[Pages H4166-H4320]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MEDICARE MODERNIZATION AND PRESCRIPTION DRUG ACT OF 2002
Mr. LINDER. Mr. Speaker, by direction of the Committee on Rules, I
call up House Resolution 465 and ask for its immediate consideration.
The Clerk read the resolution, as follows:
H. Res. 465
Resolved, That upon the adoption of this resolution it
shall be in order without intervention of any point of order
(except those arising under section 302(f) of the
Congressional Budget Act of 1974) to consider in the House
the bill (H.R. 4954) 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 and reform payments and the
[[Page H4167]]
regulatory structure of the Medicare Program, and for other
purposes. The bill shall be considered as read for amendment.
In lieu of the amendment recommended by the Committee on Ways
and Means, the amendment in the nature of a substitute
printed in the report of the Committee on Rules accompanying
this resolution shall be considered as adopted. All points of
order against the bill, as amended, are waived. The previous
question shall be considered as ordered on the bill, as
amended, to final passage without intervening motion except:
(1) two hours of debate on the bill, as amended, with one
hour equally divided and controlled by the chairman and
ranking minority member of the Committee on Ways and Means
and one hour equally divided and controlled by the chairman
and ranking minority member of the Committee on Energy and
Commerce; and (2) one motion to recommit with or without
instructions.
The SPEAKER pro tempore (Mr. Simpson). The gentleman from Georgia
(Mr. Linder) is recognized for 1 hour.
Mr. LINDER. Mr. Speaker, for the purpose of debate only, I yield the
customary 30 minutes to the gentlewoman from New York (Mrs. Slaughter),
pending which I yield myself such time as I may consume.
Mr. Speaker, H. Res. 465 is a closed rule that provides 2 hours of
debate in the House, with 1 hour equally divide and controlled by the
chairman and ranking minority member of the Committee on Ways and Means
and 1 hour equally divided and controlled by the chairman and ranking
minority member of the Committee on Energy and Commerce.
H. Res. 465 waives all points of order against consideration of the
bill, except those arising under section 302(f)of the Congressional
Budget Act of 1974. H. Res. 465 provides that in lieu of the amendment
recommended by the Committee on Ways and Means, the amendment in the
nature of a substitute printed in the report of the Committee on Rules
accompanying this resolution shall be considered as adopted.
The rule waives all points of order against the bill as amended and
provides one motion to recommit, with or without instructions.
Mr. Speaker, I urge my colleagues to join me in approving this rule
so that the full House can proceed to consider this important Medicare
reform legislation. The underlying bill is critically important
legislation that is designed to provide much-needed financial
assistance to seniors to ease the burden of the rising costs of
prescription drugs.
H.R. 4954 seeks to improve the Medicare program by introducing free
market forces in order to bring down drug prices and medical costs
overall by introducing competition to a program that currently has
none.
In addition to unleashing market forces on prescription drug prices,
the bill seeks to move the Medicare+Choice program into a more
competitive structure, the durable medical equipment and off-the-shelf
orthotics are subject to competitive bidding and, finally, Medicare
contractors will bid competitively for business. All of these reform
elements will help move Medicare in the right direction, and our
seniors will surely reap the benefits of a more consumer-friendly and
patient-sensitive Medicare.
The House voted on similar legislation in the 106th Congress but was
unable to reach agreement with the other body and the Clinton White
House in order to enact a law to help our seniors. Well, with our new
administration under President Bush now in office, I believe the House
of Representatives needs to seize the historic opportunity to move a
Medicare prescription drug benefit proposal through the 107th Congress
in order to give our President a chance to sign such important
legislation into law.
I applaud the hard work and leadership of my friends and colleagues,
the gentleman from California (Mr. Thomas), the chairman of the
Committee on Ways and Means, and the gentleman from Louisiana (Mr.
Tauzin), the chairman of the Committee on Energy and Commerce, and
their respective ranking members in bringing this legislation to the
House floor today.
I urge my colleagues on both sides of the aisle to support H. Res.
465, a rule that will allow the House to consider and pass legislation
that will improve the lives of millions of seniors across the country
by providing them affordable prescription drugs.
Mr. Speaker, I neglected to say earlier that all time yielded in the
pursuit of passage of the rule is yielded for the purpose of debate
only.
Mr. Speaker, I reserve the balance of my time.
Ms. SLAUGHTER. Mr. Speaker, I thank the gentleman from Georgia for
yielding me the customary 30 minutes, and I yield myself such time as I
may consume.
(Ms. SLAUGHTER asked and was given permission to revise and extend
her remarks.)
Ms. SLAUGHTER. Mr. Speaker, with the rule before us today, this body
is being asked to hand over one of the most popular government programs
in history to private insurance companies. Medicare is a critical
program, a program that benefits a wide spectrum of our constituents
and one that American families have come to depend on for their loved
ones in need. But today, in a cynical nod to the pharmaceutical
industry, the leadership has shut out any meaningful debate. No
Democrat substitute will be allowed, no amendments to guarantee
affordable prescription drugs for our seniors will be permitted, and
anyone voicing dissent has been silenced.
{time} 2100
Indeed, in the wee hours of this morning in the Committee on Rules,
one of my colleagues made it clear that he wanted the free market to
determine drug prices, and declared that Medicare was, attention, a
Soviet-style program, echoing the sentiment made by his former leader,
Newt Gingrich, that Medicare should be allowed ``to wither on the
vine.''
Make no mistake: the contempt for Medicare runs deep within this
leadership, as it does for other vital social programs. By calling
Medicare Soviet-style, we can be certain that this is not a mandate to
ensure the future of the program, but rather, the opposite.
Mr. LINDER. Mr. Speaker, will the gentlewoman yield? She is
misquoting something I said, and I would like to respond to it.
The SPEAKER pro tempore (Mr. LaTourette). The gentleman has not been
yielded to.
Mr. LINDER. Will the gentlewoman yield?
Ms. SLAUGHTER. No, I want to finish my statement.
Mr. LINDER. She referred directly.
The SPEAKER pro tempore. The time is controlled by the gentlewoman
from New York.
Ms. SLAUGHTER. But rather the opposite, a call to leave seniors to
the mercies of the private sector and the free market, rather than
guarantee them livable, affordable health care.
My constituents and others around the Nation are reeling from public
programs that have been turned over to the so-called free market.
Utility rates, cable rates, you name it, the free market has ensured
exorbitant prices with diminished service. Pensions and retirement
security have taken a similar beating.
Moreover, the timing of this proposal could not be worse. The
proposal places the program in the private sector at a time when
private insurers have dropped Medicare+Choice beneficiaries by the
thousands.
Private insurers will inevitably alter plans and move in and out of
markets, leading to unpredictability for our seniors. A given drug
might be covered one month, but not the next. Premiums could double
from year to year without warning.
The rule before us is one of the most heavy-handed procedures to come
out of the Committee on Rules, and given the last few weeks, that is
saying something. Amendment after amendment was blocked from floor
consideration.
My colleague, the gentlewoman from Florida (Mrs. Thurman), and the
gentleman from Maine (Mr. Allen) had a remarkably sensible idea of
requiring that prescription drug plans negotiate with pharmaceuticals
for lower prescription drug prices, a necessity before we put a Federal
program on top of them. Canada does it, and France does it, Germany,
Italy, Japan, Britain.
Virtually every developed country in the world has committed itself
to negotiating lower drug prices for its citizens. Even the United
States demonstrated remarkable success when negotiating Cipro prices
during the anthrax attacks last fall.
But under this rule, this very sensible amendment will not be
permitted.
[[Page H4168]]
This is even more remarkable when we consider that the underlying bill
prohibits the Federal Government from pushing for lower prescription
prices.
My colleagues, the gentleman from New Jersey (Mr. Pallone) and the
gentlewoman from California (Mrs. Capps), attempted to ensure that all
seniors have the option of prescription drug coverage, especially in
those geographic areas where insurance companies choose not to offer a
plan. Under the current bill, there is no guarantee that seniors will
have access to coverage at all if insurers should decide not to cover
their area.
The amendment will never see the light of day, however, under this
rule. Instead, we are left with a fundamentally flawed document that
fails our constituents on every level. The proposed plan would be
administered through either HMOs or drug-only insurance plans.
The fact that drug-only insurance plans do not exist in the private
market does not deter proponents from their privatization agenda. In
fact, they are so bent on privatizing the drug benefit that they are
prepared to bribe private plans with a subsidy as large as 99.99
percent in order to get them to offer drug coverage to seniors,
regardless of the quality of the service or extent of the benefit.
Mr. Speaker, a little more history may be in order. The Medicare
program was originally created because the private sector did not offer
affordable and reliable health insurance to the elderly and the
disabled. Health care has certainly changed in the past 30 years, but
what has not changed is the fact that the private market does not want
to ensure people who are old, disabled, and likely to need care.
Mr. Speaker, the inadequacies in this bill continue, and I will
highlight them briefly. The measure penalizes seniors who receive aid
with prescription drug costs from charitable, church, or State programs
by not counting the costs paid by those parties toward the individual's
Medicare deductible.
Seniors may actually have to drop out of programs like New York's
Elderly Prescription Insurance Coverage, the EPIC program, in an
attempt to obtain their Medicare benefits.
The proposal has numerous gaps that leave seniors without coverage
while requiring them to pay premiums. For example, earlier this month I
received a letter from a 71-year-old constituent who must take
medication to prevent a recurrence of a potentially dangerous, deadly
fungal lung infection. The drug costs her nearly $1,000 a month. Under
the majority plan, this woman would still pay well over $3,000 a year
for this medication, and in addition, she would have to drop out of New
York's program, which is currently helping her with these expenses.
The proposal includes copayments, premiums, and deductibles that will
be unaffordable for many low- and middle-income seniors. The $35-per-
month premium is a suggested amount and certainly not a guarantee.
Insurers could choose to charge double or triple that amount if they
chose to.
The bill is opposed by numerous respected organizations, including
the National Council on Aging, AARP, Families U.S.A., and the National
Committee to Preserve Social Security and Medicare.
Mr. Speaker, the majority has taken the proverbial sow's ear and is
trying to convince America it is a silk purse. My constituents are not
fooled, and I hope my colleagues will not be, either.
Mr. Speaker, I yield such time as she may consume to the gentlewoman
from California (Ms. Woolsey).
(Ms. WOOLSEY asked and was given permission to revise and extend her
remarks.)
Ms. WOOLSEY. Mr. Speaker, I express my opposition to this sham bill
that is harmful to senior women.
Mr. Speaker, studies show that older women live an average of six
years longer than men. Often widowed and living alone, the average
woman age 65 and older struggles to survive on an annual income of
$15,615.
During her lifetime she probably spent 17 years out of the workforce
caring for children, and perhaps 18 years caring for elderly parents.
Her retirement income is also smaller because she probably did not
receive a pension, and was paid less than most men.
As a result, she receives lower Social Security benefits. She spends
a larger percentage of her income on housing costs--leaving less money
for necessary expenses like utilities, food, and health care. This is a
particularly difficult problem because the average older woman spends
20 percent of her income each year on out-of-pocket health care costs.
Even though Medicare is not typically thought of as a woman's
program, it's central to a woman's well-being. Because women live
longer than their male counterparts, they also rely on Medicare and its
benefits longer.
While Medicare provides women with critical access to health care,
gaps in the program leave women vulnerable to unaffordable out-of-
pocket-costs. According to the Kaiser Family Foundation, women account
for nearly 7 in 10 Medicare beneficiaries with incomes below the
poverty level.
