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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1796 Introduced in House (IH)]

106th CONGRESS
  1st Session
                                H. R. 1796

 To amend part B of title XVIII of the Social Security Act to provide 
  for a chronic disease prescription drug benefit under the Medicare 
                                Program.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              May 13, 1999

  Mr. Cardin (for himself, Mr. Coyne, Mr. Levin, Mr. Stark, and Mrs. 
   Thurman) introduced the following bill; which was referred to the 
  Committee on Commerce, and in addition to the Committee on Ways and 
 Means, for a period to be subsequently determined by the Speaker, in 
   each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
 To amend part B of title XVIII of the Social Security Act to provide 
  for a chronic disease prescription drug benefit under the Medicare 
                                Program.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Chronic Disease 
Prescription Drug Benefit Act of 1999''.

SEC. 2. MEDICARE CHRONIC DISEASE PRESCRIPTION DRUG BENEFIT.

    (a) Coverage.--
            (1) In general.--Section 1832(a)(2) of the Social Security 
        Act (42 U.S.C. 1395k(a)(2)) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (I);
                    (B) by striking the period at the end of 
                subparagraph (J) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(K) subject to subsection (b), prescription drugs 
                for treatment of certain chronic conditions (as defined 
                in section 1861(uu)(1)).''.
            (2) Provision of benefits through existing non-medicaid 
        state prescription drug benefit programs.--Section 1832 of such 
        Act (42 U.S.C. 1395k) is further amended--
                    (1) by redesignating subsection (b) as subsection 
                (c); and
                    (2) by inserting after subsection (a) the following 
                new subsection:
    ``(b)(1) Prescription drug benefits shall not be available under 
subsection (a)(2)(K) to an individual to the extent that the individual 
receives benefits for the prescription drugs under a State non-medicaid 
prescription drug benefit program if the following requirements are 
met:
            ``(A) The program is sponsored or financially underwritten 
        by a State, but Federal financial assistance under title XIX is 
        not available for expenditures under the program.
            ``(B) The program is in operation as of May 1, 1999.
            ``(C) The State elects to receive payment (described in 
        paragraph (2)) for providing benefits under this subsection.
            ``(D) The deductible and coinsurance applicable does not 
        exceed the deductible and coinsurance otherwise applicable to 
        the prescription drug benefit described in subsection 
        (a)(2)(K).
    ``(2) The Secretary shall provide for payment to a State that 
operates a program that meets the requirements of paragraph (1) of an 
amount (agreed to by the State) that does not exceed the Secretary's 
estimate of the amount of payment that would have been made under this 
part (taking into account the application of a deductible and 
coinsurance) for prescription drugs for which coverage is provided 
under such program, if this subsection did not apply.''.
    (b) Definition of Benefit.--
            (1) In general.--Section 1861 of such Act (42 U.S.C. 1395x) 
        is amended by adding at the end the following new subsection:

    ``Prescription Drugs for Treatment of Certain Chronic Conditions

    ``(uu)(1) The term `prescription drugs for treatment of certain 
chronic conditions' means, subject to paragraph (3), prescription drugs 
described in paragraph (2) that have been shown to have a demonstrable 
effect in treating any of the following conditions (in the case of an 
individual who has been diagnosed by a physician as having that 
condition):
            ``(A) Hypertension.
            ``(B) Diabetes.
            ``(C) Congestive or ischemic heart disease.
            ``(D) Major depression.
            ``(E) Rheumatoid arthritis.
    ``(2) Prescription drugs described in this paragraph are--
            ``(A) a prescription drug that meets the requirement of 
        clause (i), (ii), or (iii) of section 1927(k)(2)(A);
            ``(B) a biological product described in section 
        1927(k)(2)(B); or
            ``(C) insulin described in section 1927(k)(2)(C).
    ``(3) The term `prescription drugs for treatment of certain chronic 
conditions' does not include any product--
            ``(A) which may be distributed to individuals without a 
        prescription;
            ``(B) when furnished as part of, or as incident to, a 
        diagnostic service or any other item or service for which 
        payment may be made under this title;
            ``(C) that was covered under this title on the day before 
        the date of enactment of the Medicare Chronic Disease 
        Prescription Drug Benefit Act of 1999; or
            ``(D) that is a therapeutically equivalent replacement for 
        a product described in subparagraph (B) or (C), as determined 
        by the Secretary.''.
            (2) Process for identification of covered drugs.--The 
        Secretary of Health and Human Services shall implement a 
        process for the timely identification of prescription drugs for 
        treatment of certain chronic conditions that should be covered 
        under section 1861(uu) of the Social Security Act, as added by 
        paragraph (1). Under such process--
                    (A) within 60 days after the date of the enactment 
                of this Act, the Agency for Health Care Policy and 
                Research shall complete an initial review of the 
                available data on the prevalence of conditions 
                described in such section in the population of medicare 
                beneficiaries, the adequacy of data demonstrating the 
                effectiveness of different prescription drugs in 
                treating such conditions, and the severity of potential 
                complications in using such drugs;
                    (B) within 6 months after the date of the enactment 
                of this Act, the Secretary shall specify by rule the 
                initial prescription drugs that shall be covered under 
                such section;
                    (C) thereafter the Secretary, taking into 
                consideration recommendations made under subsection 
                (e), may by rule change the prescription drugs that are 
                so covered; and
                    (D) the Secretary may, on an emergency basis, 
                provide for the replacement of a prescription drug on 
                the list if another drug (for the treatment of the same 
                condition) is recalled.
            (3) Construction.--Nothing in this section (or the 
        amendments made by this section) shall be construed--
                    (A) as preventing medicare beneficiaries from 
                purchasing prescription drugs not identified under 
                paragraph (2), including through coverage under a group 
                health plan or medicare supplemental policy; and
                    (B) the coverage under a medicare supplemental 
                policy of prescription drugs for conditions not 
                specified on the list complied under paragraph (2) 
                shall not be considered to duplicate benefits under 
                title XVIII of such Act, for purposes of applying 
                section 1882(d)(3) of such Act (42 U.S.C. 
                1395ss(d)(3)).
    (c) Selection of Entity To Provide Drug Benefit; Payment.--Part B 
of title XVIII of the Social Security Act is amended by adding at the 
end the following new section:

``SEC. 1849. SELECTION OF ENTITIES TO PROVIDE OUTPATIENT DRUG BENEFIT; 
              PAYMENT.

