I
107TH CONGRESS
1ST SESSION
H. R. 2513
To amend title XI of the Social Security Act to clarify that the Secretary
of Health and Human Services has the authority to treat certain State
payments made in an approved demonstration project as medical assist-
ance under the medicaid program for purposes of a rebate agreement
under section 1927 of the Social Security Act, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JULY 17, 2001
Mr. ALLEN (for himself, Mr. BALDACCI, and Mr. SANDERS) introduced the
following bill; which was referred to the Committee on Energy and Commerce
A BILL
To amend title XI of the Social Security Act to clarify
that the Secretary of Health and Human Services has
the authority to treat certain State payments made in
an approved demonstration project as medical assistance
under the medicaid program for purposes of a rebate
agreement under section 1927 of the Social Security
Act, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘State Prescription
Drug Flexibility Act of 2001’’.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) Access to prescription drugs is important to
all Americans.
(2) Many low-income individuals cannot afford
to purchase the drugs prescribed by their doctors.
Others skip doses or split pills contrary to their doc-
tor’s orders because they cannot afford to refill their
prescriptions.
(3) Low-income individuals who use their lim-
ited financial resources to obtain needed drugs may
do so by foregoing other expenditures important to
their health and well-being.
(4) One of the objectives of the medicaid pro-
gram set forth in section 1901 of the Social Security
Act (42 U.S.C. 1396) is to enable each State, as far
as practicable under the conditions in such State, to
provide medical assistance on behalf of families with
dependent children and of aged, blind, or disabled
individuals, whose income and resources are insuffi-
cient to meet the costs of necessary medical services.
(5) As part of carrying out this objective, every
State has elected the option of providing prescription
drugs as a benefit under the medicaid program,
thereby providing an important means of increasing
the access of low-income individuals to drugs pre-
scribed by their doctors.
(6) Section 1115 of the Social Security Act (42
U.S.C. 1315) provides the Secretary of Health and
Human Services with broad authority to—
(A) approve any experimental, pilot, or
demonstration project which, in the judgment
of the Secretary, is likely to assist in promoting
the objectives of the medicaid program; and
(B) waive compliance with any of the State
plan requirements of the medicaid program
under section 1902 of the Social Security Act
(42 U.S.C. 1396a), including paragraphs (14)
(relating to limitations on cost sharing under
section 1916 of that Act (42 U.S.C. 1396o))
and (54) (relating to applicable requirements of
section 1927 of that Act (42 U.S.C. 1396r–8)),
in order to conduct such a project.
(7) Medicaid demonstration projects help pro-
mote the objectives of the medicaid program, includ-
ing obtaining information about options for increas-
ing access to prescription drugs for low-income indi-
viduals.
(8) Both Maine and Vermont have, with the ap-
proval of the Secretary of Health and Human Re-
sources, implemented demonstration projects to ex-
pand access to prescription drugs under the med-
icaid program. Thousands of individuals with no
other prescription drug insurance benefits are en-
rolled in those programs.
(9) 
Terminating 
medicaid 
demonstration
projects prior to their planned expiration dates may
result in a significant waste of public funds and may
be detrimental to those individuals who have come to
rely on such projects.
SEC. 3. CLARIFICATION OF SECRETARIAL AUTHORITY
WITH RESPECT TO TREATMENT OF CERTAIN
PAYMENTS MADE IN AN APPROVED DEM-
ONSTRATION PROJECT.
(a) IN GENERAL.—Section 1115 of the Social Secu-
rity Act (42 U.S.C. 1315) is amended by adding at the
end the following:
‘‘(g) Notwithstanding any other provision of law, with
respect to any experimental, pilot, or demonstration
project conducted by a State that was approved by the
Secretary under subsection (a) prior to January 31, 2001,
and that waives compliance with, or makes inapplicable,
certain requirements of section 1902 for the purposes of
establishing an outpatient prescription drug program for
residents of the State who are not otherwise eligible for
medical assistance under title XIX—
‘‘(1) any expenditures, payments, or outlays by
the State for covered outpatient drugs under the
project shall be treated as payments made under the
State plan under title XIX for covered outpatient
drugs defined in section 1927(k)(2) for purposes of
a rebate agreement under section 1927, regardless
of whether such expenditures, payments, or outlays
of the State are offset or reimbursed, in whole or in
part, by rebates received under such an agreement;
‘‘(2) any such expenditures, payments, or out-
lays by the State are consistent with the objectives
of the medicaid program set forth in section 1901;
‘‘(3) any such expenditures, payments, or out-
lays by the State shall be considered amounts ex-
pended for medical assistance in the form of pre-
scribed drugs, as defined in section 1905(a)(12),
under the State plan under title XIX; and
‘‘(4) the requirements of section 1916 shall not
apply with respect to any enrollment fees, premiums,
deductions, copayments, cost sharing, or similar
charges imposed upon individuals participating in
such project.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) takes effect on the date of enactment of
this Act and applies to State expenditures, payments, or
outlays under an experimental, pilot, or demonstration
project described in section 1115(g) of the Social Security
Act (as added by subsection (a)) made before, on, or after
such date.
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