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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1725 Introduced in Senate (IS)]

106th CONGRESS
  1st Session
                                S. 1725

 To amend title XVIII of the Social Security Act to modernize medicare 
    supplemental policies so that outpatient prescription drugs are 
         affordable and accessible for medicare beneficiaries.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            October 14, 1999

 Mr. Jeffords 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 modernize medicare 
    supplemental policies so that outpatient prescription drugs are 
         affordable and accessible for medicare beneficiaries.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``DrugGap Insurance 
for Seniors Act of 1999''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Modernization of medicare supplemental benefit packages.
Sec. 4. Assistance to qualified low-income medicare beneficiaries.
Sec. 5. Grandfathering of current Medigap enrollees.
Sec. 6. Health insurance information, counseling, and assistance 
                            grants.
Sec. 7. NAIC study and report.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--Congress finds the following:
            (1) Coverage of outpatient prescription drugs is the most 
        important aspect of medical care not currently provided under 
        the medicare program under title XVIII of the Social Security 
        Act.
            (2) The medicare program needs to be reformed, and should 
        include provisions that provide access to outpatient 
        prescription drugs for all medicare beneficiaries.
            (3) Comprehensive medicare reform will require extensive 
        time and effort, but Congress must act now to provide 
        outpatient prescription drug coverage to the most vulnerable 
        medicare beneficiaries until such time as the medicare program 
        is reformed.
            (4) Low-income medicare beneficiaries are the most 
        vulnerable to the high cost of outpatient prescription drugs, 
        since they are often not eligible to receive benefits under 
        medicaid, yet have incomes too low to afford medicare 
        supplemental policies that include coverage for outpatient 
        prescription drugs.
            (5) Medicare beneficiaries deserve meaningful choices among 
        medicare supplemental policies, including the option of 
        purchasing affordable outpatient prescription drug-only 
        medicare supplemental policies.
            (6) Premiums for medicare supplemental policies have risen 
        dramatically in recent years, and steps must be taken to keep 
        premiums from rising out of the reach of medicare 
        beneficiaries.
            (7) Increased use of medicare supplemental policies does 
        not represent sufficient structural medicare reform.
    (b) Purposes.--The purposes of this Act are as follows:
            (1) To provide medicare supplemental policies covering 
        outpatient prescription drugs to low-income medicare 
        beneficiaries at no cost.
            (2) To provide expanded choice to all medicare 
        beneficiaries by creating affordable drug-only medicare 
        supplemental policies.
            (3) To ensure that medicare supplemental policies are 
        modernized in a manner that promotes competition and preserves 
        affordability for all medicare beneficiaries.

SEC. 3. MODERNIZATION OF MEDICARE SUPPLEMENTAL BENEFIT PACKAGES.