    ``(a) Establishment of Bidding Process.--
            ``(1) In general.--The Secretary shall establish procedures 
        under which the Secretary accepts bids from eligible entities 
        and awards contracts to such entities in order to provide 
        covered outpatient drugs to eligible beneficiaries in an area. 
        Such contracts may be awarded based on shared risk, capitation, 
        or performance.
            ``(2) Area.--
                    ``(A) Regional basis.--The contract entered into 
                between the Secretary and an eligible entity shall 
                require the eligible entity to provide covered 
                outpatient drugs on a regional basis.
                    ``(B) Determination.--In determining coverage areas 
                under this section, the Secretary shall take into 
                account the number of eligible beneficiaries in an area 
                in order to encourage participation by eligible 
                entities.
            ``(3) Submission of bids.--Each eligible entity desiring to 
        provide covered outpatient drugs under this section shall 
        submit a bid to the Secretary at such time, in such manner, and 
        accompanied by such information as the Secretary may reasonably 
        require. Such bids shall include the amount the eligible entity 
        will charge enrollees under subsection (e)(2) for covered 
        outpatient drugs under the contract.
            ``(4) Access.--The Secretary shall ensure that--
                    ``(A) an eligible entity complies with the access 
                requirements described in subsection (f)(5);
                    ``(B) if an eligible entity employs formularies 
                pursuant to subsection (f)(6)(A), such entity complies 
with the requirements of subsection (f)(6)(B);
                    ``(C) an eligible entity makes available to each 
                beneficiary covered under the contract at least one 
                drug in each therapeutic class from those approved by 
                the Secretary for the treatment of certain chronic 
                conditions and at least one generic equivalent for each 
                drug, if available; and
                    ``(D) an eligible entity makes available to each 
                such beneficiary alternative prescription drugs for the 
                treatment of certain chronic conditions when a 
                physician certifies that, because of a drug allergy or 
                other documented medical condition, that none of the 
                drugs approved by the Secretary for the treatment of 
                these conditions can adequately treat the patient and 
                that these drugs are medically necessary.
            ``(5) Duration of contracts.--Each contract under this 
        section shall be for a term of at least 2 years but not more 
        than 5 years, as determined by the Secretary.
    ``(b) Enrollment.--
            ``(1) In general.--The Secretary shall establish a process 
        through which an eligible beneficiary shall make an election to 
        enroll with any eligible entity that has been awarded a 
        contract under this section and serves the geographic area in 
        which the beneficiary resides. In establishing such process, 
        the Secretary shall use rules similar to the rules for 
        enrollment and disenrollment with a Medicare+Choice plan under 
        section 1851.
            ``(2) Requirement of enrollment.--An eligible beneficiary 
        not enrolled in a Medicare+Choice plan under part C must enroll 
        with an eligible entity under this section in order to be 
        eligible to receive covered outpatient drugs under this title.
            ``(3) Enrollment in absence of election by eligible 
        beneficiary.--In the case of an eligible beneficiary that fails 
        to make an election pursuant to paragraph (1), the Secretary 
        shall provide, pursuant to procedures developed by the 
        Secretary, for the enrollment of such beneficiary with an 
        eligible entity that has a contract under this section that 
        covers the area in which such beneficiary resides.
            ``(4) Areas not covered by contracts.--The Secretary shall 
        develop procedures for the provision of covered outpatient 
        drugs under this title to eligible beneficiaries that reside in 
        an area that is not covered by any contract under this section.
            ``(5) Beneficiaries residing in different locations.--The 
        Secretary shall develop procedures to ensure that an eligible 
        beneficiary that resides in different regions in a year is 
        provided benefits under this section throughout the entire 
        year.
    ``(c) Providing Information to Beneficiaries.--The Secretary shall 
provide for activities under this section to broadly disseminate 
information to medicare beneficiaries on the coverage provided under 
this section. Such activities shall be similar to the activities 
performed by the Secretary under section 1851(d).
    ``(d) Payments to Eligible Entities.--The Secretary shall establish 
procedures for making payments to an eligible entity under a contract.
    ``(e) Cost-Sharing.--
            ``(1) Annual deductible.--Benefits under this section shall 
        not begin in a year until the eligible beneficiary has met a 
        $250 deductible.
            ``(2) Copayment.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                eligible beneficiary shall be responsible for making 
                payments in an amount not greater than 20 percent of 
                the cost (as stated in the contract) of any covered 
                outpatient drug that is provided to the beneficiary. 
                Pursuant to subsection (a)(4)(B), an eligible entity 
