I

106TH CONGRESS

1ST SESSION H. R. 2012

To amend title XVIII of the Social Security Act to provide for coverage

of outpatient prescription drugs under the Medicare Program.

IN THE HOUSE OF REPRESENTATIVES

JUNE 7, 1999

Mr. DEUTSCH (for himself and Mr. WEXLER) introduced the following bill;

which was referred to the Committee on Ways and Means, and in addition to the Committee on Commerce, 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 title XVIII of the Social Security Act to provide

for coverage of outpatient prescription drugs under the

Medicare 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 ‘‘Medicare Prescription Drug Benefit Act of 1999’’.

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

7 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Medicare coverage of outpatient prescription drugs.
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Sec. 3. Selection of entities to provide outpatient drug benefit.

Sec. 4. Optional coverage for certain beneficiaries.

Sec. 5. Medigap revisions.

Sec. 6. Improved medicaid assistance for low-income individuals.

Sec. 7. Waiver of additional portion of part B premium for certain medicare

beneficiaries having actuarially equivalent coverage.

Sec. 8. Elimination of time limitation on medicare benefits for immunosuppressive drugs.

Sec. 9. Expansion of membership of MedPAC to 19.

Sec. 10. GAO study and report to Congress.

Sec. 11. Effective date.

1 SEC. 2. MEDICARE COVERAGE OF OUTPATIENT PRESCRIP2 TION DRUGS.

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

5 (1) by striking ‘‘and’’ at the end of subpara6 graph (S);

7 (2) by striking the period at the end of sub8 paragraph (T) and inserting ‘‘; and’’; and

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

10 ‘‘(U) covered outpatient drugs (as defined in

11 subsection (i)(1) of section 1849) pursuant to the

12 procedures established under such section;’’.

13 (b) PAYMENT.—Section 1833(a)(1) of the Social Se14 curity Act (42 U.S.C. 1395l(a)(1)) is amended—

15 (1) by striking ‘‘and (S)’’ and inserting ‘‘(S)’’;

16 and

17 (2) by striking the semicolon at the end and in18 serting the following: ‘‘, and (T) with respect to cov19 ered outpatient drugs (as defined in subsection (i)(1)

20 of section 1849), the amounts paid shall be the
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1 amounts established by the Secretary pursuant to

2 such section;’’.

3 SEC. 3. SELECTION OF ENTITIES TO PROVIDE OUTPATIENT

4 DRUG BENEFIT.

5 Part B of title XVIII of the Social Security Act (42

6 U.S.C. 1395j et seq.) is amended by adding at the end

7 the following:

8 ‘‘SEC. 1849. SELECTION OF ENTITIES TO PROVIDE OUT9 PATIENT DRUG BENEFIT.

10 ‘‘(a) ESTABLISHMENT OF BIDDING PROCESS.—

11 ‘‘(1) IN GENERAL.—The Secretary shall estab12 lish procedures under which the Secretary accepts

13 bids from eligible entities and awards contracts to

14 such entities in order to provide covered outpatient

15 drugs to eligible beneficiaries in an area. Such con16 tracts may be awarded based on shared risk, capita17 tion, or performance.

18 ‘‘(2) AREA.—

19 ‘‘(A) REGIONAL BASIS.—The contract en20 tered into between the Secretary and an eligible

21 entity shall require the eligible entity to provide

22 covered outpatient drugs on a regional basis.

23 ‘‘(B) DETERMINATION.—In determining

24 coverage areas under this section, the Secretary

25 shall take into account the number of eligible
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1 beneficiaries in an area in order to encourage

2 participation by eligible entities.

3 ‘‘(3) SUBMISSION OF BIDS.—Each eligible enti4 ty desiring to provide covered outpatient drugs

5 under this section shall submit a bid to the Sec6 retary at such time, in such manner, and accom7 panied by such information as the Secretary may

8 reasonably require. Such bids shall include the

9 amount the eligible entity will charge enrollees under

10 subsection (e)(2) for covered outpatient drugs under

11 the contract.

12 ‘‘(4) ACCESS.—The Secretary shall ensure

13 that—

14 ‘‘(A) an eligible entity complies with the

15 access requirements described in subsection

16 (f)(5);

17 ‘‘(B) if an eligible entity employs

18 formularies pursuant to subsection (f)(6)(A),

19 such entity complies with the requirements of

20 subsection (f)(6)(B); and

21 ‘‘(C) an eligible entity makes available to

22 each beneficiary covered under the contract the

23 full scope of benefits required under paragraph

24 (5).
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1 ‘‘(5) SCOPE OF BENEFITS.—The Secretary shall

2 ensure that all covered outpatient drugs that are

3 reasonable and necessary to prevent or slow the de4 terioration of, and improve or maintain, the health

5 of eligible beneficiaries are offered under a contract

6 entered into under this section.

7 ‘‘(6) NUMBER OF CONTRACTS.—The Secretary

8 shall, consistent with the requirements of this sec9 tion and the goal of containing medicare program

10 costs, award at least 2 contracts in an area, unless

11 only 1 bidding entity meets the minimum standards

12 specified under this section and by the Secretary.

13 ‘‘(7) DURATION OF CONTRACTS.—Each con14 tract under this section shall be for a term of at

15 least 2 years but not more than 5 years, as deter16 mined by the Secretary.

17 ‘‘(8) BENCHMARK FOR CONTRACTS.—The Sec18 retary shall not enter into a contract with an eligible

19 entity under this section unless the Secretary deter20 mines that the average cost (excluding any cost21 sharing) for all covered outpatient drugs provided to

22 beneficiaries under the contract is comparable to the

23 average cost charged (exclusive of any cost-sharing)

24 by large private sector purchasers for such drugs.

25 ‘‘(b) ENROLLMENT.—
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1 ‘‘(1) IN GENERAL.—The Secretary shall estab2 lish a process through which an eligible beneficiary

3 shall make an election to enroll with any eligible en4 tity that has been awarded a contract under this sec5 tion and serves the geographic area in which the

6 beneficiary resides. In establishing such process, the

7 Secretary shall use rules similar to the rules for en8 rollment and disenrollment with a Medicare+Choice

9 plan under section 1851.

10 ‘‘(2) REQUIREMENT OF ENROLLMENT.—Ex11 cluding an eligible beneficiary enrolled in a group

12 health plan described in section 4 of the Medicare

13 Prescription Drug Benefit Act of 1999, an eligible

14 beneficiary not enrolled in a Medicare+Choice plan

15 under part C must enroll with an eligible entity

16 under this section in order to be eligible to receive

17 covered outpatient drugs under this title.

18 ‘‘(3) ENROLLMENT IN ABSENCE OF ELECTION

19 BY ELIGIBLE BENEFICIARY.—In the case of an eligi20 ble beneficiary that fails to make an election pursu21 ant to paragraph (1), the Secretary shall provide,

22 pursuant to procedures developed by the Secretary,

23 for the enrollment of such beneficiary with an eligi24 ble entity that has a contract under this section that

25 covers the area in which such beneficiary resides.
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1 ‘‘(4) AREAS NOT COVERED BY CONTRACTS.—

2 The Secretary shall develop procedures for the provi3 sion of covered outpatient drugs under this title to

4 eligible beneficiaries that reside in an area that is

5 not covered by any contract under this section.

6 ‘‘(5) BENEFICIARIES RESIDING IN DIFFERENT

7 LOCATIONS.—The Secretary shall develop procedures

8 to ensure that an eligible beneficiary that resides in

9 different regions in a year is provided benefits under

10 this section throughout the entire year.

11 ‘‘(c) PROVIDING INFORMATION TO BENE12 FICIARIES.—The Secretary shall provide for activities

13 under this section to broadly disseminate information to

14 medicare beneficiaries on the coverage provided under this

15 section. Such activities shall be similar to the activities

16 performed by the Secretary under section 1851(d).

17 ‘‘(d) PAYMENTS TO ELIGIBLE ENTITIES.—The Sec18 retary shall establish procedures for making payments to

19 an eligible entity under a contract.

20 ‘‘(e) COST-SHARING.—

21 ‘‘(1) DEDUCTIBLE.—Benefits under this section

22 shall not begin until the eligible beneficiary has met

23 a deductible equal to—

24 ‘‘(A) $200 for 2000; or
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1 ‘‘(B) for a subsequent year the amount of

2 the deductible under subparagraph (A) or this

3 subparagraph for the previous year increased by

4 a factor that reflects the annual rate of change

5 in the per capita cost of prescription drugs for

6 beneficiaries under this title.

7 If any dollar amount determined under subpara8 graph (B) for a year is not a multiple of $5, such

9 dollar amount shall be rounded to the nearest mul10 tiple of $5.

11 ‘‘(2) COPAYMENT.—

12 ‘‘(A) IN GENERAL.—Subject to subpara13 graph (B), the eligible beneficiary shall be re14 sponsible for making payments in an amount

15 not greater than 20 percent of the cost (as stat16 ed in the contract) of any covered outpatient

17 drug that is provided to the beneficiary. Pursu18 ant to subsection (a)(4)(B), an eligible entity

19 may reduce the payment amount that an eligi20 ble beneficiary is responsible for making to the

21 entity.

