II

106TH CONGRESS

1ST SESSION S. 1535

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

of outpatient prescription drugs under part B of the Medicare Program,

and for other purposes.

IN THE SENATE OF THE UNITED STATES

AUGUST 5, 1999

Mr. GRAMS introduced the following bill; which was read twice and referred

to the Committee on Finance

A BILL

To amend title XVIII of the Social Security Act to provide

for coverage of outpatient prescription drugs under part

B of the Medicare Program, 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.

4 This Act may be cited as the ‘‘Medicare Ensuring

5 Prescription Drugs for Seniors Act of 1999’’.

6 SEC. 2. MEDICARE COVERAGE OF OUTPATIENT PRESCRIP7 TION DRUGS.

8 (a) DESCRIPTION OF COVERED OUTPATIENT

9 DRUGS.—
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1 (1) COVERAGE.—Section 1861(s)(2)(J) of the

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

3 amended to read as follows:

4 ‘‘(J) covered outpatient drugs;’’.

5 (2) DRUGS DESCRIBED.—Section 1861(t) of the

6 Social Security Act (42 U.S.C. 1395x(t)) is

7 amended—

8 (A) in the heading, by adding at the end

9 the following: ‘‘; Covered Outpatient Drugs’’;

10 (B) in paragraph (1), by striking ‘‘para11 graph (2)’’ and inserting ‘‘the succeeding para12 graphs of this subsection’’; and

13 (C) by striking paragraph (2) and insert14 ing the following:

15 ‘‘(2) Subject to paragraph (3), the term ‘covered out16 patient drug’ means—

17 ‘‘(A) a drug which may be dispensed only upon

18 prescription and—

19 ‘‘(i) which is approved for safety and effec20 tiveness as a prescription drug under section

21 505 of the Federal Food, Drug, and Cosmetic

22 Act;

23 ‘‘(ii)(I) which was commercially used or

24 sold in the United States before the date of the

25 enactment of the Drug Amendments of 1962 or
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1 which is identical, similar, or related (within the

2 meaning of section 310.6(b)(1) of title 21 of the

3 Code of Federal Regulations) to such a drug,

4 and (II) which has not been the subject of a

5 final determination by the Secretary that it is

6 a ‘new drug’ (within the meaning of section

7 201(p) of the Federal Food, Drug, and Cos8 metic Act) or an action brought by the Sec9 retary under section 301, 302(a), or 304(a) of

10 such Act to enforce section 502(f) or 505(a) of

11 such Act; or

12 ‘‘(iii)(I) which is described in section

13 107(c)(3) of the Drug Amendments of 1962

14 and for which the Secretary has determined

15 there is a compelling justification for its med16 ical need, or is identical, similar, or related

17 (within the meaning of section 310.6(b)(1) of

18 title 21 of the Code of Federal Regulations) to

19 such a drug, and (II) for which the Secretary

20 has not issued a notice of an opportunity for a

21 hearing under section 505(e) of the Federal

22 Food, Drug, and Cosmetic Act on a proposed

23 order of the Secretary to withdraw approval of

24 an application for such drug under such section

25 because the Secretary has determined that the
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1 drug is less than effective for all conditions of

2 use prescribed, recommended, or suggested in

3 its labeling;

4 ‘‘(B) a biological product which—

5 ‘‘(i) may only be dispensed upon prescrip6 tion;

7 ‘‘(ii) is licensed under section 351 of the

8 Public Health Service Act; and

9 ‘‘(iii) is produced at an establishment li10 censed under such section to produce such

11 product; and

12 ‘‘(C) insulin approved under appropriate Fed13 eral law.

14 ‘‘(3) The term ‘covered outpatient drug’ does not

15 include—

16 ‘‘(A) any drug, biological product, or insulin

17 when furnished as part of, or as incident to, a diag18 nostic service or any other item or service for which

19 payment may be made under this title (other than

20 physicians’ services or services which would be physi21 cians’ services if furnished by a physician); or

22 ‘‘(B) any drug that is intravenously adminis23 tered in a home setting.’’.

24 (3) CONFORMING AMENDMENTS REPEALING

25 SEPARATE COVERAGE OF CERTAIN DRUGS AND
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1 PRODUCTS.—(A) Effective January 1, 2001, section

2 1861(s)(2) of the Social Security Act (42 U.S.C.

