I
107TH CONGRESS
2D SESSION
H. R. 3684
To amend the Social Security Act to establish an outpatient prescription
drug assistance program for low-income Medicare beneficiaries.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 5, 2002
Mr. SIMMONS (for himself, Ms. HART, Mr. KOLBE, Mr. MANZULLO, Mr.
LATOURETTE, Mr. FORBES, and Mr. PLATTS) introduced the following
bill; which was referred to the Committee on Ways and Means, and in
addition to the Committee on Energy and Commerce, 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 con-
cerned
A BILL
To amend the Social Security Act to establish an outpatient
prescription drug assistance program for low-income
Medicare beneficiaries.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Immediate Helping
Hand Prescription Drug Assistance Act of 2002’’.
HR 3684 IH
SEC. 2. OUTPATIENT PRESCRIPTION DRUG ASSISTANCE
PROGRAM.
(a) ESTABLISHMENT.—The Social Security Act (42
U.S.C. 301 et seq.) is amended by adding at the end the
following new title:
‘‘TITLE XXII—OUTPATIENT PRE-
SCRIPTION 
DRUG 
ASSIST-
ANCE PROGRAM
‘‘SEC. 2201. PURPOSE: OUTPATIENT PRESCRIPTION DRUG
ASSISTANCE PROGRAMS.
‘‘(a) IN GENERAL.—The purpose of this title is to
provide funding for States to establish a program to pro-
vide assistance to low-income medicare beneficiaries (as
defined in section 2212(a)(4)), or to provide assistance to
such beneficiaries through a State plan under title XIX
or through part C of title XVII.
‘‘(b) ENTITLEMENT.—Subject to subsection (c)(2),
this title constitutes budget authority in advance of appro-
priations Acts and represents the obligation of the Federal
Government to provide for the payment to the program
sponsors described in section 2212(a)(9), of the amounts
provided under section 2206.
‘‘(c) PERIOD OF APPLICABILITY.—
‘‘(1) IN GENERAL.—No program sponsor may
receive payments under section 2207 for outpatient
prescription drug assistance provided before the date
HR 3684 IH
(2) LEGACY BENEFICIARIES.—In the case of a
State that has an existing comprehensive state-based
program, as defined in section 2212(a)(2), that pro-
vides outpatient prescription drug coverage for indi-
viduals described in paragraph (1)(A) (‘‘Legacy
Beneficiaries’’), the State is required to provide out-
patient prescription drug assistance for all such
beneficiaries residing in that state who were eligible
for such coverage on the date of enactment of this
Act, notwithstanding that any such beneficiaries
have incomes exceeding the income eligibility level
specified by section 2212(a)(4)(C).
‘‘(3) INDIVIDUAL NONENTITLEMENT.—Nothing
in this title shall be construed as providing an indi-
vidual with an entitlement to outpatient prescription
drug assistance provided under this title.
‘‘(b) ENROLLMENT
OF ELIGIBLE INDIVIDUALS.—
States shall develop procedures designed to encourage and
facilitate enrollment in their outpatient prescription drug
assistance programs, including but not limited to the fol-
lowing:
‘‘(1) Developing a streamlined application proc-
ess that is capable of being administered separately
from processes used to enroll individuals in medicaid
or other public assistance programs;
HR 3684 IH
‘‘(2) Ensuring that eligible individuals may ob-
tain benefit information and application materials in
a wide variety of settings, such as physicians offices,
pharmacies, health clinics, senior community centers,
and public libraries; and
‘‘(3) Developing an outreach program designed
to raise awareness of the availability of benefits, eli-
gibility requirements, and application procedures
under this title among all eligible individuals.
‘‘SEC. 2203. COVERAGE REQUIREMENTS.
‘‘(a) REQUIRED SCOPE OF COVERAGE.—
‘‘(1) IN GENERAL.—The outpatient prescription
drug assistance provided by a program sponsor shall
provide coverage of all covered outpatient drugs, as
defined in section 1927(k)(2).
‘‘(2) PERMISSIBLE
EXCLUSIONS.—A program
sponsor may exclude coverage of any outpatient drug
described under section 1927(d)(2).
‘‘(3) EXCLUSION OF DRUGS COVERED UNDER
PART B.—No coverage shall be provided under this
part for outpatient prescription drugs that are cov-
ered under part B of title XVIII as of the date of
enactment of this Act.
HR 3684 IH
‘‘(4) MORE
GENEROUS
COVERAGE.—Nothing
shall preclude a State from offering more generous
coverage that the coverage described in this section.
‘‘(b) COVERAGE RESTRICTIONS AND OTHER BEN-
EFIT LIMITATIONS.—
‘‘(1) IN GENERAL.—A drug prescribed for an
individual that would otherwise be a covered out-
patient drug under this part may be excluded or
subject to coverage restrictions and other benefit
limitations only if the program sponsor meets the re-
quirements of subsection (b)(3) (including providing
an appeals process) with respect to such restrictions
of limitations.
‘‘(2) SCOPE OF THIS SUBSECTION.—Coverage
restrictions and benefit limitations to which sub-
section (b)(1) would apply include, without limita-
tion, any mechanism the purpose of which or result
of is to differentiate among drugs in the same cat-
egory or class that are not bioequivalent and phar-
maceutically equivalent, whether through a prior au-
thorization requirement, preferred drug list, tiered
or differential copayment structure or other differen-
tials in beneficiary cost-sharing requirements.
