I 
108TH CONGRESS 
1ST SESSION 
H. R. 1
To amend title XVIII of the Social Security Act to provide for a voluntary 
program for prescription drug coverage under the Medicare Program, 
to modernize the Medicare Program, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 25, 2003
Mr. HASTERT (for himself, Mr. DELAY, Mr. BLUNT, Ms. PRYCE of Ohio, Mr. 
THOMAS, Mr. TAUZIN, Mrs. JOHNSON of Connecticut, Mr. BILIRAKIS, 
Mr. PETERSON of Minnesota, Mrs. CAPITO, Ms. GINNY BROWN-WAITE 
of Florida, Mr. BRADLEY of New Hampshire, Mr. BURNS, Ms. DUNN, 
Mr. FLETCHER, Mr. GOSS, Mr. GRAVES, Mr. MCCRERY, Mr. NUNES, Mr. 
SIMMONS, and Mr. SULLIVAN) introduced the following bill; which was re-
ferred jointly to the Committees on Energy and Commerce, and Ways 
and Means, in each case for consideration of such provisions as fall with-
in the jurisdiction of the committee concerned 
A BILL 
To amend title XVIII of the Social Security Act to provide 
for a voluntary program for prescription drug coverage 
under the Medicare Program, to modernize 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; AMENDMENTS TO SOCIAL SECU-
RITY ACT; REFERENCES TO BIPA AND SEC-
RETARY; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Medicare Prescription Drug and Modernization Act of 
2003’’. 
(b) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex-
cept as otherwise specifically provided, whenever in this 
Act an amendment is expressed in terms of an amendment 
to or repeal of a section or other provision, the reference 
shall be considered to be made to that section or other 
provision of the Social Security Act. 
(c) BIPA; SECRETARY.—In this Act: 
(1) BIPA.—The term ‘‘BIPA’’ means the 
Medicare, Medicaid, and SCHIP Benefits Improve-
ment and Protection Act of 2000, as enacted into 
law by section 1(a)(6) of Public Law 106–554. 
(2) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Health and Human Services. 
(d) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows:
Sec. 1. Short title; amendments to Social Security Act; references to BIPA and 
Secretary; table of contents. 
TITLE I—MEDICARE PRESCRIPTION DRUG BENEFIT 
Sec. 101. Establishment of a medicare prescription drug benefit. 
‘‘PART D—VOLUNTARY PRESCRIPTION DRUG BENEFIT PROGRAM 
‘‘Sec. 1860D–1. Benefits; eligibility; enrollment; and coverage period. 
‘‘Sec. 1860D–2. Requirements for qualified prescription drug coverage.
Sec. 231. Making permanent change in medicare advantage reporting deadlines 
and annual, coordinated election period. 
Sec. 232. Avoiding duplicative State regulation. 
Sec. 233. Specialized medicare advantage plans for special needs beneficiaries. 
Sec. 234. Medicare MSAs. 
Sec. 235. Extension of reasonable cost contracts. 
Sec. 236. Extension of municipal health service demonstration projects. 
Sec. 237. Study of performance-based payment systems. 
Subtitle C—Application of FEHBP-Style Competitive Reforms 
Sec. 241. Application of FEHBP-style competitive reform beginning in 2010. 
TITLE III—COMBATTING WASTE, FRAUD, AND ABUSE 
Sec. 301. Medicare secondary payor (MSP) provisions. 
Sec. 302. Competitive acquisition of certain items and services. 
Sec. 303. Competitive acquisition of covered outpatient drugs and biologicals. 
Sec. 304. Demonstration project for use of recovery audit contractors. 
TITLE IV—RURAL HEALTH CARE IMPROVEMENTS 
Sec. 401. Enhanced disproportionate share hospital (DSH) treatment for rural 
hospitals and urban hospitals with fewer than 100 beds. 
Sec. 402. Immediate establishment of uniform standardized amount in rural 
and small urban areas. 
Sec. 403. Establishment of essential rural hospital classification. 
