I 

108TH CONGRESS 

2D SESSION H. R. 4195 

To amend part D of title XVIII of the Social Security Act to improve 

the coordination of prescription drug coverage provided under retiree 

plans and State pharmaceutical assistance programs with the prescription 

drug benefit provided under the Medicare Program, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 22, 2004 

Mr. MENENDEZ (for himself, Mr. HOLT, Mr. PALLONE, Mr. ANDREWS, Mr. 

PASCRELL, Mr. ROTHMAN, and Mr. PAYNE) introduced the following bill; 

which was referred to the Committee on Energy and Commerce, and in 

addition to the Committee on Ways and Means, 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 part D of title XVIII of the Social Security 

Act to improve the coordination of prescription drug 

coverage provided under retiree plans and State pharmaceutical assistance programs with the prescription drug 

benefit provided under the Medicare Program, and for 

other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 
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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Preserving Access to 

3 Affordable Drugs Act of 2004’’. 

4 SEC. 2. ELIMINATION OF DISCRIMINATORY TREATMENT OF 

5 EMPLOYER PLANS. 

6 (a) ELIMINATION OF TRUE OUT-OF-POCKET LIMITA7 TION.—Section 1860D–2(b)(4)(C) of the Social Security 

8 Act, as added by section 101(a) of the Medicare Prescrip9 tion Drug, Improvement, and Modernization Act of 2003 

10 (Public Law 108–173), is amended to read as follows: 

11 ‘‘(C) APPLICATION.—In applying subpara12 graph (A), incurred costs shall only include 

13 costs incurred with respect to covered part D 

14 drugs for the annual deductible described in 

15 paragraph (1), for cost-sharing described in 

16 paragraph (2), and for amounts for which bene17 fits are not provided because of the application 

18 of the initial coverage limit described in para19 graph (3).’’. 

20 (b) EQUALIZATION OF SUBSIDIES.—Notwithstanding 

21 any other provision of law, the Secretary of Health and 

22 Human Services shall provide for such increase in the spe23 cial subsidy payment amounts under section 1860D– 

24 22(a)(3) of the Social Security Act, as added by section 

25 101(a) of the Medicare Prescription Drug, Improvement, 

26 and Modernization Act of 2003 (Public Law 108–173), 
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1 as may be appropriate to provide for payments in the ag2 gregate equivalent to the payments that would have been 

3 made under section 1860D–15 of such Act if the individ4 uals were not enrolled in a qualified retiree prescription 

5 drug plan. In making such computation, the Secretary 

6 shall not take into account the application of the amend7 ments made by section 1202 of the Medicare Prescription 

8 Drug, Improvement, and Modernization Act of 2003. 

9 SEC. 3. DIRECT SUBSIDY FOR CERTAIN STATE PHARMA10 CEUTICAL ASSISTANCE PROGRAMS 

11 Part D of title XVIII of the Social Security Act (as 

12 so added) is amended by inserting after section 1860D– 

13 23 the following: 

14 ‘‘DIRECT SUBSIDIES FOR CERTAIN STATE

15 PHARMACEUTICAL ASSISTANCE PROGRAMS

16 ‘‘SEC. 1860D–23A. (a) DIRECT SUBSIDY.— 

17 ‘‘(1) IN GENERAL.—The Secretary shall provide 

18 for the payment to a State offering a State pharma19 ceutical assistance program described in section 

20 1860D–23(b)(1) for each individual who is eligible 

21 for, but not enrolled in, a prescription drug plan or 

22 MA–PD plan under this part, and who is enrolled in 

23 such program for each month for which such indi24 vidual is so enrolled. 

25 ‘‘(2) AMOUNT OF PAYMENT.— 
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1 ‘‘(A) IN GENERAL.—The amount of the 

2 payment under paragraph (1) shall be an 

3 amount equal to the special subsidy payment 

4 amount determined under section 1860D– 

5 22(a)(3) for a qualifying covered retiree for a 

6 coverage year enrolled with the sponsor of a 

7 qualified retiree prescription drug plan. 

8 ‘‘(b) ADDITIONAL SUBSIDY.— 

9 ‘‘(1) IN GENERAL.—The Secretary shall provide 

10 for the payment to a State offering a State pharma11 ceutical assistance program described in section 

12 1860D–23(b)(1) for each applicable low-income indi13 vidual enrolled in the program for each month for 

14 which such individual is so enrolled. 

15 ‘‘(2) AMOUNT OF PAYMENT.— 

16 ‘‘(A) IN GENERAL.—The amount of the 

17 payment under paragraph (1) shall be the 

18 amount the Secretary estimates would have 

19 been made to a prescription drug plan or MA– 

20 PD plan under section 1860D–14 with respect 

21 to the applicable low-income individual if such 

22 individual was enrolled in such a plan. 

