II

107TH CONGRESS

1ST SESSION S. 1185

To amend title XVIII of the Social Security Act to assure access of medicare

beneficiaries to prescription drug coverage through the SPICE drug

benefit program.

IN THE SENATE OF THE UNITED STATES

JULY 17, 2001

Mr. WYDEN (for himself and Ms. SNOWE) introduced the following bill; which

was read twice and referred to the Committee on Finance

A BILL

To amend title XVIII of the Social Security Act to assure

access of medicare beneficiaries to prescription drug coverage through the SPICE drug benefit 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 ‘‘Seniors Prescription Insurance Coverage Equity

6 (SPICE) Act of 2001’’.

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

8 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. SPICE drug benefit program.
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‘‘PART D—SPICE DRUG BENEFIT PROGRAM

‘‘Sec. 1860A. Establishment of SPICE drug benefit program.

‘‘Sec. 1860B. SPICE prescription drug coverage.

‘‘Sec. 1860C. Enrollment under SPICE drug benefit program.

‘‘Sec. 1860D. Enrollment in a policy or plan.

‘‘Sec. 1860E. Medicare Drug Plan for Noncompetitive Areas.

‘‘Sec. 1860F. Selection of private entities to provide basic coverage.

‘‘Sec. 1860G. Providing information to beneficiaries.

‘‘Sec. 1860H. Premiums.

‘‘Sec. 1860I. Approval for entities offering SPICE prescription drug coverage.

‘‘Sec. 1860J. Payments to entities.

‘‘Sec. 1860K. Financial assistance to obtain SPICE prescription drug coverage.

‘‘Sec. 1860L. Employer incentive program for employment-based retiree

drug coverage.

‘‘Sec. 1860M. SPICE Board.

‘‘Sec. 1860N. SPICE Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund.’’.

Sec. 3. SPICE prescription drug coverage under Medicare+Choice plans.

Sec. 4. Medigap revisions and transition provisions.

Sec. 5. Provision of information on SPICE drug benefit program under health

insurance information, counseling, and assistance grants.

Sec. 6. Personal Digital Access Technology Demonstration Project.

1 SEC. 2. SPICE DRUG BENEFIT PROGRAM.

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

3 Act (42 U.S.C. 1395 et seq.) is amended by redesignating

4 part D as part E and by inserting after part C the fol5 lowing new part:

6 ‘‘PART D—SPICE DRUG BENEFIT PROGRAM

7 ‘‘ESTABLISHMENT OF SPICE DRUG BENEFIT PROGRAM

8 ‘‘SEC. 1860A. (a) ACCESS TO SPICE PRESCRIPTION

9 DRUG COVERAGE.—

10 ‘‘(1) IN GENERAL.—Beginning in 2003, the

11 SPICE Board (established under section 1860M)

12 shall provide for a SPICE drug benefit program

13 under which all eligible medicare beneficiaries who

14 voluntarily enroll under this part shall be entitled to
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1 obtain SPICE prescription drug coverage (meeting

2 the terms and conditions under this part) as follows:

3 ‘‘(A) MEDICARE+CHOICE PLAN.—If the el4 igible medicare beneficiary is eligible to enroll in

5 a Medicare+Choice plan, the beneficiary may

6 enroll in the plan and obtain SPICE prescrip7 tion drug coverage (as defined in section

8 1860B(a)) through such plan.

9 ‘‘(B) MEDICARE SUPPLEMENTAL POL10 ICY.—If the eligible medicare beneficiary is not

11 enrolled in a Medicare+Choice plan but is en12 rolled in a medicare supplemental policy, the

13 beneficiary may—

14 ‘‘(i) obtain SPICE prescription drug

15 coverage through such policy; or

16 ‘‘(ii) waive basic coverage (as defined

17 in section 1860B(b)) pursuant to section

18 1860C(a)(3) and obtain financial assist19 ance pursuant to section 1860K(c) for

20 stop-loss coverage (as defined in section

21 1860B(c)) provided under such policy.

22 ‘‘(C) MEDICARE DRUG PLAN FOR NON23 COMPETITIVE AREAS.—If the eligible medicare

24 beneficiary is not enrolled in a

25 Medicare+Choice plan, a medicare supple-
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1 mental policy, or a basic coverage plan under

2 section 1860F, and there is a Medicare Drug

3 Plan for Noncompetitive Areas available in the

4 area in which the beneficiary resides, the bene5 ficiary may obtain SPICE prescription drug

6 coverage under this part through enrollment in

7 such plan.

8 ‘‘(D) BASIC COVERAGE ONLY THROUGH A

9 PRIVATE ENTITY.—If the eligible medicare ben10 eficiary is not enrolled in a Medicare+Choice

11 plan, a medicare supplemental policy, or a

12 Medicare Drug Plan for Noncompetitive Areas,

13 the beneficiary may obtain basic coverage (in14 cluding financial assistance for such coverage

15 under section 1860K(b) and access to nego16 tiated prices under section 1860B(d)) through

17 enrollment in a plan offered by a private entity

18 with a contract to offer such plan under section

19 1860F.

20 ‘‘(2) VOLUNTARY NATURE OF PROGRAM.—

21 Nothing in this part shall be construed as requiring

22 an eligible medicare beneficiary to enroll in the pro23 gram established under this part.

24 ‘‘(3) ADMINISTRATION OF BENEFITS.—In pro25 viding SPICE prescription drug coverage to an eligi-
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1 ble medicare beneficiary under this part, an entity

2 offering a medicare supplemental policy, a

3 Medicare+Choice plan, a Medicare Drug Plan for

4 Noncompetitive Areas, or a basic coverage plan

5 under section 1860F may—

6 ‘‘(A) directly administer the benefits under

7 such coverage; or

8 ‘‘(B) contract with an entity that meets

9 the applicable requirements under this part to

10 administer such benefits.

11 ‘‘(b) ACCESS TO ALTERNATIVE PRESCRIPTION DRUG

12 COVERAGE.—In the case of an eligible medicare bene13 ficiary who has creditable prescription drug coverage (as

14 defined in section 1860C(b)(4)) under a policy or plan,

15 such beneficiary—

16 ‘‘(1) may continue to receive such coverage

17 under such policy or plan and not enroll under this

18 part; and

19 ‘‘(2) pursuant to section 1860C(b)(3), is per20 mitted to subsequently enroll under this part and

21 obtain SPICE prescription drug coverage without

22 any penalty if such policy or plan terminated, ceased

23 to provide, or substantially reduced the value of the

24 prescription drug coverage under such plan or pol25 icy.
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1 ‘‘(c) FINANCIAL ASSISTANCE.—

2 ‘‘(1) UNDER SPICE DRUG BENEFIT PROGRAM.—

3 Under the SPICE drug benefit program, the SPICE

4 Board shall provide financial assistance, with such

5 assistance varying depending upon the income of

6 such beneficiary, for any eligible medicare bene7 ficiary enrolled under this part who voluntarily

8 obtains—

9 ‘‘(A) basic coverage (pursuant to sub10 section (b) of section 1860K); or

11 ‘‘(B) stop-loss coverage (pursuant to sub12 section (c) of such section).

13 ‘‘(2) ASSISTANCE TO GROUP HEALTH PLANS

14 THAT PROVIDE PRESCRIPTION DRUG COVERAGE TO

15 ELIGIBLE MEDICARE BENEFICIARIES.—Pursuant to

16 the Employer Incentive Program established under

17 section 1860L, the SPICE Board shall make pay18 ments to employers and other sponsors of employ19 ment-based health care coverage to encourage such

20 employers and sponsors to provide adequate pre21 scription drug coverage to retired individuals.

22 ‘‘(d) ELIGIBLE MEDICARE BENEFICIARY DE23 FINED.—For purposes of this part, the term ‘eligible

24 medicare beneficiary’ means an individual who is entitled

25 to benefits under part A and enrolled under part B.
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1 ‘‘(e) FINANCING.—The costs of providing benefits

2 under this part shall be payable from the SPICE Prescrip3 tion Drug Account (as established under section 1860N)

4 within the Federal Supplementary Medical Insurance

5 Trust Fund under section 1841.

6 ‘‘SPICE PRESCRIPTION DRUG COVERAGE

7 ‘‘SEC. 1860B. (a) IN GENERAL.—For purposes of

8 this part, the term ‘SPICE prescription drug coverage’

9 means coverage consisting of the following:

10 ‘‘(1) BASIC COVERAGE.—Basic coverage (as de11 fined in subsection (b)) and access to negotiated

12 prices under subsection (d), except as waived pursu13 ant to section 1860C(a)(3).

14 ‘‘(2) STOP-LOSS COVERAGE.—Stop-loss cov15 erage (as defined in subsection (c)).

16 ‘‘(b) BASIC COVERAGE.—For purposes of this part,

17 the term ‘basic coverage’ means coverage of covered out18 patient drugs (as defined in subsection (e)) that meets the

19 following requirements:

20 ‘‘(1) DEDUCTIBLE.—The coverage has an an21 nual deductible—

22 ‘‘(A) for 2003, that is equal to $350; or

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

24 to the amount specified under this paragraph

25 for the previous year increased by the percent-
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1 age specified in paragraph (4) for the year in2 volved.

3 Any amount determined under subparagraph (B)

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

5 nearest multiple of $5.

6 ‘‘(2) COINSURANCE.—The coverage has coin7 surance (for the cost of a covered outpatient drug

8 above the annual deductible specified in paragraph

9 (1) for the year and up to the initial coverage limit

10 specified in paragraph (3) for the year) that does

11 not exceed 25 percent of the cost of such drug.

12 ‘‘(3) INITIAL COVERAGE LIMIT.—

13 ‘‘(A) IN GENERAL.—The coverage has an

14 initial coverage limit for covered outpatient

15 drugs in a year that is reached when the eligi16 ble medicare beneficiary has incurred the appli17 cable amount of out-of-pocket expenses in the

18 year.

19 ‘‘(B) APPLICABLE AMOUNT DEFINED.—

20 For purposes of subparagraph (A), the term

21 ‘applicable amount’ means—

22 ‘‘(i) for 2003, $3,000; or

23 ‘‘(ii) for a subsequent year, the

24 amount specified in this subparagraph for

25 the previous year, increased by the annual
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1 percentage increase described in paragraph

2 (4) for the year involved.

3 Any amount determined under clause (ii) that

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

5 nearest multiple of $25.

6 ‘‘(C) APPLICATION.—In applying para7 graph (1)—

8 ‘‘(i) incurred out-of-pocket expenses

9 shall only include expenses incurred for the

10 annual deductible (described in paragraph

11 (1)) and coinsurance (described in para12 graph (2)); and

13 ‘‘(ii) such expenses shall be treated as

14 incurred without regard to whether the in15 dividual or another person, including a

16 State program or other third-party cov17 erage, has paid for such expenses.

18 ‘‘(4) ANNUAL PERCENTAGE INCREASE.—For

19 purposes of this part, the annual percentage increase

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

21 annual percentage increase in average per capita ag22 gregate expenditures for benefits under this title, as

23 determined by the Secretary for the 12-month period

24 ending in July of the previous year.
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1 ‘‘(c) STOP-LOSS COVERAGE.—For purposes of this

2 part, the term ‘stop-loss coverage’ means coverage of cov3 ered outpatient drugs in a year without any coinsurance

4 after the eligible medicare beneficiary has reached the ini5 tial coverage limit specified in subsection (b)(3) for the

6 year.

7 ‘‘(d) ACCESS TO NEGOTIATED PRICES.—Under

8 SPICE prescription drug coverage offered under a policy

9 or plan, the entity offering the policy or plan (or the ad10 ministering entity pursuant to subsection (a)(3)(B)) shall

11 provide beneficiaries with access to negotiated prices (in12 cluding applicable discounts) used for payment for covered

13 outpatient drugs, regardless of the fact that no benefits

14 may be payable under the coverage with respect to such

15 drugs because of the application of the annual deductible.

16 ‘‘(e) COVERED OUTPATIENT DRUGS DEFINED.—

17 ‘‘(1) IN GENERAL.—Except as provided in this

18 subsection, for purposes of this part, the term ‘cov19 ered outpatient drug’ means—

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

21 upon a prescription and that is described in

22 subparagraph (A)(i) or (A)(ii) of section

23 1927(k)(2); or

24 ‘‘(B) a biological product described in

25 clauses (i) through (iii) of subparagraph (B) of
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1 such section or insulin described in subpara2 graph (C) of such section,

3 and such term includes any use of a covered out4 patient drug for a medically accepted indication (as

5 defined in section 1927(k)(6)).

