I

107TH CONGRESS

1ST SESSION H. R. 1905

To amend title XVIII of the Social Security Act to assure access of Medicare

beneficiaries to prescription drug coverage through the NICE drug benefit program.

IN THE HOUSE OF REPRESENTATIVES

MAY 17, 2001

Mr. MALONEY of Connecticut introduced the following bill; which was referred

to the Committee on Ways and Means, and in addition to the Committee

on Energy and 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 assure

access of Medicare beneficiaries to prescription drug coverage through the NICE drug benefit 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 ‘‘New Insurance Coverage Equity (NICE) Act of 2001’’.

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

7 this Act is as follows:

Sec. 1. Short title; table of contents.
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Sec. 2. NICE drug benefit program.

‘‘PART D—NICE DRUG BENEFIT PROGRAM

‘‘Sec. 1860A. Establishment of NICE drug benefit program.

‘‘Sec. 1860B. Requirements for offering NICE drug benefit coverage.

‘‘Sec. 1860C. Enrollment process for NICE drug benefit coverage.

‘‘Sec. 1860D. Financial assistance to obtain NICE prescription drug coverage

‘‘Sec. 1860E. NICE Board.

‘‘Sec. 1860F. NICE Trust Fund.

Sec. 3. Conforming changes to medigap.

Sec. 4. Provision of information on NICE drug benefit program under health

insurance information, counseling, and assistance grants.

1 SEC. 2. NICE DRUG BENEFIT PROGRAM.

2 Title XVIII of the Social Security Act (42 U.S.C.

3 1395 et seq.) is amended by redesignating part D as part

4 E and by inserting after part C the following new part:

5 ‘‘PART D—NICE DRUG BENEFIT PROGRAM

6 ‘‘ESTABLISHMENT OF NICE DRUG BENEFIT PROGRAM

7 ‘‘SEC. 1860A. (a) IN GENERAL.—Under this part,

8 the NICE Board (established under section 1860E) shall

9 provide for a NICE drug benefit program under which—

10 ‘‘(1) all eligible medicare beneficiaries shall be

11 provided access to NICE prescription drug coverage

12 (meeting the conditions of section 1860B) through

13 either enrollment in a Medicare+Choice plan, enroll14 ment in a NICE medicare supplemental policy, or

15 coverage under a group health plan; and

16 ‘‘(2) there is financial assistance provided under

17 section 1860D for beneficiaries who voluntarily ob18 tain such coverage, with such assistance varying de19 pending upon the income of such beneficiaries.
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1 ‘‘(b) VOLUNTARY NATURE OF PROGRAM FOR ENTI2 TIES AND BENEFICIARIES.—Nothing in this part shall be

3 construed as requiring—

4 ‘‘(1) an eligible medicare beneficiary to obtain

5 coverage under a plan or policy that provides NICE

6 prescription drug coverage;

7 ‘‘(2) a Medicare+Choice organization to offer a

8 Medicare+Choice plan that provides NICE prescrip9 tion drug coverage; or

10 ‘‘(3) an issuer of a medicare supplemental pol11 icy to issue a NICE medicare supplemental policy.

12 ‘‘(c) PROVIDING INFORMATION TO BENE13 FICIARIES.—

14 ‘‘(1) IN GENERAL.—The NICE Board shall

15 broadly disseminate information to eligible medicare

16 beneficiaries on the NICE drug benefit program

17 under this part, including information on the sanc18 tions for delayed enrollment under section 1860D(e).

19 ‘‘(2) SIMILAR TO MEDICARE+CHOICE ACTIVI20 TIES.—Such activities shall be similar to the activi21 ties performed under section 1851(d) (including the

22 approval of policy marketing materials).

23 ‘‘(3) ARRANGEMENTS.—The NICE Board shall,

24 in cooperation with the Secretary, enter into such

25 arrangements as may be appropriate to disseminate
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1 widely to eligible medicare beneficiaries information

2 about the NICE drug benefit program in connection

3 with materials distributed by the Secretary to medi4 care beneficiaries, including in the medicare hand5 book under section 1804 and in materials distrib6 uted under section 1851(d).

7 ‘‘(d) ELIGIBLE MEDICARE BENEFICIARY DE8 FINED.—For purposes of this part, the term ‘eligible

9 medicare beneficiary’ means an individual who is entitled

10 to benefits under part A and enrolled under part B.

11 ‘‘REQUIREMENTS FOR OFFERING NICE DRUG BENEFIT

12 COVERAGE

13 ‘‘SEC. 1860B. (a) REQUIREMENT FOR APPROVAL OF

14 NAIC MODEL REVISIONS.—

15 ‘‘(1) IN GENERAL.—

16 ‘‘(A) CONDITION FOR OFFERING NICE

17 MEDICARE SUPPLEMENTAL POLICY.—On or

18 after the effective date of this provision, it is

19 unlawful to issue or sell a medicare supple20 mental policy (as defined in section 1882(g))

21 that provides coverage of outpatient prescrip22 tion drugs in a State unless—

23 ‘‘(i) the State has adopted the Na24 tional Association of Insurance Commis25 sioners revisions under section
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1 1882(v)(1)(A) that have been approved by

2 the NICE Board under this section; and

3 ‘‘(ii) the coverage is offered consistent

4 with section 1860C.

