‘‘(i) a timely internal review for reso-
lution of denials of coverage (in whole or 
in part and including those regarding the 
coverage of nonpreferred drugs) in accord-
ance with the medical exigencies of the 
case and a timely resolution of complaints, 
by enrollees in the plan, or by providers, 
pharmacists, and other individuals acting 
on behalf of each such enrollee (with the 
enrollee’s consent) in accordance with re-
quirements (as established by the Sec-
retary) that are comparable to such re-
quirements for MA organizations under 
part C; 
‘‘(ii) that the entity complies in a 
timely manner with requirements estab-
lished by the Secretary that (I) provide for 
an external review by an independent enti-
ty selected by the Secretary of denials of 
coverage described in clause (i) not re-
solved in the favor of the beneficiary (or 
other complainant) under the process de-
scribed in such clause and (II) are com-
parable to the external review requirements
established for MA organizations under 
part C; and 
‘‘(iii) that enrollees are provided with 
information regarding the appeals proce-
dures under this part at the time of enroll-
ment with a pharmacy contractor under 
this part and upon request thereafter. 
‘‘(6) TRANSFER OF FUNDS TO COVER COSTS OF 
PART B PRESCRIPTION DRUG CATASTROPHIC BEN-
EFIT.—With respect to benefits described in sub-
section (a)(2), there shall be transferred from the 
Federal Medicare Prescription Drug Trust Fund to 
the Federal Supplementary Medical Insurance Trust 
Fund amounts equivalent to the elimination of cost- 
sharing described in such subsection. 
‘‘(7) PERMITTING APPLICATION UNDER PART B 
OF NEGOTIATED PRICES.—For purposes of making 
payment under part B for drugs that would be cov-
ered outpatient prescription drugs but for the exclu-
sion under subparagraph (B) or (C) of subsection 
(b)(2), the Secretary may elect to apply the payment 
basis used for payment of covered outpatient pre-
scription drugs under this part instead of the pay-
ment basis otherwise used under such part, if it re-
sults in a lower cost to the program.
‘‘(8) INFLATION ADJUSTMENT.— 
‘‘(A) IN GENERAL.—With respect to ex-
penses incurred in a year after 2006, the stop- 
loss limit under paragraph (3) is equal to the 
stop-loss limit determined under such para-
graph (or this subparagraph) for the previous 
year increased by such percentage increase. The 
Secretary shall adjust such percentage increase 
in subsequent years to take into account 
misestimations made of the per capita program 
expenditures under this subparagraph in pre-
vious years. Any increase under this subpara-
graph that is not a multiple of $10 shall be 
rounded to the nearest multiple of $10. 
‘‘(B) ESTIMATION
OF
INCREASE
IN
PER 
CAPITA
PROGRAM
EXPENDITURES.—The Sec-
retary shall before the beginning of each year 
(beginning with 2007) estimate the percentage 
increase in average per capita aggregate ex-
penditures from the Federal Medicare Prescrip-
tion Drug Trust Fund for the year involved 
compared to the previous year. 
‘‘(C) 
RECONCILIATION.—The 
Secretary 
shall also compute (beginning with 2008) the 
actual percentage increase in such aggregate
expenditures in order to provide for reconcili-
ation of deductibles, and stop-loss limits, under 
the second sentence of subparagraph (A) and 
under section 1860D–5(d)(2). 
‘‘(d) NO MONTHLY PREMIUMS.—In accordance with 
section 1860D–1(1) there is no monthly premium for pre-
scription drug benefits under this part. 
‘‘(e) REDUCTIONS IN COINSURANCE FOR LOWER IN-
COME BENEFICIARIES.— 
‘‘(1) INSTITUTIONALIZED INDIVIDUALS.—In the 
case of an individual who is a full-benefit dual eligi-
ble individual (as defined in paragraph (4)(C)) and 
who is an institutionalized individual or couple (as 
defined in section 1902(q)(1)(B)), the coinsurance 
under subsection (c)(4) shall be eliminated. 