Similarly, access to affordable prescription drugs is a woman's
issue. Why? Because women make up a large portion of consumers
purchasing prescription drugs.
Women have a greater rate of health problems since they live longer.
They have lower incomes, which make access to affordable prescription
drugs more difficult. In addition, because of age, women report more
chronic conditions that require ongoing treatment, accompanied by a
regimen of costly drugs.
As the costs of prescription drugs continue to rise these out-of-
pocket expenses will continue to take a higher percentage of older
women's limited monthly income. Where do we draw the line? When will we
enact a drug benefit that will allow all seniors to live out their
lives without being forced to choose between food or medicine?
It's time we start considering women's needs when we debate
prescription drug proposals.
Sadly, the GOP's Medicare modernization plan will only perpetuate
persistent health care disparities among women because it creates new
gaps in coverage.
If the GOP plan prevails, seniors won't feel any more certain about
their benefits--in fact, the GOP proposal allows plans to vary their
benefits and premiums from one region to another; from one plan to
another and, the GOP plan provides no guarantees. Their plan would
privatize prescription drug plans like an HMO . . . not put the plan
under Medicare. Our seniors need more stability and certainty than
that--especially older women who are counting on Congress to provide a
real solution to the high cost of prescription drugs.
Women are major stakeholders in the debate over Medicare's future and
a prescription drug benefit. Policies that expand access to outpatient
prescription drugs and long-term care would help fill coverage gaps
that drive up out-of-pocket spending for women.
Conversely, policies that erode coverage or that shift costs to
beneficiaries could affect women, especially those with low incomes.
Older women are one of the nation's most at-risk gropus, and a
prescription drug benefit must meet their needs. Understanding the full
implications of proposed reforms for aging women must be an essential
component of efforts to preserve and protect medicare for generations
to come.
Under the GOP plan, there will be no real winners--only struggling
survivors, seniors who manage to make ends meet.
For my constituents and the older women in this country, merely
getting by is not good enough, so instead, let's make everyone a winner
by enacting a prescription drug benefit that guarantees seniors and
women real assistance.
After a lifetime of taking care of their families, older women
deserve better than what the Republican leadership is proposing. That's
why I strongly urge my colleagues to stop further debate on this sham
of a proposal and get serious about providing genuine relief to
Medicare recipients.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Ohio (Mrs. Jones).
(Mrs. JONES of Ohio asked and was given permission to revise and
extend her remarks.)
Mrs. JONES of Ohio. Mr. Speaker, I express my opposition to this bill
that is particularly harmful to senior women, like my mother.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from California (Ms. Lee).
(Ms. LEE asked and was given permission to revise and extend her
remarks.)
Ms. LEE. Mr. Speaker, I express my opposition to this sham bill that
is particularly harmful to senior women. This is a shame.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Indiana (Ms. Carson).
(Ms. CARSON of Indiana asked and was given permission to revise and
extend her remarks.)
[[Page H4169]]
Ms. CARSON of Indiana. Mr. Speaker, I express my opposition to this
bill that does not allow senior women to be able to afford to live,
particularly those senior women who suffer from cardiovascular disease.
Mr. Speaker, I rise in support of the American people. The same
American people who have been paying too much for prescription drugs
and have been waiting for years for Congress to pass a fair Medicare
prescription drug benefit. This plan that the Republican leadership has
brought to the floor is a sham.
Where is the benefit for our seniors who are living on a fixed income
and cannot afford such a high co-payment? Where is the benefit for the
women who, because they were stay at home mothers and did not earn a
pension, cannot afford the prescription drugs that are needed for a
better quality of life.
The costs of prescription drugs for seniors are rising at a rate
greater than that of inflation.
Senior women must be accounted for and given a platform regarding
prescription drug benefits because they make up almost 60% of the
Medicare population. Without affordable benefits, women will be forced
to pay extremely high costs for prescription drugs that they already
struggle to afford.
We need a plan that makes prescription drugs more affordable for the
people who cannot live without these products. What the Republicans are
proposing is not help for seniors, but more heartache.
The ``plan'' the Republicans have drawn up would not be a benefit to
anyone except the insurance companies.
Forcing Medicare recipients into private plans which cover less than
half of the costs of prescription drugs is not a benefit?
A plan that forces Medicare recipients to pay for a gap in coverage
of at least $1,800 a year is not a benefit!
A plan that does not guarantee the same coverage for the entire
country, that seniors in Indiana could pay a higher premium than those
in a different part of the country, is not a benefit!
There are over 844,835 people on Medicare in my state of Indiana.
That is 14% of the population. 44% of these people are under 200% of
the federal poverty level. I will not go home and tell them that I gave
away their security to a private company trying to make money off of
their health.
Prescription drug benefits are particularly crucial for women because
they tend to live an average of 6 years longer than men and are more
likely to suffer from prolonged chronic illness. Senior women have a
longer period of time to incur out of pocket cost to pay for
prescription drugs and deserve to be provided with considerable
benefits.
Not only do women tend to live longer than men, but they are also at
an unfair disadvantage where their income is concerned. The average
annual income for women age 65 and older is $15,615, which is only half
of the annual income of men. Recent surveys indicate that eight out of
ten women on Medicare, approximately 17 million women, use prescription
drugs regularly and most pay for these medications themselves. Senior
women have a limited income and must receive affordable prescription
drug benefits that they can rely on.
How dare the Republicans try to give to the seniors of this country a
plan that is not equal to what they receive as Members of Congress!
They have stated over and over that seniors deserve the same coverage
as Members of Congress.
When the non-partisan Congressional Research Service did a comparison
of the drug benefit under the Blue Cross-Blue Shield Standard option
available to Federal Employees to the Democrat and Republican
prescription drug plans, they found that the Republican plan would give
about 40% of the coverage Members of Congress receive, but the
Democratic plan would give comparable coverage.
In addition, when given the opportunity to rectify this gap in
coverage, the Republicans on the Committee voted against giving this
same coverage.
Whay type of thinking is this?
Give the minority a voice! Let there be a vote on the Democratic
Medicare Prescription Drug benefit, a plan that actually helps seniors
and does not hurt them!
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from California (Mrs. Napolitano).
(Mrs. NAPOLITANO asked and was given permission to revise and extend
her remarks.)
Mrs. NAPOLITANO. Mr. Speaker, I express my opposition to this
shameful bill that is particularly harmful to our senior women who live
longer and have the largest consumption of purchases of drugs.
Parliamentary Inquiry
Mr. LINDER. Parliamentary inquiry, Mr. Speaker.
The SPEAKER pro tempore. The gentleman from Georgia will state his
parliamentary inquiry.
Mr. LINDER. Mr. Speaker, at what point does this series of speeches
become credited against their time?
The SPEAKER pro tempore. After their request for unanimous consent to
revise and extend their remarks in opposition, the Chair will count
against the minority's time any speeches that are given. To this point,
the Chair has not heard any.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Hawaii (Mrs. Mink).
(Mrs. MINK of Hawaii asked and was given permission to revise and
extend her remarks.)
Mrs. MINK of Hawaii. Mr. Speaker, I rise on behalf of my constituents
to oppose the rule and the passage of this bill as a fatal step towards
privatization of Social Security.
Mr. Speaker, I rise today to urge my colleagues to oppose the
Republican's prescription drug benefit plan because it does not provide
a meaningful prescription drug benefit.
There are 40 million elderly and disabled people enrolled in
Medicare. They need Medicare to obtain basic health care coverage.
Unfortunately, the program has a very limited prescription drug
benefit. Since Congress created Medicare in 1965, it has struggled to
find a way to create an adequate prescription drug benefit.
Prescription drug expenditures have grown at a double-digit rate
almost every year since 1980. Congress needs to act now to help those
currently in the system and the estimated 77 million Americans who will
be in Medicare by 2030. These Americans expect to obtain affordable
prescription drugs through Medicare. Congress cannot wait any longer.
It must create a prescription drug benefit.
Even though creating a prescription drug benefit is one of the most
important bills of this Congress, the Republican leadership has
prohibited members of the House from offering amendments or even voting
on the Democrat's substitute. Since the Republicans began their rule,
they have imposed ``gag'' rules to prevent a full debate on may
important issues. In a chamber dedicated to the principles of democracy
and a free and open debate, it is unacceptable for the Republican
leadership to prevent members from even considering other prescription
drug plans or amending the Republican plan. The House should have an
opportunity to amend the bill created by the Republican leadership
because it is flawed. It is not a guaranteed Medicare benefit. It
relies on HMOs and other private insurance companies, who may restrict
benefits at any time.
The Republican's bill (H.R. 4954) does not create a defined
prescription drug benefit under Medicare. It subsidizes private
insurance companies, who will offer prescription drug coverage to
Medicare beneficiaries. This plan leaves the elderly alone in a fight
with private insurance companies to obtain the prescription drug
coverage they need.
H.R. 4954 does not specifically define the type of benefit that
insurance companies must provide. The insurance companies can create
strict rules that limit access to certain expensive drugs that could
hurt a company's bottom line. Doctors will prescribe medicine without
any assurance that seniors will be able to obtain them through their
private insurer.
Additionally, insurance companies can limit which pharmacies
participate in their network. Seniors in rural areas may be forced to
travel many miles to find a pharmacy that is ``acceptable'' to their
private insurance provider.
By relying on private insurers, the elderly will not even know how
much their monthly premium will cost. The Republicans think it will be
$35 per month. It might be higher. It might be lower. Premiums could
vary from county to county and year to year. The monthly premiums in
the Republican's prescription drug benefit plan could rise beyond the
resources of the disabled and the elderly. In Nevada, the only state
where a similar plan is offered, premiums exceed $80 per month.
The Republican plan does not provide sufficient coverage. It covers
less than a quarter of Medicare beneficiaries' estimated drug costs
over the next 10 years, and the complicated coverage formula has a
large hole. After providing partial coverage on the first $2,000
seniors spend on prescription drugs, the Republican plan does not
provide any additional help until they pay $3,800. It does not cover
expenses between $2,000 and $3,800. The elderly must find a way to pay
for these expenses by themselves.
America needs a prescription drug plan that truly helps the elderly
obtain the drugs they desperately need. We do not need a plan that
exposes Medicare beneficiaries to the whims of private insurance
companies who are more interested in profits than providing
comprehensive benefits.
Under the Democratic proposal, which the Republicans refused to
debate: the monthly
[[Page H4170]]
premium is locked in at $25, the annual deductible is only $100,
Medicare pays 80% of seniors' drug costs up to $2,000, and there is a
$2,000 out-of-pocket limit per beneficiary per year.
The Democratic proposal fully integrates prescription drug benefits
into the Medicare program. It allows the elderly to rely on their
governmental prescription drug benefit, rather than depending on the
generosity of profit driven insurance companies.
This House has an opportunity to pass legislation to help disabled
and elderly women obtain affordable prescription drugs. I urge my
colleagues to support the Democratic plan to create a simple
prescription drug plan that helps all seniors pay for the skyrocketing
cost of prescription drugs. I urge my colleagues to vote against the
Republican bill because it fails to do this.
Announcement by the Speaker pro Tempore
The SPEAKER pro tempore. The Chair would advise the gentlewoman from
New York that one came close to debate.
Ms. SLAUGHTER. Mr. Speaker, we will watch it.
Mr. Speaker, I yield such time as she may consume to the gentlewoman
from California (Ms. Roybal-Allard).
