(B) APPLICATION
OF
DIFFERENT
PER-
FORMANCE
STANDARDS.—The Secretary of
Health and Human Services, before entering
into contracts under section 1842 of the Social
Security Act with respect to the implementation
and operation (and related functions) of the
electronic system for covered outpatient drugs,
shall establish standards with respect to per-
formance with respect to such activities. The
provisions of subsections (e)(2), (h)(1), and
(h)(2) of section 1153 of such Act (42 U.S.C.
1320c–2) shall apply to such activities in the
same manner as they apply to contracts with
peer review organizations, instead of the re-
quirements of the second and third sentences of
section 1842(b)(2)(A) of such Act (42 U.S.C.
1395u(b)(2)(A)).
(C) USE OF REGIONAL CARRIERS.—Section
1842(b)(2)(A) 
of 
such 
Act 
(42 
U.S.C.
1395u(b)(2)(A)) is amended by adding at the
end the following new sentence: ‘‘With respect
to activities relating to implementation and op-
eration (and related functions) of the electronic
system established under subsection (u)(4), the
Secretary may enter into contracts with carriers
under this section to perform such activities on
a regional basis.’’.
(4) DELAY IN APPLICATION OF COORDINATED
BENEFITS WITH MEDIGAP.—The provisions of sub-
paragraph (B) of section 1842(h)(3) of the Social
Security Act (42 U.S.C. 1395u(h)(3)) shall not
apply to covered outpatient drugs (other than drugs
described in section 1861(s)(2)(J) of such Act (42
U.S.C. 1395x(s)(2)(J)) as of the date of the enact-
ment of this Act) dispensed before January 1, 2004.
(5) BATCH PROMPT PROCESSING OF CLAIMS.—
Section 1842(c) of such Act (42 U.S.C. 1395u(c)),
is amended—
(A) by redesignating paragraph (6) as
paragraph (7);
(B) in paragraphs (2)(A) and (3)(A), by
striking ‘‘Each’’ and inserting ‘‘Except as pro-
vided in paragraph (6), each’’; and
(C) by inserting after paragraph (5) the
following new paragraph:
‘‘(6)(A) Each contract under this section which pro-
vides for the disbursement of funds, as described in sub-
section (a)(1)(B), with respect to claims for payment for
covered outpatient drugs shall provide for a payment cycle
under which each carrier will, on a monthly basis, make
a payment with respect to all claims which were received
and approved for payment in the period since the most
recent date on which such a payment was made with re-
spect to the participating pharmacy or individual submit-
ting the claim.
‘‘(B) If payment is not issued, mailed, or otherwise
transmitted within 5 days of when such a payment is re-
quired to be made under subparagraph (A), interest shall
be paid at the rate used for purposes of section 3902(a)
of title 31, United States Code (relating to interest pen-
alties for failure to make prompt payments) for the period
beginning on the day after such 5-day period and ending
on the date on which payment is made.’’.
(f) MODIFICATION OF HMO/CMP CONTRACTS.—
(1) SEPARATE
ACTUARIAL
DETERMINATION
FOR COVERED OUTPATIENT DRUG BENEFIT.—Sec-
tion 
1876(e)(1) 
of 
such 
Act 
(42 
U.S.C.
1395mm(e)(1)) is amended by adding at the end
thereof the following new sentence: ‘‘The preceding
sentence shall be applied separately with respect to
covered outpatient drugs.’’.
(2) ADDITIONAL OPTIONAL BENEFITS.—Section
1876(g)(3)(A) 
of 
such 
Act 
(42 
U.S.C.
1395mm(g)(3)(A)) is amended by striking ‘‘rate’’
and inserting ‘‘rates’’.
(g) CONFORMING AMENDMENTS.—
(1) The first sentence of section 1866(a)(2)(A)
(42 U.S.C. 1395cc(a)(2)(A)) is amended—
(A) 
by 
inserting 
‘‘1834(e),’’ 
after
‘‘1833(b),’’; and
(B) by inserting ‘‘and in the case of cov-
ered outpatient drugs, applicable coinsurance
percent (specified in section 1834(e)(2)(C)) of
the lesser of the actual charges for the drugs or
the payment limit (established under section
1834(d)(3))’’ after ‘‘established by the Sec-
retary)’’.