‘‘(2) INDIVIDUALS
WITH
INCOME
BELOW
150 
PERCENT OF THE POVERTY LEVEL.—In the case of 
an individual who is not described in paragraph (1) 
and whose family income does not exceed 150 per-
cent of the poverty level applicable to a family of the 
size involved, the coinsurance under subsection 
(c)(4) shall not exceed— 
‘‘(A) $1 in the case of a preferred drug de-
scribed in subsection (c)(3)(B); or
‘‘(B) $3 in the case of a nonpreferred drug 
described in subsection (c)(3)(C). 
‘‘(3) PROCESS
OF
QUALIFICATION
FOR
RE-
DUCED COINSURANCE.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
provide a process for the qualification of bene-
ficiaries for reduced coinsurance under this sub-
section. Such process shall be coordinated, to 
the maximum extent practicable, with State 
medicaid programs, but shall also permit indi-
viduals to qualify on the basis of simple, 1-page 
applications made directly to the Secretary (or 
the Secretary’s designee, such as through a 
local pharmacy). 
‘‘(B) NO
ASSETS
TEST.—An individual’s 
eligibility for reduced coinsurance under this 
subsection shall be determined without regard 
to the amount of the assets of the individual or 
family members. 
‘‘(4) DEFINITIONS.—In this part: 
‘‘(A) FAMILY
INCOME.—The Secretary 
shall define the term ‘family income’. 
‘‘(B) POVERTY LEVEL.—The term ‘poverty 
line’ has the meaning given the term ‘poverty 
line’ in section 673(2) of the Community Serv-
ices Block Grant Act (42 U.S.C. 9902(2)), in-
cluding any revision required by such section. 
‘‘(C) FULL-BENEFIT DUAL ELIGIBLE INDI-
VIDUAL DEFINED.— 
‘‘(i) IN
GENERAL.—The term ‘full- 
benefit dual eligible individual’ means, with 
respect to a month, an individual residing 
in a State who— 
‘‘(I) has coverage for the month 
for covered part D drugs under this 
part (including under an MA plan 
under part C); and 
‘‘(II) is determined eligible by the 
State for medical assistance for full 
benefits under title XIX for such 
month under section 1902(a)(10)(A) 
or 1902(a)(10)(C), by reason of sec-
tion 1902(f), or under any other cat-
egory of eligibility for medical assist-
ance for full benefits under such title, 
as determined by the Secretary. 
‘‘(ii) 
TREATMENT
OF
MEDICALLY 
NEEDY
AND
OTHER
INDIVIDUALS
RE-
QUIRED
TO
SPEND
DOWN.—In applying 
clause (i) in the case of an individual de-
termined to be eligible by the State for 
medical 
assistance 
under 
section 
1902(a)(10)(C) or by reason of section 
1902(f), the individual shall be treated as 
meeting the requirement of clause (i)(II) 
for any month if such medical assistance is 
provided for in any part of the month. 
‘‘(5) TREATMENT
OF
RESIDENTS
OF
TERRI-
TORIES.—The Secretary shall provide for such ad-
justment in the application of this subsection to resi-
dents of the territories as may be necessary to take 
into account differences in average family income for 
such residents compared to average family income 
for eligible individuals residing in the 50 States or 
the District of Columbia. 
‘‘ADMINISTRATION; QUALITY ASSURANCE 
‘‘SEC. 1860D–6. (a) RULES RELATING TO PROVI-
SION OF BENEFITS.— 
‘‘(1) PROVISION OF BENEFITS.— 
‘‘(A) IN GENERAL.—In providing benefits 
under this part, the Secretary (directly or 
through the contracts with pharmacy contrac-
tors) shall employ mechanisms to provide bene-
fits appropriately and efficiently, and those 
mechanisms may include— 
‘‘(i) the use of—
‘‘(I) 
price 
negotiations 
(con-
sistent with subsection (b)); 
‘‘(II) reduced coinsurance (below 
20 percent) to encourage the utiliza-
tion of appropriate preferred prescrip-
tion drugs; and 
‘‘(III) methods to reduce medica-
tion errors and encourage appropriate 
use of medications; and 
‘‘(ii) permitting pharmacy contractors, 
as approved by the Secretary, to make ex-
ceptions to section 1860D–5(c)(3)(C) (re-
lating to cost-sharing for non-preferred 
drugs) to secure best prices for enrollees so 
long as the payment amount under section 
1860D–5(c)(1) does not equal zero. 
