Home > 106th Congressional Bills > H.R. 4680 (rh) To amend title XVIII of the Social Security Act to provide for a voluntary program for prescription drug coverage under the Medicare Program, to modernize the Medicare Program, and for other purposes. [Reported in House] ...H.R. 4680 (rh) To amend title XVIII of the Social Security Act to provide for a voluntary program for prescription drug coverage under the Medicare Program, to modernize the Medicare Program, and for other purposes. [Reported in House] ...
had prescription drug coverage described in
subparagraph (C).
``(E) Construction.--Nothing in this section shall
be construed as preventing the disenrollment of an
individual from a prescription drug plan or a
Medicare+Choice plan based on the termination of an
election described in section 1851(g)(3), including for
non-payment of premiums or for other reasons specified
in subsection (d)(3), which takes into account a grace
period described in section 1851(g)(3)(B)(i).
``(3) Nondiscrimination.--A PDP sponsor offering a
prescription drug plan shall not establish a service area in a
manner that would discriminate based on health or economic
status of potential enrollees.
``(d) Effective Date of Elections.--
``(1) In general.--Except as provided in this section, the
Medicare Benefits Administrator shall provide that elections
under subsection (b) take effect at the same time as the
Secretary provides that similar elections under section 1851(e)
take effect under section 1851(f).
``(2) No election effective before 2003.--In no case shall
any election take effect before January 1, 2003.
``(3) Termination.--The Medicare Benefits Administrator
shall provide for the termination of an election in the case
of--
``(A) termination of coverage under part B (other
than the case of an individual described in subsection
(b)(2)(D) (relating to part A only individuals)); and
``(B) termination of elections described in section
1851(g)(3) (including failure to pay required
premiums).
``SEC. 1860B. REQUIREMENTS FOR QUALIFIED PRESCRIPTION DRUG COVERAGE.
``(a) Requirements.--
``(1) In general.--For purposes of this part and part C,
the term `qualified prescription drug coverage' means either of
the following:
``(A) Standard coverage with access to negotiated
prices.--Standard coverage (as defined in subsection
(b)) and access to negotiated prices under subsection
(d).
``(B) Actuarially equivalent coverage with access
to negotiated prices.--Coverage of covered outpatient
drugs which meets the alternative coverage requirements
of subsection (c) and access to negotiated prices under
subsection (d).
``(2) Permitting additional outpatient prescription drug
coverage.--
``(A) In general.--Subject to subparagraph (B),
nothing in this part shall be construed as preventing
qualified prescription drug coverage from including
coverage of covered outpatient drugs that exceeds the
coverage required under paragraph (1), but any such
additional coverage shall be limited to coverage of
covered outpatient drugs.
``(B) Disapproval authority.--The Medicare Benefits
Administrator shall review the offering of qualified
prescription drug coverage under this part or part C.
If the Administrator finds that, in the case of a
qualified prescription drug coverage under a
prescription drug plan or a Medicare+Choice plan, that
the organization or sponsor offering the coverage is
purposefully engaged in activities intended to result
in favorable selection of those eligible medicare
beneficiaries obtaining coverage through the plan, the
Administrator may terminate the contract with the
sponsor or organization under this part or part C.
``(3) Application of secondary payor provisions.--The
provisions of section 1852(a)(4) shall apply under this part in
the same manner as they apply under part C.
``(b) Standard Coverage.--For purposes of this part, the `standard
coverage' is coverage of covered outpatient drugs (as defined in
subsection (f)) that meets the following requirements:
``(1) Deductible.--The coverage has an annual deductible--
``(A) for 2003, that is equal to $250; or
``(B) for a subsequent year, that is equal to the
amount specified under this paragraph for the previous
year increased by the percentage specified in paragraph
(5) for the year involved.
Any amount determined under subparagraph (B) that is not a
multiple of $5 shall be rounded to the nearest multiple of $5.
``(2) Limits on cost-sharing.--The coverage has cost-
sharing (for costs above the annual deductible specified in
paragraph (1) and up to the initial coverage limit under
paragraph (3)) that is equal to 50 percent or that is
actuarially consistent (using processes established under
subsection (e)) with an average expected payment of 50 percent
of such costs.
``(3) Initial coverage limit.--Subject to paragraph (4),
the coverage has an initial coverage limit on the maximum costs
that may be recognized for payment purposes (above the annual
deductible)--
``(A) for 2003, that is equal to $2,100; or
``(B) for a subsequent year, that is equal to the
amount specified in this paragraph for the previous
year, increased by the annual percentage increase
described in paragraph (5) for the year involved.
