Reconciliation Act of 1981) applicable to a
family of the size involved.
‘‘(D) TREATMENT OF TERRITORIAL RESI-
DENTS.—In the case of an individual who is not
a resident of the 50 States or the District of
Columbia, the individual is not eligible to be a
low-income individual but may be eligible for fi-
nancial assistance with prescription drug ex-
penses under section 1935(e).
‘‘(c) PREMIUM DISCOUNT AMOUNT.—The premium
discount amount described in this subsection for an eligi-
ble beneficiary residing in an area is an amount equal to—
‘‘(1) in the case of an individual enrolled in a
Medicare Prescription Plus plan, the actuarial value
of the standard drug coverage provided under the
plan (determined without regard to any premium
discount under this section); and
‘‘(2) in the case of an individual enrolled in a
Medicare+Choice plan that provides qualified pre-
scription drug coverage, the standard premium com-
puted under section 1851(j)(5)(A)(iii).
‘‘(d) RULES
IN
APPLYING
COST-SHARING
SUB-
SIDIES.—
‘‘(1) IN
GENERAL.—In applying subsection
(b)(1)(B)—
‘‘(A) the maximum amount of subsidy that
may be provided with respect to an enrollee for
a year may not exceed 95 percent of the max-
imum cost-sharing described in such subsection
that may be incurred for standard coverage;
‘‘(B) the Secretary shall determine what is
‘nominal’ taking into account the rules applied
under section 1916(a)(3); and
‘‘(C) nothing in this part shall be con-
strued as preventing a plan or provider from
waiving or reducing the amount of cost-sharing
otherwise applicable.
‘‘(2) LIMITATION ON CHARGES.—In the case of
a low-income individual receiving cost-sharing sub-
sidies under subsection (b)(1)(B), the eligible entity
may not charge more than a nominal amount in
cases in which the cost-sharing subsidy is provided
under such subsection.
‘‘(e) ADMINISTRATION
OF
COST-SHARING
PRO-
GRAM.—The Secretary shall provide a process whereby, in
the case of a low-income individual who is eligible for re-
duced cost-sharing under subsection (b)(1)(B) and is en-
rolled in a Medicare Prescription Plus plan or a
Medicare+Choice plan under which qualified prescription
drug coverage is provided—
‘‘(1) the Secretary provides for a notification of
the eligible entity or Medicare+Choice organization
involved that the individual is eligible for such re-
duced cost-sharing;
‘‘(2) the entity or organization involved reduces
the cost-sharing pursuant to this section and sub-
mits to the Secretary information on the amount of
such reduction; and
‘‘(3) the Secretary periodically and on a timely
basis reimburses the entity or organization for the
amount of such reductions.
The reimbursement under paragraph (3) may be com-
puted on a capitated basis, taking into account the actu-
arial value of the reductions and with appropriate adjust-
ments to reflect differences in the risks actually involved.
‘‘(f) RELATION TO MEDICAID PROGRAM.—
‘‘(1) IN
GENERAL.—For provisions providing
for eligibility determinations, and additional financ-
ing, under the medicaid program, see section 1935.
‘‘(2) MEDICAID PROVIDING WRAP AROUND BEN-
EFITS.—The coverage provided under this part is
primary payor to benefits for prescribed drugs pro-
vided under the medicaid program under title XIX.
‘‘ADDITIONAL PRESCRIPTION DRUG SUBSIDIES THROUGH
REINSURANCE
‘‘SEC. 2212. (a) REINSURANCE
SUBSIDY
PAY-
MENT.—In order to reduce premium levels applicable to
qualified prescription drug coverage for all medicare bene-
ficiaries, to reduce adverse selection among Medicare Pre-
scription Plus plans and Medicare+Choice plans that pro-
vide qualified prescription drug coverage, and to promote
the participation of eligible entities under this part, the
Secretary shall provide in accordance with this section for
payment to a qualifying entity (as defined in subsection
(b)) of the reinsurance payment amount (as defined in
subsection (c)) for excess costs incurred in providing quali-
fied prescription drug coverage—
‘‘(1) for individuals enrolled with a Medicare
Prescription Plus plan under this part;
‘‘(2) 
for 
individuals 
enrolled 
with 
a
Medicare+Choice plan that provides qualified pre-
scription drug coverage under part C of title XVIII;
and
‘‘(3) for medicare secondary payer eligible indi-
viduals (described in subsection (e)(3)(D)) who are
enrolled in a qualified retiree prescription drug plan.
