‘‘(iv) INDEXING LIMITATION ON COST-
SHARING.—For a year after 2000, the dol-
lar amount specified in the last sentence of
clause (i) shall be increased by the same
percentage as the percentage increase (if
any) in per capita expenditures for pre-
scription drugs (as estimated by the Sec-
retary based on the best data available
from the Bureau of Labor Statistics) be-
tween July 1999 and July of the previous
year, except that any such increase which
is not a multiple of $10 shall be rounded
to the nearest multiple of $10.
‘‘(3) NO
BALANCE
BILLING.—The coverage
does not permit the imposition of any cost-sharing
or balance billing except as permitted under para-
graph (2).
‘‘(d) ADDITIONAL
CONDITIONS.—The conditions
specified in this subsection with respect to outpatient pre-
scription drug coverage are as follows:
‘‘(1) NO
DURATIONAL
LIMITATION
ON
BEN-
EFIT.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the coverage does not impose any
maximum annual, lifetime, or other durational
limit on benefits that may be paid with respect
to covered prescription drugs.
‘‘(B) CONSTRUCTION.—Subparagraph (A)
shall not be construed from preventing the im-
position of limits so long as such limits are no
lower than the limits imposed under the State’s
medicaid plan.
‘‘(2) RESTRICTION ON APPLICATION OF PRE-
EXISTING
CONDITION
EXCLUSIONS.—The coverage
shall not impose any preexisting condition exclusion
(as defined in section 2701(b)(1)(A)) for covered
benefits.
‘‘(e) NO APPLICATION OF MEDICAID OR OTHER FED-
ERAL PRESCRIPTION DRUG REBATE SYSTEM.—Federal
rebate systems (including that under section 1927 of the
Social Security Act) applicable to the purchase of prescrip-
tion drugs shall not apply to the prescription drugs fur-
nished under this part.
‘‘SEC. 2804. PAYMENTS TO STATES.
‘‘(a) IN GENERAL.—Subject to the succeeding provi-
sions of this section, the Secretary shall pay to each State
which has submitted a plan pursuant to section 2805(a)
an amount for each quarter (beginning on or after October
1, 1999) equal to the sum of—
‘‘(1) the enhanced FMAP (as defined in section
2105(b) of the Social Security Act) of expenditures
in the quarter for prescription drug assistance under
the program for low-income medicare beneficiaries
whose family income is below 150 percent of the
poverty line;
‘‘(2) the Federal medical assistance percentage
(as defined in section 1905(b) of the Social Security
Act) of expenditures in the quarter for prescription
drug assistance under the program for low-income
medicare beneficiaries not described in paragraph
(1); plus
‘‘(3) only to the extent permitted consistent
with subsection (b)(1), the enhanced FMAP (as de-
fined in section 2105(b) of the Social Security Act)
of expenditures—
‘‘(A) for outreach activities described in
section 2805(a)(2) under the program; and
‘‘(B) for other reasonable costs incurred by
the State to administer the program.
‘‘(b) LIMITATION ON CERTAIN PAYMENTS FOR CER-
TAIN EXPENDITURES.—
‘‘(1) LIMITATION ON ADMINISTRATIVE EXPEND-
ITURES.—Payment shall not be made under sub-
section (a) for expenditures for items described in
subsection (a)(3) for a fiscal year to the extent the
payment for expenditures under subsection (a)(3)
exceeds 10 percent of the total of all payments made
to the State under subsection (a) for such fiscal year
(or 20 percent of such total for the first such fiscal
year).
‘‘(2) USE OF NON-FEDERAL FUNDS FOR STATE
MATCHING
REQUIREMENT.—Amounts provided by
the Federal Government, or services assisted or sub-
sidized to any significant extent by the Federal Gov-
ernment, may not be included in determining the
amount of non-Federal contributions required under
subsection (a).
‘‘(3) OFFSET OF RECEIPTS ATTRIBUTABLE TO
COST-SHARING.—For purposes of subsection (a), the
amount of the expenditures under the program shall
be reduced by the amount of any cost-sharing re-
ceived by the State.