Sec. 404. More frequent update in weights used in hospital market basket. 
Sec. 405. Improvements to critical access hospital program. 
Sec. 406. Redistribution of unused resident positions. 
Sec. 407. Two-year extension of hold harmless provisions for small rural hos-
pitals and sole community hospitals under prospective payment 
system for hospital outpatient department services. 
Sec. 408. Exclusion of certain rural health clinic and federally qualified health 
center services from the prospective payment system for skilled 
nursing facilities. 
Sec. 409. Recognition of attending nurse practitioners as attending physicians 
to serve hospice patients. 
Sec. 410. Improvement in payments to retain emergency capacity for ambu-
lance services in rural areas. 
Sec. 411. Two-year increase for home health services furnished in a rural area. 
Sec. 412. Providing safe harbor for certain collaborative efforts that benefit 
medically underserved populations. 
Sec. 413. GAO study of geographic differences in payments for physicians’ 
services. 
Sec. 414. Treatment of missing cost reporting periods for sole community hos-
pitals. 
Sec. 415. Extension of telemedicine demonstration project. 
Sec. 416. Adjustment to the medicare inpatient hospital PPS wage index to re-
vise the labor-related share of such index. 
Sec. 417. Medicare incentive payment program improvements for physician 
scarcity. 
Sec. 418. Rural hospice demonstration project. 
TITLE V—PROVISIONS RELATING TO PART A 
Subtitle A—Inpatient Hospital Services
Sec. 501. Revision of acute care hospital payment updates. 
Sec. 502. Recognition of new medical technologies under inpatient hospital 
PPS. 
Sec. 503. Increase in Federal rate for hospitals in Puerto Rico. 
Sec. 504. Wage index adjustment reclassification reform . 
Sec. 505. MedPAC report on specialty hospitals. 
Subtitle B—Other Provisions 
Sec. 511. Payment for covered skilled nursing facility services. 
Sec. 512. Coverage of hospice consultation services. 
Sec. 513. Correction of Trust Fund holdings. 
TITLE VI—PROVISIONS RELATING TO PART B 
Subtitle A—Physicians’ Services 
Sec. 601. Revision of updates for physicians’ services. 
Sec. 602. Studies on access to physicians’ services. 
Sec. 603. MedPAC report on payment for physicians’ services. 
Sec. 604. Inclusion of podiatrists and dentists under private contracting au-
thority. 
Sec. 605. Establishment of floor on work geographic adjustment. 
SUBTITLE B—PREVENTIVE SERVICES 
Sec. 611. Coverage of an initial preventive physical examination. 
Sec. 612. Coverage of cholesterol and blood lipid screening. 
Sec. 613. Waiver of deductible for colorectal cancer screening tests. 
Sec. 614. Improved payment for certain mammography services. 
Subtitle C—Other Services 
Sec. 621. Hospital outpatient department (HOPD) payment reform. 
Sec. 622. Payment for ambulance services. 
Sec. 623. Renal dialysis services. 
Sec. 624. One-year moratorium on therapy caps; provisions relating to reports. 
Sec. 625. Adjustment to payments for services furnished in ambulatory surgical 
centers. 
Sec. 626. Payment for certain shoes and inserts under the fee schedule for 
orthotics and prosthetics. 
Sec. 627. Waiver of part B late enrollment penalty for certain military retirees; 
special enrollment period. 
Sec. 628. Part B deductible. 
Sec. 629. Extension of coverage of intravenous immune globulin (IVIG) for the 
treatment of primary immune deficiency diseases in the home. 
Sec. 630. Medicare coverage of diabetes laboratory diagnostic tests. 
Sec. 631. Demonstration project for coverage of certain prescription drugs and 
biologics. 
TITLE VII—PROVISIONS RELATING TO PARTS A AND B 
Subtitle A—Home Health Services 
Sec. 701. Update in home health services. 
Sec. 702. Establishment of reduced copayment for a home health service epi-
sode of care for certain beneficiaries. 
