I
106TH CONGRESS
1ST SESSION
H. R. 2012
To amend title XVIII of the Social Security Act to provide for coverage
of outpatient prescription drugs under the Medicare Program.
IN THE HOUSE OF REPRESENTATIVES
JUNE 7, 1999
Mr. DEUTSCH (for himself and Mr. WEXLER) introduced the following bill;
which was referred to the Committee on Ways and Means, and in addi-
tion to the Committee on Commerce, for a period to be subsequently de-
termined 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 provide
for coverage of outpatient prescription drugs under the
Medicare Program.
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 Prescription Drug Benefit Act of 1999’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Medicare coverage of outpatient prescription drugs.
Sec. 3. Selection of entities to provide outpatient drug benefit.
Sec. 4. Optional coverage for certain beneficiaries.
Sec. 5. Medigap revisions.
Sec. 6. Improved medicaid assistance for low-income individuals.
Sec. 7. Waiver of additional portion of part B premium for certain medicare
beneficiaries having actuarially equivalent coverage.
Sec. 8. Elimination of time limitation on medicare benefits for immuno-
suppressive drugs.
Sec. 9. Expansion of membership of MedPAC to 19.
Sec. 10. GAO study and report to Congress.
Sec. 11. Effective date.
SEC. 2. MEDICARE COVERAGE OF OUTPATIENT PRESCRIP-
TION DRUGS.
(a) COVERAGE.—Section 1861(s)(2) of the Social Se-
curity Act (42 U.S.C. 1395x(s)(2)) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (S);
(2) by striking the period at the end of sub-
paragraph (T) and inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(U) covered outpatient drugs (as defined in
subsection (i)(1) of section 1849) pursuant to the
procedures established under such section;’’.
(b) PAYMENT.—Section 1833(a)(1) of the Social Se-
curity Act (42 U.S.C. 1395l(a)(1)) is amended—
(1) by striking ‘‘and (S)’’ and inserting ‘‘(S)’’;
and
(2) by striking the semicolon at the end and in-
serting the following: ‘‘, and (T) with respect to cov-
ered outpatient drugs (as defined in subsection (i)(1)
of section 1849), the amounts paid shall be the
amounts established by the Secretary pursuant to
such section;’’.
SEC. 3. SELECTION OF ENTITIES TO PROVIDE OUTPATIENT
DRUG BENEFIT.
Part B of title XVIII of the Social Security Act (42
U.S.C. 1395j et seq.) is amended by adding at the end
the following:
‘‘SEC. 1849. SELECTION OF ENTITIES TO PROVIDE OUT-
PATIENT DRUG BENEFIT.
‘‘(a) ESTABLISHMENT OF BIDDING PROCESS.—
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish procedures under which the Secretary accepts
bids from eligible entities and awards contracts to
such entities in order to provide covered outpatient
drugs to eligible beneficiaries in an area. Such con-
tracts may be awarded based on shared risk, capita-
tion, or performance.
‘‘(2) AREA.—
‘‘(A) REGIONAL BASIS.—The contract en-
tered into between the Secretary and an eligible
entity shall require the eligible entity to provide
covered outpatient drugs on a regional basis.
‘‘(B) DETERMINATION.—In determining
coverage areas under this section, the Secretary
shall take into account the number of eligible
beneficiaries in an area in order to encourage
participation by eligible entities.
‘‘(3) SUBMISSION OF BIDS.—Each eligible enti-
ty desiring to provide covered outpatient drugs
under this section shall submit a bid to the Sec-
retary at such time, in such manner, and accom-
panied by such information as the Secretary may
reasonably require. Such bids shall include the
amount the eligible entity will charge enrollees under
subsection (e)(2) for covered outpatient drugs under
the contract.
‘‘(4) ACCESS.—The Secretary shall ensure
that—
‘‘(A) an eligible entity complies with the
access requirements described in subsection
(f)(5);
‘‘(B) 
if 
an 
eligible 
entity 
employs
formularies pursuant to subsection (f)(6)(A),
such entity complies with the requirements of
subsection (f)(6)(B); and
‘‘(C) an eligible entity makes available to
each beneficiary covered under the contract the
full scope of benefits required under paragraph
(5).