(Ms. ROYBAL-ALLARD asked and was given permission to revise and
extend her remarks.)
Ms. ROYBAL-ALLARD. Mr. Speaker, I rise to express my strong
opposition to this irresponsible bill that is particularly harmful to
women.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Florida (Mrs. Thurman).
(Mrs. THURMAN asked and was given permission to revise and extend her
remarks.)
Mrs. THURMAN. Mr. Speaker, I express my opposition to this rule and
to this sham bill that is particularly harmful to senior women.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from New York (Mrs. McCarthy).
(Mrs. McCARTHY of New York asked and was given permission to revise
and extend her remarks.)
Mrs. McCARTHY of New York. Mr. Speaker, I express my opposition to
this sham bill that is particularly harmful to senior women.
I have seen much in my lifetime, but nothing like the blatant
disregard for America's seniors by House Republican Leadership.
Prescription Drugs is a life and death issue affecting millions of
seniors.
This body should not be forced to debate a bill severaly lacking in
substance and without even the opportunity for a discussion on an
alternative.
Unfortunately, there is no room for discussion.
There is no room for options.
There is no chance for an open, constructive and spirited debate on
what America's seniors need most--a Prescription Drug Benefit under
Medicare.
The bill before us today is nothing but a SHAM proposal, which does
nothing to provide a real, guaranteed prescription drug benefit to our
nation's seniors.
I was a nurse before I came to Congress. Let me tell you what this
bill does not do for America's seniors.
This bill does not bring down the cost of prescription drugs.
This bill does not guarantee a prescription drug benefit for seniors;
and This bill does not guarantee coverage for any drug prescribed by
their doctor.
What the bill does do, however, is to provide benefits to insurance
companies.
As a nurse, the worst aspect of this bill to me is that the higher
your drug bills get, the less help you get with paying those bills.
Our seniors deserve a plan that is guaranteed and affordable. They
should not have to worry about coverage gaps, or which pharmacy they
can go to for their prescription drugs.
And they certainly shouldn't be limited to which drugs their doctor
can prescribe.
We owe our seniors more than vague promises. We owe them a
prescription drug benefit that will be there whenever they need it, and
for whatever drug their doctor prescribes.
We owe it to the American people not to support this sham
Prescription Drug Bill.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from California (Mrs. Tauscher).
(Mrs. TAUSCHER asked and was given permission to revise and extend
her remarks.)
Mrs. TAUSCHER. Mr. Speaker, I express my opposition to this sham bill
that is particularly harmful to senior women, my sisters, and my
mother.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Michigan (Ms. Kilpatrick).
(Ms. KILPATRICK asked and was given permission to revise and extend
her remarks.)
Ms. KILPATRICK. Mr. Speaker, I express my opposition to this sham
Republican bill that is harmful to women all over America.
Mr. Speaker, I rise today to stress the importance of providing a
meaningful prescription drug benefit for seniors in our nation. We have
paid lip service for too long and now is the time for Members of
Congress to deliver good on our word.
However, while we need to enact a prescription drug coverage under
Medicare, we cannot afford to enact a benefit that is anything less
than what seniors deserve--a meaningful benefit that is voluntary and
universal and will provide seniors with affordable prescription drugs.
The plan that Republicans plan to offer does not meet these important
goals.
Most importantly, the proposed Republican plan does not provide
seniors with the promise of guaranteed universal coverage. What does
this mean? The Republican plan relies on private insurance plans or
Medicare HMOs to offer prescription drug coverage to seniors and offers
no concrete or strict guidelines for benefits. Simply put, Republicans
have put the industry's interests above those of seniors. Seniors will
be given no guarantee of meaningful drug coverage and will be at the
mercy of the private industry. Seniors have worked too hard and
contributed too much to this nation for us to give them anything but
the best we can. And, Mr. Speaker, the Republican plan is definitely
not the best we can do--it is far from it.
Democrats are committed to providing a universal, comprehensive drug
benefit through Medicare for all seniors. We also are committed to
addressing the high cost of prescription drugs that have skyrocketed
out of control. It is time for Congress to deliver on our promise and
provide seniors with a true prescription drug benefit. Anything less is
unsatisfactory.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Minnesota (Ms. McCollum).
(Ms. McCOLLUM asked and was given permission to revise and extend her
remarks.)
Ms. McCOLLUM. Mr. Speaker, I express my opposition to this sham bill
that is particularly harmful to senior women.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Florida (Ms. Brown).
Ms. BROWN of Florida. Mr. Speaker, I ask unanimous consent to revise
and extend my remarks, and I rise against this shameful GOP
prescription drug so-called benefit that is very much against my
grandmother and all of the grandmothers in this country.
Mr. CUNNINGHAM. Mr. Speaker, I object. I object to the last one.
The SPEAKER pro tempore. There was objection to the statement of the
gentlewoman from Florida.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Florida (Mrs. Meek).
(Mrs. MEEK of Florida asked and was given permission to revise and
extend her remarks.)
Mrs. MEEK of Florida. Mr. Speaker, this is a sham bill. I represent
senior women very seriously.
Mr. Speaker, I rise in strong opposition to both the ``sham''
prescription drug bill that the Republican leadership has brought to
the floor today, and to the unconscionable Rule that the Republican
Leadership has proposed, a Rule that denies the Democrats an
opportunity to offer a Substitute bill providing real prescription drug
coverage through Medicare.
Mr. Speaker, no one in America should have to choose between buying
medicine or food, between paying their utility bills or their drug
store account, between taking their medicine or living in pain and
discomfort. Yet this is the problem that many of our people face every
day and we all know it. ``Miracle drugs,'' no matter how innovative or
effective, are worthless to those who cannot afford them. Yet today
there are huge numbers of seniors who are unable to follow their
doctor's orders because they cannot afford the medications their
doctors prescribe.
The problem is obvious and so is the solution. Unfortunately, it
involves the one thing
[[Page H4171]]
that our people want and that the Republican Leadership steadfastly
refuses to provide: a real prescription drug benefit through Medicare.
The Republican Leadership knows that American people want a real
prescription drug benefit through Medicare. The Republican Leadership's
efforts to pass this bill are attempt to create an illusion for the
voters this fall. They want to give their candidates a talking point
with the voters so they can say that they support prescription drug
coverage without actually having to provide it. This is a sham. Our
seniors deserve much better.
Mr. Speaker, America's seniors, particularly older women, need
comprehensive prescription drug coverage through Medicare and fair drug
pricing. The Republican bill on the floor provides neither. The
Republican bill is unworkable, unreliable and grossly inadequate.
Mr. Speaker, America's seniors do not want to be left to their own
devices and sent on a wild goose chase shopping for private drug plans
with no guaranteed benefits, plans that private health insurers do not
even want to offer. They should not have to join an HMO that tells them
where they are able to fill their prescriptions in order to get drug
coverage. They deserve the reductions in drug prices that can only be
obtained if we pass a real prescription drug bill that takes advantage
of the purchasing power of Medicare's 40 million beneficiaries.
While I am outraged by the Republican Leadership's refusal to allow
the Democrats an opportunity to offer a Substitute, I certainly
understand the reason for it and so do the American people. The
Republican Leadership will not allow the Democrats to offer a
Substitute because they know their bill cannot withstand a ``side by
side'' comparison with the Democratic Substitute.
The Democratic Substitute that the Republican Leadership will not
allow to be debated and voted on has a yearly out of pocket limit on
drug costs of $2000. Why would the Republican Leadership want to
highlight the fact that under their bill, seniors will have to pay
$100% of their drug costs between $2000 and $3700 when nearly one half
of all seniors have drug costs over $2000 and would be subject to this
gap in coverage?
Why would the Republican Leadership want a comparison between a
Republican bill that will force seniors into private HMO's and restrict
patients' choice of drugs and pharmacies and a Democratic Substitute
that guarantees affordable, dependable, comprehensive drug coverage at
a uniform price while preserving freedom of choice for seniors?
Why should seniors in different states pay different premiums for the
exact same benefits as the Republican bill will permit?
Now some will in this body will contend that a real comprehensive
prescription drug benefit through Medicare is simply not affordable. I
say that anybody that can find the funds to grant the bloated tax
relief for the rich that this House has provided, including $1.2
trillion in estate tax relief for the millionaires in this country,
surely can find a way to pay for a real prescription drug benefit. It's
simply a matter of our priorities.
Mr. Speaker, the affordability of providing a real prescription drug
benefit is a fair subject for debate and should be debated. But this
surely is a reason why the Democratic Substitute needs to be debated
and voted upon. It is not a reason to keep the Democratic Substitute
from the floor. If a Member of this body believes that we can not
afford the real prescription drug benefit that the Democratic
Substitute provides, then I say: vote against it.
So the reasons for the Republican Leadership's approach to this issue
are clear as they are deplorable. They want a press release for the
fall elections, not a real drug benefit and they don't want to take the
heat that would come from a side by side comparison of the Republican
``pretend'' bill and the Democratic Substitute.
I urge all my Colleagues. Reject this unfair, one-sided process.
Let's have a full and fair debate and produce a real prescription drug
benefit. Defeat the proposed rule; pass a fair rule that allows a
Democratic Substitute; Vote for the Democratic Substitute and reject
the Republican Leadership's bill.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Texas (Ms. Eddie Bernice Johnson).
(Ms. EDDIE BERNICE JOHNSON of Texas asked and was given permission to
revise and extend her remarks.)
Ms. EDDIE BERNICE JOHNSON of Texas. Mr. Speaker, I express my
opposition to this bill because it does hurt senior women, in
particular, and is another big windfall for the corporate industry.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from California (Ms. Lofgren).
Ms. LOFGREN. Mr. Speaker, I rise to express my opposition to this
bogus bill that will hurt older women.
Mr. Speaker, today, prescription drugs play a larger role in modern
medicine than ever before. Prescription drugs are used as complements
to surgical procedures, as substitutes for surgery, and to help reduce
future health risks and treat many chronic health conditions. Yet those
who need them the most, older adults, and we know that the majority of
seniors are women, often find themselves without either affordable
prescription drugs coverage or the means to pay for their prescription
drugs needs.
Women on average live longer and are more likely to suffer from
prolonged chronic illness. In fact, women on Medicare spend nearly 20%
more for prescription drugs than men. And--with women's poverty rates
twice that of men, prescription drug costs take a bigger bite out of
women's limited income.
It is a shame that we are not considering a real prescription drug
benefit today, one that would benefit all seniors. Under the Republican
bill, the more a senior woman spends for prescription drugs, the less
coverage she gets. For some reason, the Republican bill forces seniors,
your mother, your grandmother, to pay a higher percentage of costs as
their needs increase. Mr. Speaker, does this makes any sense?
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from California (Ms. Millender-McDonald).
(Ms. MILLENDER-McDONALD asked and was given permission to revise and
extend her remarks.)
Ms. MILLENDER-McDONALD. Mr. Speaker, I express my opposition to this
bill that is particularly harmful to senior women.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Nevada (Ms. Berkley).
(Ms. BERKLEY asked and was given permission to revise and extend her
remarks.)
Ms. BERKLEY. Mr. Speaker, I express my opposition to this shameful
bill that is particularly harmful to the senior women in my district.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from California (Ms. Solis).
(Ms. SOLIS asked and was given permission to revise and extend her
remarks.)
Ms. SOLIS. Mr. Speaker, I express my opposition to this bill.
(The following sentence was delivered in Spanish.)