3 1395x(s)(2)) is amended—

4 (i) in each of subparagraphs (A) and (B),

5 by striking ‘‘(including drugs’’ and all that fol6 lows through ‘‘self-administered)’’;

7 (ii) by striking subparagraphs (G), (I),

8 (O), (Q), and (T);

9 (iii) in subparagraph (R), by adding ‘‘and’’

10 at the end; and

11 (iv) in subparagraph (S), by striking ‘‘;

12 and’’ at the end.

13 (B) Effective January 1, 2001, section 1861 of

14 the Social Security Act (42 U.S.C. 1395x) is amend15 ed by striking subsection (kk).

16 (C) Effective January 1, 2001, section 1881(b)

17 of the Social Security Act (42 U.S.C. 1395rr(b)) is

18 amended—

19 (i) in the first sentence of paragraph (1)—

20 (I) by striking ‘‘, (B)’’ and inserting

21 ‘‘, and (B)’’; and

22 (II) by striking ‘‘, and (C)’’ and all

23 that follows and inserting a period; and

24 (ii) in paragraph (11)—
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1 (I) by striking ‘‘(11)(A)’’ and insert2 ing ‘‘(11)’’; and

3 (II) by striking subparagraphs (B)

4 and (C).

5 (b) DEDUCTIBLE AND PAYMENT AMOUNTS.—(1)

6 Section 1833(a)(1)(S) of the Social Security Act (42

7 U.S.C. 1395l(a)(1)(S)) is amended to read as follows: ‘‘(S)

8 with respect to expenses incurred for covered outpatient

9 drugs, the amounts paid shall be the amounts determined

10 under section 1834(e)(2);’’.

11 (2) Section 1833(a)(2) of the Social Security Act (42

12 U.S.C. 1395l(a)(2)) is amended in the matter preceding

13 subparagraph (A) by inserting ‘‘(other than covered out14 patient drugs)’’ after ‘‘(2) in the case of services’’.

15 (3) Section 1833(b) of the Social Security Act (42

16 U.S.C. 1395l(b)) is amended—

17 (A) in paragraph (1), by inserting ‘‘or for cov18 ered outpatient drugs’’ after ‘‘1861(s)(10)(A)’’; and

19 (B) in paragraph (2), by striking ‘‘osteoporosis

20 drug (as defined in section 1861(kk))’’ and inserting

21 ‘‘covered outpatient drug (as defined in section

22 1861(t))’’.

23 (4) Section 1834 of the Social Security Act (42

24 U.S.C. 1395m) is amended by inserting after subsection

25 (d) the following:
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1 ‘‘(e) PAYMENT FOR COVERED OUTPATIENT

2 DRUGS.—

3 ‘‘(1) DEDUCTIBLE.—

4 ‘‘(A) APPLICATION.—

5 ‘‘(i) IN GENERAL.—Except as pro6 vided in clause (ii), payment shall be made

7 under paragraph (2) only with respect to

8 expenses incurred by an individual for cov9 ered outpatient drugs during a month on

10 or after such date in the month as the Sec11 retary determines that the individual has

12 incurred expenses in the month for covered

13 outpatient drugs (during a period in which

14 the individual is entitled to benefits under

15 this part) equal to the amount of the pre16 scription drug deductible specified in sub17 paragraph (C) for that month.

18 ‘‘(ii) WAIVER OF DEDUCTIBLE FOR

19 LOW-INCOME INDIVIDUALS.—The prescrip20 tion drug deductible established under this

21 paragraph shall not apply to an individual

22 whose income is not greater than 135 per23 cent of the income official poverty line (as

24 defined by the Office of Management and

25 Budget, and revised annually in accord-
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1 ance with section 673(2) of the Omnibus

2 Budget Reconciliation Act of 1981) appli3 cable to a family of the size involved.

4 ‘‘(B) RESPONSE TO APPLICATION.—If the

5 system described in section 1842(o)(4) has not

6 been established and an individual applies to

7 the Secretary to establish that the individual

8 has met the requirement of subparagraph (A),

9 the Secretary shall promptly notify the indi10 vidual (and, if the application was submitted by

11 or through a participating pharmacy, the phar12 macy) as to the date (if any) as of which the

13 individual has met such requirement.