                may reduce the payment amount that an eligible 
                beneficiary is responsible for making to the entity.
                    ``(B) No copayment for generics.--The copayment 
                amount under subparagraph (A) shall be zero in the case 
                of a covered outpatient drug that is a drug approved 
                under section 505(j) of the Federal Food Drug and 
                Cosmetic Act.
    ``(f) Conditions for Awarding Contract.--The Secretary shall not 
award a contract to an eligible entity under subsection (a) unless the 
Secretary finds that the eligible entity is in compliance with such 
terms and conditions as the Secretary shall specify, including the 
following:
            ``(1) Quality and financial standards.--The eligible entity 
        meets quality and financial standards specified by the 
        Secretary.
            ``(2) Information.--The eligible entity provides the 
        Secretary with information that the Secretary determines is 
        necessary in order to carry out the bidding process under this 
        section, including data needed to implement subsection (a)(6) 
        and data regarding utilization, expenditures, and costs.
            ``(3) Education.--The eligible entity establishes 
        educational programs that meet the criteria established by the 
        Secretary pursuant to subsection (g)(1).
            ``(4) Procedures to ensure proper utilization and to avoid 
        adverse drug reactions.--The eligible entity has in place 
        procedures to ensure the--
                    ``(A) appropriate utilization by eligible 
                beneficiaries of the benefits to be provided under the 
                contract; and
                    ``(B) avoidance of adverse drug reactions among 
                eligible beneficiaries enrolled with the entity.
            ``(5) Access.--The eligible entity ensures that the covered 
        outpatient drugs are accessible and convenient to eligible 
        beneficiaries covered under the contract, including by offering 
        the services in the following manner:
                    ``(A) Services during emergencies.--The offering of 
                services 24 hours a day and 7 days a week for 
                emergencies.
                    ``(B) Contracts with retail pharmacies.--The 
                offering of services--
                            ``(i) at a sufficient (as determined by the 
                        Secretary) number of retail pharmacies; and
                            ``(ii) to the extent feasible, at retail 
                        pharmacies located throughout the eligible 
                        entity's service area.
            ``(6) Rules relating to provision of benefits.--
                    ``(A) Provision of benefits.--In providing benefits 
                under a contract under this section, an eligible entity 
                may--
                            ``(i) employ mechanisms to provide benefits 
                        economically, including the use of--
                                    ``(I) formularies (pursuant to 
                                subparagraph (B));
                                    ``(II) alternative methods of 
                                distribution; and
                                    ``(III) generic drug substitution; 
                                and
                            ``(ii) use incentives to encourage eligible 
                        beneficiaries to select less costly means of 
                        receiving drugs.
                    ``(B) Formularies.--If an eligible entity uses a 
                formulary to contain costs under this Act--
                            ``(i) the eligible entity shall--
                                    ``(I) ensure participation of 
                                practicing physicians and pharmacists 
                                in the development of the formulary;
                                    ``(II) include in the formulary at 
                                least 1 drug from each therapeutic 
                                class from the drugs identified under 
                                section 2(b)(2) of the Medicare Chronic 
                                Disease Prescription Drug Benefit Act 
                                of 1999 and provide at least 1 generic 
                                equivalent, if available;
                                    ``(III) provide for coverage of 
                                otherwise covered non-formulary drugs 
                                when recommended by prescribing 
                                providers; and
                                    ``(IV) disclose to current and 
                                prospective beneficiaries and to 
                                providers in the service area the 
                                nature of the formulary restrictions, 
                                including information regarding the 
                                drugs included in the formulary, 
                                copayment amounts, and any difference 
                                in the cost-sharing for different types 
                                of drugs; but
                            ``(ii) nothing shall preclude an entity 
                        from--
                                    ``(I) requiring higher cost-sharing 
                                for drugs provided under clause 
                                (i)(III), subject to limits established 
                                in subsection (e)(2)(A), except that an 
                                entity shall provide for coverage of a 
                                nonformulary drug on the same basis as 
                                a drug within the formulary if such 