This section constitutes budget authority in advance of ap-
propriations Acts and represents the obligation of the Sec-
retary to provide for the payment of amounts provided
under this section.
‘‘(b) QUALIFYING ENTITY DEFINED.—For purposes
of this section, the term ‘qualifying entity’ means any of
the following that has entered into an agreement with the
Secretary to provide the Secretary with such information
as may be required to carry out this section:
‘‘(1) An eligible entity offering a Medicare Pre-
scription Plus plan under this part.
‘‘(2) A Medicare+Choice organization that pro-
vides qualified prescription drug coverage under a
Medicare+Choice plan under part C of title XVIII.
‘‘(3) The sponsor of a qualified retiree prescrip-
tion drug plan (as defined in subsection (e)).
‘‘(c) REINSURANCE PAYMENT AMOUNT.—
‘‘(1) IN GENERAL.—Subject to subsection (e)(2)
and paragraph (4), the reinsurance payment amount
under this subsection for a qualified beneficiary (as
defined in subsection (f)(1)) for a coverage year (as
defined in subsection (f)(2)) is an amount equal to
80 percent of the allowable costs attributable to the
portion of the individual’s gross covered prescription
drug costs for the year that exceeds $7,050.
‘‘(2) ALLOWABLE COSTS.—For purposes of this
section, the term ‘allowable costs’ means, with re-
spect to gross covered prescription drug costs under
a plan described in subsection (b) offered by a quali-
fying entity, the part of such costs that are actually
paid under the plan, but in no case more than the
part of such costs that would have been paid under
the plan if the prescription drug coverage under the
plan were standard coverage.
‘‘(3) GROSS
COVERED
PRESCRIPTION
DRUG
COSTS.—For purposes of this section, the term
‘gross covered prescription drug costs’ means, with
respect to an enrollee with a qualifying entity under
a plan described in subsection (b) during a coverage
year, the costs incurred under the plan for covered
prescription drugs dispensed during the year, includ-
ing costs relating to the deductible, whether paid by
the enrollee or under the plan, regardless of whether
the coverage under the plan exceeds standard cov-
erage and regardless of when the payment for such
drugs is made.
‘‘(4) INDEXING DOLLAR AMOUNT.—
‘‘(A) AMOUNT
FOR
2003.—The dollar
amount applied under paragraph (1) for 2003
shall be the dollar amount specified in such
paragraph.
‘‘(B) FOR 2004.—The dollar amount ap-
plied under paragraph (1) for 2004 shall be the
dollar amount specified in such paragraph in-
creased by the annual percentage increase de-
scribed in section 2205(d)(5) for 2004.
‘‘(C) FOR SUBSEQUENT YEARS.—The dol-
lar amount applied under paragraph (1) for a
year after 2004 shall be the dollar amount
(under this paragraph) applied under para-
graph (1) for the preceding year increased by
the annual percentage increase described in sec-
tion 2205(d)(5) for the year involved.
‘‘(D) ROUNDING.—Any amount, deter-
mined under the preceding provisions of this
paragraph for a year, which is not a multiple of
$5 shall be rounded to the nearest multiple of
$5.
‘‘(d) PAYMENT METHODS.—
‘‘(1) IN GENERAL.—Payments under this sec-
tion shall be based on such a method as the Sec-
retary determines. The Secretary may establish a
payment method by which interim payments of
amounts under this section are made during a year
based on the Secretary’s best estimate of amounts
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.
‘‘(e) QUALIFIED
RETIREE
PRESCRIPTION
DRUG
PLAN DEFINED.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualified retiree prescription drug
plan’ means employment-based retiree health cov-
erage (as defined in paragraph (3)(A)) if, with re-
spect to an individual enrolled (or eligible to be en-
rolled) under this part who is covered under the
plan, the following requirements are met:
‘‘(A) ASSURANCE.—The sponsor of the
plan shall annually attest, and provide such as-
surances as the Secretary may require, that the
coverage meets the requirements for qualified
prescription drug coverage.
‘‘(B) AUDITS.—The sponsor (and the plan)
shall maintain, and afford the Secretary access
to, such records as the Secretary may require
for purposes of audits and other oversight ac-
tivities necessary to ensure the adequacy of pre-
scription drug coverage, the accuracy of pay-
ments made, and such other matters as may be
appropriate.