Sec. 703. MedPAC study on medicare margins of home health agencies.
Sec. 704. Demonstration project to clarify the definition of homebound. 
Subtitle B—Direct Graduate Medical Education 
Sec. 711. Extension of update limitation on high cost programs. 
Subtitle C—Chronic Care Improvement 
Sec. 721. Voluntary chronic care improvement under traditional fee-for-service. 
Sec. 722. Chronic care improvement under medicare advantage and enhanced 
fee-for-service programs. 
Sec. 723. Institute of Medicine report. 
Sec. 724. MedPAC report. 
Subtitle D—Other Provisions 
Sec. 731. Modifications to medicare payment advisory commission (MedPAC). 
Sec. 732. Demonstration project for medical adult day care services. 
Sec. 733. Improvements in national and local coverage determination process to 
respond to changes in technology. 
Sec. 734. Treatment of certain physician pathology services. 
Sec. 735. Clinical investigation of medicare pancreatic islet cell transplants. 
Sec. 736. Demonstration project for consumer-directed chronic outpatient serv-
ices. 
TITLE VIII—MEDICARE BENEFITS ADMINISTRATION 
Sec. 801. Establishment of Medicare Benefits Administration. 
TITLE IX—REGULATORY REDUCTION AND CONTRACTING 
REFORM 
Subtitle A—Regulatory Reform 
Sec. 901. Construction; definition of supplier. 
Sec. 902. Issuance of regulations. 
Sec. 903. Compliance with changes in regulations and policies. 
Sec. 904. Reports and studies relating to regulatory reform. 
Subtitle B—Contracting Reform 
Sec. 911. Increased flexibility in medicare administration. 
Sec. 912. Requirements for information security for medicare administrative 
contractors. 
Subtitle C—Education and Outreach 
Sec. 921. Provider education and technical assistance. 
Sec. 922. Small provider technical assistance demonstration program. 
Sec. 923. Medicare Provider Ombudsman; Medicare Beneficiary Ombudsman. 
Sec. 924. Beneficiary outreach demonstration program. 
Sec. 925. Inclusion of additional information in notices to beneficiaries about 
skilled nursing facility benefits. 
Sec. 926. Information on medicare-certified skilled nursing facilities in hospital 
discharge plans. 
Subtitle D—Appeals and Recovery 
Sec. 931. Transfer of responsibility for medicare appeals.
Sec. 932. Process for expedited access to review. 
Sec. 933. Revisions to medicare appeals process. 
Sec. 934. Prepayment review. 
Sec. 935. Recovery of overpayments. 
Sec. 936. Provider enrollment process; right of appeal. 
Sec. 937. Process for correction of minor errors and omissions without pur-
suing appeals process. 
Sec. 938. Prior determination process for certain items and services; advance 
beneficiary notices. 
Subtitle V—Miscellaneous Provisions 
Sec. 941. Policy development regarding evaluation and management (E & M) 
documentation guidelines. 
Sec. 942. Improvement in oversight of technology and coverage. 
Sec. 943. Treatment of hospitals for certain services under medicare secondary 
payor (MSP) provisions. 
Sec. 944. EMTALA improvements. 
Sec. 945. Emergency Medical Treatment and Active Labor Act (EMTALA) 
technical advisory group. 
Sec. 946. Authorizing use of arrangements to provide core hospice services in 
certain circumstances. 
Sec. 947. Application of OSHA bloodborne pathogens standard to certain hos-
pitals. 
Sec. 948. BIPA-related technical amendments and corrections. 
Sec. 949. Conforming authority to waive a program exclusion. 
Sec. 950. Treatment of certain dental claims. 
Sec. 951. Furnishing hospitals with information to compute dsh formula. 
Sec. 952. Revisions to reassignment provisions. 
Sec. 953. Other provisions. 
Sec. 954. Temporary suspension of OASIS requirement for collection of data 
on non-medicare and non-medicaid patients. 
TITLE X—MEDICAID 
Sec. 1001. Medicaid disproportionate share hospital (DSH) payments. 