22 ‘‘(B) BASIC BENEFIT.—If the aggregate

23 amount of covered outpatient drugs provided to

24 an eligible beneficiary under this section for any

25 calendar year (based on the cost of covered out-
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1 patient drugs stated in the contract) exceeds

2 $5,200—

3 ‘‘(i) the beneficiary may continue to

4 purchase covered outpatient drugs under

5 the contract based on the contract price,

6 but

7 ‘‘(ii) the copayment under subpara8 graph (A) shall be 100 percent.

9 ‘‘(C) INFLATION ADJUSTMENT.—

10 ‘‘(i) IN GENERAL.—In the case of any

11 calendar year beginning after 2000, each

12 of the dollar amounts in subparagraph (B)

13 shall be increased by an amount equal to—

14 ‘‘(I) such dollar amount, multi15 plied by

16 ‘‘(II) an adjustment, as deter17 mined by the Secretary, for changes

18 in the per capita cost of prescription

19 drugs for beneficiaries under this title.

20 ‘‘(ii) ROUNDING.—If any dollar

21 amount after being increased under clause

22 (i) is not a multiple of $10, such dollar

23 amount shall be rounded to the nearest

24 multiple of $10.
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1 ‘‘(f) CONDITIONS FOR AWARDING CONTRACT.—The

2 Secretary shall not award a contract to an eligible entity

3 under subsection (a) unless the Secretary finds that the

4 eligible entity is in compliance with such terms and condi5 tions as the Secretary shall specify, including the fol6 lowing:

7 ‘‘(1) QUALITY AND FINANCIAL STANDARDS.—

8 The eligible entity meets quality and financial stand9 ards specified by the Secretary.

10 ‘‘(2) INFORMATION.—The eligible entity pro11 vides the Secretary with information that the Sec12 retary determines is necessary in order to carry out

13 the bidding process under this section, including

14 data needed to implement subsection (a)(8) and data

15 regarding utilization, expenditures, and costs.

16 ‘‘(3) EDUCATION.—The eligible entity estab17 lishes educational programs that meet the criteria

18 established by the Secretary pursuant to subsection

19 (g)(1).

20 ‘‘(4) PROCEDURES TO ENSURE PROPER UTILI21 ZATION AND TO AVOID ADVERSE DRUG REAC22 TIONS.—The eligible entity has in place procedures

23 to ensure the—
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1 ‘‘(A) appropriate utilization by eligible

2 beneficiaries of the benefits to be provided

3 under the contract; and

4 ‘‘(B) avoidance of adverse drug reactions

5 among eligible beneficiaries enrolled with the

6 entity.

7 ‘‘(5) ACCESS.—The eligible entity ensures that

8 the covered outpatient drugs are accessible and con9 venient to eligible beneficiaries covered under the

10 contract, including by offering the services in the fol11 lowing manner:

12 ‘‘(A) SERVICES DURING EMERGENCIES.—

13 The offering of services 24 hours a day and 7

14 days a week for emergencies.

15 ‘‘(B) CONTRACTS WITH RETAIL PHAR16 MACIES.—The offering of services—

17 ‘‘(i) at a sufficient (as determined by

18 the Secretary) number of retail phar19 macies; and

20 ‘‘(ii) to the extent feasible, at retail

21 pharmacies located throughout the eligible

22 entity’s service area.

23 ‘‘(6) RULES RELATING TO PROVISION OF BENE24 FITS.—
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1 ‘‘(A) PROVISION OF BENEFITS.—In pro2 viding benefits under a contract under this sec3 tion, an eligible entity may—

4 ‘‘(i) employ mechanisms to provide

5 benefits economically, including the use

6 of—

7 ‘‘(I) formularies (pursuant to

8 subparagraph (B));

9 ‘‘(II) alternative methods of dis10 tribution; and

11 ‘‘(III) generic drug substitution;

12 and

13 ‘‘(ii) use incentives to encourage eligi14 ble beneficiaries to select cost-effective

15 drugs or less costly means of receiving

16 drugs.

