I
107TH CONGRESS
1ST SESSION
H. R. 2632
To amend title XVIII of the Social Security Act to provide Medicare
beneficiaries with access to affordable outpatient prescription drugs.
IN THE HOUSE OF REPRESENTATIVES
JULY 25, 2001
Mr. FOLEY (for himself, Mrs. CAPITO, and Mr. TERRY) introduced the fol-
lowing bill; which was referred to the Committee on Energy and Com-
merce, and in addition to the Committee on Ways and Means, for a pe-
riod to be subsequently determined by the Speaker, in each case for con-
sideration of such provisions as fall within the jurisdiction of the com-
mittee concerned
A BILL
To amend title XVIII of the Social Security Act to provide
Medicare beneficiaries with access to affordable out-
patient prescription drugs.
Be it enacted by the Senate and House of Representa-
tives 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
‘‘Medicare Rx Drug Discount and Security 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. Voluntary Medicare Outpatient Prescription Drug Discount and Secu-
rity Program.
‘‘PART D—VOLUNTARY MEDICARE OUTPATIENT PRESCRIPTION DRUG
DISCOUNT AND SECURITY PROGRAM
‘‘Sec. 1860. Definitions.
‘‘SUBPART 1—ESTABLISHMENT OF VOLUNTARY MEDICARE OUTPATIENT
PRESCRIPTION DRUG DISCOUNT AND SECURITY PROGRAM
‘‘Sec. 1860A. Establishment of program.
‘‘Sec. 1860B. Enrollment.
‘‘Sec. 1860C. Providing enrollment and coverage information to bene-
ficiaries.
‘‘Sec. 1860D. Enrollee protections.
‘‘Sec. 1860E. Annual enrollment fee.
‘‘Sec. 1860F. Benefits under the program.
‘‘Sec. 1860G. Selection of entities to provide prescription drug coverage.
‘‘Sec. 1860H. Payments to eligible entities for administering the cata-
strophic benefit.
‘‘Sec. 1860I. Determination of income levels.
‘‘Sec. 1860J. Appropriations.
‘‘SUBPART 2—ESTABLISHMENT OF THE MEDICARE PRESCRIPTION DRUG
AGENCY
‘‘Sec. 1860S. Medicare Prescription Drug Agency.
‘‘Sec. 1860T. Commissioner; Deputy Commissioner; other officers.
‘‘Sec. 1860U. Administrative duties of the Commissioner.
‘‘Sec. 1860V. Medicare Competition and Prescription Drug Advisory
Board.’’.
Sec. 3. Commissioner as member of the board of trustees of the medicare trust
funds.
Sec. 4. Exclusion of part D costs from determination of part B monthly pre-
mium.
Sec. 5. Medigap revisions.
SEC. 2. VOLUNTARY MEDICARE OUTPATIENT PRESCRIP-
TION DRUG DISCOUNT AND SECURITY PRO-
GRAM.
(a) ESTABLISHMENT OF PROGRAM.—Title XVIII of
the Social Security Act (42 U.S.C. 1395 et seq.) is amend-
ed by redesignating part D as part E and by inserting
after part C the following new part:
‘‘PART D—VOLUNTARY MEDICARE OUTPATIENT PRE-
SCRIPTION DRUG DISCOUNT AND SECURITY PRO-
GRAM
‘‘DEFINITIONS
‘‘SEC. 1860. In this part:
‘‘(1) 
COMMISSIONER.—The 
term 
‘Commis-
sioner’ means the Commissioner of Medicare Pre-
scription Drugs appointed under section 1860S(a).
‘‘(2) COVERED OUTPATIENT DRUG.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘covered outpatient
drug’ means—
‘‘(i) a drug that may be dispensed
only upon a prescription and that is de-
scribed in clause (i) or (ii) of subparagraph
(A) of section 1927(k)(2); or
‘‘(ii) a biological product or insulin de-
scribed in subparagraph (B) or (C) of such
section.
‘‘(B) EXCLUSIONS.—
‘‘(i) IN GENERAL.—The term ‘covered
outpatient drug’ does not include drugs or
classes of drugs, or their medical uses,
which may be excluded from coverage or
otherwise 
restricted 
under 
section
1927(d)(2), other than those restricted
under subparagraph (E) of such section
(relating to smoking cessation agents).
‘‘(ii) AVOIDANCE OF DUPLICATE COV-
ERAGE.—A drug prescribed for an indi-
vidual that would otherwise be a covered
outpatient drug under this part shall not
be considered to be such a drug if payment
for the drug is available under part A or
B (but such drug shall be so considered if
such payment is not available because the
eligible beneficiary has exhausted benefits
under part A or B), without regard to
whether the individual is entitled to bene-
fits under part A or enrolled under part B.