5 The penalties described in clause (ii) of section

6 1882(d)(3)(A) shall apply to whoever violates

7 this subparagraph in the same manner as they

8 apply to whoever violates such section.

9 ‘‘(B) CONDITION FOR RECEIPT OF NICE

10 FINANCIAL ASSISTANCE.—No payment of finan11 cial assistance with respect to coverage of an el12 igible medicare beneficiary under NICE pre13 scription drug coverage which is offered either

14 as a NICE medicare supplemental policy, as

15 part of the benefits under a Medicare+Choice

16 plan, or as part of the benefits under a group

17 health plan, shall be made unless—

18 ‘‘(i) an application with respect to

19 such coverage has been approved by the

20 NICE Board under this section; and

21 ‘‘(ii) in the case of a NICE medicare

22 supplemental policy or a Medicare+Choice

23 plan, the coverage is offered consistent

24 with section 1860C.
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1 ‘‘(2) ESTABLISHMENT OF APPLICATION PROC2 ESS.—

3 ‘‘(A) IN GENERAL.—The NICE Board

4 shall establish—

5 ‘‘(i) procedures regarding the informa6 tion to be included in applications under

7 this section and for the time and manner

8 in which such applications should be sub9 mitted;

10 ‘‘(ii) conditions (consistent with this

11 part) for the approval of such applications;

12 and

13 ‘‘(iii) the period (in no case less than

14 1 year) for which approval of such an ap15 plication is valid.

16 ‘‘(B) DISAPPROVAL.—The NICE Board

17 may disapprove (or revoke the approval) of such

18 an application if the Board finds that, in the

19 case of a NICE medicare supplemental policy or

20 Medicare+Choice plan, that the entity offering

21 the NICE prescription drug coverage is pur22 posefully engaged in activities intended to result

23 in favorable selection of those eligible medicare

24 beneficiaries obtaining coverage through the

25 policy or plan.
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1 ‘‘(b) NICE PRESCRIPTION DRUG COVERAGE DE2 FINED.—For purposes of this title, the term ‘NICE pre3 scription drug coverage’ means coverage of outpatient pre4 scription drugs that the NICE Board determines meets

5 the following requirements:

6 ‘‘(1) BENEFIT LEVEL.—The benefits

7 provided—

8 ‘‘(A) are limited to outpatient prescription

9 drugs;

10 ‘‘(B) include at least the threshold benefits

11 specified under subsection (c); and

12 ‘‘(C) do not include benefits for prescrip13 tion drugs for which benefits are otherwise

14 available (directly or when furnished as part of,

15 or as an incident to, another item or service)

16 under part A or B.

17 ‘‘(2) ACCESSIBILITY.—The benefits are acces18 sible and convenient to all eligible medicare bene19 ficiaries who have such coverage and provide for ac20 cess on a timely basis to new outpatient prescription

21 drugs and they become available.

22 ‘‘(3) NO PRE-EXISTING CONDITION EXCLU23 SIONS.—There are no pre-existing condition exclu24 sions or similar exclusions applied with respect to

25 the coverage.
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1 ‘‘(4) LIMITS ON FORMULARIES.—If the cov2 erage uses a formulary, the formulary meets the re3 quirements of subsection (d).

4 ‘‘(c) THRESHOLD BENEFIT LEVEL.—

5 ‘‘(1) IN GENERAL.—The NICE Board shall re6 quest the National Association of Insurance Com7 missioners to revise the model standards for medi8 care supplemental policies pursuant to section

9 1882(v) for the purpose of—

10 ‘‘(A) defining the term ‘outpatient pre11 scription drugs’; and

12 ‘‘(B) specifying a threshold level of benefits

13 for NICE prescription drug coverage.

14 ‘‘(2) CONSIDERATIONS.—

15 ‘‘(A) DEFINITION.—In establishing a defi16 nition under paragraph (1)(A), the Board shall

17 request that the National Association of Insur18 ance Commissioners take into account the defi19 nition of covered outpatient drugs under section

20 1927(k)(2) (which includes biological products

21 and insulin).

22 ‘‘(B) THRESHOLD.—In specifying the

23 threshold level under paragraph (1)(B), the

24 Board shall request that the National Associa25 tion of Insurance Commissioners—
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1 ‘‘(i) take into account the level of such

2 coverage (including deductibles and other

3 cost-sharing) applied under health plans

4 offered under the Federal Employees

5 Health Benefits Program (under chapter

6 89 of title 5, United States Code) and

7 under other large group health plans; and

8 ‘‘(ii) permit (if determined appro9 priate) optional coverage of drugs (except

10 for agents used to promote smoking ces11 sation) for which coverage may be excluded

12 or restricted under section 1927(d)(2).

