I

104TH CONGRESS

2D SESSION H. R. 3991

To assure equitable treatment in health care coverage of prescription drugs.

IN THE HOUSE OF REPRESENTATIVES

AUGUST 2, 1996

Mrs. LOWEY introduced the following bill; which was referred to the Committee on Commerce, and in addition to the Committees on Ways and

Means, and Economic and Educational Opportunities, 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 assure equitable treatment in health care coverage of

prescription drugs.

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 ‘‘Prescription Drug

5 Benefit Equity Act of 1996’’.

6 SEC. 2. EQUITY IN PROVISION OF PRESCRIPTION DRUG

7 COVERAGE.

8 (a) IN GENERAL.—No health plan (as defined in sec9 tion 5(1)) may provide for mail-order prescription drug
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1 coverage (as defined in section 5(2)) unless the plan also

2 provides non-mail-order prescription drug coverage con3 sistent with subsection (b).

4 (b) EQUITABLE COVERAGE.—A health plan provides

5 non-mail-order prescription drug coverage consistent with

6 this subsection only if—

7 (1) benefits under the non-mail-order prescrip8 tion coverage are provided for in the case of all

9 drugs and all circumstances under which benefits

10 are provided under the mail-order prescription drug

11 coverage;

12 (2) no deductible or similar cost-sharing is im13 posed with respect to benefits under the non-mail14 order prescription drug coverage unless such a de15 ductible or similar cost-sharing is imposed with re16 spect to benefits under the mail-order prescription

17 drug coverage; and

18 (3) the benefits for the non-mail-order coverage

19 assures payments consistent with either (or both) of

20 the following subparagraphs:

21 (A) The dollar amount of payment for pre22 scription drug coverage is not less than the dol23 lar amount of benefits provided with respect to

24 the mail-order coverage for that same coverage.
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1 (B) The cost-sharing (including

2 deductibles, copayments, or coinsurance) im3 posed with respect to non-mail-order coverage

4 that is not greater (as a percentage of charges

5 or dollar amount, as specified under the cov6 erage) than the cost-sharing imposed with re7 spect to the mail-order coverage.

8 (c) APPLICATION TO ORGANIZATIONS AND INSUR9 ERS.—A requirement imposed under this section on a

10 health plan offered by a health maintenance organization

11 or insurer shall be deemed to be a requirement imposed

12 on the organization or insurer.

13 SEC. 3. ENFORCEMENT.

14 (a) HEALTH PLAN ISSUED BY HMOS AND INSUR15 ERS.—

16 (1) IN GENERAL.—Each State shall require

17 that each health plan issued, sold, renewed, offered

18 for sale or operated in such State by a health main19 tenance organization meet the requirements of sec20 tion 2 pursuant to an enforcement plan filed by the

21 State with the Secretary of Health and Human

22 Services. A State shall submit such information as

23 required by such Secretary demonstrating effective

24 implementation of the State enforcement plan.
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1 (2) FAILURE TO IMPLEMENT PLAN.—In the

2 case of the failure of a State to substantially enforce

3 the requirements of section 2 with respect to health

4 plans as provided for under the State enforcement

5 plan filed under paragraph (1), the Secretary of

6 Health and Human Services shall implement an en7 forcement plan to enforce such requirements for or8 ganizations and insurers in such State. In the case

9 of a State that fails to substantially enforce such re10 quirements, each health maintenance organization

11 and insurer operating in such State shall be subject

12 to civil enforcement as provided for under sections

13 502, 504, 506, and 510 of the Employee Retirement

14 Income Security Act of 1974 (29 U.S.C. 1132,

15 1134, 1136, and 1140) through the Secretary of

16 Health and Human Services. The civil penalties con17 tained in paragraphs (1) and (2) of section 502(c)

18 of such Act (29 U.S.C. 1132(c) (1) and (2)) shall

19 apply to any information required by such Secretary

20 to be disclosed and reported under this subsection.

21 (b) EMPLOYEE HEALTH BENEFIT PLANS.—With re22 spect to employee health benefit plans, the Secretary of

23 Labor shall enforce the requirements of section 2 in the

24 same manner as provided for under sections 502, 504,

25 506, and 510 of the Employee Retirement Income Secu-
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1 rity Act of 1974 (29 U.S.C. 1132, 1134, 1136, and 1140).

2 The civil penalties contained in paragraphs (1) and (2)

3 of section 502(c) of such Act (29 U.S.C. 1132(c) (1) and

4 (2)) shall apply to any information required by such Sec5 retary to be disclosed and reported under this subsection.

6 (c) MEDICAID.—With respect to a health plan de7 scribed in section 5(1)(C), the requirements of section 2

8 shall be treated as requirements of a State plan under title

9 XIX of the Social Security Act.

10 (d) FEHBP.—With respect to a health plan de11 scribed in section 5(1)(E), the requirements of section 2

12 shall be treated as a condition for contracting with the

13 plan under chapter 89 of title 5, United States Code.

14 (e) MEDICARE HMOS.—With respect to a health

15 plan described in section 5(1)(F), the requirements of sec16 tion 2 shall be treated as requirements of a State plan

17 under section 1876 of the Social Security Act.

18 (f) REGULATIONS.—The Secretaries of Labor and

19 Health and Human Services and the Director of the Office

20 of Personnel Management may promulgate such regula21 tions as may be necessary or appropriate to carry out this

22 Act.

23 (g) TECHNICAL AMENDMENT.—Section 508 of the

24 Employee Retirement Income Security Act of 1974 (29

25 U.S.C. 1138) is amended by inserting ‘‘and under the Pre-
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1 scription Drug Benefit Equity Act of 1996’’ before the

2 period.

