I
106TH CONGRESS
2D SESSION
H. R. 4607
To amend title XVIII of the Social Security Act to provide for a prescription
drug benefit for Medicare beneficiaries.
IN THE HOUSE OF REPRESENTATIVES
JUNE 8, 2000
Ms. ESHOO (for herself, Mr. ENGEL, Mr. FROST, Mr. GORDON, Mr.
DEUTSCH, Mrs. CAPPS, Mr. WYNN, Ms. DEGETTE, Mr. SAWYER, Ms.
MCCARTHY of Missouri, Ms. WOOLSEY, Mr. RUSH, and Mr. ACKERMAN)
introduced the following bill; which was referred to the Committee on
Ways and Means, and in addition to the Committee on 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 com-
mittee concerned
A BILL
To amend title XVIII of the Social Security Act to provide
for a prescription drug benefit for 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; TABLE OF CONTENTS; REF-
ERENCES TO SOCIAL SECURITY ACT.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Medicare Prescription Drug Act of 2000’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents; references to Social Security Act.
Sec. 2. Providing for medicare prescription drug benefit.
‘‘PART D—PRESCRIPTION DRUG BENEFIT FOR THE AGED AND DISABLED
‘‘Sec. 1860. Establishment of prescription drug benefit program for the
aged and disabled.
‘‘Sec. 1860A. Scope of benefits.
‘‘Sec. 1860B. Payment of benefits.
‘‘Sec. 1860C. Eligibility and enrollment.
‘‘Sec. 1860D. Premiums.
‘‘Sec. 1860E. Special eligibility, enrollment, and copayment rules for low-
income individuals.
‘‘Sec. 1860F. Prescription Drug Insurance Account.
‘‘Sec. 1860G. Administration of benefits.
‘‘Sec. 1860H. Employer incentive program for employment-based retiree
drug coverage.
‘‘Sec. 1860I. Appropriations to cover government contributions.
‘‘Sec. 1860J. Definition.
Sec. 3. Medicaid buy-in of medicare prescription drug coverage for certain low-
income individuals.
Sec. 4. MedPAC studies on benefit managers.
(c) REFERENCES TO SOCIAL SECURITY ACT.—Ex-
cept as otherwise expressly provided, whenever in this Act
an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section
or other provision of the Social Security Act.
SEC. 2. PROVIDING FOR MEDICARE PRESCRIPTION DRUG
BENEFIT.
(a) IN GENERAL.—Title XVIII is amended—
(1) by redesignating part D as part E; and
(2) by inserting after part C the following new
part:
‘‘PART D—PRESCRIPTION DRUG BENEFIT FOR THE
AGED AND DISABLED
‘‘SEC. 1860. ESTABLISHMENT OF PRESCRIPTION DRUG BEN-
EFIT PROGRAM FOR THE AGED AND DIS-
ABLED.
‘‘There is hereby established a voluntary program to
provide prescription drug benefits in accordance with the
provisions of this part for individuals who are aged or dis-
abled or have end stage renal disease and who elect to
enroll under such program, to be financed from premium
payments by enrollees together with contributions from
funds appropriated by the Federal Government and to be
administered by the Director of the Office of Personnel
Management (in this part referred to as the ‘Director’),
except that functions relating to eligibility to enroll, enroll-
ment, and collection of beneficiary premiums under this
part shall be administered by the Secretary in coordination
with the Director.
‘‘SEC. 1860A. SCOPE OF BENEFITS.
‘‘(a) IN GENERAL.—The benefits provided to an indi-
vidual enrolled in the program under this part shall consist
of—
‘‘(1) payments made, in accordance with the
provisions of this part, for covered prescription
drugs (as specified in subsection (b)) dispensed by
any pharmacy participating in the program under
this part (and, in circumstances designated by the
benefit manager, by a nonparticipating pharmacy),
including any specifically named drug prescribed for
the individual by a qualified health care professional
regardless of whether the drug is included in a for-
mulary established by the benefit manager if such
drug is certified as medically necessary by such
health care professional, up to the benefit limits
specified in section 1860B; and
‘‘(2) charging by participating pharmacies of—
‘‘(A) the price for all covered prescription
drugs, without regard to such benefit limit; and
‘‘(B) the price (if any) established with re-
spect to any drugs or classes of drugs described
in subparagraphs (A) through (D) or (F) of
section 1927(d)(2) that are available to individ-
uals receiving benefits under this title.
‘‘(b) COVERED PRESCRIPTION DRUGS.—
‘‘(1) IN GENERAL.—Covered prescription drugs,
for purposes of this part, include all prescription
drugs (as defined in section 1860J(1)), including
smoking cessation agents, except as otherwise pro-
vided in this subsection.