13 ‘‘(3) CONSTRUCTION.—Nothing in this part

14 shall be construed as preventing NICE prescription

15 drug coverage from providing benefits for outpatient

16 prescription drugs in excess of the threshold speci17 fied under this subsection.

18 ‘‘(d) FORMULARY REQUIREMENTS.—

19 ‘‘(1) IN GENERAL.—A formulary meets the re20 quirements of this subsection only if—

21 ‘‘(A) such formulary is based on the med22 ical needs of eligible medicare beneficiaries;

23 ‘‘(B) the entity offering the coverage has

24 in place an appeals process for any eligible

25 medicare beneficiary to receive any medically
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1 necessary outpatient prescription drug that is

2 not on the formulary;

3 ‘‘(C) such procedures do not impose a sig4 nificant financial burden on an eligible medicare

5 beneficiary or delay the provision of medically

6 necessary outpatient prescription drugs to such

7 a beneficiary; and

8 ‘‘(D) the entity offering the coverage pro9 vides notification to enrollees of any change in

10 the formulary and such notification is provided

11 at least 60 days prior to such change.

12 ‘‘(2) APPEAL PROCESS.—The appeals process

13 established under paragraph (1)(B) shall provide for

14 at least a level of protection that is similar to or bet15 ter than the level of protection provided with respect

16 to benefits under Medicare+Choice plans under

17 part C.

18 ‘‘(e) USE OF COST CONTAINMENT MECHANISMS.—

19 Nothing in this part shall be construed as preventing an

20 entity offering NICE prescription drug coverage from

21 using reasonable cost containment methods, such as

22 formularies, mail order services, and generic drug substi23 tution, consistent with the specific requirements of this

24 part and applicable law.
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1 ‘‘ENROLLMENT PROCESS FOR NICE DRUG BENEFIT

2 COVERAGE

3 ‘‘SEC. 1860C. (a) ENROLLMENT PROCESS.—The

4 NICE Board shall establish procedures, consistent with

5 this section, through which an eligible medicare bene6 ficiary may voluntarily elect whether or not to enroll,

7 disenroll, and change enrollment in a NICE medicare sup8 plemental policy or in a Medicare+Choice plan that in9 cludes NICE prescription drug coverage.

10 ‘‘(b) CONSIDERATIONS.—In establishing such proce11 dures, the NICE Board shall—

12 ‘‘(1) use rules similar to the rules for enroll13 ment, disenrollment, and changes in enrollment in a

14 Medicare+Choice plan under section 1851 (includ15 ing annual open enrollment periods and guaranteed

16 issue during any enrollment period);

17 ‘‘(2) permit special enrollment periods in cases

18 in which an eligible medicare beneficiary, who is en19 rolled under a Medicare+Choice plan or group

20 health plan that provides NICE prescription drug

21 coverage—

22 ‘‘(A) loses such coverage under such a

23 plan; or

24 ‘‘(B) experiences a significant adverse in25 come level change (as defined by the NICE
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1 Board) which changes the level of financial as2 sistance available under section 1860D; and

3 ‘‘(3) provide for coordination with the Secretary

4 with respect to such enrollment, disenrollment, and

5 changes in enrollment under part C.

6 ‘‘FINANCIAL ASSISTANCE TO OBTAIN NICE PRESCRIPTION

7 DRUG COVERAGE

8 ‘‘SEC. 1860D. (a) IN GENERAL.—The NICE Board

9 shall provide financial assistance, in accordance with this

10 section, with respect to eligible medicare beneficiaries who

11 have NICE prescription drug coverage through enrollment

12 in a NICE medicare supplemental policy, in a

13 Medicare+Choice plan that includes such coverage, or in

14 a group health plan that includes such coverage.

15 ‘‘(b) AMOUNT OF ASSISTANCE.—

16 ‘‘(1) IN GENERAL.—Subject to subsections (e)

17 and (f) and paragraph (2), the amount of financial

18 assistance with respect to an eligible medicare bene19 ficiary is equal to the following percentage of the ap20 plicable cost (as defined in subsection (g)(1)) of the

21 NICE prescription drug coverage:

22 ‘‘(A) 100 PERCENT IF INCOME BELOW 150

23 PERCENT OF POVERTY.—In the case of an eligi24 ble medicare beneficiary who applies for en25 hanced financial assistance under subsection (c)

26 and whose income (as verified under such sub-
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1 section) does not exceed 150 percent of the pov2 erty line, the percentage is 100 percent.

3 ‘‘(B) OTHER PERCENT IF INCOME BE4 TWEEN 150 AND 175 PERCENT OF POVERTY.—

5 In the case of an eligible medicare beneficiary

6 who applies for enhanced financial assistance

7 under subsection (c) and whose income (as

8 verified under such subsection) is greater than

9 150 percent, but does not exceed 175 percent,

10 of the poverty line, the NICE Board shall speci11 fy the percentage consistent with the following

12 rules:

13 ‘‘(i) RANGE.—The percentage may

14 not exceed 100 percent nor be less than

15 the percentage specified under subpara16 graph (C).