23 ‘‘(B) MAXIMUM PAYMENTS.—In no case 

24 may the amount of the payment determined 

25 under subparagraph (A) with respect to an ap-
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1 plicable low-income individual exceed, as esti2 mated by the Secretary, the average amount 

3 paid in a year under section 1860D–14 on be4 half of a subsidy eligible individual (as defined 

5 in section 1860D–14(a)(3)(A)) with income 

6 that is the same as the income of the applicable 

7 low-income individual. 

8 ‘‘(3) APPLICABLE LOW-INCOME INDIVIDUAL.— 

9 For purposes of this subsection, the term ‘applicable 

10 low-income individual’ means an individual who— 

11 ‘‘(A) is eligible for, but not enrolled in, a 

12 prescription drug plan or MA–PD plan under 

13 this part, and who is enrolled in a State phar14 maceutical assistance program described in sec15 tion 1860D–23(b)(1); and 

16 ‘‘(B) would be a subsidy eligible individual 

17 (as defined in section 1860D–14(a)(3)(A)) if 

18 the individual were enrolled in such a plan. 

19 ‘‘(c) PAYMENT METHODS.— 

20 ‘‘(1) IN GENERAL.—Payments under this sec21 tion shall be based on such a method as the Sec22 retary determines. The Secretary may establish a 

23 payment method by which interim payments of 

24 amounts under this section are made during a year 

25 based on the Secretary’s best estimate of amounts 
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1 that will be payable after obtaining all of the infor2 mation. 

3 ‘‘(2) SOURCE OF PAYMENTS.—Payments under 

4 this section shall be made from the Medicare Pre5 scription Drug Account. 

6 ‘‘(d) CONSTRUCTION.—Nothing in this section, sec7 tion 1860D–23, or section 1860D–24 shall be construed 

8 as requiring a prescription drug plan or MA–PD plan to 

9 coordinate coverage provided under such plan with cov10 erage provided under a State pharmaceutical assistance 

11 program described in section 1860D–23(b)(1) that is op12 erated by a State which receives a payment under this sec13 tion.’’. 

14 SEC. 4. FACILITATION OF COORDINATION. 

15 Section 1860D–24(c)(1) of the Social Security Act 

16 (as so added) is amended by striking ‘‘all methods of oper17 ation’’ and inserting ‘‘its own methods of operation, except 

18 that a PDP sponsor or MA organization may not require 

19 a State Pharmaceutical Assistance Program or an RX 

20 plan described in subsection (b) to apply such tools when 

21 coordinating benefits’’. 

22 SEC. 5. ALLOWING MEDICAID WRAP. 

23 Section 1935(d) of the Social Security Act, as added 

24 by section 103(c) of the Medicare Prescription Drug, Im-
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1 provement, and Modernization Act of 2003 (Public Law 

2 108–173), is repealed. 

3 SEC. 6. REPEAL OF COMPARATIVE COST ADJUSTMENT 

4 PROGRAM. 

5 Effective as if included in the enactment of the Medi6 care Prescription Drug, Improvement, and Modernization 

7 Act of 2003 (Public Law 108–173), subtitle E of title II 

8 of such Act is repealed and any provisions of law amended 

9 by such subtitle are restored as if such subtitle had not 

10 been enacted. 

11 SEC. 7. PROVISION OF WRAP-AROUND PRESCRIPTION 

12 DRUG COVERAGE THROUGH MEDIGAP. 

13 Section 1882(v) of the Social Security Act (42 U.S.C. 

14 1395ss(v)), as added by section 104(a) of the Medicare 

15 Prescription Drug, Improvement, and Modernization Act 

16 of 2003 (Public Law 108–173), is amended as follows: 

17 (1) In paragraph (1)(A), by inserting ‘‘, other 

18 than such a policy that provides wrap-around pre19 scription drug coverage included within a range of 

20 such coverage approved under subparagraph 

21 (D)(ii),’’ after ‘‘paragraph (6)(A))’’. 

22 (2) Add at the end of paragraph (1) the fol23 lowing new subparagraph: 

24 ‘‘(D) WRAP-AROUND PRESCRIPTION DRUG

25 COVERAGE.— 
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1 ‘‘(i) IN GENERAL.—Notwithstanding 

2 any other provision of this subsection, a 

3 medigap Rx policy that provides wrap4 around prescription drug coverage included 

5 within a range of such coverage approved 

6 by the Secretary under clause (ii) may be 

7 offered to part D enrollees. 

8 ‘‘(ii) DEVELOPMENT OF STAND9 ARDS.—The Secretary shall approve a 

10 range of wrap-around prescription drug 

11 coverage that may be offered under this 

12 subparagraph to part D enrollees.’’. 

13 SEC. 8. EFFECTIVE DATE. 

14 The amendments made by this Act shall take effect 

15 as if included in the enactment of the Medicare Prescrip16 tion Drug, Improvement, and Modernization Act of 2003 

17 (Public Law 108–173). 

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