Sec. 1002. Clarification of inclusion of inpatient drug prices charged to certain 
public hospitals in the best price exemptions for the medicaid 
drug rebate program. 
TITLE XI—ACCESS TO AFFORDABLE PHARMACEUTICALS 
Subtitle A—Access to Affordable Pharmaceuticals 
Sec. 1101. 30-month stay-of-effectiveness period. 
Sec. 1102. Forfeiture of 180-day exclusivity period. 
Sec. 1103. Bioavailability and bioequivalence. 
Sec. 1104. Conforming amendments. 
Subtitle B—Ability of Federal Trade Commission to Enforce Antitrust Laws 
Sec. 1111. Definitions. 
Sec. 1112. Notification of agreements. 
Sec. 1113. Filing deadlines. 
Sec. 1114. Disclosure exemption. 
Sec. 1115. Enforcement. 
Sec. 1116. Rulemaking.
Sec. 1117. Savings clause. 
Sec. 1118. Effective date. 
SUBTITLE C—IMPORTATION OF PRESCRIPTION DRUGS 
Sec. 1121. Importation of prescription drugs.
TITLE I—MEDICARE 
PRESCRIPTION DRUG BENEFIT 
SEC. 101. ESTABLISHMENT OF A MEDICARE PRESCRIPTION 
DRUG BENEFIT. 
(a) IN GENERAL.—Title XVIII is amended—
(1) by redesignating part D as part F; and 
(2) by inserting after part C the following new 
part:
‘‘PART D—VOLUNTARY PRESCRIPTION DRUG BENEFIT 
PROGRAM 
‘‘SEC. 1860D–1. BENEFITS; ELIGIBILITY; ENROLLMENT; AND 
COVERAGE PERIOD. 
‘‘(a) PROVISION OF QUALIFIED PRESCRIPTION DRUG 
COVERAGE THROUGH ENROLLMENT IN PLANS.—Subject 
to the succeeding provisions of this part, each individual 
who is entitled to benefits under part A or is enrolled 
under part B is entitled to obtain qualified prescription 
drug coverage (described in section 1860D–2(a)) as fol-
lows:
‘‘(1) MEDICARE-RELATED PLANS.—
‘‘(A) MEDICARE ADVANTAGE.—If the indi-
vidual is eligible to enroll in a Medicare Advan-
tage plan that provides qualified prescription
drug coverage under section 1851(j), the indi-
vidual may enroll in such plan and obtain cov-
erage through such plan. 
‘‘(B) EFFS PLANS.—If the individual is 
eligible to enroll in an EFFS plan that provides 
qualified prescription drug coverage under part 
E under section 1860E–2(d), the individual 
may enroll in such plan and obtain coverage 
through such plan. 
‘‘(C) MA-EFFS 
PLAN; MA-EFFS RX 
PLAN.—For purposes of this part, the term 
‘MA-EFFS plan’ means a Medicare Advantage 
plan under part C and an EFFS plan under 
part E and the term ‘MA-EFFS Rx plan’ 
means a MA-EFFS plan insofar as such plan 
provides qualified prescription drug coverage. 
‘‘(2) PRESCRIPTION DRUG PLAN.—If the indi-
vidual is not enrolled in a MA-EFFS plan, the indi-
vidual may enroll under this part in a prescription 
drug plan (as defined in section 1860D–10(a)(5)). 
Such individuals shall have a choice of such plans under 
section 1860D–5(d). 
‘‘(b) GENERAL ELECTION PROCEDURES.—
‘‘(1) IN
GENERAL.—An individual eligible to 
make an election under subsection (a) may elect to
enroll in a prescription drug plan under this part, or 
elect the option of qualified prescription drug cov-
erage under a MA-EFFS Rx plan under part C or 
part E, and to change such election only in such 
manner and form as may be prescribed by regula-
tions of the Administrator of the Medicare Benefits 
Administration (appointed under section 1809(b)) 
(in this part referred to as the ‘Medicare Benefits 
Administrator’) and only during an election period 
prescribed in or under this subsection. 