Any amount determined under subparagraph (B) that is not a
multiple of $25 shall be rounded to the nearest multiple of
$25.
``(4) Limitation on out-of-pocket expenditures by
beneficiary.--
``(A) In general.--Notwithstanding paragraph (3),
the coverage provides benefits without any cost-sharing
after the individual has incurred costs (as described
in subparagraph (C)) for covered outpatient drugs in a
year equal to the annual out-of-pocket limit specified
in subparagraph (B).
``(B) Annual out-of-pocket limit.--For purposes of
this part, the `annual out-of-pocket limit' specified
in this subparagraph--
``(i) for 2003, is equal to $6,000; or
``(ii) for a subsequent year, is equal to
the amount specified in this subparagraph for
the previous year, increased by the annual
percentage increase described in paragraph (5)
for the year involved.
Any amount determined under clause (ii) that is not a
multiple of $100 shall be rounded to the nearest
multiple of $100.
``(C) Application.--In applying subparagraph (A)--
``(i) incurred costs shall only include
costs incurred for the annual deductible
(described in paragraph (1)), cost-sharing
(described in paragraph (2)), and amounts for
which benefits are not provided because of the
application of the initial coverage limit
described in paragraph (3); and
``(ii) such costs shall be treated as
incurred without regard to whether the
individual or another person, including a State
program or other third-party coverage, has paid
for such costs.
``(5) Annual percentage increase.--For purposes of this
part, the annual percentage increase specified in this
paragraph for a year is equal to the annual percentage increase
in average per capita aggregate expenditures for covered
outpatient drugs in the United States for medicare
beneficiaries, as determined by the Medicare Benefits
Administrator for the 12-month period ending in July of the
previous year.
``(c) Alternative Coverage Requirements.--A prescription drug plan
or Medicare+Choice plan may provide a different prescription drug
benefit design from the standard coverage described in subsection (b)
so long as the following requirements are met:
``(1) Assuring at least actuarially equivalent coverage.--
``(A) Assuring equivalent value of total
coverage.--The actuarial value of the total coverage
(as determined under subsection (e)) is at least equal
to the actuarial value (as so determined) of standard
coverage.
``(B) Assuring equivalent unsubsidized value of
coverage.--The unsubsidized value of the coverage is at
least equal to the unsubsidized value of standard
coverage. For purposes of this subparagraph, the
unsubsidized value of coverage is the amount by which
the actuarial value of the coverage (as determined
under subsection (e)) exceeds the actuarial value of
the reinsurance subsidy payments under section 1860H
with respect to such coverage.
``(C) Assuring standard payment for costs at
initial coverage limit.--The coverage is designed,
based upon an actuarially representative pattern of
utilization (as determined under subsection (e)), to
provide for the payment, with respect to costs incurred
that are equal to the sum of the deductible under
subsection (b)(1) and the initial coverage limit under
subsection (b)(3), of an amount equal to at least such
initial coverage limit multiplied by the percentage
specified in subsection (b)(2).
``(2) Limitation on out-of-pocket expenditures by
beneficiaries.--The coverage provides the limitation on out-of-
pocket expenditures by beneficiaries described in subsection
(b)(4).
``(d) Access to Negotiated Prices.--Under qualified prescription
drug coverage offered by a PDP sponsor or a Medicare+Choice
organization, the sponsor or organization shall provide beneficiaries
with access to negotiated prices (including applicable discounts) used
for payment for covered outpatient drugs, regardless of the fact that
no benefits may be payable under the coverage with respect to such
drugs because of the application of cost-sharing or an initial coverage
limit (described in subsection (b)(3)). Insofar as a State elects to
provide medical assistance under title XIX for a drug based on the
prices negotiated by a prescription drug plan under this part, the
requirements of section 1927 shall not apply to such drugs.
``(e) Actuarial Valuation; Determination of Annual Percentage
Increases.--
``(1) Processes.--For purposes of this section, the
Medicare Benefits Administrator shall establish processes and
methods--
``(A) for determining the actuarial valuation of
prescription drug coverage, including--
``(i) an actuarial valuation of standard
coverage and of the reinsurance subsidy
payments under section 1860H;
``(ii) the use of generally accepted
actuarial principles and methodologies; and
``(iii) applying the same methodology for
determinations of alternative coverage under
subsection (c) as is used with respect to
determinations of standard coverage under
subsection (b); and
``(B) for determining annual percentage increases
described in subsection (b)(5).