‘‘(B) CONSTRUCTION.—Nothing in this 
subsection shall be construed to prevent the 
Secretary (directly or through the contracts 
with pharmacy contractors) from using incen-
tives to encourage enrollees to select generic or 
other cost-effective drugs, so long as— 
‘‘(i) such incentives are designed not 
to result in any increase in the aggregate
expenditures under the Federal Medicare 
Prescription Drug Trust Fund; and 
‘‘(ii) a beneficiary’s coinsurance shall 
be no greater than 20 percent in the case 
of a preferred drug (including a nonpre-
ferred drug treated as a preferred drug 
under section 1860D–5(c)(5)). 
‘‘(2) CONSTRUCTION.—Nothing in this part 
shall preclude the Secretary or a pharmacy con-
tractor from— 
‘‘(A) educating prescribing providers, phar-
macists, and enrollees about medical and cost 
benefits of preferred drugs; 
‘‘(B) requesting prescribing providers to 
consider a preferred drug prior to dispensing of 
a nonpreferred drug, as long as such request 
does not unduly delay the provision of the drug; 
‘‘(C) using mechanisms to encourage en-
rollees under this part to select cost-effective 
drugs or less costly means of receiving or ad-
ministering drugs, including the use of thera-
peutic interchange programs, disease manage-
ment programs, and notification to the bene-
ficiary that a more affordable generic drug 
equivalent was not selected by the prescribing
provider and a statement of the lost cost sav-
ings to the beneficiary; 
‘‘(D) using price negotiations to achieve re-
duced prices on covered outpatient prescription 
drugs, including new drugs, drugs for which 
there are few therapeutic alternatives, and 
drugs of particular clinical importance to indi-
viduals enrolled under this part; and 
‘‘(E) utilizing information on drug prices 
of OECD countries and of other payors in the 
United States in the negotiation of prices under 
this part. 
‘‘(b) PRICE NEGOTIATIONS PROCESS.— 
‘‘(1) REQUIREMENTS WITH RESPECT TO PRE-
FERRED
DRUGS.—Negotiations of contracts with 
manufacturers with respect to covered outpatient 
prescription drugs under this part shall be con-
ducted in a manner so that— 
‘‘(A) there is at least a contract for a drug 
within each therapeutic class (as defined by the 
Secretary in consultation with such Medicare 
Prescription Drug Advisory Committee); 
‘‘(B) if there is more than 1 drug available 
in a therapeutic class, there are contracts for at 
least 2 drugs within such class unless deter-
mined clinically inappropriate in accordance 
with standards established by the Secretary; 
and 
‘‘(C) if there are more than 2 drugs avail-
able in a therapeutic class, there is a contract 
for at least 2 drugs within such class and a 
contract for generic drug substitute if available 
unless determined clinically inappropriate in ac-
cordance with standards established by the Sec-
retary. 
‘‘(2) ESTABLISHMENT OF THERAPEUTIC CLASS-
ES.—The Secretary, in consultation with the Medi-
care Prescription Drug Advisory Committee (estab-
lished under section 1860D–9), shall establish for 
purposes of this part therapeutic classes and assign 
to such classes covered outpatient prescription 
drugs. 
‘‘(3) DISCLOSURE
CONCERNING
PREFERRED 
DRUGS.—The Secretary shall provide, through phar-
macy contractors or otherwise, for— 
‘‘(A) disclosure to current and prospective 
enrollees and to participating providers and 
pharmacies in each service area a list of the 
preferred drugs and differences in applicable
cost-sharing between such drugs and nonpre-
ferred drugs; and 
‘‘(B) advance disclosure to current enroll-
ees and to participating providers and phar-
macies in each service area of changes to any 
such list of preferred drugs and differences in 
applicable cost-sharing. 
