II 

111TH CONGRESS 

1ST SESSION S. 1307 

To amend part C of title XVIII of the Social Security Act with respect 

to Medicare special needs plans and the alignment of Medicare and 

Medicaid for dually eligible individuals, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 19, 2009 

Mr. FEINGOLD (for himself and Ms. KLOBUCHAR) introduced the following 

bill; which was read twice and referred to the Committee on Finance 

A BILL 

To amend part C of title XVIII of the Social Security Act 

with respect to Medicare special needs plans and the 

alignment of Medicare and Medicaid for dually eligible 

individuals, and for other purposes. 

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

5 ‘‘Medicare Specialty Care Improvement and Protection 

6 Act of 2009’’. 

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

8 this Act is as follows: 


rfrederick on PROD1PC67 with BILLS
2 

•S 1307 IS

Sec. 1. Short title; table of contents. 

Sec. 2. Extension of SNP authority. 

Sec. 3. Improve risk adjustment for high-risk, high-cost beneficiaries. 

Sec. 4. Additional enhancements to ensure payment equity for specialized MA 

plans. 

Sec. 5. Advance alignment of Medicare and Medicaid for dual eligibles. 

Sec. 6. Medicaid presumptive eligibility option. 

Sec. 7. Extension of prescription drug discounts to enrollees of Medicaid managed care organizations. 

Sec. 8. Definitions. 

1 SEC. 2. EXTENSION OF SNP AUTHORITY. 

2 Section 1859(f)(1) of the Social Security Act (42 

3 U.S.C. 1395w–28(f)(1)), as amended by section 164(a) of 

4 the Medicare Improvements for Patients and Providers 

5 Act of 2008 (Public Law 110–275), is amended— 

6 (1) by striking ‘‘2011’’ and inserting ‘‘2014’’; 

7 and 

8 (2) by adding at the end the following new sen9 tence: ‘‘In the case of a specialized MA plan for spe10 cial needs individuals that is designated as a Fully 

11 Integrated Dual Eligible Special Needs Plan under 

12 section 5(a)(1) of the Medicare Specialty Care Im13 provement and Protection Act of 2009, the pre14 ceding sentence shall be applied by substituting 

15 ‘2016’ for ‘2014’.’’. 

16 SEC. 3. IMPROVE RISK ADJUSTMENT FOR HIGH-RISK, HIGH17 COST BENEFICIARIES. 

18 (a) EVALUATION.— 

19 (1) IN GENERAL.—The Secretary shall evaluate 

20 the Medicare Advantage risk adjustment payment 


rfrederick on PROD1PC67 with BILLS
3 

•S 1307 IS

1 mechanism under section 1853(a)(1)(C) of the So2 cial Security Act (42 U.S.C. 1395w–23(a)(1)(C)) 

3 and the risk adjustment payment mechanism under 

4 section 1860D–15(c)(1)(A) of such Act (42 U.S.C. 

5 1395w–115(c)(1)(A)) in order to resolve plan pay6 ment inequities relative to Medicare fee-for-service 

7 payments for beneficiaries identified under para8 graph (2). 

9 (2) REQUIREMENTS.—The evaluation conducted 

10 under paragraph (1) shall address the need for im11 proving the adequacy of the existing hierarchical 

12 condition categories and pharmacy risk adjustment 

13 methods for Medicare Advantage plans that exclu14 sively or disproportionately serve high-risk bene15 ficiaries as it relates to— 

16 (A) accurately predicting costs relative to 

17 Medicare fee-for-service for beneficiaries with— 

18 (i) sustained high-risk scores over 

19 multiple contract periods; 

20 (ii) sustained high costs over multiple 

21 contract periods; 

22 (iii) co-morbid chronic conditions; 

23 (iv) diagnoses not included in the risk24 adjustment methodology, including demen25 tia and other cognitive impairments; 


rfrederick on PROD1PC67 with BILLS
4 

•S 1307 IS

1 (v) physical disabilities, developmental 

2 disabilities, or both; and 

3 (vi) frailty; 

4 (B) accurately predicting costs relative to 

5 Medicare fee-for-service for beneficiaries near 

6 the end of life; 

7 (C) accurately predicting costs relative to 

8 Medicare fee-for-service for other conditions for 

9 which the current risk adjustment methodology 

10 underpays in relation to Medicare fee-for-serv11 ice, as determined by the Secretary; 

12 (D) further gradations of diseases and con13 ditions to better reflect stage of condition, con14 dition severity, and costs related to burden of 

15 illness; 

16 (E) accounting for costs of pre-existing 

17 conditions at the time of initial enrollment for 

18 new entrants into Medicare; and 

19 (F) enhancing coding persistency by calcu20 lating risk scores using data covering at least 2 

21 years. 