    (a) Addition of DrugGap Policies and Modification of Existing 
Medigap Policies.--Section 1882 of the Social Security Act (42 U.S.C. 
1395ss) is amended by adding at the end the following:
    ``(v) Modernized Benefit Packages for Medicare Supplemental 
Policies.--
            ``(1) Promulgation of model regulation.--
                    ``(A) NAIC model regulation.--If, within 9 months 
                after the date of enactment of the DrugGap Insurance 
                for Seniors Act of 1999, the National Association of 
                Insurance Commissioners (in this subsection referred to 
                as the ``NAIC'') changes the 1991 NAIC Model Regulation 
                (described in subsection (p)) to incorporate--
                            ``(i) limitations on the benefit packages 
                        that may be offered under a medicare 
                        supplemental policy consistent with paragraphs 
                        (2) and (3) of this subsection;
                            ``(ii) an appropriate range of coverage 
                        options for outpatient prescription drugs, 
                        including at least a minimal level of coverage 
                        under each benefit package;
                            ``(iii) a deductible for outpatient 
                        prescription drugs that is uniform across each 
                        benefit package;
                            ``(iv) uniform language and definitions to 
                        be used with respect to such benefits;
                            ``(v) uniform format to be used in the 
                        policy with respect to such benefits; and
                            ``(vi) other standards to meet the 
                        additional requirements imposed by the 
                        amendments made by the DrugGap Insurance for 
                        Seniors Act of 1999;
                subsection (g)(2)(A) shall be applied in each State, 
                effective for policies issued to policy holders on and 
                after the date specified in subparagraph (C), as if the 
                reference to the Model Regulation adopted on June 6, 
                1979, were a reference to the 1991 NAIC Model 
                Regulation as changed under this subparagraph (such 
                changed regulation referred to in this section as the 
                `2000 NAIC Model Regulation').
                    ``(B) Regulation by the secretary.--If the NAIC 
                does not make the changes in the 1991 NAIC Model 
                Regulation within the 9-month period specified in 
                subparagraph (A), the Secretary shall promulgate, not 
                later than 9 months after the end of such period, a 
                regulation and subsection (g)(2)(A) shall be applied in 
                each State, effective for policies issued to policy 
                holders on and after the date specified in subparagraph 
                (C), as if the reference to the Model Regulation 
                adopted on June 6, 1979, were a reference to the 1991 
                NAIC Model Regulation as changed by the Secretary under 
                this subparagraph (such changed regulation referred to 
                in this section as the `2000 Federal Regulation').
                    ``(C) Date specified.--
                            ``(i) In general.--Subject to clause (ii), 
                        the date specified in this subparagraph for a 
                        State is the date the State adopts the 2000 
                        NAIC Model Regulation or 2000 Federal 
                        Regulation or 1 year after the date the NAIC or 
                        the Secretary first adopts such standards, 
                        whichever is earlier.
                            ``(ii) States requiring revisions to state 
                        law.--In the case of a State which the 
                        Secretary identifies, in consultation with the 
                        NAIC, as--
                                    ``(I) requiring State legislation 
                                (other than legislation appropriating 
                                funds) in order for medicare 
                                supplemental policies to meet the 2000 
                                NAIC Model Regulation or 2000 Federal 
                                Regulation; but
                                    ``(II) having a legislature which 
                                is not scheduled to meet in 2001 in a 
                                legislative session in which such 
                                legislation may be considered;
                        the date specified in this subparagraph is the 
                        first day of the first calendar quarter 
                        beginning after the close of the first 
                        legislative session of the State legislature 
                        that begins on or after January 1, 2000. For 
                        purposes of the previous sentence, in the case 
                        of a State that has a 2-year legislative 
                        session, each year of such session shall be 
                        deemed to be a separate regular session of the 