‘‘(3) ELIGIBLE BENEFICIARY.—The term ‘eligi-
ble beneficiary’ means an individual who is—
‘‘(A) eligible for benefits under part A or
enrolled under part B; and
‘‘(B) not eligible for prescription drug cov-
erage under a medicaid plan under title XIX.
‘‘(4) ELIGIBLE ENTITY.—The term ‘eligible en-
tity’ means any entity that the Commissioner deter-
mines to be appropriate to provide the benefits
under this part, including—
‘‘(A) pharmaceutical benefit management
companies;
‘‘(B) wholesale and retail pharmacy deliv-
ery systems;
‘‘(C) insurers;
‘‘(D) Medicare+Choice organizations;
‘‘(E) other entities; or
‘‘(F) any combination of the entities de-
scribed in subparagraphs (A) through (E).
‘‘(5) 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.
‘‘SUBPART 1—ESTABLISHMENT OF VOLUNTARY MEDI-
CARE OUTPATIENT PRESCRIPTION DRUG DISCOUNT
AND SECURITY PROGRAM
‘‘ESTABLISHMENT OF PROGRAM
‘‘SEC. 1860A. (a) PROVISION
OF BENEFIT.—The
Commissioner shall establish a Medicare Outpatient Pre-
scription Drug Discount and Security Program under
which an eligible beneficiary may voluntarily enroll and re-
ceive benefits under this part through enrollment with an
eligible entity with a contract under this part.
‘‘(b) PROGRAM TO BEGIN IN 2003.—The Commis-
sioner shall establish the program under this part in a
manner so that benefits are first provided for months be-
ginning with January 2003.
‘‘(c) VOLUNTARY NATURE OF PROGRAM.—Nothing
in this part shall be construed as requiring an eligible ben-
eficiary to enroll in the program under this part.
‘‘(d) FINANCING.—The costs of providing benefits
under this part shall be payable from the Federal Supple-
mentary Medical Insurance Trust Fund established under
section 1841.
‘‘ENROLLMENT
‘‘SEC. 1860B. (a) ENROLLMENT UNDER PART D.—
‘‘(1) ESTABLISHMENT OF PROCESS.—
‘‘(A) IN
GENERAL.—The Commissioner
shall establish a process through which an eligi-
ble beneficiary (including an eligible beneficiary
enrolled in a Medicare+Choice plan offered by
a Medicare+Choice organization) may make an
election to enroll under this part. Except as
otherwise provided in this subsection, such
process shall be similar to the process for en-
rollment under part B under section 1837.
‘‘(B) REQUIREMENT
OF
ENROLLMENT.—
An eligible beneficiary must enroll under this
part in order to be eligible to receive the bene-
fits under this part.
‘‘(2) ENROLLMENT PERIODS.—
‘‘(A) IN
GENERAL.—Except as provided
under subparagraph (B) or (C), an eligible ben-
eficiary may not enroll in the program under
this part during any period after the bene-
ficiary’s initial enrollment period under part B
(as determined under section 1837).
‘‘(B) SPECIAL ENROLLMENT PERIOD.—In
the case of eligible beneficiaries that have re-
cently lost eligibility for prescription drug cov-
erage under a medicaid plan under title XIX,
the Commissioner shall establish a special en-
rollment period in which such beneficiaries may
enroll under this part.
‘‘(C) OPEN ENROLLMENT PERIOD IN 2003
FOR CURRENT BENEFICIARIES.—The Commis-
sioner shall establish a period, which shall begin
on the date on which the Commissioner first be-
gins to accept elections for enrollment under
this part and shall end on December 31, 2003,
during which any eligible beneficiary may—
‘‘(i) enroll under this part; or
‘‘(ii) enroll or re-enroll under this part
after having previously declined or termi-
nated such enrollment.
‘‘(3) PERIOD OF COVERAGE.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B) and subject to subparagraph
(C), an eligible beneficiary’s coverage under the
program under this part shall be effective for
the period provided under section 1838, as if
that section applied to the program under this
part.
‘‘(B) ENROLLMENT
DURING
OPEN
AND
SPECIAL
ENROLLMENT.—Subject to subpara-
graph (C), an eligible beneficiary who enrolls
under the program under this part under sub-
paragraph (B) or (C) of paragraph (2) shall be
entitled to the benefits under this part begin-
ning on the first day of the month following the
month in which such enrollment occurs.
‘‘(C) LIMITATION.—Coverage under this
part shall not begin prior to January 1, 2003.
