 count under section 2213.

6 ‘‘SECONDARY PAYER PROVISIONS

7 ‘‘SEC. 2215. The provisions of section 1862(b) shall

8 apply to the benefits provided under this part.

9 ‘‘DEFINITIONS; TREATMENT OF REFERENCES TO

10 PROVISIONS IN MEDICARE+CHOICE PROGRAM

11 ‘‘SEC. 2216. (a) DEFINITIONS.—In this part:

12 ‘‘(1) COVERED OUTPATIENT DRUG.—

13 ‘‘(A) IN GENERAL.—Except as provided in

14 this subparagraph (B), the term ‘covered out15 patient drug’ means—

16 ‘‘(i) a drug that may be dispensed

17 only upon a prescription and that is de18 scribed in clause (i) or (ii) of section

19 1927(k)(2)(A); or

20 ‘‘(ii) a biological product or insulin de21 scribed in subparagraph (B) or (C) of such

22 section.

23 ‘‘(B) EXCLUSIONS.—

24 ‘‘(i) IN GENERAL.—The term ‘covered

25 outpatient drug’ does not include drugs or

26 classes of drugs, or their medical uses,
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1 which may be excluded from coverage or

2 otherwise restricted under section

3 1927(d)(2), other than subparagraph (E)

4 thereof (relating to smoking cessation

5 agents).

6 ‘‘(ii) AVOIDANCE OF DUPLICATE COV7 ERAGE.—A drug prescribed for an indi8 vidual that would otherwise be a covered

9 outpatient drug under this part shall not

10 be so considered if payment for such drug

11 is available under part A or B of title

12 XVIII (but shall be so considered if such

13 payment is not available because benefits

14 under part A or B of title XVIII have been

15 exhausted), without regard to whether the

16 individual is entitled to benefits under such

17 part A or enrolled under such part B.

18 ‘‘(3) ELIGIBLE BENEFICIARY.—The term ‘eligi19 ble beneficiary’ means an individual that is entitled

20 to benefits under part A of title XVIII and enrolled

21 under part B of such title.

22 ‘‘(4) ELIGIBLE ENTITY.—The term ‘eligible en23 tity’ means any risk-bearing entity that the Sec24 retary determines to be appropriate to provide eligi-
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1 ble beneficiaries with the benefits under a Medicare

2 Prescription Plus plan, including—

3 ‘‘(A) a pharmaceutical benefit management

4 company;

5 ‘‘(B) a wholesale or retail pharmacist deliv6 ery system;

7 ‘‘(C) an insurer (including an insurer that

8 offers medicare supplemental policies under sec9 tion 1882);

10 ‘‘(D) another entity; or

11 ‘‘(E) any combination of the entities de12 scribed in subparagraphs (A) through (D).

13 ‘‘(5) INITIAL COVERAGE LIMIT.—The term ‘ini14 tial coverage limit’ means the limit as established

15 under section 2205(d)(3), or, in the case of coverage

16 that is not standard coverage, the comparable limit

17 (if any) established under the coverage.

18 ‘‘(6) MEDICARE+CHOICE ORGANIZATION;

19 MEDICARE+CHOICE PLAN.—The terms

20 ‘Medicare+Choice organization’ and

21 ‘Medicare+Choice plan’ have the meanings given

22 such terms in subsections (a)(1) and (b)(1), respec23 tively, of section 1859 (relating to definitions relat24 ing to Medicare+Choice organizations and plans).
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1 ‘‘(7) MEDICARE PRESCRIPTION DRUG AC2 COUNT.—The term ‘Medicare Prescription Drug Ac3 count’ means the Medicare Prescription Drug Ac4 count established under section 2214 and located

5 within the Federal Supplementary Medical Insur6 ance Trust Fund established under section 1841.

7 ‘‘(8) MEDICARE PRESCRIPTION PLUS PLAN.—

8 The term ‘Medicare Prescription Plus plan’ means a

9 health benefits plan that the Secretary has approved

10 under section 2209.

11 ‘‘(9) STANDARD COVERAGE.—The term ‘stand12 ard coverage’ means the coverage described in sec13 tion 2205(d).