                        State legislature.
                    ``(D) Consultation with working group.--In 
                promulgating standards under this paragraph, the NAIC 
                or Secretary shall consult with a working group 
                composed of representatives of issuers of medicare 
                supplemental policies, consumer groups, medicare 
                beneficiaries, and other qualified individuals. Such 
                representatives shall be selected in a manner so as to 
                assure balanced representation among the interested 
                groups.
                    ``(E) Modification of standards if medicare 
                benefits change.--If benefits (including deductibles 
                and coinsurance) under this title are changed and the 
                Secretary determines, in consultation with the NAIC, 
                that changes in the 2000 NAIC Model Regulation or 2000 
                Federal Regulation are needed to reflect such changes, 
                the preceding provisions of this paragraph shall apply 
                to the modification of standards previously established 
                in the same manner as they applied to the original 
                establishment of such standards.
            ``(2) Core group of benefits and number of benefit 
        packages.--The benefits under the 2000 NAIC Model Regulation or 
        2000 Federal Regulation shall provide--
                    ``(A) for such groups or packages of benefits as 
                may be appropriate taking into account the 
                considerations specified in paragraph (3) and the 
                requirements of the succeeding subparagraphs;
                    ``(B) for identification of a core group of basic 
                benefits common to all policies other than the medicare 
supplemental policies described in paragraph (12)(B); and
                    ``(C) that, subject to paragraph (4)(B), the total 
                number of different benefit packages (counting the core 
                group of basic benefits described in subparagraph (B) 
                and each other combination of benefits that may be 
                offered as a separate benefit package) that may be 
                established in all the States and by all issuers shall 
                not exceed 10 plus the 2 benefit packages described in 
                paragraph (11) and the 3 policies described in 
                paragraph (12)(B).
            ``(3) Balance of objectives.--The benefits under paragraph 
        (2) shall, to the extent possible, balance the objectives of--
                    ``(A) ensuring that medicare supplemental policies 
                are affordable for beneficiaries under this title, and 
                that the policies modernized under this subsection do 
                not have premiums higher than the medicare supplemental 
                policies available on the date of enactment of the 
                DrugGap Insurance for Seniors Act of 1999;
                    ``(B) facilitating comparisons among policies;
                    ``(C) avoiding adverse selection;
                    ``(D) providing consumer choice;
                    ``(E) providing market stability;
                    ``(F) promoting competition;
                    ``(G) including some drug coverage, however 
                limited, in each of the 10 benefit packages described 
                in paragraph (2)(C); and
                    ``(H) ensuring that beneficiaries under this title 
                receive the benefit of prices for outpatient 
                prescription drugs negotiated by issuers of medicare 
                supplemental policies under this section.
            ``(4) States may offer new or innovative supplemental 
        benefits.--
                    ``(A) Compliance with applicable 2000 naic model 
                regulation or 2000 federal regulation required.--
                            ``(i) States.--Except as provided in 
                        subparagraph (B) or paragraph (6), no State 
                        with a regulatory program approved under 
                        subsection (b)(1) may provide for or permit the 
                        grouping of benefits (or language or format 
                        with respect to such benefits) under a medicare 
                        supplemental policy unless such grouping meets 
                        the applicable 2000 NAIC Model Regulation or 
                        2000 Federal Regulation.
                            ``(ii) Federal government.--Except as 
                        provided in subparagraph (B), the Secretary may 
                        not provide for or permit the grouping of 
                        benefits (or language or format with respect to 
                        such benefits) under a medicare supplemental 
                        policy seeking approval by the Secretary unless 
                        such grouping meets the applicable 2000 NAIC 
                        Model Regulation or 2000 Federal Regulation.
                    ``(B) Additional benefits.--The issuer of a 
                medicare supplemental policy may offer the benefits 
                described in subsection (p)(3)(B) under the 