Mr. Speaker, for all of the old women who can hear me loud and clear,
this is another tactic for the Republicans to take away your
medication.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Ohio (Ms. Kaptur).
Ms. KAPTUR. Mr. Speaker, I ask unanimous consent to revise and extend
my remarks.
Mr. Speaker, I express my strong opposition to this pitiful bill that
denies senior women across America access to affordable prescription
drugs because the Republicans gave all the money away to companies like
Enron in tax cuts, and they were not deserved.
Mr. CUNNINGHAM. Mr. Speaker, I object.
The SPEAKER pro tempore. An objection is heard to the last request to
revise and extend.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Oregon (Ms. Hooley).
(Ms. HOOLEY of Oregon asked and was given permission to revise and
extend her remarks.)
Ms. HOOLEY of Oregon. Mr. Speaker, I rise against the Republican no-
benefit prescription drug proposal that is harmful to seniors in my
State.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from California (Mrs. Davis).
(Mrs. DAVIS of California asked and was given permission to revise
and extend her remarks.)
Mrs. DAVIS of California. Mr. Speaker, I express my opposition to
this unacceptable bill that is particularly harmful to senior women in
my district.
Mr. Speaker, I rise today to talk about H.R. 4954, the Medicare
Modernization and Prescription Drug Act and its implications for our
seniors. In particular, I would like to discuss how women fare under
this proposal before us.
Women are literally the face of Medicare. They comprise 58 percent of
the Medicare
[[Page H4172]]
population at age 65 and represent 71 percent of beneficiaries at age
85. Any potential prescription drug plan must be evaluated with regard
to its impact on women--if it works for women, it works for everyone.
When Medicare was established in the 1960s, the biggest need was
insurance coverage for hospital stays and doctor visits, not
prescription drugs. The focus then was on providing relief for acute
conditions, not chronic.
Today more than 88 percent of Medicare's 42 million beneficiaries use
prescription drugs. The average senior takes four prescriptions daily
and fills an average of 18 prescriptions a year.
The use of prescription drugs is more pronounced among women.
Beginning at midlife, women have a higher incidence of chronic illness
than men. The average woman age 65 and over lives nearly seven years
longer than the average man and relies on Medicare for her health
insurance coverage for more years.
While most women on Medicare use prescription drugs regularly, over
\1/4\ of these beneficiaries--nearly six million women--lack any
prescription drug coverage.
Out-of-pocket spending for prescription drugs place a
disproportionate burden on older women who have retirement incomes that
are roughly half than those of men. In 2000, the average income for
women over 65 was $15,638, compared to $29,329 for men.
Even though women have significantly smaller incomes than men, they
spend a larger proportion of their income on out-of-pocket health
costs. Women over 65 spend 20 percent in comparison to the 17 percent
spent by men. These expenses increase to 27 percent for women 85 and
older.
Older women are one of our nation's most vulnerable groups and
providing affordable prescription drug coverage is critical to
improving their quality of life.
Unfortunately, the proposal before us today does not achieve this
objective. This legislation does not guarantee any specific benefit.
Instead, the bill provides subsidies to insurance companies to provide
private insurance to seniors. The coverage and $33 premium mentioned
today would only be available to beneficiaries who can find a private
plan that offers it. All these figures depend on what HMOs and private
drug insurance plans want to charge.
H.R. 4954 provides less than one-quarter of the amount seniors are
estimated to pay for prescription drugs over 10 years. In fact, it
leaves seniors wholly responsible for costs between $2000 and $3700.
Nearly half of all seniors' annual drug costs are above $2000. I cannot
support a plan that subjects seniors to a gap in coverage. These
seniors will not receive any help with their drug bills for at least
part of the year, even though they continue to pay premiums.
I am committed to passing a fair prescription drug plan under
Medicare that does not stifle innovation or eliminate choice in
coverage. Seniors need assistance in order to obtain prescription drugs
to treat or prevent illness.
In addition, I am disappointed that today's activities will not
include a discussion of an alternative bill. As our senior population
continues to grow, we must take a comprehensive look at all of our
options in order to provide seniors with real benefits.
Instead of H.R. 4954, I support a meaningful prescription drug
benefit that does not handicap our seniors at a time when they most
need assistance. The plan I support builds on the existing Medicare
system and provides seniors with guaranteed benefits, premiums, and
cost sharing for all beneficiaries. Not estimates. The federal
government would use the collective bargaining clout of all Medicare
beneficiaries to negotiate fair drug prices and these savings would be
passed on to our seniors.
American seniors want, need, and deserve real prescription drug
coverage. The Medicare Modernization and Prescription Drug Act
establishes a complex program that offers modest benefits at most.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from New York (Ms. Velazquez).
(Ms. VELAZQUEZ asked and was given permission to revise and extend
her remarks.)
Ms. VELAZQUEZ. Mr. Speaker, I express my opposition to this sham bill
that is a giveaway to the pharmaceutical industry at the expense of
seniors and especially women in our country.
Mr. Speaker, I rise today in opposition to this legislation. While we
all agree that today's elderly need and deserve a prescription drug
benefit, I am afraid this proposal is not the answer.
If we are lucky enough, our parents are still with us. And we know
how they can live longer and more active lives with the new medical
treatments that exist today. Some of our parents already face--and some
of us in the not so distant future may face--the issue of drug
affordability--drugs that help us to live life to the fullest.
We are in the middle of a health care crisis in this Nation. Drug
prices rose 17 percent last year alone--after five years of double-
digit spikes. The prices of popular and heavily-marketed drugs
increased even more--an incredible 34 percent.
No one doubts that something must be done--and fast. But passing
legislation that makes two wrongs does not make a right. As Ranking
member of the Small Business Committee, I want to point out how this
plan fails in two critical ways.
First, it fails our seniors. It does nothing to provide a
comprehensive, affordable drug benefit with Medicare. Second, it fails
small community pharmacists. These pharmacists serve a vital purpose in
our communities. The corner drug stores anchor our neighborhoods and
the local pharmacist counsels our seniors about their medications.
Once again, through the lens of this proposal, we see who the
Republicans care about most--big business--the pharmaceuticals, the
health care companies. Not the little people--seniors citizens that
give so much back to our communities and the corner drug stores they
visit and depend on each and every day.
Mr. Speaker, this is a bad plan. It enriches a handful of
corporations at the expense of seniors and the small businesses across
the country that serve them--without even delivering on the promise of
comprehensive, affordable prescription drug coverage.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Michigan (Ms. Rivers).
(Ms. RIVERS asked and was given permission to revise and extend her
remarks.)
Ms. RIVERS. Mr. Speaker, I express my opposition to this terrible
bill that is particularly harmful to senior women.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from California (Ms. Watson).
(Ms. WATSON of California asked and was given permission to revise
and extend her remarks.)
Ms. WATSON of California. Mr. Speaker, I rise to express my
opposition to this most deceptive bill that is particularly harmful to
my 92-year-old mother and other senior women.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from North Carolina (Mrs. Clayton).
(Mrs. CLAYTON asked and was given permission to revise and extend her
remarks.)
Mrs. CLAYTON. Mr. Speaker, I express my opposition to this sham bill
that is particularly harmful to older women who live longer, have more
diseases, have less money, and need prescription drugs that they can
afford.
Women live longer, suffer from more diseases, have less money when
they retire and must pay more for their prescriptions. 65 percent of
Social Security recipients are women--75 percent of the low income
retired persons are women. The majority of those need real prescription
help, not this bill which does nothing to help sick older women.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Wisconsin (Ms. Baldwin).
(Ms. BALDWIN asked and was given permission to revise and extend her
remarks.)
Ms. BALDWIN. Mr. Speaker, I rise to express my opposition to this
bill, which I deem to be a betrayal of the women of the Greatest
Generation.
Mr. Speaker, I urge my colleagues to vote against this sham of a
bill. It lays the groundwork to privatize Medicare and does not provide
a real, guaranteed, defined benefit that our seniors desperately need.
The Republican bill that is on the floor today forces seniors to shop
around for prescription drug coverage through Medicare HMOs and private
insurance plans. The prices and benefits under this private coverage
would vary from region to region, so that a senior in Wisconsin would
have to pay a different premium than a senior in Florida for the exact
same benefit. These geographic disparities are simply unacceptable.
There are no assurances in this bill that prescription drugs will be
affordable. In fact, this bill would cover less than one-fifth of the
estimated drug costs of Medicare beneficiaries over the next ten years.
In addition, there is a huge gap in coverage. Seniors who need more
than 2,000 worth of drugs a year must pay 100% out-of-pocket, and keep
paying premiums, until they reach the $3,700 out-of-pocket cap.
Millions of seniors will fall into this gaping hole. I believe all
seniors deserve affordable prescription drug coverage, and we
[[Page H4173]]
should not help some seniors cover their drug costs while leaving
others out in the cold.
Seniors will not be guaranteed access to the drugs they need or to
their local pharmacies. The bill would allow private insurance plans to
limit access to covered drugs, even if the drugs are on an approved
list. Seniors would be restricted to certain pharmacy providers or
would be forced to pay higher costs to use the pharmacy of their
choice, even a pharmacy they have been using for years. I know many
seniors in my district who have developed relationships with their
pharmacists over the years and would hate to have to go to another
provider or pay extra to keep going to their same trusted pharmacist.
I hear from seniors in my district who cannot afford their
prescriptions. They send me receipts for their drug bills and ask me
how they are supposed to afford their rising drug costs on a fixed
budget. They take less than the required dosage to save money, which
puts their health at even greater risk.
I support the Democratic proposal that adds a new Part D in Medicare
to provide voluntary prescription drug coverage for all Medicare
beneficiaries. This proposal would provide the same benefits, premiums
and cost sharing for all beneficiaries no matter where they live. It
guarantees fair drug prices by giving the Secretary of the Department
of Health and Human Services the authority to use the collective
bargaining clout of all 40 million Medicare beneficiaries to negotiate
drug prices. Savings will then be passed on to seniors. Unlike the
Republican bill, there are no gaps in coverage in the Democratic
proposal. Coverage is provided for any drug a senior's doctor
prescribes. Seniors will be able to choose where to fill their
prescriptions and will not have to join an HMO or a private insurance
plan to get drug coverage. This is the proposal seniors have been
waiting for. Unfortunately, it is not the proposal that was brought to
the floor today.
Today we are voting on a bill that is a sad mockery of what the
seniors in our country deserve. Instead of providing a comprehensive
Medicare prescription drug benefit for America's seniors, the
Republicans have decided to make sure this bill suits big drug
companies. Close ties to the pharmaceutical industry have influenced
this bill at the expense of our seniors. That is just plain wrong for
the retirees of the greatest generation who worked hard, lived through
the depression won a war, and raised their families.
Seniors need a comprehensive prescription drug benefit that is
affordable and dependable for all--with no gaps or gimmicks in
coverage. The Republican proposal fails on all these counts. I urge my
colleagues to vote against H.R. 4954.
{time} 2115
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Illinois (Ms. Schakowsky).
(Ms. SCHAKOWSKY asked and was given permission to revise and extend
her remarks.)
Ms. SCHAKOWSKY. Mr. Speaker, I rise in opposition to this pathetic
excuse for a bill that is particularly harmful to senior women and to
persons with disabilities.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from California (Ms. Sanchez).
(Ms. SANCHEZ asked and was given permission to revise and extend her
remarks.)
Ms. SANCHEZ. Mr. Speaker, I rise in opposition to this sham bill that
is particularly harmful to senior women, the heart and the soul of our
families.
Mr. Speaker, I rise today to express my strong opposition to the
Republican prescription drug bill, H.R. 4954. This bill, while unfair
to millions of seniors, is particularly harmful to women.
Women make up a large portion of consumers purchasing prescription
drugs. For this reason alone, women's health care needs must be
considered as we debate prescription drug proposals. And unfortunately,
I am hard-pressed to find many of my women colleagues who were
consulted as this bill was drafted. It is no surprise, therefore, that
this GOP bill ignores health problems unique to women.
At least one-third of Medicare beneficiaries, many of them women, do
not have coverage for drugs--and others are forced to create a
patchwork of coverage that simply doesn't get the job done. Too often,
women and seniors are left choosing between food and medicine.
Thanks to Medicare, millions of women have dignity and security in
their retirement years. Millions of women have avoided poverty and
lived better lives. But today, with all of the incredible medical
advances coupled with the rising cost of prescription drugs, it's vital
that the country pull together to pass a meaningful Medicare
prescription drug plan for all women--and all senior citizens.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Texas (Ms. Jackson-Lee).
(Ms. JACKSON-LEE of Texas asked and was given permission to revise
and extend her remarks.)
Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise in opposition to this
destructive insurance protection act that hurts the grandmothers,
mothers, aunts and sisters and all of seniors and those disabled and
provides zero benefits to Americans.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from New York (Mrs. Maloney).
(Mrs. MALONEY of New York asked and was given permission to revise
and extend her remarks.)
Mrs. MALONEY of New York. Mr. Speaker, I rise in opposition to this
rule that would not allow a Democratic substitute and to the underlying
bill.
I rise against the rule and the Republican bill. I regret for
America's seniors that a Democratic alternative was not allowed.
Medicare provides health care coverage to forty million retired and
disabled Americans.
For decades, Medicare has worked to provide needed, lifesaving health
care to millions, but it is missing a fundamental component: a
prescription drug benefit.
If we have courage, this Congress can make history and give our
nation's seniors what they desperately need: a real, and meaningful
prescription drug plan.
I am proud to join my Democratic colleagues, led by Mr. Dingell, Mr.
Rangel, Mr. Stark, and Mr. Brown, as an original cosponsor of H.R.
5019, the ``Medicare Prescription Drug Benefit and Discount Act.''
I come to the floor to discuss two points:
Number 1: unlike the Republican drug plan, the Democratic plan is
simple because it builds upon a proven model--Medicare.
Just like seniors pay a Part B premium today for doctor visits, under
our plan, seniors would pay a voluntary Part D premium of $25 per month
for drug coverage. For that, Medicare or the government will pay 80
percent of drug costs after a $100 deductible. And no senior will have
to pay more than $2,000 in costs per year.
There is an urgent need for this plan. The most recent data indicates
that almost 40 percent of seniors--an estimated 11 milion--have no drug
coverage. Problems are particularly acute for low income seniors and
seniors over the age of 85 (the majority whom are women). Additionally,
those older Americans who do have coverage find that their coverage is
often inadequate for their needs.
The Democratic plan is a real plan with real numbers, not estimates.
Point 2: the Republican plan does nothing to bring down the cost of
prescription drugs. The Democratic plan is the only plan that provides
real Medicare prescription drug coverage for our seniors by stopping
soaring drug costs.
Under the buying power of Medicare, through competition and
bargaining we can rein in drug costs. Prescription drug costs are too
high for our older Americans. They need help now!
For instance, let's look at the cost of Prevacid. Prevacid is an
ulcer medication, and the second most widely used drug by American
seniors. The cost for this prescription is on average $137.54 per month
in New York City--but only $45.02 in the United Kingdom, a price
differential of 206 percent.
Or look at Celebrex, a popular arthritis medication and a drug needed
by many older women, especially, since older women are stricken more
often than men by arthritis. According to a Government Reform Committee
report released by Mr. Weiner and myself, a monthly supply of this drug
costs $86.26 in New York City. In France, a monthly supply of Celebrex
costs only $30.60. This is a price differential of 182 percent. Seniors
in New York City without drug coverage must pay almost three times as
much as purchasers in France.
Prices for prescriptions have risen 10 percent per year for the last
several years, leading to over $37 billion in profits last year for the
giant drug companies. While these corporations wallow in their spoils,
seniors suffer without coverage.
Mr. Speaker, we must pass the Democratic prescription drug plan
without delay. It is built on a proven model, Medicare. The Republican
plan only offers gap-ridden coverage. The Republican bill is about
privatization. The Republican plan is all about election year politics.
For the sake of our seniors, we must pass the Democratic plan, and we
must pass it now.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from California (Ms. Harman).
(Ms. HARMAN asked and was given permission to revise and extend her
remarks.)
[[Page H4174]]
Ms. HARMAN. Mr. Speaker, on behalf of seniors in my district,
particularly women, and in particular veterans, I express my strong
opposition to this bill.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Colorado (Ms. DeGette).
(Ms. DeGETTE asked and was given permission to revise and extend her
remarks.)
Ms. DeGETTE. Mr. Speaker, I rise in opposition to this rule on behalf
of the senior women in my district and around this country who live
longer than men and pay far more money for prescription drugs.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from California (Ms. Waters).
(Ms. WATERS asked and was given permission to revise and extend her
remarks.)
Ms. WATERS. Mr. Speaker, I enter my objection and opposition to this
irresponsible bill that will do nothing to help the senior women of
this country.
Every day, millions of American seniors are forced to choose between
buying prescription drugs and buying food. The Republican leadership in
Congress has responded to this crisis with H.R. 4954, a prescription
drug bill that does nothing to help them.
The Republican bill would force seniors who want prescription drug
coverage to get it from private insurance companies, but the bill
provides no guarantee that insurance companies will offer prescription
drug policies. Even the Health Insurance Association of America has
admitted that insurance companies will not offer drug-only policies. So
the Republican plan is guaranteed to fail.
Furthermore, even if prescription drug policies do become available,
the premiums, deductibles and co-payments will vary widely. Low-income
seniors could be denied the drugs they need if they cannot afford the
co-payments. For many middle-income seniors, the benefits would be so
limited that it would not be worthwhile for them to enroll. H.R. 4954
is a poor excuse for a prescription drug plan for our nation's senior
citizens.
The Democrats have proposed a prescription drug plan that would
provide a guaranteed prescription drug benefit under Medicare to all
seniors who want one.
This bill would ensure that all seniors who choose to participate
would pay the same low premiums and receive the same benefits.
Beneficiaries could choose to obtain their prescriptions from any
willing pharmacy and would be guaranteed coverage for any drug their
doctor prescribes.
Premiums and co-payments would be waived for seniors who are living
under 150% of the poverty level.
The bill would use the collective bargaining clout of all 40 million
Medicare beneficiaries to negotiate fair and reasonable drug prices.
Finally, no senior would have to pay more than $2 thousand per year
in out-of-pocket expenses for the prescriptions they need.
It is time that Congress make prescription drugs available to all
seniors who need them. I urge my colleagues to oppose H.R. 4954 and
support the Democratic plan to provide guaranteed prescription drug
coverage to all seniors who desire it.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Georgia (Ms. McKinney).
(Ms. McKINNEY asked and was given permission to revise and extend her
remarks.)
Ms. McKINNEY. Mr. Speaker, I rise in opposition to this bill which is
a sham and does nothing for seniors in my district, in my State and in
my country.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from California (Ms. Eshoo).
(Ms. ESHOO asked and was given permission to revise and extend her
remarks.)
Ms. ESHOO. Mr. Speaker, I rise to express my opposition to the bill
that will be considered this evening on behalf of my constituents,
especially the senior women that I represent. They deserve a great deal
more and much better and all the women of the country do.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from California (Ms. Pelosi).
(Ms. PELOSI asked and was given permission to revise and extend her
remarks.)
Ms. PELOSI. Mr. Speaker, I rise in opposition to this sham bill which
is a cruel hoax on the American people, especially cruel to America's
senior women who raised our families and deserve better.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as she may consume to
the gentlewoman from Connecticut (Ms. DeLauro).
(Ms. DeLAURO asked and was given permission to revise and extend her
remarks.)
Ms. DeLAURO. Mr. Speaker, I rise in opposition to this insurance
industry, pharmaceutical written bill that does not drive down the cost
of prescription drugs or cover most of America's seniors and is very
harmful to women in this country, those tomorrow, and those who are in
older generations.
Mr. LINDER. Mr. Speaker, I, too, enjoyed that parade; and I
particularly enjoyed the fact that they had not a particular thing to
say about the bill. To say something about impact the bill and how it
impacts women, I yield such time as she may consume to the gentlewoman
from Connecticut (Mrs. Johnson), who wrote the bill.
Mrs. JOHNSON of Connecticut. Mr. Speaker, we have had a parade of my
colleagues from the other side claim that this legislation is harmful
to senior women. I wonder how they could have so lost touch with the
lives of women in America and women in their districts. This bill
represents the greatest leap forward in women's health since the
passage of Medicare.
I was polite to you, and I ask that you be polite to me.
For the very first time, women, particularly low-income women, will
have their prescriptions covered. Perhaps you did not read the bill.
You know and I know that women live longer than men. The great majority
of seniors are women. Perhaps you did not know that retired women are
living on half the income of retired men, that the average income of
retired men in America is $30,000 and the average income of retired
women is $15,000 and of retired women over 85 is $10,000.
Under this bill those low-income women will receive 100 percent of
the costs of their drugs, of their premiums, of the deductible, and of
the co-insurance up to maybe 2 to $5. They will have a right to charge
that much co-insurance. That is an incredible boon to these women. They
will have the security of knowing that every dollar of their
prescription costs up to $2,000 will be covered if your income is under
175 percent of poverty, and that is 44 percent of all seniors.
Yes, this is a wonderful thing for women in America. Yes, this bill
is a giant step forward for seniors in America. Yes, this is the
greatest leap forward for women in health care since the founding of
Medicare. And once you have read the bill, I will be happy to talk with
you about details. But there can be no arguing with the fact that the
first $2,000 of drug expense for people under 175 percent of poverty is
completely covered and, by saving the State $40 billion, they will be
able to go up that ladder of income.
So let us try to talk about the facts tonight, let us have a little
less theater, let us have a little more discussion about the details of
the legislation, and let us try to do America proud as we talk about
the need for prescription drugs in Medicare.
Mr. THOMAS. Mr. Speaker, will the gentlewoman yield?
Mrs. JOHNSON of Connecticut. I yield to the gentleman from
California.
Mr. THOMAS. As women enter their senior years, in terms of the
problems they have with osteoporosis, do we include in this bill
additional money to assist in mammography?
Mrs. JOHNSON of Connecticut. We certainly do. We fix all the problems
with reimbursements for mammography so they will be more accessible to
the women of America. Furthermore, we provide access for something that
is extremely important to women, more important to women than men, and
that is access to disease management plans to manage chronic illness.
It is women who are plagued with four, five, and six chronic illnesses.
Mr. THOMAS. Mr. Speaker, will the gentlewoman yield?
Mrs. JOHNSON of Connecticut. I yield to the gentleman from
California.
Mr. THOMAS. Is it not true that during their working lives men very
often have physicals? In fact, it is oftentimes part of their
professional occupation to get a physical periodically, and many times
women who are not working do not get that physical?
[[Page H4175]]
Mrs. JOHNSON of Connecticut. Absolutely.