14 ‘‘(C) PRESCRIPTION DRUG DEDUCTIBLE

15 AMOUNT.—The prescription drug deductible

16 specified in this subparagraph for each

17 month—

18 ‘‘(i) in 2001, is $150 for an individual

19 (or $300 for a married couple, both of

20 whom enrolled under this part); and

21 ‘‘(ii) in any succeeding year, is the

22 prescription drug deductible for a month in

23 the preceding year, increased by the per24 centage by which the monthly premium

25 under section 1839 for months during the
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1 year exceeds the monthly premium under

2 such section for months during the pre3 ceding year.

4 ‘‘(2) PAYMENT AMOUNT.—Subject to the pre5 scription drug deductible established under para6 graph (1)(A), the amount payable under this part

7 with respect to a covered outpatient drug is equal to

8 75 percent of the lesser of—

9 ‘‘(A) the actual charge for the drug; or

10 ‘‘(B) the average wholesale price for the

11 drug.

12 ‘‘(3) PROHIBITION OF FORMULARY.—Nothing

13 in this title (other than section 1862(c)) shall be

14 construed as authorizing the Secretary to exclude

15 from coverage or to deny payment—

16 ‘‘(A) for any specific covered outpatient

17 drug, or specific class of covered outpatient

18 drug; or

19 ‘‘(B) for any specific use of such a drug

20 for a specific indication unless such exclusion is

21 pursuant to section 1862(a)(1) based on a find22 ing by the Secretary that such use is not safe

23 or is not effective.

24 ‘‘(4) REPORTS ON UTILIZATION AND EFFECTS

25 ON PRICES.—
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1 ‘‘(A) COMPILATION OF INFORMATION.—

2 The Secretary shall compile information on—

3 ‘‘(i) manufacturers’ prices for covered

4 outpatient drugs, and on charges of phar5 macists for covered outpatient drugs; and

6 ‘‘(ii) the use of covered outpatient

7 drugs by individuals entitled to benefits

8 under this part.

9 ‘‘(B) REPORTS.—The Secretary shall sub10 mit to the Committees on Ways and Means and

11 Commerce of the House of Representatives and

12 the Committee on Finance of the Senate a re13 port, in May and November of 2000 and 2001

14 and in May of each succeeding year, providing

15 the information compiled under subparagraph

16 (A). Each report submitted after 2002 shall in17 clude an explanation of the extent to which the

18 increases in outlays for covered outpatient

19 drugs under this part are due to the factors de20 scribed in clauses (i) and (ii) of subparagraph

21 (A).’’.

22 (c) PARTICIPATING PHARMACIES; CIVIL MONEY

23 PENALTIES.—
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1 (1) PARTICIPATING PHARMACIES.—Section

2 1842 of the Social Security Act (42 U.S.C. 1395t)

3 is amended—

4 (A) in subsection (h)—

5 (i) in paragraph (1), by inserting be6 fore the period at the end of the second

7 sentence the following: ‘‘, except that, with

8 respect to a supplier of covered outpatient

9 drugs, the term ‘participating supplier’

10 means a participating pharmacy (as de11 fined in subsection (o)(1))’’; and

12 (ii) in paragraph (4), by adding at the

13 end the following: ‘‘In publishing direc14 tories under this paragraph, the Secretary

15 shall provide for separate directories

16 (wherever appropriate) for participating

17 pharmacies.’’; and

18 (B) by striking subsection (o) and insert19 ing the following:

20 ‘‘(o)(1) For purposes of this section, the term ‘par21 ticipating pharmacy’ means, with respect to covered out22 patient drugs dispensed on or after January 1, 2001, an

23 entity which is authorized under State law to dispense cov24 ered outpatient drugs and which has entered into an
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1 agreement with the Secretary, providing at least the fol2 lowing:

3 ‘‘(A) The entity agrees to accept payment under

4 this part on an assignment-related basis for all cov5 ered outpatient drugs dispensed to an individual en6 titled to benefits under this part (in this subsection

7 referred to as a ‘Medicare beneficiary’) during a

8 year after—

9 ‘‘(i) the Secretary has notified the entity,

10 through the electronic system described in para11 graph (4); or

12 ‘‘(ii) in the absence of such a system, the

13 entity is otherwise notified that the Secretary

14 has determined,

15 that the individual has met the prescription drug de16 ductible with respect to such drugs under section

17 1834(e)(1) for the year.