22 (b) USE OF THE RESULTS OF THE STUDY FOR RE23 FINEMENTS.— 

24 (1) REFINEMENTS.— 


rfrederick on PROD1PC67 with BILLS
5 

•S 1307 IS

1 (A) IN GENERAL.—Beginning with plan 

2 year 2011, the Secretary, using the results of 

3 the evaluation conducted under subsection 

4 (a)(1), shall refine the risk adjustment payment 

5 mechanisms referred to in subsection (a)(1) for 

6 beneficiaries identified under subsection (a)(2). 

7 The Secretary shall make additional refine8 ments, as appropriate, for subsequent plan 

9 years. 

10 (B) PROTECTION.—To the extent that the 

11 Secretary determines that the risk adjustment 

12 payment mechanisms referred to in subsection 

13 (a)(1) do not accurately pay for Medicare bene14 ficiaries identified under subsection (a)(2), the 

15 Secretary shall ensure that a Medicare Advan16 tage plan that exclusively or disproportionately 

17 serves high-risk beneficiaries is not paid less, in 

18 the aggregate, than 100 percent of Medicare 

19 fee-for-service payment rates (as determined 

20 under section 1853(c)(1)(D)(i)). 

21 (C) RECALIBRATION.—Beginning with 

22 plan year 2011, the Secretary shall recalibrate 

23 the risk adjustment payment mechanisms re24 ferred to in subsection (a)(1) so that the overall 

25 predicted costs for all Medicare beneficiaries are 


rfrederick on PROD1PC67 with BILLS
6 

•S 1307 IS

1 identical to what they would have been in the 

2 absence of the new risk adjustment payment 

3 mechanism. 

4 (2) BUDGET NEUTRAL ADJUSTMENTS.—If the 

5 Secretary determines that the application of para6 graph (1) results in expenditures under title XVIII 

7 of the Social Security Act that exceed the expendi8 tures under such title that would have been made 

9 without such application, the Secretary shall provide 

10 for an appropriate adjustment to payment rates 

11 under part C of such title for beneficiaries for whom 

12 the risk adjustment payment mechanism overpays in 

13 relation to Medicare fee-for-service in order to elimi14 nate such excess. 

15 SEC. 4. ADDITIONAL ENHANCEMENTS TO ENSURE PAY16 MENT EQUITY FOR SPECIALIZED MA PLANS. 

17 (a) ACCOUNTING FOR ADDED REGULATORY

18 COSTS.—For plan year 2011 and subsequent plan years, 

19 the Secretary shall provide bonus payments to account for 

20 added SNP costs associated with additional benefit, care 

21 management, reporting, and other requirements estab22 lished by Congress and the Secretary in excess of other 

23 Medicare Advantage plans. 

24 (b) ENSURING FAIR BIDDING PRACTICES.—For plan 

25 year 2011 and subsequent plan years, the Secretary shall 


rfrederick on PROD1PC67 with BILLS
7 

•S 1307 IS

1 take into account the following factors with respect to the 

2 bid structure for SNPs: 

3 (1) Dual eligibility. 

4 (2) Geographic cost differences. 

5 (3) Population characteristics. 

6 (4) The differences in plan requirements, in7 cluding differences in additional benefits, care man8 agement, and reporting requirements. 

9 (5) The differences between community-based 

10 and regional or nationally based plans. 

11 (c) AUTHORITY TO APPLY PACE RULES.—For plan 

12 year 2011 and subsequent plan years, the Secretary may 

13 apply the payment rules under section 1894(d) of the So14 cial Security Act (42 U.S.C. 1395eee(d)) to Fully Inte15 grated Dual Eligible Special Needs Plans rather than the 

16 payment rules that would otherwise apply to such plans 

17 under part C. 