Mr. THOMAS. Is it not true in this bill that, for the first time,
every senior who becomes Medicare eligible, that means every woman,
gets a free physical?
Mrs. JOHNSON of Connecticut. Every woman gets a free physical under
this bill, and for the first time they have an option for a plan that
provides entirely free preventative benefits across the board to men
and women.
So this is an enormous advancement for women because women are the
ones who get the poorest health care throughout their lives, and they
will have an option to a plan that has free preventive benefits across
the board and, if they choose it, and they will all get a free baseline
physical when they enter Medicare. Yes, a great advancement for senior
women.
Ms. SLAUGHTER. Mr. Speaker, I yield 1 minute to the gentleman from
Massachusetts (Mr. McGovern).
Mr. McGOVERN. Mr. Speaker, I rise in strong opposition to this sham
bill and to this woefully inadequate bill offered by the majority.
Every Member of this House knows that the number one issue facing
senior citizens is the soaring cost of prescription drugs. Our seniors
need relief and real relief now.
My Republicans colleagues go on about how they support giving our
seniors relief, and then they send this poor excuse for a benefit bill
to the House floor. This guarantees seniors nothing, nothing. It is a
bad bill. And to make matters worse, the gentlewoman from Connecticut
(Mrs. Johnson) gets up and tells us how wonderful and strong her bill
is. Yet she and the Republican leadership make it unamendable. No
substitute. No amendments. No bipartisanship. Two hours total debate.
That is it.
How sad. How outrageous. If there ever should have been an open and
fair process, it should have been today. There were even good
Republican amendments that were offered before the Committee on Rules
that were ruled out of order. But, no, you are afraid you might lose
because deep in your hearts you know that your bill is nothing more
than a political soundbite and you deserve to lose.
Vote ``no'' on this rule and vote ``no'' on this bad bill.
Mr. LINDER. Mr. Speaker, I yield 3 minutes to the gentlewoman from
West Virginia (Mrs. Capito).
Mrs. CAPITO. Mr. Speaker, I stand before you today to offer my
remarks on the prescription drug plan.
On May 1, 2002, four of my constituents boarded a bus, traveled from
Martinsburg, West Virginia, to Washington, D.C., to offer their voice
and their story on how the prescription drug dilemma has reshaped their
lives. That day I heard each of their voices; and, unfortunately, it is
a voice I hear and we all hear all too often.
At each of the town meetings I have had the majority of the questions
deal with the high cost of prescription drugs. After one particular
town meeting a young lady approached me. She showed me a list of
prescription drugs that her mother was taking and the cost of each drug
listed besides it. Looking at the list my heart sank. These figures
were staggering. Additionally, because of the high cost of her mother's
medication, lack of Medicare coverage for her mother, this young woman
who had a family of her own was paying for her mother's medication.
Is this right, Mr. Speaker? No, it is not.
Our seniors deserve the peace of mind of knowing that they can and
will be able to afford their prescriptions. Anxiety over the
affordability of prescribed medications should not spoil one's golden
years. That is why I am standing here tonight.
I am choosing to stand here and tell you that Medicare needs to offer
prescription drug benefit. To be blunt, we need to offer it. We needed
to offer it yesterday or the day before or the day before. This
situation should be resolved.
It is our duty as representatives to represent the people's voice,
and their voice says now is the time. I urge all of my colleagues to
stand up, pass this rule, pass the Medicare prescription drug
legislation which is extremely beneficial to the senior women of
America.
Ms. SLAUGHTER. Mr. Speaker, I yield 3 minutes to the gentleman from
New York (Mr. Rangel).
Mr. RANGEL. Mr. Speaker, this rule does not allow Democrats an
opportunity to say that we think we have a better idea. The majority
found it very difficult to get enough votes to support the
pharmaceutical industry, but it would just seem to me that it is not a
rule against Democrats. It is not a rule even against the integrity of
the House. It is a rule against the senior citizens who really deserve
better treatment than they are getting.
Mr. Speaker, I yield to the gentleman from Maryland (Mr. Hoyer).
Mr. HOYER. Mr. Speaker, I thank the distinguished ranking member of
the Committee on Ways and Means.
There may be no more serious issue that we consider on the floor of
this House this year. The gentlewoman from West Virginia (Mrs. Capito)
that just spoke said why it was so important. She is right. This issue
is critically important to the women that she mentioned, critically
important to the individuals that the gentlewoman from Connecticut
(Mrs. Johnson) mentioned, and I would say critically important to the
citizens that every one of the women on this side of the aisle
represent and came and said they were concerned about and, therefore,
are not supporting this rule.
The gentlewoman from Connecticut said she was polite to those people,
and she was. But I suggest to the gentlewoman that this rule is not
polite. This rule denigrates the importance and seriousness of this
issue.
When your side took over in 1995, Gerald Solomon, the then-chairman
of the Committee on Rules, said this, ``The guiding principals will be
openness and fairness. The Rules Committee will no longer rig the
procedure to contrive a pre-determined outcome. From now on the Rules
Committee will clear the stage for debate and let the House work its
will.''
You have, of course, retreated from that statement. You have not
honored the seriousness of this issue.
{time} 2130
The gentlewoman from Connecticut who the gentleman from California
(Mr. Thomas) says wrote this bill will not have the opportunity to
defend this bill against an alternative that can be fully debated as to
whether or not the seniors to whom she refers will, in fact, be
protected.
The gentlewoman served with Bill Gradison. Bill Gradison for those
who are relatively new to the House was a member of the Committee on
Ways and Means and one of the senior members of the Committee on Ways
and Means, and then Bill Gradison left here, and he went to head up the
Insurance Industries Association in this country.
Ms. SLAUGHTER. Mr. Speaker, I yield 1 minute to the gentleman from
Maryland (Mr. Hoyer).
Mr. HOYER. Mr. Speaker, he went to the insurance industry and what
does Bill Gradison say, a Republican, not a Democrat, a member of the
Committee on Ways and Means, retired, what does he say? A member
representing the insurance agency, he says this bill will not work.
That is what Bill Gradison says, and the shame on this democratic body
is that an issue that all of us agree is so critically important will
not be fully debated consistent with the principle that Mr. Solomon
enunciated in 1995 when the reformers took over this House.
How sad it is, how sad it is that we come here at this hour to debate
one of America's most important issues, affecting millions and millions
and millions of people. All of us, all of us have heard the lament of
those individuals, be they female or male, who cannot pay their
prescription drugs. It is our duty to reject this rule and to have a
full and fair debate, consistent with the Solomon principles.
Mr. LINDER. Mr. Speaker, I am pleased to yield 2 minutes to the
gentlewoman from Virginia (Mrs. Jo Ann Davis).
Mrs. JO ANN DAVIS of Virginia. Mr. Speaker, I rise to speak in
support of the rule. For years I have been an avid supporter of
prescription drug coverage for senior citizens. Why? Because I have a
mom whose prescription drugs amount to over 50 percent of her Social
Security check.
Today, I rise to speak for all of those who have moms and dads on
Medicare.
[[Page H4176]]
The minority does not have a serious bill. They have a $1 trillion
election year gimmick that will bankrupt Medicare.
This is a good and fair rule because it allows a vote on the only
credible plan that has been carefully and thoughtfully designed to help
seniors by lowering drug costs, guaranteeing coverage and providing
choices.
Under the Republican plan, every senior will be eligible for
coverage. We guarantee this coverage. It cannot be taken away. The
Democrat plan, however, phases out coverage. It is essentially an
experiment. Mr. Speaker, seniors cannot afford an experiment. They need
real, credible coverage that they can rely on.
This bill will help our seniors. This is a good rule for a long-
awaited and much-needed legislation and we must pass it. I urge my
colleagues to join me in voting ``yes'' on the rule and ``yes'' on
final passage of the bill for my mom and everyone's mom and dad that is
on Medicare.
Ms. SLAUGHTER. Mr. Speaker, I yield 1 minute to the gentleman from
New Jersey (Mr. Menendez).
Mr. MENENDEZ. Mr. Speaker, I rise on behalf of my 83-year-old mother
and millions like her across this country who work for decades, in her
case, in the factories of New Jersey, now has Alzheimer's and spends
over half of her Social Security check on prescription drugs and but
for my sister and my assistance would not live with the dignity that
she deserves. There is a difference between Republicans and Democrats
on prescription drugs, and that is why Republicans will not even let us
debate our proposal here on the floor of the House of Representatives.
The denial of a vote on the Democratic proposal for a universal,
affordable, guaranteed benefit under Medicare is a corruption of this
institution by the Republican majority, by the way, for an industry
that has given them millions in campaign contributions.
There is a difference in who benefits. Democrats cover all seniors.
My colleagues subsidize big insurance companies and cover less than a
quarter of seniors' costs. There is a difference in what seniors will
pay. Democrats guarantee a $25 monthly premium with low out-of-pocket
expenses. My colleagues leave those decisions to the whims of
corporations. Plenty of opportunity for more corporate greed.
No senior in America should have to choose between paying their rent,
putting food on the table, and having access to life-enhancing drugs.
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (Mr. LaTourette). The Chair would ask the
courtesy of all Members in not exceeding the time that has been yielded
to them.
Mr. LINDER. Mr. Speaker, I yield 2 minutes to the gentleman from Iowa
(Mr. Latham).
Mr. LATHAM. Mr. Speaker, I thank the gentleman from Georgia for
yielding me the time, and I thank the Speaker for this time.
This is a long time coming. This is so important for people like my
mother who is 85 years old, living in a town of 168 people in
Alexander, Iowa. This is not only a bill that is going to help her to
be able to afford her prescription drugs and to enhance her length of
life and quality of life; but just as importantly, in rural America,
this bill is going to make sure that there is access to quality health
care in rural America.
There is a lot of work that has gone into this bill, and I would like
to see any other proposal out there that has brought together so many
people when we look at the American Hospital Association, the AMA, the
physical therapists, the National Association of Home Care, the
National Rural Health Care Association, all coming together in support
of this very, very important legislation.
Mr. Speaker, I have been very proud to serve on the Speaker's
Prescription Drug Action Team, and I want to thank the Speaker and all
the chairmen of the committees that have worked so hard on this bill
and to the successful end which is really going to address the problems
that we have.
I also want to congratulate my three Republican colleagues from Iowa
(Mr. Leach), (Mr. Nussle), and (Mr. Ganske) for working as a team to
try and make sure that we did get relief in Iowa. We have the lowest
reimbursement for our hospitals in the country by a wide margin. This
bill is going to take a giant step toward keeping those rural hospitals
open, to keep the kind of high-quality health care providers on the job
and serving in Iowa. It is absolutely critical that we continue to have
the physicians, the nurses, the home health care folks available for my
mother.
Mr. Speaker, this is a great evening, and I support the rule and the
bill.
Ms. SLAUGHTER. Mr. Speaker, I yield 2 minutes to the gentleman from
New Jersey (Mr. Pallone).
Mr. PALLONE. Mr. Speaker, some of the comments that are being made by
my colleagues on the other side, both on the floor and in the Committee
on Rules, have been very upsetting to me.
I rise in opposition to the rule, but I heard the gentlewoman from
Virginia just say that the rule was fair because it allows an up-or-
down vote on what is the only good bill dealing with prescription
drugs. That is not what fairness is about. That is not what democracy
is about.