17 ‘‘(B) FORMULARIES.—If an eligible entity

18 uses a formulary to contain costs under this

19 Act—

20 ‘‘(i) the eligible entity shall—

21 ‘‘(I) ensure participation of prac22 ticing physicians and pharmacists in

23 the development of the formulary;
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1 ‘‘(II) include in the formulary at

2 least 1 drug from each therapeutic

3 class;

4 ‘‘(III) provide for coverage of

5 otherwise covered non-formulary

6 drugs when recommended by pre7 scribing providers; and

8 ‘‘(IV) disclose to current and

9 prospective beneficiaries and to pro10 viders in the service area the nature

11 of the formulary restrictions, includ12 ing information regarding the drugs

13 included in the formulary, copayment

14 amounts, and any difference in the

15 cost-sharing for different types of

16 drugs; but

17 ‘‘(ii) nothing shall preclude an entity

18 from—

19 ‘‘(I) requiring higher cost-sharing

20 for drugs provided under clause

21 (i)(III), subject to limits established

22 in subsection (e)(2)(A), except that an

23 entity shall provide for coverage of a

24 nonformulary drug on the same basis

25 as a drug within the formulary if such
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1 nonformulary drug is determined by

2 the prescribing provider to be medi3 cally indicated;

4 ‘‘(II) educating prescribing pro5 viders, pharmacists, and beneficiaries

6 about medical and cost benefits of for7 mulary products; and

8 ‘‘(III) requesting prescribing pro9 viders to consider a formulary product

10 prior to dispensing of a nonformulary

11 drug, as long as such request does not

12 unduly delay the provision of the

13 drug.

14 ‘‘(7) CLINICAL QUALITY STANDARDS.—

15 ‘‘(A) REQUIREMENT.—The eligible entity

16 shall comply with clinical quality standards as

17 determined by the Secretary.

18 ‘‘(B) DEVELOPMENT OF STANDARDS.—

19 The Secretary, in consultation with appropriate

20 medical specialty societies, shall develop clinical

21 quality standards that are applicable to eligible

22 entities. Such standards shall be based on cur23 rent standards of care.
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1 ‘‘(8) PROCEDURES REGARDING DENIALS OF

2 CARE.—The eligible entity has in place procedures to

3 ensure—

4 ‘‘(A) the timely review and resolution of

5 denials of care and complaints (including those

6 regarding the use of formularies under para7 graph (6)) by enrollees, or providers, phar8 macists, and other individuals acting on behalf

9 of such individual (with the individual’s con10 sent) in accordance with requirements (as es11 tablished by the Secretary) that are comparable

12 to such requirements for Medicare+Choice or13 ganizations under part C; and

14 ‘‘(B) that beneficiaries are provided with

15 information regarding the appeals procedures

16 under this section at the time of enrollment.

17 ‘‘(g) EDUCATIONAL REQUIREMENTS TO ENSURE AP18 PROPRIATE UTILIZATION.—

19 ‘‘(1) ESTABLISHMENT OF PROGRAM CRI20 TERIA.—The Secretary shall establish a model for

21 comprehensive educational programs in order to as22 sure the appropriate—

23 ‘‘(A) prescribing and dispensing of covered

24 outpatient drugs under this section; and
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1 ‘‘(B) use of such drugs by eligible bene2 ficiaries.

3 ‘‘(2) ELEMENTS OF MODEL.—The model estab4 lished under paragraph (1) shall include the fol5 lowing elements:

6 ‘‘(A) On-line prospective review available

7 24 hours a day and 7 days a week in order to

8 evaluate each prescription for drug therapy

9 problems due to duplication, interaction, or in10 correct dosage or duration of therapy.

11 ‘‘(B) Consistent with State law, guidelines

12 for counseling eligible beneficiaries enrolled

13 under a contract under this section regarding—

14 ‘‘(i) the proper use of prescribed cov15 ered outpatient drugs; and

16 ‘‘(ii) interactions and contra-indica17 tions.

18 ‘‘(C) Where appropriate and non-duplica19 tive, methods to identify and educate providers,

20 pharmacists, and eligible beneficiaries

21 regarding—

22 ‘‘(i) instances or patterns concerning

23 the unnecessary or inappropriate pre24 scribing or dispensing of covered out25 patient drugs;
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1 ‘‘(ii) instances or patterns of sub2 standard care;

3 ‘‘(iii) potential adverse reactions to

4 covered outpatient drugs;

5 ‘‘(iv) inappropriate use of antibiotics;

6 ‘‘(v) appropriate use of generic prod7 ucts; and

8 ‘‘(vi) the importance of using covered

9 outpatient drugs in accordance with the in10 struction of prescribing providers.