6 ‘‘(2) EXCLUSIONS.—

7 ‘‘(A) IN GENERAL.—Such term does not

8 include drugs or classes of drugs, or their med9 ical uses, which may be excluded from coverage

10 or otherwise restricted under section

11 1927(d)(2), other than subparagraph (E) there12 of (relating to smoking cessation agents) and

13 except to the extent otherwise specifically pro14 vided by the SPICE Board with respect to a

15 drug in any of such classes.

16 ‘‘(B) AVOIDANCE OF DUPLICATE COV17 ERAGE.—A drug prescribed for an individual

18 that would otherwise be a covered outpatient

19 drug under this part shall not be so considered

20 if payment for such drug is available under part

21 A or B or would be available under part B but

22 for the application of a deductible under such

23 part (but shall be so considered if such payment

24 is not available because benefits under part A

25 or B have been exhausted).
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1 ‘‘(3) APPLICATION OF FORMULARY RESTRIC2 TIONS.—A drug prescribed for an individual that

3 would otherwise be a covered outpatient drug under

4 this part shall not be so considered under a policy

5 or plan if the policy or plan excludes the drug under

6 a formulary that meets the requirements of section

7 1860I(c)(3) (including providing an appeal process).

8 ‘‘(4) APPLICATION OF GENERAL EXCLUSION

9 PROVISIONS.—An entity may exclude from SPICE

10 prescription drug coverage any covered outpatient

11 drug—

12 ‘‘(A) for which payment would not be

13 made if section 1862(a) applied to part D; or

14 ‘‘(B) which are not prescribed in accord15 ance with the policy or plan or this part.

16 Such exclusions are determinations subject to recon17 sideration and appeal pursuant to section

18 1860I(c)(6).

19 ‘‘ENROLLMENT UNDER SPICE DRUG BENEFIT PROGRAM

20 ‘‘SEC. 1860C. (a) ESTABLISHMENT OF PROCESS.—

21 ‘‘(1) ESTABLISHMENT.—

22 ‘‘(A) IN GENERAL.—The SPICE Board, in

23 consultation with the Secretary, the National

24 Association of Insurance Commissioners,

25 issuers of medicare supplemental policies, and

26 Medicare+Choice organizations, shall establish
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1 a process through which an eligible medicare

2 beneficiary (including an eligible medicare bene3 ficiary enrolled in a Medicare+Choice plan)

4 may enroll under this part.

5 ‘‘(B) SIMILAR TO PART B.—

6 ‘‘(i) IN GENERAL.—Except as pro7 vided in clause (ii), the process established

8 under subparagraph (A) shall be similar to

9 the process for enrollment in part B under

10 section 1837.

11 ‘‘(ii) BENEFICIARY MUST AFFIRMA12 TIVELY ENROLL.—Notwithstanding section

13 1837(f), such process shall require that an

14 eligible medicare beneficiary affirmatively

15 enroll under this part rather than deeming

16 the beneficiary to be so enrolled if certain

17 requirements are met.

18 ‘‘(2) REQUIREMENT OF ENROLLMENT.—An eli19 gible medicare beneficiary must enroll under this

20 part in order to be eligible to receive SPICE pre21 scription drug coverage, including financial assist22 ance for basic and stop-loss coverage under section

23 1860K.

24 ‘‘(3) WAIVER OF BASIC COVERAGE FOR

25 MEDIGAP ENROLLEES.—
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1 ‘‘(A) IN GENERAL.—The process estab2 lished under paragraph (1) shall permit a bene3 ficiary enrolled under this part and enrolled

4 under a medicare supplemental policy to—

5 ‘‘(i) waive the basic coverage available

6 under this part; and

7 ‘‘(ii) rescind such waiver in order to

8 obtain such coverage.

9 ‘‘(B) RULES.—If a beneficiary waives basic

10 coverage pursuant to subparagraph (A)(i), the

11 following rules shall apply:

12 ‘‘(i) Such waiver shall not effect the

13 stop-loss coverage that the beneficiary re14 ceives under the medicare supplemental

15 policy, including the entitlement to finan16 cial assistance under section 1860K(c) for

17 such coverage.

18 ‘‘(ii) The beneficiary shall not be lia19 ble for the basic monthly premium under

20 section 1860H(a).

21 ‘‘(iii) The beneficiary shall not receive

22 basic coverage but shall be entitled to ne23 gotiated prices for covered outpatient

24 drugs as if the beneficiary had not waived

25 such coverage.
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1 ‘‘(iv) If the beneficiary subsequently

2 rescinds such waiver pursuant to subpara3 graph (A)(ii), the beneficiary shall be sub4 ject to the late enrollment penalty under

5 subsection (b).

6 ‘‘(b) LATE ENROLLMENT PENALTY.—

7 ‘‘(1) IN GENERAL.—Subject to the succeeding

8 provisions of this subsection, in the case of an eligi9 ble medicare beneficiary whose coverage period

10 under this part began pursuant to an enrollment

11 after the beneficiary’s initial enrollment period under

12 part B (determined pursuant to section 1837(d))

13 and not pursuant to the open enrollment period de14 scribed in subsection (c), the SPICE Board shall es15 tablish procedures for increasing the amount of the

16 basic monthly premium under section 1860H(a) ap17 plicable to such beneficiary—

18 ‘‘(A) by an amount that is equal to 25 per19 cent of such premium for each full 12-month

20 period (in the same continuous period of eligi21 bility) in which the eligible medicare beneficiary

22 could have been enrolled under this part but

23 was not so enrolled; or

24 ‘‘(B) if determined appropriate by the

25 SPICE Board, by an amount that the SPICE
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1 Board determines is actuarily sound for each

2 such period.

3 ‘‘(2) PERIODS TAKEN INTO ACCOUNT.—For

4 purposes of calculating any 12-month period under

5 paragraph (1), there shall be taken into account—

6 ‘‘(A) the months which elapsed between

7 the close of the eligible medicare beneficiary’s

8 initial enrollment period and the close of the en9 rollment period in which the beneficiary en10 rolled;

11 ‘‘(B) in the case of an eligible medicare

12 beneficiary who reenrolls under this part, the

13 months which elapsed between the date of ter14 mination of a previous coverage period and the

15 close of the enrollment period in which the ben16 eficiary reenrolled; and

17 ‘‘(C) in the case of an eligible medicare

18 beneficiary who is enrolled under this part but

19 has waived basic coverage pursuant to sub20 section (a)(3), the months which elapsed be21 tween the effective date of such waiver and the

22 effective date of the rescission of such waiver.

23 ‘‘(3) PERIODS NOT TAKEN INTO ACCOUNT.—

24 ‘‘(A) IN GENERAL.—For purposes of calcu25 lating any 12-month period under paragraph
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1 (1), subject to subparagraph (B), there shall

2 not be taken into account months for which the

3 eligible medicare beneficiary can demonstrate

4 that the beneficiary—

5 ‘‘(i) met such exceptional conditions

6 (including conditions recognized under sec7 tion 1851(e)(4)(D)) as the SPICE Board

8 may provide; or

9 ‘‘(ii) had creditable prescription drug

10 coverage (as defined in paragraph (4)).

11 ‘‘(B) APPLICATION.—The exception de12 scribed in subparagraph (A)(ii) shall only apply

13 with respect to a coverage period the enrollment

14 for which occurs before the end of the 63-day

15 period that begins on the first day of the month

16 which includes the date on which the policy or

17 plan involved terminates, ceases to provide, or

18 substantially reduces the value of the prescrip19 tion drug coverage under such policy or plan.

20 ‘‘(4) PRESCRIPTION DRUG COVERAGE.—For

21 purposes of this part, the term ‘creditable prescrip22 tion drug coverage’ means any of the following:

23 ‘‘(A) MEDICAID PRESCRIPTION DRUG COV24 ERAGE.—Prescription drug coverage under a

25 medicaid plan under title XIX, including
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1 through the Program of All-inclusive Care for

2 the Elderly (PACE) under section 1934,

3 through a social health maintenance organiza4 tion (referred to in section 4104(c) of the Bal5 anced Budget Act of 1997), or through a

6 Medicare+Choice project that demonstrates the

7 application of capitation payment rates for frail

8 elderly medicare beneficiaries through the use

9 of a interdisciplinary team and through the pro10 vision of primary care services to such bene11 ficiaries by means of such a team at the nurs12 ing facility involved.

13 ‘‘(B) PRESCRIPTION DRUG COVERAGE

14 UNDER GROUP HEALTH PLAN.—Any outpatient

15 prescription drug coverage under a group

16 health plan, including a health benefits plan

17 under the Federal Employees Health Benefit

18 Plan under chapter 89 of title 5, United States

19 Code, and a qualified retiree prescription drug

20 plan as defined in section 1860L(e)(3).

21 ‘‘(C) PRESCRIPTION DRUG COVERAGE

22 UNDER CERTAIN MEDIGAP POLICIES.—Coverage

23 under a medicare supplemental policy under

24 section 1882 that provides benefits for prescrip25 tion drugs but only if the policy was in effect
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1 on December 31, 2002, and only until the date

2 such coverage is terminated.

3 ‘‘(D) STATE PHARMACEUTICAL ASSIST4 ANCE PROGRAM.—Coverage of prescription

5 drugs under a State pharmaceutical assistance

6 program.

7 ‘‘(E) VETERANS’ COVERAGE OF PRESCRIP8 TION DRUGS.—Coverage of prescription drugs

9 for veterans under chapter 17 of title 38,

10 United States Code.

11 ‘‘(5) PERIODS TREATED SEPARATELY.—Any in12 crease in an eligible medicare beneficiary’s basic

13 monthly premium under paragraph (1) with respect

14 to a particular continuous period of eligibility shall

15 not be applicable with respect to any other contin16 uous period of eligibility which the beneficiary may

17 have.

18 ‘‘(6) CONTINUOUS PERIOD OF ELIGIBILITY.—

19 ‘‘(A) IN GENERAL.—Subject to subpara20 graph (B), for purposes of this subsection, an

21 eligible medicare beneficiary’s ‘continuous pe22 riod of eligibility’ is the period that begins with

23 the first day on which the beneficiary is eligible

24 to enroll under section 1836 and this part and

25 ends with the beneficiary’s death.
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1 ‘‘(B) SEPARATE PERIOD.—Any period dur2 ing all of which an eligible medicare beneficiary

3 satisfied paragraph (1) of section 1836 and

4 which terminated during or before the month

5 preceding the month in which the beneficiary

6 attained age 65 shall be a separate ‘continuous

7 period of eligibility’ with respect to the bene8 ficiary (and each such period which terminates

9 shall be deemed not to have existed for pur10 poses of subsequently applying this subpara11 graph).

12 ‘‘(c) OPEN ENROLLMENT PERIOD FOR CURRENT

13 BENEFICIARIES IN WHICH LATE ENROLLMENT PROCE14 DURES DO NOT APPLY.—The SPICE Board shall estab15 lish an applicable period, which shall begin on the date

16 on which the SPICE Board first begins to accept enroll17 ments under this part, during which any eligible medicare

18 beneficiary may enroll under this part without the applica19 tion of the late enrollment procedures established under

20 subsection (b)(1).

21 ‘‘(d) PERIOD OF COVERAGE.—

22 ‘‘(1) IN GENERAL.—Except as provided in para23 graph (2), an eligible medicare beneficiary’s coverage

24 under the program under this part shall be effective
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1 for the period provided in section 1838, as if that

2 section applied to the program under this part.

3 ‘‘(2) OPEN ENROLLMENT.—An eligible medi4 care beneficiary who enrolls under the program

5 under this part pursuant to subsection (c) shall be

6 entitled to the benefits under this part beginning on

7 the first day of the month following the month in

8 which such enrollment occurs.

9 ‘‘(3) RESCISSION OF WAIVER.—The SPICE

10 Board shall establish procedures regarding coverage

11 periods for an eligible medicare beneficiary enrolled

12 under this part who previously waived basic coverage

13 under subsection (a)(3) and now wishes to rescind

14 such waiver.

15 ‘‘(4) LIMITATION.—Coverage under this part

16 shall not begin prior to January 1, 2003.

17 ‘‘(e) TERMINATION.—

18 ‘‘(1) IN GENERAL.—The causes of termination

19 specified in section 1838 shall apply to this part in

20 the same manner as they apply to part B.

21 ‘‘(2) COVERAGE TERMINATED BY TERMINATION

22 OF COVERAGE UNDER PARTS A AND B.—

23 ‘‘(A) IN GENERAL.—In addition to the

24 causes of termination described in paragraph

25 (1), the SPICE Board shall terminate an indi-
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1 vidual’s coverage under this part if the indi2 vidual is no longer enrolled in either part A or

3 B.

4 ‘‘(B) EFFECTIVE DATE.—The termination

5 described in subparagraph (A) shall be effective

6 on the effective date of termination of coverage

7 under part A or (if earlier) under part B.