17 ‘‘(ii) SLIDING SCALE.—The percent18 age may not be higher for eligible medicare

19 beneficiaries whose income is higher.

20 ‘‘(iii) WITHIN AVAILABLE FUNDS.—

21 The percentage is established in a manner

22 that is consistent with the amount of funds

23 available for financial assistance under this

24 section.
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1 ‘‘(C) 25 PERCENT FOR OTHER BENE2 FICIARIES.—In the case of any other eligible

3 medicare beneficiary, the percentage is 25 per4 cent.

5 ‘‘(2) LIMITATION IN CASE OF COVERAGE PRO6 VIDED THROUGH A MEDICARE+CHOICE PLAN.—In

7 the case of financial assistance provided under this

8 section with respect to NICE prescription drug cov9 erage provided through a Medicare+Choice plan, the

10 amount of the financial assistance may not exceed

11 the amount of the portion of the premium charged

12 for enrollment in the plan that is related to out13 patient prescription drugs.

14 ‘‘(c) APPLICATION FOR ENHANCED FINANCIAL AS15 SISTANCE.—

16 ‘‘(1) IN GENERAL.—The NICE Board shall es17 tablish procedures under which an individual who

18 desires enhanced financial assistance under this sec19 tion may voluntarily apply for an income determina20 tion.

21 ‘‘(2) INCOME VERIFICATION.—

22 ‘‘(A) IN GENERAL.—Under the procedures

23 established under paragraph (1), if an indi24 vidual voluntarily applies for an income deter25 mination under this subsection, the individual is
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1 deemed to have consented to the NICE Board

2 seeking and using income-related information

3 from other Government agencies in order to

4 verify the individual’s income.

5 ‘‘(B) RESTRICTION ON USE OF INFORMA6 TION.—Information obtained under subpara7 graph (A) may be used by officers and employ8 ees of the NICE Board only for the purposes

9 of, and to the extent necessary in, carrying out

10 their responsibilities under this part.

11 ‘‘(3) PERIODIC REDETERMINATIONS.—Such in12 come determinations shall be valid for a period (of

13 not less than 1 year) specified by the NICE Board.

14 ‘‘(d) FORM OF ASSISTANCE.—

15 ‘‘(1) IN GENERAL.—Financial assistance under

16 this section shall be provided in the form of a pay17 ment to the issuer of the NICE medicare supple18 mental policy involved, the Medicare+Choice organi19 zation offering the Medicare+Choice plan involved,

20 or the sponsor of the group health plan involved, of

21 the amount of the subsidy. Such payment shall be

22 in a manner and time provided for by the NICE

23 Board.

24 ‘‘(2) ADDITIONAL REQUIREMENT.—No financial

25 assistance shall be made available with respect to
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1 NICE prescription drug coverage provided by an en2 tity to an eligible medicare beneficiary unless the en3 tity provides assurances satisfactory to the NICE

4 Board that the entity shall reduce the amount other5 wise charged the beneficiary for such coverage by an

6 amount equal to the amount of such assistance.

7 ‘‘(3) SPECIAL RULE WHERE NO OR LOW PRE8 MIUM CHARGED.—The NICE Board shall establish

9 appropriate procedures to assure that eligible medi10 care beneficiaries who obtain NICE prescription

11 drug coverage through enrollment in a group health

12 plan which does not impose a premium or imposes

13 a premium that is less than the amount of the finan14 cial assistance otherwise provided, are provided the

15 benefit of some of such financial assistance.

16 ‘‘(e) LATE ENROLLMENT PENALTY.—

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

18 the NICE Board shall establish procedures for re19 ducing the amount of financial assistance provided

20 under this section on behalf of an eligible medicare

21 beneficiary if the beneficiary fails to obtain and

22 maintain NICE prescription drug coverage during

23 periods in which the beneficiary is eligible to obtain

24 such coverage. Such procedures may be similar to

25 the part B late enrollment penalty provisions under
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1 section 1839(b) and shall not take into account peri2 ods before the first period in which financial assist3 ance is made available under this section.

4 ‘‘(2) EXCEPTION.—The late enrollment proce5 dures established pursuant to paragraph (1) shall

6 not apply to an eligible medicare beneficiary who is

7 enrolled under Medicare+Choice plan or a group

8 health plan that provides outpatient prescription

9 drug coverage and the plan terminates or ceases to

10 provide such coverage to the beneficiary, but only

11 if—

12 ‘‘(A) the beneficiary seeks to enroll under

13 a plan or policy that offers NICE prescription

14 drug coverage at the next opportunity that is

15 available to the beneficiary after the effective

16 date of the termination of such coverage; and

17 ‘‘(B) submits evidence of the effective date

18 of the termination of such coverage.