‘‘(C) OTHER REQUIREMENTS.—The spon-
sor of the plan shall comply with such other re-
quirements as the Secretary finds necessary to
administer the program under this section.
‘‘(2) LIMITATION ON BENEFIT ELIGIBILITY.—
No payment shall be provided under this section
with respect to an individual who is enrolled under
a qualified retiree prescription drug plan unless the
individual is a medicare secondary payer eligible in-
dividual who—
‘‘(A) is covered under the plan; and
‘‘(B) is eligible to obtain qualified prescrip-
tion drug coverage under this part but did not
elect such coverage (either through a Medicare
Prescription 
Plus 
plan 
or 
through 
a
Medicare+Choice plan).
‘‘(3) DEFINITIONS.—As used in this section:
‘‘(A) 
EMPLOYMENT-BASED
RETIREE
HEALTH
COVERAGE.—The term ‘employment-
based retiree health coverage’ means health in-
surance or other coverage of health care costs
for medicare secondary payer eligible individ-
uals (or for such individuals and their spouses
and dependents) based on their status as
former employees or labor union members.
‘‘(B) EMPLOYER.—The term ‘employer’
has the meaning given such term by section
3(5) of the Employee Retirement Income Secu-
rity Act of 1974 (except that such term shall
include only employers of 2 or more employees).
‘‘(C) 
SPONSOR.—The 
term 
‘sponsor’
means a plan sponsor, as defined in section
3(16)(B) of the Employee Retirement Income
Security Act of 1974.
‘‘(D) MEDICARE SECONDARY PAYER INDI-
VIDUAL.—The term ‘medicare secondary payer
eligible individual’ means, with respect to a
plan, an individual who is covered under the
plan and with respect to whom the plan is not
a 
primary 
plan 
(as 
defined 
in 
section
1862(b)(2)(A)).
‘‘(f) GENERAL DEFINITIONS.—For purposes of this
section:
‘‘(1) 
QUALIFIED
BENEFICIARY.—The 
term
‘qualified beneficiary’ means an individual who—
‘‘(A) is enrolled with a Medicare Prescrip-
tion Plus plan under this part;
‘‘(B) is enrolled with a Medicare+Choice
plan that provides qualified prescription drug
coverage under part C of title XVIII; or
‘‘(C) is covered as a medicare secondary
payer eligible individual under a qualified re-
tiree prescription drug plan.
‘‘(2) COVERAGE
YEAR.—The term ‘coverage
year’ means a calendar year in which covered out-
patient drugs are dispensed if a claim for payment
is made under the plan for such drugs, regardless of
when the claim is paid.
‘‘PLAN FEES FOR ADMINISTRATIVE COSTS
‘‘SEC. 2213. (a) IN GENERAL.—The Secretary may
levy 
on 
Medicare 
Prescription 
Plus 
plans 
and
Medicare+Choice plans that provide drug coverage pursu-
ant to this part an assessment sufficient to pay the esti-
mated expenses of the Secretary for administering the pro-
gram under this part.
‘‘(b) DEPOSITS
AND USE.—The assessments de-
scribed in subsection (a) shall be—
‘‘(1) deposited into the Medicare Prescription
Drug Account; and
‘‘(2) available for administering the program
under this part without regard to amounts provided
for in advance by appropriations Acts.
‘‘MEDICARE PRESCRIPTION DRUG ACCOUNT
‘‘SEC. 2214. (a) ESTABLISHMENT.—There is created
within the Federal Supplementary Medical Insurance
Trust Fund established under section 1841 an account to
be known as the ‘Medicare Prescription Drug Account’.
‘‘(b) AMOUNTS IN ACCOUNT.—
‘‘(1) IN GENERAL.—The Medicare Prescription
Drug Account shall consist of—
‘‘(A) such amounts as may be deposited in,
or appropriated to, such account as provided in
this part; and
‘‘(B) such gifts and bequests as may be
made as provided in section 201(i)(1).
‘‘(2) SEPARATION OF FUNDS.—Funds provided
under this part to the Medicare Prescription Drug
Account shall be kept separate from all other funds
within the Federal Supplemental Medical Insurance
Trust Fund.