‘‘(5) SCOPE OF BENEFITS.—The Secretary shall
ensure that all covered outpatient drugs that are
reasonable and necessary to prevent or slow the de-
terioration of, and improve or maintain, the health
of eligible beneficiaries are offered under a contract
entered into under this section.
‘‘(6) NUMBER OF CONTRACTS.—The Secretary
shall, consistent with the requirements of this sec-
tion and the goal of containing medicare program
costs, award at least 2 contracts in an area, unless
only 1 bidding entity meets the minimum standards
specified under this section and by the Secretary.
‘‘(7) DURATION
OF
CONTRACTS.—Each con-
tract under this section shall be for a term of at
least 2 years but not more than 5 years, as deter-
mined by the Secretary.
‘‘(8) BENCHMARK FOR CONTRACTS.—The Sec-
retary shall not enter into a contract with an eligible
entity under this section unless the Secretary deter-
mines that the average cost (excluding any cost-
sharing) for all covered outpatient drugs provided to
beneficiaries under the contract is comparable to the
average cost charged (exclusive of any cost-sharing)
by large private sector purchasers for such drugs.
‘‘(b) ENROLLMENT.—
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish a process through which an eligible beneficiary
shall make an election to enroll with any eligible en-
tity that has been awarded a contract under this sec-
tion and serves the geographic area in which the
beneficiary resides. In establishing such process, the
Secretary shall use rules similar to the rules for en-
rollment and disenrollment with a Medicare+Choice
plan under section 1851.
‘‘(2) REQUIREMENT
OF
ENROLLMENT.—Ex-
cluding an eligible beneficiary enrolled in a group
health plan described in section 4 of the Medicare
Prescription Drug Benefit Act of 1999, an eligible
beneficiary not enrolled in a Medicare+Choice plan
under part C must enroll with an eligible entity
under this section in order to be eligible to receive
covered outpatient drugs under this title.
‘‘(3) ENROLLMENT IN ABSENCE OF ELECTION
BY ELIGIBLE BENEFICIARY.—In the case of an eligi-
ble beneficiary that fails to make an election pursu-
ant to paragraph (1), the Secretary shall provide,
pursuant to procedures developed by the Secretary,
for the enrollment of such beneficiary with an eligi-
ble entity that has a contract under this section that
covers the area in which such beneficiary resides.
‘‘(4) AREAS NOT COVERED BY CONTRACTS.—
The Secretary shall develop procedures for the provi-
sion of covered outpatient drugs under this title to
eligible beneficiaries that reside in an area that is
not covered by any contract under this section.
‘‘(5) BENEFICIARIES RESIDING IN DIFFERENT
LOCATIONS.—The Secretary shall develop procedures
to ensure that an eligible beneficiary that resides in
different regions in a year is provided benefits under
this section throughout the entire year.
‘‘(c) 
PROVIDING
INFORMATION
TO
BENE-
FICIARIES.—The Secretary shall provide for activities
under this section to broadly disseminate information to
medicare beneficiaries on the coverage provided under this
section. Such activities shall be similar to the activities
performed by the Secretary under section 1851(d).
‘‘(d) PAYMENTS TO ELIGIBLE ENTITIES.—The Sec-
retary shall establish procedures for making payments to
an eligible entity under a contract.
‘‘(e) COST-SHARING.—
‘‘(1) DEDUCTIBLE.—Benefits under this section
shall not begin until the eligible beneficiary has met
a deductible equal to—
‘‘(A) $200 for 2000; or
‘‘(B) for a subsequent year the amount of
the deductible under subparagraph (A) or this
subparagraph for the previous year increased by
a factor that reflects the annual rate of change
in the per capita cost of prescription drugs for
beneficiaries under this title.
If any dollar amount determined under subpara-
graph (B) for a year is not a multiple of $5, such
dollar amount shall be rounded to the nearest mul-
tiple of $5.