18 (d) BUDGET NEUTRAL ADJUSTMENTS.—If the Sec19 retary determines that the application of subsections (a), 

20 (b), and (c) result in expenditures under title XVIII of 

21 the Social Security Act that exceed the expenditures under 

22 such title that would have been made without such appli23 cation, the Secretary shall provide for an appropriate ad24 justment to payment rates under part C of such title for 

25 beneficiaries for whom the risk adjustment payment mechVerDate Nov 24 2008 01:43 Jun 20, 2009 Jkt 079200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1307.IS S1307

rfrederick on PROD1PC67 with BILLS
8 

•S 1307 IS

1 anism overpays in relation to Medicare fee-for-service in 

2 order to eliminate such excess. 

3 SEC. 5. ADVANCE ALIGNMENT OF MEDICARE AND MED4 ICAID FOR DUAL ELIGIBLES. 

5 (a) MEDICARE AND MEDICAID INTEGRATION PRO6 GRAMS.— 

7 (1) DESIGNATION.— 

8 (A) IN GENERAL.—For plan year 2011 

9 and subsequent plan years, the Secretary shall 

10 have in place a process under which the Sec11 retary designates dual eligible SNPs as Fully 

12 Integrated Dual Eligible Special Needs Plans 

13 for the purpose of advancing fully integrated 

14 Medicare and Medicaid benefits and services for 

15 dual beneficiaries, including State designated 

16 Dual subsets. 

17 (B) CRITERIA FOR DESIGNATION.—In 

18 order to be designated as a Fully Integrated 

19 Dual Eligible Special Needs Plan, the dual eli20 gible SNP shall meet the following require21 ments: 

22 (i) The dual eligible SNP provides 

23 dual eligibles with access to Medicare and 

24 Medicaid benefits specified by the State for 

25 Medicaid beneficiaries enrolled in inteVerDate Nov 24 2008 01:43 Jun 20, 2009 Jkt 079200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1307.IS S1307

rfrederick on PROD1PC67 with BILLS
9 

•S 1307 IS

1 grated programs under a single managed 

2 care organization (MCO). 

3 (ii) The dual eligible SNP has a con4 tract in place with a State Medicaid agency 

5 that includes coverage of specified primary, 

6 acute, and long-term care benefits and 

7 services, consistent with State policy, 

8 under risk-based financing. 

9 (iii) The dual eligible SNP coordinates 

10 the delivery of covered Medicare and Med11 icaid health and long-term care services, 

12 consistent with State policy, using aligned 

13 care management and specialty care net14 work methods for high-risk beneficiaries. 

15 (iv) The dual eligible SNP employs 

16 policies and procedures approved by the 

17 Secretary and the State to coordinate or 

18 integrate enrollment, member materials, 

19 communications, grievance and appeals, 

20 and quality assurance. 

21 (v) The dual eligible SNP provides ad22 vanced person-centered, integrated care for 

23 the full array of primary, acute, and resi24 dential and home and community-based 


rfrederick on PROD1PC67 with BILLS
10 

•S 1307 IS

1 long-term care services, using a robust ad2 vanced medical home model that— 

3 (I) empowers dual eligibles with 

4 serious chronic conditions and their 

5 family caregivers to optimize their 

6 health and well-being; 

7 (II) provides a comprehensive 

8 array of patient-centered benefits and 

9 services designed to meet the unique 

10 needs of dual eligibles; 

11 (III) helps dual eligibles and 

12 their family caregivers to access the 

13 right care, at the right time, in the 

14 right place, given the nature of their 

15 condition; 

16 (IV) aligns the incentives of re17 lated care providers to improve transi18 tions and care continuity; and 

19 (V) optimizes total quality and 

20 cost performance across time, place, 

21 and profession. 