                                nonformulary drug is determined by the 
                                prescribing provider to be medically 
                                indicated;
                                    ``(II) educating prescribing 
                                providers, pharmacists, and 
                                beneficiaries about medical and cost 
                                benefits of formulary products; and
                                    ``(III) requesting prescribing 
                                providers to consider a formulary 
                                product prior to dispensing of a 
                                nonformulary drug, as long as such 
                                request does not unduly delay the 
                                provision of the drug.
            ``(7) Procedures to compensate pharmacists for 
        counseling.--The eligible entity shall compensate pharmacists 
        for providing the counseling described in subsection (g)(2)(B).
            ``(8) Clinical outcomes.--
                    ``(A) Requirement.--The eligible entity shall 
                comply with clinical quality standards as determined by 
                the Secretary.
                    ``(B) Development of standards.--The Secretary, in 
                consultation with appropriate medical specialty 
                societies, shall develop clinical quality standards 
                that are applicable to eligible entities. Such 
                standards shall be based on current standards of care.
            ``(9) Procedures regarding denials of care.--The eligible 
        entity has in place procedures to ensure--
                    ``(A) the timely review and resolution of denials 
                of care and complaints (including those regarding the 
                use of formularies under paragraph (6)) by enrollees, 
                or providers, pharmacists, and other individuals acting 
                on behalf of such individual (with the individual's 
                consent) in accordance with requirements (as 
                established by the Secretary) that are comparable to 
                such requirements for Medicare+Choice organizations 
                under part C;
                    ``(B) that beneficiaries are provided with 
                information regarding the appeals procedures under this 
                section at the time of enrollment; and
                    ``(C) that providers receive information on the 
                entity's procedures for coverage of otherwise covered 
                non-formulary and alternative prescription drugs for 
                treatment of certain chronic conditions.
    ``(g) Educational Requirements To Ensure Appropriate Utilization.--
            ``(1) Establishment of program criteria.--The Secretary 
        shall establish a model for comprehensive educational programs 
        in order to assure the appropriate--
                    ``(A) prescribing and dispensing of covered 
                outpatient drugs under this section; and
                    ``(B) use of such drugs by eligible beneficiaries.
            ``(2) Elements of model.--The model established under 
        paragraph (1) shall include the following elements:
                    ``(A) On-line prospective review available 24 hours 
                a day and 7 days a week in order to evaluate each 
                prescription for drug therapy problems due to 
                duplication, interaction, or incorrect dosage or 
                duration of therapy.
                    ``(B) Consistent with State law, guidelines for 
                counseling eligible beneficiaries enrolled under a 
                contract under this section regarding--
                            ``(i) the proper use of prescribed covered 
                        outpatient drugs; and
                            ``(ii) interactions and contra-indications.
                    ``(C) Methods to identify and educate providers, 
                pharmacists, and eligible beneficiaries regarding--
                            ``(i) instances or patterns concerning the 
                        unnecessary or inappropriate prescribing or 
                        dispensing of covered outpatient drugs;
                            ``(ii) instances or patterns of substandard 
                        care;
                            ``(iii) potential adverse reactions to 
                        covered outpatient drugs;
                            ``(iv) inappropriate use of antibiotics;
                            ``(v) appropriate use of generic products; 
                        and
                            ``(vi) the importance of using covered 
                        outpatient drugs in accordance with the 
                        instruction of prescribing providers.
    ``(h) Protection of Patient Confidentiality.--Insofar as an 
eligible organization maintains individually identifiable medical 
records or other health information regarding enrollees under a 
contract entered into under this section, the organization shall--
            ``(1) safeguard the privacy of any individually 
        identifiable enrollee information;
            ``(2) maintain such records and information in a manner 
        that is accurate and timely; and
            ``(3) assure timely access of such enrollees to such 
        records and information.
    ``(i) Definitions.--In this section:
            ``(1) Covered outpatient drug.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `covered outpatient drug' 
                means prescription drugs for treatment of certain 
                chronic conditions (as defined in section 1861(uu)(1)).
                    ``(B) Exclusion.--The term `covered outpatient 
                drug' does not include any product--