‘‘(2) ELECTION PERIODS.—
‘‘(A) IN GENERAL.—Except as provided in 
this paragraph, the election periods under this 
subsection shall be the same as the coverage 
election periods under the Medicare Advantage 
and EFFS programs under section 1851(e), in-
cluding—
‘‘(i) annual coordinated election peri-
ods; and 
‘‘(ii) special election periods. 
In applying the last sentence of section 
1851(e)(4) (relating to discontinuance of an 
election during the first year of eligibility) 
under this subparagraph, in the case of an elec-
tion described in such section in which the indi-
vidual had elected or is provided qualified pre-
scription drug coverage at the time of such first 
enrollment, the individual shall be permitted to 
enroll in a prescription drug plan under this 
part at the time of the election of coverage 
under the original fee-for-service plan. 
‘‘(B) INITIAL ELECTION PERIODS.—
‘‘(i) INDIVIDUALS
CURRENTLY
COV-
ERED.—In the case of an individual who is 
entitled to benefits under part A or en-
rolled under part B as of October 1, 2005, 
there shall be an initial election period of 
6 months beginning on that date. 
‘‘(ii) INDIVIDUAL
COVERED
IN
FU-
TURE.—In the case of an individual who is 
first entitled to benefits under part A or 
enrolled under part B after such date, 
there shall be an initial election period 
which is the same as the initial enrollment 
period under section 1837(d). 
‘‘(C) ADDITIONAL SPECIAL ELECTION PE-
RIODS.—The Administrator shall establish spe-
cial election periods—
‘‘(i) in cases of individuals who have 
and involuntarily lose prescription drug 
coverage described in subsection (c)(2)(C); 
‘‘(ii) in cases described in section 
1837(h) (relating to errors in enrollment), 
in the same manner as such section applies 
to part B; 
‘‘(iii) in the case of an individual who 
meets such exceptional conditions (includ-
ing conditions provided under section 
1851(e)(4)(D)) as the Administrator may 
provide; and 
‘‘(iv) in cases of individuals (as deter-
mined by the Administrator) who become 
eligible for prescription drug assistance 
under title XIX under section 1935(d). 
‘‘(3) INFORMATION
ON
PLANS.—Information 
described in section 1860D–3(b)(1) on prescription 
drug plans and MA-EFFS Rx plans shall be made 
available during election periods. 
‘‘(4) ADDITIONAL INFORMATION.—In order to 
promote the efficient marketing of prescription drug 
plans and MA-EFFS plans, the Administrator may 
provide information to the sponsors and organiza-
tions offering such plans about individuals eligible to 
enroll in such plans. 
‘‘(c) GUARANTEED ISSUE; COMMUNITY RATING; AND 
NONDISCRIMINATION.—
‘‘(1) GUARANTEED ISSUE.—
‘‘(A) IN GENERAL.—An eligible individual 
who is eligible to elect qualified prescription 
drug coverage under a prescription drug plan or 
MA-EFFS Rx plan at a time during which elec-
tions are accepted under this part with respect 
to the plan shall not be denied enrollment 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 ADVANTAGE 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 PDP sponsors 
under this subsection. 
‘‘(2) COMMUNITY-RATED PREMIUM.—
‘‘(A) IN GENERAL.—In the case of an indi-
vidual who enrolls under a prescription drug 
plan or in a MA-EFFS Rx plan during the in-
vides benefits at least equivalent to the 
benefits under a qualified prescription drug 
plan. 
‘‘(iv) PRESCRIPTION DRUG COVERAGE 
UNDER
CERTAIN
MEDIGAP
POLICIES.—
Coverage under a medicare supplemental 
policy under section 1882 that provides 
benefits for prescription drugs (whether or 
not such coverage conforms to the stand-
ards for packages of benefits under section 
1882(p)(1)), but only if the policy was in 
effect on January 1, 2006, and if (subject 
to subparagraph (E)(ii)) the coverage pro-
vides benefits at least equivalent to the 
benefits under a qualified prescription drug 
plan. 