I asked this morning in the Committee on Rules that the Democratic
substitute and three other amendments that would lead to price
reductions and another amendment that would provide a guaranteed
Medicare benefit be placed in order. All were denied. My colleague may
not agree with me, but the gentlewoman from Virginia should not suggest
that the only thing that should be considered is what they think is the
right thing. That is not the way a democracy operates.
The other thing that upset me was that I heard the gentlewoman from
Connecticut say that we should just read the bill. Let me tell my
colleague, I read the bill. We have not had a lot of time to read the
Republican bill, but I read it. There is nothing in it. It is not a
Medicare benefit. It does not guarantee any benefit. It does not tell
us what the premium is going to be. It does not tell us what the
deductible is going to be. It does not tell us anything about whether
it is going to be available anywhere, and there is no price reduction.
The gentlewoman from Connecticut mentioned the passage of Medicare,
but she was very proud of the fact this morning in the Committee on
Rules that this was not a Medicare bill and that it operated through
private insurance and through market competition and was not part of
Medicare because she said that Medicare oftentimes does not work now
and we need to change it.
Then the gentleman from Georgia actually said in response to the
gentleman from Massachusetts (Mr. McGovern) when I spoke about how we
wanted a Medicare guarantee and we wanted this to be under Medicare,
the gentleman from Massachusetts (Mr. McGovern) said it is unfortunate
that the gentleman from Georgia (Mr. Linder) made a reference to the
Medicare prescription drug program as a Soviet-style model program, and
the gentleman from Georgia (Mr. Linder) said, well, it is; and he said
it several times.
The problem is that the Republicans do not like Medicare. They do not
want this to be a Medicare program because they never liked Medicare,
and they want it to wither on the vine, and they do not want to provide
any benefit for senior citizens in this country.
Mr. LINDER. Mr. Speaker, I yield myself such time as I may consume.
That was some of the gentleman's more interesting prose. I am sure
there is a kernel of thought in there, but I did not detect it.
Mr. Speaker, I yield 1 minute to the gentleman from California (Mr.
Thomas), the chairman of the Committee on Ways and Means.
Mr. THOMAS. Mr. Speaker, the parade on the other side of the aisle
which repeated the mantra that it was a sham bill, cruel hoax, harmful
to women and the disabled, in case anybody really thinks that is true,
I am wondering why then when we look at the more than 90 organizations
that support this bill, have names such as the Visiting Nurses
Association, the Pennsylvania Women's Health Alliance, the National
Spinal Cord Injury Association, the National Coalition for Women With
Heart Disease, the National Alliance for the Mentally Ill of
Pennsylvania, American Parkinson's Association of Vermont, the Epilepsy
Foundation of Mississippi, having someone parade to the microphone and
repeat some mantra, as though it was
[[Page H4177]]
some kind of a fixed statement that meant anything really does
embarrass me, when if we look at the organizations and more that I just
repeated who every day help the people that my colleagues say are not
helped are for this bill. Someone is wrong, and it is not them.
Ms. SLAUGHTER. Mr. Speaker, I yield myself such time as I may
consume.
The Democrats are standing with AARP, the National Committee to
Preserve Social Security and Medicare, the Alliance for Retired
Americans, National Council on the Aging, National Senior Citizens Law
Center, Families USA, the National Partnership for Women and Families,
the AFL and countless others who represent America's 40 million
Medicare beneficiaries.
Mr. Speaker, I yield 3 minutes to the gentleman from Michigan (Mr.
Dingell).
(Mr. DINGELL asked and was given permission to revise and extend his
remarks.)
Mr. DINGELL. Mr. Speaker, I thank the distinguished gentlewoman for
yielding me the time.
We have got a remarkable thing here before us, a closed rule. We have
got a bill on which there were never any hearings, a bill that just
drips defects, a bill that is opposed by almost everybody that knows
anything about pharmaceuticals and about the needs of the senior
citizens and a bill that is opposed by every single responsible major
organization of senior citizens.
We cannot offer amendments to it. They cannot be cut-and-bite
amendments. There is no possibility of us offering a substitute to it.
This is what my colleagues call democracy on that side of the aisle?
This is the way we treat the concerns and the rights and the interests
of our senior citizens? I wonder how many of them like what they are
seeing tonight on television as they watch this body engage in debate
which is at best fraudulent and which is at worst just plain
outrageous.
The hard fact of the matter is we cannot offer amendments on this
side at all, but we can bring to attention the fact that this is going
to significantly damage, if not in fact destroy, most of the plans that
on behalf of industry and labor offer to retirees the right to have
prescription pharmaceuticals as a part of the medical care program of
the company which offers that particular benefit.
That is an outrage. There is no way that we can address here what the
amount is that is going to be charged for the program. In other words,
in this legislation, there is nothing anywhere which tells how much the
senior citizen is going to pay to whom for what. That is all left up to
some kind of nebulous understanding between the Secretary and an
insurance company. There is no correction for that particular problem.
Is that bad? Of course. But there is worse. There is not a nickel's
worth of subsidy for the health care of a senior citizen in this
legislation. Do my colleagues know where the money goes in the
legislation that is before us? To an insurance company. The insurance
company can offer whatever benefits it wants or no benefits, but it is
going to get a big fat subsidy.
With companies like Arthur Andersen I am sure that we will have an
accounting system which will make that look good, but the simple fact
of the matter is the benefits that are going to come under this
legislation are not going to come to citizens. They are going to go to
a bunch of cold-hearted, steely-eyed insurance companies that are going
to be interested in maximizing benefits. In fact, there is not one plan
which will be offered by insurance companies that is not going to be
heavily subsidized.
Mr. Speaker, I rise in strong opposition to this abominable closed
rule. On the most important issue to face this Congress, the Republican
leadership has decided to prevent a single amendment to be offered, and
in particular, a Democratic substitute.
There is no secret why we Democrats are not being allowed to offer a
substitute, even a substitute that requires no waivers of the rules. It
is not because our substitute has no merit. It is because it has so
much merit, it would pass.
Let me explain why the rule needs to be defeated so that we can offer
the Democratic substitute.
Unlike the bill introduced by our Republican colleagues, our
substitute can be simply explained, because it is built on a simple,
known, and effective model--Medicare itself.
Just like seniors pay a voluntary premium for Part B medical costs
such as doctor visits, our bill provides for a voluntary Part D drug
premium of $25 per month. For that, the Government will pay 80% of drug
costs after a $100 deductible. And no senior will have to pay more than
$2,000 in costs per year.
These are real numbers, not estimates. The benefits and the $25
monthly premium are specified on the first page of the substitute.
Unfortunately, there are no such guarantees in the Republican bill.
On top of that, we will be arming seniors with the most potent
protection from soaring drug costs. Forty million seniors banded
together under the buying power of Medicare, we can begin to use the
necessary bargaining power to rein in high drug prices.
This is not price controls; it is competition and bargaining. We saw
that the Government was effective in negotiating a competitive price
for the prescription drug Cipro during the anthrax outbreak. Why
shouldn't we do the same for other life saving drugs for seniors?
In contrast to our simple and effective prescription drug benefit,
the Republican bill is a complex scheme that would make Rube Goldberg
blush. In fact, it is not a drug benefit at all. It is a host of
subsidies to private insurers in the hope that they will offer a drug-
only benefit to seniors. Will they? Time and again they have told us
``no.''
Why would the Republicans put forward such a model? Well, quite
simply they have a larger agenda--they want to privatize all of
Medicare, and this is just another step. That is the only reason why
seniors are not even given a choice of getting the benefit through
their traditional Medicare provider.
Any why don't they endorse our plan? Our plan is simple; it is
comprehensive; it is what seniors want. The Republicans have raised
just one issue: they say it costs too much. Well, I can tell you that
we can afford it. It is just a matter of priorities.
Should that priority be making the estate tax repeal on the
wealthiest people permanent, which will cost $750 billion in the decade
that the permanent repeal is effective, or should it be enacting a
critical health program that will help all of our seniors?
Our prescription drug benefit has the strong support of organizations
representing millions of seniors, such as the National Committee to
Preserve Social Security and Medicare, the alliance for Retired
Americans, the National Council on Aging, and AARP. They recognize our
benefit is a good value for seniors.
The substitute also includes provisions to shore up the Medicare fee-
for-service system such as increased payments to hospitals, doctors,
and nursing homes. Senior citizens and individuals with disabilities
depend on Medicare fee-for-service an ensuring its continued viability
has always been a priority for Democrats.
It is a good substitute, and I hope my colleagues will vote against
the rule, so that it can be offered.
{time} 2145
Mr. LINDER. Mr. Speaker, I yield 1 minute to the gentleman from
Mississippi (Mr. Pickering).
Mr. PICKERING. Mr. Speaker, I rise in proud support of the rule and
the effort of this body. It is an historic opportunity for us.
If we put the politics and the extreme language aside, these are the
facts: $350 billion will go to our seniors for prescription drugs, to
our rural hospitals, to our health community centers, to those who need
it most.
In my home State of Mississippi, 55 percent of all seniors live at
the rate that will get the fixed income assistance, which means no
deductible, no premium, only a copayment of $2 to $5 per prescription
drug, an enormous benefit for the seniors who need it most. Fifty-five
percent of seniors in Mississippi.
If we look at those who have catastrophic occurrences in their life,
when drug costs exceed $3,700, they will see no cost over that. Those
most in need will be helped. It is responsible, it is reasonable, it is
right. I urge the Members to follow and support the rule.
Ms. SLAUGHTER. Mr. Speaker, I yield such time as he may consume to
the gentleman from California (Mr. Honda).
(Mr. HONDA asked and was given permission to revise and extend his
remarks.)
Mr. HONDA. Mr. Speaker, I rise to express my opposition of this
prescription drug proposal.
Mr. Speaker, the elderly and disabled have waited long enough for a
prescription drug benefit in Medicare and for relief from the high cost
of prescription drug prices. While the Republicans have been busy
voting on permanent tax cuts and attending lavish fundraisers
[[Page H4178]]
by the pharmaceutical industry, seniors throughout the country have
been waiting for Congress to take action. All seniors need relief from
prescription drug prices, and they need it now.
However, the Republican prescription drug bill completely fails the
test of a real Medicare drug benefit. The Republican bill has no
guaranteed minimum benefit, no guaranteed, affordable monthly premium,
and no guarantee of fair drug prices. To add insult to injury, their
bill leaves a huge coverage gap. Seniors who need more than $2,000
worth of drugs must pay one hundred percent out-of-pocket, and keep
paying premiums, until they reach the $3,700 out-of-pocket cap.
Mr. Speaker, the Democrats have an alternative we had hoped to offer.
Under the Democratic plan, seniors and individuals with disabilities
will be able to keep making the choices that matter. Seniors will not
be forced to join an HMO. They will not be forced to join a private
insurance plan that will restrict their access to needed drugs, deny
coverage for the medicine their doctors prescribe, or force them to
change pharmacies. And unlike the Republican plan, our plan has no
gap--beneficiaries will always have coverage.
But the Republican Leadership is denying Democrats the opportunity to
offer our alternative. They are denying our right to participate in a
fair, democratic debate about prescription drugs. The time is now for a
real, meaningful, and affordable Medicare prescription drug benefit.
Unfortunately, it looks like this Republican-led House won't be
providing one anytime soon.
Ms. SLAUGHTER. Mr. Speaker, I yield 1 minute to the gentlewoman from
California (Mrs. Capps).
Mrs. CAPPS. Mr. Speaker, I thank my colleague for yielding me this
time.