‘‘(4) PREVENTION OF DUPLICATIVE PAYMENTS
AND LIMITATION ON PAYMENT FOR ABORTIONS.—
The provisions of paragraphs (6) and (7) of section
2105(c) of the Social Security Act apply to pay-
ments under this section for low-income medicare
beneficiaries and prescription drug assistance in the
same manner as they apply to payments under sec-
tion 2105 of such Act for targeted low-income chil-
dren and child health assistance, and any reference
in such paragraph (6) to a private insurer is deemed
a reference to the issuer of a medicare supplemental
policy (as defined in section 1882(g) of the Social
Security Act) or an organization offering a
Medicare+Choice plan.
‘‘(5) APPLICATION
OF
RULES
RELATING
TO
PROVIDER
TAXES
AND
DONATIONS.—Section
1902(w) of the Social Security Act shall apply to
States under this part in the same manner as it ap-
plies to a State under title XIX of such Act.
‘‘(c) 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 the State and such other in-
vestigation as the Secretary may find necessary, and may
reduce or increase the payments as necessary to adjust
for any overpayment or underpayment for prior quarters.
‘‘SEC. 2805. STATE PLAN, DATA COLLECTION, RECORDS, AU-
DITS, AND REPORTS.
‘‘(a) SUBMISSION OF PLAN.—
‘‘(1) IN GENERAL.—A State is eligible for pay-
ment under this part if—
‘‘(A) the State has submitted to the Sec-
retary a plan that includes—
‘‘(i) 
a 
written 
document 
that
outlines—
‘‘(I) how the State intends to use
the funds provided under this part to
provide prescription drug assistance
consistent with the provisions of this
part; and
‘‘(II) the procedures to be used
by the State to provide for outreach to
low-income medicare beneficiaries; and
‘‘(ii) a certification by the chief execu-
tive officer of the States that the State
drug assistance program operated under
such plan is operated consistent with the
specific requirements of this part; and
‘‘(B) the State is not otherwise ineligible to
receive such payment under a specific provision
of this part.
‘‘(2) LIMITATION
ON
SECRETARIAL
AUTHOR-
ITY.—The Secretary may not impose conditions, in
addition to those specified in this part, for State
plans or State drugs assistance programs under this
part.
‘‘(b) DATA COLLECTION, RECORDS, AUDITS, AND
REPORTS.—As a condition for the receipt of funds under
this part, a State, in its plan under subsection (a), shall
provide assurances satisfactory to the Secretary that—
‘‘(1) the State will collect the data, maintain
the records, and furnish the reports to the Sec-
retary, at the times and in the standardized format
the Secretary may require, in order to enable the
Secretary to monitor State program administration
and compliance and to evaluate and compare the ef-
fectiveness of State programs under this part;
‘‘(2) the State will afford the Secretary access
to any records or information relating to the State
program under this part for the purposes of review
or audit; and
‘‘(3) the State will—
‘‘(A) assess the operation of the State pro-
gram in each fiscal year, including the progress
made in covering low-income medicare bene-
ficiaries; and
‘‘(B) report to the Secretary, by January
1 following the end of the fiscal year, on the re-
sult of the assessment.
‘‘SEC. 2806. DEFINITION OF PRESCRIPTION DRUG ASSIST-
ANCE AND OTHER TERMS.
‘‘For purposes of this part:
‘‘(1) PRESCRIPTION DRUG ASSISTANCE.—
‘‘(A) IN GENERAL.—The term ‘prescription
drug assistance’ means, subject to subpara-
graph (B), payment for part or all of the cost
of coverage of self-administered outpatient pre-
scription drugs and biologicals (including insu-
lin and insulin supplies) for low-income medi-
care beneficiaries.
‘‘(B) EXCLUSIONS.—Such term does not
include payment or coverage with respect to—
‘‘(i) items covered under title XVIII of
the Social Security Act;
‘‘(ii) items for which coverage is not
available under a State medicaid plan; or
‘‘(iii) drugs and biologicals furnished
for the purpose of causing, or assisting in
causing, the death, suicide, euthanasia, or
mercy killing of a person.
‘‘(2) STATE DRUG ASSISTANCE PROGRAM; PRO-
GRAM.—The terms ‘State drug assistance program’
and ‘program’ mean a State drug assistance pro-
gram receiving funds under this part.
‘‘(3) GROUP HEALTH PLAN.—The term ‘group
health plan’ has the meaning given such term in sec-
tion 2791(a)(1).
