To prohibit application of a payment limit to a drug or biological under part B of the Medicare Program based on a less costly alternative for courses of treatment begun before the change in payment.

Provides that, if the Secretary of Health and Human Services or a carrier reduces a recognized rate for a drug or biological under part B (Supplementary Medical Insurance) of title XVIII (Medicare) of the Social Security Act based solely on the identification of an alternative drug or biological that is less costly for treatment of the same condition, the Secretary shall provide that such reduction shall not apply during a course of treatment to an individual who, as of the effective date of the payment rate reduction, was entitled to benefits under such part and was in a course of treatment with such drug or biological for which such benefits are available. States that this requirement shall not apply in the case of substitution of a generic drug for another.

Directs the Secretary to report to the Congress on: (1) the types of coverage decisions being made by carriers under Medicare part B as well as their legal authority to make them; and (2) whether further Federal guidance is needed to prevent regional disparities in coverage under Medicare part B.