‘‘(4) NO REVIEW.—The Secretary’s establish-
ment of therapeutic classes and the assignment of 
drugs to such classes and the Secretary’s determina-
tion of what is a breakthrough drug are not subject 
to administrative or judicial review. 
‘‘(c) CONFIDENTIALITY.—The Secretary shall ensure 
that the confidentiality of individually identifiable health 
information relating to the provision of benefits under this 
part is protected, consistent with the standards for the 
privacy of such information promulgated by the Secretary 
under the Health Insurance Portability and Accountability 
Act of 1996, or any subsequent comprehensive and more 
protective set of confidentiality standards enacted into law 
or promulgated by the Secretary. Nothing in this sub-
section shall be construed as preventing the coordination 
of data with a State prescription drug program so long 
as such program has in place confidentiality standards
that are equal to or exceed the standards used by the Sec-
retary. 
‘‘(d) FRAUD AND ABUSE SAFEGUARDS.—The Sec-
retary, through the Office of the Inspector General, is au-
thorized and directed to issue regulations establishing ap-
propriate safeguards to prevent fraud and abuse under 
this part. Such safeguards, at a minimum, should include 
compliance programs, certification data, audits, and rec-
ordkeeping practices. In developing such regulations, the 
Secretary shall consult with the Attorney General and 
other law enforcement and regulatory agencies. 
‘‘(e) USE OF 800 NUMBER.—Through the tollfree 
number provided under section 1804(b), the Secretary 
shall provide a means for beneficiaries to discuss problems 
and challenges with costs or access to prescription drugs 
under this part. 
‘‘(f) USE OF WEBSITE.—The Internet website main-
tained by the Secretary for purposes of this title shall in-
clude information on the price of, access to, and quality 
of prescription drugs provided under this part. 
‘‘FEDERAL MEDICARE PRESCRIPTION DRUG TRUST FUND 
‘‘SEC. 1860D–7. (a) ESTABLISHMENT.—There is 
hereby created on the books of the Treasury of the United 
States a trust fund to be known as the ‘Federal Medicare 
Prescription Drug Trust Fund’ (in this section referred 
to as the ‘Trust Fund’). The Trust Fund shall consist of
such gifts and bequests as may be made as provided in 
section 201(i)(1), and such amounts as may be deposited 
in, or appropriated to, such fund as provided in this part. 
‘‘(b) APPLICATION OF SMI TRUST FUND PROVI-
SIONS.—The provisions of subsections (b) through (i) of 
section 1841 shall apply to this part and the Trust Fund 
in the same manner as they apply to part B and the Fed-
eral Supplementary Medical Insurance Trust Fund, re-
spectively. 
‘‘COMPENSATION FOR EMPLOYERS COVERING RETIREE 
DRUG COSTS 
‘‘SEC. 1860D–8. (a) IN GENERAL.—In the case of 
an individual who is eligible to be enrolled under this part 
and is a participant or beneficiary under a group health 
plan that provides outpatient prescription drug coverage 
to retirees the actuarial value of which is not less than 
the actuarial value of the coverage provided under this 
part, the Secretary shall make payments to such plan sub-
ject to the provisions of this section. Such payments shall 
be treated as payments under this part for purposes of 
sections 1860D–7 and 1860D–4(e)(2). In applying the 
previous sentence with respect to section 1860D–4(e)(2), 
the amount of the Government contribution referred to in 
section 1844(a)(1)(A) is deemed to be equal to the aggre-
gate amount of the payments made under this section.
‘‘(b) REQUIREMENTS.—To receive payment under 
this section, a group health plan shall comply with the fol-
lowing requirements: 
‘‘(1) COMPLIANCE WITH REQUIREMENTS.—The 
group health plan shall comply with the require-
ments of this Act and other reasonable, necessary, 
and related requirements that are needed to admin-
ister this section, as determined by the Secretary. 