8 ‘‘(3) PROCEDURES REGARDING TERMINATION

9 OF A BENEFICIARY UNDER A PLAN OR POLICY.—The

10 SPICE Board shall establish procedures for deter11 mining the status of an eligible medicare bene12 ficiary’s enrollment under this part if the bene13 ficiary’s enrollment in a medicare supplemental pol14 icy, a Medicare+Choice plan, a Medicare Drug Plan

15 for Noncompetitive Areas, or a basic coverage plan

16 under section 1860F is terminated by the entity of17 fering such policy or plan for cause (under the appli18 cable requirements established under this title).

19 ‘‘ENROLLMENT IN A POLICY OR PLAN

20 ‘‘SEC. 1860D. (a) ENROLLMENT IN MEDICARE DRUG

21 PLAN FOR NONCOMPETITIVE AREAS.—The SPICE Board

22 shall establish a process through which an eligible medi23 care beneficiary who is enrolled under this part (but not

24 enrolled in a medicare supplemental policy, a

25 Medicare+Choice plan, or a basic coverage plan under sec26 tion 1860F) and resides in an area in which a Medicare
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1 Drug Plan for Noncompetitive Areas is available may en2 roll in such plan. Such process shall include rules for en3 rollment, disenrollment, and termination of enrollment in

4 such plan.

5 ‘‘(b) ENROLLMENT IN A MEDICARE SUPPLEMENTAL

6 POLICY OR A MEDICARE+CHOICE PLAN.—Enrollment in

7 a medicare supplemental policy or a Medicare+Choice

8 plan is subject to the rules for enrollment in such policy

9 or plan under sections 1882 and 1851, respectively.

10 ‘‘(c) ENROLLMENT IN A BASIC COVERAGE PLAN OF11 FERED BY A PRIVATE ENTITY WITH A CONTRACT UNDER

12 THIS PART.—The SPICE Board shall establish a process

13 through which an eligible medicare beneficiary who is en14 rolled under this part (but not enrolled in a medicare sup15 plemental policy, a Medicare+Choice plan, or a Medicare

16 Drug Plan for Noncompetitive Areas) may enroll in a

17 basic coverage plan offered by a private entity with a con18 tract under section 1860F to offer such plan. Such process

19 shall include rules for enrollment, disenrollment, and ter20 mination of enrollment in such plan.

21 ‘‘(d) COORDINATION OF ENROLLMENTS,

22 DISENROLLMENTS, AND TERMINATIONS OF ENROLL23 MENTS.—The SPICE Board shall establish procedures for

24 coordinating enrollments, disenrollments and terminations

25 of enrollments under plans described in subsections (a)
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1 and (c) with enrollments, disenrollments and terminations

2 of enrollments under part C.

3 ‘‘MEDICARE DRUG PLAN FOR NONCOMPETITIVE AREAS

4 ‘‘SEC. 1860E. (a) IN GENERAL.—The SPICE Board

5 shall provide for a Medicare Drug Plan for Noncompeti6 tive Areas that—

7 ‘‘(1) provides enrollees with SPICE prescription

8 drug coverage; and

9 ‘‘(2) is available to eligible medicare bene10 ficiaries residing in an area that has been designated

11 by the SPICE Board as a noncompetition area.

12 ‘‘(b) DESIGNATION OF NONCOMPETITION AREA.—

13 ‘‘(1) IN GENERAL.—The SPICE Board shall es14 tablish procedures for designating areas as noncom15 petition areas.

16 ‘‘(2) NONCOMPETITION AREA DEFINED.—

17 ‘‘(A) IN GENERAL.—For purposes of this

18 section, the term ‘noncompetition area’ means

19 an area in which only 1 or no medicare supple20 mental policy is available to eligible medicare

21 beneficiaries residing in the area.

22 ‘‘(B) CONSTRUCTION REGARDING MUL23 TIPLE POLICIES OFFERED BY SINGLE

24 ISSUER.—If there is an entity that offers more

25 that 1 type of medicare supplemental policy in
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1 an area, then that area is not a noncompetition

2 area for purposes of this section.

3 ‘‘(c) CONTRACTS.—In order to provide the Medicare

4 Drug Plan for Noncompetitive Areas under this section,

5 the SPICE Board shall do 1 of the following:

6 ‘‘(1) SINGLE CONTRACT THAT COVERS ALL

7 NONCOMPETITION AREAS.—Enter into a contract

8 with 1 entity to administer and deliver the benefits

9 under the plan in every designated noncompetition

10 area.

11 ‘‘(2) MULTIPLE CONTRACTS.—Enter into a con12 tract with 1 entity to administer and deliver the ben13 efits under the plan in 1 or more (but less than all)

14 of the designated noncompetition areas.

15 ‘‘(d) BIDDING PROCESS.—

16 ‘‘(1) IN GENERAL.—The SPICE Board shall es17 tablish procedures under which the SPICE Board

18 accepts bids submitted by entities and awards a con19 tract (or contracts pursuant to subsection (c)(2)) to

20 an entity in order to administer and deliver the ben21 efits under the Medicare Drug Plan for Noncompeti22 tive Areas to eligible medicare beneficiaries.

23 ‘‘(2) COMPETITIVE PROCEDURES.—Competitive

24 procedures (as defined in section 4(5) of the Office

25 of Federal Procurement Policy Act (41 U.S.C.
26

•S 1185 IS

1 403(5))) shall be used to enter into contracts under

2 this section.

3 ‘‘(e) REQUIREMENTS FOR ENTITIES.—

4 ‘‘(1) IN GENERAL.—The SPICE Board may not

5 award a contract to an entity under this section un6 less the entity meets such terms and conditions as

7 the SPICE Board shall specify, including the fol8 lowing:

9 ‘‘(A) The terms and conditions described

10 in section 1860I(c).

11 ‘‘(B) The entity meets the quality and fi12 nancial standards specified by the SPICE

13 Board.

14 ‘‘(C) The entity meets applicable State li15 censure requirements.

16 ‘‘(2) PREMIUMS.—The terms and conditions

17 specified under paragraph (1) shall—

18 ‘‘(A) permit an entity with a contract

19 under this section to require that beneficiaries

20 enrolled in the plan covered by the contract pay

21 a premium for benefits provided under the con22 tract; and

23 ‘‘(B) except as provided in section

24 1860H(b)(3) (relating to an increased premium

25 for delayed enrollment under this part), require
27

•S 1185 IS

1 that the amount of any such premium is the

2 same for all beneficiaries enrolled in the plan.

3 ‘‘SELECTION OF PRIVATE ENTITIES TO PROVIDE BASIC

4 COVERAGE PLANS

5 ‘‘SEC. 1860F. (a) SELECTION OF ENTITIES.—

6 ‘‘(1) IN GENERAL.—The SPICE Board shall es7 tablish procedures under which the SPICE Board—

8 ‘‘(A) accepts bids submitted by private en9 tities for the basic coverage plans which such

10 entities intend to offer in an area established

11 under subsection (b); and

12 ‘‘(B) awards contracts to such entities to

13 provide such plans to eligible medicare bene14 ficiaries in the area.

15 ‘‘(2) COMPETITIVE PROCEDURES.—Competitive

16 procedures (as defined in section 4(5) of the Office

17 of Federal Procurement Policy Act (41 U.S.C.

18 403(5))) shall be used to enter into contracts under

19 this section.

20 ‘‘(b) AREAS FOR CONTRACTS.—

21 ‘‘(1) IN GENERAL.—The SPICE Board shall

22 determine the areas to award contracts under this

23 section.

24 ‘‘(2) NO ADMINISTRATIVE OR JUDICIAL RE25 VIEW.—The determination of contract areas under
28

•S 1185 IS

1 paragraph (1) shall not be subject to administrative

2 or judicial review.

3 ‘‘(3) MULTIPLE CONTRACTS.—If determined

4 appropriate, the SPICE Board may award more

5 than 1 contract in a contract area.

6 ‘‘(c) REQUIREMENTS FOR ENTITIES.—

7 ‘‘(1) IN GENERAL.—The SPICE Board may not

8 award a contract to a private entity under this sec9 tion unless the entity meets such terms and condi10 tions as the SPICE Board shall specify, including

11 the following:

12 ‘‘(A) The terms and conditions described

13 in section 1860I(c).

14 ‘‘(B) The entity meets the quality and fi15 nancial standards specified by the SPICE

16 Board.

17 ‘‘(C) The entity meets applicable State li18 censure requirements.

19 ‘‘(D) Under the plan, the entity will pro20 vide basic coverage with access to negotiated

21 prices.

22 ‘‘(d) PRIVATE ENTITY DEFINED.—For purposes of

23 this part, the term ‘private entity’ means any private enti24 ty that the SPICE Board determines to be appropriate
29

•S 1185 IS

1 to provide basic coverage plans to eligible medicare bene2 ficiaries under this part, including—

3 ‘‘(1) a pharmacy benefit management company;

4 ‘‘(2) a retail pharmacy delivery system;

5 ‘‘(3) a health plan or insurer;

6 ‘‘(4) any other private entity approved by the

7 SPICE Board; or

8 ‘‘(5) any combination of the entities described

9 in paragraphs (1) through (4) approved by the

10 SPICE Board.

11 ‘‘PROVIDING INFORMATION TO BENEFICIARIES

12 ‘‘SEC. 1860G. (a) ACTIVITIES.—

13 ‘‘(1) IN GENERAL.—The SPICE Board shall

14 provide for activities that are designed to broadly

15 disseminate information to eligible medicare bene16 ficiaries (and prospective eligible medicare bene17 ficiaries) on the SPICE drug benefit program under

18 this part.

19 ‘‘(2) LATE ENROLLMENT PENALTIES TO BE

20 WELL PUBLICIZED.—The SPICE Board shall ensure

21 that information on the sanctions for delayed enroll22 ment under section 1860C(b) and on the possibility

23 of increased premiums for stop-loss coverage under

24 section 1860H(b)(3) are well publicized.

25 ‘‘(3) SPECIAL RULE FOR INITIAL ENROLLMENT

26 UNDER THE PROGRAM.—
30

•S 1185 IS

1 ‘‘(A) CONSULTATION.—The SPICE Board

2 shall consult with the Secretary, issuers of

3 medicare supplemental policies, State insurance

4 commissioners, Medicare+Choice organizations,

5 and interested consumer organizations in devel6 oping the activities described in paragraph (1)

7 that will be used to provide information regard8 ing the initial enrollment under this part during

9 the period described in section 1860C(c).

10 ‘‘(B) TIMEFRAME.—The activities de11 scribed in paragraph (1) shall ensure that eligi12 ble medicare beneficiaries (and prospective eligi13 ble medicare beneficiaries) are provided with

14 such information not later that December 1,

15 2002, in order to ensure that coverage under

16 this part may be effective as of January 1,

17 2003.

18 ‘‘(4) COORDINATION WITH ACTIVITIES PER19 FORMED BY THE SECRETARY.—The SPICE Board

20 shall work with the Secretary to ensure that the ac21 tivities provided under this subsection are coordi22 nated with the activities performed by the Secretary

23 that provide information with respect to benefits

24 under this title to eligible medicare beneficiaries and

25 prospective eligible medicare beneficiaries.
31

•S 1185 IS

1 ‘‘(b) REQUIREMENTS.—

2 ‘‘(1) IN GENERAL.—The activities described in

3 subsection (a) shall—

4 ‘‘(A) be similar to the activities performed

5 under section 1851 (including the approval of

6 policy marketing materials and maintaining a

7 toll-free number and an Internet site); and

8 ‘‘(B) include provisions to ensure that con9 sumer counselors are available to provide face10 to-face counseling to eligible medicare bene11 ficiaries (and prospective eligible medicare bene12 ficiaries) on the SPICE drug benefit program

13 under this part.

14 ‘‘(2) CONTRACTS TO PROVIDE CONSUMER

15 COUNSELING.—The SPICE Board may contract

16 with private entities to provide the consumer coun17 seling described in paragraph (1)(B).