‘‘(c) PAYMENTS FROM ACCOUNT.—
‘‘(1) IN
GENERAL.—The Managing Trustee
shall pay from time to time from the Medicare Pre-
scription Drug Account such amounts as the Sec-
retary certifies are necessary to make the payments
provided for by this part, and the payments with re-
spect to administrative expenses in accordance with
section 201(g).
‘‘(2) TRANSFERS TO MEDICAID ACCOUNT FOR
INCREASED
ADMINISTRATIVE
COSTS.—The Man-
aging Trustee shall transfer from time to time from
the Account to the Grants to States for Medicaid ac-
count amounts the Secretary certifies are attrib-
utable to increases in payment resulting from the
application of a higher Federal matching percentage
under section 1935(b).
‘‘(d) DEPOSITS INTO ACCOUNT.—
‘‘(1) MEDICAID
TRANSFER.—There is hereby
transferred to the Account, from amounts appro-
priated for Grants to States for Medicaid, amounts
equivalent to the aggregate amount of the reductions
in payments under section 1903(a)(1) attributable to
the application of section 1935(c).
‘‘(2) APPROPRIATIONS TO COVER GOVERNMENT
CONTRIBUTIONS.—There are authorized to be appro-
priated from time to time, out of any moneys in the
Treasury not otherwise appropriated, to the Ac-
count, an amount equivalent to the amount of pay-
ments made from the Account, reduced by—
‘‘(1) the amount transferred to the Ac-
count under paragraph (1);
‘‘(2) the beneficiary premiums collected
and credited to the account under section
2211(b)(2); and
‘‘(3) fees collected and credited to the ac-
count under section 2213.
‘‘SECONDARY PAYER PROVISIONS
‘‘SEC. 2215. The provisions of section 1862(b) shall
apply to the benefits provided under this part.
‘‘DEFINITIONS; TREATMENT OF REFERENCES TO
PROVISIONS IN MEDICARE+CHOICE PROGRAM
‘‘SEC. 2216. (a) DEFINITIONS.—In this part:
‘‘(1) COVERED OUTPATIENT DRUG.—
‘‘(A) IN GENERAL.—Except as provided in
this subparagraph (B), the term ‘covered out-
patient drug’ means—
‘‘(i) a drug that may be dispensed
only upon a prescription and that is de-
scribed in clause (i) or (ii) of section
1927(k)(2)(A); or
‘‘(ii) a biological product or insulin de-
scribed in subparagraph (B) or (C) of such
section.
‘‘(B) EXCLUSIONS.—
‘‘(i) IN GENERAL.—The term ‘covered
outpatient drug’ does not include drugs or
classes of drugs, or their medical uses,
which may be excluded from coverage or
otherwise 
restricted 
under 
section
1927(d)(2), other than subparagraph (E)
thereof (relating to smoking cessation
agents).
‘‘(ii) AVOIDANCE OF DUPLICATE COV-
ERAGE.—A drug prescribed for an indi-
vidual that would otherwise be a covered
outpatient drug under this part shall not
be so considered if payment for such drug
is available under part A or B of title
XVIII (but shall be so considered if such
payment is not available because benefits
under part A or B of title XVIII have been
exhausted), without regard to whether the
individual is entitled to benefits under such
part A or enrolled under such part B.
‘‘(3) ELIGIBLE BENEFICIARY.—The term ‘eligi-
ble beneficiary’ means an individual that is entitled
to benefits under part A of title XVIII and enrolled
under part B of such title.
‘‘(4) ELIGIBLE ENTITY.—The term ‘eligible en-
tity’ means any risk-bearing entity that the Sec-
retary determines to be appropriate to provide eligi-
ble beneficiaries with the benefits under a Medicare
Prescription Plus plan, including—
‘‘(A) a pharmaceutical benefit management
company;
‘‘(B) a wholesale or retail pharmacist deliv-
ery system;
‘‘(C) an insurer (including an insurer that
offers medicare supplemental policies under sec-
tion 1882);
‘‘(D) another entity; or
‘‘(E) any combination of the entities de-
scribed in subparagraphs (A) through (D).
‘‘(5) INITIAL COVERAGE LIMIT.—The term ‘ini-
tial coverage limit’ means the limit as established
under section 2205(d)(3), or, in the case of coverage
that is not standard coverage, the comparable limit
(if any) established under the coverage.