‘‘(v) STATE PHARMACEUTICAL ASSIST-
ANCE PROGRAM.—Coverage of prescription 
drugs under a State pharmaceutical assist-
ance program, but only if (subject to sub-
paragraph (E)(ii)) the coverage provides 
benefits at least equivalent to the benefits 
under a qualified prescription drug plan. 
‘‘(vi) VETERANS’ COVERAGE OF PRE-
SCRIPTION DRUGS.—Coverage of prescrip-
tion drugs for veterans under chapter 17 
of title 38, United States Code, but only if 
(subject to subparagraph (E)(ii)) the cov-
erage provides benefits at least equivalent 
to the benefits under a qualified prescrip-
tion drug plan. 
‘‘(D) CERTIFICATION.—For purposes of 
carrying out this paragraph, the certifications 
of the type described in sections 2701(e) of the 
Public Health Service Act and in section 
9801(e) of the Internal Revenue Code shall also 
include a statement for the period of coverage 
of whether the individual involved had prescrip-
tion drug coverage described in subparagraph 
(C). 
‘‘(E) DISCLOSURE.—
‘‘(i) IN GENERAL.—Each entity that 
offers coverage of the type described in 
clause (iii), (iv), (v), or (vi) of subpara-
graph (C) shall provide for disclosure, con-
sistent with standards established by the 
Administrator, of whether such coverage 
provides benefits at least equivalent to the 
benefits under a qualified prescription drug 
plan.
‘‘(ii) WAIVER
OF
LIMITATIONS.—An 
individual may apply to the Administrator 
to waive the requirement that coverage of 
such type provide benefits at least equiva-
lent to the benefits under a qualified pre-
scription drug plan, if the individual estab-
lishes that the individual was not ade-
quately informed that such coverage did 
not provide such level of benefits. 
‘‘(F) CONSTRUCTION.—Nothing in this 
section shall be construed as preventing the 
disenrollment of an individual from a prescrip-
tion drug plan or a MA-EFFS Rx plan based 
on the termination of an election described in 
section 1851(g)(3), including for non-payment 
of premiums or for other reasons specified in 
subsection (d)(3), which takes into account a 
grace 
period 
described 
in 
section 
1851(g)(3)(B)(i). 
‘‘(3) NONDISCRIMINATION.—A PDP sponsor 
that offers a prescription drug plan in an area des-
ignated under section 1860D–4(b)(5) shall make 
such plan available to all eligible individuals residing 
in the area without regard to their health or eco-
nomic status or their place of residence within the 
area. 
‘‘(d) EFFECTIVE DATE OF ELECTIONS.—
‘‘(1) IN GENERAL.—Except as provided in this 
section, the Administrator shall provide that elec-
tions under subsection (b) take effect at the same 
time as the Administrator provides that similar elec-
tions under section 1851(e) take effect under section 
1851(f). 
‘‘(2) NO ELECTION EFFECTIVE BEFORE 2006.—
In no case shall any election take effect before Janu-
ary 1, 2006. 
‘‘(3) TERMINATION.—The Administrator shall 
provide for the termination of an election in the case 
of—
‘‘(A) termination of coverage under both 
part A and part B; and 
‘‘(B) termination of elections described in 
section 1851(g)(3) (including failure to pay re-
quired premiums). 
‘‘SEC. 1860D–2. REQUIREMENTS FOR QUALIFIED PRESCRIP-
TION DRUG COVERAGE. 
‘‘(a) REQUIREMENTS.—
‘‘(1) IN GENERAL.—For purposes of this part 
and part C and part E, the term ‘qualified prescrip-
tion drug coverage’ means either of the following: 
‘‘(A) STANDARD COVERAGE WITH ACCESS 
TO
NEGOTIATED
PRICES.—Standard coverage 
(as defined in subsection (b)) and access to ne-
gotiated prices under subsection (d). 
‘‘(B) ACTUARIALLY
EQUIVALENT
COV-
ERAGE
WITH
ACCESS
TO
NEGOTIATED 
PRICES.—Coverage of covered outpatient drugs 
which meets the alternative coverage require-
ments of subsection (c) and access to negotiated 
prices under subsection (d), but only if it is ap-
proved by the Administrator, as provided under 
subsection (c). 
‘‘(2) PERMITTING
ADDITIONAL
OUTPATIENT 
PRESCRIPTION DRUG COVERAGE.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), nothing in this part shall be con-
strued as preventing qualified prescription drug 
coverage from including coverage of covered 
outpatient drugs that exceeds the coverage re-
quired under paragraph (1), but any such addi-
tional coverage shall be limited to coverage of 
covered outpatient drugs.
for beneficiaries to inquire as to how 
to present such information; 
‘‘(III) provide for the verification 
of the information in such return by 
the Secretary of the Treasury under 
section 6103(l)(19) of the Internal 
Revenue Code of 1986; and 
‘‘(IV) provide for the payment by 
the Secretary (in a manner specified 
by the Secretary) to the enrollee of an 
amount equal to the excess of the ben-
efit payments that would have been 
payable under the plan if the more re-
cent return information were used, 
over the benefit payments that were 
made under the plan. 
In the case of a payment under subclause 
(III) for an enrollee under a prescription 
drug plan, the PDP sponsor of the plan 
shall pay to the Secretary the amount so 
paid, 
less 
the 
applicable 
reinsurance 
amount that would have applied under sec-
tion 1860D–8(c)(1)(B) if such payment 
had been treated as an allowable cost 
under such section. Such plan payment
shall be deposited in the Treasury to the 
credit of the Medicare Prescription Drug 
Account in the Federal Supplementary 
Medical Insurance Trust Fund (under sec-
tion 1841). 
‘‘(vi) DISSEMINATION
OF
INFORMA-
TION
ON
PROCESS.—The Secretary shall 
provide, through the annual medicare 
handbook under section 1804(a), for a 
general description of the adjustment of 
annual out-of-pocket thresholds provided 
under this subparagraph, including the 
process for adjustment based upon more 
recent information and the confidentiality 
provisions of subparagraph (F), and shall 
provide for dissemination of a table for 
each year that sets forth the amount of the 
adjustment that is made under clause (i) 
based on the amount of an enrollee’s ad-
justed gross income. 
‘‘(vii) ENROLLEE OPT-OUT.—The Sec-
retary shall provide a procedure whereby, 
if an enrollee elects to have the maximum 
annual out-of-pocket threshold applied 
under this subparagraph for a year, the
Secretary shall not request any informa-
tion regarding the enrollee under subpara-
graph (E) for that year. 
‘‘(E) REQUESTING INFORMATION ON EN-
ROLLEES.—
‘‘(i) IN
GENERAL.—The Secretary 
shall, periodically as required to carry out 
subparagraph (D), transmit to the Sec-
retary of the Treasury a list of the names 
and TINs of enrollees in prescription drug 
plans (or in MA-EFFS Rx plans) and re-
quest that such Secretary disclose to the 
Secretary information under subparagraph 
(A) of section 6103(l)(19) of the Internal 
Revenue Code of 1986 with respect to 
those enrollees for a specified taxable year 
for application in a particular calendar 
year. 
‘‘(ii) DISCLOSURE
TO
PLAN
SPON-
SORS.—In the case of a specified taxpayer 
(as defined in section 6103(l)(19)(B) of 
the Internal Revenue Code of 1986) who is 
enrolled in a prescription drug plan or in 
an MA-EFFS Rx plan or an individual 
who makes an election under subparagraph
(D)(vii), the Secretary shall disclose to the 
entity that offers the plan the annual out-
of-pocket threshold applicable to such indi-
vidual under subparagraph (D). 
‘‘(F) MAINTAINING CONFIDENTIALITY OF 
INFORMATION.—
‘‘(i) IN
GENERAL.—The amount of 
any increase in an annual out-of-pocket 
threshold under subparagraph (D) may not 
be disclosed by the Secretary except to a 
PDP sponsor or entity that offers a MA-
EFFS Rx plan to the extent necessary to 
carry out this part. 
‘‘(ii) CRIMINAL AND CIVIL PENALTIES 
FOR UNAUTHORIZED DISCLOSURE.—A per-
son who makes an unauthorized disclosure 
of information disclosed under section 
6103(l)(19) of the Internal Revenue Code 
of 1986 (including disclosure of any in-
crease in an annual out-of-pocket threshold 
under subparagraph (D)) shall be subject 
to penalty to the extent provided under—
‘‘(I) section 7213 of such Code 
(relating to criminal penalty for unau-
thorized disclosure of information);
‘‘(II) section 7213A of such Code 
(relating to criminal penalty for unau-
thorized inspection of returns or re-
turn information); 
‘‘(III) section 7431 of such Code 
(relating to civil damages for unau-
thorized inspection or disclosure of re-
turns and return information); 
‘‘(IV) any other provision of the 
Internal Revenue Code of 1986; or 
‘‘(V) any other provision of law. 
‘‘(iii) APPLICATION
OF
ADDITIONAL 
CIVIL
MONETARY
PENALTY
FOR
UNAU-
THORIZED
DISCLOSURES.—In addition to 
any penalty otherwise provided under law, 
any person who makes an unauthorized 
disclosure of such information shall be sub-
ject to a civil monetary penalty of not to 
exceed $10,000 for each such unauthorized 
disclosure. The provisions of section 1128A 
(other than subsections (a) and (b)) shall 
apply to civil money penalties under this 
subparagraph in the same manner as they 
apply to a penalty or proceeding under sec-
tion 1128A(a).
‘‘(B) FOR SUBSEQUENT YEARS.—The dol-
lar amounts applied under paragraph (1)(B) for 
a year after 2007 shall be the amounts (under 
this paragraph) applied under paragraph (1)(B) 
for the preceding year increased by the annual 
percentage 
increase 
described 
in 
section 
1860D–2(b)(5) (relating to growth in medicare 
prescription drug costs per beneficiary) for the 
year involved. 
‘‘(b) PREMIUM SUBSIDY AMOUNT.—
‘‘(1) IN
GENERAL.—The premium subsidy 
amount described in this subsection for an individual 
residing in an area is the benchmark premium 
amount (as defined in paragraph (2)) for qualified 
prescription drug coverage offered by the prescrip-
tion drug plan or the MA-EFFS Rx plan in which 
the individual is enrolled. 
‘‘(2) BENCHMARK
PREMIUM
AMOUNT
DE-
FINED.—For purposes of this subsection, the term 
‘benchmark premium amount’ means, with respect 
to qualified prescription drug coverage offered 
under—
‘‘(A) a prescription drug plan that—
‘‘(i) provides standard coverage (or al-
ternative prescription drug coverage the
actuarial value of which is equivalent to 
that of standard coverage), the premium 
amount for enrollment under the plan 
under this part (determined without regard 
to any subsidy under this section or any 
late enrollment penalty under section 
1860D–1(c)(2)(B)); or 
‘‘(ii) provides alternative prescription 
drug coverage the actuarial value of which 
is greater than that of standard coverage, 
the premium amount described in clause 
(i) multiplied by the ratio of (I) the actu-
arial value of standard coverage, to (II) 
the actuarial value of the alternative cov-
erage; or 
‘‘(B) a MA-EFFS Rx plan, the portion of 
the premium amount that is attributable to 
statutory drug benefits (described in section 
1853(a)(1)(A)(ii)(II)). 
‘‘(c) RULES
IN
APPLYING
COST-SHARING
SUB-
SIDIES.—
‘‘(1) IN
GENERAL.—In applying subsection 
(a)(1)(B), nothing in this part shall be construed as 
preventing a plan or provider from waiving or reduc-
ing the amount of cost-sharing otherwise applicable.