18 ‘‘(c) COORDINATION WITH OTHER INFORMATION.—

19 The SPICE Board shall, in cooperation with the Sec20 retary, enter into such arrangements as may be appro21 priate to disseminate the information referred to in sub22 section (a) in coordination with materials distributed by

23 the Secretary to medicare beneficiaries, including the

24 medicare handbook under section 1804 and materials dis25 tributed under section 1851(d).
32

•S 1185 IS

1 ‘‘PREMIUMS

2 ‘‘SEC. 1860H. (a) PREMIUM FOR BASIC COVERAGE

3 FOR ALL BENEFICIARIES.—

4 ‘‘(1) ANNUAL ESTABLISHMENT OF BASIC

5 MONTHLY PREMIUM RATES.—The SPICE Board

6 shall, during September of each year (beginning in

7 2002), determine and promulgate a basic monthly

8 premium rate for the succeeding year in accordance

9 with the provisions of this subsection.

10 ‘‘(2) ACTUARIAL DETERMINATIONS.—

11 ‘‘(A) DETERMINATION OF ANNUAL BEN12 EFIT AND ADMINISTRATIVE COSTS FOR BASIC

13 COVERAGE.—The SPICE Board shall estimate

14 annually for the succeeding year the amount

15 equal to the total of the benefits (including fi16 nancial assistance provided under subsections

17 (b) and (c) of section 1860K and payments

18 made to sponsors under section 1860L) and ad19 ministrative costs that will be payable from the

20 SPICE Prescription Drug Account within the

21 Federal Supplementary Medical Insurance

22 Trust Fund for providing benefits under this

23 part in such calendar year.

24 ‘‘(B) DETERMINATION OF BASIC MONTHLY

25 PREMIUM RATES.—
33

•S 1185 IS

1 ‘‘(i) IN GENERAL.—The SPICE

2 Board shall determine the basic monthly

3 premium rate for such succeeding year,

which shall be 1 4 ⁄12 of the amount deter5 mined under subparagraph (A), divided by

6 the average total number of enrollees

7 under this part who have not waived basic

8 coverage under section 1860C(a)(3) (as es9 timated for the year), and rounded (if such

10 rate is not a multiple of 10 cents) to the

11 nearest multiple of 10 cents.

12 ‘‘(ii) PREMIUM REDUCED BY AMOUNT

13 OF FINANCIAL ASSISTANCE.—The amount

14 that shall be charged a beneficiary for

15 basic coverage under this part is the basic

16 monthly premium determined under clause

17 (i), reduced by the amount of the financial

18 assistance for basic coverage determined

19 for the beneficiary under section 1860K(b).

20 ‘‘(3) PUBLICATION OF ASSUMPTIONS.—The

21 SPICE Board shall publish, together with the pro22 mulgation of the basic monthly premium rates for

23 the succeeding year, a statement setting forth the

24 actuarial assumptions and bases employed in arriv-
34

•S 1185 IS

1 ing at the amounts and rates determined under

2 paragraphs (1) and (2).

3 ‘‘(4) COLLECTION OF PREMIUMS.—Any basic

4 monthly premium applicable to an eligible medicare

5 beneficiary pursuant to this subsection, after appli6 cation of the reduction described in paragraph

7 (2)(B)(ii) and any increase for late enrollment under

8 section 1860C(b), shall be collected and credited to

9 the SPICE Prescription Drug Account in the same

10 manner as the monthly premium determined under

11 section 1839 is collected and credited to the Federal

12 Supplementary Medical Insurance Trust Fund under

13 section 1840.

14 ‘‘(b) PREMIUMS FOR STOP-LOSS COVERAGE.—

15 ‘‘(1) BENEFICIARY RESPONSIBLE FOR MAKING

16 PAYMENT DIRECTLY TO ENTITY.—Subject to para17 graph (2), any eligible medicare beneficiary who is

18 receiving stop-loss coverage, either through enroll19 ment in a medicare supplemental policy, a

20 Medicare+Choice plan, or a Medicare Drug Plan for

21 Noncompetitive Areas, shall be responsible for mak22 ing payments for any premiums required under the

23 policy or plan for such coverage directly to the entity

24 offering such policy or plan.
35

•S 1185 IS

1 ‘‘(2) PREMIUM REDUCED BY AMOUNT OF FI2 NANCIAL ASSISTANCE.—The entity offering such pol3 icy or plan shall reduce the premium described in

4 paragraph (1) by the amount of the financial assist5 ance for stop-loss coverage determined for the bene6 ficiary under section 1860K(c).

7 ‘‘(3) INCREASE IN PREMIUM FOR LATE EN8 ROLLMENT OR FOR LACK OF CONTINUOUS STOP9 LOSS COVERAGE.—In the case of an eligible medi10 care beneficiary who is subject to a late enrollment

11 penalty under section 1860C or who has not had

12 continuous stop-loss coverage under this part be13 cause the beneficiary was enrolled in a basic cov14 erage plan under section 1860F, the entity offering

15 the medicare supplemental policy, the

16 Medicare+Choice plan, or the Medicare Drug Plan

17 for Noncompetitive Areas in which the beneficiary is

18 enrolled may, notwithstanding any provision in this

19 title, increase the portion of the premium attrib20 utable to stop-loss coverage that is otherwise appli21 cable to such beneficiary for such enrollment in a

22 manner that reflects the additional actuarial risk in23 volved. Such a risk shall be established through an

24 appropriate actuarial opinion of the type described
36

•S 1185 IS

1 in subparagraphs (A) through (C) of section

2 2103(c)(4).

3 ‘‘APPROVAL FOR ENTITIES OFFERING SPICE

4 PRESCRIPTION DRUG COVERAGE

5 ‘‘SEC. 1860I. (a) APPROVAL.—No payments may be

6 made to an entity offering a policy or plan that provides

7 SPICE prescription drug coverage under section 1860J

8 unless the entity has been approved by the SPICE Board.

9 ‘‘(b) PROCEDURES.—

10 ‘‘(1) IN GENERAL.—The SPICE Board shall es11 tablish procedures for approving entities that offer

12 policies and plans that provide SPICE prescription

13 drug coverage under this part, including an entity

14 with a contract under section 1860F.

15 ‘‘(2) COORDINATION.—The procedures estab16 lished under subparagraph (A) shall be coordinated

17 with—

18 ‘‘(A) in the case of the approval of medi19 care supplemental policies, the procedures for

20 approval of such policies under State law; and

21 ‘‘(B) in the case of the approval of

22 Medicare+Choice plans, the procedures estab23 lished by the Secretary for approval of such

24 plans under part C.

25 ‘‘(c) TERMS AND CONDITIONS.—The SPICE Board

26 may not approve an entity under subsection (b) unless the
37

•S 1185 IS

1 entity, with respect to such policy or plan, meets such

2 terms and conditions as the SPICE Board shall specify,

3 including the following:

4 ‘‘(1) DISSEMINATION OF INFORMATION.—

5 ‘‘(A) GENERAL INFORMATION.—The entity

6 shall disclose, in a clear, accurate, and stand7 ardized form to each enrollee under the policy

8 or plan at the time of enrollment and at least

9 annually thereafter, the information described

10 in section 1852(c)(1) relating to such policy or

11 plan. Such information shall include the fol12 lowing:

13 ‘‘(i) Access to covered outpatient

14 drugs, including access through pharmacy

15 networks.

16 ‘‘(ii) How any formulary used by the

17 entity functions.

18 ‘‘(iii) Coinsurance and deductible re19 quirements.

20 ‘‘(iv) Grievance and appeals proce21 dures.

22 ‘‘(B) DISCLOSURE UPON REQUEST OF

23 GENERAL COVERAGE, UTILIZATION, AND GRIEV24 ANCE INFORMATION.—Upon request of an indi25 vidual eligible to enroll under the policy or plan,
38

•S 1185 IS

1 the entity shall provide the information de2 scribed in section 1852(c)(2) (other than sub3 paragraph (D)) to such individual.

4 ‘‘(C) RESPONSE TO BENEFICIARY QUES5 TIONS.—The entity shall have a mechanism for

6 providing specific information regarding the

7 policy or plan to enrollees upon request and

8 shall make available, through the Internet

9 website described in paragraph (7) and in writ10 ing upon request, information on specific

11 changes in its formulary.

12 ‘‘(D) CLAIMS INFORMATION.—The entity

13 shall furnish to each enrollee under the plan or

14 policy in a form easily understandable to such

15 enrollees an explanation of benefits (in accord16 ance with section 1806(a) or in a comparable

17 manner) and a notice regarding how close the

18 enrollee is to getting stop-loss coverage for the

19 year, whenever prescription drug benefits are

20 provided under this part (except that such no21 tice need not be provided more often than

22 monthly).

23 ‘‘(2) ACCESS TO COVERED BENEFITS.—

24 ‘‘(A) ASSURING PHARMACY ACCESS.—The

25 entity shall secure the participation of sufficient
39

•S 1185 IS

1 numbers of pharmacies to ensure convenient ac2 cess (including adequate emergency access) for

3 enrollees under the policy or plan. Nothing in

4 the preceding sentence shall be construed as re5 quiring the participation of all pharmacies in

6 any area under a policy or plan.

7 ‘‘(B) ACCESS TO NEGOTIATED PRICES FOR

8 PRESCRIPTION DRUGS.—The entity shall issue a

9 card that may be used by an enrollee under the

10 policy or plan to assure access to negotiated

11 prices pursuant to section 1860B(d).

12 ‘‘(3) FORMULARIES.—If an eligible entity uses

13 a formulary under the policy or plan, such entity

14 shall—

15 ‘‘(A) establish the formulary based on the

16 medical needs of eligible medicare beneficiaries;

17 ‘‘(B) ensure that the formulary includes

18 drugs within all therapeutic categories and

19 classes of covered outpatient drugs (although

20 not necessarily for all drugs within such cat21 egories and classes);

22 ‘‘(C) have in place an appeals process—

23 ‘‘(i) under which any eligible medicare

24 beneficiary could receive any medically nec-
40

•S 1185 IS

1 essary covered outpatient drug that is not

2 on the formulary;

3 ‘‘(ii) that does not impose a signifi4 cant financial burden on an eligible medi5 care beneficiary or delay the provision of

6 medically necessary covered outpatient

7 drugs to such a beneficiary; and

8 ‘‘(iii) that provides for at least a level

9 of protection that is similar to or better

10 than the level of protection provided with

11 respect to benefits under Medicare+Choice

12 plans under part C; and

13 ‘‘(D) provide notification to enrollees of

14 any change in the formulary at least 60 days

15 prior to such change.

16 ‘‘(4) COST AND UTILIZATION MANAGEMENT;

17 QUALITY ASSURANCE; MEDICATION THERAPY MAN18 AGEMENT PROGRAM.—

19 ‘‘(A) IN GENERAL.—The entity shall have

20 in place—

21 ‘‘(i) an effective cost and drug utiliza22 tion management program, including ap23 propriate incentives to use generic drugs

24 when appropriate;
41

•S 1185 IS

1 ‘‘(ii) quality assurance measures and

2 systems to reduce medical errors and ad3 verse drug interactions, including a medi4 cation therapy management program de5 scribed in subparagraph (B); and

6 ‘‘(iii) a program to control fraud,

7 abuse, and waste.

8 ‘‘(B) MEDICATION THERAPY MANAGEMENT

9 PROGRAM.—

10 ‘‘(i) IN GENERAL.—A medication

11 therapy management program described in

12 this subparagraph is a program of drug

13 therapy management and medication ad14 ministration that is designed to assure that

15 covered outpatient drugs under the policy

16 or plan are appropriately used to achieve

17 therapeutic goals and reduce the risk of

18 adverse events, including adverse drug

19 interactions.

20 ‘‘(ii) ELEMENTS.—Such program may

21 include—

22 ‘‘(I) enhanced beneficiary under23 standing of such appropriate use

24 through beneficiary education, coun-
42

•S 1185 IS

1 seling, and other appropriate means;

2 and

3 ‘‘(II) increased beneficiary adher4 ence with prescription medication

5 regimens through medication refill re6 minders, special packaging, and other

7 appropriate means.

8 ‘‘(iii) DEVELOPMENT OF PROGRAM IN

9 COOPERATION WITH LICENSED PHAR10 MACISTS.—The program shall be developed

11 in cooperation with licensed pharmacists

12 and physicians.

13 ‘‘(iv) CONSIDERATIONS IN PHARMACY

14 FEES.—The entity shall take into account,

15 in establishing fees for pharmacists and

16 others providing services under the medica17 tion therapy management program, the re18 sources and time used in implementing the

19 program.

20 ‘‘(C) TREATMENT OF ACCREDITATION.—

21 Section 1852(e)(4) (relating to treatment of ac22 creditation) shall apply to policies and plans

23 under this part with respect to the following re24 quirements, in the same manner as they apply

25 to Medicare+Choice plans under part C with
43

•S 1185 IS

1 respect to the requirements described in a

2 clause of section 1852(e)(4)(B):

3 ‘‘(i) Subparagraph (A) (including

4 quality assurance), including medication

5 therapy management program under sub6 paragraph (B).