‘‘(3) REQUIREMENTS FOR DEVELOPMENT AND
APPLICATION
OF
COVERAGE
RESTRICTIONS
AND
HR 3684 IH
OTHER BENEFIT LIMITATIONS.—Insofar as a pro-
gram sponsor excludes or otherwise subjects any
otherwise covered outpatient drug to coverage re-
strictions or benefit limitations, the following re-
quirement must be met—
‘‘(A) 
PHARMACEUTICAL
AND
THERA-
PEUTIC COMMITTEE.—The sponsor shall estab-
lish a pharmaceutical and therapeutic com-
mittee (‘‘Committee’’), which shall include, at a
minimum, practicing physicians (including spe-
ciality physicians), pharmacists, and others who
are independent of the program sponsor and
have expertise in the care of elderly or disabled
persons.
‘‘(B) PROCEDURES
FOR
ESTABLISHING
COVERAGE RESTRICTIONS OR BENEFIT LIMITA-
TIONS.—
‘‘(i) A covered outpatient drug may be
excluded, or made subject to other cov-
erage restrictions or benefit limitations,
with respect to the treatment of a specific
disease or condition, if the Committee de-
termines, based on reliable scientific evi-
dence, that the drug does not have a sig-
nificant, clinically meaningful therapeutic
HR 3684 IH
advantage over other drugs in the same
category or class and the Committee’s de-
termination is set forth in a written record
that includes a specific explanation of the
scientific and clinical bases for the deter-
mination.
‘‘(ii) 
Notwithstanding 
subsection
(b)(3)(B)(i), no coverage restrictions or
benefit limitations shall apply with respect
to a drug when prescribed for a beneficiary
who is part of an identified population for
which such drug has been determined to
have a significant, clinically meaningful
therapeutic advantage over alternative
treatments.
‘‘(C) MEDICAL
EXCEPTIONS
PROCESS.—
The program sponsor shall have, as part of the
appeals process under subsection 2205(b)(4), a
medical exceptions process that provides for ex-
ceptions from application of coverage restric-
tions or benefit limitations when a drug is
medically necessary and appropriate for a bene-
ficiary. In the case of such an exception, the
same cost-sharing and other requirements that
would have applied to the alternative covered
HR 3684 IH
outpatient drug would apply to the drug cov-
ered pursuant to this exception process.
‘‘(c) BENEFICIARY
PREMIUMS
AND
COST-SHAR-
ING.—
‘‘(1) GENERAL CONDITIONS.—
‘‘(A) PUBLIC SCHEDULE OF CHARGES.—
Any premium or cost-sharing shall be imposed
by the program sponsor in accordance with a
public schedule.
‘‘(B) PROTECTION FOR BENEFICIARIES.—
The program sponsor may only vary premiums
and cost-sharing based on the family income of
low-income medicare beneficiaries in a manner
that does not favor such beneficiaries with high-
er incomes over beneficiaries with lower in-
comes.
‘‘(2) LIMITATIONS
ON
PREMIUMS
AND
COST-
SHARING.—
‘‘(A) NO PREMIUMS OR COST-SHARING FOR
BENEFICIARIES WITH INCOME BELOW 150 PER-
CENT OF POVERTY LINE.—In the case of a low-
income medicare beneficiary whose family in-
come does not exceed 150 percent of the pov-
erty line, the program sponsor may not charge
HR 3684 IH
the beneficiary any premium and may impose
only nominal cost-sharing.
‘‘(B) OTHER BENEFICIARIES.—
‘‘(i) For low-income medicare bene-
ficiaries not described in subparagraph
(A), any premiums or cost-sharing imposed
by the program sponsor may be based,
subject to paragraph (1)(B), on a sliding
scale related to income, except that the
total annual aggregate amount of such pre-
miums and cost-sharing with respect to all
such beneficiaries in a family under this
title may not exceed five percent of the
family income.
‘‘(ii) No low-income medicare bene-
ficiary described in subparagraph (B)(i)
shall be responsible for more than 50 per-
cent of any premium imposed by the pro-
gram sponsor.
‘‘(3) PREMIUMS AND COST-SHARING FOR LEG-
ACY BENEFICIARIES.—In the case of Legacy Bene-
ficiaries described in section 2202(a)(2), the pro-
gram sponsor shall not impose any premium or cost-
sharing higher than that imposed under the existing
HR 3684 IH
comprehensive state-based program before enact-
ment of this Act.
‘‘(d) RESTRICTION ON APPLICATION OF PRE-EXIST-
ING CONDITION EXCLUSIONS.—The program sponsor
shall not permit the imposition of any preexisting condi-
tion exclusion for covered benefits and may not discrimi-
nate in the pricing of premiums because of health status,
claims experience, receipt of health care, or medical condi-
tion.
‘‘Sec. 2204. MANUFACTURER REBATES.
‘‘(A) IN GENERAL.—A state with an outpatient pre-
scription drug program that administers its drug benefit
on a fee-for-service basis shall be eligible to receive manu-
facturer rebates as provided under subsection (b).
‘‘(b) REBATES.—
‘‘(1) A manufacturer, as defined in section
1927(k)(5), shall provide rebates to States described
in subsection (a) for drugs of the manufacturer for
which payment is made under this title.
‘‘(2) Such rebates shall be calculated and paid
in accordance with the requirements of section 1927.
‘‘Sec. 2205. BENEFICIARY PROTECTIONS.
‘‘(a) BENEFICIARIES COVERED UNDER MEDICAID
AND MEDICARE+CHOICE PROGRAMS.—
HR 3684 IH
‘‘(1) IN GENERAL.—Eligible beneficiaries who
are provided outpatient prescription drug assistance
under a State plan under title XIX or under part C
of title XVIII shall be afforded the patient protec-
tions contained in those programs.
‘‘(2) ADDITIONAL PROTECTION.—In addition to
the protections required under subsection (a)(1), all
program sponsors must meet the requirements es-
tablished in subsections (b)(1) and (b)(2).