‘‘(2) COPAYMENT.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the eligible beneficiary shall be re-
sponsible for making payments in an amount
not greater than 20 percent of the cost (as stat-
ed in the contract) of any covered outpatient
drug that is provided to the beneficiary. Pursu-
ant to subsection (a)(4)(B), an eligible entity
may reduce the payment amount that an eligi-
ble beneficiary is responsible for making to the
entity.
‘‘(B) BASIC
BENEFIT.—If the aggregate
amount of covered outpatient drugs provided to
an eligible beneficiary under this section for any
calendar year (based on the cost of covered out-
patient drugs stated in the contract) exceeds
$5,200—
‘‘(i) the beneficiary may continue to
purchase covered outpatient drugs under
the contract based on the contract price,
but
‘‘(ii) the copayment under subpara-
graph (A) shall be 100 percent.
‘‘(C) INFLATION ADJUSTMENT.—
‘‘(i) IN GENERAL.—In the case of any
calendar year beginning after 2000, each
of the dollar amounts in subparagraph (B)
shall be increased by an amount equal to—
‘‘(I) such dollar amount, multi-
plied by
‘‘(II) an adjustment, as deter-
mined by the Secretary, for changes
in the per capita cost of prescription
drugs for beneficiaries under this title.
‘‘(ii) 
ROUNDING.—If 
any 
dollar
amount after being increased under clause
(i) is not a multiple of $10, such dollar
amount shall be rounded to the nearest
multiple of $10.
‘‘(f) CONDITIONS FOR AWARDING CONTRACT.—The
Secretary shall not award a contract to an eligible entity
under subsection (a) unless the Secretary finds that the
eligible entity is in compliance with such terms and condi-
tions as the Secretary shall specify, including the fol-
lowing:
‘‘(1) QUALITY AND FINANCIAL STANDARDS.—
The eligible entity meets quality and financial stand-
ards specified by the Secretary.
‘‘(2) INFORMATION.—The eligible entity pro-
vides the Secretary with information that the Sec-
retary determines is necessary in order to carry out
the bidding process under this section, including
data needed to implement subsection (a)(8) and data
regarding utilization, expenditures, and costs.
‘‘(3) EDUCATION.—The eligible entity estab-
lishes educational programs that meet the criteria
established by the Secretary pursuant to subsection
(g)(1).
‘‘(4) PROCEDURES TO ENSURE PROPER UTILI-
ZATION
AND
TO
AVOID
ADVERSE
DRUG
REAC-
TIONS.—The eligible entity has in place procedures
to ensure the—
‘‘(A) appropriate utilization by eligible
beneficiaries of the benefits to be provided
under the contract; and
‘‘(B) avoidance of adverse drug reactions
among eligible beneficiaries enrolled with the
entity.
‘‘(5) ACCESS.—The eligible entity ensures that
the covered outpatient drugs are accessible and con-
venient to eligible beneficiaries covered under the
contract, including by offering the services in the fol-
lowing manner:
‘‘(A) SERVICES DURING EMERGENCIES.—
The offering of services 24 hours a day and 7
days a week for emergencies.
‘‘(B) CONTRACTS
WITH
RETAIL
PHAR-
MACIES.—The offering of services—
‘‘(i) at a sufficient (as determined by
the Secretary) number of retail phar-
macies; and
‘‘(ii) to the extent feasible, at retail
pharmacies located throughout the eligible
entity’s service area.
‘‘(6) RULES RELATING TO PROVISION OF BENE-
FITS.—
‘‘(A) PROVISION
OF
BENEFITS.—In pro-
viding benefits under a contract under this sec-
tion, an eligible entity may—
‘‘(i) employ mechanisms to provide
benefits economically, including the use
of—
‘‘(I) formularies (pursuant to
subparagraph (B));
‘‘(II) alternative methods of dis-
tribution; and
‘‘(III) generic drug substitution;
and
‘‘(ii) use incentives to encourage eligi-
ble beneficiaries to select cost-effective
drugs or less costly means of receiving
drugs.