‘‘(4) PART D COVERAGE TERMINATED BY TER-
MINATION OF COVERAGE UNDER PARTS A AND B OR
ELIGIBILITY FOR MEDICAL ASSISTANCE.—
‘‘(A) IN
GENERAL.—In addition to the
causes of termination specified in section 1838,
the Commissioner shall terminate an individ-
ual’s coverage under this part if the individual
is—
‘‘(i) no longer enrolled in part A or B;
or
‘‘(ii) eligible for prescription drug cov-
erage under a medicaid plan under title
XIX.
‘‘(B) EFFECTIVE DATE.—The termination
described in subparagraph (A) shall be effective
on the effective date of—
‘‘(i) the termination of coverage under
part A or (if later) under part B; or
‘‘(ii) the coverage under title XIX.
‘‘(b) ENROLLMENT WITH ELIGIBLE ENTITY.—
‘‘(1) PROCESS.—
‘‘(A) IN
GENERAL.—The Commissioner
shall establish a process through which an eligi-
ble beneficiary who is enrolled under this part
shall make an annual election to enroll with any
eligible entity that has been awarded a contract
under this part and serves the geographic area
in which the beneficiary resides.
‘‘(B) RULES.—In establishing the process
under subparagraph (A), the Commissioner
shall use rules similar to the rules for enroll-
ment 
and 
disenrollment 
with 
a
Medicare+Choice plan under section 1851 (in-
cluding the special election periods under sub-
section (e)(4) of such section).
‘‘(2) MEDICARE+CHOICE ENROLLEES.—An eli-
gible beneficiary who is enrolled under this part and
enrolled in a Medicare+Choice plan offered by a
Medicare+Choice organization must enroll with an
eligible entity in order to receive benefits under this
part. The beneficiary may elect to receive such bene-
fits from the Medicare+Choice organization in
which the beneficiary is enrolled if the organization
has been awarded a contract under this part.
‘‘(3) COMPETITION.—Eligible entities with a
contract under this part shall compete for bene-
ficiaries on the basis of discounts, formularies, phar-
macy networks, and other services provided for
under the contract.
‘‘(c) ENROLLMENT
PERIOD
FOR
BENEFITS
IN
2003.—The processes developed under subsections (a) and
(b) shall ensure that eligible beneficiaries are permitted
to enroll under this part and with an eligible entity prior
to January 1, 2003, in order to ensure that coverage
under this part is effective as of such date.
‘‘PROVIDING ENROLLMENT AND COVERAGE INFORMATION
TO BENEFICIARIES
‘‘SEC. 1860C. (a) ACTIVITIES.—The Commissioner
shall provide for activities under this part to broadly dis-
seminate information to eligible beneficiaries (and pro-
spective eligible beneficiaries) regarding enrollment under
this part and the prescription drug coverage made avail-
able by eligible entities with a contract under this part.
‘‘(b) SPECIAL
RULE
FOR
FIRST
ENROLLMENT
UNDER THE PROGRAM.—To the extent practicable, the
activities described in subsection (a) shall ensure that eli-
gible beneficiaries are provided with such information at
least 60 days prior to the first enrollment period described
in section 1860B(c).
‘‘ENROLLEE PROTECTIONS
‘‘SEC. 1860D. (a) GUARANTEED ISSUE AND NON-
DISCRIMINATION.—
‘‘(1) GUARANTEED ISSUE.—
‘‘(A) IN GENERAL.—An eligible beneficiary
who is eligible to enroll with an eligible entity
under section 1860B(b) for prescription drug
coverage under this part at a time during which
elections are accepted under this part with re-
spect to the coverage shall not be denied enroll-
ment based on any health status-related factor
(described in section 2702(a)(1) of the Public
Health Service Act) or any other factor.
‘‘(B) 
MEDICARE+CHOICE
LIMITATIONS
PERMITTED.—The provisions of paragraphs (2)
and (3) (other than subparagraph (C)(i), relat-
ing to default enrollment) of section 1851(g)
(relating to priority and limitation on termi-
nation of election) shall apply to eligible entities
under this subsection.
‘‘(2) NONDISCRIMINATION.—An eligible entity
offering prescription drug coverage under this part
shall not establish a service area in a manner that
would discriminate based on health or economic sta-
tus of potential enrollees.
‘‘(b) DISSEMINATION OF INFORMATION.—
‘‘(1) GENERAL INFORMATION.—An eligible enti-
ty with a contract under this part shall disclose, in
a clear, accurate, and standardized form to each eli-
gible beneficiary enrolled for prescription drug cov-
erage with such entity under this part at the time
of enrollment and at least annually thereafter, the
information described in section 1852(c)(1) relating
to such prescription drug coverage. Such information
includes the following: