Establishes within the Supplementary Medical Insurance Trust Fund the Prescription Drug Benefit Insurance Account for the payment of benefits under the program.
Makes program enrollees responsible for a $250 annual deductible and a co-payment for services for which payment may be made under the program.
Establishes a Medicare Prescription Drug Benefit Advisory Commission. Directs the Secretary of Health and Human Services, with the Commission's advice, to: (1) determine and promulgate a coinsurance amount that qualified beneficiaries pay with benefits covered under this program for the next calendar year; and (2) determine and promulgate a monthly premium.
[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3626 Introduced in House (IH)]
107th CONGRESS
2d Session
H. R. 3626
To amend title XVIII of the Social Security Act to provide for an
outpatient prescription drug benefit under the Medicare Program.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 24, 2002
Mrs. Emerson (for herself and Mr. Ross) introduced the following bill;
which was referred to the Committee on Energy and Commerce, and in
addition to the Committee on Ways and Means, 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 committee
concerned
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to provide for an
outpatient prescription drug benefit under the Medicare Program.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; FINDINGS.
(a) Short Title.--This Act may be cited as the ``Medicare Drug and
Service Coverage Act of 2002''.
(b) Findings.--Congress makes the following findings:
(1) It is important for seniors to have access to
prescription drugs for life and health. Prescription drugs are
an important part of medical therapy, but medicare does not
have a voluntary prescription drug benefit for seniors who need
and want drug coverage.
(2) A comprehensive prescription drug benefit program for
seniors would help assure that seniors have access to necessary
prescription drugs and medication therapy management services,
which are among the most cost-effective medical interventions
available in the health care system.
(3) Seniors use more pharmaceuticals than any other
population group, and are in greater need of medication therapy
management services to assist them in proper medication
utilization. These services will help reduce the chance for
adverse medication events, which result in increased medicare
spending for hospitalizations, nursing home stays, emergency
room visits, and physician office visits.
(4) A new prescription drug benefit for seniors should be
structured so that seniors have access to the distribution
method of their choice without any form of economic or other
inducement to use an alternative distribution system.
(5) To assure appropriate and meaningful cost controls
under the program, and in order to have their drugs covered,
manufacturers should be required to contribute to cost
reductions in the medicare program.
SEC. 2. PRESCRIPTION DRUG BENEFIT PROGRAM.
(a) In General.--Title XVIII of the Social Security Act is
amended--
(1) by redesignating part D as part E; and
(2) by inserting after part C the following new part:
``Part D--Outpatient Prescription Drug Benefit Program
``outpatient prescription drug benefit program established
``Sec. 1860. There is established a voluntary prescription drug
benefit program to provide covered outpatient drugs and medication
therapy management services in accordance with the provisions of this
part for beneficiaries who elect to enroll under such program, to be
financed with contributions from funds appropriated by the Federal
Government and premiums collected from participating beneficiaries.
``scope of benefits
``Sec. 1860A. (a) Covered Outpatient Prescription Drugs and
Associated Services.--
``(1) In general.--The benefits provided to a beneficiary
under this part shall consist of payments made in accordance
with the provisions of this part for the following services
furnished by any pharmacy provider (as defined in section
1860I(e):
``(A) Prescription drugs.--Covered outpatient
prescription drugs, as specified in subsection (b).
``(B) Medication preparation services.--Covered
medication preparation services, as specified in
subsection (c).
``(C) Medication therapy management services.--
Covered medication therapy management services, as
specified in subsection(d).
``(2) Willing pharmacy providers.--Any pharmacy provider
that is authorized by the applicable State agency to engage in
the practice of pharmacy may participate in the program
established under this part.
``(b) Covered Outpatient Prescription Drugs.--
``(1) In general.--Subject to paragraph (2), benefits under
this part for outpatient prescription drugs means, subject to
section 1860B, payment for all prescribed drugs within the
meaning of the term covered outpatient prescription drugs, as
defined in section 1860I(a).
``(2) Avoidance of duplicate payment under medicare.--
Payment under paragraph (1) for covered outpatient prescription
drugs may only be made, with respect to such drugs for which
payment may be made under part A or B, only if benefits under
part A or part B for such drugs have been exhausted.
``(c) Covered Medication Preparation Services.--Covered medication
preparation services, for purposes of this part, means services
provided by pharmacy providers involving prescription drug compounding,
the provision of special packaging, and such other services involved in
the preparation and delivery of prescription drugs as the Secretary may
prescribe.
``(d) Covered Medication Therapy Management Services.--
``(1) In general.--Covered medication therapy management
services means--
``(A) services or programs furnished by a pharmacy
provider which are designed--
``(i) to assure that medications are used
appropriately by beneficiaries;
``(ii) to enhance beneficiaries'
understanding of the appropriate use of
medications;
``(iii) to increase beneficiaries'
compliance with prescription medication
regimens;
``(iv) to reduce the risk of potential
adverse events associated with medications; and
``(v) to reduce the need for other costly
medical services through better management of
medication therapy; and
``(B) services provided in collaboration with
physicians, pharmacists, and other health care
professionals when necessary, involving case
management, disease management, patient training and
education, medication refill reminders, medication
therapy problem resolution, laboratory testing
conducted to monitor medication therapy, other services
that enhance the use of prescription medications, and
such other professional services consistent with the
scope of the practice of pharmacy as defined by
applicable State law or regulation.
``(2) Program operation.--The program established under
this subsection will--
``(A) identify and provide medication therapy
management services to beneficiaries at risk for
potential medication problems, such as beneficiaries
taking multiple medications and beneficiaries with
complex or chronic medical conditions;
``(B) be developed and structured in cooperation
with organizations representing pharmacy providers,
including identifying those medication therapy
management services that will be provided, as well as
payment mechanisms for such services;
``(C) structure and update payments to reflect the
resources and time involved in the provision of such
services, the level of risk associated with the use of
particular medications, and the health status of
beneficiaries to whom medication therapy management
services are provided; and
``(D) provide for ongoing evaluation and
documentation of these services in improving quality of
care and reducing health care costs.
``payment of benefits; benefit limits; beneficiary copay
``Sec. 1860B. (a) Establishment of Account.--There is established
within the Supplementary Medical Insurance Trust Fund an account to be
known as the Prescription Drug Benefit Insurance Account (hereinafter
in this part referred to as the `Account').
``(b) Payment of Benefits.--Subject to the succeeding provisions of
this section, there shall be paid from the Account to a pharmacy
provider that furnishes services for which payment may be made under
this part to an individual who is enrolled under this part an amount,
for each such service, equal to the lesser of--
``(1) the reasonable charges for the benefits, as
determined under section 1860G; or
``(2) the pharmacy provider's customary charges with
respect to such benefits.
``(c) Annual Deductible.--Before applying subsection (b) with
respect to expenses incurred by an individual enrolled under this part
during any calendar year, the total amount of the expenses incurred by
such individual during such year (which would, except for this
subsection, constitute incurred expenses from which benefits payable
under subsection (b) are determinable) shall be reduced by a deductible
of $250.
``(d) Coinsurance.--
``(1) In general.--Subject to paragraphs (3) and (4), the
amount payable for services for which payment may be made under
this part furnished an individual enrolled under this part
shall be reduced by a coinsurance amount equal to established
under paragraph (2).
``(2) Establishing annual coinsurance percentage.--Each
year the Secretary shall, with the advice of the Medicare
Prescription Drug Benefit Advisory Commission established in
section 1860H, determine and promulgate a coinsurance amount
(as a percentage of the benefits provided) that qualified
beneficiaries pay with benefits covered under this program for
the next calendar year and in accordance with the limitations
of this subsection.
``(3) Maximum coinsurance.--The coinsurance established in
paragraph (2) may not exceed 20 percent.
``(4) Limits on varying coinsurance amounts.--The Secretary
may not vary the coinsurance amounts or make any
differentiation of scope or quantity of benefits coverage
provided based on the method of providing the services.
``procedure for payment of claims
``Sec. 1860C. Payment for services described in section 1860A may
be made only to pharmacy providers and only if a claim is filed for
such payment in such form and manner as the Secretary may by regulation
require. In no case may payment be made later than 12 months following
the year in which such services are furnished.
``eligibility and enrollment
``Sec. 1860D. Every individual who, during or after 2003, is
entitled to hospital insurance benefits under part A and is enrolled in
part B shall be eligible to enroll in the program under this part in
such form and manner as the Secretary may require by regulation.
``premium fees and payment
``Sec. 1860E. (a) Annual Establishment of Premium Amount.--Each
year the Secretary shall, with the advice of the Medicare Prescription
Drug Benefit Advisory Commission established in section 1860H,
determine and promulgate a monthly premium for beneficiaries who enroll
under this part, taking into account the total amount of payments
expected to be made from Account for furnishing services under this
part for the next calendar year and in accordance with the provisions
of this section.
``(b) Payment of Premiums.--An individual enrolled in the program
under this part shall pay the premium established under subsection (a)
to the Secretary at such times and in such manner as the Secretary
shall by regulation require.
``(c) Deposit of Funds.--Amounts paid to the Secretary under
subsection (a) shall be deposited in the Treasury to the credit of the
Account.
``administration of benefits through carriers
``Sec. 1860F. (a) In General.--The Secretary shall contract with
carriers designated in accordance with subsection (d), based on a
competitive bid, fixed fee per transaction basis, to perform some or
all of the following administrative functions:
``(1) Process and adjudicate claims.--The carrier shall
receive, process, and make payment for claims to pharmacy
providers through an online, real time claims adjudication
system that conforms to current industry standards, and shall
disburse and account for funds in making payments to pharmacy
providers under this part.
``(2) Communicate information.--The carrier shall serve as
a channel of communication of eligibility and coverage
information to beneficiaries and pharmacy providers.
``(3) Quality assurance.--The carrier shall provide the
information and computer system support, either directly or
through a contract with an outside entity, for the pharmacy
provider to conduct a drug utilization review program
conforming to the standards established by section 1927(g)(2),
with modifications as the Secretary determines by regulation to
be appropriate.
``(4) Protection against fraud and abuse.--The carrier
shall conduct activities to control fraud, abuse, and waste in
accordance with regulations promulgated by the Secretary.
``(5) Collection of payments.--The carrier shall collect
payments from participating pharmaceutical manufacturers as
specified in subsection (e).
``(b) Limits on Carrier Function.--The Secretary shall not contract
with carriers--
``(1) to make determinations of the rates and amounts of
payments to be made to pharmacy providers under this part;
``(2) to make determinations of any limitations on covered
benefits, such as the nature, scope, choice, or amount of
benefits available, as referred to in section 1860A;
``(3) to make determinations of pharmacy provider
eligibility;
``(4) to carry out any tasks beyond the administrative and
ministerial duties authorized by this section, including
aggregate purchasing; or
``(5) to practice medicine or pharmacy.
``(c) Requirements for Paying Claims and Grievance Procedures.--
Each contract under this section that provides for the disbursement of
funds as described in subsection (a)(1) shall provide that--
``(1) payment shall be issued, mailed, or otherwise
transmitted for claims submitted under this part in accordance
with the procedures established by section 1842(c); and
``(2) each carrier shall have in place such procedures as
the Secretary shall specify for hearing and resolving
grievances brought by enrolled beneficiaries against the
carrier or pharmacy provider and the pharmacy provider against
the carrier concerning benefits under this part.
``(d) Eligible Entities.--Each carrier responsible for
administering the program established under this part shall meet at
least the following criteria:
``(1) Performance capability.--The entity shall have
sufficient expertise, personnel, and resources to perform the
contracted benefit administrations.
``(2) Performance rating.--The entity shall be subject to
such review as required by the Secretary, both prior to issuing
a contract under this part and in review of performance
administering contracts under this part.
``(3) Financial integrity.--The entity and its officers,
directors, agents, and managing employees shall have a
satisfactory record of professional competence and professional
and financial integrity, and the entity shall have adequate
financial resources to perform services under the contract
without risk of insolvency.
``(4) Capability to maintain records.--The entity shall
have systems to maintain adequate records and afford the
Secretary access to such records (including for audit
purposes).
``(5) Compliance with industry standards.--The entity shall
comply with standards adopted by the National Council on
Prescription Drug Programs for uniform identification cards,
telecommunication standards, and drug utilization review
messaging.
``(6) Cost and pricing data.--The entity shall submit to
the Secretary as part of its bid submission all relevant cost
and pricing data, including all fees charged by the entity for
performing the administrative functions pursuant to any
competitively bid contract awarded to the carrier under this
section, plus any and all administrative fees or other payments
received by the entity from drug manufacturers pursuant to the
contract award.
``(7) Capability to generate reports.--The entity shall
have systems to make such reports and submissions of financial
and utilization data as the Secretary may require, including
reports describing the nature and type of direct and indirect
manufacturers' payments received by the carrier, assurance that
payments made to pharmacy providers are based on such standards
as the Secretary may prescribe, and any other types of
administrative or claims processing fees received by the
carrier.
``(e) Manufacturer Payments.--
``(1) In general.--The Secretary shall only make payment
under this part for innovator multiple source drugs or single
source drugs (as defined in clauses (ii) and (iv),
respectively, of section 1927(k)(7)(A)) for which payment may
be made under this part of a manufacturer if that manufacturer
has entered into and has in effect an agreement with the Secretary that
requires the manufacturer to make periodic payments in the amount
described in this subsection. A payment agreement shall be effective
for an initial period of not less than 1 year and shall be
automatically renewed for a period of not less than 1 year.
``(2) Amount of payment.--
``(A) In general.--The payment amount for a covered
outpatient prescription drug furnished under this part
shall be equal to not less than the sum of the basic
rebate amount (determined under subparagraph (B)) for
each dosage form and strength of such drug increased by
the amount of the inflation adjustment rebate
(determined under subparagraph (C)) for each dosage
form and strength of such drug.
``(B) Basic rebate amount.--The basic rebate amount
shall be equal to the product of the total number of
units of each dosage form and strength paid for by the
carrier in the payment period (as defined in section
1927(b)), and the average manufacturers' price (as
defined in section 1860I) for the quarter for the
dosage form and strength of the covered outpatient drug
minus not less than 18 percent of the average
manufacturers' price for the quarter, or such amount as
determined by the Secretary through negotiations with
the manufacturer of such drug.
``(C) Inflation adjustment amount.--The amount of
the basic rebate payment shall be increased by an
amount equal to the product of the number of units of
each dosage form and strength paid for by the carrier
in the payment period and the amount by which the
average manufacturers' price for such drug and dosage
form and strength for the calendar quarter increased in
excess of the percentage by which the consumer price
index for all urban consumers increased during the
calendar quarter.
``(3) Carrier responsibility.--The carrier shall report to
each manufacturer not later than 60 days after the end of each
payment period and in a form consistent with a standard
reporting format established by the Secretary, information on
the total number of units of each dosage form and strength and
package size of each covered outpatient drug dispensed in the
quarter for which payment was made under the plan during the
period, and shall promptly transmit a copy of such report to
the Secretary.
``(4) Manufacturer responsibility.--The manufacturer shall
remit payments to the Secretary through the carrier not later
than 30 days after receiving information from the carrier on
the total number of units of each dosage form and strength of
the manufacturers' drugs paid for by the carrier in the
quarter.
``(5) Collection of payments.--The Secretary shall deposit
the payments collected under this subsection from manufacturers
in the Account, and shall use the payments to reduce the
premiums paid by beneficiaries for the purpose of providing the
prescription drug benefit.
``pharmacy provider eligibility and payment amounts
``Sec. 1860G. (a) In General.--Any pharmacy provider that meets the
requirements of this section shall be eligible to enter into an
agreement with the Secretary to furnish covered benefits to enrolled
beneficiaries.
``(b) Terms of Agreement.--An agreement under this section shall
include the following terms and requirements:
``(1) Licensing.--The pharmacy provider shall meet (and
throughout the contract period will continue to meet) all
applicable Federal, State, and local licensing requirements.
``(2) Performance standards.--The pharmacy provider shall
comply with quality assurance standards applicable to
pharmacists under section 1927(g).
``(3) Payment.--The Secretary shall, after consultation
with the Medicare Prescription Drug Benefit Advisory Commission
established in section 1860H, establish payment rates to--
``(A) pharmacy providers that--
``(i) are reasonable and adequate to cover
all direct and indirect costs of furnishing the
items and services covered by this part, and a
reasonable return;
``(ii) are sufficient to enlist enough
pharmacy providers to ensure that items and
services covered under this part are available
to beneficiaries at least to the extent that
such items and services are available to the
general public;
``(iii) do not vary based on the size or
corporate structure of the pharmacy provider or
factors commonly associated with the size of
the provider, such as prescription volume;
``(iv) provide appropriate incentives for
dispensing lower cost multiple source
prescription drugs; and
``(v) recognize and provide appropriate
payment incentives for pharmacy providers
located in rural and underserved areas (as the
Secretary may define by regulation); and
``(B) carriers that reflect the administrative
costs of providing administration of the prescription
drug benefit as specified under section 1860F.
``medicare prescription drug benefit advisory commission
``Sec. 1860H. (a) Establishment.--There is established the Medicare
Prescription Drug Benefit Advisory Commission.
``(b) Composition.--The Commission, appointed by the Secretary,
shall consist of an equal number of actively practicing physicians,
consumers, and actively practicing pharmacists. Other individuals may
advise the Commission as necessary, but may not participate as
Commission members.
``(c) Duties.--
``(1) Consultation with secretary.--The Medicare
Prescription Drug Benefit Advisory Commission shall consult
with the Secretary as required by this part.
``(2) Review of payment policies and annual reports.--The
Medicare Prescription Drug Benefit Advisory Commission shall--
``(A) review payment and eligibility policies under
this part and make recommendations to Congress
concerning such payment policies;
``(B) review the impact on cost and quality of care
of medication therapy management services; and
``(C) by not later than May 1 of each year
(beginning in 2004), submit a report to Congress
containing the results of such reviews and
recommendations concerning such policies.
``definitions
``Sec. 1860I. In this part:
``(a) Covered Outpatient Prescription Drug.--
``(1) In general.--Subject to paragraph (2), the term
`covered outpatient prescription drug' means--
``(A) a drug or biological that may be dispensed
only upon a prescription;
``(B) insulin certified under section 506 of the
Federal Food, Drug, and Cosmetic Act, and needles,
syringes, and disposable pumps for the administration
of such insulin; and
``(C) such nonprescription drugs as defined under
section 503 of the Federal Food, Drug, and Cosmetic Act
that are prescribed and determined medically necessary
by a physician or other health care provider licensed
by the State to prescribe medications.
``(2) Exclusion of cosmetic agents and fertility agents.--
Such term does not include medications or classes of outpatient
prescription drugs described in subparagraphs (B) and (C) of
section 1927(d)(2).
``(b) Average Manufacturers' Price.--The term `average
manufacturers' price' means, with respect to a prescription drug of a
manufacturer provided under this part for a calendar quarter, the
average unit price paid to the manufacturer by wholesalers for drugs
distributed to the retail pharmacy class of trade (excluding direct
sales to hospitals, health maintenance organizations, and wholesalers
where the drug is relabeled under the distributor's national drug
code.) Average manufacturers' price includes cash discounts allowed and
all other price reductions that reduce the actual price paid.
``(c) Carrier.--The term `carrier' means the entity responsible for
administering the prescription drug benefit program under this part. A
carrier may be a prescription claims processing vendor, wholesale and
community pharmacy delivery system, health care provider, insurer, or
any other type of entity as the Secretary may specify.
``(d) Pharmacy Provider.--The term `pharmacy provider' means a
pharmacist or pharmacy that--
``(1) is authorized by applicable State agencies to engage
in the practice of pharmacy;
``(2) meets the requirements of section 1860G; and
``(3) participates in the program under this part.''.
(b) Conforming Amendments.--
(1) Amendments to federal supplementary health insurance
trust fund.--Section 1841 of the Social Security Act (42 U.S.C.
1395t) is amended--
(A) in the last sentence of subsection (a)--
(i) by striking ``and'' after ``section
201(i)(I)''; and
(ii) by inserting before the period the
following: ``, and such amounts as may be
deposited in, or appropriated to, the
Prescription Drug Benefit Insurance Account
established by section 1860B''; and
(B) in subsection (g), by inserting after ``by this
part,'' the following: ``the payments provided for
under part D (in which case the payments shall come
from the Prescription Drug Benefit Insurance Account in
the Supplementary Medical Insurance Trust Fund),''.
(2) Exclusions from coverage.--
(A) Application to part d.--Section 1862(a) of such
Act (42 U.S.C. 1395y(a)) is amended in the matter
preceding paragraph (1) by striking ``part A or part
B'' and inserting ``part A, B, or D''.
(B) Prescription medications not excluded from
coverage if appropriately prescribed.--Section
1862(a)(1) of such Act (42 U.S.C. 1395y(a)(1)) is
amended--
(i) in subparagraph (H), by striking
``and'' at the end;
(ii) in subparagraph (I), by striking the
semicolon at the end and inserting ``, and'';
and
(iii) by adding at the end the following
new subparagraph:
``(J) in the case of prescription medications
covered under part D, which are not prescribed in
accordance with such part;''.
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act, and shall apply with
respect to benefits for prescription drugs furnished on or after
January 1, 2003.
SEC. 3. GAO STUDY AND BIENNIAL REPORTS ON SAVINGS.
(a) Ongoing Study.--The Comptroller General of the United States,
in consultation with the Medicare Prescription Drug Benefit Advisory
Commission established under section 1860H of the Social Security Act
(as added by section 2(a)), shall conduct an ongoing study and analysis
of the prescription drug benefit program under part D of the Social
Security Act (as added by such section), with an analysis of the
savings to the medicare program resulting from such drug benefit
program, including savings to medicare parts A and B, by reason of, for
example, the reduction in the number or length of hospital visits.
(b) Report.--Not later than January 1, 2004, and every 2 years
thereafter, the Comptroller General of the United States shall submit
to Congress a report on the results of the study conducted under this
section, together with any recommendation for legislation determined to
be appropriate as a result of such study.
SEC. 4. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated from time to time, out of
any moneys in the Treasury not otherwise appropriated, to the
Prescription Drug Benefit Insurance Account within the Supplementary
Medical Insurance Trust Fund established under section 1841, an amount
equal to the amount by which the benefits and administrative costs of
providing the benefits under this part exceed the premiums collected
under section 1860E.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, 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 committee concerned.
Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, 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 committee concerned.
Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, 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 committee concerned.
Referred to the Subcommittee on Health.
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