19 ‘‘(f) ADJUSTMENT OF FINANCIAL ASSISTANCE IF IN20 SUFFICIENT FUNDING.—

21 ‘‘(1) LIMITATION OF ASSISTANCE TO FUNDS

22 AVAILABLE.—In no case shall the amount of finan23 cial assistance provided under this section exceed the

24 amount of funds available for such assistance under

25 the NICE Trust Fund.
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1 ‘‘(2) REQUIRED ADJUSTMENT.—If the NICE

2 Board determines under section 1860E(b)(3)(C)

3 that the amount in the NICE Trust Fund in the

4 next year will be insufficient to cover the costs of

5 providing financial assistance under this section in

6 such year—

7 ‘‘(A) the NICE Board shall first reduce

8 the percentage specified in subsection (b)(3) to

9 such lower percentage (but not below 10 per10 cent) as may be required, and to adjust the per11 centage specified under subsection (b)(2) to re12 flect such reduction;

13 ‘‘(B) if such percentage reductions are not

14 sufficient to reduce the costs to comply with

15 paragraph (1), the NICE Board shall next re16 duce the income thresholds (as a percentage of

17 the poverty line) under subsection (b) as may

18 be further required; and

19 ‘‘(C) if such previous reductions are still

20 not sufficient to reduce the costs to comply with

21 paragraph (1), the NICE Board shall imme22 diately report to Congress and suspend the pro23 vision of financial assistance under this section

24 during such year.

25 ‘‘(g) DEFINITIONS.—For purposes of this section:
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1 ‘‘(1) APPLICABLE COST.—The term ‘applicable

2 cost’ means, with respect to NICE prescription drug

3 coverage provided under—

4 ‘‘(A) a NICE medicare supplemental pol5 icy, is the premium charged for the policy;

6 ‘‘(B) a Medicare+Choice plan, is the actu7 arial value of the portion of the adjusted com8 munity rate for the plan that is related to pro9 viding such coverage, as determined by the

10 NICE Board in consultation with the Secretary;

11 or

12 ‘‘(C) a group health plan, is the actuarial

13 value of the portion of the applicable premium

14 for the plan that is related to providing such

15 coverage, as determined by the NICE Board

16 taking into account the applicable premium for

17 such plan (as defined in section 604(1) of the

18 Employee Retirement Income Security Act of

19 1974).

20 ‘‘(2) POVERTY LINE.—The term ‘poverty line’

21 means the income official poverty line (as defined by

22 the Office of Management and Budget, and revised

23 annually in accordance with section 673(2) of the

24 Omnibus Budget Reconciliation Act of 1981) appli25 cable to a family of the size involved.
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1 ‘‘NICE BOARD

2 ‘‘SEC. 1860E. (a) ESTABLISHMENT.—There is estab3 lished within the Department of Health and Human Serv4 ices a New Insurance Coverage Equity Office, which shall

5 be—

6 ‘‘(1) outside of the Health Care Financing Ad7 ministration; and

8 ‘‘(2) run by a board to be known as the NICE

9 Board.

10 ‘‘(b) DUTIES.—

11 ‘‘(1) IN GENERAL.—The NICE Board shall ad12 minister the NICE drug benefit program under this

13 part.

14 ‘‘(2) ONGOING STUDIES.—The NICE Board

15 shall conduct ongoing studies of the following issues:

16 ‘‘(A) The administration of this part.

17 ‘‘(B) The provision of information about

18 the program under the health insurance infor19 mation, counseling, and assistance grants under

20 section 4360 of the Omnibus Budget Reconcili21 ation Act of 1990.

22 ‘‘(C) Ways in which drug utilization can be

23 used to provide better overall care for eligible

24 medicare beneficiaries.
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1 ‘‘(D) Savings and potential savings in Fed2 eral health care programs which may occur, or

3 can be attributed to, eligible medicare bene4 ficiary access to, and utilization of, outpatient

5 prescription drugs.

6 ‘‘(E) Trends in premium increases and fac7 tors that contribute to changes in premiums.

8 ‘‘(F) Integration of the NICE drug benefit

9 program into a reformed medicare program.

10 ‘‘(G) The ability of eligible medicare bene11 ficiaries to afford NICE prescription drug cov12 erage.

13 ‘‘(H) The impact of the program on the

14 prescription drug benefits offered under

15 Medicare+Choice plans and group health plans.

16 ‘‘(I) The appropriateness of the levels of fi17 nancial assistance provided in the case of eligi18 ble medicare beneficiaries who obtain assistance

19 through NICE prescription drug coverage pro20 vided under Medicare+Choice plans or group

21 health plans.

22 ‘‘(3) ANNUAL REPORT.—

23 ‘‘(A) IN GENERAL.—Not later than June 1

24 of each year (beginning with 2003), the NICE
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1 Board shall submit an annual report to Con2 gress on the program under this part.

3 ‘‘(B) INFORMATION ON STUDIES.—Such

4 report shall include a detailed statement on the

5 issues studied under paragraph (2).

6 ‘‘(C) DETAILED FINANCIAL PROJECTIONS

7 AND REQUIRED ADJUSTMENTS IN FINANCIAL

8 ASSISTANCE.—Such report shall include—

9 ‘‘(i) the report on the financial status

10 of the NICE Trust Fund under section

11 1860F; and

12 ‘‘(ii) a statement if, based on such

13 status, a reduction in financial assistance

14 for the subsequent year is required under

15 section 1860D(f) and, if so, the manner in

16 which such reductions will be made.