                circumstances described in such subsection as if each 
                reference to `1991' were a reference to `2000'.
            ``(5) States may not restrict core benefits.--
                    ``(A) Medicare supplemental policies subject to 
                state regulation.--Except as provided in subparagraph 
                (B), this subsection shall not be construed as 
                preventing a State from restricting the groups of 
                benefits that may be offered in medicare supplemental 
                policies in the State.
                    ``(B) Must make core benefits available.--A State 
                with a regulatory program approved under subsection 
                (b)(1) may not restrict under subparagraph (A) the 
                offering of a medicare supplemental policy consisting 
                only of the core group of benefits described in 
                paragraph (2)(B).
            ``(6) State alternative simplification programs.--The 
        Secretary may waive the application of standards described in 
        clauses (i) through (vi) of paragraph (1)(A) in those States 
        that on the date of enactment of the DrugGap Insurance for 
        Seniors Act of 1999 had in place an alternative simplification 
        program.
            ``(7) Discounts for items and services not covered under 
        medicare supplemental policies.--This subsection shall not be 
        construed as preventing an issuer of a medicare supplemental 
        policy who otherwise meets the requirements of this section 
        from providing, through an arrangement with a vendor, for 
        discounts from that vendor to policy holders or certificate 
        holders for the purchase of items or services not covered under 
        its medicare supplemental policies or under this title, 
        including the issuance of drug discount cards.
            ``(8) Civil penalty for violation of the model 
        regulation.--Except as provided in paragraph (10), any person 
        who sells or issues a medicare supplemental policy, on and 
        after the effective date specified in paragraph (1)(C), in 
        violation of the applicable 2000 NAIC Model Regulation or 2000 
        Federal Regulation insofar as such regulation relates to the 
        requirements of subsection (o) or (q) or clauses (i) through 
        (vi) of paragraph (1)(A) is subject to a civil money penalty of 
        not to exceed $25,000 (or $15,000 in the case of a seller who 
        is not an issuer of a policy) for each such violation. The 
        provisions of section 1128A (other than the first sentence of 
        subsection (a) and other than subsection (b)) shall apply to a 
        civil money penalty under the previous sentence in the same 
        manner as such provisions apply to a penalty or proceeding 
        under section 1128A(a).
            ``(9) Requirements of sellers.--
                    ``(A) Core benefit package.--Anyone who sells a 
                medicare supplemental policy to an individual shall 
                make available for sale to the individual a medicare 
                supplemental policy with only the core group of basic 
                benefits (described in paragraph (2)(B)).
                    ``(B) Outline of coverage.--Anyone who sells a 
                medicare supplemental policy to an individual shall 
                provide the individual, before the sale of the policy, 
                an outline of coverage which describes the benefits 
                under the policy. Such outline shall be on a standard 
                form approved by the State regulatory program or the 
                Secretary (as the case may be) consistent with the 2000 
                NAIC Model Regulation or 2000 Federal Regulation under 
                this subsection.
                    ``(C) Penalties.--Whoever sells a medicare 
                supplemental policy in violation of this paragraph is 
                subject to a civil money penalty of not to exceed 
                $25,000 (or $15,000 in the case of a seller who is not 
                the issuer of the policy) for each such violation. The 
                provisions of section 1128A (other than the first 
                sentence of subsection (a) and other than subsection 
                (b)) shall apply to a civil money penalty under the 
                previous sentence in the same manner as such provisions 
                apply to a penalty or proceeding under section 
                1128A(a).
                    ``(D) Effective date.--Subject to paragraph (10), 
                this paragraph shall apply to sales of policies 
                occurring on or after the effective date specified in 
                paragraph (1)(C).
            ``(10) Safe harbor for sellers.--No penalty may be imposed 
        under paragraph (8) or (9) in the case of a seller who is not 
        the issuer of a policy until the Secretary has published a list 
        of the groups of benefit packages that may be sold or issued 
        consistent with paragraph (1)(A)(i).
            ``(11) Addition of high deductible medicare supplemental 
        policies.--For purposes of paragraph (2), the benefit packages 
        described in this paragraph are the benefit packages modernized 
        under this subsection that the Secretary determines are most 