11 ‘‘(h) PROTECTION OF PATIENT CONFIDENTIALITY.—

12 Insofar as an eligible organization maintains individually

13 identifiable medical records or other health information re14 garding enrollees under a contract entered into under this

15 section, the organization shall—

16 ‘‘(1) safeguard the privacy of any individually

17 identifiable enrollee information;

18 ‘‘(2) maintain such records and information in

19 a manner that is accurate and timely; and

20 ‘‘(3) assure timely access of such enrollees to

21 such records and information.

22 ‘‘(i) DEFINITIONS.—In this section:

23 ‘‘(1) COVERED OUTPATIENT DRUG.—
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1 ‘‘(A) IN GENERAL.—Except as provided in

2 subparagraph (B), the term ‘covered outpatient

3 drug’ means any of the following products:

4 ‘‘(i) A drug which may be dispensed

5 only upon prescription, and—

6 ‘‘(I) which is approved for safety

7 and effectiveness as a prescription

8 drug under section 505 of the Federal

9 Food, Drug, and Cosmetic Act;

10 ‘‘(II)(aa) which was commercially

11 used or sold in the United States be12 fore the date of enactment of the

13 Drug Amendments of 1962 or which

14 is identical, similar, or related (within

15 the meaning of section 310.6(b)(1) of

16 title 21 of the Code of Federal Regu17 lations) to such a drug, and (bb)

18 which has not been the subject of a

19 final determination by the Secretary

20 that it is a ‘new drug’ (within the

21 meaning of section 201(p) of the Fed22 eral Food, Drug, and Cosmetic Act)

23 or an action brought by the Secretary

24 under section 301, 302(a), or 304(a)
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1 of such Act to enforce section 502(f)

2 or 505(a) of such Act; or

3 ‘‘(III)(aa) which is described in

4 section 107(c)(3) of the Drug Amend5 ments of 1962 and for which the Sec6 retary has determined there is a com7 pelling justification for its medical

8 need, or is identical, similar, or re9 lated (within the meaning of section

10 310.6(b)(1) of title 21 of the Code of

11 Federal Regulations) to such a drug,

12 and (bb) for which the Secretary has

13 not issued a notice of an opportunity

14 for a hearing under section 505(e) of

15 the Federal Food, Drug, and Cos16 metic Act on a proposed order of the

17 Secretary to withdraw approval of an

18 application for such drug under such

19 section because the Secretary has de20 termined that the drug is less than ef21 fective for all conditions of use pre22 scribed, recommended, or suggested in

23 its labeling.

24 ‘‘(ii) A biological product which—
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1 ‘‘(I) may only be dispensed upon

2 prescription;

3 ‘‘(II) is licensed under section

4 351 of the Public Health Service Act;

5 and

6 ‘‘(III) is produced at an estab7 lishment licensed under such section

8 to produce such product.

9 ‘‘(iii) Insulin approved under appro10 priate Federal law.

11 ‘‘(iv) A prescribed drug or biological

12 product that would meet the requirements

13 of clause (i) or (ii) but that is available

14 over-the-counter in addition to being avail15 able upon prescription.

16 ‘‘(B) EXCLUSION.—The term ‘covered out17 patient drug’ does not include any product—

18 ‘‘(i) except as provided in subpara19 graph (A)(iv), which may be distributed to

20 individuals without a prescription;

21 ‘‘(ii) when furnished as part of, or as

22 incident to, a diagnostic service or any

23 other item or service for which payment

24 may be made under this title;
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1 ‘‘(iii) that was covered under this title

2 on the day before the date of enactment of

3 the Medicare Prescription Drug Benefit

4 Act of 1999; or

5 ‘‘(iv) that is a therapeutically equiva6 lent replacement for a product described in

7 clause (ii) or (iii), as determined by the

8 Secretary.

9 ‘‘(2) ELIGIBLE BENEFICIARY.—The term ‘eligi10 ble beneficiary’ means an individual that is enrolled

11 under part B of this title.

12 ‘‘(3) ELIGIBLE ENTITY.—The term ‘eligible en13 tity’ means any entity that the Secretary determines

14 to be appropriate, including—

15 ‘‘(A) pharmaceutical benefit management

16 companies;

17 ‘‘(B) wholesale and retail pharmacist deliv18 ery systems;

19 ‘‘(C) insurers;

20 ‘‘(D) other entities; or

21 ‘‘(E) any combination of the entities de22 scribed in subparagraphs (A) through (D).’’.
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1 SEC. 4. OPTIONAL COVERAGE FOR CERTAIN BENE2 FICIARIES.