‘‘(B) FORMULARIES.—If an eligible entity
uses a formulary to contain costs under this
Act—
‘‘(i) the eligible entity shall—
‘‘(I) ensure participation of prac-
ticing physicians and pharmacists in
the development of the formulary;
‘‘(II) include in the formulary at
least 1 drug from each therapeutic
class;
‘‘(III) provide for coverage of
otherwise 
covered 
non-formulary
drugs when recommended by pre-
scribing providers; and
‘‘(IV) disclose to current and
prospective beneficiaries and to pro-
viders in the service area the nature
of the formulary restrictions, includ-
ing information regarding the drugs
included in the formulary, copayment
amounts, and any difference in the
cost-sharing for different types of
drugs; but
‘‘(ii) nothing shall preclude an entity
from—
‘‘(I) requiring higher cost-sharing
for drugs provided under clause
(i)(III), subject to limits established
in subsection (e)(2)(A), except that an
entity shall provide for coverage of a
nonformulary drug on the same basis
as a drug within the formulary if such
nonformulary drug is determined by
the prescribing provider to be medi-
cally indicated;
‘‘(II) educating prescribing pro-
viders, pharmacists, and beneficiaries
about medical and cost benefits of for-
mulary products; and
‘‘(III) requesting prescribing pro-
viders to consider a formulary product
prior to dispensing of a nonformulary
drug, as long as such request does not
unduly delay the provision of the
drug.
‘‘(7) CLINICAL QUALITY STANDARDS.—
‘‘(A) REQUIREMENT.—The eligible entity
shall comply with clinical quality standards as
determined by the Secretary.
‘‘(B) DEVELOPMENT
OF
STANDARDS.—
The Secretary, in consultation with appropriate
medical specialty societies, shall develop clinical
quality standards that are applicable to eligible
entities. Such standards shall be based on cur-
rent standards of care.
‘‘(8) PROCEDURES
REGARDING
DENIALS
OF
CARE.—The eligible entity has in place procedures to
ensure—
‘‘(A) the timely review and resolution of
denials of care and complaints (including those
regarding the use of formularies under para-
graph (6)) by enrollees, or providers, phar-
macists, and other individuals acting on behalf
of such individual (with the individual’s con-
sent) in accordance with requirements (as es-
tablished by the Secretary) that are comparable
to such requirements for Medicare+Choice or-
ganizations under part C; and
‘‘(B) that beneficiaries are provided with
information regarding the appeals procedures
under this section at the time of enrollment.
‘‘(g) EDUCATIONAL REQUIREMENTS TO ENSURE AP-
PROPRIATE UTILIZATION.—
‘‘(1) 
ESTABLISHMENT
OF
PROGRAM
CRI-
TERIA.—The Secretary shall establish a model for
comprehensive educational programs in order to as-
sure the appropriate—
‘‘(A) prescribing and dispensing of covered
outpatient drugs under this section; and
‘‘(B) use of such drugs by eligible bene-
ficiaries.
‘‘(2) ELEMENTS OF MODEL.—The model estab-
lished under paragraph (1) shall include the fol-
lowing elements:
‘‘(A) On-line prospective review available
24 hours a day and 7 days a week in order to
evaluate each prescription for drug therapy
problems due to duplication, interaction, or in-
correct dosage or duration of therapy.
‘‘(B) Consistent with State law, guidelines
for counseling eligible beneficiaries enrolled
under a contract under this section regarding—
‘‘(i) the proper use of prescribed cov-
ered outpatient drugs; and
‘‘(ii) interactions and contra-indica-
tions.
‘‘(C) Where appropriate and non-duplica-
tive, methods to identify and educate providers,
pharmacists, 
and 
eligible 
beneficiaries
regarding—
‘‘(i) instances or patterns concerning
the unnecessary or inappropriate pre-
scribing or dispensing of covered out-
patient drugs;
‘‘(ii) instances or patterns of sub-
standard care;
‘‘(iii) potential adverse reactions to
covered outpatient drugs;
‘‘(iv) inappropriate use of antibiotics;
‘‘(v) appropriate use of generic prod-
ucts; and
‘‘(vi) the importance of using covered
outpatient drugs in accordance with the in-
struction of prescribing providers.