‘‘(2) EXCLUSIONS FROM COVERAGE.—Covered
prescription drugs shall not include drugs or classes
of drugs described in subparagraphs (A) through
(D) and (F) through (H) of section 1927(d)(2) (ex-
cept to the extent otherwise specifically provided by
the Director with respect to a drug in any of such
classes).
‘‘(3) EXCLUSION OF PRESCRIPTION DRUGS TO
THE EXTENT COVERED UNDER PART A OR B.—A
drug prescribed for an individual that would other-
wise be a covered prescription drug under this part
shall not be so considered to the extent that pay-
ment for such drug is available under part A or B
(but shall be so considered to the extent that such
payment is not available because benefits under part
A or B have been exhausted).
‘‘(c) EFFECTIVE DATE OF BENEFITS.—In no case
shall benefits be available under this part for prescription
drugs for which costs are incurred before January 1,
2002.
‘‘SEC. 1860B. PAYMENT OF BENEFITS.
‘‘(a) PAYMENTS.—
‘‘(1) IN GENERAL.—There shall be paid from
the Prescription Drug Insurance Account within the
Supplementary Medical Insurance Trust Fund
(hereafter in this part referred to as the ‘Prescrip-
tion Drug Insurance Account’ or ‘the Insurance Ac-
count’), in the case of each individual who is enrolled
in the insurance program under this part and who
purchases covered prescription drugs in a calendar
year, an amount equal to the Federal payment per-
centage (specified under paragraph (2)) of the price
for each such covered prescription drug.
‘‘(2) FEDERAL
PAYMENT
PERCENTAGE.—For
purposes of paragraph (1), the ‘Federal payment
percentage’ with respect to purchases during a
year—
‘‘(A) up to the initial benefit limit specified
in subsection (b), is equal to 50 percent or such
higher percentage as is proposed by a benefit
manager pursuant to section 1860G(c)(8), if
the Director finds that such percentage will not
increase aggregate costs to the Insurance Ac-
count; or
‘‘(B) above the stop loss amount specified
in paragraph (3) (or, if greater for a year after
2008, the initial benefit limit specified under
subsection (b)(2)), is equal to 100 percent.
If the Federal payment percentage is increased
under subparagraph (A), the beneficiary payment
percentage is reduced accordingly.
‘‘(3) 
STOP-LOSS
AMOUNT.—The 
stop-loss
amount specified in this paragraph—
‘‘(A) for 2002 is $5,000; or
‘‘(B) for a subsequent year is the stop-loss
amount specified in this paragraph for the pre-
ceding year increased by the percentage in-
crease (if any) in the consumer price index for
all urban consumers (U.S. urban average) for
the 12-month period ending with June of the
preceding year.
If the stop-loss amount computed under subpara-
graph (B) for a year is not a multiple of $25, it
shall be rounded to the nearest multiple of $25.
‘‘(b) INITIAL BENEFIT LIMIT.—For purposes of sub-
section (a)—
‘‘(1) FOR 2002 THROUGH 2008.—The initial ben-
efit limit specified under this subsection is—
‘‘(A) $2,000 for each of calendar years
2002 and 2003;
‘‘(B) $3,000 for each of calendar years
2004 and 2005;
‘‘(C) $4,000 for each of calendar years
2006 and 2007; and
‘‘(D) $5,000 for calendar year 2008.
‘‘(2) FOR 2009 AND SUBSEQUENT YEARS.—The
initial benefit limit specified under this subsection
for 2009 and each subsequent year is equal to the
amount specified under this subsection for the pre-
ceding year increased by the percentage increase (if
any) in the consumer price index for all urban con-
sumers (U.S. urban average) for the 12-month pe-
riod ending with June of the preceding year.
‘‘(c) ELECTION OF BENEFIT MANAGER.—
‘‘(1) IN GENERAL.—The Director shall establish
a process (based upon the process under which a
Medicare+Choice eligible individual may elect cov-
erage under a Medicare+Choice plan under part C)
under which an individual enrolled under this part
elects a specific benefit manager (under section
1860G) that will be responsible for the provision of
benefits under this part on behalf of the individual.
‘‘(2) CHANGES
IN
ELECTION.—Such process
shall permit a change in election at least annually
and at such other times as the Director may specify,
based upon the type of circumstances for which a
change would be permitted under part C.
‘‘(3) NONDISCRIMINATION.—Such process shall
not permit a benefit manager to refuse the election
of any individual, except as the Director may permit
in a nondiscriminatory manner based upon legiti-
mate capacity limitations.
‘‘(4) INFORMATION.—The Director shall pro-
vide for dissemination of such information as will
enable individuals enrolled under this part to make
informed decisions about the election of benefit man-
agers.
‘‘SEC. 1860C. ELIGIBILITY AND ENROLLMENT.