‘‘(4) MEDICAID
PLAN.—The term ‘medicaid
plan’ means a plan of a State under title XIX of the
Social Security Act and includes such a plan oper-
ating under a waiver under such Act.
‘‘(5) MEDICARE+CHOICE
PLAN.—The term
‘Medicare+Choice plan’ means such a plan offered
under part C of title XVIII of the Social Security
Act.
‘‘(6) FAMILY INCOME.—Family income shall be
determined in the same manner as it is determined
for purposes of section 1905(p) of the Social Secu-
rity Act, except that such determinations shall be
made only on an annual basis.
‘‘PART B—MEDICARE OUTPATIENT PRESCRIPTION
DRUG STOP-LOSS PROTECTION
‘‘SEC. 2811. MEDICARE OUTPATIENT PRESCRIPTION DRUG
STOP-LOSS PROTECTION.
‘‘(a) IN GENERAL.—This section establishes a pro-
gram under which, in the case of medicare beneficiaries
who are covered under qualified medicare prescription
drug coverage (as defined in subsection (b)(1)), the pro-
gram provides for payment through carriers or other
qualified entities to the organization, issuer, or sponsor
offering the coverage of the cost of providing benefits (pro-
vided on or after January 1, 2000) under the coverage
in a year after the beneficiary has incurred out-of-pocket
costs for outpatient prescription drugs covered under such
coverage equal to $1,500. For purposes of this section,
the term ‘medicare beneficiary’ means an individual enti-
tled to benefits under part A, B, or C of title XVIII of
the Social Security Act.
‘‘(b) QUALIFIED MEDICARE PRESCRIPTION DRUG
COVERAGE DEFINED.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualified medicare prescription drug
coverage’ means outpatient prescription drug cov-
erage under a plan or policy described in paragraph
(2) with respect to a medicare beneficiary if the fol-
lowing requirements are met:
‘‘(A) The amount of any deductible im-
posed with respect to such coverage for such a
beneficiary does not exceed $500 in any year.
‘‘(B) The cost-sharing (in the form of co-
payment or coinsurance or both) imposed (after
the imposition of any such deductible) with re-
spect to such coverage for such a beneficiary
does not exceed 50 percent of the payment
amount to purchase the covered outpatient pre-
scription drug involved.
‘‘(C) There is a annual limit of not more
than $1,500 on the out-of-pocket expenses for
covered outpatient prescription drugs under the
coverage of such a beneficiary.
‘‘(D) The organization, issuer, or sponsor
offering the coverage has entered into an agree-
ment with the carrier or other qualified entity
operating the program under subsection (c)
under which it agrees to provide for the ex-
change of such information, in such electronic
or other form as the agreement specifies, as the
carrier or entity may require in order to verify
the eligibility for payment described in sub-
section (a).
‘‘(2) PLANS AND POLICIES COVERED.—A plan
or policy described in this paragraph is any of the
following:
‘‘(A) 
MEDICARE+CHOICE
PLAN.—A
Medicare+Choice plan under part C of title
XVIII of the Social Security Act.
‘‘(B) MEDIGAP POLICY.—A medicare sup-
plemental policy, as defined in section 1882(g)
of 
the 
Social 
Security 
Act 
(42 
U.S.C.
1395ss(g)).
‘‘(C) GROUP
HEALTH
PLAN.—A group
health plan, as defined in section 607(1) of Em-
ployee Retirement Income Security Act of 1974
(29 U.S.C. 1167(1)), but only with respect to
a participant or beneficiary who is a medicare
beneficiary.
‘‘(c) OPERATION OF PROGRAM THROUGH PRIVATE
ENTITIES.—
‘‘(1) IN GENERAL.—The Secretary shall enter
into contracts with one or more carriers or other
qualified entities to operate the stop-loss program
provided under this section.
‘‘(2) LIMITATION ON AUTHORITY.—Nothing in
this section shall be construed as authorizing the
Secretary, a carrier, or other qualified entity acting
under paragraph (1) to deny or limit payment to an
entity that is offering qualified medicare prescription
drug coverage and has made payments for the cost
of providing benefits under such coverage based on
the drugs so covered or the amount so paid. The
previous sentence shall not be construed as pre-
venting the Secretary, a carrier, or entity from com-
puting costs taking into account discounts or other