‘‘(h) PROTECTION OF PATIENT CONFIDENTIALITY.—
Insofar as an eligible organization maintains individually
identifiable medical records or other health information re-
garding enrollees under a contract entered into under this
section, the organization shall—
‘‘(1) safeguard the privacy of any individually
identifiable enrollee information;
‘‘(2) maintain such records and information in
a manner that is accurate and timely; and
‘‘(3) assure timely access of such enrollees to
such records and information.
‘‘(i) DEFINITIONS.—In this section:
‘‘(1) COVERED OUTPATIENT DRUG.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘covered outpatient
drug’ means any of the following products:
‘‘(i) A drug which may be dispensed
only upon prescription, and—
‘‘(I) which is approved for safety
and effectiveness as a prescription
drug under section 505 of the Federal
Food, Drug, and Cosmetic Act;
‘‘(II)(aa) which was commercially
used or sold in the United States be-
fore the date of enactment of the
Drug Amendments of 1962 or which
is identical, similar, or related (within
the meaning of section 310.6(b)(1) of
title 21 of the Code of Federal Regu-
lations) to such a drug, and (bb)
which has not been the subject of a
final determination by the Secretary
that it is a ‘new drug’ (within the
meaning of section 201(p) of the Fed-
eral Food, Drug, and Cosmetic Act)
or an action brought by the Secretary
under section 301, 302(a), or 304(a)
of such Act to enforce section 502(f)
or 505(a) of such Act; or
‘‘(III)(aa) which is described in
section 107(c)(3) of the Drug Amend-
ments of 1962 and for which the Sec-
retary has determined there is a com-
pelling justification for its medical
need, or is identical, similar, or re-
lated (within the meaning of section
310.6(b)(1) of title 21 of the Code of
Federal Regulations) to such a drug,
and (bb) for which the Secretary has
not issued a notice of an opportunity
for a hearing under section 505(e) of
the Federal Food, Drug, and Cos-
metic Act on a proposed order of the
Secretary to withdraw approval of an
application for such drug under such
section because the Secretary has de-
termined that the drug is less than ef-
fective for all conditions of use pre-
scribed, recommended, or suggested in
its labeling.
‘‘(ii) A biological product which—
‘‘(I) may only be dispensed upon
prescription;
‘‘(II) is licensed under section
351 of the Public Health Service Act;
and
‘‘(III) is produced at an estab-
lishment licensed under such section
to produce such product.
‘‘(iii) Insulin approved under appro-
priate Federal law.
‘‘(iv) A prescribed drug or biological
product that would meet the requirements
of clause (i) or (ii) but that is available
over-the-counter in addition to being avail-
able upon prescription.
‘‘(B) EXCLUSION.—The term ‘covered out-
patient drug’ does not include any product—
‘‘(i) except as provided in subpara-
graph (A)(iv), which may be distributed to
individuals without a prescription;
‘‘(ii) when furnished as part of, or as
incident to, a diagnostic service or any
other item or service for which payment
may be made under this title;
‘‘(iii) that was covered under this title
on the day before the date of enactment of
the Medicare Prescription Drug Benefit
Act of 1999; or
‘‘(iv) that is a therapeutically equiva-
lent replacement for a product described in
clause (ii) or (iii), as determined by the
Secretary.
‘‘(2) ELIGIBLE BENEFICIARY.—The term ‘eligi-
ble beneficiary’ means an individual that is enrolled
under part B of this title.
‘‘(3) ELIGIBLE ENTITY.—The term ‘eligible en-
tity’ means any entity that the Secretary determines
to be appropriate, including—
‘‘(A) pharmaceutical benefit management
companies;
‘‘(B) wholesale and retail pharmacist deliv-
ery systems;
‘‘(C) insurers;
‘‘(D) other entities; or
‘‘(E) any combination of the entities de-
scribed in subparagraphs (A) through (D).’’.
SEC. 
4. 
OPTIONAL 
COVERAGE 
FOR 
CERTAIN 
BENE-
FICIARIES.
(a) IN GENERAL.—If drug coverage under a group
health plan that provides health insurance coverage for re-
tirees is equivalent to or greater than the coverage pro-
vided under section 1849 of the Social Security Act (as
added by section 3), beneficiaries receiving coverage
through the group health plan may continue to receive
such coverage from the plan and the Secretary may make
payments to such plans, subject to the requirements of
this section.
(b) REQUIREMENTS.—To receive payment under this
section, group health plans shall—
(1) comply with certain requirements of this
Act and other reasonable, necessary, and related re-
quirements that are needed to administer this sec-
tion, as determined by the Secretary;
(2) to the extent that there is a contractual ob-
ligation to provide drug coverage to retirees that is
equal to or greater than the drug coverage provided
under this Act, reimburse or otherwise arrange to
compensate beneficiaries during the life of the con-
tract for the portion of the part B premium under
section 1839 of the Social Security Act that is iden-
tified by the Secretary of Health and Human Serv-
ices as attributable to the drug coverage provided
under section 1849 of that Act (as added by section
3); or
(3) for group health plans that are in existence
prior to enactment of this section and provide drug
coverage to retirees that is equal to or greater than
the drug coverage provided under section 1849 of
the Social Security Act (as added by section 3), re-
imburse or otherwise arrange to compensate bene-
ficiaries for the portion of the part B premium
under section 1839 of the Social Security Act that
is identified by the Secretary of Health and Human
Services as attributable to the drug coverage pro-
vided under section 1849 of that Act (as added by
section 3) for at least 1 year from the date that the
group health plan begins participation under this
section.
(c) PAYMENTS.—The Secretary shall establish a
process to provide payments to eligible group health plans
under this section on behalf of enrolled beneficiaries. Such
payments shall not exceed the amount that would other-
wise be paid to a private entity serving similar bene-
ficiaries in the same service area under section 1849 of
the Social Security Act (as added by section 3).
SEC. 5. MEDIGAP REVISIONS.
(a) REQUIRED COVERAGE OF COVERED OUTPATIENT
DRUGS.—Section 1882(p)(2)(B) of the Social Security
Act (42 U.S.C. 1395ss(p)(2)(B)) is amended by inserting
before ‘‘and’’ at the end the following: ‘‘including a re-
quirement that an appropriate number of policies provide
coverage of drugs which compliments but does not dupli-
cate the drug benefits that beneficiaries are otherwise enti-
tled to under this title (with the Secretary and the Na-
tional Association of Insurance Commissioners deter-
mining the appropriate level of drug benefits that each
benefit package must provide and ensuring that policies
providing such coverage remain affordable for bene-
ficiaries);’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on July 1, 2000.
(c) TRANSITION PROVISIONS.—
(1) IN GENERAL.—If the Secretary of Health
and Human Services identifies a State as requiring
a change to its statutes or regulations to conform its
regulatory program to the amendments made by this
section, the State regulatory program shall not be
considered to be out of compliance with the require-
ments of section 1882 of the Social Security Act due
solely to failure to make such change until the date
specified in paragraph (4).
(2) NAIC STANDARDS.—If, within 9 months
after the date of enactment of this Act, the National
Association of Insurance Commissioners (in this
subsection referred to as the ‘‘NAIC’’) modifies its
NAIC Model Regulation relating to section 1882 of
the Social Security Act (referred to in such section
as the 1991 NAIC Model Regulation, as subse-
quently modified) to conform to the amendments
made by this section, such revised regulation incor-
porating the modifications shall be considered to be
the applicable NAIC model regulation (including the
revised NAIC model regulation and the 1991 NAIC
Model Regulation) for the purposes of such section.
(3) SECRETARY
STANDARDS.—If the NAIC
does not make the modifications described in para-
graph (2) within the period specified in such para-
graph, the Secretary of Health and Human Services
shall make the modifications described in such para-
graph and such revised regulation incorporating the
modifications shall be considered to be the appro-
priate regulation for the purposes of such section.
(4) DATE SPECIFIED.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the date specified in this paragraph
for a State is the earlier of—
(i) the date the State changes its stat-
utes or regulations to conform its regu-
latory program to the changes made by
this section; or
(ii) 1 year after the date the NAIC or
the Secretary first makes the modifications
under paragraph (2) or (3), respectively.