‘‘(2) ANNUAL
ASSURANCES
AND
NOTICE
BE-
FORE
TERMINATION.—The sponsor of the plan 
shall— 
‘‘(A) annually attest, and provide such as-
surances as the Secretary may require, that the 
coverage offered under the group health plan 
meets the requirements of this section and will 
continue to meet such requirements for the du-
ration of the sponsor’s participation in the pro-
gram under this section; and 
‘‘(B) guarantee that it will give notice to 
the Secretary and covered enrollees— 
‘‘(i) at least 120 days before termi-
nating its plan, and 
‘‘(ii) immediately upon determining 
that the actuarial value of the prescription 
drug benefit under the plan falls below the
actuarial value required under subsection 
(a). 
‘‘(3) BENEFICIARY INFORMATION.—The spon-
sor of the plan shall report to the Secretary, for 
each calendar quarter for which it seeks a payment 
under this section, the names and social security 
numbers of all enrollees described in subsection (a) 
covered under such plan during such quarter and 
the dates (if less than the full quarter) during which 
each such individual was covered. 
‘‘(4) AUDITS.—The sponsor or plan seeking 
payment under this section shall agree to maintain, 
and to afford the Secretary access to, such records 
as the Secretary may require for purposes of audits 
and other oversight activities necessary to ensure the 
adequacy of prescription drug coverage, the accuracy 
of payments made, and such other matters as may 
be appropriate. 
‘‘(c) PAYMENT.— 
‘‘(1) IN
GENERAL.—The sponsor of a group 
health plan that meets the requirements of sub-
section (b) with respect to a quarter in a calendar 
year shall be entitled to have payment made on a 
quarterly basis of the amount specified in paragraph 
(2) for each individual described in subsection (a)
who during the quarter is covered under the plan 
and was not enrolled in the insurance program 
under this part. 
‘‘(2) AMOUNT OF PAYMENT.— 
‘‘(A) IN
GENERAL.—The amount of the 
payment for a quarter shall approximate, for 
each such covered individual, 2⁄3 of the sum of 
the monthly Government contribution amounts 
(computed under subparagraph (B)) for each of 
the 3 months in the quarter. 
‘‘(B) COMPUTATION
OF
MONTHLY
GOV-
ERNMENT CONTRIBUTION AMOUNT.—For pur-
poses of subparagraph (A), the monthly Gov-
ernment contribution amount for a month in a 
year is equal to the amount by which— 
‘‘(i) 1⁄12 of the average per capita ag-
gregate expenditures, as estimated under 
section 1860D–5(c)(8) for the year in-
volved; exceeds 
‘‘(ii) the monthly premium rate under 
section 1860D–5(d) for the month in-
volved. 
‘‘MEDICARE PRESCRIPTION DRUG ADVISORY COMMITTEE 
‘‘SEC. 1860D–9. (a) ESTABLISHMENT
OF COM-
MITTEE.—There is established a Medicare Prescription
Drug Advisory Committee (in this section referred to as 
the ‘Committee’). 
‘‘(b) FUNCTIONS OF COMMITTEE.—The Committee 
shall advise the Secretary on policies related to— 
‘‘(1) the development of guidelines for the im-
plementation and administration of the outpatient 
prescription drug benefit program under this part; 
and 
‘‘(2) the development of— 
‘‘(A) standards required of pharmacy con-
tractors under section 1860D–5(c)(5) for deter-
mining if a drug is as effective for an enrollee 
or has a significant adverse effect on an en-
rollee under this part; 
‘‘(B) standards for— 
‘‘(i) defining therapeutic classes; 
‘‘(ii) adding new therapeutic classes; 
‘‘(iii) assigning to such classes covered 
outpatient prescription drugs; and 
‘‘(iv) identifying breakthrough drugs; 
‘‘(C) procedures to evaluate the bids sub-
mitted by pharmacy contractors under this 
part; 
‘‘(D) procedures for negotiations, and 
standards for entering into contracts, with
manufacturers, including identifying drugs or 
classes of drugs where Secretarial negotiation is 
most likely to yield savings under this part sig-
nificantly above those that which could be 
achieved by a pharmacy contractor; and 
‘‘(E) procedures to ensure that pharmacy 
contractors with a contract under this part are 
in compliance with the requirements under this 
part. 