3 (a) IN GENERAL.—If drug coverage under a group

4 health plan that provides health insurance coverage for re5 tirees is equivalent to or greater than the coverage pro6 vided under section 1849 of the Social Security Act (as

7 added by section 3), beneficiaries receiving coverage

8 through the group health plan may continue to receive

9 such coverage from the plan and the Secretary may make

10 payments to such plans, subject to the requirements of

11 this section.

12 (b) REQUIREMENTS.—To receive payment under this

13 section, group health plans shall—

14 (1) comply with certain requirements of this

15 Act and other reasonable, necessary, and related re16 quirements that are needed to administer this sec17 tion, as determined by the Secretary;

18 (2) to the extent that there is a contractual ob19 ligation to provide drug coverage to retirees that is

20 equal to or greater than the drug coverage provided

21 under this Act, reimburse or otherwise arrange to

22 compensate beneficiaries during the life of the con23 tract for the portion of the part B premium under

24 section 1839 of the Social Security Act that is iden25 tified by the Secretary of Health and Human Serv26 ices as attributable to the drug coverage provided
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1 under section 1849 of that Act (as added by section

2 3); or

3 (3) for group health plans that are in existence

4 prior to enactment of this section and provide drug

5 coverage to retirees that is equal to or greater than

6 the drug coverage provided under section 1849 of

7 the Social Security Act (as added by section 3), re8 imburse or otherwise arrange to compensate bene9 ficiaries for the portion of the part B premium

10 under section 1839 of the Social Security Act that

11 is identified by the Secretary of Health and Human

12 Services as attributable to the drug coverage pro13 vided under section 1849 of that Act (as added by

14 section 3) for at least 1 year from the date that the

15 group health plan begins participation under this

16 section.

17 (c) PAYMENTS.—The Secretary shall establish a

18 process to provide payments to eligible group health plans

19 under this section on behalf of enrolled beneficiaries. Such

20 payments shall not exceed the amount that would other21 wise be paid to a private entity serving similar bene22 ficiaries in the same service area under section 1849 of

23 the Social Security Act (as added by section 3).
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1 SEC. 5. MEDIGAP REVISIONS.

2 (a) REQUIRED COVERAGE OF COVERED OUTPATIENT

3 DRUGS.—Section 1882(p)(2)(B) of the Social Security

4 Act (42 U.S.C. 1395ss(p)(2)(B)) is amended by inserting

5 before ‘‘and’’ at the end the following: ‘‘including a re6 quirement that an appropriate number of policies provide

7 coverage of drugs which compliments but does not dupli8 cate the drug benefits that beneficiaries are otherwise enti9 tled to under this title (with the Secretary and the Na10 tional Association of Insurance Commissioners deter11 mining the appropriate level of drug benefits that each

12 benefit package must provide and ensuring that policies

13 providing such coverage remain affordable for bene14 ficiaries);’’.

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

16 subsection (a) shall take effect on July 1, 2000.

17 (c) TRANSITION PROVISIONS.—

18 (1) IN GENERAL.—If the Secretary of Health

19 and Human Services identifies a State as requiring

20 a change to its statutes or regulations to conform its

21 regulatory program to the amendments made by this

22 section, the State regulatory program shall not be

23 considered to be out of compliance with the require24 ments of section 1882 of the Social Security Act due

25 solely to failure to make such change until the date

26 specified in paragraph (4).
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1 (2) NAIC STANDARDS.—If, within 9 months

2 after the date of enactment of this Act, the National

3 Association of Insurance Commissioners (in this

4 subsection referred to as the ‘‘NAIC’’) modifies its

5 NAIC Model Regulation relating to section 1882 of

6 the Social Security Act (referred to in such section

7 as the 1991 NAIC Model Regulation, as subse8 quently modified) to conform to the amendments

9 made by this section, such revised regulation incor10 porating the modifications shall be considered to be

11 the applicable NAIC model regulation (including the

12 revised NAIC model regulation and the 1991 NAIC

13 Model Regulation) for the purposes of such section.

14 (3) SECRETARY STANDARDS.—If the NAIC

15 does not make the modifications described in para16 graph (2) within the period specified in such para17 graph, the Secretary of Health and Human Services

18 shall make the modifications described in such para19 graph and such revised regulation incorporating the

20 modifications shall be considered to be the appro21 priate regulation for the purposes of such section.

22 (4) DATE SPECIFIED.—

23 (A) IN GENERAL.—Subject to subpara24 graph (B), the date specified in this paragraph

25 for a State is the earlier of—
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1 (i) the date the State changes its stat2 utes or regulations to conform its regu3 latory program to the changes made by

4 this section; or

5 (ii) 1 year after the date the NAIC or

6 the Secretary first makes the modifications

7 under paragraph (2) or (3), respectively.