‘‘(6) 
MEDICARE+CHOICE
ORGANIZATION;
MEDICARE+CHOICE
PLAN.—The 
terms
‘Medicare+Choice 
organization’ 
and
‘Medicare+Choice plan’ have the meanings given
such terms in subsections (a)(1) and (b)(1), respec-
tively, of section 1859 (relating to definitions relat-
ing to Medicare+Choice organizations and plans).
‘‘(7) MEDICARE
PRESCRIPTION
DRUG
AC-
COUNT.—The term ‘Medicare Prescription Drug Ac-
count’ means the Medicare Prescription Drug Ac-
count established under section 2214 and located
within the Federal Supplementary Medical Insur-
ance Trust Fund established under section 1841.
‘‘(8) MEDICARE PRESCRIPTION PLUS PLAN.—
The term ‘Medicare Prescription Plus plan’ means a
health benefits plan that the Secretary has approved
under section 2209.
‘‘(9) STANDARD COVERAGE.—The term ‘stand-
ard coverage’ means the coverage described in sec-
tion 2205(d).
‘‘(b) APPLICATION OF MEDICARE+CHOICE PROVI-
SIONS UNDER THIS PART.—For purposes of applying pro-
visions of part C of title XVIII under this part with re-
spect to a Medicare Prescription Plus plan and an eligible
entity, unless otherwise provided in this part such provi-
sions shall be applied as if—
‘‘(1) any reference to a Medicare+Choice plan
included a reference to a Medicare Prescription Plus
plan;
‘‘(2) any reference to a provider-sponsored or-
ganization included a reference to an eligible entity;
‘‘(3) any reference to a contract under section
1857 included a reference to a contract under sec-
tion 2207(b); and
‘‘(4) any reference to part C of title XVIII in-
cluded a reference to this part.’’.
(b) SUBMISSION OF LEGISLATIVE PROPOSAL.—Not
later than 6 months after the date of enactment of this
Act, the Secretary of Health and Human Services shall
submit to the appropriate committees of Congress a legis-
lative proposal providing for such technical and con-
forming amendments in the law as are required by the
provisions of this Act.
SEC. 202. AMENDMENTS TO FEDERAL SUPPLEMENTARY
MEDICAL INSURANCE TRUST FUND.
Section 1841 of the Social Security Act (42 U.S.C.
1395t) is amended—
(1) in the last sentence of subsection (a)—
(A) by striking ‘‘and’’ after ‘‘section
201(i)(1)’’; and
(B) by inserting before the period the fol-
lowing: ‘‘, and such amounts as may be depos-
ited in, or appropriated to, the Medicare Pre-
scription Drug Account established by section
2214’’;
(2) in subsection (g), by inserting after ‘‘by this
part,’’ the following: ‘‘the payments provided for
under the Prescription Drug and Supplemental Ben-
efit Program under title XXII (in which case the
payments shall come from the Medicare Prescription
Drug Account in the Supplementary Medical Insur-
ance Trust Fund),’’;
(3) in the first sentence of subsection (h), by
inserting ‘‘(or the Secretary by reason of section
2215 (in which case the payments shall come from
the Medicare Prescription Drug Account within such
Trust Fund))’’ after ‘‘Human Services’’; and
(4) in the first sentence of subsection (i), by in-
serting ‘‘(or the Secretary by reason of section 2215
(in which case the payments shall come from the
Medicare Prescription Drug Account within such
Trust Fund))’’ after ‘‘Human Services’’.
SEC. 203. PRESCRIPTION DRUG COVERAGE UNDER THE
MEDICARE+CHOICE PROGRAM.
(a) IN GENERAL.—Section 1851 of the Social Secu-
rity Act (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.—A Medicare+Choice orga-
nization may not offer prescription drug coverage
(other than that required under parts A and B) to
an enrollee under a Medicare+Choice plan unless
such drug coverage is at least qualified prescription
drug coverage and unless the requirements of this
subsection with respect to such coverage are met.
‘‘(2) COMPLIANCE
WITH
ADDITIONAL
BENE-
FICIARY PROTECTIONS.—With respect to the offer-
ing of qualified prescription drug coverage by a
Medicare+Choice 
organization 
under 
a
Medicare+Choice plan, the organization and plan
shall meet the requirements of section 2206, includ-
ing requirements relating to information dissemina-
tion and grievance and appeals, in the same manner
as they apply to an eligible entity and a Medicare
Prescription Plus plan under title XXII. The Sec-
retary shall waive such requirements to the extent
the Administrator determines that such require-
ments duplicate requirements otherwise applicable to
the organization or plan under this part.