(2) Section 1903(i)(5) (42 U.S.C. 1396b(i)(5))
is amended by striking ‘‘section 1862(c)’’ and insert-
ing ‘‘section 1862(c)(1)’’.
(h) PRESCRIPTION DRUG PAYMENT REVIEW COM-
MISSION.—Part B is amended by adding at the end the
following new section:
‘‘PRESCRIPTION DRUG PAYMENT REVIEW COMMISSION
‘‘SEC. 1849. (a)(1) The Director of the Congressional
Office of Technology Assessment (in this section referred
to as the ‘Director’ and the ‘Office’, respectively) shall
provide for the appointment of a Prescription Drug Pay-
ment Review Commission (in this section referred to as
the ‘Commission’), to be composed of individuals with ex-
pertise in the provision and financing of covered out-
patient drugs appointed by the Director (without regard
to the provisions of title 5, United States Code, governing
appointments in the competitive service).
‘‘(2) The Commission shall consist of 11 individuals.
Members of the Commission shall first be appointed by
no later than January 1, 2002, for a term of 3 years, ex-
cept that the Director may provide initially for such short-
er terms as will ensure that (on a continuing basis) the
terms of no more than 4 members expire in any one year.
‘‘(3) The membership of the Commission shall in-
clude recognized experts in the fields of health care eco-
nomics, medicine, pharmacology, pharmacy, and prescrip-
tion drug reimbursement, as well as at least one individual
who is a medicare beneficiary.
‘‘(b)(1) The Commission shall submit to Congress an
annual report no later than May 1 of each year, beginning
with 2003, concerning methods of determining payment
for covered outpatient drugs under this part.
‘‘(2) Such report, in 2004 and thereafter, shall in-
clude, with respect to the previous year, information on—
‘‘(A) increases in manufacturers’ prices for cov-
ered outpatient drugs and in charges of pharmacists
for covered outpatient drugs,
‘‘(B) the level of utilization of covered out-
patient drugs by medicare beneficiaries, and
‘‘(C) administrative costs relating to covered
outpatient drugs.
‘‘(c) The following provisions of section 1805 shall
apply to the Commission in the same manner as they
apply to the Medicare Payment Advisory Commission:
‘‘(1) Subsection (c)(4) (relating to compensa-
tion of members).
‘‘(2) Subsection (d) (relating to staffing and ad-
ministration).
‘‘(3) Subsection (e) (relating to powers of the
Commission generally).
‘‘(4) Subsection (f)(1) (relating to requests for
appropriations).
‘‘(d) There are authorized to be appropriated such
sums as may be necessary to carry out the provisions of
this section. Such sums shall be payable from the Federal
Supplementary Medical Insurance Trust Fund.’’.
(i) DEVELOPMENT OF STANDARD MEDICARE CLAIMS
FORM.—
(1) The Secretary shall develop, in consultation
with representatives of pharmacies and other inter-
ested individuals, a standard claims form (and a
standard electronic claims format) to be used in re-
quests for payment for covered outpatient drugs
under the medicare program and other third-party
payors.
(2) Not later than October 1, 2002, the Sec-
retary shall distribute official sample copies of the
format developed under paragraph (1) to pharmacies
and other interested parties and by not later than
October 1, 2002, shall distribute official sample cop-
ies of the form developed under paragraph (1) to
pharmacies and other interested parties.
(j) EFFECTIVE DATES.—
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by
this section shall apply to items dispensed on or
after January 1, 2003.
(2) CARRIERS.—The amendments made by sub-
section (e) shall take effect on the date of the enact-
ment of this Act; except that the amendments made
by subsection (e)(5) shall take effect on January 1,
2004, but shall not be construed as requiring pay-
ment before February 1, 2004.
(3) HMO/CMP ENROLLMENTS.—The amend-
ment made by subsection (f) shall apply to enroll-
ments effected on or after January 1, 2003.
Æ