8 (B) ADDITIONAL LEGISLATIVE ACTION RE9 QUIRED.—In the case of a State which the Sec10 retary identifies as—

11 (i) requiring State legislation (other

12 than legislation appropriating funds) to

13 conform its regulatory program to the

14 changes made in this section; but

15 (ii) having a legislature which is not

16 scheduled to meet in 2000 in a legislative

17 session in which such legislation may be

18 considered;

19 the date specified in this paragraph is the first

20 day of the first calendar quarter beginning after

21 the close of the first legislative session of the

22 State legislature that begins on or after July 1,

23 2000. For purposes of the previous sentence, in

24 the case of a State that has a 2-year legislative

25 session, each year of such session shall be
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1 deemed to be a separate regular session of the

2 State legislature.

3 SEC. 6. IMPROVED MEDICAID ASSISTANCE FOR LOW-IN4 COME INDIVIDUALS.

5 (a) INCREASE IN SLMB ELIGIBILITY TO 135 PER6 CENT OF POVERTY LEVEL.—.

7 (1) IN GENERAL.—Section 1902(a)(10)(E) of

8 the Social Security Act (42 U.S.C. 1396a(a)(10)(E))

9 is amended—

10 (A) in clause (iii), by striking ‘‘and 120

11 percent in 1995 and years thereafter’’ and in12 serting ‘‘, 120 percent in 1995 and through

13 July 1, 2000, and 135 percent for subsequent

14 periods’’; and

15 (B) in clause (iv)—

16 (i) by striking the dash and all that

17 follows through ‘‘(II)’’, and

18 (ii) by striking ‘‘who would be de19 scribed in subclause (I) if ‘135 percent’

20 and ‘175 percent’ were substituted for

21 ‘120 percent’ and ‘135 percent’ respec22 tively’’ and inserting ‘‘who would be de23 scribed in clause (iii) but for the fact that

24 their income exceeds 135 percent, but is

25 less than 175 percent, of the official pov-
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1 erty line (referred to in such clause) for a

2 family of the size involved’’.

3 (2) CONFORMING AMENDMENT.—Section

4 1933(c)(2)(A) of such Act (42 U.S.C.

5 1396v(c)(2)(A)) is amended by striking ‘‘the sum’’

6 and all that follows and inserting ‘‘the total number

7 of individuals described in section

8 1902(a)(10)(E)(iv) in the State; to’’.

9 (b) PROVISION OF MEDICAID PRESCRIPTION DRUG

10 BENEFITS FOR QMBS AND SLMBS AS WRAP-AROUND

11 BENEFIT.—

12 (1) IN GENERAL.—Section 1902(a)(10) of such

13 Act (42 U.S.C. 1396a(a)(10)) is amended—

14 (A) in subparagraph (E)(i), by inserting

15 ‘‘and for prescribed drugs (in the same amount,

16 duration, and scope as for individuals described

17 in subparagraph (A)(i))’’ after ‘‘1905(p)(3))’’;

18 (B) in subparagraph (E)(iii), by inserting

19 ‘‘and for prescribed drugs (in the same amount,

20 duration, and scope as for individuals described

21 in subparagraph (A)(i))’’ after ‘‘section

22 1905(p)(3)(A)(ii)’’; and

23 (C) in the clause (VIII) following subpara24 graph (F), by inserting ‘‘and to medical assist-
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1 ance for prescribed drugs described in subpara2 graph (E)(i)’’ after ‘‘1905(p)(3))’’.

3 (2) CONFORMING AMENDMENT.—Section

4 1916(a) of such Act (42 U.S.C. 1396o(a)) is amend5 ed, in the matter before paragraph (1), by striking

6 ‘‘(E)(i)’’ and inserting ‘‘(E)’’.

7 (c) EFFECTIVE DATES.—

8 (1) The amendments made by subsections

9 (a)(1) and (b) take effect on July 1, 2000, and

10 apply to prescribed drugs furnished on or after such

11 date.

12 (2) The amendment made by subsection (a)(2)

13 applies to the allocation for the portion of fiscal year

14 2000 that occurs on or after July 1, 2000, and to

15 the allocation for subsequent fiscal years.

16 (3) The amendments made by this section apply

17 without regard to whether or not regulations to im18 plement such amendments are promulgated by July

19 1, 2000.

20 SEC. 7. WAIVER OF ADDITIONAL PORTION OF PART B PRE21 MIUM FOR CERTAIN MEDICARE BENE22 FICIARIES HAVING ACTUARIALLY EQUIVA23 LENT COVERAGE.

