Prescription Drug Benefit Equity Act of 1997

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Prescription Drug Benefit Equity Act 
of 1997''.

SEC. 2. EQUITY IN PROVISION OF PRESCRIPTION DRUG COVERAGE.

    (a) Group Health Plans.--
            (1) Public health service act amendments.--(A) Subpart 2 of 
        part A of title XXVII of the Public Health Service Act (as 
        added by section 604(a) of the Newborns' and Mothers' Health 
        Protection Act of 1996 and amended by section 703(a) of the 
        Mental Health Parity Act of 1996) is amended by adding at the 
        end the following new section:

``SEC. 2706. EQUITY IN PROVISION OF PRESCRIPTION DRUG COVERAGE.

    ``(a) Equity in Provision of Prescription Drug Coverage.--
            ``(1) In general.--A group health plan, and a health 
        insurance issuer offering group health insurance coverage, that 
        provides for mail-order prescription drug coverage (as defined 
        in paragraph (3)(A)) shall also provide non-mail-order 
        prescription drug coverage consistent with paragraph (2).
            ``(2) Equitable coverage.--A plan or coverage provides non-
        mail-order prescription drug coverage consistent with this 
        paragraph only if--
                    ``(A) benefits under the non-mail-order 
                prescription coverage are provided for in the case of 
                all drugs and all circumstances under which benefits 
                are provided under the mail-order prescription drug 
                coverage;
                    ``(B) no deductible or similar cost-sharing is 
                imposed with respect to benefits under the non-mail-
                order prescription drug coverage unless such a 
                deductible or similar cost-sharing is imposed with 
                respect to benefits under the mail-order prescription 
                drug coverage; and
                    ``(C) the benefits for the non-mail-order coverage 
                assures payments consistent with either (or both) of 
                the following clauses:
                            ``(i) The dollar amount of payment for 
                        prescription drug coverage is not less than the 
                        dollar amount of benefits provided with respect 
                        to the mail-order coverage for that same 
                        coverage.
                            ``(ii) The cost-sharing (including 
                        deductibles, copayments, or coinsurance) 
                        imposed with respect to non-mail-order coverage 
                        is not greater (as a percentage of charges or 
                        dollar amount, as specified under the coverage) 
                        than the cost-sharing imposed with respect to 
                        the mail-order coverage.
            ``(3) Definitions.--For purposes of this subsection:
                    ``(A) Mail-order prescription drug coverage.--The 
                term `mail-order prescription drug coverage' means 
                provision of benefits for prescription drugs and 
                biologicals that are delivered directly to participants 
                and beneficiaries through the mail or similar means.
                    ``(B) Non-mail-order prescription drug coverage.--
                The term `non-mail-order prescription drug coverage' 
                means the provision of benefits for prescription drugs 
                and biologicals through one or more local pharmacies.
                    ``(C) Local pharmacy.--The term `local pharmacy' 
                means, with respect to a prescription drug or 
                biological and a participant or beneficiary, an 
                establishment that is authorized to dispense such drug 
                or biological and that is located within such distance 
                (not to exceed 5 miles in the case of a participant or 
                beneficiary residing in an urban area or 10 miles in 
                the case of a participant or beneficiary residing in a 
non-urban area) of the residence of such participant or beneficiary, as 
the Secretary of Health and Human Services shall prescribe.
    ``(b) Prohibitions.--A group health plan, and a health insurance 
issuer offering group health insurance coverage in connection with a 
group health plan, may not provide monetary payments or rebates to an 
individual to encourage such individual to accept less than the minimum 
protections available under this section.
    ``(c) Construction.--Nothing in this section shall be construed as 
preventing a plan or issuer from--
            ``(1) restricting the drugs for which benefits are provided 
        under the plan or health insurance coverage, or
            ``(2) imposing a limitation on the amount of benefits 
        provided with respect to such coverage or the cost-sharing that 
        may be imposed with respect to such coverage,
so long as such restrictions and limitations are consistent with 
subsection (a).
    ``(d) Notice.--A group health plan under this part shall comply 
with the notice requirement under section 713(d) of the Employee 
Retirement Income Security Act of 1974 with respect to the requirements 
of this section as if such section applied to such plan.''.
            (B) Section 2723(c) of such Act (42 U.S.C. 300gg-23(c)), as 
        amended by section 604(b)(2) of Public Law 104-204, is amended 
        by striking ``section 2704'' and inserting ``sections 2704 and 
        2706''.
            (2) ERISA amendments.--(A) Subpart B of part 7 of subtitle 
        B of title I of the Employee Retirement Income Security Act of 
        1974 (as added by section 603(a) of the Newborns' and Mothers' 
        Health Protection Act of 1996 and amended by section 702(a) of 
        the Mental Health Parity Act of 1996) is amended by adding at 
        the end the following new section:

``SEC. 713. EQUITY IN PROVISION OF PRESCRIPTION DRUG COVERAGE.

    ``(a) Equity in Provision of Prescription Drug Coverage.--
            ``(1) In general.--A group health plan, and a health 
        insurance issuer offering group health insurance coverage, that 
        provides for mail-order prescription drug coverage (as defined 
        in paragraph (3)(A)) shall also provide non-mail-order 
        prescription drug coverage consistent with paragraph (2).
            ``(2) Equitable coverage.--A plan or coverage provides non-
        mail-order prescription drug coverage consistent with this 
        paragraph only if--
                    ``(A) benefits under the non-mail-order 
                prescription coverage are provided for in the case of 
                all drugs and all circumstances under which benefits 
                are provided under the mail-order prescription drug 
                coverage;
                    ``(B) no deductible or similar cost-sharing is 
                imposed with respect to benefits under the non-mail-
                order prescription drug coverage unless such a 
                deductible or similar cost-sharing is imposed with 
                respect to benefits under the mail-order prescription 
                drug coverage; and
                    ``(C) the benefits for the non-mail-order coverage 
                assures payments consistent with either (or both) of 
                the following clauses:
                            ``(i) The dollar amount of payment for 
                        prescription drug coverage is not less than the 
                        dollar amount of benefits provided with respect 
                        to the mail-order coverage for that same 
                        coverage.
                            ``(ii) The cost-sharing (including 
                        deductibles, copayments, or coinsurance) 
                        imposed with respect to non-mail-order coverage 
                        is not greater (as a percentage of charges or 
                        dollar amount, as specified under the coverage) 
                        than the cost-sharing imposed with respect to 
                        the mail-order coverage.
            ``(3) Definitions.--For purposes of this subsection:
                    ``(A) Mail-order prescription drug coverage.--The 
                term `mail-order prescription drug coverage' means 
                provision of benefits for prescription drugs and 
                biologicals that are delivered directly to participants 
                and beneficiaries through the mail or similar means.
                    ``(B) Non-mail-order prescription drug coverage.--
                The term `non-mail-order prescription drug coverage' 
                means the provision of benefits for prescription drugs 
                and biologicals through one or more local pharmacies.
                    ``(C) Local pharmacy.--The term `local pharmacy' 
                means, with respect to a prescription drug or 
                biological and a participant or beneficiary, an 
                establishment that is authorized to dispense such drug 
                or biological and that is located within such distance 
                (not to exceed 5 miles in the case of a participant or 
                beneficiary residing in an urban area or 10 miles in 
                the case of a participant or beneficiary residing in a 
non-urban area) of the residence of such participant or beneficiary, as 
the Secretary of Health and Human Services shall prescribe.
    ``(b) Prohibitions.--A group health plan, and a health insurance 
issuer offering group health insurance coverage in connection with a 
group health plan, may not provide monetary payments or rebates to an 
individual to encourage such individual to accept less than the minimum 
protections available under this section.
    ``(c) Construction.--Nothing in this section shall be construed as 
preventing a plan or issuer from--
            ``(1) restricting the drugs for which benefits are provided 
        under the plan or health insurance coverage, or
            ``(2) imposing a limitation on the amount of benefits 
        provided with respect to such coverage or the cost-sharing that 
        may be imposed with respect to such coverage,
so long as such restrictions and limitations are consistent with 
subsection (a).
    ``(d) Notice Under Group Health Plan.--The imposition of the 
requirements of this section shall be treated as a material 
modification in the terms of the plan described in section 102(a)(1), 
for purposes of assuring notice of such requirements under the plan; 
except that the summary description required to be provided under the 
last sentence of section 104(b)(1) with respect to such modification 
shall be provided by not later than 60 days after the first day of the 
first plan year in which such requirements apply.''.
            (B) Section 731(c) of such Act (29 U.S.C. 1191(c)), as 
        amended by section 603(b)(1) of Public Law 104-204, is amended 
        by striking ``section 711'' and inserting ``sections 711 and 
        713''.
            (C) Section 732(a) of such Act (29 U.S.C. 1191a(a)), as 
        amended by section 603(b)(2) of Public Law 104-204, is amended 
        by striking ``section 711'' and inserting ``sections 711 and 
        713''.
            (D) The table of contents in section 1 of such Act is 
        amended by inserting after the item relating to section 712 the 
        following new item:

``Sec. 713. Equity in provision of prescription drug coverage.''.
    (b) Individual Health Insurance.--(1) Part B of title XXVII of the 
Public Health Service Act (as added by section 605(a) of the Newborn's 
and Mother's Health Protection Act of 1996) is amended by inserting 
after section 2751 the following new section:

``SEC. 2752. EQUITY IN PROVISION OF PRESCRIPTION DRUG COVERAGE.

    ``(a) In General.--The provisions of section 2706 (other than 
subsection (d)) shall apply to health insurance coverage offered by a 
health insurance issuer in the individual market in the same manner as 
it applies to health insurance coverage offered by a health insurance 
issuer in connection with a group health plan in the small or large 
group market.
    ``(b) Notice.--A health insurance issuer under this part shall 
comply with the notice requirement under section 713(d) of the Employee 
Retirement Income Security Act of 1974 with respect to the requirements 
referred to in subsection (a) as if such section applied to such issuer 
and such issuer were a group health plan.''.
    (2) Section 2762(b)(2) of such Act (42 U.S.C. 300gg-62(b)(2)), as 
added by section 605(b)(3)(B) of Public Law 104-204, is amended by 
striking ``section 2751'' and inserting ``sections 2751 and 2752''.
    (c) Application to Medicare Managed Care Plans.--Subparagraph (B) 
of section 1876(c)(4) of the Social Security Act (42 U.S.C. 
1395mm(c)(4)) is amended to read as follows:
            ``(B) meets the requirements of section 2752 of the Public 
        Health Service Act with respect to individuals enrolled with 
        the organization under this section.''.
    (d) Application to Medicaid Managed Care Plans.--Title XIX of such 
Act (42 U.S.C. 1396 et seq.) is amended by inserting after section 1908 
the following new section:

          ``equity in provision of prescription drug coverage

    ``Sec. 1909. (a) In General.--A State plan may not be approved 
under this title, and Federal financial participation not available 
under section 1903(a) with respect to such a plan, unless the plan 
requires each health insurance issuer or other entity with a contract 
with such plan to provide coverage or benefits to individuals eligible 
for medical assistance under the plan to comply with the provisions of 
section 2752 of the Public Health Service Act with respect to such 
coverage or benefits.
    ``(b) Waivers Prohibited.--The requirement of subsection (a) may 
not be waived under section 1115 or section 1915(b) of the Social 
Security Act.''.
    (e) Medigap and Medicare Select Policies.--Section 1882 of such Act 
(42 U.S.C. 1395ss) is amended--
            (1) in subsection (s)(2), by adding at the end the 
        following new subparagraph:
    ``(D) An issuer of a medicare supplemental policy (as defined in 
section 1882(g)) shall comply with the requirements of section 2752 of 
the Public Health Service Act with respect to benefits offered under 
such policy.''; and
            (2) in subsection (t)(1)--
                    (A) in subparagraph (B), by inserting ``subject to 
                subparagraph (G),'' after ``(B)'',
                    (B) by striking ``and'' at the end of subparagraph 
                (E),
                    (C) by striking the period at the end of 
                subparagraph (F) and inserting ``; and'', and
                    (D) by adding at the end the following new 
                subparagraph:
            ``(G) the issuer of the policy complies with the 
        requirements of section 2752 of the Public Health Service Act 
        with respect to enrollees under this subsection .''.
    (f) FEHBP.--Section 8902 of title 5, United States Code, is amended 
by adding at the end the following new subsection:
    ``(o) A contract may not be made or a plan approved which excludes 
or does not comply with the requirements of section 2752 of the Public 
Health Service Act.''.
    (g) Effective Dates.--(1)(A) Subject to subparagraph (B), the 
amendments made by subsection (a) shall apply with respect to group 
health plans for plan years beginning on or after January 1, 1998.
    (B) In the case of a group health plan maintained pursuant to 1 or 
more collective bargaining agreements between employee representatives 
and 1 or more employers ratified before the date of enactment of this 
Act, the amendments made by subsection (a) shall not apply to plan 
years beginning before the later of--
            (i) the date on which the last collective bargaining 
        agreements relating to the plan terminates (determined without 
        regard to any extension thereof agreed to after the date of 
        enactment of this Act), or
            (ii) January 1, 1998.
For purposes of clause (i), any plan amendment made pursuant to a 
collective bargaining agreement relating to the plan which amends the 
plan solely to conform to any requirement added by subsection (a) shall 
not be treated as a termination of such collective bargaining 
agreement.
    (2) The amendments made by subsection (b) shall apply with respect 
to health insurance coverage offered, sold, issued, renewed, in effect, 
or operated in the individual market on or after January 1, 1998.
    (3) The amendment made by subsection (c) shall apply to contracts 
for contract periods beginning on or after January 1, 1998.
    (4) The amendment made by subsection (d) shall apply to Federal 
financial participation for State plan expenditures made on or after 
January 1, 1998.
    (5) The amendments made by subsection (e) shall apply with respect 
to medicare supplemental policies and medicare select policies offered, 
sold, issued, renewed, in effect, or operated on and after January 1, 
1998.
    (6) The amendment made by subsection (f) shall apply with respect 
to contracts for periods beginning on and after January 1, 1998.
    (h) Coordinated Regulations.--Section 104(1) of the Health 
Insurance Portability and Accountability Act of 1996 is amended by 
striking ``this subtitle (and the amendments made by this subtitle and 
section 401)'' and inserting ``the provisions of part 7 of subtitle B 
of title I of the Employee Retirement Income Security Act of 1974, and 
the provisions of parts A and C of title XXVII of the Public Health 
Service Act''.

Summary: Prescription Drug Benefit Equity Act of 1997 - Amends the Public Health Service Act and the Employee Retirement Income Security Act of 1974 to prohibit a group health plan (and a health insurance issuer offering group coverage) from providing mail-order prescription drug coverage without also providing non-mail-order prescription drug coverage meeting benefit and cost-sharing requirements.  Prohibits monetary payments or rebates to encourage an individual to accept less than the minimum protections available under this Act. 
Amends the Public Health Service Act to apply the requirements of this Act to issuers in the individual market. 
Amends titles XVIII (Medicare) and XIX (Medicaid) of the Social Security Act to require health maintenance organizations, competitive medical plans, State Medicaid plans, issuers of Medicare supplemental policies, and Medicare select policies to meet the requirements of this Act. 
Amends Federal law relating to health benefits for Federal employees to require compliance with this Act.