‘‘(a) ELIGIBILITY.—Every individual who, in or after
2002, is entitled to hospital insurance benefits under part
A or enrolled in the medical insurance program under part
B is eligible to enroll, in accordance with the provisions
of this section, in the program under this part, during an
enrollment period prescribed in or under this section, in
such manner and form as may be prescribed by the Sec-
retary in regulations.
‘‘(b) ENROLLMENT.—
‘‘(1) IN GENERAL.—Each individual who satis-
fies subsection (a) shall be enrolled (or eligible to en-
roll) in the program under this part in accordance
with the provisions of section 1837, as if that section
applied to this part, except as otherwise explicitly
provided in this part.
‘‘(2) ENROLLMENT
PERIOD.—Except as pro-
vided in section 1860E or 1860H, or as otherwise
explicitly provided, no individual shall be entitled to
enroll in the program under this part at any time
after the initial enrollment period.
‘‘(3) 
SPECIAL
ENROLLMENT
PERIOD
FOR
2002.—
‘‘(A) IN
GENERAL.—An individual who
first satisfies subsection (a) in 2002 may, at
any time on or before December 31, 2002—
‘‘(i) enroll in the program under this
part; and
‘‘(ii) enroll or re-enroll in such pro-
gram after having previously declined or
terminated enrollment in such program.
‘‘(B) EFFECTIVE DATE OF COVERAGE.—
An individual who enrolls under the program
under this part pursuant to subparagraph (A)
shall be entitled to benefits under this part be-
ginning on the first day of the month following
the month in which such enrollment occurs.
‘‘(e) PERIOD OF COVERAGE.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this part, an individual’s coverage under the
program under this part shall be effective for the pe-
riod provided in section 1838, as if that section ap-
plied to the program under this part.
‘‘(2) PART D COVERAGE TERMINATED BY TER-
MINATION OF COVERAGE UNDER PARTS A AND B.—
In addition to the causes of termination specified in
section 1838, an individual’s coverage under this
part shall be terminated when the individual retains
coverage under neither the program under part A
nor the program under part B, effective on the effec-
tive date of termination of coverage under part A or
(if later) under part B.
‘‘SEC. 1860D. PREMIUMS.
‘‘(a) ANNUAL ESTABLISHMENT OF MONTHLY PRE-
MIUM RATES.—
‘‘(1) IN GENERAL.—The Director in coordina-
tion with the Secretary shall, during September of
2001 and of each succeeding year, determine and
promulgate a monthly premium rate for the suc-
ceeding year in accordance with the provisions of
this subsection.
‘‘(2) ACTUARIAL DETERMINATIONS.—
‘‘(A) DETERMINATION
OF
ANNUAL
BEN-
EFIT
COSTS.—The Director in coordination
with the Secretary shall estimate annually for
the succeeding year the amount equal to the
total of the benefits that will be payable from
the Insurance Account for prescription drugs
dispensed in such calendar year with respect to
enrollees in the program under this part. In cal-
culating such amount, the Director in coordina-
tion with the Secretary shall include an appro-
priate amount for a contingency margin.
‘‘(B) DETERMINATION OF MONTHLY PRE-
MIUM RATES.—
‘‘(i) IN
GENERAL.—The Director in
coordination with the Secretary shall deter-
mine the monthly premium rate with re-
spect to such enrollees for such succeeding
year, which shall be one-twelfth of the
share specified in clause (ii) of the amount
determined under subparagraph (A), di-
vided by the total number of such enroll-
ees, and rounded (if such rate is not a
multiple of 10 cents) to the nearest mul-
tiple of 10 cents.
‘‘(ii) ENROLLEE AND EMPLOYER PER-
CENTAGE SHARES.—The share specified in
this clause, for purposes of clause (i), shall
be—
‘‘(I) one-half, in the case of pre-
miums paid by an individual enrolled
in the program under this part; and
‘‘(II) two-thirds, in the case of
premiums paid for such an individual
by a former employer (as defined in
section 1860H(f)(2)).
‘‘(3) PUBLICATION OF ASSUMPTIONS.—The Di-
rector in coordination with the Secretary shall pub-
lish, together with the promulgation of the monthly
premium rates for the succeeding year, a statement
setting forth the actuarial assumptions and bases
employed in arriving at the amounts and rates deter-
mined under paragraphs (1) and (2).
‘‘(b) PAYMENT OF PREMIUMS.—
‘‘(1) PAYMENTS BY DEDUCTION FROM SOCIAL
SECURITY, RAILROAD
RETIREMENT
BENEFITS, OR
BENEFITS ADMINISTERED BY OPM.—
‘‘(A) DEDUCTION
FROM
BENEFITS.—In
the case of an individual who is entitled to or
receiving benefits as described in subsection (a),