18 ‘‘(B) The entity agrees—

19 ‘‘(i) not to refuse to dispense covered out20 patient drugs stocked by the entity to any medi21 care beneficiary; and

22 ‘‘(ii) not to charge any Medicare bene23 ficiary (regardless of whether or not the bene24 ficiary is enrolled in a Medicare+Choice plan

25 offered by a Medicare+Choice organization
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1 under part C) more for such drugs than the

2 amount such entity charges to the general pub3 lic (as determined by the Secretary in regula4 tions).

5 ‘‘(C) The entity agrees to keep patient records

6 (including records on expenses) for all covered out7 patient drugs dispensed to all Medicare beneficiaries.

8 ‘‘(D) The entity agrees to submit information

9 (in a manner specified by the Secretary to be nec10 essary to administer this title) on all purchases of

11 covered outpatient drugs dispensed to Medicare

12 beneficiaries.

13 ‘‘(E) The entity agrees—

14 ‘‘(i) to offer to counsel, or to offer to pro15 vide information (consistent with State law re16 specting the provision of such information) to,

17 each Medicare beneficiary on the appropriate

18 use of a drug to be dispensed and whether there

19 are potential interactions between the drug and

20 other drugs dispensed to the beneficiary; and

21 ‘‘(ii) to advise the beneficiary on the avail22 ability (consistent with State laws respecting

23 substitution of drugs) of therapeutically equiva24 lent covered outpatient drugs.
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1 Nothing in this paragraph shall be construed as requiring

2 a pharmacy operated by a Medicare+Choice organization

3 under part C for the exclusive benefit of its members to

4 dispense covered outpatient drugs to individuals who are

5 not members of the organization.

6 ‘‘(2) The Secretary shall provide to each participating

7 pharmacy—

8 ‘‘(A) a distinctive emblem (suitable for display

9 to the public) indicating that the pharmacy is a par10 ticipating pharmacy; and

11 ‘‘(B) upon request, such electronic equipment

12 and technical assistance (other than the costs of ob13 taining, maintaining, or expanding telephone service)

14 as the Secretary determines may be necessary for

15 the pharmacy to submit claims using the electronic

16 system established under paragraph (4).

17 ‘‘(3) The Secretary shall provide for periodic audits

18 of participating pharmacies to ensure—

19 ‘‘(A) compliance with the requirements for par20 ticipation under this title; and

21 ‘‘(B) the accuracy of information submitted by

22 the pharmacies under this title.

23 ‘‘(4) The Secretary shall establish, by not later than

24 January 1, 2001, a point-of-sale electronic system for use

25 by carriers and participating pharmacies in the submission
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1 of information respecting covered outpatient drugs dis2 pensed to Medicare beneficiaries under this part.

3 ‘‘(5) Notwithstanding subsection (b)(3)(B), payment

4 for covered outpatient drugs may be made on the basis

5 of an assignment described in clause (ii) of that subsection

6 only to a participating pharmacy.’’.

7 (2) CIVIL MONEY PENALTIES FOR VIOLATION

8 OF PARTICIPATION AGREEMENT, FOR EXCESSIVE

9 CHARGES FOR NONPARTICIPATING PHARMACIES,

10 AND FOR FAILURE TO PROVIDE SURVEY INFORMA11 TION.—Section 1128A(a) of the Social Security Act

12 (42 U.S.C. 1320a–7a(a)) is amended—

13 (A) in paragraph (2)(C), by inserting ‘‘or

14 to be a participating pharmacy under section

15 1842(o)’’ after ‘‘1842(h)(1)’’;

16 (B) in paragraph (6), by striking ‘‘, or’’ at

17 the end;

18 (C) in paragraph (7), by adding ‘‘or’’ at

19 the end; and

20 (D) by inserting after paragraph (7) the

21 following:

22 ‘‘(8) in the case of a participating or non23 participating pharmacy (as defined for purposes of

24 part B of title XVIII), presents or causes to be pre25 sented to any person a request for payment for cov-
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1 ered outpatient drugs dispensed to an individual en2 titled to benefits under part B of title XVIII and for

3 which the amount charged by the pharmacy is great4 er than the amount the pharmacy charges the gen5 eral public (as determined by the Secretary in regu6 lations);’’.

