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[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1905 Introduced in House (IH)]

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.

    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 ``New Insurance 
Coverage Equity (NICE) Act of 2001''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
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.

SEC. 2. NICE DRUG BENEFIT PROGRAM.

    Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is 
amended by redesignating part D as part E and by inserting after part C 
the following new part:

                  ``Part D--NICE Drug Benefit Program

              ``establishment of nice drug benefit program

    ``Sec. 1860A. (a) In General.--Under this part, the NICE Board 
(established under section 1860E) shall provide for a NICE drug benefit 
program under which--
            ``(1) all eligible medicare beneficiaries shall be provided 
        access to NICE prescription drug coverage (meeting the 
        conditions of section 1860B) through either enrollment in a 
        Medicare+Choice plan, enrollment in a NICE medicare 
        supplemental policy, or coverage under a group health plan; and
            ``(2) there is financial assistance provided under section 
        1860D for beneficiaries who voluntarily obtain such coverage, 
        with such assistance varying depending upon the income of such 
        beneficiaries.
    ``(b) Voluntary Nature of Program for Entities and Beneficiaries.--
Nothing in this part shall be construed as requiring--
            ``(1) an eligible medicare beneficiary to obtain coverage 
        under a plan or policy that provides NICE prescription drug 
        coverage;
            ``(2) a Medicare+Choice organization to offer a 
        Medicare+Choice plan that provides NICE prescription drug 
        coverage; or
            ``(3) an issuer of a medicare supplemental policy to issue 
        a NICE medicare supplemental policy.
    ``(c) Providing Information to Beneficiaries.--
            ``(1) In general.--The NICE Board shall broadly disseminate 
        information to eligible medicare beneficiaries on the NICE drug 
        benefit program under this part, including information on the 
        sanctions for delayed enrollment under section 1860D(e).
            ``(2) Similar to medicare+choice activities.--Such 
        activities shall be similar to the activities performed under 
        section 1851(d) (including the approval of policy marketing 
        materials).
            ``(3) Arrangements.--The NICE Board shall, in cooperation 
        with the Secretary, enter into such arrangements as may be 
        appropriate to disseminate widely to eligible medicare 
        beneficiaries information about the NICE drug benefit program 
        in connection with materials distributed by the Secretary to 
        medicare beneficiaries, including in the medicare handbook 
        under section 1804 and in materials distributed under section 
        1851(d).
    ``(d) Eligible Medicare Beneficiary Defined.--For purposes of this 
part, the term `eligible medicare beneficiary' means an individual who 
is entitled to benefits under part A and enrolled under part B.