(B) ADDITIONAL LEGISLATIVE ACTION RE-
QUIRED.—In the case of a State which the Sec-
retary identifies as—
(i) requiring State legislation (other
than legislation appropriating funds) to
conform its regulatory program to the
changes made in this section; but
(ii) having a legislature which is not
scheduled to meet in 2000 in a legislative
session in which such legislation may be
considered;
the date specified in this paragraph is the first
day of the first calendar quarter beginning after
the close of the first legislative session of the
State legislature that begins on or after July 1,
2000. For purposes of the previous sentence, in
the case of a State that has a 2-year legislative
session, each year of such session shall be
deemed to be a separate regular session of the
State legislature.
SEC. 6. IMPROVED MEDICAID ASSISTANCE FOR LOW-IN-
COME INDIVIDUALS.
(a) INCREASE IN SLMB ELIGIBILITY TO 135 PER-
CENT OF POVERTY LEVEL.—.
(1) IN GENERAL.—Section 1902(a)(10)(E) of
the Social Security Act (42 U.S.C. 1396a(a)(10)(E))
is amended—
(A) in clause (iii), by striking ‘‘and 120
percent in 1995 and years thereafter’’ and in-
serting ‘‘, 120 percent in 1995 and through
July 1, 2000, and 135 percent for subsequent
periods’’; and
(B) in clause (iv)—
(i) by striking the dash and all that
follows through ‘‘(II)’’, and
(ii) by striking ‘‘who would be de-
scribed in subclause (I) if ‘135 percent’
and ‘175 percent’ were substituted for
‘120 percent’ and ‘135 percent’ respec-
tively’’ and inserting ‘‘who would be de-
scribed in clause (iii) but for the fact that
their income exceeds 135 percent, but is
less than 175 percent, of the official pov-
erty line (referred to in such clause) for a
family of the size involved’’.
(2) 
CONFORMING
AMENDMENT.—Section
1933(c)(2)(A) 
of 
such 
Act 
(42 
U.S.C.
1396v(c)(2)(A)) is amended by striking ‘‘the sum’’
and all that follows and inserting ‘‘the total number
of 
individuals 
described 
in 
section
1902(a)(10)(E)(iv) in the State; to’’.
(b) PROVISION OF MEDICAID PRESCRIPTION DRUG
BENEFITS FOR QMBS AND SLMBS AS WRAP-AROUND
BENEFIT.—
(1) IN GENERAL.—Section 1902(a)(10) of such
Act (42 U.S.C. 1396a(a)(10)) is amended—
(A) in subparagraph (E)(i), by inserting
‘‘and for prescribed drugs (in the same amount,
duration, and scope as for individuals described
in subparagraph (A)(i))’’ after ‘‘1905(p)(3))’’;
(B) in subparagraph (E)(iii), by inserting
‘‘and for prescribed drugs (in the same amount,
duration, and scope as for individuals described
in 
subparagraph 
(A)(i))’’ 
after 
‘‘section
1905(p)(3)(A)(ii)’’; and
(C) in the clause (VIII) following subpara-
graph (F), by inserting ‘‘and to medical assist-
ance for prescribed drugs described in subpara-
graph (E)(i)’’ after ‘‘1905(p)(3))’’.
(2) 
CONFORMING
AMENDMENT.—Section
1916(a) of such Act (42 U.S.C. 1396o(a)) is amend-
ed, in the matter before paragraph (1), by striking
‘‘(E)(i)’’ and inserting ‘‘(E)’’.
(c) EFFECTIVE DATES.—
(1) The amendments made by subsections
(a)(1) and (b) take effect on July 1, 2000, and
apply to prescribed drugs furnished on or after such
date.
(2) The amendment made by subsection (a)(2)
applies to the allocation for the portion of fiscal year
2000 that occurs on or after July 1, 2000, and to
the allocation for subsequent fiscal years.
(3) The amendments made by this section apply
without regard to whether or not regulations to im-
plement such amendments are promulgated by July
1, 2000.