For purposes of this part, a drug is a ‘breakthrough drug’ 
if the Secretary, in consultation with the Committee, de-
termines it is a new product that will make a significant 
and major improvement by reducing physical or mental 
illness, reducing mortality, or reducing disability, and that 
no other product is available to beneficiaries that achieves 
similar results for the same condition. The Committee 
may consider cost-effectiveness in establishing standards 
for defining therapeutic classes and assigning drugs to 
such classes under subparagraph (B). 
‘‘(c) STRUCTURE AND MEMBERSHIP OF THE COM-
MITTEE.— 
‘‘(1) STRUCTURE.—The Committee shall be 
composed of 19 members who shall be appointed by 
the Secretary. 
‘‘(2) MEMBERSHIP.—
‘‘(A) IN GENERAL.—The members of the 
Committee shall be chosen on the basis of their 
integrity, impartiality, and good judgment, and 
shall be individuals who are, by reason of their 
education, experience, and attainments, excep-
tionally qualified to perform the duties of mem-
bers of the Committee. 
‘‘(B) SPECIFIC MEMBERS.—Of the mem-
bers appointed under paragraph (1)— 
‘‘(i) 5 shall be chosen to represent 
practicing physicians, 2 of whom shall be 
gerontologists; 
‘‘(ii) 2 shall be chosen to represent 
practicing nurse practitioners; 
‘‘(iii) 4 shall be chosen to represent 
practicing pharmacists; 
‘‘(iv) 1 shall be chosen to represent 
the Centers for Medicare & Medicaid Serv-
ices; 
‘‘(v) 4 shall be chosen to represent ac-
tuaries, pharmacoeconomists, researchers, 
and other appropriate experts; 
‘‘(vi) 1 shall be chosen to represent 
emerging medicine technologies;
‘‘(vii) 1 shall be chosen to represent 
the Food and Drug Administration; and 
‘‘(viii) 1 shall be chosen to represent 
individuals enrolled under this part. 
‘‘(d) TERMS OF APPOINTMENT.—Each member of 
the Committee shall serve for a term determined appro-
priate by the Secretary. The terms of service of the mem-
bers initially appointed shall begin on January 1, 2006. 
‘‘(e) CHAIRPERSON.—The Secretary shall designate 
a member of the Committee as Chairperson. The term as 
Chairperson shall be for a 1-year period. 
‘‘(f) COMMITTEE PERSONNEL MATTERS.— 
‘‘(1) MEMBERS.— 
‘‘(A) COMPENSATION.—Each member of 
the Committee 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 Committee. All members of the 
Committee 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 Committee 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 Committee. 
‘‘(2) STAFF.—The Committee may appoint 
such personnel as the Committee considers appro-
priate. 
‘‘(g) OPERATION OF THE COMMITTEE.— 
‘‘(1) MEETINGS.—The Committee shall meet at 
the call of the Chairperson (after consultation with 
the other members of the Committee) not less often 
than quarterly to consider a specific agenda of 
issues, as determined by the Chairperson after such 
consultation. 
‘‘(2) QUORUM.—Ten members of the Com-
mittee shall constitute a quorum for purposes of 
conducting business.
‘‘(h) FEDERAL ADVISORY COMMITTEE ACT.—Section 
14 of the Federal Advisory Committee Act (5 U.S.C. 
App.) shall not apply to the Committee. 