                            ``(i) which may be distributed to 
                        individuals without a prescription;
                            ``(ii) when furnished as part of, or as 
                        incident to, a diagnostic service or any other 
                        item or service for which payment may be made 
                        under this title;
                            ``(iii) that was covered under this title 
                        on the day before the date of enactment of the 
                        Medicare Chronic Disease Prescription Drug 
                        Benefit Act of 1999; or
                            ``(iv) that is a therapeutically equivalent 
                        replacement for a product described in clause 
                        (ii) or (iii), as determined by the Secretary.
            ``(2) Eligible beneficiary.--The term `eligible 
        beneficiary' means an individual that is enrolled under part B 
        of this title.
            ``(3) Eligible entity.--The term `eligible entity' means 
        any entity that the Secretary determines to be appropriate, 
        including--
                    ``(A) pharmaceutical benefit management companies;
                    ``(B) wholesale and retail pharmacist delivery 
                systems;
                    ``(C) insurers;
                    ``(D) other entities; or
                    ``(E) any combination of the entities described in 
                subparagraphs (A) through (D).''.
            (2) No application to regular part b deductible.--Section 
        1833(b) of such Act (42 U.S.C. 1395l(b)) is amended--
                    (A) in paragraph (1), by inserting ``or for 
                prescription drugs for treatment of certain chronic 
                conditions'' after ``section 1861(s)(10)(A)''; and
                    (B) in paragraph (2), by inserting ``and shall not 
                apply with respect to prescription drugs for treatment 
                of certain chronic conditions' after ``section 
                1861(kk)))''.
            (3) Payment conforming amendment.--Section 1832(a) of such 
        Act (42 U.S.C. 1395k(a)) is amended--
                    (A) in paragraph (2)(A), by striking ``and (I)'' 
                and inserting ``(I), and (K)'';
                    (B) by striking ``and'' at the end of paragraph 
                (8);
                    (C) by striking the period at the end of 
                subparagraph (9) and inserting ``; and''; and
                    (D) by adding at the end the following new 
                paragraph:
            ``(10) with respect to prescription drugs for treatment of 
        certain chronic conditions, the amounts provided under section 
        1849;''.
    (d) Analysis of Benefit.--
            (1) In general.--The Secretary of Health and Human Services 
        shall enter into an arrangement with the Institute of Medicine 
        of the National Academy of Sciences under which the Institute 
        on an ongoing basis collects and analyzes data, and submits 
        annual reports to the Secretary and Congress, on--
                    (A) the effectiveness of the benefits provided 
                under the amendments made by this section in reducing 
                demand for acute medical services;
                    (B) the annual cost of the benefits and the annual 
                savings in acute medical services; and
                    (C) additional diagnoses, and additional 
                prescription drugs, for which such benefits should be 
                provided, using the criteria described in section 
                2(b)(2)(A) of this Act.
            (2) Consultation.--In carrying out paragraph (1)(C), the 
        Secretary shall establish a process through which health care 
        providers, advocacy groups, and other interested parties may 
        submit evidence to the Institute of Medicine and the Institute 
        shall consider such evidence.
            (3) Considerations.--Analyses under this subsection shall 
        consider both the short term and long term benefits, and costs 
        to the medicare program of any change in benefits.
            (4) Secretarial recommendations.--The Secretary, taking 
        into account the annual reports submitted under this 
        subsection, may submit to Congress recommendations regarding 
        changes in the chronic conditions for which prescription drug 
        coverage is available under the medicare program.
            (5) Hearings.--The Committee on Ways and Means and the 
        Committee on Commerce of the House of Representatives and the 
        Committee on Finance of the Senate shall conduct hearings to 
        consider the reports and recommendations submitted under this 
        subsection before making any change in covered prescription 
        drug benefits under the medicare program.
            (6) Funding.--From funds appropriated to the Department of 
        Health and Human Services for each fiscal year (beginning with 
        fiscal year 2000), the Secretary shall provide for such funding 
        as the Secretary determines necessary for the conduct of the 
        analyses conducted under this subsection.
    (e) Effective Date.--Benefits shall first be made available under 
the amendments made by this section for prescription drugs furnished on 
or after January 1, 2001.

SEC. 3. MEDICAID COVERAGE OF MEDICARE PRESCRIPTION DRUG COST SHARING 
              FOR SLMBS.

    Section 1902(a)(10)(E)(iii) of the Social Security Act (42 U.S.C. 
1396a(a)(10)(E)(iii)) by inserting ``and medicare cost-sharing 
described in subparagraphs (B) and (C) of section 1905(p)(3) with 
respect to the deductible and copayment described in section 1849(e)'' 
after ``section 1905(p)(4),''.
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