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 finan-
cial assistance with respect to coverage of an el-
igible medicare beneficiary under NICE pre-
scription 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 PROC-
ESS.—
‘‘(A) IN
GENERAL.—The NICE Board
shall establish—
‘‘(i) procedures regarding the informa-
tion to be included in applications under
this section and for the time and manner
in which such applications should be sub-
mitted;
‘‘(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 ap-
plication 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 pur-
posefully 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 DE-
FINED.—For purposes of this title, the term ‘NICE pre-
scription drug coverage’ means coverage of outpatient pre-
scription 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 prescrip-
tion 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 acces-
sible and convenient to all eligible medicare bene-
ficiaries who have such coverage and provide for ac-
cess on a timely basis to new outpatient prescription
drugs and they become available.
‘‘(3) NO
PRE-EXISTING
CONDITION
EXCLU-
SIONS.—There are no pre-existing condition exclu-
sions or similar exclusions applied with respect to
the coverage.
‘‘(4) LIMITS
ON
FORMULARIES.—If the cov-
erage uses a formulary, the formulary meets the re-
quirements of subsection (d).
‘‘(c) THRESHOLD BENEFIT LEVEL.—
‘‘(1) IN GENERAL.—The NICE Board shall re-
quest the National Association of Insurance Com-
missioners to revise the model standards for medi-
care supplemental policies pursuant to section
1882(v) for the purpose of—
‘‘(A) defining the term ‘outpatient pre-
scription drugs’; and
‘‘(B) specifying a threshold level of benefits
for NICE prescription drug coverage.
‘‘(2) CONSIDERATIONS.—
‘‘(A) DEFINITION.—In establishing a defi-
nition under paragraph (1)(A), the Board shall
request that the National Association of Insur-
ance Commissioners take into account the defi-
nition 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 Associa-
tion 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 appro-
priate) optional coverage of drugs (except
for agents used to promote smoking ces-
sation) 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 speci-
fied under this subsection.
‘‘(d) FORMULARY REQUIREMENTS.—
‘‘(1) IN GENERAL.—A formulary meets the re-
quirements of this subsection only if—
‘‘(A) such formulary is based on the med-
ical 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 sig-
nificant 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 pro-
vides 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 bet-
ter 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 substi-
tution, consistent with the specific requirements of this
part and applicable law.
Board) which changes the level of financial as-
sistance 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 bene-
ficiary is equal to the following percentage of the ap-
plicable 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 eligi-
ble medicare beneficiary who applies for en-
hanced financial assistance under subsection (c)
and whose income (as verified under such sub-
section) does not exceed 150 percent of the pov-
erty line, the percentage is 100 percent.
‘‘(B) OTHER
PERCENT
IF
INCOME
BE-
TWEEN 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 speci-
fy the percentage consistent with the following
rules:
‘‘(i) RANGE.—The percentage may
not exceed 100 percent nor be less than
the percentage specified under subpara-
graph (C).
‘‘(ii) SLIDING
SCALE.—The percent-
age 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
BENE-
FICIARIES.—In the case of any other eligible
medicare beneficiary, the percentage is 25 per-
cent.
‘‘(2) LIMITATION IN CASE OF COVERAGE PRO-
VIDED THROUGH A MEDICARE+CHOICE PLAN.—In
the case of financial assistance provided under this
section with respect to NICE prescription drug cov-
erage 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 out-
patient prescription drugs.
‘‘(c) APPLICATION FOR ENHANCED FINANCIAL AS-
SISTANCE.—
‘‘(1) IN GENERAL.—The NICE Board shall es-
tablish procedures under which an individual who
desires enhanced financial assistance under this sec-
tion may voluntarily apply for an income determina-
tion.
‘‘(2) INCOME VERIFICATION.—
‘‘(A) IN GENERAL.—Under the procedures
established under paragraph (1), if an indi-
vidual voluntarily applies for an income deter-
mination 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 INFORMA-
TION.—Information obtained under subpara-
graph (A) may be used by officers and employ-
ees 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 in-
come 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 pay-
ment to the issuer of the NICE medicare supple-
mental policy involved, the Medicare+Choice organi-
zation 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 en-
tity to an eligible medicare beneficiary unless the en-
tity provides assurances satisfactory to the NICE
Board that the entity shall reduce the amount other-
wise charged the beneficiary for such coverage by an
amount equal to the amount of such assistance.
‘‘(3) SPECIAL RULE WHERE NO OR LOW PRE-
MIUM CHARGED.—The NICE Board shall establish
appropriate procedures to assure that eligible medi-
care 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 finan-
cial 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 re-
ducing 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 peri-
ods before the first period in which financial assist-
ance is made available under this section.
‘‘(2) EXCEPTION.—The late enrollment proce-
dures 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 IN-
SUFFICIENT FUNDING.—
‘‘(1) LIMITATION
OF
ASSISTANCE
TO
FUNDS
AVAILABLE.—In no case shall the amount of finan-
cial 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 per-
cent) as may be required, and to adjust the per-
centage specified under subsection (b)(2) to re-
flect such reduction;
‘‘(B) if such percentage reductions are not
sufficient to reduce the costs to comply with
paragraph (1), the NICE Board shall next re-
duce 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 imme-
diately report to Congress and suspend the pro-
vision 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 pol-
icy, is the premium charged for the policy;
‘‘(B) a Medicare+Choice plan, is the actu-
arial value of the portion of the adjusted com-
munity rate for the plan that is related to pro-
viding 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) appli-
cable to a family of the size involved.