14 ‘‘(b) APPLICATION OF MEDICARE+CHOICE PROVI15 SIONS UNDER THIS PART.—For purposes of applying pro16 visions of part C of title XVIII under this part with re17 spect to a Medicare Prescription Plus plan and an eligible

18 entity, unless otherwise provided in this part such provi19 sions shall be applied as if—

20 ‘‘(1) any reference to a Medicare+Choice plan

21 included a reference to a Medicare Prescription Plus

22 plan;

23 ‘‘(2) any reference to a provider-sponsored or24 ganization included a reference to an eligible entity;
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1 ‘‘(3) any reference to a contract under section

2 1857 included a reference to a contract under sec3 tion 2207(b); and

4 ‘‘(4) any reference to part C of title XVIII in5 cluded a reference to this part.’’.

6 (b) SUBMISSION OF LEGISLATIVE PROPOSAL.—Not

7 later than 6 months after the date of enactment of this

8 Act, the Secretary of Health and Human Services shall

9 submit to the appropriate committees of Congress a legis10 lative proposal providing for such technical and con11 forming amendments in the law as are required by the

12 provisions of this Act.

13 SEC. 202. AMENDMENTS TO FEDERAL SUPPLEMENTARY

14 MEDICAL INSURANCE TRUST FUND.

15 Section 1841 of the Social Security Act (42 U.S.C.

16 1395t) is amended—

17 (1) in the last sentence of subsection (a)—

18 (A) by striking ‘‘and’’ after ‘‘section

19 201(i)(1)’’; and

20 (B) by inserting before the period the fol21 lowing: ‘‘, and such amounts as may be depos22 ited in, or appropriated to, the Medicare Pre23 scription Drug Account established by section

24 2214’’;
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1 (2) in subsection (g), by inserting after ‘‘by this

2 part,’’ the following: ‘‘the payments provided for

3 under the Prescription Drug and Supplemental Ben4 efit Program under title XXII (in which case the

5 payments shall come from the Medicare Prescription

6 Drug Account in the Supplementary Medical Insur7 ance Trust Fund),’’;

8 (3) in the first sentence of subsection (h), by

9 inserting ‘‘(or the Secretary by reason of section

10 2215 (in which case the payments shall come from

11 the Medicare Prescription Drug Account within such

12 Trust Fund))’’ after ‘‘Human Services’’; and

13 (4) in the first sentence of subsection (i), by in14 serting ‘‘(or the Secretary by reason of section 2215

15 (in which case the payments shall come from the

16 Medicare Prescription Drug Account within such

17 Trust Fund))’’ after ‘‘Human Services’’.

18 SEC. 203. PRESCRIPTION DRUG COVERAGE UNDER THE

19 MEDICARE+CHOICE PROGRAM.

20 (a) IN GENERAL.—Section 1851 of the Social Secu21 rity Act (42 U.S.C. 1395w–21) is amended by adding at

22 the end the following new subsection:

23 ‘‘(j) AVAILABILITY OF PRESCRIPTION DRUG BENE24 FITS.—
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1 ‘‘(1) IN GENERAL.—A Medicare+Choice orga2 nization may not offer prescription drug coverage

3 (other than that required under parts A and B) to

4 an enrollee under a Medicare+Choice plan unless

5 such drug coverage is at least qualified prescription

6 drug coverage and unless the requirements of this

7 subsection with respect to such coverage are met.

8 ‘‘(2) COMPLIANCE WITH ADDITIONAL BENE9 FICIARY PROTECTIONS.—With respect to the offer10 ing of qualified prescription drug coverage by a

11 Medicare+Choice organization under a

12 Medicare+Choice plan, the organization and plan

13 shall meet the requirements of section 2206, includ14 ing requirements relating to information dissemina15 tion and grievance and appeals, in the same manner

16 as they apply to an eligible entity and a Medicare

17 Prescription Plus plan under title XXII. The Sec18 retary shall waive such requirements to the extent

19 the Administrator determines that such require20 ments duplicate requirements otherwise applicable to

21 the organization or plan under this part.

22 ‘‘(3) TREATMENT OF COVERAGE.—Except as

23 provided in this subsection, qualified prescription

24 drug coverage offered under this subsection shall be

25 treated under this part in the same manner as sup-
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1 plemental health care benefits described in section

2 1852(a)(3)(A).