‘‘(b) OTHER BENEFICIARIES.—Eligible beneficiaries
who are provided outpatient prescription drug assistance
under this title shall be afforded the following patient
protections—
‘‘(1) CONFLICT OF INTEREST SAFEGUARDS.—
Before entering into a contract with a program
sponsor, the State shall determine whether the pro-
gram sponsor or any of its proposed subcontractors
has any significant organizational conflict of inter-
est, and if so, shall only contract with the prospec-
tive sponsor if the sponsor has implemented ade-
quate safeguards to avoid or neutralize any such
conflict. Prior to renewing such a contract, the Sec-
retary shall evaluate the effectiveness of the safe-
guards in avoiding or neutralizing the conflict and
shall ensure that the program sponsor makes any
HR 3684 IH
changes necessary to ensure their continuing effec-
tiveness during the new contract period.
‘‘(2) ACKNOWLEDGEMENT OF BENEFICIARY IN-
TERESTS.—A program sponsor shall certify to the
State that it shall at all times act in the best inter-
ests of enrollee in connection with the provision of
outpatient prescription drug assistance.
‘‘(3) GRIEVANCE
PROCEDURES.—A program
sponsor shall meet the requirements of section
1852(f) with respect to hearing and resolving griev-
ances in the same manner as such requirements
apply to a Medicare+Choice organization under that
section.
‘‘(4) COVERAGE
DETERMINATIONS
AND
AP-
PEALS.—A program sponsor shall meet the require-
ments of section 1852(g) with respect to coverage
determinations and appeals in the same manner as
such requirements apply to a Medicare+Choice or-
ganization under that section.
‘‘(5) CONFIDENTIALITY
AND
ACCURACY
OF
BENEFICIARY RECORDS.—A program sponsor shall
meet the requirements of section 1852(h) with re-
spect to confidentiality and accuracy of patient
records in the same manner as such requirements
HR 3684 IH
apply to a Medicare+Choice organization under that
section.
‘‘(6) 
ACCESS
TO
COVERED
OUTPATIENT
DRUGS.—
‘‘(A) IN
GENERAL.—A program sponsor
shall secure the participation of sufficient num-
bers of pharmacies to ensure convenient access
to covered outpatient drugs for eligible bene-
ficiaries.
‘‘(B) ANY
WILLING
PHARMACY.—A pro-
gram sponsor shall permit the participation of
any pharmacy that meets State licensing re-
quirements for such an entity.
‘‘SEC. 2206. ALLOTMENTS.
‘‘(A) APPROPRIATION.—
‘‘(1) IN GENERAL.—For the purpose of pro-
viding allotments under this section to States, there
is appropriated, out of any funds in the Treasury
not otherwise appropriated—
‘‘(A) for fiscal year 2003, $7,000,000,000;
‘‘(B) for fiscal year 2004, $7,000,000,000;
‘‘(C) for fiscal year 2005, $7,000,000,000;
‘‘(D) for fiscal year 2006, $7,000,000,000;
‘‘(E) for fiscal year 2007, $7,000,000,000;
HR 3684 IH
‘‘(F) for fiscal year 2008, $7,000,000,000;
and
‘‘(G) for fiscal year 2009, $6,000,000,000.
‘‘(2) 
AVAILABILITY.—Amounts 
appropriated
under paragraph (1) shall only be available for pro-
viding the allotments described in such paragraph
during the fiscal year for which such amounts are
appropriated. Any amounts that have not been obli-
gated by the Secretary for the purposes of making
payments from such allotments under section 2207,
or under section 2211, on or before September 30
of fiscal year 2003, 2004, 2005, 2006, 2007, 2008,
or 2009 (as applicable), shall be returned to the
Treasury.
‘‘(b) ALLOTMENTS TO 50 STATES AND DISTRICT OF
COLUMBIA.—
‘‘(1) IN GENERAL.—Subject to paragraph (3),
of the amount available for allotment under sub-
section (a) for a fiscal year, reduced by the amount
of allotments made under subsection (c) for the fis-
cal year, the Secretary shall allot to each State with
an outpatient prescription drug assistance program
the same proportion as the ratio of—
‘‘(A) the number of medicare beneficiaries
with family income that does not exceed 200
HR 3684 IH
‘‘(D) American Samoa is 1.2 percent; and
‘‘(E) the Northern Mariana Islands is 1.1
percent.
‘‘(3) COMMONWEALTHS AND TERRITORIES.—A
commonwealth or territory described in this para-
graph is any of the following if it has an outpatient
prescription drug assistance program approved
under this title:
‘‘(A) Puerto Rico.
‘‘(B) Guam.
‘‘(C) the United States Virgin Islands.
‘‘(D) American Samoa.
‘‘(E) the Northern Mariana Islands.
‘‘(d) TRANSFER
OF CERTAIN ALLOTMENTS
AND
PORTIONS OF ALLOTMENTS.—
‘‘(1) IN GENERAL.—If, not later than within
two years of the date of enactment of this Act, a
State has not submitted a State Participation Plan
to the Secretary that meets the requirements of this
title—
‘‘(A) 90 percent of the allotment deter-
mined for a fiscal year (or pro rata share there-
of) under subsection (b) or (c) for a State shall
be transferred and made available in such fiscal
year to the Secretary for purposes of carrying
HR 3684 IH
out the default program established under sec-
tion 2211; and
‘‘(B) 10 percent of such allotment shall be
used to make payments to States in accordance
with section 2207(b).
‘‘(2) Notwithstanding paragraph (1), if a State
submits a State Participation Plan to the Secretary
that meets the requirements of this title after the
two-year period described above such State’s allot-
ment (or pro rata share thereof) for the fiscal year
shall be distributed in accordance with subsections
(b) and (c).
