I
104TH CONGRESS
2D SESSION
H. R. 3991
To assure equitable treatment in health care coverage of prescription drugs.
IN THE HOUSE OF REPRESENTATIVES
AUGUST 2, 1996
Mrs. LOWEY introduced the following bill; which was referred to the Commit-
tee on Commerce, and in addition to the Committees on Ways and
Means, and Economic and Educational Opportunities, 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 con-
cerned
A BILL
To assure equitable treatment in health care coverage of
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.
This Act may be cited as the ‘‘Prescription Drug
Benefit Equity Act of 1996’’.
SEC. 2. EQUITY IN PROVISION OF PRESCRIPTION DRUG
COVERAGE.
(a) IN GENERAL.—No health plan (as defined in sec-
tion 5(1)) may provide for mail-order prescription drug
coverage (as defined in section 5(2)) unless the plan also
provides non-mail-order prescription drug coverage con-
sistent with subsection (b).
(b) EQUITABLE COVERAGE.—A health plan provides
non-mail-order prescription drug coverage consistent with
this subsection only if—
(1) benefits under the non-mail-order prescrip-
tion coverage are provided for in the case of all
drugs and all circumstances under which benefits
are provided under the mail-order prescription drug
coverage;
(2) no deductible or similar cost-sharing is im-
posed with respect to benefits under the non-mail-
order prescription drug coverage unless such a de-
ductible or similar cost-sharing is imposed with re-
spect to benefits under the mail-order prescription
drug coverage; and
(3) the benefits for the non-mail-order coverage
assures payments consistent with either (or both) of
the following subparagraphs:
(A) The dollar amount of payment for pre-
scription drug coverage is not less than the dol-
lar amount of benefits provided with respect to
the mail-order coverage for that same coverage.
(B) 
The 
cost-sharing 
(including
deductibles, copayments, or coinsurance) im-
posed with respect to non-mail-order coverage
that is not greater (as a percentage of charges
or dollar amount, as specified under the cov-
erage) than the cost-sharing imposed with re-
spect to the mail-order coverage.
(c) APPLICATION TO ORGANIZATIONS AND INSUR-
ERS.—A requirement imposed under this section on a
health plan offered by a health maintenance organization
or insurer shall be deemed to be a requirement imposed
on the organization or insurer.
SEC. 3. ENFORCEMENT.
(a) HEALTH PLAN ISSUED BY HMOS AND INSUR-
ERS.—
(1) IN
GENERAL.—Each State shall require
that each health plan issued, sold, renewed, offered
for sale or operated in such State by a health main-
tenance organization meet the requirements of sec-
tion 2 pursuant to an enforcement plan filed by the
State with the Secretary of Health and Human
Services. A State shall submit such information as
required by such Secretary demonstrating effective
implementation of the State enforcement plan.
(2) FAILURE
TO
IMPLEMENT
PLAN.—In the
case of the failure of a State to substantially enforce
the requirements of section 2 with respect to health
plans as provided for under the State enforcement
plan filed under paragraph (1), the Secretary of
Health and Human Services shall implement an en-
forcement plan to enforce such requirements for or-
ganizations and insurers in such State. In the case
of a State that fails to substantially enforce such re-
quirements, each health maintenance organization
and insurer operating in such State shall be subject
to civil enforcement as provided for under sections
502, 504, 506, and 510 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1132,
1134, 1136, and 1140) through the Secretary of
Health and Human Services. The civil penalties con-
tained in paragraphs (1) and (2) of section 502(c)
of such Act (29 U.S.C. 1132(c) (1) and (2)) shall
apply to any information required by such Secretary
to be disclosed and reported under this subsection.
(b) EMPLOYEE HEALTH BENEFIT PLANS.—With re-
spect to employee health benefit plans, the Secretary of
Labor shall enforce the requirements of section 2 in the
same manner as provided for under sections 502, 504,
506, and 510 of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1132, 1134, 1136, and 1140).
The civil penalties contained in paragraphs (1) and (2)
of section 502(c) of such Act (29 U.S.C. 1132(c) (1) and
(2)) shall apply to any information required by such Sec-
retary to be disclosed and reported under this subsection.
(c) MEDICAID.—With respect to a health plan de-
scribed in section 5(1)(C), the requirements of section 2
shall be treated as requirements of a State plan under title
XIX of the Social Security Act.
(d) FEHBP.—With respect to a health plan de-
scribed in section 5(1)(E), the requirements of section 2
shall be treated as a condition for contracting with the
plan under chapter 89 of title 5, United States Code.
(e) MEDICARE HMOS.—With respect to a health
plan described in section 5(1)(F), the requirements of sec-
tion 2 shall be treated as requirements of a State plan
under section 1876 of the Social Security Act.
(f) REGULATIONS.—The Secretaries of Labor and
Health and Human Services and the Director of the Office
of Personnel Management may promulgate such regula-
tions as may be necessary or appropriate to carry out this
Act.
(g) TECHNICAL AMENDMENT.—Section 508 of the
Employee Retirement Income Security Act of 1974 (29
U.S.C. 1138) is amended by inserting ‘‘and under the Pre-
scription Drug Benefit Equity Act of 1996’’ before the
period.