‘‘(3) TREATMENT
OF
COVERAGE.—Except as
provided in this subsection, qualified prescription
drug coverage offered under this subsection shall be
treated under this part in the same manner as sup-
plemental health care benefits described in section
1852(a)(3)(A).
‘‘(4) AVAILABILITY
OF
COST-SHARING
SUB-
SIDIES FOR LOW-INCOME ENROLLEES AND REINSUR-
ANCE SUBSIDY PAYMENTS FOR ORGANIZATIONS.—
For provisions—
‘‘(A) providing cost-sharing subsidies to
low-income individuals receiving qualified pre-
scription 
drug 
coverage 
through 
a
Medicare+Choice plan, see section 2211; and
‘‘(B) providing a Medicare+Choice organi-
zation with reinsurance subsidy payments for
providing qualified prescription drug coverage
under this part, see section 2212.
‘‘(5) SPECIFICATION OF SEPARATE AND STAND-
ARD PREMIUM.—
‘‘(A) IN GENERAL.—For purposes of ap-
plying section 1854 and determining the pre-
mium discount under section 2211(c) with re-
spect to qualified prescription drug coverage of-
fered under this subsection under a plan, the
Medicare+Choice organization shall compute
and publish the following:
‘‘(i) SEPARATE
PRESCRIPTION
DRUG
PREMIUM.—A premium for prescription
drug benefits that constitutes qualified
prescription drug coverage that is separate
from other coverage under the plan.
‘‘(ii) PORTION OF COVERAGE ATTRIB-
UTABLE
TO
STANDARD
BENEFITS.—The
ratio of the actuarial value of standard
coverage to the actuarial value of the
qualified prescription drug coverage offered
under the plan.
‘‘(iii) PORTION OF PREMIUM ATTRIB-
UTABLE
TO
STANDARD
BENEFITS.—A
standard premium equal to the product of
the premium described in clause (i) and
the ratio under clause (ii).
The premium under clause (i) shall be com-
puted without regard to any reduction in the
premium permitted under subparagraph (B).
‘‘(B) 
REDUCTION
OF
PREMIUMS
AL-
LOWED.—Nothing in this subsection shall be
construed as preventing a Medicare+Choice or-
ganization from reducing the amount of a pre-
mium charged for prescription drug coverage
because of the application of subsections
(f)(1)(A) and (i)(2)(A) of section 1854 to other
coverage.
‘‘(6) TRANSITION IN INITIAL ENROLLMENT PE-
RIOD.—Notwithstanding any other provision of this
part, the annual, coordinated election period under
subsection (e)(3)(B) for 2003 shall be the 6-month
period beginning with November 2002.
‘‘(7) QUALIFIED
PRESCRIPTION
DRUG
COV-
ERAGE; STANDARD
COVERAGE.—For purposes of
this part, the terms ‘qualified prescription drug cov-
erage’ and ‘standard coverage’ have the meanings
given such terms in section 2205.’’.
(b) 
CONFORMING
AMENDMENTS.—Section
1851(a)(1) of such Act (42 U.S.C. 1395w–21(a)(1)) is
amended—
(1) by inserting ‘‘(other than qualified prescrip-
tion drug benefits)’’ after ‘‘benefits’’;
(2) by striking the period at the end of sub-
paragraph (B) and inserting a comma; and
(3) by adding at the end the following flush lan-
guage:
‘‘and may elect qualified prescription drug coverage
in accordance with title XXII.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section apply to coverage provided on or after January
1, 2003.
SEC. 205. MEDIGAP PROVISIONS.
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, no new medicare supplemental policy that pro-
vides coverage of expenses for prescription drugs may be
issued under section 1882 of the Social Security Act on
or after January 1, 2003, to an individual unless it re-
places a medicare supplemental policy that was issued to
that individual and that provided some coverage of ex-
penses for prescription drugs.