7 (d) LIMITATION ON LENGTH OF PRESCRIPTION.—

8 Section 1862(c) of the Social Security Act (42 U.S.C.

9 1395y(c)) is amended—

10 (1) by redesignating subparagraphs (A) through

11 (D) of paragraph (1) as clauses (i) through (iv), re12 spectively;

13 (2) in paragraph (2)(A), by striking ‘‘paragraph

14 (1)’’ and inserting ‘‘subparagraph (A)’’;

15 (3) by redesignating subparagraphs (A) and

16 (B) of paragraph (2) as clauses (i) and (ii), respec17 tively;

18 (4) by redesignating paragraphs (1) and (2) as

19 subparagraphs (A) and (B), respectively;

20 (5) by inserting ‘‘(1)’’ after ‘‘(c)’’; and

21 (6) by adding at the end the following:

22 ‘‘(2) No payment may be made under part B for any

23 expense incurred for a covered outpatient drug if the drug

24 is dispensed in a quantity exceeding a supply of 30 days

25 or such longer period of time (not to exceed 90 days, ex-
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1 cept in exceptional circumstances) as the Secretary may

2 authorize.’’.

3 (e) USE OF CARRIERS, FISCAL INTERMEDIARIES,

4 AND OTHER ENTITIES IN ADMINISTRATION.—

5 (1) AUTHORIZING USE OF OTHER ENTITIES IN

6 ELECTRONIC CLAIMS SYSTEM.—Section 1842(f) of

7 the Social Security Act (42 U.S.C. 1395u(f)) is

8 amended—

9 (A) in paragraph (1), by striking ‘‘and’’ at

10 the end;

11 (B) in paragraph (2), by striking the pe12 riod at the end and inserting ‘‘; and’’; and

13 (C) by adding at the end the following:

14 ‘‘(3) with respect to implementation and oper15 ation (and related functions) of the electronic system

16 established under subsection (o)(4), a voluntary as17 sociation, corporation, partnership, or other non18 governmental organization, which the Secretary de19 termines to be qualified to conduct such activities.’’.

20 (2) ADDITIONAL FUNCTIONS OF CARRIERS.—

21 Section 1842(b)(3) of the Social Security Act (42

22 U.S.C. 1395u(b)(3)) is amended—

23 (A) in subparagraph (I), by striking ‘‘and’’

24 at the end;
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1 (B) by redesignating subparagraph (L) as

2 subparagraph (J); and

3 (C) by inserting after subparagraph (J)

4 (as so redesignated) the following:

5 ‘‘(K) if such carrier makes determinations or

6 payments with respect to covered outpatient drugs,

7 will—

8 ‘‘(i) receive information transmitted under

9 the electronic system established under sub10 section (o)(4); and

11 ‘‘(ii) respond to requests by participating

12 pharmacies (and any individual entitled to bene13 fits under this part) as to whether or not such

14 an individual has met the prescription drug de15 ductible established under section 1834(e)(1)

16 for the month; and

17 ‘‘(L) will enter into such contracts with organi18 zations described in subsection (f)(3) as the Sec19 retary determines may be necessary to implement

20 and operate (and for related functions with respect

21 to) the electronic system established under sub22 section (o)(4) for covered outpatient drugs under

23 this part.’’.

24 (3) SPECIAL CONTRACT PROVISIONS FOR ELEC25 TRONIC CLAIMS SYSTEM.—
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1 (A) PAYMENT ON OTHER THAN A COST

2 BASIS.—Section 1842(c)(1) of the Social Secu3 rity Act (42 U.S.C. 1395u(c)(1)) is amended—

4 (i) by inserting ‘‘(A)’’ after ‘‘(c)(1)’’;

5 (ii) in the first sentence, by inserting

6 ‘‘, except as provided in subparagraph

7 (B),’’ after ‘‘under this part, and’’; and

8 (iii) by adding at the end the fol9 lowing:

10 ‘‘(B) To the extent that a contract under this section

11 provides for implementation and operation (and related

12 functions) of the electronic system established under sub13 section (o)(4) for covered outpatient drugs, the Secretary

14 may provide for payment for such activities based on any

15 method of payment determined by the Secretary to be ap16 propriate.’’.