‘‘(i) TRANSFER OF PERSONNEL, RESOURCES, AND 
ASSETS.—For purposes of carrying out its duties, the Sec-
retary and the Committee may provide for the transfer 
to the Committee of such civil service personnel in the em-
ploy of the Department of Health and Human Services 
(including the Centers for Medicare & Medicaid Services), 
and such resources and assets of the Department used in 
carrying out this title, as the Committee requires. 
‘‘(j) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated such sums as may be 
necessary to carry out the purposes of this section.’’. 
(b) RETENTION OF CERTAIN PROVISIONS.— 
(1) TITLE I OF MPDIMA.—Except as provided 
in paragraph (2), the provisions of title I (other than 
sections 105 and 107(c)) of the Medicare Prescrip-
tion Drug, Improvement, and Modernization Act of 
2003 (Public Law 108–173) are repealed and the 
laws affected by such title shall be in effect as if 
such title had not been enacted. 
(2) PART D PROVISIONS.—The following provi-
sions of part D of title XVIII of the Social Security 
Act, as inserted by section 101 of the Medicare Pre-
scription Drug, Improvement, and Modernization 
Act of 2003 (Public Law 108–173), shall remain in 
effect: 
(A) Section 1860D–31 (relating to medi-
care prescription drug discount card and transi-
tional assistance program). 
(B) Section 1860D–4(e) (relating to elec-
tronic prescription program). 
(c) APPLICATION OF GENERAL EXCLUSIONS FROM 
COVERAGE.— 
(1) APPLICATION TO PART D.—Section 1862(a) 
(42 U.S.C. 1395y(a)) is amended in the matter pre-
ceding paragraph (1) by striking ‘‘part A or part B’’ 
and inserting ‘‘part A, B, or D’’. 
(2) PRESCRIPTION
DRUGS
NOT
EXCLUDED 
FROM COVERAGE IF APPROPRIATELY PRESCRIBED.— 
Section 1862(a)(1) (42 U.S.C. 1395y(a)(1)) is 
amended— 
(A) in subparagraph (H), by striking 
‘‘and’’ at the end; 
(B) in subparagraph (I), by striking the 
semicolon at the end and inserting ‘‘, and’’; and 
(C) by adding at the end the following new 
subparagraph:
‘‘(J) in the case of prescription drugs cov-
ered under part D, which are not prescribed in 
accordance with such part;’’. 
(d) 
CONFORMING
AMENDMENT.—Section 
1171(a)(5)(D) (42 U.S.C. 1320d(a)(5)(D)) is amended by 
striking ‘‘or (C)’’ and inserting ‘‘(C), or (D)’’. 
SEC. 102. PROVISION OF MEDICARE OUTPATIENT PRE-
SCRIPTION DRUG COVERAGE UNDER THE 
MEDICAREADVANTAGE PROGRAM. 
(a) REQUIRING AVAILABILITY OF AN ACTUARIALLY 
EQUIVALENT PRESCRIPTION DRUG BENEFIT.—Section 
1851 (42 U.S.C. 1395w–21) is amended by adding at the 
end the following new subsection: 
‘‘(j) AVAILABILITY OF PRESCRIPTION DRUG BENE-
FITS.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of this part, each MA organization that 
makes available an MA plan described in section 
1851(a)(2)(A) shall make available such a plan that 
offers coverage of covered outpatient prescription 
drugs that is at least actuarially equivalent to the 
benefits provided under part D. Information respect-
ing such benefits shall be made available in the same 
manner as information on other benefits provided 
under this part is made available. Nothing in this
paragraph shall be construed as requiring the offer-
ing of such coverage separate from coverage that in-
cludes benefits under parts A and B. 
‘‘(2) TREATMENT OF PRESCRIPTION DRUG EN-
ROLLEES.—In the case of an MA eligible individual 
who is enrolled under part D, the benefits described 
in paragraph (1) shall be treated in the same man-
ner as benefits described in part B for purposes of 
coverage and payment and any reference in this part 
to the Federal Supplementary Medical Insurance 
Trust Fund shall be deemed, with respect to such 
benefits, to be a reference to the Federal Medicare 
Prescription Drug Trust Fund.’’. 