7 ‘‘(ii) Paragraph (2)(A) (relating to ac8 cess to covered benefits).

9 ‘‘(iii) Paragraph (8) (relating to con10 fidentiality and accuracy of enrollee

11 records).

12 ‘‘(5) GRIEVANCE MECHANISM.—The entity shall

13 provide meaningful procedures for hearing and re14 solving grievances between the entity (including any

15 entity or individual through which the entity pro16 vides covered benefits) and enrollees of the policy or

17 plan under this part in accordance with section

18 1852(f).

19 ‘‘(6) COVERAGE DETERMINATIONS, RECONSID20 ERATIONS, AND APPEALS.—The entity shall meet

21 the requirements of section 1852(g) with respect to

22 covered benefits under the policy or plan it offers

23 under this part in the same manner as such require24 ments apply to a Medicare+Choice organization
44

•S 1185 IS

1 with respect to benefits it offers under a

2 Medicare+Choice plan under part C.

3 ‘‘(7) PROVIDE INFORMATION ON THE INTER4 NET.—The entity shall maintain a web site on the

5 Internet that provides eligible medicare beneficiaries

6 with information regarding any policy or plan of7 fered by the entity that provides SPICE prescription

8 drug coverage.

9 ‘‘(8) CONFIDENTIALITY AND ACCURACY OF EN10 ROLLEE RECORDS.—The entity shall meet the re11 quirements of section 1852(h) with respect to enroll12 ees under this part in the same manner as such re13 quirements apply to a Medicare+Choice organiza14 tion with respect to enrollees under part C.

15 ‘‘(d) SPICE BOARD MODELS FOR FORMULARIES.—

16 ‘‘(1) MODEL.—The SPICE Board may issue

17 models for formularies for use in providing covered

18 outpatient drugs under this part. Such models, and

19 any revised models (pursuant to paragraph (3)) shall

20 meet the requirements of subparagraphs (A) and

21 (B) of subsection (c)(3).

22 ‘‘(2) EFFECT OF COMPLIANCE WITH A

23 MODEL.—If the SPICE Board determines that a

24 formulary used by an entity offering a policy or plan

25 that provides SPICE prescription drug coverage is
45

•S 1185 IS

1 in compliance with a model formulary issued under

2 paragraph (1), or the revised model (as the case may

3 be), then the entity shall be deemed to meet the re4 quirements of subparagraphs (A) and (B) of sub5 section (c)(3).

6 ‘‘(3) REVISIONS OF MODELS.—

7 ‘‘(A) IN GENERAL.—The SPICE Board

8 may periodically (but not more frequently than

9 annually) revise any model established under

10 this subsection.

11 ‘‘(B) PERIOD TO COMPLY WITH REVI12 SION.—If the SPICE Board revises a model

13 formulary pursuant to subparagraph (A), the

14 SPICE Board shall provide for an appropriate

15 period of time for entities who were in compli16 ance with such model before such revision to

17 comply with the revised model.

18 ‘‘(e) RULE OF CONSTRUCTION REGARDING COST-EF19 FECTIVE PROVISION OF BENEFITS.—Nothing in this part

20 shall be construed as preventing an entity that provides

21 SPICE prescription drug coverage under a policy or plan

22 from employing mechanisms to provide such coverage eco23 nomically, including the use of—

24 ‘‘(1) formularies (pursuant to subsection

25 (c)(3));
46

•S 1185 IS

1 ‘‘(2) alternative methods of distribution;

2 ‘‘(3) generic drug substitution;

3 ‘‘(4) pharmacy networks; and

4 ‘‘(4) mail order pharmacies.

5 ‘‘PAYMENTS TO ENTITIES

6 ‘‘SEC. 1860J. (a) PAYMENTS FOR ADMINISTERING

7 BASIC COVERAGE.—

8 ‘‘(1) IN GENERAL.—The SPICE Board shall es9 tablish procedures for making payments to an entity

10 offering a medicare supplemental policy, a

11 Medicare+Choice plan, a Medicare Drug Plan for

12 Noncompetitive Areas, or a basic coverage plan

13 under section 1860F for—

14 ‘‘(A) in accordance with the provisions of

15 this part, the costs of covered outpatient drugs

16 provided under basic coverage to eligible medi17 care beneficiaries—

18 ‘‘(i) enrolled under such policy or plan

19 and under this part; and

20 ‘‘(ii) entitled to such coverage; and

21 ‘‘(B) pursuant to paragraph (2), admin22 istering the basic coverage on behalf of bene23 ficiaries described in subparagraph (A).

24 ‘‘(2) ADMINISTRATIVE FEE.—

25 ‘‘(A) PROCEDURES.—The procedures es26 tablished pursuant to paragraph (1) shall pro-
47

•S 1185 IS

1 vide for payment to the entity of an administra2 tive fee for each prescription filled by the entity

3 for an eligible medicare beneficiary enrolled in

4 the policy or plan offered by such entity. Sub5 ject to paragraph (3), the entity shall not be at

6 risk for providing basic coverage for a bene7 ficiary.

8 ‘‘(B) AMOUNT.—The fee described in para9 graph (1) shall be—

10 ‘‘(i) negotiated by the SPICE Board;

11 and

12 ‘‘(ii) consistent with such fees paid

13 under private sector pharmaceutical benefit

14 contracts.

15 ‘‘(C) REDUCTION OF ADMINISTRATIVE

16 COSTS.—The SPICE Board shall work with en17 tities receiving payments under this section on

18 ways to control the administrative costs associ19 ated with providing basic coverage under this

20 part.

21 ‘‘(3) RISK CORRIDORS TIED TO PERFORMANCE

22 MEASURES AND OTHER INCENTIVES FOR ENTITY

23 PROVIDING MEDICARE DRUG PLAN FOR NON24 COMPETITIVE AREAS.—In the case of payments to

25 an entity with a contract to provide a Medicare
48

•S 1185 IS

1 Drug Plan for Noncompetitive Areas, the procedures

2 established under paragraph (1) may include the use

3 of—

4 ‘‘(A) risk corridors tied to performance

5 measures that have been agreed to between the

6 entity and the SPICE Board under the con7 tract; and

8 ‘‘(B) any other incentives that the SPICE

9 Board determines appropriate.

10 ‘‘(4) SECONDARY PAYER PROVISIONS.—The

11 provisions of section 1862(b) shall apply to basic

12 coverage provided under this part.

13 ‘‘(b) PAYMENT OF FINANCIAL ASSISTANCE TO ENTI14 TIES FOR PROVISION OF STOP-LOSS COVERAGE.—

15 ‘‘(1) IN GENERAL.—The SPICE Board shall es16 tablish procedures for making financial assistance

17 payments for stop-loss coverage to an entity offering

18 a medicare supplemental policy, a Medicare+Choice

19 plan, or a Medicare Drug Plan for Noncompetitive

20 Areas on behalf of an eligible medicare beneficiary

21 enrolled in such policy or plan and under this part.

22 ‘‘(2) AMOUNT OF FINANCIAL ASSISTANCE PAY23 MENT.—The amount of the financial assistance pay24 ments on behalf of an eligible medicare beneficiary
49

•S 1185 IS

1 for stop-loss coverage is equal to the amount deter2 mined for the beneficiary under section 1860K(c).

3 ‘‘(3) ENTITY PROVIDING STOP-LOSS COVERAGE

4 AT RISK.—The entity providing stop-loss coverage,

5 and not the SPICE Board, shall be at risk for the

6 provision of such coverage.

7 ‘‘FINANCIAL ASSISTANCE TO OBTAIN SPICE

8 PRESCRIPTION DRUG COVERAGE

9 ‘‘SEC. 1860K. (a) IN GENERAL.—The SPICE Board

10 shall provide financial assistance, in accordance with this

11 section, with respect to eligible medicare beneficiaries who

12 have SPICE prescription drug coverage through enroll13 ment in a medicare supplemental policy, a

14 Medicare+Choice plan, a Medicare Drug Plan for Non15 competitive Areas, or a basic coverage plan under section

16 1860F.

17 ‘‘(b) ASSISTANCE FOR BASIC COVERAGE.—

18 ‘‘(1) IN GENERAL.—The amount of financial

19 assistance with respect to an eligible medicare bene20 ficiary for basic coverage is equal to the following

21 percentage of the basic monthly premium deter22 mined under subsection (a) of section 1860H (with23 out regard to any increase for late enrollment under

24 subsection (b) of such section):

25 ‘‘(A) 100 PERCENT IF INCOME BELOW 150

26 PERCENT OF POVERTY.—In the case of an eligi-
50

•S 1185 IS

1 ble medicare beneficiary who applies for en2 hanced financial assistance under subsection (d)

3 and whose income (as determined under such

4 subsection) does not exceed 150 percent of the

5 poverty line, the percentage is 100 percent.

6 ‘‘(B) OTHER PERCENT IF INCOME BE7 TWEEN 150 AND 175 PERCENT OF POVERTY.—

8 In the case of an eligible medicare beneficiary

9 who applies for enhanced financial assistance

10 under subsection (d) and whose income (as de11 termined under such subsection) is greater than

12 150 percent, but does not exceed 175 percent,

13 of the poverty line, the SPICE Board shall

14 specify the percentage consistent with the fol15 lowing rules:

16 ‘‘(i) RANGE.—The percentage may

17 not exceed 100 percent nor be less than 25

18 percent.

19 ‘‘(ii) SLIDING SCALE.—The percent20 age may not be higher for eligible medicare

21 beneficiaries whose income is higher.

22 ‘‘(C) 25 PERCENT FOR OTHER BENE23 FICIARIES.—In the case of any other eligible

24 medicare beneficiary, the percentage is 25 per25 cent.
51

•S 1185 IS

1 ‘‘(2) FORM OF ASSISTANCE.—Financial assist2 ance under this subsection shall be provided in the

3 form of a reduction of the basic monthly premium

4 pursuant to section 1860H(a)(2)(B)(ii).

5 ‘‘(c) ASSISTANCE FOR STOP-LOSS COVERAGE.—

6 ‘‘(1) AMOUNT.—

7 ‘‘(A) IN GENERAL.—The amount of finan8 cial assistance for stop-loss coverage with re9 spect to an eligible medicare beneficiary en10 rolled under this part and in a medicare supple11 mental policy, a Medicare+Choice plan, or a

12 Medicare Drug Plan for Noncompetitive Areas

13 for stop-loss coverage is equal to the following

14 percentage of the national average medigap

15 stop-loss monthly premium for the region in

16 which the beneficiary resides (as determined

17 under paragraph (2)):

18 ‘‘(i) 100 PERCENT IF INCOME BELOW

19 150 PERCENT OF POVERTY.—In the case of

20 an eligible medicare beneficiary described

21 in subsection (b)(1)(A), the percentage is

22 100 percent.

23 ‘‘(ii) OTHER PERCENT IF INCOME BE24 TWEEN 150 AND 175 PERCENT OF POV25 ERTY.—In the case of an eligible medicare
52

•S 1185 IS

1 beneficiary described in subsection

2 (b)(1)(B), the SPICE Board shall specify

3 the percentage consistent with the rules

4 described in clauses (i) and (ii) of such

5 subsection.

6 ‘‘(iii) 25 PERCENT FOR OTHER BENE7 FICIARIES.—In the case of any other eligi8 ble medicare beneficiary, the percentage is

9 25 percent.

10 ‘‘(B) FORM OF ASSISTANCE.—Financial

11 assistance under this subsection for bene12 ficiaries shall be provided in the form of a pay13 ment to the entity offering the policy or plan in

14 which the beneficiary is receiving stop-loss cov15 erage pursuant to section 1860J(b).

16 ‘‘(2) ESTABLISHMENT OF NATIONAL AVERAGE

17 MEDIGAP STOP-LOSS MONTHLY PREMIUM.—

18 ‘‘(A) IN GENERAL.—The SPICE Board

19 shall, during September of each year (beginning

20 in 2002), estimate a national average medigap

21 stop-loss monthly premium for each region (as

22 determined by the Board) of the total geo23 graphic area served by the programs under this

24 part that will be applicable for the succeeding

25 year.
53

•S 1185 IS

1 ‘‘(B) DEFINITION OF NATIONAL AVERAGE

2 MEDIGAP STOP-LOSS MONTHLY PREMIUM.—For

3 purposes of subparagraph (A), the term ‘na4 tional average medigap stop-loss monthly pre5 mium’ means, with respect to a region, the av6 erage of the portion of the monthly premiums

7 charged by medicare supplemental policies in

8 that region for providing stop-loss coverage to

9 beneficiaries enrolled under this part.

10 ‘‘(3) LIMITATIONS.—

11 ‘‘(A) FINANCIAL ASSISTANCE MAY NOT EX12 CEED PREMIUM.—In the case of financial as13 sistance provided under this subsection with re14 spect to stop-loss coverage provided under a

15 policy or plan, the amount of the financial as16 sistance may not exceed the amount of the por17 tion of the premium charged for enrollment in

18 the policy or plan that is related to the provi19 sion of stop-loss coverage.

20 ‘‘(B) ENTITY MUST REDUCE PREMIUM.—

21 No financial assistance shall be made available

22 with respect to stop-loss coverage provided by

23 an entity to an eligible medicare beneficiary un24 less the entity provides assurances satisfactory

25 to the SPICE Board that the entity shall re-
54

•S 1185 IS

1 duce the amount otherwise charged the bene2 ficiary for such coverage by an amount equal to

3 the amount of such assistance.

4 ‘‘(d) APPLICATION FOR ENHANCED FINANCIAL AS5 SISTANCE.—

6 ‘‘(1) IN GENERAL.—The SPICE Board shall es7 tablish procedures under which a beneficiary who de8 sires enhanced financial assistance under this section

9 may voluntarily apply for an income determination.

10 ‘‘(2) REQUIREMENTS REGARDING INFORMA11 TION.—

12 ‘‘(A) INFORMATION FROM BENEFICIARY.—

13 The procedures established under paragraph (1)

14 shall require the beneficiary to submit with the

15 application for enhanced financial assistance

16 such information that the SPICE Board deter17 mines necessary to make the income determina18 tion with respect to such beneficiary.

19 ‘‘(B) INFORMATION FROM OTHER GOVERN20 MENT AGENCIES.—Under the procedures estab21 lished under paragraph (1), if an individual vol22 untarily applies for enhanced financial assist23 ance under this section, the individual is

24 deemed to have consented to the SPICE Board

25 seeking and using income-related information
55

•S 1185 IS

1 from other Government agencies in order to

2 make the income determination with respect to

3 such beneficiary.

4 ‘‘(C) RESTRICTION ON USE OF INFORMA5 TION.—Information obtained under subpara6 graph (A) or (B) may be used by officers and

7 employees of the SPICE Board only for the

8 purposes of, and to the extent necessary in, car9 rying out their responsibilities under this part.

10 ‘‘(3) PERIODIC REDETERMINATIONS.—Such in11 come determinations shall be valid for a period (of

12 not less than 1 year) specified by the SPICE Board.

13 ‘‘(e) INCOME DETERMINATIONS.—The SPICE Board

14 shall establish procedures for making income determina15 tions under this section.

16 ‘‘(f) POVERTY LINE.—In this section, the term ‘pov17 erty line’ means the income official poverty line (as defined

18 by the Office of Management and Budget, and revised an19 nually in accordance with section 673(2) of the Omnibus

20 Budget Reconciliation Act of 1981) applicable to a family

21 of the size involved.

22 ‘‘EMPLOYER INCENTIVE PROGRAM FOR EMPLOYMENT23 BASED RETIREE DRUG COVERAGE

24 ‘‘SEC. 1860L. (a) PROGRAM AUTHORITY.—The

25 SPICE Board shall develop and implement a program

26 under this section to be known as the ‘Employer Incentive
56

•S 1185 IS

1 Program’ that encourages employers and other sponsors

2 of employment-based health care coverage to provide ade3 quate prescription drug benefits to retired individuals by

4 subsidizing, in part, the sponsor’s cost of providing cov5 erage under qualifying plans.

6 ‘‘(b) SPONSOR REQUIREMENTS.—In order to be eligi7 ble to receive an incentive payment under this section with

8 respect to coverage of an individual under a qualified re9 tiree prescription drug plan (as defined in subsection

10 (e)(3)), a sponsor shall meet the following requirements:

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

12 ‘‘(A) annually attest, and provide such as13 surances as the SPICE Board may require,

14 that the coverage offered by the sponsor is a

15 qualified retiree prescription drug plan, and will

16 remain such a plan for the duration of the

17 sponsor’s participation in the program under

18 this section; and

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

20 the SPICE Board and covered retirees—

21 ‘‘(i) at least 120 days before termi22 nating its plan; and

23 ‘‘(ii) immediately upon determining

24 that the actuarial value of the prescription

25 drug benefit under the plan falls below the
57

•S 1185 IS

1 actuarial value of the basic coverage under

2 the SPICE prescription drug coverage

3 under this part.

4 ‘‘(2) BENEFICIARY INFORMATION.—The spon5 sor shall report to the SPICE Board, for each cal6 endar quarter for which it seeks an incentive pay7 ment under this section, the names and social secu8 rity numbers of all retirees (and their spouses and

9 dependents) covered under such plan during such

10 quarter and the dates (if less than the full quarter)

11 during which each such individual was covered.

12 ‘‘(3) AUDITS.—The sponsor and the employ13 ment-based retiree health coverage plan seeking in14 centive payments under this section shall agree to

15 maintain, and to afford the SPICE Board access to,

16 such records as the SPICE Board may require for

17 purposes of audits and other oversight activities nec18 essary to ensure the adequacy of prescription drug

19 coverage, the accuracy of incentive payments made,

20 and such other matters as may be appropriate.

21 ‘‘(4) OTHER REQUIREMENTS.—The sponsor

22 shall provide such other information, and comply

23 with such other requirements, as the SPICE Board

24 may find necessary to administer the program under

25 this section.
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•S 1185 IS

1 ‘‘(c) INCENTIVE PAYMENTS.—

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

3 requirements of subsection (b) with respect to a

4 quarter in a calendar year shall be entitled to have

5 payment made by the SPICE Board on a quarterly

6 basis (to the sponsor or, at the sponsor’s direction,

7 to the appropriate employment-based health plan) of

8 an incentive payment, in the amount determined in

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

10 spouse) who—

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

12 qualified retiree prescription drug plan during

13 such quarter; and

14 ‘‘(B) was eligible for, but was not enrolled

15 in, the SPICE drug benefit program under this

16 part.

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

18 under this section with respect to each individual de19 scribed in paragraph (1) for a month shall be equal

20 to 25 percent of the basic monthly premium amount

21 payable by an eligible medicare beneficiary enrolled

22 under this part, as set for the calendar year pursu23 ant to section 1860H(a) and without application of

24 and financial assistance for such premium under

25 section 1860K(b).
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•S 1185 IS

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

2 this section with respect to a calendar quarter shall

3 be payable as of the end of the next succeeding cal4 endar quarter.

5 ‘‘(d) CIVIL MONEY PENALTIES.—A sponsor, health

6 plan, or other entity that the SPICE Board determines

7 has, directly or through its agent, provided information

8 in connection with a request for an incentive payment

9 under this section that the entity knew or should have

10 known to be false shall be subject to a civil monetary pen11 alty in an amount up to 3 times the total incentive

12 amounts under subsection (c) that were paid (or would

13 have been payable) on the basis of such information.

14 ‘‘(e) DEFINITIONS.—In this section:

15 ‘‘(1) EMPLOYMENT-BASED RETIREE HEALTH

16 COVERAGE.—The term ‘employment-based retiree

17 health coverage’ means health insurance coverage or

18 other coverage of health care costs for retired indi19 viduals (or for such individuals and their spouses

20 and dependents) based on their status as former em21 ployees or labor union members.

22 ‘‘(2) EMPLOYER.—The term ‘employer’ has the

23 meaning given the term in section 3(5) of the Em24 ployee Retirement Income Security Act of 1974 (ex-
60

•S 1185 IS

1 cept that such term shall include only employers of

2 2 or more employees).

3 ‘‘(3) QUALIFIED RETIREE PRESCRIPTION DRUG

4 PLAN.—The term ‘qualified retiree prescription drug

5 plan’ means health insurance coverage or other cov6 erage of health care costs included in employment7 based retiree health coverage that—

8 ‘‘(A) provides coverage of the cost of pre9 scription drugs whose actuarial value (as de10 fined by the SPICE Board) to each retired ben11 eficiary equals or exceeds the actuarial value of

12 the basic coverage provided to an individual en13 rolled in the SPICE drug benefit program

14 under this part; and

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

16 coverage or provision of prescription drug bene17 fits for retired individuals based on age or any

18 health status-related factor described in section

19 2702(a)(1) of the Public Health Service Act.

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

21 meaning given the term ‘plan sponsor’ in section

22 3(16)(B) of the Employer Retirement Income Secu23 rity Act of 1974.

24 ‘‘SPICE BOARD

25 ‘‘SEC. 1860M. (a) ESTABLISHMENT.—There is estab26 lished within the Department of Health and Human Serv-
61

•S 1185 IS

1 ices, a Seniors Prescription Insurance Coverage Equity

2 Office, which shall be—

3 ‘‘(1) outside of the Centers for Medicare &

4 Medicaid Services; and

5 ‘‘(2) run by a board to be known as the SPICE

6 Board.

7 ‘‘(b) DUTIES.—

8 ‘‘(1) ADMINISTRATION OF SPICE DRUG BEN9 EFIT PROGRAM.—

10 ‘‘(A) IN GENERAL.—The SPICE Board

11 shall administer the SPICE drug benefit pro12 gram under this part.

13 ‘‘(B) NONINTERFERENCE.—In carrying

14 out its duty under subparagraph (A), the

15 SPICE Board may not—

16 ‘‘(i) require a particular formulary or

17 institute a price structure for the reim18 bursement of covered outpatient drugs;

19 ‘‘(ii) interfere in any way with nego20 tiations between entities providing SPICE

21 prescription drug coverage under part D

22 and drug manufacturers, wholesalers, or

23 other suppliers of covered outpatient

24 drugs; and
62

•S 1185 IS

1 ‘‘(iii) otherwise interfere with the

2 competitive nature of providing such cov3 erage through such entities.

4 ‘‘(2) ONGOING STUDIES.—The SPICE Board

5 shall conduct ongoing studies of the following issues:

6 ‘‘(A) The administration of this part.

7 ‘‘(B) The provision of information about

8 the program under the health insurance infor9 mation, counseling, and assistance grants under

10 section 4360 of the Omnibus Budget Reconcili11 ation Act of 1990.

12 ‘‘(C) Ways in which drug utilization can be

13 used to provide better overall care for eligible

14 medicare beneficiaries.

15 ‘‘(D) Savings and potential savings in Fed16 eral health care programs which may occur, or

17 can be attributed to, eligible medicare bene18 ficiary access to, and utilization of, covered out19 patient drugs.

20 ‘‘(E) Trends in premium increases and fac21 tors that contribute to changes in premiums.

22 ‘‘(F) Integration of the SPICE drug ben23 efit program into a reformed medicare program.
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•S 1185 IS

1 ‘‘(G) The ability of eligible medicare bene2 ficiaries to afford SPICE prescription drug cov3 erage.

4 ‘‘(H) The impact of the program on the

5 prescription drug benefits offered under group

6 health plans.

7 ‘‘(I) The appropriateness of the levels of fi8 nancial assistance provided under this part.

9 ‘‘(3) ANNUAL REPORT.—

10 ‘‘(A) IN GENERAL.—Not later than June 1

11 of each year (beginning with 2004), the SPICE

12 Board shall submit an annual report to Con13 gress on the program under this part.

14 ‘‘(B) INFORMATION ON STUDIES.—Such

15 report shall include a detailed statement on the

16 issues studied under paragraph (2).

17 ‘‘(C) RECOMMENDATIONS.—Such report

18 shall include such recommendations for legisla19 tion and administrative actions as the SPICE

20 Board considers appropriate.

21 ‘‘(4) PROVISION OF RECOMMENDATIONS AND

22 INFORMATION TO SECRETARY.—The SPICE Board

23 shall provide recommendations and necessary infor24 mation regarding the SPICE drug benefit program

25 to the Secretary in order for the Secretary to—
64

•S 1185 IS

1 ‘‘(A) integrate such information with infor2 mation regarding the other programs under this

3 title; and

4 ‘‘(B) provide health insurance information,

5 counseling, and assistance grants under section

6 4360 of the Omnibus Budget Reconciliation Act

7 of 1990.

8 ‘‘(c) DEMONSTRATION PROJECT AUTHORITY.—

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

10 the SPICE Board shall have the authority to con11 duct demonstration projects for the purpose of dem12 onstrating ways to improve the quality of services

13 provided under the SPICE drug benefit program, in14 cluding ways to reduce medical errors.