        comparable to the benefit packages described in subsection 
        (p)(11).
            ``(12) Druggap medicare supplemental policies.--
                    ``(A) Establishment of drug-only medicare 
                supplemental policies.--
                            ``(i) In general.--There are established 3 
                        benefit packages, consistent with the benefit 
                        packages described in subparagraph (B), that--
                                    ``(I) consist of only outpatient 
                                prescription drug benefits;
                                    ``(II) may be designed to 
                                incorporate the utilization management 
                                techniques described in subparagraph 
                                (C);
                                    ``(III) do not include benefits for 
                                prescription drugs otherwise available 
                                under part A or B; and
                                    ``(IV) do not include benefits for 
                                any prescription drug excluded by the 
                                State in which the medicare 
                                supplemental policy is issued or sold 
                                under section 1927(d).
                            ``(ii) Definition.--In this section, the 
                        term `DrugGap medicare supplemental policy' 
                        means a medicare supplemental policy (as 
                        defined in subsection (g)(1)) that has 1 of the 
                        benefit packages described in subparagraph (B).
                    ``(B) Benefit packages described.--The benefit 
                packages for DrugGap medicare supplemental policies 
                described in this paragraph are as follows:
                            ``(i) Standard druggap benefit packages.--
                                    ``(I) Standard druggap.--A Standard 
                                DrugGap medicare supplemental policy 
                                that provides a deductible not to 
                                exceed $250, coinsurance not to exceed 
                                20 percent, and a $5,000 maximum 
                                benefit.
                                    ``(II) Low-cost standard druggap.--
                                A Low-Cost Standard DrugGap medicare 
                                supplemental policy that provides a 
                                deductible not to exceed $750, 
                                coinsurance not to exceed 30 percent, 
                                and a $5,000 maximum benefit.
                            ``(ii) Stop-loss druggap benefit package.--
                        A Stop-Loss DrugGap medicare supplemental 
                        policy that provides a stop-loss coverage 
                        benefit that limits the application of any 
                        beneficiary cost-sharing during a year after 
                        the beneficiary incurs out-of-pocket covered 
                        expenditures in excess of $5,000, or, in the 
                        case that the beneficiary owns a DrugGap 
                        medicare supplemental policy described in 
                        clause (i), such beneficiary reaches the 
                        maximum benefit under such policy.
                            ``(iii) Maximum benefit defined.--In this 
                        paragraph, the term `maximum benefit' means the 
                        total amount paid for covered outpatient 
                        prescription drugs, including any amounts paid 
                        by the issuer of the DrugGap medicare 
                        supplemental policy and any cost-sharing paid 
                        by the policyholder.
                    ``(C) Use of utilization management techniques.--
                            ``(i) Formularies.--An issuer may use a 
                        formulary to contain costs under any benefit 
                        package established under subparagraph (A)(i) 
                        only if the issuer--
                                    ``(I) includes in the formulary at 
                                least 1 drug from each therapeutic 
                                class and provides at least 1 generic 
                                equivalent, if available; and
                                    ``(II) provides for coverage of 
                                otherwise covered nonformulary drugs 
                                when a nonformulary alternative is 
                                medically necessary and appropriate.
                            ``(ii) Other utilization management 
                        techniques.--Nothing in this part shall be 
                        construed as preventing an issuer offering 
                        DrugGap medicare supplemental policies from 
                        using reasonable utilization management 
                        techniques, including generic drug 
                        substitution, consistent with applicable 
                        law.''.
    (b) DrugGap Medigap Policies Do Not Duplicate Other Medigap 
Policies.--Section 1882(d)(3) of the Social Security Act (42 U.S.C. 
1395ss(d)(3)) is amended--
            (1) in subparagraph (A), by adding at the end the 
        following:
    ``(ix) Nothing in this subparagraph shall be construed as 
preventing the sale of a DrugGap policy to an individual, provided that 
the sale is of a DrugGap policy that does not duplicate any health 
benefits under a medicare supplemental policy owned by the 
individual.'';
            (2) in subparagraph (B)(ii)(I), by inserting ``and one 
        DrugGap medicare supplemental policy'' before the comma; and
            (3) in subparagraph (B)(iii)--
                    (A) in subclause (I), by striking ``(II) and 
                (III)'' and inserting ``(II), (III), and (IV)'';
                    (B) by redesignating subclause (III) as subclause 
                (IV); and
                    (C) by inserting after subclause (II) the 
                following:
    ``(III) If the statement required by clause (i) is obtained and 
indicates that the individual is enrolled in 1 or more medicare 
supplemental policies, the sale of a DrugGap policy is not in violation 
of clause (i) if such DrugGap policy does not duplicate health benefits 
under any policy in which the individual is enrolled.''.
    (c) Enrollment in Case of Involuntary Terminations of Coverage.--
Section 1882(s)(3)(C)(i) of the Social Security Act (42 U.S.C. 
1395ss(s)(3)(C)(i)) is amended by striking ``under subsection (p)(2)'' 
and inserting ``under subsection (v)(2), a Standard DrugGap medicare 
supplemental policy under the standards established under subsection 
(v)(12)(B)(i), and a Stop-Loss DrugGap medicare supplemental policy 
under the standards established under subsection (v)(12)(B)(ii)''.
    (d) Special Enrollment Period.--Section 1882(n) of the Social 
Security Act (42 U.S.C. 1395ss(n)) is amended by adding at the end the 
following:
    ``(7)(A) No medicare supplemental policy of the issuer shall be 
deemed to meet the standards in subsection (c) unless the issuer--
            ``(i) provides written notice, within a 60-day period 
        specified in the modernization of the medicare supplemental 
policies under subsection (v), to the policyholder or certificate 
holder (at the most recent available address) of the offer described in 
clause (ii); and
            ``(ii) offers the individual under the terms described in 
        subparagraph (B), during a period of 180 days beginning on the 
        date specified in subparagraph (C), institution of coverage 
        effective as of the date specified in the modernization 
        described in clause (i) for such purpose, for any policy 
        described under subsection (v).
    ``(B) The terms described under this subparagraph are terms which 
do not--
            ``(i) deny or condition the issuance or effectiveness of a 
        medicare supplemental policy described in subparagraph (A)(ii) 
        that is offered and is available for issuance to new enrollees 
        by such issuer;
            ``(ii) discriminate in the pricing of such policy, because 
        of health status, claims experience, receipt of health care, or 
        medical condition; or
            ``(iii) impose an exclusion of benefits based on a 
        preexisting condition under such policy.
    ``(C) The date specified in this subparagraph for a policy issued 
in a State is such date as the Secretary, in consultation with the 
NAIC, specifies (taking into account the method used under paragraph 
(4) for establishing a date under this subsection).''.
    (e) Conforming Amendments.--Section 1882 of the Social Security Act 
(42 U.S.C. 1395ss) is amended--
            (1) in subsection (a)(2)--
                    (A) in the matter preceding subparagraph (A), by 
                striking ``(p)'' and inserting ``(v)'';
                    (B) in subparagraph (A)--
                            (i) by striking ``1991'' each place it 
                        appears and inserting ``2000''; and
                            (ii) by striking ``(p)'' and inserting 
                        ``(v)''; and
                    (C) in the matter following subparagraph (B), by 
                striking ``(p)'' and inserting ``(v)'';
            (2) in subsection (o)--
                    (A) in paragraph (1), by striking ``(p)'' and 
                inserting ``(v)''; and
                    (B) in paragraph (2), by striking ``(p)'' and 
                inserting ``(v)''; and
            (3) in subsection (r)--
                    (A) in paragraph (1)--
                            (i) in the matter preceding subparagraph 
                        (A), by striking ``(p)'' and inserting ``(v)''; 
                        and
                            (ii) in the matter following subparagraph 
                        (B), by striking ``(p)'' and inserting ``(v)''; 
                        and
                    (B) in paragraph (2)(A)--
                            (i) by striking ``(p)'' and inserting 
                        ``(v)''; and
                            (ii) by striking ``the date specified in 
                        section 171(m)(4) of the Social Security Act 
                        Amendments of 1994'' and inserting ``the date 
                        of enactment of the DrugGap Insurance for 
                        Seniors Act of 1999''.

SEC. 4. ASSISTANCE TO QUALIFIED LOW-INCOME MEDICARE BENEFICIARIES.

    (a) In General.--Part B of title XVIII of the Social Security Act 
(42 U.S.C. 1395j et seq.) is amended by adding at the end the 
following:

``SEC. 1849. ASSISTANCE TO QUALIFIED LOW-INCOME MEDICARE BENEFICIARIES.

    ``(a) Qualified Low-Income Medicare Beneficiary Defined.--For 
purposes of this part, the term `qualified low-income medicare 
beneficiary' means an individual--
            ``(1) who is--
                    ``(A) entitled to benefits under part A;
                    ``(B) enrolled under this part; and
                    ``(C) who does not have coverage for outpatient 
                prescription drugs through enrollment in a 
                Medicare+Choice plan offered by a Medicare+Choice 
                organization under part C or in a group health plan;
            ``(2) who would be eligible for medical assistance under 
        title XIX but for the fact that the individual's income exceeds 
        the income level (expressed as a percentage of the poverty 
        line) established by the State for eligibility for medical 
        assistance under such title, including at least the care and 
        services listed in paragraphs (1) through (5), (17), and (21) 
        of section 1905(a), but does not exceed the lesser of--
                    ``(A) 50 percentage points above such income level; 
                or
                    ``(B) 200 percent of the poverty line; and
            ``(3) who is enrolled in--
                    ``(A) a Standard DrugGap medicare supplemental 
                policy and a Stop-Loss DrugGap medicare supplemental 
                policy as such policies are described in clauses (i)(I) 
                and (ii) of section 1882(v)(12)(B), respectively; or
                    ``(B) a Low-Cost Standard DrugGap medicare 
                supplemental policy and a Stop-Loss DrugGap medicare 
supplemental policy as such policies are described in clauses (i)(II) 
and (ii) of section 1882(v)(12)(B), respectively.
    ``(b) Program Administered by the States.--
            ``(1) In general.--The Secretary shall establish an 
        arrangement with each State (as defined under section 1861(x)) 
        under which the State performs the functions described in 
        paragraphs (2) through (4).
            ``(2) Annual eligibility.--The State shall determine 
        whether a beneficiary under this title in the State is a 
        qualified low-income medicare beneficiary. A determination that 
        such an individual is a qualified low-income medicare 
        beneficiary shall remain valid for a period of 12 months but is 
        conditioned upon continuing enrollment in medicare supplemental 
        policies described in subsection (a)(4).
            ``(3) Computation of state weighted average premium for 
        standard druggap and stop-loss druggap medicare supplemental 
        policies.--For each year, the State shall compute a State 
        weighted average premium equal to the weighted average of the 
        premiums for medicare supplemental policies described in clause 
        (i)(I) of section 1882(v)(12)(B) and the medicare supplemental 
        policies described in clause (ii) of such section for the 
        State, with the weight for each medicare supplemental policy 
        being equal to the average number of beneficiaries under this 
        title enrolled under such policy in the previous year. In the 
        initial year that such medicare supplemental policies are 
        available, the State shall estimate the State weighted average 
        premium for each type of policy.
            ``(4) Payment by states on behalf of qualified low-income 
        medicare beneficiaries.--The State shall provide for payment to 
        the appropriate entity on behalf of a qualified low-income 
        medicare beneficiary for a year in an amount equal to--
                    ``(A) for the medicare supplemental policy 
                described under clause (i) of section 1882(v)(12)(B) in 
                which such beneficiary is enrolled, the lesser of--
                            ``(i) the amount of the State weighted 
                        average premium (as computed under paragraph 
                        (3)) for the policies described under subclause 
                        (I) of such clause; or
                            ``(ii) the full quoted premium for the 
                        policy;
                    ``(B) for the medicare supplemental policy 
                described under clause (ii) of section 1882(v)(12)(B) 
                in which such beneficiary is enrolled, the lesser of--
                            ``(i) the amount of the State weighted 
                        average premium (as computed under paragraph 
                        (3)) for the policies described under such 
                        clause; or
                            ``(ii) the full quoted premium for the 
                        policy; and
                    ``(C) such beneficiary out-of-pocket expenses 
                related to the supplemental benefits provided under the 
                policies described in subparagraphs (A) and (B) as the 
                State determines is appropriate.
    ``(c) Payments to States.--
            ``(1) Reimbursement from federal supplementary medical 
        insurance trust fund.--Each calendar quarter in a fiscal year, 
        the Secretary shall pay to each State from the Federal 
        Supplementary Medical Insurance Trust Fund under section 1841 
        an amount equal to the amount paid by the State under 
        subsection (b)(4).
            ``(2) Exclusion of additional part b costs from 
        determination of part b premium.--In estimating the benefits 
        and administrative costs that will be payable from the Federal 
        Supplementary Medical Insurance Trust Fund for a year for 
        purposes of determining the monthly premium rate under section 
        1839(a)(3), the Secretary shall exclude an estimate of any 
        benefits and administrative costs attributable to the 
        application of this section.
            ``(3) Construction relative to other benefits.--Nothing in 
        this section shall be construed as requiring a State, under its 
        plan under title XIX, to be responsible for any portion of the 
        subsidy or beneficiary cost-sharing provided under this section 
        to qualified low-income medicare beneficiaries.
    ``(d) Maintenance of State Effort Requirement.--In the case of any 
State in which the income level (expressed as a percentage of the 
poverty line) established by the State for eligibility for medical 
assistance under title XIX (that includes at least the care and 
services listed in paragraphs (1) through (5), (17), and (21) of 
section 1905(a)) is less than 150 percent of the poverty line 
applicable to a family of the size involved in a calendar quarter in a 
fiscal year--
            ``(1) no payment may be made to such State under section 
        1849(c) for a calendar quarter in a fiscal year unless the 
        State demonstrates to the satisfaction of the Secretary that 
the expenditures of the State for any State-funded prescription drug 
program for which individuals entitled to benefits under this section 
are eligible during the fiscal year is not less than the level of such 
expenditures for fiscal year 1999; and
            ``(2) payments shall not be made under this section for 
        coverage of prescription drugs to the extent that--
                    ``(A) payment is made under such a program; or
                    ``(B) the Secretary determines payment would be 
                made under such a program as in effect on the date of 
                enactment of the DrugGap Insurance for Seniors Act of 
                1999.
    ``(e) Poverty Line Defined.--The term `poverty line' has the 
meaning given such term in section 673(2) of the Community Services 
Block Grant Act (42 U.S.C. 9902(2)), including any revision required by 
such section.''.
    (b) Conforming Amendment.--Section 1839(a)(3) of the Social 
Security Act (42 U.S.C. 1395r(a)(3)), as amended by section 5101(e) of 
the Tax and Trade Relief Extension Act of 1998 (contained in division J 
of Public Law 105-277), is amended by striking ``except as provided in 
subsection (g)'' and inserting ``except as provided in subsection (g) 
or section 1849(d)''.