17 Such report may include recommendations re18 garding increases in financial assistance that

19 should be made in a subsequent year, to the ex20 tent they may be made consistent with section

21 1860D(f)(1).

22 ‘‘(D) RECOMMENDATIONS.—Such report

23 shall include such other recommendations for

24 legislation and administrative actions as the

25 NICE Board considers appropriate.
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1 ‘‘(4) STUDY AND REPORT REGARDING EXPAN2 SION.—

3 ‘‘(A) STUDY.—The NICE Board, in con4 sultation with the National Association of In5 surance Commissioners, shall conduct a study

6 on—

7 ‘‘(i) permitting a benefit package

8 under section 1882 of the Social Security

9 Act (other than the outpatient prescription

10 drug only package established under sub11 section (v)(1)(A) of such section) to offer

12 outpatient prescription drugs; and

13 ‘‘(ii) providing financial assistance

14 under this part on behalf of eligible medi15 care beneficiaries receiving coverage under

16 such a benefit package.

17 ‘‘(B) REPORT.—Not later than 1 year

18 after all of the members of the NICE Board are

19 appointed under subsection (c), the NICE

20 Board shall submit a detailed report to Con21 gress on the study conducted pursuant to sub22 paragraph (A), together with any recommenda23 tions as determined appropriate by the NICE

24 Board.
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1 ‘‘(5) RECOMMENDATIONS REGARDING GRANT

2 PROGRAM.—The NICE Board shall provide rec3 ommendations and necessary information regarding

4 the NICE drug benefit program to the Secretary in

5 order for the Secretary to provide health insurance

6 information, counseling, and assistance grants under

7 section 4360 of the Omnibus Budget Reconciliation

8 Act of 1990.

9 ‘‘(c) MEMBERSHIP OF NICE BOARD.—

10 ‘‘(1) NUMBER AND APPOINTMENT.—

11 ‘‘(A) IN GENERAL.—The NICE Board

12 shall be composed of 7 members appointed by

13 the President, by and with the advice and con14 sent of the Senate.

15 ‘‘(B) SPECIFIC REPRESENTATIVES.—In

16 making appointments under subparagraph (A),

17 the President shall ensure that the following

18 groups are represented on the NICE Board:

19 ‘‘(i) Consumers.

20 ‘‘(ii) Private health plan insurers (in21 cluding insurers that offer fee-for-service

22 and managed care plans) with expertise in

23 the quality, scope, and marketing of health

24 care services.
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1 ‘‘(iii) The Health Care Financing Ad2 ministration.

3 ‘‘(iv) State insurance commissioners.

4 ‘‘(C) SECRETARY OF HHS.—The Secretary

5 shall be a nonvoting, ex officio member of the

6 NICE Board.

7 ‘‘(2) DEADLINE FOR INITIAL APPOINTMENT.—

8 The initial members of the NICE Board shall be ap9 pointed by not later than 6 months after the date

10 of enactment of this section.

11 ‘‘(3) TERMS.—

12 ‘‘(A) IN GENERAL.—The terms of the

13 members of the NICE Board shall be for 6

14 years, except that of the members first

15 appointed—

16 ‘‘(i) three shall be appointed for terms

17 of 6 years;

18 ‘‘(ii) two shall be appointed for terms

19 of 4 years; and

20 ‘‘(iii) two shall be appointed for terms

21 of 2 years.

22 ‘‘(B) VACANCIES.—Any member appointed

23 to fill a vacancy occurring before the expiration

24 of the term for which the member’s predecessor

25 was appointed shall be appointed only for the
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1 remainder of that term. A member may serve

2 after the expiration of that member’s term until

3 a successor has taken office.

4 ‘‘(4) CHAIRPERSON.—The President shall des5 ignate the chairperson of the NICE Board, except

6 that the representative from the Health Care Fi7 nancing Administration may not be designated as

8 chairperson.

9 ‘‘(d) OPERATION OF THE BOARD.—

10 ‘‘(1) MEETINGS.—The NICE Board shall meet

11 at the call of the chairperson or upon written re12 quest of a majority of its members.

13 ‘‘(2) QUORUM.—A majority of the members of

14 the NICE Board shall constitute a quorum, but a

15 lesser number of members may hold hearings.

16 ‘‘(e) POWERS OF THE NICE BOARD.—

17 ‘‘(1) HEARINGS.—The NICE Board may hold

18 such hearings, sit and act at such times and places,

19 take such testimony, and receive such evidence as

20 the NICE Board considers advisable to carry out the

21 purposes of this part.

22 ‘‘(2) INFORMATION FROM FEDERAL AGEN23 CIES.—Upon request of the chairperson of the NICE

24 Board, the head of any Federal department or agen25 cy shall furnish such information to the NICE
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1 Board as is necessary to carry out the functions of

2 the NICE Board under this part.

3 ‘‘(3) POSTAL SERVICES.—The NICE Board

4 may use the United States mails in the same man5 ner and under the same conditions as other depart6 ments and agencies of the Federal Government.

7 ‘‘(4) GIFTS.—The NICE Board may accept,

8 use, and dispose of gifts or donations of services or

9 property.

10 ‘‘(f) BOARD PERSONNEL MATTERS.—

11 ‘‘(1) MEMBERS.—

12 ‘‘(A) COMPENSATION.—Each member of

13 the NICE Board who is not an officer or em14 ployee of the Federal Government shall be com15 pensated at a rate equal to the daily equivalent

16 of the annual rate of basic pay prescribed for

17 level IV of the Executive Schedule under section

18 5315 of title 5, United States Code, for each

19 day (including travel time) during which such

20 member is engaged in the performance of the

21 duties of the NICE Board. All members of the

22 NICE Board who are officers or employees of

23 the United States shall serve without compensa24 tion in addition to that received for their serv-
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1 ices as officers or employees of the United

2 States.

3 ‘‘(B) TRAVEL EXPENSES.—The members

4 of the NICE Board shall be allowed travel ex5 penses, including per diem in lieu of subsist6 ence, at rates authorized for employees of agen7 cies under subchapter I of chapter 57 of title 5,

8 United States Code, while away from their

9 homes or regular places of business in the per10 formance of services for the NICE Board.

11 ‘‘(C) REMOVAL.—The President may re12 move a member of the NICE Board only for ne13 glect of duty or malfeasance in office.

14 ‘‘(2) STAFF.—

15 ‘‘(A) IN GENERAL.—The chairperson of

16 the NICE Board may, without regard to the

17 civil service laws and regulations, appoint and

18 terminate an executive director and such other

19 additional personnel as may be necessary to en20 able the NICE Board to perform its duties. The

21 employment of an executive director shall be

22 subject to confirmation by the NICE Board.

23 ‘‘(B) COMPENSATION.—The chairperson of

24 the NICE Board may fix the compensation of

25 the executive director and other personnel with-
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1 out regard to the provisions of chapter 51 and

2 subchapter III of chapter 53 of title 5, United

3 States Code, relating to classification of posi4 tions and General Schedule pay rates, except

5 that the rate of pay for the executive director

6 and other personnel may not exceed the rate

7 payable for level V of the Executive Schedule

8 under section 5316 of such title.

9 ‘‘(C) DETAIL OF GOVERNMENT EMPLOY10 EES.—Any Federal Government employee may

11 be detailed to the NICE Board without further

12 reimbursement, and such detail shall be without

13 interruption or loss of civil service status or

14 privilege.

15 ‘‘(D) PROCUREMENT OF TEMPORARY AND

16 INTERMITTENT SERVICES.—The chairperson of

17 the NICE Board may procure temporary and

18 intermittent services under section 3109(b) of

19 title 5, United States Code, at rates for individ20 uals which do not exceed the daily equivalent of

21 the annual rate of basic pay prescribed for level

22 V of the Executive Schedule under section 5316

23 of such title.

24 ‘‘NICE TRUST FUND

25 ‘‘SEC. 1860F. (a) CREATION OF TRUST FUND.—

26 There is established in the Treasury of the United States
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1 a trust fund to be known as the ‘NICE Trust Fund’, con2 sisting of such amounts as may be appropriated or cred3 ited to the NICE Trust Fund as provided in this section.

4 ‘‘(b) AMOUNTS IN NICE TRUST FUND.—

5 ‘‘(1) IN GENERAL.—The NICE Trust Fund

6 shall consist of the following amounts:

7 ‘‘(A) Amounts deposited in, or appro8 priated to, the NICE Trust Fund as provided

9 in this section.

10 ‘‘(B) Any gifts and bequests made to such

11 Trust Fund.

12 ‘‘(2) APPROPRIATION.—There are hereby au13 thorized to be appropriated to the NICE Trust

14 Fund amounts from the on-budget surplus.

15 ‘‘(3) TRANSFER.—The amounts appropriated

16 pursuant to paragraph (2) shall be transferred by

17 the Secretary of the Treasury from time to time

18 from the general fund in the Treasury to the NICE

19 Trust Fund.

20 ‘‘(c) EXPENDITURES FROM TRUST FUND.—Amounts

21 in the NICE Trust Fund shall only be available for mak22 ing expenditures to carry out this part, including adminis23 trative expenses of the NICE Board.

24 ‘‘(d) APPLICATION OF HI TRUST FUND PROVI25 SIONS.—The provisions of subsections (b) through (e) of
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1 section 1817 shall apply to the NICE Board, this part,

2 and the NICE Trust Fund in the same manner as they

3 apply to the Board of Trustees (and the Secretary and

4 the Health Care Financing Administration), part A, and

5 the Federal Hospital Insurance Trust Fund, respectively,

6 except that—

7 ‘‘(1) the Board of Trustees shall be composed

8 of the NICE Board and the Secretary of the Treas9 ury; and

10 ‘‘(2) the annual report shall be submitted as

11 part of the annual report provided under section

12 1860E(b)(3).’’.

13 SEC. 3. CONFORMING CHANGES TO MEDIGAP.

14 Section 1882 of the Social Security Act (42 U.S.C.

15 1395ss) is amended by adding at the end the following:

16 ‘‘(v)(1) Notwithstanding subsection (p), the benefit

17 packages established under such subsection shall be re18 vised (in the manner described in subsection (p)(1)(E))

19 so that—

20 ‘‘(A) there is established a benefit package con21 sisting of only outpatient prescription drug benefits

22 that are consistent with NICE prescription drug cov23 erage (as defined in section 1860B(b)) and that are

24 offered only through the NICE Board and in accord25 ance with part D;
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1 ‘‘(B) such package shall permit coverage of out2 patient prescription drugs that exceeds the thresh3 olds established under such section;

4 ‘‘(C) no package (except the package estab5 lished under subparagraph (A)) includes coverage of

6 outpatient prescription drugs provided under part D;

7 and

8 ‘‘(D) other benefit packages that do not include

9 prescription drug coverage may be substituted for

10 the packages eliminated under subparagraph (C).

11 In this title, a medicare supplemental policy which has the

12 benefit package described in subparagraph (A) is referred

13 to as a ‘NICE medicare supplemental policy’. The revi14 sions of benefit packages under this paragraph shall not

15 effect the renewal of medicare supplemental policies under

16 this section that are in existence on the effective date of

17 such revisions, and shall be designed to avoid adverse se18 lection and to be affordable.

19 ‘‘(2) Notwithstanding subsection (d), nothing in this

20 section shall be construed as prohibiting or making

21 unlawful—

22 ‘‘(A) the sale or issuance of a NICE medicare

23 supplemental policy to an individual who has a medi24 care supplemental policy that does not provide cov25 erage of outpatient prescription drugs;
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1 ‘‘(B) the sale or issuance of a medicare supple2 mental policy that does not provide coverage of out3 patient prescription drugs to an individual who has

4 a NICE medicare supplemental policy; or

5 ‘‘(C) the sale or issuance of such a NICE medi6 care supplemental policy to an individual who is en7 rolled in a Medicare+Choice plan that does not pro8 vide coverage of outpatient prescription drugs (not

9 including coverage required to be provided under

10 part A or B).

11 The sale or issuance of policies under the circumstances

12 described in this paragraph shall be treated as not ‘dupli13 cative’ under this section.

14 ‘‘(3)(A) No medicare supplemental policy of the in15 surer that is in effect on the effective date of the revision

16 under paragraph (1) and that has a benefit package classi17 fied as ‘H’, ‘I’, or ‘J’ under the standards established by

18 subsection (p)(2) shall be deemed to meet the standards

19 in subsection (c) unless the insurer—

20 ‘‘(i) provides written notice, within a 60-day pe21 riod specified by the revisions, to the policyholder or

22 certificate holder (at the most recent available ad23 dress) of the offer described in clause (ii) and of the

24 fact that, so long as they retain coverage under such
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1 policy, they are unable to purchase a NICE medi2 care supplemental policy; and

3 ‘‘(ii) offers the individual under the terms de4 scribed in subparagraph (B), during a period of at

5 least 180 days beginning on the date specified in

6 subparagraph (C), institution of coverage effective

7 as of a date specified by the revisions, a non-NICE

8 medicare supplemental policy that the Secretary de9 termines is most comparable to the policy in which

10 the individual is enrolled (but for coverage of pre11 scription drugs).

12 ‘‘(B) The terms described under this subparagraph

13 are terms which do not—

14 ‘‘(i) deny or condition the issuance or effective15 ness of a medicare supplemental policy described in

16 subparagraph (A)(ii) that is offered and is available

17 for issuance to new enrollees by such issuer;

18 ‘‘(ii) discriminate in the pricing of such policy

19 because of health status, claims experience, receipt

20 of health care, or medical condition; or

21 ‘‘(iii) impose an exclusion of benefits based on

22 a pre-existing condition under such policy.

23 ‘‘(C) The date specified in this subparagraph for a

24 policy issued in a State is such date as specified by the

25 revisions (taking into account the method used under sub-
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1 section (n)(4) for establishing a date under that sub2 section).

3 ‘‘(4) In applying this section with respect to NICE

4 medicare supplemental policies, any reference to the ‘Sec5 retary’ is deemed a reference to the NICE Board.’’.

6 SEC. 4. PROVISION OF INFORMATION ON NICE DRUG BEN7 EFIT PROGRAM UNDER HEALTH INSURANCE

8 INFORMATION, COUNSELING, AND ASSIST9 ANCE GRANTS.

10 Section 4360(b)(2)(A)(ii) of the Omnibus Budget

11 Reconciliation Act of 1990 (42 U.S.C. 1395b–

12 4(b)(2)(A)(ii)) is amended by striking ‘‘and information’’

13 and inserting ‘‘, information regarding the NICE drug

14 benefit program under part D of title XVIII of the Social

15 Security Act, and information’’.

Æ