15 ‘‘(2) CONSULTATION WITH SECRETARY.—The

16 SPICE Board shall consult with the Secretary be17 fore conducting any demonstration project.

18 ‘‘(d) MEMBERSHIP OF SPICE BOARD.—

19 ‘‘(1) NUMBER AND APPOINTMENT.—

20 ‘‘(A) IN GENERAL.—The SPICE Board

21 shall be composed of 7 members appointed by

22 the President, by and with the advice and con23 sent of the Senate.

24 ‘‘(B) SPECIFIC REPRESENTATIVES.—In

25 making appointments under subparagraph (A),
65

•S 1185 IS

1 the President shall ensure that the following

2 groups are represented on the SPICE Board:

3 ‘‘(i) Consumers.

4 ‘‘(ii) Private health plan insurers (in5 cluding insurers that offer fee-for-service

6 and managed care plans) with expertise in

7 the quality, scope, and marketing of health

8 care services.

9 ‘‘(iii) Certified geriatric pharmacists.

10 ‘‘(iv) The Centers for Medicare &

11 Medicaid Services.

12 ‘‘(v) State insurance commissioners.

13 ‘‘(C) SECRETARY OF HHS.—In addition to

14 the 7 members appointed under subparagraph

15 (A), the Secretary shall be a nonvoting, ex offi16 cio member of the SPICE Board.

17 ‘‘(2) DEADLINE FOR INITIAL APPOINTMENT.—

18 The initial members of the SPICE Board shall be

19 appointed by not later than 6 months after the date

20 of enactment of this section.

21 ‘‘(3) TERMS.—

22 ‘‘(A) IN GENERAL.—The terms of the

23 members of the SPICE Board shall be for 6

24 years, except that of the members first

25 appointed—
66

•S 1185 IS

1 ‘‘(i) three shall be appointed for terms

2 of 6 years;

3 ‘‘(ii) two shall be appointed for terms

4 of 4 years; and

5 ‘‘(iii) two shall be appointed for terms

6 of 2 years.

7 ‘‘(B) VACANCIES.—Any member appointed

8 to fill a vacancy occurring before the expiration

9 of the term for which the member’s predecessor

10 was appointed shall be appointed only for the

11 remainder of that term. A member may serve

12 after the expiration of that member’s term until

13 a successor has taken office.

14 ‘‘(4) CHAIRPERSON.—The President shall des15 ignate the chairperson of the SPICE Board, except

16 that the representative from the Centers for Medi17 care & Medicaid Services may not be designated as

18 chairperson.

19 ‘‘(e) OPERATION OF THE BOARD.—

20 ‘‘(1) MEETINGS.—The SPICE Board shall meet

21 at the call of the chairperson or upon the written re22 quest of a majority of its members.

23 ‘‘(2) QUORUM.—A majority of the members of

24 the SPICE Board shall constitute a quorum, but a

25 lesser number of members may hold hearings.
67

•S 1185 IS

1 ‘‘(f) POWERS OF THE SPICE BOARD.—

2 ‘‘(1) HEARINGS.—The SPICE Board may hold

3 such hearings, sit and act at such times and places,

4 take such testimony, and receive such evidence as

5 the SPICE Board considers advisable to carry out

6 the purposes of this part.

7 ‘‘(2) INFORMATION FROM FEDERAL AGEN8 CIES.—Upon request of the chairperson of the

9 SPICE Board, the head of any Federal department

10 or agency shall furnish such information to the

11 SPICE Board as is necessary to carry out the func12 tions of the SPICE Board under this part.

13 ‘‘(3) POSTAL SERVICES.—The SPICE Board

14 may use the United States mails in the same man15 ner and under the same conditions as other depart16 ments and agencies of the Federal Government.

17 ‘‘(4) GIFTS.—The SPICE Board may accept,

18 use, and dispose of gifts or donations of services or

19 property.

20 ‘‘(g) BOARD PERSONNEL MATTERS.—

21 ‘‘(1) MEMBERS.—

22 ‘‘(A) COMPENSATION.—Each member of

23 the SPICE Board who is not an officer or em24 ployee of the Federal Government shall be com25 pensated at a rate equal to the daily equivalent
68

•S 1185 IS

1 of the annual rate of basic pay prescribed for

2 level IV of the Executive Schedule under section

3 5315 of title 5, United States Code, for each

4 day (including travel time) during which such

5 member is engaged in the performance of the

6 duties of the SPICE Board. All members of the

7 SPICE Board who are officers or employees of

8 the United States shall serve without compensa9 tion in addition to that received for their serv10 ices as officers or employees of the United

11 States.

12 ‘‘(B) TRAVEL EXPENSES.—The members

13 of the SPICE Board shall be allowed travel ex14 penses, including per diem in lieu of subsist15 ence, at rates authorized for employees of agen16 cies under subchapter I of chapter 57 of title 5,

17 United States Code, while away from their

18 homes or regular places of business in the per19 formance of services for the SPICE Board.

20 ‘‘(C) REMOVAL.—The President may re21 move a member of the SPICE Board only for

22 neglect of duty or malfeasance in office.

23 ‘‘(2) STAFF.—

24 ‘‘(A) IN GENERAL.—The chairperson of

25 the SPICE Board may, without regard to the
69

•S 1185 IS

1 civil service laws and regulations, appoint and

2 terminate an executive director and such other

3 additional personnel as may be necessary to en4 able the SPICE Board to perform its duties.

5 The employment of an executive director shall

6 be subject to confirmation by the SPICE

7 Board.

8 ‘‘(B) COMPENSATION.—The chairperson of

9 the SPICE Board may fix the compensation of

10 the executive director and other personnel with11 out regard to the provisions of chapter 51 and

12 subchapter III of chapter 53 of title 5, United

13 States Code, relating to classification of posi14 tions and General Schedule pay rates, except

15 that the rate of pay for the executive director

16 and other personnel may not exceed the rate

17 payable for level V of the Executive Schedule

18 under section 5316 of such title.

19 ‘‘(C) DETAIL OF GOVERNMENT EMPLOY20 EES.—Any Federal Government employee may

21 be detailed to the SPICE Board without further

22 reimbursement, and such detail shall be without

23 interruption or loss of civil service status or

24 privilege.
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•S 1185 IS

1 ‘‘(D) PROCUREMENT OF TEMPORARY AND

2 INTERMITTENT SERVICES.—The chairperson of

3 the SPICE Board may procure temporary and

4 intermittent services under section 3109(b) of

5 title 5, United States Code, at rates for individ6 uals which do not exceed the daily equivalent of

7 the annual rate of basic pay prescribed for level

8 V of the Executive Schedule under section 5316

9 of such title.

10 ‘‘SPICE PRESCRIPTION DRUG ACCOUNT IN THE FEDERAL

11 SUPPLEMENTARY MEDICAL INSURANCE TRUST FUND

12 ‘‘SEC. 1860N. (a) ESTABLISHMENT.—

13 ‘‘(1) IN GENERAL.—There is created within the

14 Federal Supplementary Medical Insurance Trust

15 Fund established by section 1841 an account to be

16 known as the ‘SPICE Prescription Drug Account’

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

18 ‘‘(2) FUNDS.—The Account shall consist of

19 such gifts and bequests as may be made as provided

20 in section 201(i)(1), and such amounts as may be

21 deposited in, or appropriated to, such fund as pro22 vided in this part.

23 ‘‘(3) SEPARATE FROM REST OF TRUST FUND.—

24 Funds provided under this part to the Account shall

25 be kept separate from all other funds within the
71

•S 1185 IS

1 Federal Supplementary Medical Insurance Trust

2 Fund.

3 ‘‘(b) PAYMENTS FROM ACCOUNT.—

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

5 shall pay from time to time from the Account such

6 amounts as the SPICE Board certifies are necessary

7 to make payments to operate the program under this

8 part, including payments to entities under section

9 1860J, payments to sponsors under section 1860L,

10 and payments with respect to administrative ex11 penses under this part in accordance with section

12 201(g).

13 ‘‘(2) TREATMENT IN RELATION TO PART B PRE14 MIUM.—Amounts payable from the Account shall not

15 be taken into account in computing actuarial rates

16 or premium amounts under section 1839.

17 ‘‘(c) APPROPRIATIONS TO COVER GOVERNMENT

18 CONTRIBUTION.—There are authorized to be appropriated

19 from time to time, out of any moneys in the Treasury not

20 otherwise appropriated, to the Account an amount equal

21 to the amount by which the benefits and administrative

22 costs of providing the benefits under this part exceed the

23 premiums collected under section 1860H(a)(4).’’.

24 (b) CONFORMING AMENDMENTS TO FEDERAL SUP25 PLEMENTARY MEDICAL INSURANCE TRUST FUND.—Sec-
72

•S 1185 IS

1 tion 1841 of the Social Security Act (42 U.S.C. 1395t)

2 is amended—

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

4 (A) by striking ‘‘and’’ before ‘‘such

5 amounts’’; and

6 (B) by inserting before the period the fol7 lowing: ‘‘, and such amounts as may be depos8 ited in, or appropriated to, the SPICE Pre9 scription Drug Account established by section

10 1860N’’; and

11 (2) in subsection (g), by inserting after ‘‘by this

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

13 under part D (in which case the payments shall be

14 made from the SPICE Prescription Drug Account in

15 the Trust Fund),’’.

16 (c) ADDITIONAL CONFORMING CHANGES.—

17 (1) CONFORMING REFERENCES TO PREVIOUS

18 PART D.—Any reference in law (in effect before the

19 date of enactment of this Act) to part D of title

20 XVIII of the Social Security Act is deemed a ref21 erence to part E of such title (as in effect after such

22 date).

23 (2) SECRETARIAL SUBMISSION OF LEGISLATIVE

24 PROPOSAL.—Not later than 6 months after the date

25 of enactment of this Act, the Secretary of Health
73

•S 1185 IS

1 and Human Services shall submit to the appropriate

2 committees of Congress a legislative proposal pro3 viding for such technical and conforming amend4 ments in the law as are required by the provisions

5 of this Act.

6 SEC. 3. SPICE PRESCRIPTION DRUG COVERAGE UNDER

7 MEDICARE+CHOICE PLANS.

8 (a) SPECIAL RULES.—Section 1851 of the Social Se9 curity Act (42 U.S.C. 1395w–21) is amended by adding

10 at the end the following new subsection:

11 ‘‘(j) RULES FOR PROVISION OF SPICE PRESCRIP12 TION DRUG COVERAGE.—

13 ‘‘(1) PLAN REQUIRED TO PROVIDE COVERAGE

14 IF BENEFICIARY ENROLLED IN PART D.—

15 ‘‘(A) IN GENERAL.—In the case of an indi16 vidual that is enrolled in a Medicare+Choice

17 plan and enrolled under part D, the basic bene18 fits required to be provided under section

19 1852(a)(1)(A) shall include SPICE prescription

20 drug coverage (as defined in section 1860B(a))

21 under the terms and conditions for such cov22 erage established under part D, including the

23 terms and conditions described in section

24 1860I(c).
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•S 1185 IS

1 ‘‘(B) VOLUNTARY ENROLLMENT IN PART

2 D.—An individual enrolled in a

3 Medicare+Choice plan shall not be required to

4 enroll under part D.

5 ‘‘(2) LIMITATION ON ENROLLEE LIABILITY.—In

6 the case of an individual described in paragraph

7 (1)(A), with respect to SPICE prescription drug cov8 erage, a Medicare+Choice organization may not re9 quire that such individual pay a deductible or a coin10 surance percentage that exceeds the deductible or

11 coinsurance percentage applicable for such coverage

12 pursuant to part D.

13 ‘‘(3) PREMIUM FOR STOP-LOSS COVERAGE.—

14 ‘‘(A) IN GENERAL.—Subject to subpara15 graph (B), a Medicare+Choice organization of16 fering a Medicare+Choice plan on behalf of an

17 individual described in paragraph (1)(A) may

18 require the individual to pay a premium for

19 stop-loss coverage (as defined in section

20 1860B(c). Any such premium shall be consid21 ered to be part of the Medicare+Choice month22 ly basic premium (as defined in section

23 1854(b)(2)(A)) that the individual is respon24 sible for.
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•S 1185 IS

1 ‘‘(B) ORGANIZATION REQUIRED TO RE2 DUCE PREMIUM BY AMOUNT OF FINANCIAL AS3 SISTANCE.—A Medicare+Choice organization

4 receiving a payment for financial assistance for

5 stop-loss coverage on behalf of an individual de6 scribed in paragraph (1)(A) pursuant to sub7 section (b) of section 1860J shall reduce any

8 premium described in subparagraph (A) by the

9 amount of such financial assistance.