(b) ISSUANCE OF SUBSTITUTE POLICIES IF OBTAIN-
ING PRESCRIPTION DRUG COVERAGE THROUGH MEDI-
CARE.—
(1) IN
GENERAL.—The issuer of a medicare
supplemental policy—
(A) may not deny or condition the issuance
or effectiveness of a medicare supplemental pol-
icy that has a benefit package classified as ‘‘A’’,
‘‘B’’, ‘‘C’’, ‘‘D’’, ‘‘E’’, ‘‘F’’, or ‘‘G’’ (under the
standards established under subsection (p)(2) of
section 1882 of the Social Security Act (42
U.S.C. 1395ss)) and that is offered and is
available for issuance to new enrollees by such
issuer;
(B) may not discriminate in the pricing of
such policy, because of health status, claims ex-
perience, receipt of health care, or medical con-
dition; and
(C) may not impose an exclusion of bene-
fits based on a preexisting condition under such
policy,
in the case of an individual described in paragraph
(2) who seeks to enroll under the policy not later
than 63 days after the date of the termination of en-
rollment described in such paragraph and who sub-
mits evidence of the date of termination or
disenrollment along with the application for such
medicare supplemental policy.
(2) INDIVIDUAL COVERED.—An individual de-
scribed in this paragraph is an individual who—
(A) enrolls in a Medicare Prescription Plus
plan under title XXII of the Social Security Act
(as added by section 201); and
(B) at the time of such enrollment was en-
rolled and terminates enrollment in a medicare
supplemental policy which has a benefit pack-
age classified as ‘‘H’’, ‘‘I’’, or ‘‘J’’ under the
standards referred to in paragraph (1)(A) or
terminates enrollment in a policy to which such
standards do not apply but which provides ben-
efits for prescription drugs.
(3) ENFORCEMENT.—The provisions of para-
graph (1) shall be enforced as though such provi-
sions were included in section 1882(s) of the Social
Security Act (42 U.S.C. 1395ss(s)).
(4) DEFINITIONS.—For purposes of this sub-
section, the term ‘‘medicare supplemental policy’’
has the meaning given such term in section 1882(g)
of the Social Security Act (42 U.S.C. 1395ss(g)).
(c) MEDIGAP PROTECTIONS FOR INDIVIDUALS WHO
LOSE
MEDICARE
PRESCRIPTION
PLUS
PLAN
COV-
ERAGE.—Section 1882 of the Social Security Act (42
U.S.C. 1395ss) is amended—
(1) in subsection (d)(3)—
(A) in subparagraph (A), by adding at the
end the following:
‘‘(ix) Nothing in this subparagraph shall be construed
as preventing the sale of 1 medicare supplemental policy
and 1 Medicare Prescription Plus plan to an individual,
except that the sale of such a policy or plan may not dupli-
cate any health benefits under any policy or plan owned
by the individual.’’; and
(B) in subparagraph (B)(iii)—
(i) in subclause (I), by striking ‘‘(II)
and (III)’’ and inserting ‘‘(II), (III), and
(IV)’’;
(ii) by redesignating subclause (III) as
subclause (IV); and
(iii) by inserting after subclause (II)
the following:
‘‘(III) If the statement required by clause (i) is ob-
tained and indicates that the individual is enrolled in 1
medicare supplemental policy or 1 Medicare Prescription
Plus plan, the sale of another policy or plan is not in viola-
tion of clause (i) if such other policy or plan does not du-
plicate health benefits under the policy or plan in which
the individual is enrolled.’’;
(2) in subsection (g)(1), by inserting ‘‘, Medi-
care 
Prescription 
Plus 
plan,’’ 
after
‘‘Medicare+Choice plan’’; and
(3) in subsection (s)(3)—
(A) in subparagraph (B)—
(i) in clause (ii), by inserting ‘‘is en-
rolled with an eligible entity under a Medi-
care Prescription Plus plan under title
XXII or’’ after ‘‘section 1851(e)(4) or the
individual’’;
(ii) in clause (v)(II), by inserting
‘‘with any eligible entity under a Medicare
Prescription Plus plan under title XXII,’’
after ‘‘under part C,’’; and
(iii) in clause (vi), by inserting ‘‘, in
a Medicare Prescription Plus plan under
title XXII,’’ after ‘‘under part C’’; and
(B) in subparagraph (E)—
(i) in clause (i), by inserting ‘‘(or, in
the case of an individual enrolled under a
Medicare Prescription Plus plan, the date
on which the individual was notified by the
eligible entity of the impending termination
or discontinuance of the Medicare Pre-
scription Plus plan) after ‘‘it offers in the
area’’; and
(ii) in clause (ii), by inserting ‘‘or
Medicare Prescription Plus plan’’ after
‘‘Medicare+Choice plan’’.
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