         ``requirements for offering nice drug benefit coverage

    ``Sec. 1860B. (a) Requirement for Approval of NAIC Model 
Revisions.--
            ``(1) In general.--
                    ``(A) Condition for offering nice medicare 
                supplemental policy.--On or after the effective date of 
                this provision, it is unlawful to issue or sell a 
                medicare supplemental policy (as defined in section 
                1882(g)) that provides coverage of outpatient 
                prescription drugs in a State unless--
                            ``(i) the State has adopted the National 
                        Association of Insurance Commissioners 
                        revisions under section 1882(v)(1)(A) that have 
                        been approved by the NICE Board under this 
                        section; and
                            ``(ii) the coverage is offered consistent 
                        with section 1860C.
                The penalties described in clause (ii) of section 
                1882(d)(3)(A) shall apply to whoever violates this 
                subparagraph in the same manner as they apply to 
                whoever violates such section.
                    ``(B) Condition for receipt of nice financial 
                assistance.--No payment of financial assistance with 
                respect to coverage of an eligible medicare beneficiary 
                under NICE prescription drug coverage which is offered 
                either as a NICE medicare supplemental policy, as part 
                of the benefits under a Medicare+Choice plan, or as 
                part of the benefits under a group health plan, shall 
                be made unless--
                            ``(i) an application with respect to such 
                        coverage has been approved by the NICE Board 
                        under this section; and
                            ``(ii) in the case of a NICE medicare 
                        supplemental policy or a Medicare+Choice plan, 
                        the coverage is offered consistent with section 
                        1860C.
            ``(2) Establishment of application process.--
                    ``(A) In general.--The NICE Board shall establish--
                            ``(i) procedures regarding the information 
                        to be included in applications under this 
                        section and for the time and manner in which 
                        such applications should be submitted;
                            ``(ii) conditions (consistent with this 
                        part) for the approval of such applications; 
                        and
                            ``(iii) the period (in no case less than 1 
                        year) for which approval of such an application 
                        is valid.
                    ``(B) Disapproval.--The NICE Board may disapprove 
                (or revoke the approval) of such an application if the 
                Board finds that, in the case of a NICE medicare 
                supplemental policy or Medicare+Choice plan, that the 
                entity offering the NICE prescription drug coverage is 
                purposefully engaged in activities intended to result 
                in favorable selection of those eligible medicare 
                beneficiaries obtaining coverage through the policy or 
                plan.
    ``(b) NICE Prescription Drug Coverage Defined.--For purposes of 
this title, the term `NICE prescription drug coverage' means coverage 
of outpatient prescription drugs that the NICE Board determines meets 
the following requirements:
            ``(1) Benefit level.--The benefits provided--
                    ``(A) are limited to outpatient prescription drugs;
                    ``(B) include at least the threshold benefits 
                specified under subsection (c); and
                    ``(C) do not include benefits for prescription 
                drugs for which benefits are otherwise available 
                (directly or when furnished as part of, or as an 
                incident to, another item or service) under part A or 
                B.
            ``(2) Accessibility.--The benefits are accessible and 
        convenient to all eligible medicare beneficiaries who have such 
        coverage and provide for access on a timely basis to new 
        outpatient prescription drugs and they become available.
            ``(3) No pre-existing condition exclusions.--There are no 
        pre-existing condition exclusions or similar exclusions applied 
        with respect to the coverage.
            ``(4) Limits on formularies.--If the coverage uses a 
        formulary, the formulary meets the requirements of subsection 
        (d).
    ``(c) Threshold Benefit Level.--
            ``(1) In general.--The NICE Board shall request the 
        National Association of Insurance Commissioners to revise the 
        model standards for medicare supplemental policies pursuant to 
        section 1882(v) for the purpose of--
                    ``(A) defining the term `outpatient prescription 
                drugs'; and
                    ``(B) specifying a threshold level of benefits for 
                NICE prescription drug coverage.
            ``(2) Considerations.--
                    ``(A) Definition.--In establishing a definition 
                under paragraph (1)(A), the Board shall request that 
                the National Association of Insurance Commissioners 
                take into account the definition of covered outpatient 
                drugs under section 1927(k)(2) (which includes 
                biological products and insulin).
                    ``(B) Threshold.--In specifying the threshold level 
                under paragraph (1)(B), the Board shall request that 
                the National Association of Insurance Commissioners--
                            ``(i) take into account the level of such 
                        coverage (including deductibles and other cost-
                        sharing) applied under health plans offered 
                        under the Federal Employees Health Benefits 
                        Program (under chapter 89 of title 5, United 
                        States Code) and under other large group health 
                        plans; and
                            ``(ii) permit (if determined appropriate) 
                        optional coverage of drugs (except for agents 
                        used to promote smoking cessation) for which 
                        coverage may be excluded or restricted under 
                        section 1927(d)(2).
            ``(3) Construction.--Nothing in this part shall be 
        construed as preventing NICE prescription drug coverage from 
        providing benefits for outpatient prescription drugs in excess 
        of the threshold specified under this subsection.
    ``(d) Formulary Requirements.--
            ``(1) In general.--A formulary meets the requirements of 
        this subsection only if--
                    ``(A) such formulary is based on the medical needs 
                of eligible medicare beneficiaries;
                    ``(B) the entity offering the coverage has in place 
                an appeals process for any eligible medicare 
                beneficiary to receive any medically necessary 
                outpatient prescription drug that is not on the 
                formulary;
                    ``(C) such procedures do not impose a significant 
                financial burden on an eligible medicare beneficiary or 
                delay the provision of medically necessary outpatient 
                prescription drugs to such a beneficiary; and
                    ``(D) the entity offering the coverage provides 
                notification to enrollees of any change in the 
                formulary and such notification is provided at least 60 
                days prior to such change.
            ``(2) Appeal process.--The appeals process established 
        under paragraph (1)(B) shall provide for at least a level of 
        protection that is similar to or better than the level of 
        protection provided with respect to benefits under 
        Medicare+Choice plans under 
        part C.
    ``(e) Use of Cost Containment Mechanisms.--Nothing in this part 
shall be construed as preventing an entity offering NICE prescription 
drug coverage from using reasonable cost containment methods, such as 
formularies, mail order services, and generic drug substitution, 
consistent with the specific requirements of this part and applicable 
law.

