I 
108TH CONGRESS 
1ST SESSION H. R. 3332
To amend title XVIII of the Social Security Act to establish a safety net 
Medicare outpatient prescription drug program for indigent beneficiaries 
without other outpatient prescription drug coverage. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 17, 2003
Mr. BURTON of Indiana introduced the following bill; which was referred to 
the Committee on Energy and Commerce, and in addition to the Com-
mittee on Ways and Means, 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 concerned 
A BILL 
To amend title XVIII of the Social Security Act to establish 
a safety net Medicare outpatient prescription drug pro-
gram for indigent beneficiaries without other outpatient 
prescription drug coverage.
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 Safety Net Prescription Drug Coverage Act of 
2003’’.
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows:
Sec. 1. Short title; table of contents. 
Sec. 2. Safety net medicare outpatient prescription drug program for indigent, 
uncovered beneficiaries. 
‘‘PART D—SAFETY NET MEDICARE OUTPATIENT PRESCRIPTION DRUG 
PROGRAM FOR INDIGENT, UNCOVERED BENEFICIARIES 
‘‘Sec. 1860D–1. Establishment of program. 
‘‘Sec. 1860D–2. Enrollment. 
‘‘Sec. 1860D–3. Enrollee protections. 
‘‘Sec. 1860D–4. Benefits under the program. 
‘‘Sec. 1860D–5. Prescription drug accounts. 
‘‘Sec. 1860D–6. Safety Net Prescription Drug Account in the Federal 
Supplementary Medical Insurance Trust Fund. 
‘‘Sec. 1860D–7. Definitions. 
Sec. 3. Exclusion of part D costs from determination of part B monthly pre-
mium. 
Sec. 4. Medicaid amendments. 
Sec. 5. Importation of prescription drugs.
SEC. 2. SAFETY NET MEDICARE OUTPATIENT PRESCRIP-
TION DRUG PROGRAM FOR INDIGENT, UN-
COVERED BENEFICIARIES. 
(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—SAFETY NET MEDICARE OUTPATIENT PRE-
SCRIPTION DRUG PROGRAM FOR INDIGENT, UNCOV-
ERED BENEFICIARIES 
‘‘ESTABLISHMENT OF PROGRAM 
‘‘SEC. 1860D–1. (a) PROVISION OF BENEFIT.—The 
Secretary shall establish a Medicare Safety Net Out-
patient Prescription Drug Program under this part under
which an eligible beneficiary who voluntarily enrolls under 
this part is provided—
‘‘(1) access to negotiated prices for costs before 
catastrophic threshold; 
‘‘(2) catastrophic coverage under this part; and 
‘‘(3) a prescription drug account and a public 
contribution into such an account. 
‘‘(b) ELIGIBLE BENEFICIARY; ELIGIBLE ENTITY; 
PRESCRIPTION DRUG ACCOUNT.—For purposes of this 
part: 
‘‘(1) ELIGIBLE BENEFICIARY.—The term ‘eligi-
ble beneficiary’ means an individual who—
‘‘(A) is eligible for benefits under part A or 
enrolled under part B, regardless of whether or 
not the individual is enrolled with a plan under 
part C; 
‘‘(B) does not have, and is not eligible for, 
any prescription drug coverage under title XIX, 
under a group health plan, under part C, under 
individual health insurance coverage, under a 
medicare supplemental policy, under a State 
pharmaceutical assistance program, or under 
chapter 17 of title 38, United States Code (re-
lating to Veterans benefits); and
‘‘(C) has current income (as defined and 
determined by the Secretary) to be less than 
250 percent of the official poverty line. 
‘‘(2) PRESCRIPTION
DRUG
ACCOUNT.—The 
term ‘prescription drug account’ means, with respect 
to an eligible beneficiary, an account established for 
the benefit of that beneficiary under section 1860D–
5.
‘‘(c) IMPLEMENTATION OF PROGRAM.—
‘‘(1) DEADLINE
FOR
IMPLEMENTATION.—The 
Secretary shall establish the program under this 
part in a manner so that benefits with respect to 
contributions to a prescription drug account and cat-
astrophic coverage shall begin with the month of 
January 2005. 
‘‘(2) ADMINISTRATION THROUGH NEW DIVISION 
WITHIN HHS.—The Secretary shall provide for es-
tablishment of a separate division within the Depart-
ment of Health and Human Services that shall be 
responsible for the administration of this part.
‘‘(d) 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. 
‘‘(e) FINANCING.—The costs of providing benefits 
under this part shall be payable from the Safety Net Pre-
scription Drug Account established within the Federal 
Supplementary Medical Insurance Trust Fund under sec-
tion 1860D–6. 
‘‘ENROLLMENT; SELECTION OF ELIGIBLE ENTITY 
‘‘SEC. 1860D–2. (a) ENROLLMENT UNDER PART 
D.—
‘‘(1) ESTABLISHMENT OF PROCESS.—
‘‘(A) IN
GENERAL.—The Secretary shall 
establish a process through which an eligible 
beneficiary may make an election to enroll 
under this part. Under such process—
‘‘(i) a beneficiary may enroll at any 
time during a year (or during an initial en-
rollment period beginning on October 1, 
2004, for 2005); 
‘‘(ii) once first enrolled with respect to 
a year, a beneficiary is eligible for benefits 
for the remainder of the year; and
‘‘(iii) for succeeding years, a bene-
ficiary must recertify eligibility on an an-
nual basis (as specified by the Secretary) 
to remain eligible for benefits under this 
part. 
‘‘(B) REQUIREMENT
OF
ENROLLMENT.—
An eligible beneficiary must be enrolled under
and the prescription drug coverage made available under 
this part. 
‘‘(c) NO ENROLLMENT FEE.—There shall be no fee 
for enrollment under this part. 
‘‘(d) ISSUANCE OF CARD AND COORDINATION.—The 
Secretary shall—
‘‘(1) issue to each enrolled beneficiary a card 
and an enrollment number that establishes proof of 
enrollment and that can be used in a coordinated 
manner—
‘‘(A) to identify the beneficiary for pur-
poses of this part, including tracking expendi-
tures that count against the catastrophic cov-
erage threshold; and 
‘‘(B) to make deposits to and withdrawals 
from a prescription drug account under section 
1860D–5; and 
‘‘(2) provide for electronic methods to coordi-
nate with such prescription drug accounts. 
‘‘ENROLLEE PROTECTIONS 
‘‘SEC. 1860D–3. (a) DISSEMINATION OF INFORMA-
TION.—
‘‘(1) GENERAL INFORMATION.—The Secretary 
shall disclose, in a clear, accurate, and standardized 
manner to eligible beneficiaries enrolled under this
part, information relating to prescription drug cov-
erage under this part. 
‘‘(2) DISCLOSURE UPON REQUEST OF GENERAL 
COVERAGE, UTILIZATION, AND GRIEVANCE INFORMA-
TION.—Upon request of an eligible beneficiary, the 
Secretary shall provide the information described in 
section 1852(c)(2) (other than subparagraph (D)) to 
such beneficiary. 
‘‘(3) RESPONSE TO BENEFICIARY QUESTIONS.—
The Secretary shall have a mechanism (including a 
toll-free telephone number) for providing upon re-
quest specific information (such as negotiated prices, 
including discounts) to beneficiaries enrolled under 
this part. 
‘‘(4) COORDINATION WITH CATASTROPHIC COV-
ERAGE AND PRESCRIPTION DRUG ACCOUNT BENE-
FITS.—The Secretary shall provide for coordination 
of such information as the Secretary may specify to 
carry out sections 1860D–4(b) and 1860D–5. 
‘‘(b) ACCESS TO COVERED BENEFITS.—
‘‘(1) ENSURING PHARMACY ACCESS.—
‘‘(A) PARTICIPATION
OF
ANY
WILLING 
PHARMACY.—The Secretary shall permit the 
participation of any pharmacy that meets terms
and conditions that the Secretary has estab-
lished. 
‘‘(B) NEGOTIATION OF PRICES.—The Sec-
retary may negotiate with different vendors dif-
ferent prices to be paid for outpatient prescrip-
tion drugs. 
‘‘(2) ACCESS TO NEGOTIATED PRICES FOR PRE-
SCRIPTION
DRUGS.—For requirements relating to 
the access of an eligible beneficiary to negotiated 
prices (including applicable discounts), see section 
1860D–4(a). 
‘‘(c) COST AND UTILIZATION MANAGEMENT; QUAL-
ITY ASSURANCE; MEDICATION THERAPY MANAGEMENT 
PROGRAM.—
‘‘(1) IN GENERAL.—For purposes of providing 
access to negotiated benefits under section 1860D–
4(a) and the catastrophic benefit described in sec-
tion 1860D–4(b), the Secretary may establish—
‘‘(A) an effective cost and drug utilization 
management program, including appropriate in-
centives to use generic drugs, when appropriate; 
‘‘(B) quality assurance measures and sys-
tems to reduce medical errors and adverse drug 
interactions, including a medication therapy
management program described in paragraph 
(2); and 
‘‘(C) a program to control fraud, abuse, 
and waste. 
‘‘(2) MEDICATION THERAPY MANAGEMENT PRO-
GRAM.—
‘‘(A) IN GENERAL.—A medication therapy 
management program described in this para-
graph is a program of drug therapy manage-
ment and medication administration that may 
be furnished by a pharmacy provider and that 
is designed to assure, with respect to bene-
ficiaries at risk for potential medication prob-
lems, such as beneficiaries with complex or 
chronic diseases (such as diabetes, asthma, hy-
pertension, and congestive heart failure) or 
multiple prescriptions, that covered outpatient 
drugs are appropriately used to optimize thera-
peutic outcomes through improved medication
use and reduce the risk of adverse events, in-
cluding adverse drug interactions. Such pro-
grams may distinguish between services in am-
bulatory and institutional settings. 
‘‘(B) ELEMENTS.—Such program may in-
clude—
‘‘(i) 
enhanced 
beneficiary 
under-
standing to promote the appropriate use of 
medications by beneficiaries and to reduce 
the risk of potential adverse events associ-
ated with medications, through beneficiary 
education, counseling, case management, 
disease state management programs, and 
other appropriate means; 
‘‘(ii) increased beneficiary adherence 
with 
prescription 
medication 
regimens 
through medication refill reminders, special 
packaging, and other compliance programs 
and other appropriate means; and 
‘‘(iii) detection of patterns of overuse 
and underuse of prescription drugs. 
‘‘(C) DEVELOPMENT OF PROGRAM IN CO-
OPERATION
WITH
LICENSED
PHARMACISTS.—
The program shall be developed in cooperation 
with licensed and practicing pharmacists and 
physicians. 
‘‘(D) 
CONSIDERATIONS
IN
PHARMACY 
FEES.—The Secretary may take into account, 
in establishing fees for pharmacists and others 
providing services under the medication therapy
management program, the resources and time 
used in implementing the program.
‘‘(d) GRIEVANCE MECHANISM, COVERAGE DETER-
MINATIONS, AND RECONSIDERATIONS.—Subsections (f) 
and (g) of section 1852 shall apply with respect to benefits 
for drugs through the Secretary under this part in the 
same manner as such requirements apply to an organiza-
tion with respect to benefits it offers under a plan under 
part C.
‘‘BENEFITS UNDER THE PROGRAM 
‘‘SEC. 1860D–4. (a) SAVINGS
TO
ENROLLEES 
THROUGH NEGOTIATED PRICES.—
‘‘(1) ACCESS TO NEGOTIATED PRICES.—
‘‘(A) IN GENERAL.—Subject to paragraph 
(2), the Secretary shall provide each eligible 
beneficiary enrolled under this part with access 
to negotiated prices (including applicable dis-
counts) for prescription drugs. 
‘‘(B) SCOPE OF ACCESS.—For purposes of 
this paragraph, the term ‘prescription drugs’ is 
not limited to covered outpatient drugs, but 
does not include any over-the-counter drug that 
is not a covered outpatient drug. 
‘‘(C) EXEMPTION FROM COMPUTATION OF 
BEST PRICE UNDER MEDICAID PROGRAM.—The 
prices negotiated by the Secretary under this
paragraph shall (notwithstanding any other 
provision of law) not be taken into account for 
the purposes of establishing the best price 
under section 1927(c)(1)(C). 
‘‘(2) PROHIBITION ON CHARGES FOR REQUIRED 
SERVICES.—The Secretary (and any pharmacy con-
tracting with the Secretary for the provision of a 
discount under this part) may not charge a bene-
ficiary any amount for any services required to be 
provided under this part. 
‘‘(b) CATASTROPHIC COVERAGE.—
‘‘(1) SCOPE OF COVERAGE.—
‘‘(A) SCOPE.—
‘‘(i) IN GENERAL.—Subject to para-
graph (4), the catastrophic coverage under 
this section shall consist of payment under 
this part for incurred expenses for covered 
outpatient drugs for an enrollee after the 
enrollee has incurred in a year expenses 
that 
equal 
the 
catastrophic 
coverage 
threshold specified in subparagraph (C) or 
(D) for the enrollee and year involved. 
‘‘(ii) PAYMENT
RATE.—The rate of 
payment negotiated by the Secretary with 
the manufacturer for a covered outpatient
drug shall be the amount paid under this 
part on behalf of the individual for the 
drug. 
‘‘(B) APPLICATION.—In applying subpara-
graph (A)—
‘‘(i) incurred expenses shall only in-
clude costs incurred for the catastrophic 
coverage threshold; and 
‘‘(ii) expenses that are not paid di-
rectly from a prescription drug account 
shall be counted under clause (i) only if, 
under such process as the Secretary shall 
recognize, the account number of the indi-
vidual’s prescription drug account is part 
of the transaction involved. 
‘‘(C) CATASTROPHIC COVERAGE THRESH-
OLDS.—
‘‘(i) 
INITIAL
CATASTROPHIC
COV-
ERAGE THRESHOLD.—Subject to clause (ii) 
and subsection (e)(3), the catastrophic cov-
erage threshold is $3,000. 
‘‘(ii) INFLATION
ADJUSTMENT.—The 
provisions of subsection (c)(2)(B) shall 
apply with respect to the catastrophic cov-
erage threshold under clause (i) for a year
after 2004 in the same manner as it ap-
plied to the annual Federal contribution 
amount for that year, except that, for pur-
poses of this subparagraph, any reference 
in subsection (c)(2)(B)(ii) to ‘$1’ is 
deemed a reference to ‘$100’. 
‘‘(2) ADMINISTRATION.—Insofar as the Sec-
retary does not provide for the catastrophic coverage 
under this subsection through a contract with a 
qualifying private entity, the Secretary is authorized 
to enter into such agreements with entities as may 
be required to provide for the benefits under this 
subsection. Such entities may be eligible entities, 
carriers under part B, fiscal intermediaries under 
part A, or other qualified entities. 
‘‘(c) CONTRIBUTION INTO PRESCRIPTION DRUG AC-
COUNT.—
‘‘(1) IN GENERAL.—In the case of an individual 
enrolled under this part, the Secretary shall—
‘‘(A) establish a prescription drug account 
for the individual under section 1860D–5; and 
‘‘(B) make deposits into such account in 
accordance with subsection (c) of such section.
Amounts so deposited shall not be treated as income 
to the accountholder for purposes of the Internal 
Revenue Code of 1986. 
‘‘(2) 
ANNUAL
FEDERAL
CONTRIBUTION 
AMOUNT.—
‘‘(A) INITIAL
AMOUNT.—Subject to sub-
paragraph (B) and subsections (d) and (e)(3), 
in the case of an accountholder whose modified 
adjusted gross income is—
‘‘(i) not more than 100 percent of the 
poverty line, the annual Federal contribu-
tion amount is $2,500; 
‘‘(ii) more than 100 percent, but less 
than 125 percent, of the poverty line, the 
annual Federal contribution amount is 
$1,500; 
‘‘(iii) more than 125 percent, but less 
than 175 percent, of the poverty line, the 
annual Federal contribution amount is 
$1,100; and 
‘‘(iv) at least 175 percent, but less 
than 250 percent, of the poverty line, the 
annual Federal contribution amount is 
$600. 
‘‘(B) INFLATION ADJUSTMENT.—
‘‘(i) IN GENERAL.—For a year after 
2004, the annual Federal contribution 
amount shall be the amount specified in 
subparagraph (A) increased by the per-
centage (if any) by which—
‘‘(I) the average per capita ag-
gregate expenditures for covered out-
patient drugs in the United States for 
medicare beneficiaries, as determined 
by the Secretary for the 12-month pe-
riod ending in July of the previous 
year; exceeds 
‘‘(II) such aggregate expendi-
tures for the 12-month period ending 
with July 2004. 
‘‘(ii) ROUNDING.—If an annual Fed-
eral contribution amount determined under 
clause (i) is not a multiple of $1, such in-
crease shall be rounded to the nearest mul-
tiple of $1. 
‘‘(d) REQUIREMENT FOR VERIFICATION OF ELIGI-
BILITY.—
‘‘(1) IN GENERAL.—An individual shall not be 
treated as an eligible beneficiary for purposes of 
benefits under this part unless the individual—