SEC. 5. GRANDFATHERING OF CURRENT MEDIGAP ENROLLEES.

    (a) In General.--The amendments made by this Act shall take effect 
on the date of enactment of this Act, and shall apply to medicare 
supplemental policies issued or sold after the date specified in 
subsection (b), but shall not apply to the renewal of medicare 
supplemental policies that are in existence on such date.
    (b) Date Specified.--The date specified in this subsection for each 
State is the date specified under section 1882(n)(7)(C) of the Social 
Security Act (42 U.S.C. 1395ss(n)(7)(C)) (as added by section 3(d) of 
this Act).

SEC. 6. HEALTH INSURANCE INFORMATION, COUNSELING, AND ASSISTANCE 
              GRANTS.

    (a) In General.--Section 4360(b)(2)(A)(ii) of the Omnibus Budget 
Reconciliation Act of 1990 (42 U.S.C. 1395b-4(b)(2)(A)(ii)) is amended 
by striking ``and information'' and inserting ``, providing specific 
information regarding any DrugGap benefit medicare supplemental policy 
described under section 1882(v) of the Social Security Act (42 U.S.C. 
1395ss(v)), and information''.
    (b) Authorization of Appropriations.--In addition to any amounts 
otherwise appropriated, there are authorized to be appropriated 
$50,000,000 for each fiscal year, beginning with the first year in 
which a DrugGap medicare supplemental policy described in section 
1882(v)(12) is available, for the purpose of carrying out the 
provisions of section 4360 of the Omnibus Budget Reconciliation Act of 
1990 (as amended by subsection (a)).

SEC. 7. NAIC STUDY AND REPORT.

    (a) Study.--The Secretary of Health and Human Services shall 
contract with the National Association of Insurance Commissioners 
(referred to in this section as the ``NAIC'') to conduct a study of 
medicare supplemental policies offered under section 1882 of the Social 
Security Act (42 U.S.C. 1395ss) in order to identify--
            (1) areas that are the cause of increasing medicare 
        supplemental insurance claims costs (such as outpatient 
        expenses) that affect the affordability of medicare 
        supplemental policies;
            (2) changes to Federal law (if any) required to address the 
        issues identified under paragraph (1) to make medicare 
        supplemental policies more affordable for beneficiaries under 
        the medicare program under title XVIII of the Social Security 
        Act (42 U.S.C. 1395 et seq.); and
            (3) methods of encouraging additional issuers to offer such 
        policies and to reduce the cost of premiums for such policies.
    (b) Report.--Not later than November 1, 2001, the NAIC shall submit 
a report to the Secretary of Health and Human Services on the study 
conducted under subsection (a) that contains a detailed statement of 
the findings and conclusions of the NAIC together with recommendations 
for such legislation and administrative actions as the NAIC considers 
appropriate.
    (c) Transmission to Congress.--Not later than January 1, 2002, the 
Secretary of Health and Human Services shall transmit the report 
submitted under subsection (b) to Congress together with 
recommendations for such legislation and administrative actions as the 
Secretary considers appropriate.
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