          ``enrollment process for nice drug benefit coverage

    ``Sec. 1860C. (a) Enrollment Process.--The NICE Board shall 
establish procedures, consistent with this section, through which an 
eligible medicare beneficiary may voluntarily elect whether or not to 
enroll, disenroll, and change enrollment in a NICE medicare 
supplemental policy or in a Medicare+Choice plan that includes NICE 
prescription drug coverage.
    ``(b) Considerations.--In establishing such procedures, the NICE 
Board shall--
            ``(1) use rules similar to the rules for enrollment, 
        disenrollment, and changes in enrollment in a Medicare+Choice 
        plan under section 1851 (including annual open enrollment 
        periods and guaranteed issue during any enrollment period);
            ``(2) permit special enrollment periods in cases in which 
        an eligible medicare beneficiary, who is enrolled under a 
        Medicare+Choice plan or group health plan that provides NICE 
        prescription drug coverage--
                    ``(A) loses such coverage under such a plan; or
                    ``(B) experiences a significant adverse income 
                level change (as defined by the NICE Board) which 
                changes the level of financial assistance available 
                under section 1860D; and
            ``(3) provide for coordination with the Secretary with 
        respect to such enrollment, disenrollment, and changes in 
        enrollment under part C.

    ``financial assistance to obtain nice prescription drug coverage

    ``Sec. 1860D. (a) In General.--The NICE Board shall provide 
financial assistance, in accordance with this section, with respect to 
eligible medicare beneficiaries who have NICE prescription drug 
coverage through enrollment in a NICE medicare supplemental policy, in 
a Medicare+Choice plan that includes such coverage, or in a group 
health plan that includes such coverage.
    ``(b) Amount of Assistance.--
            ``(1) In general.--Subject to subsections (e) and (f) and 
        paragraph (2), the amount of financial assistance with respect 
        to an eligible medicare beneficiary is equal to the following 
        percentage of the applicable cost (as defined in subsection 
        (g)(1)) of the NICE prescription drug coverage:
                    ``(A) 100 percent if income below 150 percent of 
                poverty.--In the case of an eligible medicare 
                beneficiary who applies for enhanced financial 
                assistance under subsection (c) and whose income (as 
                verified under such subsection) does not exceed 150 
                percent of the poverty line, the percentage is 100 
                percent.
                    ``(B) Other percent if income between 150 and 175 
                percent of poverty.--In the case of an eligible 
                medicare beneficiary who applies for enhanced financial 
                assistance under subsection (c) and whose income (as 
                verified under such subsection) is greater than 150 
                percent, but does not exceed 175 percent, of the 
                poverty line, the NICE Board shall specify the 
                percentage consistent with the following rules:
                            ``(i) Range.--The percentage may not exceed 
                        100 percent nor be less than the percentage 
                        specified under subparagraph (C).
                            ``(ii) Sliding scale.--The percentage may 
                        not be higher for eligible medicare 
                        beneficiaries whose income is higher.
                            ``(iii) Within available funds.--The 
                        percentage is established in a manner that is 
                        consistent with the amount of funds available 
                        for financial assistance under this section.
                    ``(C) 25 percent for other beneficiaries.--In the 
                case of any other eligible medicare beneficiary, the 
                percentage is 25 percent.
            ``(2) Limitation in case of coverage provided through a 
        medicare+choice plan.--In the case of financial assistance 
        provided under this section with respect to NICE prescription 
        drug coverage provided through a Medicare+Choice plan, the 
        amount of the financial assistance may not exceed the amount of 
        the portion of the premium charged for enrollment in the plan 
        that is related to outpatient prescription drugs.
    ``(c) Application for Enhanced Financial Assistance.--
            ``(1) In general.--The NICE Board shall establish 
        procedures under which an individual who desires enhanced 
        financial assistance under this section may voluntarily apply 
        for an income determination.
            ``(2) Income verification.--
                    ``(A) In general.--Under the procedures established 
                under paragraph (1), if an individual voluntarily 
                applies for an income determination under this 
                subsection, the individual is deemed to have consented 
                to the NICE Board seeking and using income-related 
                information from other Government agencies in order to 
                verify the individual's income.
                    ``(B) Restriction on use of information.--
                Information obtained under subparagraph (A) may be used 
                by officers and employees of the NICE Board only for 
                the purposes of, and to the extent necessary in, 
                carrying out their responsibilities under this part.
            ``(3) Periodic redeterminations.--Such income 
        determinations shall be valid for a period (of not less than 1 
        year) specified by the NICE Board.
    ``(d) Form of Assistance.--
            ``(1) In general.--Financial assistance under this section 