24 (a) IN GENERAL.—The Secretary of Health and

25 Human Services shall establish a method under which the
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1 portion of the part B premium under section 1839 of the

2 Social Security Act that is identified by the Secretary of

3 Health and Human Services as attributable to the drug

4 coverage provided under section 1849 of that Act (as

5 added by section 3) is waived (and not collected) for any

6 individual enrolled under part B of title XVIII of the So7 cial Security Act who demonstrates that the individual has

8 drug coverage that is actuarially equivalent to the cov9 erage provided under that part.

10 (b) LIMITATION.—Subsection (a) shall not apply to

11 an individual with coverage through a group health plan

12 if the group health plan receives payments for such indi13 vidual pursuant to section 4.

14 SEC. 8. ELIMINATION OF TIME LIMITATION ON MEDICARE

15 BENEFITS FOR IMMUNOSUPPRESSIVE

16 DRUGS.

17 (a) REVISION.—

18 (1) IN GENERAL.—Section 1861(s)(2)(J) of the

19 Social Security Act (42 U.S.C. 1395x(s)(2)(J)) is

20 amended by striking ‘‘, but only’’ and all that fol21 lows up to the semicolon at the end.

22 (2) EFFECTIVE DATE.—The amendment made

23 by paragraph (1) shall apply to drugs furnished on

24 or after the date of enactment of this Act.
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1 (b) EXTENSION OF CERTAIN SECONDARY PAYER RE2 QUIREMENTS.—Section 1862(b)(1)(C) of the Social Secu3 rity Act (42 U.S.C. 1395y(b)(1)(C)) is amended by adding

4 at the end the following: ‘‘With regard to immuno5 suppressive drugs furnished on or after the date of enact6 ment of the Medicare Prescription Drug Benefit Act of

7 1999, this subparagraph shall be applied without regard

8 to any time limitation.’’.

9 SEC. 9. EXPANSION OF MEMBERSHIP OF MEDPAC TO 19.

10 (a) IN GENERAL.—Section 1805(c) of the Social Se11 curity Act (42 U.S.C. 1395b–6(c)), as amended by section

12 5202 of the Tax and Trade Relief Extension Act of 1998

13 (contained in division J of Public Law 105–277), is

14 amended—

15 (1) in paragraph (1), by striking ‘‘17’’ and in16 serting ‘‘19’’; and

17 (2) in paragraph (2)(B), by inserting ‘‘experts

18 in the area of pharmacology and prescription drug

19 benefit programs,’’ after ‘‘other health profes20 sionals,’’.

21 (b) INITIAL TERMS OF ADDITIONAL MEMBERS.—

22 (1) IN GENERAL.—For purposes of staggering

23 the initial terms of members of the Medicare Pay24 ment Advisory Commission under section 1805(c)(3)

25 of the Social Security Act (42 U.S.C. 1395b–
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1 6(c)(3)), the initial terms of the 2 additional mem2 bers of the Commission provided for by the amend3 ment under subsection (a)(1) are as follows:

4 (A) One member shall be appointed for 1

5 year.

6 (B) One member shall be appointed for 2

7 years.

8 (2) COMMENCEMENT OF TERMS.—Such terms

9 shall begin on January 1, 2000.

10 SEC. 10. GAO STUDY AND REPORT TO CONGRESS.

11 (a) STUDY.—The Comptroller General of the United

12 States shall conduct a study and analysis of the implemen13 tation of the competitive bidding process for covered out14 patient drugs under section 1849 of the Social Security

15 Act (as added by section 3), including an analysis of—

16 (1) the reduction of hospital visits (or lengths

17 of such visits) by beneficiaries as a result of pro18 viding coverage of covered outpatient drugs under

19 such section;

20 (2) prices paid by the medicare program rel21 ative to comparable private and public sector pro22 grams; and

23 (3) any other savings to the medicare program

24 as a result of—

25 (A) such coverage; and
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1 (B) the education and counseling provi2 sions of section 1849(g).

3 (b) REPORT.—Not later than January 1, 2001, and

4 annually thereafter, the Comptroller General of the United

5 States shall submit a report to Congress on the study and

6 analysis conducted pursuant to subsection (a), and shall

7 include in the report such recommendations regarding the

8 coverage of covered outpatient drugs under the medicare

9 program as the Comptroller General determines to be ap10 propriate.

11 SEC. 11. EFFECTIVE DATE.

12 Except as otherwise provided, the amendments made

13 by this Act apply to items and services furnished on or

14 after July 1, 2000.

Æ