SEC. 4. CONSTRUCTION; PREEMPTION.
(a) IN GENERAL.—Nothing in this Act shall be con-
strued as preventing a health plan from—
(1) restricting the drugs for which benefits are
provided under the plan, or
(2) imposing a limitation on the amount of ben-
efits provided with respect to such coverage or the
cost-sharing that may be imposed with respect to
such coverage,
so long as such restrictions and limitations are consistent
with this Act.
(b) PREEMPTION OF STATE LAW.—
(1) IN GENERAL.—Subject to paragraph (2),
nothing in this Act shall be construed to prevent a
State from establishing, implementing, or continuing
in effect standards and requirements—
(A) not prescribed in this Act; or
(B) related to the provision of prescription
drug coverage that are consistent with, and are
not in direct conflict with, this Act and provide
greater protection or benefit to participants,
beneficiaries, or individuals.
(2) RULE
OF
CONSTRUCTION.—Nothing in
paragraph (1) shall be construed to affect or modify
the provisions of section 514 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C.
1144).
SEC. 5. DEFINITIONS.
In this Act:
(1) HEALTH PLAN.—The term ‘‘health plan’’
means—
(A) an employee welfare benefit plan to the
extent that the plan provides medical care to
employees or their dependents (as defined
under the terms of the plan) directly or through
insurance, reimbursement, or otherwise, and in-
cludes a group health plan (within the meaning
of section 5000(b)(1) of the Internal Revenue
Code of 1986);
(B) benefits consisting of medical care
(provided directly, through insurance or reim-
bursement, or otherwise and whether or not
provided to a group, association, or individual)
under any hospital or medical service policy or
certificate, hospital or medical service plan con-
tract, or health maintenance organization group
contract offered by an insurer or a health main-
tenance organization;
(C) a State medical assistance plan under
title XIX of the Social Security Act;
(D) a medicare supplemental policy under
section 1882 of the Social Security Act;
(E) a health plan under chapter 89 of title
5, United States Code; and
(F) benefits provided under a risk-sharing
contract under section 1876 of the Social Secu-
rity Act.
(2) MAIL-ORDER
PRESCRIPTION
DRUG
COV-
ERAGE.—The term ‘‘mail-order prescription drug
coverage’’ means provision of benefits for prescrip-
tion drugs and biologicals that are delivered directly
to beneficiaries through the mail or similar means.
(3) NON-MAIL-ORDER
PRESCRIPTION
DRUG
COVERAGE.—The term ‘‘non-mail-order prescription
drug coverage’’ means the provision of benefits for
prescription drugs and biologicals through one or
more local pharmacies.
(4) LOCAL PHARMACY.—The term ‘‘local phar-
macy’’ means, with respect to a prescription drug or
biological and a beneficiary, an establishment that is
authorized to dispense such drug or biological and
that is located within such distance (not to exceed
5 miles in the case of a beneficiary residing in an
urban area or 10 miles in the case of a beneficiary
residing in a non-urban area) of the residence of
such beneficiary, as the Secretary of Health and
Human Services shall prescribe.
(5) EMPLOYEE HEALTH BENEFIT PLAN.—The
term ‘‘employee health benefit plan’’ means any em-
ployee welfare benefit plan, governmental plan, or
church plan (as defined under paragraphs (1), (32),
and (33) of section 3 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002 (1),
(32), and (33))), that provides or pays for health
benefits (such as provider and hospital benefits) for
participants and beneficiaries (as defined in such
section) whether—
(A) directly;
(B) through a health plan offered by a
health maintenance organization or insurer; or
(C) otherwise.
Such term includes any health benefit plan under
section 5(e) of the Peace Corps Act (22 U.S.C.
2504(e)).
(6) HEALTH
MAINTENANCE
ORGANIZATION;
HMO.—The terms ‘‘health maintenance organiza-
tion’’ and ‘‘HMO’’ mean—
(A) a federally qualified health mainte-
nance organization (as defined in section
1301(a) of the Public Health Service Act (42
U.S.C. 300e(a))),
(B) an organization recognized under State
law as a health maintenance organization, or
(C) a similar organization regulated under
State law for solvency in the same manner and
to the same extent as such a health mainte-
nance organization,
if it is subject to State law which regulates insur-
ance (within the meaning of section 514(b)(2) of the
Employee Retirement Income Security Act of 1974).
(7) INSURER.—The term ‘‘insurer’’ means an
insurance company, insurance service, or insurance
organization which is licensed to engage in the busi-
ness of insurance in a State and which is subject to
State law which regulates insurance (within the
meaning of section 514(b)(2)(A) of the Employee
Retirement Income Security Act of 1974).
(8) STATE.—The term ‘‘State’’ means each of
the several States, the District of Columbia, Puerto
Rico, the United States Virgin Islands, Guam,
American Samoa, and the Commonwealth of the
Northern Mariana Islands.
SEC. 6. EFFECTIVE DATE.
This Act shall apply to coverage provided under—
(1) health plans described in section 5(1)(A),
for plan years beginning more than 6 months after
the date of the enactment of this Act, or
(2) other health plans, for contract years begin-
ning more than 6 months after the date of the en-
actment of this Act.
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