        shall be provided in the form of a payment to the issuer of the 
        NICE medicare supplemental policy involved, the Medicare+Choice 
        organization offering the Medicare+Choice plan involved, or the 
        sponsor of the group health plan involved, of the amount of the 
        subsidy. Such payment shall be in a manner and time provided 
for by the NICE Board.
            ``(2) Additional requirement.--No financial assistance 
        shall be made available with respect to NICE prescription drug 
        coverage provided by an entity to an eligible medicare 
        beneficiary unless the entity provides assurances satisfactory 
        to the NICE Board that the entity shall reduce the amount 
        otherwise charged the beneficiary for such coverage by an 
        amount equal to the amount of such assistance.
            ``(3) Special rule where no or low premium charged.--The 
        NICE Board shall establish appropriate procedures to assure 
        that eligible medicare beneficiaries who obtain NICE 
        prescription drug coverage through enrollment in a group health 
        plan which does not impose a premium or imposes a premium that 
        is less than the amount of the financial assistance otherwise 
        provided, are provided the benefit of some of such financial 
        assistance.
    ``(e) Late Enrollment Penalty.--
            ``(1) In general.--Subject to paragraph (2), the NICE Board 
        shall establish procedures for reducing the amount of financial 
        assistance provided under this section on behalf of an eligible 
        medicare beneficiary if the beneficiary fails to obtain and 
        maintain NICE prescription drug coverage during periods in 
        which the beneficiary is eligible to obtain such coverage. Such 
        procedures may be similar to the part B late enrollment penalty 
        provisions under section 1839(b) and shall not take into 
        account periods before the first period in which financial 
        assistance is made available under this section.
            ``(2) Exception.--The late enrollment procedures 
        established pursuant to paragraph (1) shall not apply to an 
        eligible medicare beneficiary who is enrolled under 
        Medicare+Choice plan or a group health plan that provides 
        outpatient prescription drug coverage and the plan terminates 
        or ceases to provide such coverage to the beneficiary, but only 
        if--
                    ``(A) the beneficiary seeks to enroll under a plan 
                or policy that offers NICE prescription drug coverage 
                at the next opportunity that is available to the 
                beneficiary after the effective date of the termination 
                of such coverage; and
                    ``(B) submits evidence of the effective date of the 
                termination of such coverage.
    ``(f) Adjustment of Financial Assistance if Insufficient Funding.--
            ``(1) Limitation of assistance to funds available.--In no 
        case shall the amount of financial assistance provided under 
        this section exceed the amount of funds available for such 
        assistance under the NICE Trust Fund.
            ``(2) Required adjustment.--If the NICE Board determines 
        under section 1860E(b)(3)(C) that the amount in the NICE Trust 
        Fund in the next year will be insufficient to cover the costs 
        of providing financial assistance under this section in such 
        year--
                    ``(A) the NICE Board shall first reduce the 
                percentage specified in subsection (b)(3) to such lower 
                percentage (but not below 10 percent) as may be 
                required, and to adjust the percentage specified under 
                subsection (b)(2) to reflect such reduction;
                    ``(B) if such percentage reductions are not 
                sufficient to reduce the costs to comply with paragraph 
                (1), the NICE Board shall next reduce the income 
                thresholds (as a percentage of the poverty line) under 
                subsection (b) as may be further required; and
                    ``(C) if such previous reductions are still not 
                sufficient to reduce the costs to comply with paragraph 
                (1), the NICE Board shall immediately report to 
                Congress and suspend the provision of financial 
                assistance under this section during such year.
    ``(g) Definitions.--For purposes of this section:
            ``(1) Applicable cost.--The term `applicable cost' means, 
        with respect to NICE prescription drug coverage provided 
        under--
                    ``(A) a NICE medicare supplemental policy, is the 
                premium charged for the policy;
                    ``(B) a Medicare+Choice plan, is the actuarial 
                value of the portion of the adjusted community rate for 
                the plan that is related to providing such coverage, as 
                determined by the NICE Board in consultation with the 
                Secretary; or
                    ``(C) a group health plan, is the actuarial value 
                of the portion of the applicable premium for the plan 
                that is related to providing such coverage, as 
                determined by the NICE Board taking into account the 
                applicable premium for such plan (as defined in section 
                604(1) of the Employee Retirement Income Security Act 
                of 1974).
            ``(2) Poverty line.--The term `poverty line' means the 
        income official poverty line (as defined by the Office of 
        Management and Budget, and revised annually in accordance with 
        section 673(2) of the Omnibus Budget Reconciliation Act of 
        1981) applicable to a family of the size involved.