22 (2) INTEGRATION AUTHORITY.—In order to in23 crease simplicity for dual eligibles in accessing and 

24 coordinating Medicare and Medicaid benefits, the 

25 Secretary, working in conjunction with States, on a 


rfrederick on PROD1PC67 with BILLS
11 

•S 1307 IS

1 State by State basis, consistent with existing statu2 tory authority, is encouraged to establish a single 

3 administrative structure and process under titles 

4 XVIII and XIX for Fully Integrated Dual Eligible 

5 Special Needs Plans, under a three-way contract or 

6 Memorandum of Understanding, among CMS, the 

7 State, and related plans, for— 

8 (A) the enrollment of dual eligibles; 

9 (B) member materials and related commu10 nications; 

11 (C) care management and model of care 

12 requirements; 

13 (D) reporting, auditing, and performance 

14 evaluation; 

15 (E) grievance and appeals procedures; and 

16 (F) payment methods. 

17 (3) ALIGNMENT OF MEDICARE AND MEDICAID

18 POLICIES AND PROCEDURES FOR SNPS SERVING

19 DUAL ELIGIBLES.—In order to increase simplicity 

20 for dual eligibles in accessing and coordinating 

21 Medicare and Medicaid benefits by enhancing coordi22 nation between CMS and State Medicaid agencies in 

23 the oversight of SNPs insofar as they serve dual eli24 gibles, the Secretary, working in collaboration with 

25 State Medicaid agencies, may modify rules, policies, 


rfrederick on PROD1PC67 with BILLS
12 

•S 1307 IS

1 and procedures under titles XVIII and XIX of such 

2 Act in order to provide for the alignment of Medi3 care and Medicaid requirements, including mar4 keting, enrollment, care coordination, auditing, re5 porting, quality assurance, and other relevant over6 sight functions. 

7 (4) REPORTS TO CONGRESS.— 

8 (A) INTERIM REPORT.—Not later than De9 cember 31, 2013, the Secretary shall submit to 

10 Congress an interim report on the impact of in11 tegrating Medicare and Medicaid benefits and 

12 services on total quality and cost performance 

13 in serving dual eligibles. 

14 (B) FINAL REPORT.—Not later than De15 cember 31, 2015, the Secretary shall submit to 

16 Congress a final report on the impact of inte17 grating Medicare and Medicaid benefits and 

18 services on total quality and cost performance 

19 in serving dual eligibles. 

20 (C) REQUIREMENT.—A report under sub21 paragraph (A) and (B) shall include rec22 ommendations for such legislative and adminis23 trative actions as the Secretary determines ap24 propriate to further advance Medicare and Med25 icaid integration, including options for inteVerDate Nov 24 2008 01:43 Jun 20, 2009 Jkt 079200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S1307.IS S1307

rfrederick on PROD1PC67 with BILLS
13 

•S 1307 IS

1 grating Medicare and Medicaid funding, to fa2 cilitate ongoing improvements in total quality 

3 and cost performance in care of dual eligibles. 

4 (D) QUALITY AND COST PERFORMANCE.— 

5 Not later than 6 months after the date of the 

6 enactment of this Act, the Secretary, working 

7 in consultation with consumers, plans, and 

8 States, shall identify the measures and bench9 marks to be used for evaluating cost and qual10 ity performance for purposes of subparagraph 

11 (C). 

12 (b) OFFICE OF MEDICARE/MEDICAID INTEGRA13 TION.— 

14 (1) ESTABLISHMENT.—The Secretary shall es15 tablish or designate an Office on Medicare/Medicaid 

16 Integration (in this subsection referred to as the 

17 ‘‘Office’’) for the purpose of aligning Medicare and 

18 Medicaid policies and procedures and developing 

19 tools to support State integration efforts in order 

20 to— 

21 (A) simplify dual eligible access to Medi22 care and Medicaid benefits and services; 

23 (B) improve care continuity and ensure 

24 safe and effective care transitions; 


rfrederick on PROD1PC67 with BILLS
14 

•S 1307 IS

1 (C) eliminate cost shifting between Medi2 care and Medicaid and among related care pro3 viders; 

4 (D) eliminate regulatory conflicts between 

5 Medicare and Medicaid rules; and 

6 (E) improve total cost and quality per7 formance. 

8 (2) RESPONSIBILITIES.—The responsibilities of 

9 the Office are to develop policies and procedures 

10 to— 

11 (A) oversee the designation, implementa12 tion, and oversight of Fully Integrated Dual El13 igible Special Needs Plans under subsection 

14 (a)(1) in collaboration with the States, with au15 thority to effectively align Medicare and Med16 icaid policy for dual eligibles; 

17 (B) provide State Medicaid agencies with 

18 training, materials, technical assistance, and 

19 other resources in support of advancing Medi20 care and Medicaid integration in States where 

21 Fully Integrated Dual Eligible Special Needs 

22 Plans have been designated and other integra23 tion initiatives are being advanced to coordinate 

24 and align primary, acute, and long-term care 


rfrederick on PROD1PC67 with BILLS
15 

•S 1307 IS

1 benefits for dual eligibles through a State plan 

2 option or other means; 

3 (C) identify incentives for States to ad4 vance the integration of Medicare and Medicaid 

5 to improve total cost and quality performance, 

6 including shared cost savings among consumers, 

7 plans, and Federal and State governments with 

8 respect to State initiatives for advancing Medi9 care and Medicaid integration; 

10 (D) support State efforts to coordinate and 

11 align acute and long-term care benefits for dual 

12 eligibles through a State plan option or other 

13 means; 

14 (E) provide support for coordination of 

15 State and Federal contracting and oversight for 

16 dual integration programs supportive of the 

17 goals described in paragraph (1); 

18 (F) align Federal rules for Medicaid man19 aged care and Medicare Advantage Plans to in20 clude methods for integrating marketing, enroll21 ment, grievances and appeals, auditing, report22 ing, quality assurance, and other relevant over23 sight functions; 

24 (G) serve as a liaison between CMS central 

25 and regional offices to ensure consistent appliVerDate Nov 24 2008 01:43 Jun 20, 2009 Jkt 079200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\S1307.IS S1307

rfrederick on PROD1PC67 with BILLS
16 

•S 1307 IS

1 cation of CMS rules, policies, and auditing 

2 practices as such rules, policies, and auditing 

3 practices pertain to dual eligibles; 

4 (H) monitor total combined Medicare and 

5 Medicaid costs in serving dual eligibles and 

6 make recommendations for optimizing total 

7 quality and cost performance across both pro8 grams; and 

9 (I) work with the Congressional Budget 

10 Office and the Office of Management and 

11 Budget to establish a process for evaluating 

12 total Medicare and Medicaid spending for dual 

13 eligibles who are enrolled in Fully Integrated 

14 Dual Eligible Special Needs Plans such that the 

15 enrollment of such dual eligibles in such plans 

16 is treated as ‘‘budget neutral’’ if the combined 

17 Medicare and Medicaid costs under such plans 

18 do not exceed the combined costs of providing 

19 Medicare and Medicaid services on a fee-for20 service basis for a comparable risk group. 

21 (3) FUNDING FROM SAVINGS.— 

22 (A) IN GENERAL.—For purposes of fund23 ing for the Office, there shall be made available 

24 for each of fiscal years 2010 through 2014, 


rfrederick on PROD1PC67 with BILLS
17 

•S 1307 IS

1 $2,000,000 from the savings described in sub2 paragraph (B). 

3 (B) SAVINGS.—The savings described in 

4 this subparagraph are the average per capita 

5 savings described in paragraphs (3)(C) and 

6 (4)(C) of section 1854(b) for which monthly re7 bates are provided under section 1854(b)(1)(C) 

8 in the fiscal year involved. 

9 (C) AVAILABILITY.—Funds made available 

10 under this paragraph shall be transferred to the 

11 Secretary from the Federal Hospital Insurance 

12 Trust Fund under section 1817 of the Social 

13 Security Act (42 U.S.C. 1395i) and the Federal 

14 Supplementary Insurance Trust Fund under 

15 section 1841 of such Act (42 U.S.C. 1395t) in 

16 the proportion specified in section 1853(f) of 

17 such Act (42 U.S.C. 1395w–23(f)). 

18 SEC. 6. MEDICAID PRESUMPTIVE ELIGIBILITY OPTION. 

19 (a) IN GENERAL.—Section 1902(e) of the Social Se20 curity Act (42 U.S.C. 1396a(e)) is amended by adding at 

21 the end the following: 

22 ‘‘(14) At the option of the State, the plan may pro23 vide for a period of presumptive eligibility for an individual 

24 who has attained age 65, who has 12 or more consecutive 

25 months of eligibility under this title, and who the State 


rfrederick on PROD1PC67 with BILLS
18 

•S 1307 IS

1 has reason to believe will be determined to be a full-benefit 

2 dual eligible individual (as defined in section 1935(c)(6)), 

3 but only if the State— 

4 ‘‘(A) agrees to randomly conducted eligibility 

5 audits by the Secretary; and 

6 ‘‘(B) ensures that any individual enrolled under 

7 the State plan who is determined to be ineligible for 

8 medical assistance as a result of such an audit (and, 

9 if such individual is enrolled in a specialized MA 

10 plan for special needs individuals under part C of 

11 title XVIII, ensures that the organization offering 

12 such plan) is notified at least 30 days prior to the 

13 date on which the individual is disenrolled from the 

14 State plan.’’. 

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

16 subsection (a) takes effect on January 1, 2010. 

17 SEC. 7. EXTENSION OF PRESCRIPTION DRUG DISCOUNTS 

18 TO ENROLLEES OF MEDICAID MANAGED 

19 CARE ORGANIZATIONS. 

20 (a) IN GENERAL.—Section 1903(m)(2)(A) of the So21 cial Security Act (42 U.S.C. 1396b(m)(2)(A)) is amend22 ed— 

23 (1) in clause (xi), by striking ‘‘and’’ at the end; 

24 (2) in clause (xii), by striking the period at the 

25 end and inserting ‘‘; and’’; and 


rfrederick on PROD1PC67 with BILLS
19 

•S 1307 IS

1 (3) by adding at the end the following: 

2 ‘‘(xiii) such contract provides that (I) 

3 payment for covered outpatient drugs dis4 pensed to individuals eligible for medical 

5 assistance who are enrolled with the entity 

6 shall be subject to the same rebate re7 quired by the agreement entered into 

8 under section 1927 as the State is subject 

9 to, and (II) capitation rates paid to the en10 tity shall be based on actual cost experi11 ence related to rebates and subject to the 

12 Federal regulations requiring actuarially 

13 sound rates.’’. 

14 (b) CONFORMING AMENDMENTS.—Section 1927 of 

15 the Social Security Act (42 U.S.C. 1396r–8) is amended— 

16 (1) in subsection (d)— 

17 (A) in paragraph (1), by adding at the end 

18 the following: 

19 ‘‘(C) Notwithstanding the subparagraphs 

20 (A) and (B)— 

21 ‘‘(i) a Medicaid managed care organi22 zation with a contract under section 

23 1903(m) may exclude or otherwise restrict 

24 coverage of a covered outpatient drug on 

25 the basis of policies or practices of the orVerDate Nov 24 2008 01:43 Jun 20, 2009 Jkt 079200 PO 00000 Frm 00019 Fmt 6652 Sfmt 6201 E:\BILLS\S1307.IS S1307

rfrederick on PROD1PC67 with BILLS
20 

•S 1307 IS

1 ganization, such as those affecting utiliza2 tion management, formulary adherence, 

3 and cost sharing or dispute resolution, in 

4 lieu of any State policies or practices relat5 ing to the exclusion or restriction of cov6 erage of such drugs, provided, however, 

7 that any such exclusions and restrictions of 

8 coverage shall be subject to any contrac9 tual requirements and oversight by the 

10 State as contained in the Medicaid man11 aged care organization’s contract with the 

12 State, and the State shall maintain ap13 proval authority over the formulary used 

14 by the Medicaid managed care organiza15 tion; and 

16 ‘‘(ii) nothing in this section or para17 graph (2)(A)(xiii) of section 1903(m) shall 

18 be construed as requiring a Medicaid man19 aged care organization with a contract 

20 under such section to maintain the same 

21 such policies and practices as those estab22 lished by the State for purposes of individ23 uals who receive medical assistance for cov24 ered outpatient drugs on a fee-for-service 

25 basis.’’; and 


rfrederick on PROD1PC67 with BILLS
21 

•S 1307 IS

1 (B) in paragraph (4), by inserting after 

2 subparagraph (E) the following: 

3 ‘‘(F) Notwithstanding the preceding sub4 paragraphs of this paragraph, any formulary 

5 established by Medicaid managed care organiza6 tion with a contract under section 1903(m) may 

7 be based on positive inclusion of drugs selected 

8 by a formulary committee consisting of physi9 cians, pharmacists, and other individuals with 

10 appropriate clinical experience as long as drugs 

11 excluded from the formulary are available 

12 through prior authorization, as described in 

13 paragraph (5).’’; and 

14 (2) in subsection (j), by striking paragraph (1) 

15 and inserting the following: 

16 ‘‘(1) Covered outpatients drugs are not subject 

17 to the requirements of this section if such drugs 

18 are— 

19 ‘‘(A) dispensed by health maintenance or20 ganizations, including Medicaid managed care 

21 organizations that contract under section 

22 1903(m); and 

23 ‘‘(B) subject to discounts under section 

24 340B of the Public Health Service Act.’’. 


rfrederick on PROD1PC67 with BILLS
22 

•S 1307 IS

1 (c) REPORTS.—Each State with a contract with a 

2 Medicaid managed care organization under section 

3 1903(m) of the Social Security Act (42 U.S.C. 1396b(m)) 

4 shall report to the Secretary on a quarterly basis the total 

5 amount of rebates in dollars and volume received from 

6 manufacturers (as defined in section 1927(k)(5) of such 

7 Act (42 U.S.C. 1396r–8(k)(5)) for drugs provided to indi8 viduals enrolled with such an organization as a result of 

9 the amendments made by this section for both brand-name 

10 and generic drugs. The Secretary shall review the reports 

11 submitted by States under this subsection and, after such 

12 review, make publically available the aggregate data con13 tained in such reports. 

14 (d) EFFECTIVE DATE.—This section and the amend15 ments made by this section take effect on the date of en16 actment of this Act and apply to rebate agreements en17 tered into or renewed under section 1927 of the Social 

18 Security Act (42 U.S.C. 1396r–8) on or after such date. 

19 SEC. 8. DEFINITIONS. 

20 In this Act: 

21 (1) CMS.—The term ‘‘CMS’’ means the Cen22 ters for Medicare & Medicaid Services. 

23 (2) DUAL ELIGIBLE.—The term ‘‘dual eligible’’ 

24 means an MA eligible individual (as defined in sec25 tion 1851(a)(3) of the Social Security Act, 42 


rfrederick on PROD1PC67 with BILLS
23 

•S 1307 IS

1 U.S.C. 13195w–21(a)(3)) who is also entitled to 

2 medical assistance under a State plan under title 

3 XIX of the Social Security Act. 

4 (3) DUAL ELIGIBLE SNP.—The term ‘‘dual eli5 gible SNP’’ means a SNP described in section 

6 1859(b)(6)(A)(ii) of the Social Security Act. 

7 (4) MEDICAID.—The term ‘‘Medicaid’’ means 

8 the program under title XIX of the Social Security 

9 Act. 

10 (5) MEDICARE.—The term ‘‘Medicare’’ means 

11 the program under title XVIII of the Social Security 

12 Act. 

13 (6) MEDICARE FEE-FOR-SERVICE.—The term 

14 ‘‘Medicare fee-for-service’’ means the original Medi15 care fee-for-service program under parts A and B of 

16 title XVIII of the Social Security Act. 

17 (7) SECRETARY.—The term ‘‘Secretary’’ means 

18 the Secretary of Health and Human Services. 

19 (8) SNP.—The term ‘‘SNP’’ means a special20 ized MA plan for special needs individuals, as de21 fined in section 1859(b)(6)(A) of the Social Security 

22 Act (42 U.S.C. 1395w–28(b)(6)(A)). 


rfrederick on PROD1PC67 with BILLS
24 

•S 1307 IS

1 (9) STATE.—The term ‘‘State’’ has the mean2 ing given such term for purposes of title XIX of the 

3 Social Security Act. 

Æ 


rfrederick on PROD1PC67 with BILLS