‘‘Sec. 2207. PAYMENTS TO STATES.
‘‘(a) IN GENERAL.—Subject to the succeeding provi-
sions of this section, the Secretary shall pay to each State
with a State Participation Plan approved under section
2208(c) from the State’s allotment under section 2206,
an amount for each quarter equal to the expenditures as
estimated by the State in the quarter—
‘‘(1) for outpatient prescription drug assistance
furnished to low-income medicare beneficiaries in a
manner consistent with the requirements of this
title; and
‘‘(2) only to the extent permitted under subsection
(d), for reasonable costs incurred to administer a program
HR 3684 IH
implemented under this title, including, but not limited to,
benefit management costs and outreach initiatives.
‘‘(b) ADDITIONAL PAYMENTS.—In addition to fund-
ing under subsection (a), the Secretary shall make pay-
ments to States as follows:
‘‘(1) ENROLLMENT
BONUSES.—The Secretary
shall establish program enrollment targets and make
bonus payments to States that achieve such targets;
such bonus payments may be used to provide ex-
panded drug benefits to low-income medicare bene-
ficiaries or to reduce or eliminate premium or cost-
sharing obligations for such beneficiaries;
‘‘(2) GENERAL OUTREACH SUPPORT.—During
the first two years of program operation, the Sec-
retary shall provide additional funding to States for
outreach efforts designed to encourage enrollment in
programs implemented under this title.
‘‘(3) DUAL
ELIGIBLE
OUTREACH
SUPPORT
FUNDS.—The Secretary shall make funds available
to States to develop and implement innovative out-
reach programs to enroll medicare beneficiaries cur-
rently eligible for, but not enrolled in, medicaid; and
‘‘(4) FMAP ENHANCEMENT FOR DUAL ELIGI-
BLES.—The Secretary shall pay each State an en-
hanced 
Federal 
medical 
assistance 
percentage
HR 3684 IH
(‘‘FMAP’’), as defined in section 2105(b), for pre-
scription drug benefits furnished to dual eligibles
who are enrolled in both medicare and medicaid.
‘‘(c) LIMITATION ON PAYMENTS FOR CERTAIN EX-
PENDITURES.—
‘‘(1) GENERAL LIMITATIONS.—Funds provided
to a State under this title shall only be used to carry
out the purposes of this title.
‘‘(2) ADMINISTRATIVE EXPENDITURES.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), payment shall not be made under
subsection (a) for expenditures described in
subsection (a)(2) for a fiscal year to the extent
the total of such expenditures (for which pay-
ment is made under such subsection) exceeds
10 percent of the total expenditures described
in subsection (a)(1) made by the State for such
fiscal year; and
‘‘(B) SPECIAL RULE.—With respect to the
first fiscal year that a State provides outpatient
prescription drug assistance under a program
approved under this title, the limitation de-
scribed in subparagraph (A) shall be increased
to 15 percent of the total expenditures de-
scribed in subsection (a)(1).
HR 3684 IH
‘‘(3) OFFSET OF RECEIPTS ATTRIBUTABLE TO
PREMIUMS OR COST-SHARING.—For purposes of sub-
section (a), the amount of the expenditures under a
program shall be reduced by the amount of any pre-
miums or cost-sharing received by a State.
‘‘(4) 
PREVENTION
OF
DUPLICATIVE
PAY-
MENTS.—
‘‘(A) OTHER
HEALTH
PLANS.—No pay-
ment shall be made under this section for ex-
penditures for outpatient prescription drug as-
sistance provided under an outpatient prescrip-
tion drug assistance program to the extent that
a private insurer (as defined by the Secretary
in regulations) would have been obligated to
provide such assistance but for a provision of
its insurance contract which has the effect of
limiting or excluding such obligation because
the beneficiary is eligible for or is provided out-
patient prescription drug assistance under the
program.
‘‘(B) OTHER FEDERAL GOVERNMENT PRO-
GRAMS.—Except as otherwise provided by law,
no payment shall be made under this section for
expenditures for outpatient prescription drug
assistance provided under an outpatient pre-
HR 3684 IH
scription drug assistance program to the extent
that payment has been made or can reasonably
be expected to be made promptly (as deter-
mined in accordance with regulations) under
any other federally operated or financed health
care insurance program identified by the Sec-
retary.
‘‘(d) ADVANCE PAYMENT; RETROSPECTIVE ADJUST-
MENT.—The Secretary may make payments under this
section for each quarter on the basis of advance estimates
of expenditures submitted by a State and such other inves-
tigation as the Secretary may find necessary, and may re-
duce or increase the payments as necessary to adjust for
any overpayment or underpayment for prior quarters.
‘‘(e) FLEXIBILITY
IN SUBMISSION
OF CLAIMS.—
Nothing in this section shall be construed as preventing
a State from claiming as expenditures in any quarter of
a fiscal year expenditures that were incurred in a previous
quarter of such fiscal year.
‘‘SEC. 2208. SUBMISSION, APPROVAL, AND AMENDMENT OF
STATE PARTICIPATION PLANS.
‘‘(a) INITIAL PLAN.—
‘‘(1) IN GENERAL.—A State may receive pay-
ments under section 2207 if the State has submitted
to the Secretary either an outpatient prescription
HR 3684 IH
drug assistance program description (for States not
implementing this title as part of a title XIX State
plan) or a State plan amendment (for States imple-
menting this title as part of a title XIX State plan),
that meets the applicable requirements of this title
(collectively, ‘‘State Participation Plans’’). All States
submitting a State Participation Plan shall be reim-
bursed the reasonable costs incurred in preparing
the Plan, regardless of whether such submission is
approved.