SEC. 7. WAIVER OF ADDITIONAL PORTION OF PART B PRE-
MIUM 
FOR 
CERTAIN 
MEDICARE 
BENE-
FICIARIES HAVING ACTUARIALLY EQUIVA-
LENT COVERAGE.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall establish a method under which the
portion of the part B premium under section 1839 of the
Social Security Act that is identified by the Secretary of
Health and Human Services as attributable to the drug
coverage provided under section 1849 of that Act (as
added by section 3) is waived (and not collected) for any
individual enrolled under part B of title XVIII of the So-
cial Security Act who demonstrates that the individual has
drug coverage that is actuarially equivalent to the cov-
erage provided under that part.
(b) LIMITATION.—Subsection (a) shall not apply to
an individual with coverage through a group health plan
if the group health plan receives payments for such indi-
vidual pursuant to section 4.
SEC. 8. ELIMINATION OF TIME LIMITATION ON MEDICARE
BENEFITS 
FOR 
IMMUNOSUPPRESSIVE
DRUGS.
(a) REVISION.—
(1) IN GENERAL.—Section 1861(s)(2)(J) of the
Social Security Act (42 U.S.C. 1395x(s)(2)(J)) is
amended by striking ‘‘, but only’’ and all that fol-
lows up to the semicolon at the end.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to drugs furnished on
or after the date of enactment of this Act.
(b) EXTENSION OF CERTAIN SECONDARY PAYER RE-
QUIREMENTS.—Section 1862(b)(1)(C) of the Social Secu-
rity Act (42 U.S.C. 1395y(b)(1)(C)) is amended by adding
at the end the following: ‘‘With regard to immuno-
suppressive drugs furnished on or after the date of enact-
ment of the Medicare Prescription Drug Benefit Act of
1999, this subparagraph shall be applied without regard
to any time limitation.’’.
SEC. 9. EXPANSION OF MEMBERSHIP OF MEDPAC TO 19.
(a) IN GENERAL.—Section 1805(c) of the Social Se-
curity Act (42 U.S.C. 1395b–6(c)), as amended by section
5202 of the Tax and Trade Relief Extension Act of 1998
(contained in division J of Public Law 105–277), is
amended—
(1) in paragraph (1), by striking ‘‘17’’ and in-
serting ‘‘19’’; and
(2) in paragraph (2)(B), by inserting ‘‘experts
in the area of pharmacology and prescription drug
benefit programs,’’ after ‘‘other health profes-
sionals,’’.
(b) INITIAL TERMS OF ADDITIONAL MEMBERS.—
(1) IN GENERAL.—For purposes of staggering
the initial terms of members of the Medicare Pay-
ment Advisory Commission under section 1805(c)(3)
of the Social Security Act (42 U.S.C. 1395b–
6(c)(3)), the initial terms of the 2 additional mem-
bers of the Commission provided for by the amend-
ment under subsection (a)(1) are as follows:
(A) One member shall be appointed for 1
year.
(B) One member shall be appointed for 2
years.
(2) COMMENCEMENT OF TERMS.—Such terms
shall begin on January 1, 2000.
SEC. 10. GAO STUDY AND REPORT TO CONGRESS.
(a) STUDY.—The Comptroller General of the United
States shall conduct a study and analysis of the implemen-
tation of the competitive bidding process for covered out-
patient drugs under section 1849 of the Social Security
Act (as added by section 3), including an analysis of—
(1) the reduction of hospital visits (or lengths
of such visits) by beneficiaries as a result of pro-
viding coverage of covered outpatient drugs under
such section;
(2) prices paid by the medicare program rel-
ative to comparable private and public sector pro-
grams; and
(3) any other savings to the medicare program
as a result of—
(A) such coverage; and
(B) the education and counseling provi-
sions of section 1849(g).
(b) REPORT.—Not later than January 1, 2001, and
annually thereafter, the Comptroller General of the United
States shall submit a report to Congress on the study and
analysis conducted pursuant to subsection (a), and shall
include in the report such recommendations regarding the
coverage of covered outpatient drugs under the medicare
program as the Comptroller General determines to be ap-
propriate.
SEC. 11. EFFECTIVE DATE.
Except as otherwise provided, the amendments made
by this Act apply to items and services furnished on or
after July 1, 2000.
Æ