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 pur-
poses. 
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 subse-
quently 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 pharma-
ceutical assistance programs with the prescription drug 
benefit provided under the Medicare Program, and for 
other purposes. 
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 ‘‘Preserving Access to 
Affordable Drugs Act of 2004’’. 
SEC. 2. ELIMINATION OF DISCRIMINATORY TREATMENT OF 
EMPLOYER PLANS. 
(a) ELIMINATION OF TRUE OUT-OF-POCKET LIMITA-
TION.—Section 1860D–2(b)(4)(C) of the Social Security 
Act, as added by section 101(a) of the Medicare Prescrip-
tion Drug, Improvement, and Modernization Act of 2003 
(Public Law 108–173), is amended to read as follows: 
‘‘(C) APPLICATION.—In applying subpara-
graph (A), incurred costs shall only include 
costs incurred with respect to covered part D 
drugs for the annual deductible described in 
paragraph (1), for cost-sharing described in 
paragraph (2), and for amounts for which bene-
fits are not provided because of the application 
of the initial coverage limit described in para-
graph (3).’’. 
(b) EQUALIZATION OF SUBSIDIES.—Notwithstanding 
any other provision of law, the Secretary of Health and 
Human Services shall provide for such increase in the spe-
cial subsidy payment amounts under section 1860D– 
22(a)(3) of the Social Security Act, as added by section 
101(a) of the Medicare Prescription Drug, Improvement, 
and Modernization Act of 2003 (Public Law 108–173),
as may be appropriate to provide for payments in the ag-
gregate equivalent to the payments that would have been 
made under section 1860D–15 of such Act if the individ-
uals were not enrolled in a qualified retiree prescription 
drug plan. In making such computation, the Secretary 
shall not take into account the application of the amend-
ments made by section 1202 of the Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003. 
SEC. 3. DIRECT SUBSIDY FOR CERTAIN STATE PHARMA-
CEUTICAL ASSISTANCE PROGRAMS 
Part D of title XVIII of the Social Security Act (as 
so added) is amended by inserting after section 1860D– 
23 the following: 
‘‘DIRECT SUBSIDIES FOR CERTAIN STATE 
PHARMACEUTICAL ASSISTANCE PROGRAMS 
‘‘SEC. 1860D–23A. (a) DIRECT SUBSIDY.— 
‘‘(1) IN GENERAL.—The Secretary shall provide 
for the payment to a State offering a State pharma-
ceutical assistance program described in section 
1860D–23(b)(1) for each individual who is eligible 
for, but not enrolled in, a prescription drug plan or 
MA–PD plan under this part, and who is enrolled in 
such program for each month for which such indi-
vidual is so enrolled. 
‘‘(2) AMOUNT OF PAYMENT.—
‘‘(A) IN
GENERAL.—The amount of the 
payment under paragraph (1) shall be an 
amount equal to the special subsidy payment 
amount determined under section 1860D– 
22(a)(3) for a qualifying covered retiree for a 
coverage year enrolled with the sponsor of a 
qualified retiree prescription drug plan. 
‘‘(b) ADDITIONAL SUBSIDY.— 
‘‘(1) IN GENERAL.—The Secretary shall provide 
for the payment to a State offering a State pharma-
ceutical assistance program described in section 
1860D–23(b)(1) for each applicable low-income indi-
vidual enrolled in the program for each month for 
which such individual is so enrolled. 
‘‘(2) AMOUNT OF PAYMENT.— 
‘‘(A) IN
GENERAL.—The amount of the 
payment under paragraph (1) shall be the 
amount the Secretary estimates would have 
been made to a prescription drug plan or MA– 
PD plan under section 1860D–14 with respect 
to the applicable low-income individual if such 
individual was enrolled in such a plan. 
‘‘(B) MAXIMUM
PAYMENTS.—In no case 
may the amount of the payment determined 
under subparagraph (A) with respect to an ap-
that will be payable after obtaining all of the infor-
mation. 
‘‘(2) SOURCE OF PAYMENTS.—Payments under 
this section shall be made from the Medicare Pre-
scription Drug Account. 
‘‘(d) CONSTRUCTION.—Nothing in this section, sec-
tion 1860D–23, or section 1860D–24 shall be construed 
as requiring a prescription drug plan or MA–PD plan to 
coordinate coverage provided under such plan with cov-
erage provided under a State pharmaceutical assistance 
program described in section 1860D–23(b)(1) that is op-
erated by a State which receives a payment under this sec-
tion.’’. 
SEC. 4. FACILITATION OF COORDINATION. 
Section 1860D–24(c)(1) of the Social Security Act 
(as so added) is amended by striking ‘‘all methods of oper-
ation’’ and inserting ‘‘its own methods of operation, except 
that a PDP sponsor or MA organization may not require 
a State Pharmaceutical Assistance Program or an RX 
plan described in subsection (b) to apply such tools when 
coordinating benefits’’. 
SEC. 5. ALLOWING MEDICAID WRAP. 
Section 1935(d) of the Social Security Act, as added 
by section 103(c) of the Medicare Prescription Drug, Im-
provement, and Modernization Act of 2003 (Public Law 
108–173), is repealed. 
SEC. 6. REPEAL OF COMPARATIVE COST ADJUSTMENT 
PROGRAM. 
Effective as if included in the enactment of the Medi-
care Prescription Drug, Improvement, and Modernization 
Act of 2003 (Public Law 108–173), subtitle E of title II 
of such Act is repealed and any provisions of law amended 
by such subtitle are restored as if such subtitle had not 
been enacted. 
SEC. 7. PROVISION OF WRAP-AROUND PRESCRIPTION 
DRUG COVERAGE THROUGH MEDIGAP. 
Section 1882(v) of the Social Security Act (42 U.S.C. 
1395ss(v)), as added by section 104(a) of the Medicare 
Prescription Drug, Improvement, and Modernization Act 
of 2003 (Public Law 108–173), is amended as follows: 
(1) In paragraph (1)(A), by inserting ‘‘, other 
than such a policy that provides wrap-around pre-
scription drug coverage included within a range of 
such 
coverage 
approved 
under 
subparagraph 
(D)(ii),’’ after ‘‘paragraph (6)(A))’’. 
(2) Add at the end of paragraph (1) the fol-
lowing new subparagraph: 
‘‘(D) WRAP-AROUND PRESCRIPTION DRUG 
COVERAGE.—
‘‘(i) IN
GENERAL.—Notwithstanding 
any other provision of this subsection, a 
medigap Rx policy that provides wrap- 
around prescription drug coverage included 
within a range of such coverage approved 
by the Secretary under clause (ii) may be 
offered to part D enrollees. 
‘‘(ii) 
DEVELOPMENT
OF
STAND-
ARDS.—The Secretary shall approve a 
range of wrap-around prescription drug 
coverage that may be offered under this 
subparagraph to part D enrollees.’’. 
SEC. 8. EFFECTIVE DATE. 
The amendments made by this Act shall take effect 
as if included in the enactment of the Medicare Prescrip-
tion Drug, Improvement, and Modernization Act of 2003 
(Public Law 108–173). 
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