‘‘(2) 
CONTENT
OF
STATE
PARTICIPATION
PLAN.—The State Participation Plan submitted
must describe:
‘‘(A) the purpose, nature, and scope of the
outpatient prescription drug assistance pro-
gram;
‘‘(B) how the State intends to use the
funds provided under this title to provide out-
patient prescription drug assistance to low-in-
come Medicare beneficiaries;
‘‘(C) the budget for the program and de-
tails on the planned use of funds, the sources
of any non-federal share of program expendi-
tures, and beneficiary premium and cost-shar-
HR 3684 IH
ing requirements for each of the defined groups
of eligible individuals;
‘‘(D) the procedures to be used to ensure
that the outpatient prescription drug assistance
provided to low-income Medicare beneficiaries
under the program does not supplant coverage
for outpatient prescription drugs available to
such beneficiaries under group health plans;
‘‘(E) standards for determining eligibility
for enrollment, including provisions pertaining
to income, resources, and access to other cov-
erage, and procedures for ensuring that only in-
dividuals who remain eligible continue to be en-
rolled in the program;
‘‘(F) the proposed methods of delivery of
benefits to eligible individuals, as well as proce-
dures designed to ensure quality and access to
covered services, particularly in rural regions;
‘‘(G) safeguards in place to protect bene-
ficiaries from potential conflicts of interest;
‘‘(H) plans for specific outreach initiatives
that will be undertaken to inform Medicare
beneficiaries about the availability of benefits
under this title and to provide enrollment as-
sistance to eligible individuals;
HR 3684 IH
‘‘(I) efforts designed to identify, contact,
and enroll Medicare beneficiaries eligible for
Medicaid; and
‘‘(J) plans for public participation in the
design, implementation, and development of the
program on an ongoing basis.
‘‘(b) STATE PARTICIPATION PLAN AMENDMENTS.—
Within 30 days after a State amends a State Participation
Plan submitted pursuant to section (a), the State shall
notify the Secretary of the amendment.
‘‘(c) APPROVAL OF STATE PARTICIPATION PLANS
AND STATE PARTICIPATING PLAN AMENDMENTS.—
‘‘(1) PROMPT
REVIEW
OF
STATE
PARTICIPA-
TION
PLANS
AND
STATE
PARTICIPATION
PLAN
AMENDMENTS.—Except as provided in subparagraph
(2)(B), the Secretary shall review promptly State
Participation Plans and State Participation Plan
amendments to determine if they substantially com-
ply with the requirements of this title.
‘‘(2) STREAMLINED APPROVAL PROCESS.—
‘‘(A) IN GENERAL.—A State Participation
Plan or amendment thereto is considered ap-
proved unless the Secretary notifies the State in
writing, within 45 days after receipt of the
State Participation Plan or amendment, that
HR 3684 IH
the submission is disapproved (and the reason
or reasons for disapproval) or that specified ad-
ditional information is needed.
‘‘(B) EXISTING
COMPREHENSIVE
STATE-
BASED PROGRAMS.—A State Participation Plan
that implements this title through an existing
comprehensive state-based program, as defined
in section 2212(a)(2), is deemed approved, pro-
vided that the responsible State official certifies
that the comprehensive state-based program is
consistent with the requirements of this title.
‘‘(3) CORRECTION
AND
SUPPLEMENTATION.—
In the case of a disapproval of a State Participation
Plan or amendment thereto, the Secretary shall pro-
vide the State with a reasonable opportunity for cor-
rection or supplementation to respond to identified
deficiencies before taking action against the State on
the basis of such disapproval.
‘‘(4) EFFECTIVE DATE.—A State Participation
Plan or amendment thereto shall be effective begin-
ning with a calendar quarter that is specified in the
Plan, but in no case earlier than the date of enact-
ment of this Act.
‘‘(d) PROGRAM OPERATION.—
HR 3684 IH
‘‘(1) IN GENERAL.—A State shall conduct the
program in accordance with the State Participation
Plan (and any amendments thereto) approved under
this section and consistent with the requirements of
this title.
‘‘(2) VIOLATIONS.—The Secretary shall estab-
lish a process for enforcing requirements under this
title. Such process shall provide for the withholding
of funds in the case of substantial noncompliance
with such requirements. In the case of an enforce-
ment action against a State under this paragraph,
the Secretary shall provide a State with a reasonable
opportunity for correction and for administrative
and judicial appeal of the Secretary’s action before
imposing financial sanctions against the State on the
basis of such an action.
‘‘(e) CONTINUED APPROVAL.—Subject to section
2201(c), an approved State Participation Plan shall con-
tinue in effect unless and until the State amends the Plan
under subsection (b) or the Secretary finds, in accordance
with subsection (d), substantial noncompliance of the Plan
with the requirements of this title.
HR 3684 IH
‘‘SEC. 2209. PROGRAM ADMINISTRATION; APPLICATION OF
CERTAIN GENERAL PROVISIONS.
‘‘(a) PROGRAM
ADMINISTRATION.—An outpatient
prescription drug assistance program shall ensure that the
State administering the program collect the data, main-
tain the records, afford the Secretary access to any records
or information relating to the program for the purposes
of review or audit, and furnish report to the Secretary,
at the times and in the standardized format the Secretary
may require, in order to enable the Secretary to monitor
program administration and compliance and to evaluate
and compare the effectiveness of programs under this title.
‘‘(b) APPLICATION OF CERTAIN GENERAL PROVI-
SIONS.—The following sections of the Social Security Act
shall apply to the programs established under this title
in the same manner as they apply to a State under title
XIX:
‘‘(1) Paragraph (2) and (16) of section 1903(i)
(relating to limitations on payment).