17 (B) APPLICATION OF DIFFERENT PER18 FORMANCE STANDARDS.—The Secretary of

19 Health and Human Services, before entering

20 into contracts under section 1842 of the Social

21 Security Act with respect to the implementation

22 and operation (and related functions) of an

23 electronic system for covered outpatient drugs,

24 shall establish standards with respect to per25 formance with respect to activities relating to
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1 such system. The provisions of section

2 1153(e)(2) and paragraphs (1) and (2) of sec3 tion 1153(h) of such Act shall apply to such

4 activities in the same manner as they apply to

5 contracts with peer review organizations, in6 stead of the requirements of the second and

7 third sentences of section 1842(b)(2)(A) of such

8 Act.

9 (C) USE OF REGIONAL CARRIERS.—Section

10 1842(b)(2)(A) of the Social Security Act (42

11 U.S.C. 1395u(b)(2)(A)) is amended by adding

12 at the end the following: ‘‘With respect to ac13 tivities relating to implementation and oper14 ation (and related functions) of the electronic

15 system established under subsection (o)(4), the

16 Secretary may enter into contracts with carriers

17 under this section to perform such activities on

18 a regional basis.’’.

19 (4) DELAY IN APPLICATION OF COORDINATED

20 BENEFITS WITH MEDIGAP.—The provisions of sub21 paragraph (B) of section 1842(h)(3) of the Social

22 Security Act shall not apply to covered outpatient

23 drugs (other than drugs described in section

24 1861(s)(2)(J) of such Act as in effect on the day be-
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1 fore the date of the enactment of this Act) dispensed

2 before January 1, 2002.

3 (5) BATCH PROMPT PROCESSING OF CLAIMS.—

4 Section 1842(c) of the Social Security Act (42

5 U.S.C. 1395u(c)), is amended—

6 (A) by redesignating paragraph (6) as

7 paragraph (7);

8 (B) in paragraphs (2)(A) and (3)(A), by

9 striking ‘‘Each’’ and inserting ‘‘Except as pro10 vided in paragraph (6), each’’; and

11 (C) by inserting after paragraph (5) the

12 following:

13 ‘‘(6)(A) Each contract under this section which pro14 vides for the disbursement of funds, as described in sub15 section (a)(1)(B), with respect to claims for payment for

16 covered outpatient drugs shall provide for a payment cycle

17 under which each carrier will, on a monthly basis, make

18 a payment with respect to all claims which were received

19 and approved for payment in the period since the most

20 recent date on which such a payment was made with re21 spect to the participating pharmacy or individual submit22 ting the claim.

23 ‘‘(B) If payment is not issued, mailed, or otherwise

24 transmitted within 5 days of when such a payment is re25 quired to be made under subparagraph (A), interest shall
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1 be paid at the rate used for purposes of section 3902(a)

2 of title 31, United States Code (relating to interest pen3 alties for failure to make prompt payments) for the period

4 beginning on the day after such 5-day period and ending

5 on the date on which payment is made.’’.

6 (f) CONFORMING AMENDMENTS.—

7 (1) The first sentence of section 1866(a)(2)(A)

8 (42 U.S.C. 1395cc(a)(2)(A)) is amended by insert9 ing ‘‘1834(e),’’ after ‘‘1833(b),’’.

10 (2) Section 1903(i)(5) (42 U.S.C. 1396b(i)(5))

11 is amended by striking ‘‘section 1862(c)’’ and insert12 ing ‘‘section 1862(c)(1)’’.