3 ‘‘(4) AVAILABILITY OF COST-SHARING SUB4 SIDIES FOR LOW-INCOME ENROLLEES AND REINSUR5 ANCE SUBSIDY PAYMENTS FOR ORGANIZATIONS.—

6 For provisions—

7 ‘‘(A) providing cost-sharing subsidies to

8 low-income individuals receiving qualified pre9 scription drug coverage through a

10 Medicare+Choice plan, see section 2211; and

11 ‘‘(B) providing a Medicare+Choice organi12 zation with reinsurance subsidy payments for

13 providing qualified prescription drug coverage

14 under this part, see section 2212.

15 ‘‘(5) SPECIFICATION OF SEPARATE AND STAND16 ARD PREMIUM.—

17 ‘‘(A) IN GENERAL.—For purposes of ap18 plying section 1854 and determining the pre19 mium discount under section 2211(c) with re20 spect to qualified prescription drug coverage of21 fered under this subsection under a plan, the

22 Medicare+Choice organization shall compute

23 and publish the following:

24 ‘‘(i) SEPARATE PRESCRIPTION DRUG

25 PREMIUM.—A premium for prescription
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1 drug benefits that constitutes qualified

2 prescription drug coverage that is separate

3 from other coverage under the plan.

4 ‘‘(ii) PORTION OF COVERAGE ATTRIB5 UTABLE TO STANDARD BENEFITS.—The

6 ratio of the actuarial value of standard

7 coverage to the actuarial value of the

8 qualified prescription drug coverage offered

9 under the plan.

10 ‘‘(iii) PORTION OF PREMIUM ATTRIB11 UTABLE TO STANDARD BENEFITS.—A

12 standard premium equal to the product of

13 the premium described in clause (i) and

14 the ratio under clause (ii).

15 The premium under clause (i) shall be com16 puted without regard to any reduction in the

17 premium permitted under subparagraph (B).

18 ‘‘(B) REDUCTION OF PREMIUMS AL19 LOWED.—Nothing in this subsection shall be

20 construed as preventing a Medicare+Choice or21 ganization from reducing the amount of a pre22 mium charged for prescription drug coverage

23 because of the application of subsections

24 (f)(1)(A) and (i)(2)(A) of section 1854 to other

25 coverage.
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1 ‘‘(6) TRANSITION IN INITIAL ENROLLMENT PE2 RIOD.—Notwithstanding any other provision of this

3 part, the annual, coordinated election period under

4 subsection (e)(3)(B) for 2003 shall be the 6-month

5 period beginning with November 2002.

6 ‘‘(7) QUALIFIED PRESCRIPTION DRUG COV7 ERAGE; STANDARD COVERAGE.—For purposes of

8 this part, the terms ‘qualified prescription drug cov9 erage’ and ‘standard coverage’ have the meanings

10 given such terms in section 2205.’’.

11 (b) CONFORMING AMENDMENTS.—Section

12 1851(a)(1) of such Act (42 U.S.C. 1395w–21(a)(1)) is

13 amended—

14 (1) by inserting ‘‘(other than qualified prescrip15 tion drug benefits)’’ after ‘‘benefits’’;

16 (2) by striking the period at the end of sub17 paragraph (B) and inserting a comma; and

18 (3) by adding at the end the following flush lan19 guage:

20 ‘‘and may elect qualified prescription drug coverage

21 in accordance with title XXII.’’.

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

23 this section apply to coverage provided on or after January

24 1, 2003.
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1 SEC. 205. MEDIGAP PROVISIONS.

2 (a) IN GENERAL.—Notwithstanding any other provi3 sion of law, no new medicare supplemental policy that pro4 vides coverage of expenses for prescription drugs may be

5 issued under section 1882 of the Social Security Act on

6 or after January 1, 2003, to an individual unless it re7 places a medicare supplemental policy that was issued to

8 that individual and that provided some coverage of ex9 penses for prescription drugs.

10 (b) ISSUANCE OF SUBSTITUTE POLICIES IF OBTAIN11 ING PRESCRIPTION DRUG COVERAGE THROUGH MEDI12 CARE.—

13 (1) IN GENERAL.—The issuer of a medicare

14 supplemental policy—

15 (A) may not deny or condition the issuance

16 or effectiveness of a medicare supplemental pol17 icy that has a benefit package classified as ‘‘A’’,

18 ‘‘B’’, ‘‘C’’, ‘‘D’’, ‘‘E’’, ‘‘F’’, or ‘‘G’’ (under the

19 standards established under subsection (p)(2) of

20 section 1882 of the Social Security Act (42

21 U.S.C. 1395ss)) and that is offered and is

22 available for issuance to new enrollees by such

23 issuer;

24 (B) may not discriminate in the pricing of

25 such policy, because of health status, claims ex-
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1 perience, receipt of health care, or medical con2 dition; and

3 (C) may not impose an exclusion of bene4 fits based on a preexisting condition under such

5 policy,

6 in the case of an individual described in paragraph

7 (2) who seeks to enroll under the policy not later

8 than 63 days after the date of the termination of en9 rollment described in such paragraph and who sub10 mits evidence of the date of termination or

11 disenrollment along with the application for such

12 medicare supplemental policy.

13 (2) INDIVIDUAL COVERED.—An individual de14 scribed in this paragraph is an individual who—

15 (A) enrolls in a Medicare Prescription Plus

16 plan under title XXII of the Social Security Act

17 (as added by section 201); and

18 (B) at the time of such enrollment was en19 rolled and terminates enrollment in a medicare

20 supplemental policy which has a benefit pack21 age classified as ‘‘H’’, ‘‘I’’, or ‘‘J’’ under the

22 standards referred to in paragraph (1)(A) or

23 terminates enrollment in a policy to which such

24 standards do not apply but which provides ben25 efits for prescription drugs.
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1 (3) ENFORCEMENT.—The provisions of para2 graph (1) shall be enforced as though such provi3 sions were included in section 1882(s) of the Social

4 Security Act (42 U.S.C. 1395ss(s)).

5 (4) DEFINITIONS.—For purposes of this sub6 section, the term ‘‘medicare supplemental policy’’

7 has the meaning given such term in section 1882(g)

8 of the Social Security Act (42 U.S.C. 1395ss(g)).

9 (c) MEDIGAP PROTECTIONS FOR INDIVIDUALS WHO

10 LOSE MEDICARE PRESCRIPTION PLUS PLAN COV11 ERAGE.—Section 1882 of the Social Security Act (42

12 U.S.C. 1395ss) is amended—

13 (1) in subsection (d)(3)—

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

15 end the following:

16 ‘‘(ix) Nothing in this subparagraph shall be construed

17 as preventing the sale of 1 medicare supplemental policy

18 and 1 Medicare Prescription Plus plan to an individual,

19 except that the sale of such a policy or plan may not dupli20 cate any health benefits under any policy or plan owned

21 by the individual.’’; and

22 (B) in subparagraph (B)(iii)—

23 (i) in subclause (I), by striking ‘‘(II)

24 and (III)’’ and inserting ‘‘(II), (III), and

25 (IV)’’;
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1 (ii) by redesignating subclause (III) as

2 subclause (IV); and

3 (iii) by inserting after subclause (II)

4 the following:

5 ‘‘(III) If the statement required by clause (i) is ob6 tained and indicates that the individual is enrolled in 1

7 medicare supplemental policy or 1 Medicare Prescription

8 Plus plan, the sale of another policy or plan is not in viola9 tion of clause (i) if such other policy or plan does not du10 plicate health benefits under the policy or plan in which

11 the individual is enrolled.’’;

12 (2) in subsection (g)(1), by inserting ‘‘, Medi13 care Prescription Plus plan,’’ after

14 ‘‘Medicare+Choice plan’’; and

15 (3) in subsection (s)(3)—

16 (A) in subparagraph (B)—

17 (i) in clause (ii), by inserting ‘‘is en18 rolled with an eligible entity under a Medi19 care Prescription Plus plan under title

20 XXII or’’ after ‘‘section 1851(e)(4) or the

21 individual’’;

22 (ii) in clause (v)(II), by inserting

23 ‘‘with any eligible entity under a Medicare

24 Prescription Plus plan under title XXII,’’

25 after ‘‘under part C,’’; and
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1 (iii) in clause (vi), by inserting ‘‘, in

2 a Medicare Prescription Plus plan under

3 title XXII,’’ after ‘‘under part C’’; and

4 (B) in subparagraph (E)—

5 (i) in clause (i), by inserting ‘‘(or, in

6 the case of an individual enrolled under a

7 Medicare Prescription Plus plan, the date

8 on which the individual was notified by the

9 eligible entity of the impending termination

10 or discontinuance of the Medicare Pre11 scription Plus plan) after ‘‘it offers in the

12 area’’; and

13 (ii) in clause (ii), by inserting ‘‘or

14 Medicare Prescription Plus plan’’ after

15 ‘‘Medicare+Choice plan’’.

Æ