‘‘(2) Section 1115 (relating to wavier author-
ity).
‘‘(3) Section 1116 (relating to administrative
and judicial review), but only insofar as consistent
with this title.
‘‘(4) Section 1124 (relating to disclosure of
ownership and related information).
HR 3684 IH
‘‘(5) Section 1126 (relating to disclosure of in-
formation about certain convicted individuals).
‘‘(6) Section 1128A (relating to civil monetary
penalties).
‘‘(7) Section 1128B(d) (relating to criminal
penalties for certain additional charges).
‘‘SEC. 2210. REPORTS.
‘‘(a) IN GENERAL.—Each State administering an
outpatient prescription drug assistance program under
this title shall annually—
‘‘(1) assess the operation of the program in
each fiscal year; and
‘‘(2) report to the Secretary on the result of the
assessment.
‘‘(b) REQUIRED INFORMATION.—The annual report
required under subsection (a) shall include the following:
‘‘(1) An assessment of the effectiveness of the
program in providing outpatient prescription drug
assistance to low-income medicare beneficiaries,
including—
‘‘(A) the characteristics of the low-income
medicare beneficiaries assisted under the pro-
gram, including family income and access to
other health insurance prior to the program and
after eligibility for the program ends; and
HR 3684 IH
‘‘(B) the amount and level of assistance
provided under the program.
‘‘(2) An analysis of costs and expenditures as-
sociated with the program, including a description of
the sources of any non-Federal share of program ex-
penditures.
‘‘(c) ANNUAL REPORT OF THE SECRETARY.—The
Secretary shall submit to Congress and make available to
the public an annual report based on the reports required
under subsection (a), which report shall contain any con-
clusions and recommendations the Secretary considers ap-
propriate.
‘‘SEC. 2211. ESTABLISHMENT OF DEFAULT PROGRAM.
‘‘(a) PROGRAM AUTHORITY.—
‘‘(1) IN GENERAL.—In the case of a State that
does not have a State Participation Plan approved
under this Act within two years of the date of enact-
ment of this Act (the ‘‘Dafault Date’’), outpatient
prescription drug assistance to low-income medicare
beneficiaries who reside in such State shall be pro-
vided in accordance with this section and section
1902(a)(10)(I).
‘‘(2) DEFINITION.—In this section, a low-in-
come medicare beneficiary means an individual
who—
HR 3684 IH
‘‘(A) satisfies the requirement of subpara-
graph (A) and (B) of section 2212(a)(4); and
‘‘(B) is determined to have family income
that does not exceed 150 percent of the poverty
line.
‘‘(b) NOTIFICATION
OF STATES.—On the Default
Date, the Secretary shall notify in writing any State de-
scribed in subsection (a)(1) of its responsibility to provide
outpatient prescription drug coverage to low-income medi-
care 
beneficiaries 
as 
provided 
for 
under 
section
1902(a)(10)(I).
‘‘(c) FUNDING.—
‘‘(1) TRANSFERRED AMOUNTS.—The Secretary
shall use the aggregate amounts transferred and
made available under section 2206(d)(1)(A) for pur-
poses of carrying out the default program estab-
lished under this section. Such aggregate amounts
may be used to provide outpatient prescription drug
assistance to any low-income medicare beneficiary
who resides in a State described in paragraph (a)(1).
‘‘(d) SUSPENSION.—In the event that a State has a
State Participation Plan approved under section 2208
more than two years from the date of enactment of this
Act, the default program under this section shall be sus-
HR 3684 IH
pended until such time as such State no longer has an
approved State Participation Plan.
‘‘SEC. 2212. DEFINITIONS.
‘‘(a) In this title:
‘‘(1) COST-SHARING.—The term ‘cost-sharing’
means a deductible, coinsurance, copayment, or simi-
lar charge, and includes an enrollment fee.
‘‘(2) EXISTING COMPREHENSIVE STATE-BASED
PROGRAM.—
‘‘(A) IN GENERAL.—A program described
in this paragraph is an outpatient prescription
drug assistance program for individuals who are
entitled to benefits under part A of title XVIII
or enrolled under part B of such title, including
an individual enrolled in a Medicare+Choice
plan under part C of such title, that—
‘’(i) is administered or overseen by the
State and receives funds from the State;
‘‘(ii) was offered as of the date of the
enactment of this title;
‘‘(iii) does not receive or use any Fed-
eral funds; and
‘‘(iv) satisfies the requirements of this
title.
HR 3684 IH
‘‘(B) MODIFICATIONS.—A State may mod-
ify the coverage of its program from time to
time, provided that it does not reduce the actu-
arial value (evaluated as of the time of the
modification) below the actuarial value of the
coverage described in section 2203.
‘‘(3) GROUP HEALTH PLAN; GROUP HEALTH IN-
SURANCE COVERAGE; ETC.—The terms ‘group health
plan’, ’group health insurance coverage’, and ‘health
insurance coverage’ have the meanings given such
terms in section 2791 of the Public Health Service
Act (42 U.S.C. 300gg–91).
‘‘(4) LOW-INCOME MEDICARE BENEFICIARY.—
Except as provided in section 2211(a)(2), the term
‘low-income medicare beneficiary’ means an indi-
vidual who—
‘‘(A) is entitled to benefits under part A of
title XVIII or enrolled under part B of such
title, including an individual enrolled in a
Medicare+Choice plan under part C of such
title;
‘‘(B) except as provided for under section
1902(a)(10)(H) and section 1902(a)(10)(I), is
not entitled to medical assistance with respect
to prescribed drugs under title XIX or under a
HR 3684 IH
waiver under section 1115 of the requirements
of such title;
‘‘(C) 
except 
as 
provided 
in 
section
2202(a)(2), is determined to have family in-
come that does not exceed 200 percent of the
poverty line;
‘‘(D) at the option of the State, is deter-
mined to have resources that do not exceed a
level specified by the State; and
‘‘(E) is determined not to have coverage
under a comprehensive private retiree drug cov-
erage plan.