                              ``nice board

    ``Sec. 1860E. (a) Establishment.--There is established within the 
Department of Health and Human Services a New Insurance Coverage Equity 
Office, which shall be--
            ``(1) outside of the Health Care Financing Administration; 
        and
            ``(2) run by a board to be known as the NICE Board.
    ``(b) Duties.--
            ``(1) In general.--The NICE Board shall administer the NICE 
        drug benefit program under this part.
            ``(2) Ongoing studies.--The NICE Board shall conduct 
        ongoing studies of the following issues:
                    ``(A) The administration of this part.
                    ``(B) The provision of information about the 
                program under the health insurance information, 
                counseling, and assistance grants under section 4360 of 
the Omnibus Budget Reconciliation Act of 1990.
                    ``(C) Ways in which drug utilization can be used to 
                provide better overall care for eligible medicare 
                beneficiaries.
                    ``(D) Savings and potential savings in Federal 
                health care programs which may occur, or can be 
                attributed to, eligible medicare beneficiary access to, 
                and utilization of, outpatient prescription drugs.
                    ``(E) Trends in premium increases and factors that 
                contribute to changes in premiums.
                    ``(F) Integration of the NICE drug benefit program 
                into a reformed medicare program.
                    ``(G) The ability of eligible medicare 
                beneficiaries to afford NICE prescription drug 
                coverage.
                    ``(H) The impact of the program on the prescription 
                drug benefits offered under Medicare+Choice plans and 
                group health plans.
                    ``(I) The appropriateness of the levels of 
                financial assistance provided in the case of eligible 
                medicare beneficiaries who obtain assistance through 
                NICE prescription drug coverage provided under 
                Medicare+Choice plans or group health plans.
            ``(3) Annual report.--
                    ``(A) In general.--Not later than June 1 of each 
                year (beginning with 2003), the NICE Board shall submit 
                an annual report to Congress on the program under this 
                part.
                    ``(B) Information on studies.--Such report shall 
                include a detailed statement on the issues studied 
                under paragraph (2).
                    ``(C) Detailed financial projections and required 
                adjustments in financial assistance.--Such report shall 
                include--
                            ``(i) the report on the financial status of 
                        the NICE Trust Fund under section 1860F; and
                            ``(ii) a statement if, based on such 
                        status, a reduction in financial assistance for 
                        the subsequent year is required under section 
                        1860D(f) and, if so, the manner in which such 
                        reductions will be made.
                Such report may include recommendations regarding 
                increases in financial assistance that should be made 
                in a subsequent year, to the extent they may be made 
                consistent with section 1860D(f)(1).
                    ``(D) Recommendations.--Such report shall include 
                such other recommendations for legislation and 
                administrative actions as the NICE Board considers 
                appropriate.
            ``(4) Study and report regarding expansion.--
                    ``(A) Study.--The NICE Board, in consultation with 
                the National Association of Insurance Commissioners, 
                shall conduct a study on--
                            ``(i) permitting a benefit package under 
                        section 1882 of the Social Security Act (other 
                        than the outpatient prescription drug only 
                        package established under subsection (v)(1)(A) 
                        of such section) to offer outpatient 
                        prescription drugs; and
                            ``(ii) providing financial assistance under 
                        this part on behalf of eligible medicare 
                        beneficiaries receiving coverage under such a 
                        benefit package.
                    ``(B) Report.--Not later than 1 year after all of 
                the members of the NICE Board are appointed under 
                subsection (c), the NICE Board shall submit a detailed 
report to Congress on the study conducted pursuant to subparagraph (A), 
together with any recommendations as determined appropriate by the NICE 
Board.
            ``(5) Recommendations regarding grant program.--The NICE 
        Board shall provide recommendations and necessary information 
        regarding the NICE drug benefit program to the Secretary in 
        order for the Secretary to provide health insurance 
        information, counseling, and assistance grants under section 
        4360 of the Omnibus Budget Reconciliation Act of 1990.
    ``(c) Membership of NICE Board.--
            ``(1) Number and appointment.--
                    ``(A) In general.--The NICE Board shall be composed 
                of 7 members appointed by the President, by and with 
                the advice and consent of the Senate.
                    ``(B) Specific representatives.--In making 
                appointments under subparagraph (A), the President 
                shall ensure that the following groups are represented 
                on the NICE Board:
                            ``(i) Consumers.
                            ``(ii) Private health plan insurers 
                        (including insurers that offer fee-for-service 
                        and managed care plans) with expertise in the 
                        quality, scope, and marketing of health care 
                        services.
                            ``(iii) The Health Care Financing 
                        Administration.
                            ``(iv) State insurance commissioners.
                    ``(C) Secretary of hhs.--The Secretary shall be a 
                nonvoting, ex officio member of the NICE Board.
            ``(2) Deadline for initial appointment.--The initial 
        members of the NICE Board shall be appointed by not later than 
        6 months after the date of enactment of this section.
            ``(3) Terms.--
                    ``(A) In general.--The terms of the members of the 
                NICE Board shall be for 6 years, except that of the 
                members first appointed--
                            ``(i) three shall be appointed for terms of 
                        6 years;
                            ``(ii) two shall be appointed for terms of 
                        4 years; and
                            ``(iii) two shall be appointed for terms of 
                        2 years.
                    ``(B) Vacancies.--Any member appointed to fill a 
                vacancy occurring before the expiration of the term for 
                which the member's predecessor was appointed shall be 
                appointed only for the remainder of that term. A member 
                may serve after the expiration of that member's term 
                until a successor has taken office.
            ``(4) Chairperson.--The President shall designate the 
        chairperson of the NICE Board, except that the representative 
        from the Health Care Financing Administration may not be 
        designated as chairperson.
    ``(d) Operation of the Board.--
            ``(1) Meetings.--The NICE Board shall meet at the call of 
        the chairperson or upon written request of a majority of its 
        members.
            ``(2) Quorum.--A majority of the members of the NICE Board 
        shall constitute a quorum, but a lesser number of members may 
        hold hearings.
    ``(e) Powers of the NICE Board.--
            ``(1) Hearings.--The NICE Board may hold such hearings, sit 
        and act at such times and places, take such testimony, and 
        receive such evidence as the NICE Board considers advisable to 
        carry out the purposes of this part.
            ``(2) Information from federal agencies.--Upon request of 
        the chairperson of the NICE Board, the head of any Federal 
        department or agency shall furnish such information to the NICE 
        Board as is necessary to carry out the functions of the NICE 
        Board under this part.
            ``(3) Postal services.--The NICE Board may use the United 
        States mails in the same manner and under the same conditions 
        as other departments and agencies of the Federal Government.
            ``(4) Gifts.--The NICE Board may accept, use, and dispose 
        of gifts or donations of services or property.
    ``(f) Board Personnel Matters.--
            ``(1) Members.--
                    ``(A) Compensation.--Each member of the NICE Board 
                who is not an officer or employee of the Federal 
                Government shall be compensated at a rate equal to the 
                daily equivalent of the annual rate of basic pay 
                prescribed for level IV of the Executive Schedule under 
                section 5315 of title 5, United States Code, for each 
                day (including travel time) during which such member is 
engaged in the performance of the duties of the NICE Board. All members 
of the NICE Board who are officers or employees of the United States 
shall serve without compensation in addition to that received for their 
services as officers or employees of the United States.
                    ``(B) Travel expenses.--The members of the NICE 
                Board shall be allowed travel expenses, including per 
                diem in lieu of subsistence, at rates authorized for 
                employees of agencies under subchapter I of chapter 57 
                of title 5, United States Code, while away from their 
                homes or regular places of business in the performance 
                of services for the NICE Board.
                    ``(C) Removal.--The President may remove a member 
                of the NICE Board only for neglect of duty or 
                malfeasance in office.
            ``(2) Staff.--
                    ``(A) In general.--The chairperson of the NICE 
                Board may, without regard to the civil service laws and 
                regulations, appoint and terminate an executive 
                director and such other additional personnel as may be 
                necessary to enable the NICE Board to perform its 
                duties. The employment of an executive director shall 
                be subject to confirmation by the NICE Board.
                    ``(B) Compensation.--The chairperson of the NICE 
                Board may fix the compensation of the executive 
                director and other personnel without regard to the 
                provisions of chapter 51 and subchapter III of chapter 
                53 of title 5, United States Code, relating to 
                classification of positions and General Schedule pay 
                rates, except that the rate of pay for the executive 
                director and other personnel may not exceed the rate 
                payable for level V of the Executive Schedule under 
                section 5316 of such title.
                    ``(C) Detail of government employees.--Any Federal 
                Government employee may be detailed to the NICE Board 
                without further reimbursement, and such detail shall be 
                without interruption or loss of civil service status or 
                privilege.
                    ``(D) Procurement of temporary and intermittent 
                services.--The chairperson of the NICE Board may 
                procure temporary and intermittent services under 
                section 3109(b) of title 5, United States Code, at 
                rates for individuals which do not exceed the daily 
                equivalent of the annual rate of basic pay prescribed 
                for level V of the Executive Schedule under section 
                5316 of such title.

                           ``nice trust fund

    ``Sec. 1860F. (a) Creation of Trust Fund.--There is established in 
the Treasury of the United States a trust fund to be known as the `NICE 
Trust Fund', consisting of such amounts as may be appropriated or 
credited to the NICE Trust Fund as provided in this section.
    ``(b) Amounts in NICE Trust Fund.--
            ``(1) In general.--The NICE Trust Fund shall consist of the 
        following amounts:
                    ``(A) Amounts deposited in, or appropriated to, the 
                NICE Trust Fund as provided in this section.
                    ``(B) Any gifts and bequests made to such Trust 
                Fund.
            ``(2) Appropriation.--There are hereby authorized to be 
        appropriated to the NICE Trust Fund amounts from the on-budget 
        surplus.
            ``(3) Transfer.--The amounts appropriated pursuant to 
        paragraph (2) shall be transferred by the Secretary of the 
        Treasury from time to time from the general fund in the 
        Treasury to the NICE Trust Fund.
    ``(c) Expenditures From Trust Fund.--Amounts in the NICE Trust Fund 
shall only be available for making expenditures to carry out this part, 
including administrative expenses of the NICE Board.
    ``(d) Application of HI Trust Fund Provisions.--The provisions of 
subsections (b) through (e) of section 1817 shall apply to the NICE 
Board, this part, and the NICE Trust Fund in the same manner as they 
apply to the Board of Trustees (and the Secretary and the Health Care 
Financing Administration), part A, and the Federal Hospital Insurance 
Trust Fund, respectively, except that--
            ``(1) the Board of Trustees shall be composed of the NICE 
        Board and the Secretary of the Treasury; and
            ``(2) the annual report shall be submitted as part of the 
        annual report provided under section 1860E(b)(3).''.

SEC. 3. CONFORMING CHANGES TO MEDIGAP.

    Section 1882 of the Social Security Act (42 U.S.C. 1395ss) is 
amended by adding at the end the following:
    ``(v)(1) Notwithstanding subsection (p), the benefit packages 
established under such subsection shall be revised (in the manner 
described in subsection (p)(1)(E)) so that--
            ``(A) there is established a benefit package consisting of 
        only outpatient prescription drug benefits that are consistent 
        with NICE prescription drug coverage (as defined in section 
        1860B(b)) and that are offered only through the NICE Board and 
        in accordance with part D;
            ``(B) such package shall permit coverage of outpatient 
        prescription drugs that exceeds the thresholds established 
        under such section;
            ``(C) no package (except the package established under 
        subparagraph (A)) includes coverage of outpatient prescription 
        drugs provided under part D; and
            ``(D) other benefit packages that do not include 
        prescription drug coverage may be substituted for the packages 
        eliminated under subparagraph (C).
In this title, a medicare supplemental policy which has the benefit 
package described in subparagraph (A) is referred to as a `NICE 
medicare supplemental policy'. The revisions of benefit packages under 
this paragraph shall not effect the renewal of medicare supplemental 
policies under this section that are in existence on the effective date 
of such revisions, and shall be designed to avoid adverse selection and 
to be affordable.
    ``(2) Notwithstanding subsection (d), nothing in this section shall 
be construed as prohibiting or making unlawful--
            ``(A) the sale or issuance of a NICE medicare supplemental 
        policy to an individual who has a medicare supplemental policy 
        that does not provide coverage of outpatient prescription 
        drugs;
            ``(B) the sale or issuance of a medicare supplemental 
        policy that does not provide coverage of outpatient 
        prescription drugs to an individual who has a NICE medicare 
        supplemental policy; or
            ``(C) the sale or issuance of such a NICE medicare 
        supplemental policy to an individual who is enrolled in a 
        Medicare+Choice plan that does not provide coverage of 
        outpatient prescription drugs (not including coverage required 
        to be provided under part A or B).
The sale or issuance of policies under the circumstances described in 
this paragraph shall be treated as not `duplicative' under this 
section.
    ``(3)(A) No medicare supplemental policy of the insurer that is in 
effect on the effective date of the revision under paragraph (1) and 
that has a benefit package classified as `H', `I', or `J' under the 
standards established by subsection (p)(2) shall be deemed to meet the 
standards in subsection (c) unless the insurer--
            ``(i) provides written notice, within a 60-day period 
        specified by the revisions, to the policyholder or certificate 
        holder (at the most recent available address) of the offer 
        described in clause (ii) and of the fact that, so long as they 
        retain coverage under such policy, they are unable to purchase 
        a NICE medicare supplemental policy; and
            ``(ii) offers the individual under the terms described in 
        subparagraph (B), during a period of at least 180 days 
        beginning on the date specified in subparagraph (C), 
        institution of coverage effective as of a date specified by the 
        revisions, a non-NICE medicare supplemental policy that the 
        Secretary determines is most comparable to the policy in which 
        the individual is enrolled (but for coverage of prescription 
        drugs).
    ``(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 pre-
        existing condition under such policy.
    ``(C) The date specified in this subparagraph for a policy issued 
in a State is such date as specified by the revisions (taking into 
account the method used under subsection (n)(4) for establishing a date 
under that subsection).
    ``(4) In applying this section with respect to NICE medicare 
supplemental policies, any reference to the `Secretary' is deemed a 
reference to the NICE Board.''.

SEC. 4. PROVISION OF INFORMATION ON NICE DRUG BENEFIT PROGRAM UNDER 
              HEALTH INSURANCE INFORMATION, COUNSELING, AND ASSISTANCE 
              GRANTS.

    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 ``, information regarding the NICE drug 
benefit program under part D of title XVIII of the Social Security Act, 
and information''.
                                 <all>
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