(b) APPLICATION OF QUALITY STANDARDS.—Section 
1852(e)(2)(A) (42 U.S.C. 1395w–22(e)(2)(A)) is amend-
ed— 
(1) by striking ‘‘and’’ at the end of clause (xi); 
(2) by striking the period at the end of clause 
(xii) and inserting ‘‘, and’’; and 
(3) by adding at the end the following new 
clause: 
‘‘(xiii) comply with the standards, and 
apply the programs, under section 1860D– 
3(b) for covered outpatient prescription 
drugs under the plan.’’.
(c) PAYMENT SEPARATE FROM PAYMENT FOR PART 
A AND B BENEFITS.—Section 1853 (42 U.S.C. 1395w– 
23) is amended— 
(1) in subsection (a)(1)(A), by striking ‘‘and 
(i)’’ and inserting ‘‘(i), and (j)’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(j) PAYMENT FOR PRESCRIPTION DRUG COVERAGE 
OPTION.— 
‘‘(1) IN GENERAL.—In the case of an MA plan 
that provides prescription drug benefits described in 
section 1851(j)(1), the amount of payment otherwise 
made to the MA organization offering the plan shall 
be increased by the amount described in paragraph 
(2). Such payments shall be made in the same man-
ner and time as the amount otherwise paid, but such 
amount shall be payable from the Federal Medicare 
Prescription Drug Trust Fund. 
‘‘(2) AMOUNT.—The amount described in this 
paragraph is the monthly Government contribution 
amount computed under section 1860D–8(c)(2)(B), 
but subject to adjustment under paragraph (3). 
Such amount shall be uniform geographically and 
shall not vary based on the MA payment area in-
volved.
‘‘(3) RISK ADJUSTMENT.—The Secretary shall 
establish a methodology for the adjustment of the 
payment amount under this subsection in a manner 
that takes into account the relative risks for use of 
outpatient prescription drugs by MA enrollees. Such 
methodology shall be designed in a manner so that 
the total payments under this title (including part 
D) are not changed as a result of the application of 
such methodology.’’. 
(d) SEPARATE APPLICATION OF ADJUSTED COMMU-
NITY RATE (ACR).—Section 1854 (42 U.S.C. 1395w–24) 
is amended by adding at the end the following: 
‘‘(i) APPLICATION
TO PRESCRIPTION DRUG COV-
ERAGE.—The Secretary shall apply the previous provisions 
of this section (as such provisions were in effect before 
the date of the enactment of the Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003 (Pub-
lic Law 108–173), including the computation of the ad-
justed community rate) separately with respect to pre-
scription drug benefits described in section 1851(j)(1).’’. 
(e) CONFORMING AMENDMENTS.— 
(1) Section 1851 (42 U.S.C. 1395w–21) is 
amended—
(A) in subsection (a)(1)(A), by striking 
‘‘parts A and B’’ and inserting ‘‘parts A, B, 
and D’’; and 
(B) in subsection (i) by inserting ‘‘(and, if 
applicable, part D)’’ after ‘‘parts A and B’’. 
(2) Section 1852(a)(1)(A) (42 U.S.C. 1395w– 
22(a)(1)(A)) is amended by inserting ‘‘(and under 
part D to individuals also enrolled under such part)’’ 
after ‘‘parts A and B’’. 
(3) Section 1852(d)(1) (42 U.S.C. 1395w– 
22(d)(1)) is amended— 
(A) by striking ‘‘and’’ at the end of sub-
paragraph (D); 
(B) by striking the period at the end of 
subparagraph (E) and inserting ‘‘; and’’; and 
(C) by adding at the end the following: 
‘‘(F) the plan for part D benefits guaran-
tees coverage of any specifically named pre-
scription drug for an enrollee to the extent that 
it would be required to be covered under part 
D. 
In carrying out subparagraph (F), an MA organiza-
tion has the same authority to enter into contracts 
with respect to coverage of preferred drugs as the 
Secretary has under part D, but subject to an inde-