‘‘NICE BOARD
‘‘SEC. 1860E. (a) ESTABLISHMENT.—There is estab-
lished within the Department of Health and Human Serv-
ices a New Insurance Coverage Equity Office, which shall
be—
‘‘(1) outside of the Health Care Financing Ad-
ministration; and
‘‘(2) run by a board to be known as the NICE
Board.
‘‘(b) DUTIES.—
‘‘(1) IN GENERAL.—The NICE Board shall ad-
minister 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 infor-
mation, counseling, and assistance grants under
section 4360 of the Omnibus Budget Reconcili-
ation 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 Fed-
eral health care programs which may occur, or
can be attributed to, eligible medicare bene-
ficiary access to, and utilization of, outpatient
prescription drugs.
‘‘(E) Trends in premium increases and fac-
tors 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 bene-
ficiaries to afford NICE prescription drug cov-
erage.
‘‘(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 fi-
nancial assistance provided in the case of eligi-
ble medicare beneficiaries who obtain assistance
through NICE prescription drug coverage pro-
vided 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 Con-
gress 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 re-
garding increases in financial assistance that
should be made in a subsequent year, to the ex-
tent 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 EXPAN-
SION.—
‘‘(A) STUDY.—The NICE Board, in con-
sultation with the National Association of In-
surance 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 sub-
section (v)(1)(A) of such section) to offer
outpatient prescription drugs; and
‘‘(ii) providing financial assistance
under this part on behalf of eligible medi-
care 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 Con-
gress on the study conducted pursuant to sub-
paragraph (A), together with any recommenda-
tions as determined appropriate by the NICE
Board.
‘‘(5) RECOMMENDATIONS
REGARDING
GRANT
PROGRAM.—The NICE Board shall provide rec-
ommendations 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 con-
sent 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 (in-
cluding 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 Ad-
ministration.
‘‘(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 ap-
pointed 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 des-
ignate the chairperson of the NICE Board, except
that the representative from the Health Care Fi-
nancing 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 re-
quest 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
AGEN-
CIES.—Upon request of the chairperson of the NICE
Board, the head of any Federal department or agen-
cy 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 man-
ner and under the same conditions as other depart-
ments 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 em-
ployee of the Federal Government shall be com-
pensated 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 compensa-
tion in addition to that received for their serv-
ices as officers or employees of the United
States.
‘‘(B) TRAVEL
EXPENSES.—The members
of the NICE Board shall be allowed travel ex-
penses, including per diem in lieu of subsist-
ence, at rates authorized for employees of agen-
cies under subchapter I of chapter 57 of title 5,
United States Code, while away from their
homes or regular places of business in the per-
formance of services for the NICE Board.
‘‘(C) REMOVAL.—The President may re-
move a member of the NICE Board only for ne-
glect 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 en-
able 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 with-
out regard to the provisions of chapter 51 and
subchapter III of chapter 53 of title 5, United
States Code, relating to classification of posi-
tions 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
EMPLOY-
EES.—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 individ-
uals 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’, con-
sisting of such amounts as may be appropriated or cred-
ited 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 appro-
priated 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 au-
thorized 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 mak-
ing expenditures to carry out this part, including adminis-
trative expenses of the NICE Board.
‘‘(d) APPLICATION
OF HI TRUST FUND PROVI-
SIONS.—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 Treas-
ury; 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 re-
vised (in the manner described in subsection (p)(1)(E))
so that—
‘‘(A) there is established a benefit package con-
sisting of only outpatient prescription drug benefits
that are consistent with NICE prescription drug cov-
erage (as defined in section 1860B(b)) and that are
offered only through the NICE Board and in accord-
ance with part D;
‘‘(B) such package shall permit coverage of out-
patient prescription drugs that exceeds the thresh-
olds established under such section;
‘‘(C) no package (except the package estab-
lished 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 revi-
sions 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 se-
lection 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 medi-
care supplemental policy that does not provide cov-
erage of outpatient prescription drugs;
‘‘(B) the sale or issuance of a medicare supple-
mental policy that does not provide coverage of out-
patient prescription drugs to an individual who has
a NICE medicare supplemental policy; or
‘‘(C) the sale or issuance of such a NICE medi-
care supplemental policy to an individual who is en-
rolled in a Medicare+Choice plan that does not pro-
vide 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 ‘dupli-
cative’ under this section.
‘‘(3)(A) No medicare supplemental policy of the in-
surer that is in effect on the effective date of the revision
under paragraph (1) and that has a benefit package classi-
fied 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 pe-
riod specified by the revisions, to the policyholder or
certificate holder (at the most recent available ad-
dress) 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 medi-
care supplemental policy; and
‘‘(ii) offers the individual under the terms de-
scribed 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 de-
termines is most comparable to the policy in which
the individual is enrolled (but for coverage of pre-
scription drugs).
‘‘(B) The terms described under this subparagraph
are terms which do not—
‘‘(i) deny or condition the issuance or effective-
ness 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 sub-
section (n)(4) for establishing a date under that sub-
section).
‘‘(4) In applying this section with respect to NICE
medicare supplemental policies, any reference to the ‘Sec-
retary’ is deemed a reference to the NICE Board.’’.
SEC. 4. PROVISION OF INFORMATION ON NICE DRUG BEN-
EFIT PROGRAM UNDER HEALTH INSURANCE
INFORMATION, COUNSELING, AND ASSIST-
ANCE 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’’.
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