‘‘(5) OUTPATIENT PRESCRIPTION DRUG ASSIST-
ANCE.—The term ‘outpatient prescription drug as-
sistance’ means payment for part or all of the cost
of coverage of outpatient prescription drugs and
biologicals for low-income medicare beneficiaries,
consistent with the requirements of this title.
‘‘(6) OUTPATIENT PRESCRIPTION DRUG ASSIST-
ANCE PROGRAM; PROGRAM.—Unless the context oth-
erwise requires, the terms ‘outpatient prescription
drug assistance progam’ and ‘program’ mean a pro-
gram implemented pursuant to a State Participation
Plan approved under section 2208.
HR 3684 IH
‘‘(7) POVERTY LINE.—The term ‘poverty line’
has the meaning given such term in section 673(2)
of the Community Services Block Grant Act (42
U.S.C.9902(2)), including any revision required by
such section.
‘‘(8) PREEXISTING
CONDITION
EXCLUSION.—
The term ‘preexisting condition exclusion’ has the
meaning given such term in section 2701(b)(1)(A) of
the 
Public 
Health 
Service 
Act 
(42 
U.S.C.
300gg(b)(1)(A)).
‘‘(9) PROGRAM SPONSOR.—The term ‘program
sponsor’ means any entity that administers a pro-
gram under this title, including but not limited to a
State, 
third 
party 
benefit 
administrator,
Medicare+Choice organization, or group health
plan.
‘‘(10) RESIDENT.—The term ‘resident’ means
an individual who would be deemed a resident of a
given State under that state’s residency rules appli-
cable to beneficiaries under title XIX.
‘‘(11) SECRETARY.—The term ‘secretary’ shall
means the Secretary of the United States Depart-
ment of Health and Human Services.
‘‘(12) SENIOR
FMAP.—For purposes of this
title, senior FMAP means a 100 percent FMAP per-
HR 3684 IH
centage for low-income medicare beneficiaries with
family incomes that do not exceed 200 percent of
the poverty line.
‘‘(13) STATE.—The term ‘State’ has the mean-
ing given such term for purposes of title XIX.’’.
(b) CONFORMING AMENDMENTS.—
(1) 
DEFINITION
OF
STATE.—Section
1101(a)(1) of the Social Security Act (42 U.S.C.
1301(a)(1)) is amended in the first and fourth sen-
tences, by striking ‘‘and XXI’’ each place it appears
and inserting ‘‘XXI, and XXII’’.
(2) TREATMENT AS STATE HEALTH CARE PRO-
GRAM.—Section 1128(h) of such Act (42 U.S.C.
1320a–7(h)) is amended—
(A) in paragraph (3), by striking ‘‘or’’ at
the end;
(B) in paragraph (4), by striking the pe-
riod at the end and inserting ‘‘, or’’; and
(C) by adding at the end the following new
paragraph:
‘‘(3) an outpatient prescription drug assistance
program approved under title XXII.’’.
HR 3684 IH
SEC. 3. EXPANDED COVERAGE OF LOW-INCOME MEDICARE
BENEFICIARIES UNDER MEDICAID
(a) Section 1905 of the Social Security Act (42
U.S.C. 1396dd) is amended—
(1) in subsection (b), by adding at the end the
following new sentence: ‘‘Notwithstanding the first
sentence of this subsection, in the case of a State
plan that meets the condition described in subsection
(x)(1), with respect to expenditures described in sub-
section (x)(2)(A) or subsection (x)(3), the Federal
medical assistance percentage is equal to the senior
FMAP described in section 2212(a)(12).’’; and
(2) by adding at the end the following new sub-
section:
‘‘(x)(1) The State provides for such reporting of in-
formation about expenditures and payments attributable
to the operation of this subsection as the Secretary deems
necessary in order to carry out paragraph (2) and section
2207.
‘‘(2)(A) For purposes of subsections (b) and (c), the
expenditures described in this subparagraph are expendi-
tures for medical assistance for optional low-income medi-
care beneficiaries described in subparagraph (C), or for
mandatory low-income medicare beneficiaries described in
subsection (D), but not exceeding the amount described
in subparagraph (B) for a State for a fiscal year.
HR 3684 IH
‘‘(B) The amount described in this subparagraph, for
a State for a fiscal year, is the amount of the State’s allot-
ment under section 2206 for the fiscal year, reduced by
the amounts of any payments made under section 2207
from such allotment for such fiscal year.
‘‘(C) For purposes of this paragraph, the term ‘op-
tional low-income medicare beneficiary’ means a low-in-
come 
medicare 
beneficiary 
as 
defined 
in 
section
2212(a)(4).
‘‘(D) For purposes of this paragraph, the term ‘man-
datory low-income medicare beneficiary’ means a low-in-
come 
medicare 
beneficiary 
as 
defined 
in 
section
2211(a)(2).