13 (g) PRESCRIPTION DRUG PAYMENT REVIEW COM14 MISSION.—Part B is amended by inserting after section

15 1844 the following:

16 ‘‘PRESCRIPTION DRUG PAYMENT REVIEW COMMISSION

17 ‘‘SEC. 1845. (a) ESTABLISHMENT.—

18 ‘‘(1) IN GENERAL.—The Director of the Con19 gressional Office of Technology Assessment (in this

20 section referred to as the ‘Director’ and the ‘Office’,

21 respectively) shall provide for the appointment of a

22 Prescription Drug Payment Review Commission (in

23 this section referred to as the ‘Commission’), to be

24 composed of individuals with expertise in the provi25 sion and financing of covered outpatient drugs ap26 pointed by the Director (without regard to the provi-
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1 sions of title 5, United States Code, governing ap2 pointments in the competitive service).

3 ‘‘(2) MEMBERSHIP AND TERMS.—The Commis4 sion shall consist of 11 individuals. Members of the

5 Commission shall first be appointed by not later

6 than January 1, 2000, for a term of 3 years, except

7 that the Director may provide initially for such

8 shorter terms as will ensure that (on a continuing

9 basis) the terms of not more than 4 members expire

10 in any 1 year.

11 ‘‘(3) QUALIFICATIONS.—The membership of the

12 Commission shall include—

13 ‘‘(A) recognized experts in the fields of

14 health care economics, medicine, pharmacology,

15 pharmacy, and prescription drug reimburse16 ment;

17 ‘‘(B) representatives of the prescription

18 drug manufacturing industry; and

19 ‘‘(C) at least 1 individual who is a bene20 ficiary under this title.

21 ‘‘(b) REPORTS.—

22 ‘‘(1) IN GENERAL.—Not later than May 1 of

23 each year (beginning in 2001), the Commission shall

24 submit an annual report to Congress concerning
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1 methods of determining payment for covered out2 patient drugs under this part.

3 ‘‘(2) CONTENTS.—Beginning with the annual

4 report required to be submitted in 2002, such report

5 shall include, with respect to the previous year, in6 formation on—

7 ‘‘(A) increases in manufacturers’ prices for

8 covered outpatient drugs and in charges of

9 pharmacists for covered outpatient drugs;

10 ‘‘(B) the level of utilization of covered out11 patient drugs by medicare beneficiaries; and

12 ‘‘(C) administrative costs relating to cov13 ered outpatient drugs.

14 ‘‘(c) APPLICATION OF MEDPAC PROVISIONS.—The

15 following provisions of section 1805 shall apply to the

16 Commission in the same manner as they apply to the

17 Medicare Payment Advisory Commission:

18 ‘‘(1) Subsection (c)(4) (relating to compensa19 tion of members).

20 ‘‘(2) Subsection (d) (relating to staffing and ad21 ministration).

22 ‘‘(3) Subsection (e) (relating to powers of the

23 Commission generally).

24 ‘‘(4) Subsection (f)(1) (relating to requests for

25 appropriations).
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1 ‘‘(d) FUNDING.—The Secretary shall provide to the

2 Commission, from amounts appropriated to the Depart3 ment of Health and Human Services, such sums as may

4 be necessary to carry out the provisions of this section.

5 Such sums shall not be payable from amounts appro6 priated to the Federal Hospital Insurance Trust Fund or

7 the Federal Supplementary Medical Insurance Trust

8 Fund.’’.

9 (h) DEVELOPMENT OF STANDARD MEDICARE

10 CLAIMS FORM.—

11 (1) IN GENERAL.—The Secretary of Health and

12 Human Services shall develop, in consultation with

13 representatives of pharmacies and other interested

14 individuals, a 1-page standard claims form (and a

15 standard electronic claims format) to be used in re16 quests for payment for covered outpatient drugs

17 under the medicare program and other third-party

18 payors.

19 (2) DISTRIBUTION.—Not later than October 1,

20 2000, the Secretary of Health and Human Services

21 shall distribute official sample copies of the form

22 and format developed under paragraph (1) to phar23 macies and other interested parties.

24 (i) EFFECTIVE DATES.—
26

•S 1535 IS

1 (1) IN GENERAL.—Except as otherwise pro2 vided, the amendments made by this section shall

3 apply to items dispensed on or after January 1,

4 2001.

5 (2) CARRIERS.—The amendments made by sub6 section (e) shall take effect on the date of enactment

7 of this Act, except that the amendments made by

8 subsection (e)(5) shall take effect on January 1,

9 2002, but shall not be construed as requiring pay10 ment before February 1, 2002.

Æ