``(2) Use of outside actuaries.--Under the processes under
paragraph (1)(A), PDP sponsors and Medicare+Choice
organizations may use actuarial opinions certified by
independent, qualified actuaries to establish actuarial values.
``(f) Covered Outpatient Drugs Defined.--
``(1) In general.--Except as provided in this subsection,
for purposes of this part, the term `covered outpatient drug'
means--
``(A) a drug that may be dispensed only upon a
prescription and that is described in subparagraph
(A)(i) or (A)(ii) of section 1927(k)(2); or
``(B) a biological product described in clauses (i)
through (iii) of subparagraph (B) of such section or
insulin described in subparagraph (C) of such section,
and such term includes any use of a covered outpatient drug for
a medically accepted indication (as defined in section
1927(k)(6)).
``(2) Exclusions.--
``(A) In general.--Such term does not include drugs
or classes of drugs, or their medical uses, which may
be excluded from coverage or otherwise restricted under
section 1927(d)(2), other than subparagraph (E) thereof
(relating to smoking cessation agents) and except to
the extent otherwise specifically provided by the
Medicare Benefits Administrator with respect to a drug
in any of such classes.
``(B) Avoidance of duplicate coverage.--A drug
prescribed for an individual that would otherwise be a
covered outpatient drug under this part shall not be so
considered if payment for such drug is available under
part A or B (but shall be so considered if such payment
is not available because benefits under part A or B
have been exhausted), without regard to whether the
individual is entitled to benefits under part A or
enrolled under part B.
``(3) Application of formulary restrictions.--A drug
prescribed for an individual that would otherwise be a covered
outpatient drug under this part shall not be so considered
under a plan if the plan excludes the drug under a formulary
that meets the requirements of section 1860C(f)(2) (including
providing an appeal process).
``(4) Application of general exclusion provisions.--A
prescription drug plan or Medicare+Choice plan may exclude from
qualified prescription drug coverage any covered outpatient
drug--
``(A) for which payment would not be made if
section 1862(a) applied to part D; or
``(B) which are not prescribed in accordance with
the plan or this part.
Such exclusions are determinations subject to reconsideration
and appeal pursuant to section 1860C(f).
``(5) Study on inclusion of drugs treating morbid
obesity.--The Medicare Policy Advisory Board shall provide for
a study on removing the exclusion under paragraph (2)(A) for
coverage of agents used for weight loss in the case of morbidly
obese individuals. The Board shall report to Congress on the
results of the study not later than March 1, 2002.
``SEC. 1860C. BENEFICIARY PROTECTIONS FOR QUALIFIED PRESCRIPTION DRUG
COVERAGE.
``(a) Guaranteed Issue Community-Related Premiums and
Nondiscrimination.--For provisions requiring guaranteed issue,
community-rated premiums, and nondiscrimination, see sections
1860A(c)(1), 1860A(c)(2), and 1860F(b).
``(b) Dissemination of Information.--
``(1) General information.--A PDP sponsor shall disclose,
in a clear, accurate, and standardized form to each enrollee
with a prescription drug plan offered by the sponsor under this
part at the time of enrollment and at least annually
thereafter, the information described in section 1852(c)(1)
relating to such plan. Such information includes the following:
``(A) Access to covered outpatient drugs, including
access through pharmacy networks.
``(B) How any formulary used by the sponsor
functions.
``(C) Co-payments and deductible requirements.
``(D) Grievance and appeals procedures.
``(2) Disclosure upon request of general coverage,
utilization, and grievance information.--Upon request of an
individual eligible to enroll under a prescription drug plan,
the PDP sponsor shall provide the information described in
section 1852(c)(2) (other than subparagraph (D)) to such
individual.
``(3) Response to beneficiary questions.--Each PDP sponsor
offering a prescription drug plan shall have a mechanism for
providing specific information to enrollees upon request. The
sponsor shall make available, through an Internet website and
in writing upon request, information on specific changes in its
formulary.
``(4) Claims information.--Each PDP sponsor offering a
prescription drug plan must furnish to enrolled individuals in
a form easily understandable to such individuals an explanation
of benefits (in accordance with section 1806(a) or in a
comparable manner) and a notice of the benefits in relation to
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