(b) ESTABLISHMENT OF ELIGIBILITY CATEGORY FOR
LOW-INCOME MEDICARE BENEFICIARIES.—Section 1902
(a)(10) (42 U.S.C. 1396a(a)(10)) is amended—
(1) in subparagraph (F), by striking ‘‘and’’ at
the end;
(2) in subparagraph (G), by adding ‘‘and’’ at
the end;
(3) by adding after subparagraph (G) the fol-
lowing new subparagraph:
‘‘(H) at the option of the State, for mak-
ing prescribed drugs, consistent with the re-
quirements of title XXII, available to optional
HR 3684 IH
low-income medicare beneficiaries described in
section 1905(x)(2)(C);’’ and
(4) by adding at the end the following new sub-
paragraph:
‘‘(I)(i) upon the Default Date as described
in section 2211(a)(1), for making prescribed
drugs, consistent with the requirements of title
XXII, available to mandatory low-income medi-
care 
beneficiaries 
described 
in 
section
1905(x)(2)(D).
‘‘(ii) In the event that a State Participa-
tion Plan is approved under section 2208 after
clause (i) becomes effective, clause (i) shall be
suspended until such time as such State no
longer has an approved State Participation
Plan.’’.
(c) EFFECTIVE DATE.—These amendments shall
apply for periods beginning on or after the date of enact-
ment of title XXII, but not beyond September 30, 2008.
SEC. 4. COVERAGE OF LOW-INCOME MEDICARE BENE-
FICIARIES IN MEDICARE+CHOICE.
(a) Section 1852 of the Social Security Act (U.S.C.
1395w–22) is amended—
(1) in subsection (a)(1)(A) by striking at the
end ‘‘and’’;
HR 3684 IH
(2) in subsection (a)(1)(B) by striking at the
end ‘‘.’’, and adding at the end ‘‘, and’’;
(3) in subsection (a)(1) by adding at the end
the following new subparagraph:
‘‘(C) any additional benefits required
under subsection (m).’’; and
‘‘(4) by adding at the end the following new
subsection:
‘‘(m) OUTPATIENT PRESCRIPTION DRUG ASSIST-
ANCE FOR LOW-INCOME MEDICARE BENEFICIARIES.—
‘‘(1) At state election under title XXII, a
Medicare+Choice organization shall be required to
provide outpatient prescription drug assistance con-
sistent with the requirement of title XXII for any
low-income medicare beneficiaries, as defined in sec-
tion 2212(a)(4), enrolled in its plan.
‘‘(2) Payments shall be made for drugs provided
under this subsection in accordance with section 1853(j).’’
‘‘(b) Section 1853 of the Social Security Act (42
U.S.C. 1395w–23) is amended by adding at the end the
following new subsection:
‘‘(j) SPECIAL RULE FOR LOW-INCOME MEDICARE
BENEFICIARIES.—
‘‘(1) IN GENERAL.—Notwithstanding any other
provision of this section, a Medicare+Choice organi-
HR 3684 IH
zation that provides outpatient prescription drug as-
sistance for a low-income medicare beneficiary, as
defined in section 2212(a)(4), may receive payments
for the costs of such assistance if—
‘‘(A) the outpatient prescription drug cov-
erage meets the coverage requirements provided
under section 2203; and
‘‘(B) the coverage is provided in a State
with an approved State Participation Plan as
described in section 2208.
‘‘(2) PAYMENT.—A Medicare+Choice organiza-
tion that meets the requirements of paragraph (1)
shall be eligible for payments by a State from that
State’s allotment pursuant to title XXII.
SEC. 5. ELECTION BY LOW-INCOME MEDICARE BENE-
FICIARIES TO SUSPEND MEDICAP INSUR-
ANCE.
Section 1882 of the Social Security Act (42 U.S.C.
1395ss) is amended by adding at the end the following
new paragraph:
‘‘(v) SPECIAL RULE FOR LOW-INCOME MEDICARE
BENEFICIARIES.—Nothwithstanding any other provision
of this section.—
‘‘(1) CURRENT LOW-INCOME MEDICARE BENE-
FICIARIES WITH MEDICAP COVERAGE.—
HR 3684 IH
‘‘(A) PROHIBITED PRACTICES.—An issuer
of a medicare supplemental issuance policy may
not deny or condition the issuance or effective-
ness of a medicare supplemental policy 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) and
that is offered and is available for issuance to
new enrollees by such issuer in the case of an
individual described in subparagraph (B)(i) who
seeks to enroll under the policy not later than
63 days after the date of termination of enroll-
ment described in subparagraph (B)(ii) and
who submits evidence of the date of termination
or disenrollment along with the application for
a medicare supplemental policy described in this
subparagraph.
‘‘(B) INDIVIDUAL
COVERED.—An indi-
vidual described in this paragraph is an indi-
vidual who—
‘‘(i) is a low-income medicare bene-
ficiary (as defined in section 2212(a)(4)
who is being provided outpatient prescrip-
tion drug assistance under title XXII; and
HR 3684 IH
‘‘(ii) at the time the individual was
first provided such assistance, terminated
enrollment in a medicare supplemental pol-
icy which has a benefit package classified
as ‘H’, ‘I’, ‘J’, under the standards re-
ferred to in subparagraph (A).
‘‘(2) RESTORATION OF MEDICAP PRESCRIPTION
DRUG
COVERAGE
FOR
LOW-INCOME
MEDICARE
BENEFICIARIES.—
‘‘(A) PROHIBITED PRACTICES.—The issuer
of a medicare supplemental policy may not deny
or condition the issuance or effectiveness of a
medicare supplemental policy which has a ben-
efit package classified as ‘H’, ‘I’, or ‘J’, under
the standards referred to in subparagraph
(1)(A), that is offered and is available for
issuance to new enrollees by such issuer in the
case of an individual described in subparagraph
(B)(i) who seeks to enroll under the policy not
later than 63 days after the date of the termi-
nation of enrollment described in subparagraph
(B)(ii) and who submits evidence of such date
of termination along with the application for
such medicare supplemental policy.