3 SEC. 4. CONSTRUCTION; PREEMPTION.

4 (a) IN GENERAL.—Nothing in this Act shall be con5 strued as preventing a health plan from—

6 (1) restricting the drugs for which benefits are

7 provided under the plan, or

8 (2) imposing a limitation on the amount of ben9 efits provided with respect to such coverage or the

10 cost-sharing that may be imposed with respect to

11 such coverage,

12 so long as such restrictions and limitations are consistent

13 with this Act.

14 (b) PREEMPTION OF STATE LAW.—

15 (1) IN GENERAL.—Subject to paragraph (2),

16 nothing in this Act shall be construed to prevent a

17 State from establishing, implementing, or continuing

18 in effect standards and requirements—

19 (A) not prescribed in this Act; or

20 (B) related to the provision of prescription

21 drug coverage that are consistent with, and are

22 not in direct conflict with, this Act and provide

23 greater protection or benefit to participants,

24 beneficiaries, or individuals.
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1 (2) RULE OF CONSTRUCTION.—Nothing in

2 paragraph (1) shall be construed to affect or modify

3 the provisions of section 514 of the Employee Re4 tirement Income Security Act of 1974 (29 U.S.C.

5 1144).

6 SEC. 5. DEFINITIONS.

7 In this Act:

8 (1) HEALTH PLAN.—The term ‘‘health plan’’

9 means—

10 (A) an employee welfare benefit plan to the

11 extent that the plan provides medical care to

12 employees or their dependents (as defined

13 under the terms of the plan) directly or through

14 insurance, reimbursement, or otherwise, and in15 cludes a group health plan (within the meaning

16 of section 5000(b)(1) of the Internal Revenue

17 Code of 1986);

18 (B) benefits consisting of medical care

19 (provided directly, through insurance or reim20 bursement, or otherwise and whether or not

21 provided to a group, association, or individual)

22 under any hospital or medical service policy or

23 certificate, hospital or medical service plan con24 tract, or health maintenance organization group
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1 contract offered by an insurer or a health main2 tenance organization;

3 (C) a State medical assistance plan under

4 title XIX of the Social Security Act;

5 (D) a medicare supplemental policy under

6 section 1882 of the Social Security Act;

7 (E) a health plan under chapter 89 of title

8 5, United States Code; and

9 (F) benefits provided under a risk-sharing

10 contract under section 1876 of the Social Secu11 rity Act.

12 (2) MAIL-ORDER PRESCRIPTION DRUG COV13 ERAGE.—The term ‘‘mail-order prescription drug

14 coverage’’ means provision of benefits for prescrip15 tion drugs and biologicals that are delivered directly

16 to beneficiaries through the mail or similar means.

17 (3) NON-MAIL-ORDER PRESCRIPTION DRUG

18 COVERAGE.—The term ‘‘non-mail-order prescription

19 drug coverage’’ means the provision of benefits for

20 prescription drugs and biologicals through one or

21 more local pharmacies.

22 (4) LOCAL PHARMACY.—The term ‘‘local phar23 macy’’ means, with respect to a prescription drug or

24 biological and a beneficiary, an establishment that is

25 authorized to dispense such drug or biological and
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1 that is located within such distance (not to exceed

2 5 miles in the case of a beneficiary residing in an

3 urban area or 10 miles in the case of a beneficiary

4 residing in a non-urban area) of the residence of

5 such beneficiary, as the Secretary of Health and

6 Human Services shall prescribe.

7 (5) EMPLOYEE HEALTH BENEFIT PLAN.—The

8 term ‘‘employee health benefit plan’’ means any em9 ployee welfare benefit plan, governmental plan, or

10 church plan (as defined under paragraphs (1), (32),

11 and (33) of section 3 of the Employee Retirement

12 Income Security Act of 1974 (29 U.S.C. 1002 (1),

13 (32), and (33))), that provides or pays for health

14 benefits (such as provider and hospital benefits) for

15 participants and beneficiaries (as defined in such

16 section) whether—

17 (A) directly;

18 (B) through a health plan offered by a

19 health maintenance organization or insurer; or

20 (C) otherwise.

21 Such term includes any health benefit plan under

22 section 5(e) of the Peace Corps Act (22 U.S.C.

23 2504(e)).
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1 (6) HEALTH MAINTENANCE ORGANIZATION;

2 HMO.—The terms ‘‘health maintenance organiza3 tion’’ and ‘‘HMO’’ mean—

4 (A) a federally qualified health mainte5 nance organization (as defined in section

6 1301(a) of the Public Health Service Act (42

7 U.S.C. 300e(a))),

8 (B) an organization recognized under State

9 law as a health maintenance organization, or

10 (C) a similar organization regulated under

11 State law for solvency in the same manner and

12 to the same extent as such a health mainte13 nance organization,

14 if it is subject to State law which regulates insur15 ance (within the meaning of section 514(b)(2) of the

16 Employee Retirement Income Security Act of 1974).

17 (7) INSURER.—The term ‘‘insurer’’ means an

18 insurance company, insurance service, or insurance

19 organization which is licensed to engage in the busi20 ness of insurance in a State and which is subject to

21 State law which regulates insurance (within the

22 meaning of section 514(b)(2)(A) of the Employee

23 Retirement Income Security Act of 1974).

24 (8) STATE.—The term ‘‘State’’ means each of

25 the several States, the District of Columbia, Puerto
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1 Rico, the United States Virgin Islands, Guam,

2 American Samoa, and the Commonwealth of the

3 Northern Mariana Islands.

4 SEC. 6. EFFECTIVE DATE.

5 This Act shall apply to coverage provided under—

6 (1) health plans described in section 5(1)(A),

7 for plan years beginning more than 6 months after

8 the date of the enactment of this Act, or

9 (2) other health plans, for contract years begin10 ning more than 6 months after the date of the en11 actment of this Act.

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