10 ‘‘(4) PAYMENTS TO ORGANIZATION FOR SPICE

11 PRESCRIPTION DRUG COVERAGE PURSUANT TO PART

12 D RULES.—The SPICE Board (established under

13 section 1860M) shall make payments to a

14 Medicare+Choice organization offering a

15 Medicare+Choice plan on behalf of an individual de16 scribed in paragraph (1)(A) pursuant to the pay17 ment mechanisms described in subsections (a) and

18 (b) of section 1860J. Such payments shall be coordi19 nated with payments made to such organization

20 under section 1853.

21 ‘‘(5) COORDINATED ENROLLMENT.—The Sec22 retary shall work with the SPICE Board to coordi23 nate enrollment under this part with enrollment

24 under part D.’’.
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•S 1185 IS

1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to items and services provided

3 under a Medicare+Choice plan on or after January 1,

4 2003.

5 SEC. 4. MEDIGAP REVISIONS AND TRANSITION PROVI6 SIONS.

7 (a) ESTABLISHMENT OF SPICE MEDIGAP POLI8 CIES.—Section 1882 of the Social Security Act (42 U.S.C.

9 1395ss) is amended by adding at the end the following

10 new subsection:

11 ‘‘(v) SPICE MEDIGAP POLICIES.—

12 ‘‘(1) REVISION OF BENEFIT PACKAGES.—

13 ‘‘(A) IN GENERAL.—Notwithstanding sub14 section (p), the benefit packages established

15 under such subsection shall be revised so that—

16 ‘‘(i) if the policyholder is enrolled

17 under part D, basic coverage (as defined in

18 section 1860B(b)) is available as part of

19 each benefit package;

20 ‘‘(ii) each benefit package includes

21 stop-loss coverage (as defined in section

22 1860B(c)) in the core group of basic bene23 fits described in subsection (p)(2)(B);

24 ‘‘(iii) no benefit package (including

25 each benefit package classified as ‘H’, ‘I’,
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1 or ‘J’ under the standards established by

2 such subsection (p)(2), and the benefit

3 package classified as ‘J’ with a high de4 ductible feature described in subsection

5 (p)(11)) includes prescription drug cov6 erage other than the basic coverage re7 quired under clause (i) (if applicable), or

8 the stop-loss coverage required under

9 clause (ii); and

10 ‘‘(iv) except as revised under the pre11 ceding clauses or pursuant to subsection

12 (p)(1)(E), the benefit packages are iden13 tical to the benefit packages that were

14 available on the date of enactment of the

15 Seniors Prescription Insurance Coverage

16 Equity (SPICE) Act of 2001.

17 ‘‘(B) ADMINISTRATION OF BENEFITS.—

18 Pursuant to section 1860A(a)(3), an issuer of

19 a medicare supplemental policy revised under

20 such subparagraph may directly administer the

21 prescription drug benefits required under the

22 policy or may contract with an entity that

23 meets the applicable requirements under part D

24 to administer such benefits.
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1 ‘‘(C) MANNER OF REVISION.—The benefit

2 packages revised under this section shall be re3 vised in the manner described in subparagraph

4 (E) of subsection (p)(1), except that for pur5 poses of subparagraph (C) of such subsection,

6 the standards established under this subsection

7 shall take effect not later than January 1,

8 2003.

9 ‘‘(2) GUARANTEED ISSUANCE AND RENEWAL

10 OF NEW POLICIES.—The provisions of subsections

11 (q) and (s) shall apply to medicare supplemental

12 policies revised under this subsection in the same

13 manner as such provisions apply to medicare supple14 mental policies issued under the standards estab15 lished under subsection (p).

16 ‘‘(3) OPPORTUNITY OF CURRENT POLICY17 HOLDERS TO PURCHASE REVISED POLICIES.—

18 ‘‘(A) IN GENERAL.—No medicare supple19 mental policy of an issuer with a benefit pack20 age that is revised under paragraph (1) shall be

21 deemed to meet the standards in subsection (c)

22 unless the issuer—

23 ‘‘(i) provides written notice during the

24 60-day period immediately preceding the

25 period established under section 1860C(c),
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1 to each policyholder or certificate holder of

2 a medicare supplemental policy issued by

3 that issuer (at the most recent available

4 address) of the offer described in clause

5 (ii) and of the fact that, so long as they re6 tain coverage under such policy, they are

7 unable to obtain SPICE prescription drug

8 coverage (as defined in section 1860B(a))

9 under part D; and

10 ‘‘(ii) offers the policyholder or certifi11 cate holder under the terms described in

12 subparagraph (B), during at least the pe13 riod established under subsection (c) of

14 section 1860C, institution of coverage ef15 fective for the period described in sub16 section (d) of such section, a medicare sup17 plemental policy with the benefit package

18 that has been revised under paragraph (1)

19 of this subsection that the Secretary deter20 mines is most comparable to the policy in

21 which the individual is enrolled.

22 ‘‘(B) TERMS OF OFFER DESCRIBED.—The

23 terms described under this subparagraph are

24 terms which do not—
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1 ‘‘(i) deny or condition the issuance or

2 effectiveness of a medicare supplemental

3 policy described in subparagraph (A)(ii)

4 that is offered and is available for issuance

5 to new enrollees by such issuer;

6 ‘‘(ii) discriminate in the pricing of

7 such policy because of health status, claims

8 experience, receipt of health care, or med9 ical condition; or

10 ‘‘(iii) impose an exclusion of benefits

11 based on a preexisting condition under

12 such policy.

13 ‘‘(4) OPPORTUNITY OF OTHER ELIGIBLE INDI14 VIDUALS TO PURCHASE REVISED POLICIES.—No

15 medicare supplemental policy of an issuer with a

16 benefit package that is revised under paragraph (1)

17 shall be deemed to meet the standards in subsection

18 (c) unless, during at least the period established

19 under section 1860C(c), the issuer permits each eli20 gible medicare beneficiary (as defined in section

21 1860A(d), but who is not described in paragraph

22 (3)) to purchase any medicare supplemental policy

23 that has been revised under paragraph (1) with in24 stitution of coverage effective for the period de-
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1 scribed in section 1860C(d) under the terms of the

2 offer described in paragraph (3)(B).

3 ‘‘(5) GRANDFATHERING OF CURRENT POLICY4 HOLDERS.—

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

6 subparagraph (B), no person may sell, issue, or

7 renew a medicare supplemental policy with a

8 benefit package that has not been revised under

9 this subsection on or after January 1, 2003.

10 ‘‘(B) GRANDFATHERING.—Each policy11 holder or certificate holder of a medicare sup12 plemental policy as of December 31, 2002, may

13 continue to receive benefits under such policy

14 and may renew such policy as if this subsection

15 had not been enacted, except that such bene16 ficiary shall not be eligible to enroll for SPICE

17 prescription drug coverage (as defined in sec18 tion 1860B(a)) under part D during the period

19 in which such policy is in effect.

20 ‘‘(6) PENALTIES.—Each penalty under this sec21 tion shall apply with respect to policies revised under

22 this subsection as if such policies were issued under

23 the standards established under subsection (p), in24 cluding the penalties under subsections (a), (d),
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1 (p)(8), (p)(9), (q)(5), (r)(6)(A), (s)(4), and

2 (t)(2)(D).’’.

3 (b) NAIC STUDY AND REPORT.—

4 (1) STUDY.—The Secretary of Health and

5 Human Services (in this subsection referred to as

6 the ‘‘Secretary’’) shall contract with the National

7 Association of Insurance Commissioners (in this

8 subsection referred to as the ‘‘NAIC’’) to conduct a

9 study—

10 (A) to determine whether the portion of

11 the benefit packages revised under section

12 1882(v) of the Social Security Act (as added by

13 subsection (a)) relating to parts A and B of the

14 medicare program should be revised as a result

15 of the establishment of SPICE prescription

16 drug coverage (as defined in section 1860B(a)

17 of such Act, as added by section 2) and whether

18 the total number of such benefit packages

19 should be reduced;

20 (B) to identify methods to ensure that any

21 financial assistance paid to issuers of medicare

22 supplemental policies on behalf of enrollees for

23 providing stop-loss coverage (as defined in sec24 tion 1860B(c) of the Social Security Act, as

25 added by section 2) made available under the
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1 benefit packages revised under section 1882(v)

2 of such Act (as so added) is not used to sub3 sidize any other benefits, including the benefits

4 relating to parts A and B of the medicare pro5 gram; and

6 (C) to assess the practicality and viability

7 of establishing a medicare supplemental policy

8 that only provides SPICE prescription drug

9 coverage (as so defined).

10 (2) REPORT.—Not later than 6 months after

11 the date of enactment of this Act, the NAIC shall

12 submit to Congress and the Secretary a report on

13 the study conducted under paragraph (1) together

14 with such recommendations as the NAIC determines

15 appropriate.

16 SEC. 5. PROVISION OF INFORMATION ON SPICE DRUG BEN17 EFIT PROGRAM UNDER HEALTH INSURANCE

18 INFORMATION, COUNSELING, AND ASSIST19 ANCE GRANTS.

20 Section 4360(b)(2)(A)(ii) of the Omnibus Budget

21 Reconciliation Act of 1990 (42 U.S.C. 1395b–

22 4(b)(2)(A)(ii)) is amended by striking ‘‘and information’’

23 and inserting ‘‘, information regarding the SPICE drug

24 benefit program under part D of title XVIII of the Social

25 Security Act, and information’’.
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1 SEC. 6. PERSONAL DIGITAL ACCESS TECHNOLOGY DEM2 ONSTRATION PROJECT.

3 (a) DEMONSTRATION PROJECT.—

4 (1) IN GENERAL.—The SPICE Board (estab5 lished under section 1860M of the Social Security

6 Act (as added by section 2)) shall conduct a dem7 onstration project for the purpose of increasing the

8 use of Personal Digital Access Technology in pre9 scribing covered outpatient drugs (as defined in sec10 tion 1860B(e) (as so added)) for eligible medicare

11 beneficiaries receiving SPICE prescription drug cov12 erage under part D of title XVIII of such Act (as

13 so added).

14 (2) ASPECTS OF PROJECT.—The demonstration

15 project shall address ways in which the use of Per16 sonal Digital Access Technology can be used to—

17 (A) avoid adverse drug reactions among

18 such beneficiaries, including problems due to

19 therapeutic duplication, drug-disease contra20 indications, drug-drug interactions (including

21 serious interactions with nonprescription or

22 over-the-counter drugs), incorrect drug dosage

23 or duration of drug treatment, drug-allergy

24 interactions, and clinical abuse and misuse;

25 (B) transmit information about the cov26 erage of covered outpatient drugs under the
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1 policy or plan in which such a beneficiary is re2 ceiving SPICE prescription drug coverage to

3 prescribing physicians;

4 (C) increase the use of generic drugs by

5 such beneficiaries; and

6 (D) increase the compliance of entities of7 fering policies or plans that provide SPICE pre8 scription drug coverage with the requirements

9 under part D of title XVIII of the Social Secu10 rity Act (as added by section 2).

11 (3) INCLUSION OF PROVIDERS.—In conducting

12 the demonstration project, the SPICE Board shall

13 include—

14 (A) physicians;

15 (B) pharmacists;

16 (C) entities that offer policies or plans that

17 provide SPICE prescription drug coverage; and

18 (D) any entity (including a pharmacy ben19 efits management company) that contracts with

20 an entity described in subparagraph (C) to pro21 vide benefits under such policies or plans.

22 (4) DURATION OF PROJECTS.—The demonstra23 tion project shall be conducted over a 3-year period.

24 (b) REPORTS TO CONGRESS.—

25 (1) IN GENERAL.—
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1 (A) INITIAL REPORT.—Not later than 18

2 months after the SPICE Board implements the

3 demonstration project, the SPICE Board shall

4 submit to Congress an initial report on the

5 demonstration project.

6 (B) FINAL REPORT.—Not later that 6

7 months after the conclusion of the project, the

8 SPICE Board shall submit to Congress a final

9 report on the demonstration project.

10 (2) CONTENTS OF REPORTS.—The reports de11 scribed in paragraph (1) shall include the following:

12 (A) A detailed description of the dem13 onstration project.

14 (B) An evaluation of the demonstration

15 project.

16 (C) Recommendations for legislation that

17 the SPICE Board determines to be appropriate

18 as a result of the demonstration project.

19 (D) Any other information regarding the

20 demonstration project that the SPICE Board

21 determines to be appropriate.

22 (c) FUNDING.—Expenditures made for carrying out

23 the demonstration project shall be made from funds other-
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1 wise appropriated to the Secretary of Health and Human

2 Services.

Æ