Mr. Speaker, I acknowledge my sisters in Congress as we rise in
opposition to this terrible rule.
One of the proudest days of my life was when I was sworn into this
body, the symbol of our democracy. But today I am sad for the House and
for this country. The process the majority has used to produce their
Medicare bill is completely contrary to the principles of our
constitution. A bill was rammed through committee that will not give
seniors an affordable, reliable, comprehensive benefit; seniors, most
of whom are women.
Now the majority is refusing to allow a free and fair debate on the
issue. Why? They know their bill will not work. They know seniors will
not get affordable drug coverage from insurance companies, and they
know so many seniors will get no help with their medications, and they
are afraid they would lose.
I can accept losing in a fair fight, but I cannot accept this anti-
democratic attempt to muzzle fair debate. We should reject this rule,
have a full debate on the needs of our seniors, and pass a real
prescription drug benefit.
Mr. LINDER. Mr. Speaker, I am pleased to yield 1 minute to the
gentleman from Minnesota (Mr. Kennedy).
(Mr. KENNEDY of Minnesota asked and was given permission to revise
and extend his remarks.)
Mr. KENNEDY of Minnesota. Mr. Speaker, this bill is important and
overdue for our Nation's 13 million seniors. Our seniors deserve
prescription drug coverage now. They do not deserve the Democrat's
election-year gimmick.
The average senior saves 44 percent on current drug costs under our
plan. Mr. Speaker, our plan gives seniors immediate relief from the
rising cost of prescription drugs by providing a discount of up to 25
percent off the top of the overall drug cost.
Just last week, Health and Human Services Secretary Tommy Thompson
released a study showing our plan would save seniors more money than
our friends on the other side of the aisle. In addition to the
immediate discount and cost sharing, our plan includes catastrophic
protection, 100 percent prescription drug coverage for low-income
seniors, and more Medicare choices and savings.
I support the passage of this bill and this rule, and I urge my
colleagues to do the same.
Ms. SLAUGHTER. Mr. Speaker, I yield 1 minute to the gentleman from
Michigan (Mr. Bonior)
Mr. BONIOR. Mr. Speaker, about 2 weeks ago, I got on a bus with some
seniors from my State of Michigan, and we went over to Ontario, Canada,
to buy some prescription drugs. They got these drugs at 60, 70, 80, 90,
110 percent less than what they would have to pay in the United States,
drugs like Lipitor and Celebrex.
They deserve a secure retirement. A secure retirement means not
having to choose between medication and rent, medication and food,
medication and transportation. It also means not having to go to
another country to buy medicines that they need. That is an outrage.
We have the power in this institution to change that. We have had the
power to change that for the last 8 years, and we have not done a damn
thing about it, if my colleagues will pardon my language.
The Republicans have turned a blind eye to the plight of our mothers
and our fathers and our grandparents. They have been blinded by the
money and the power of the pharmaceutical lobby, and the Republicans
are putting up roadblocks to prescription drugs time after time after
time.
It is time for real reform, not a sham proposal. I ask my colleagues
to open their eyes to the reality of what is happening in the country
and give us some decent options to vote on.
Mr. LINDER. Mr. Speaker, I yield myself such time as I may consume to
remind my friend from Michigan that, about 10 years ago, they had the
power to change it with overwhelming majorities in both bodies and the
Presidency, and they chose not to do it then, too.
Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr.
Barton).
(Mr. BARTON of Texas asked and was given permission to revise and
extend his remarks.)
Mr. BARTON of Texas. Mr. Speaker, I rise in support of the rule, even
though I had an amendment that I would have liked to have offered that
was not made in order on prescription drug savings accounts.
This is not the fairest rule. We could have made in order a
Democratic alternative. But for a first start, I think it is a fair
enough rule.
This is a good plan that will be on the floor. It spends $350 billion
over 10 years to provide a prescription drug benefit and some Medicare
reforms for the providers. The drug benefit comes to a population where
we have about 30 million senior citizens on Medicare, and 70 percent of
those seniors have some prescription drug coverage under private
medigap policies. Of those that do not have any prescription drug
benefits, 50 percent of them have drug costs that are less than $1,000
a year, and only about 700,000 have drug costs that are over $5,000 a
year.
Now, if you are one of those 700,000 or it is your mother or your
father, your grandmother, your grandfather, your aunt or your uncle,
that is a big problem. But to say that a prescription drug benefit that
is going to provide $31 billion a year to provide coverage for
prescription drugs is not at least a good start, I think is just flat
hypocritical.
Now, I think we can do more. I would like for us to do more. I would
like to, at some point in time, make in order an option for those that
want to use a prescription drug savings account to have that option;
and, hopefully, later this year, we will get that.
I would point out that if the plan that is before us were to become
law and it is a bad plan, it is optional. There is nothing mandatory
about this plan that is going to be on the floor.
I would also point out that the provider benefits in the bill, which
are over $4 billion a year, there is almost universal support for in
the provider community.
So this is a good start. I would hope we would vote for the rule and
have the debate.
Ms. SLAUGHTER. Mr. Speaker, may I inquire as to the time remaining on
both sides?
The SPEAKER pro tempore (Mr. LaTourette). The gentlewoman from New
York (Ms. Slaughter) has 10 minutes remaining, and the gentleman from
Georgia (Mr. Linder) has 11 minutes remaining.
Ms. SLAUGHTER. Mr. Speaker, I yield 1 minute to the gentleman from
Ohio (Mr. Brown).
Mr. BROWN of Ohio. Mr. Speaker, I thank my friend from New York for
yielding me this time.
Last week, the Committee on Energy and Commerce was marking up the
prescription drug bill. Last Wednesday, we stopped at 5 p.m. in the
afternoon when we should have been working into the evening. Why?
Because my friends on that side of the aisle went to a Republican fund-
raiser underwritten by the prescription drug companies.
[[Page H4179]]
The Chair of that dinner was the CEO of a British drug company who
donated $250,000 to the Republican Party. There were hundreds of
thousands of other dollars donated by drug companies that night.
The next day, Mr. Speaker, when we went back for the markup, every
amendment that Democrats offered that the drug companies did not like,
surprise, was voted down. An amendment that said seniors should get the
same drug benefits that Members of Congress get was voted down on a
party line vote because the drug company sat in the back of the room
and said no.
Every amendment we voted on that the drug companies did not like, to
close the gap in all the out-of-pocket expenses that seniors had to
pay, if the drug companies did not like it, they sat back in the back
of the room and said no.
Vote for the Democratic plan written for seniors.
The SPEAKER pro tempore. The gentleman's time has expired.
Mr. BROWN of Ohio. Vote ``no'' on the Republican plan written by the
drug companies for the drug companies.
The SPEAKER pro tempore. The gentleman's time has expired.
Ms. SLAUGHTER. I was going to yield that gentleman another 30
seconds.
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore. Members need to heed the gavel, and the
Chair would respectfully ask that, when the gravel is pounding, the
Members cease speaking so that the gentlewoman from New York (Ms.
Slaughter) could yield additional time, which is her desire.
Mr. LINDER. Mr. Speaker, I am pleased to yield 2 minutes to my
friend, the gentleman from Florida (Mr. Weldon).
Mr. WELDON of Florida. Mr. Speaker, as many of my colleagues in this
body know, I practiced internal medicine for many years before coming
to the House. Indeed, I still see patients about once a month at the
veterans' clinic in my congressional district. I lived this problem on
a daily basis. I practiced internal medicine. Mainly what I did was I
wrote prescriptions mainly for senior citizens, and I dealt personally
with the struggles that many of them face in paying for their drugs.
My primary concern is getting a bill, and frankly I was very
disappointed we did not get a bill 2 years ago, and I think the reason
we did not get a bill is because some people thought they could
capitalize on it in the campaign, and I have to honestly say this is
deja vu all over again. We are starting out very, very poorly.
I have heard that they have not had a chance. We had two committees
mark up this bill. The Committee on Ways and Means spent 13 hours on
it. They were in until 2 a.m. The Committee on Energy and Commerce went
all night. We hear these claims that the pharmaceutical company is
giving us all this money. Do I assume the Democratic party has never
taken any pharmaceutical money?
I will tell the Members what we need. We need a plan. We need some
kind of plan, and this is step one. We have to go to conference with
the Senate. Then we have to negotiate in conference, and many of you
people who are over there demagogueing this issue are going to be in
that conference committee. We are going to have plenty of opportunities
to get a very, very good bill to help our seniors.
But if we keep on with this attitude, I am going to tell my folks
back home, forget it. It is going to be kicked off into the campaign
again. People are going to hope they are going to get an advantage, and
I do not think anybody is going to get an advantage, and the people who
are going to suffer are the senior citizens.
I want to say one other thing. We do not want a plan that stifles
innovation. If you stifle innovation, I can tell you I used to write
prescriptions for people and give them to them, new pills that kept
them alive, and without those pills, they would have died.
Ms. SLAUGHTER. Mr. Speaker, I yield 1 minute to the gentlewoman from
Florida (Mrs. Thurman).
Mrs. THURMAN. Mr. Speaker, I thank the gentlewoman for yielding me
this time.
Mr. Speaker, I want the people of the fifth district's voices to be
heard tonight, too. First of all, I want to say that this debate
tonight is not about the provider givebacks in this bill. This debate
is about the most important issue facing the American people and the
issue that every Member of this Congress and including the President
ran on in the last election.
And let us make it clear, today I went to the Committee on Rules
because the people in the fifth district said to me, we want the cost
of drugs down, we are tired of seeing on the TV people going to Canada
to buy their medicines cheaper, or why is it that industrialized
nations, our competitors, are buying their drugs at a lesser cost?
Just to give you some examples, how about Zocor? In industrialized
nations their average pricing is about $65. In the fifth district, it
is $104. We need to bring these costs down.
Mr. LINDER. Mr. Speaker, I am pleased to yield 2 minutes to the
gentleman from Illinois (Mr. Shimkus).
Mr. SHIMKUS. Mr. Speaker, I wish my friend, the gentleman from
Maryland (Mr. Hoyer), was here because he played the Solomon card, and
I have great respect for Jerry Solomon, and I say semper fi to Jerry,
who is probably watching these proceedings and chuckling.
Mr. Speaker, I support this rule. We labored hard for over 25 hours
in the Committee on Energy and Commerce, and I know my friends on the
Committee on Ways and Means worked deeply as hard. It is not a perfect
bill. In fact, the bill coming to the floor stripped out my language on
orphan drugs, help for Lou Gehrig's disease, Crohn's disease and
Tourette's disease.
But this bill has some positive aspects. First, it fits within the
budget. This is critical because any amendment either on the floor
would add to the bill which would strip it on a budget point of order
or it would shortchange the prescription drug benefit or shortchange
the hospital benefits.
Illinois offers a pharmaceutical assistance program for dual
eligibles. This bill will assume Federal responsibility for dual
eligibles, saving Illinois $2 billion over 8 years.
{time} 2200
Individuals who make 175 percent of poverty level will receive full
cost-sharing assistance. This covers 34 percent of Illinois' Medicare
population, 549,000 people. It increases payments to all hospitals in
2003. It increases payments to community hospitals. It increases DSH
payments, adds a 10 percent increase to rural home health care
agencies, increases by 10 percent hospice payments.
Mr. Speaker, it is a finely crafted bill that went through the
committee process. It is not a perfect bill. It is a bill that we can
pass on the floor tonight. I commend my colleagues and look forward to
passing this bill.
Ms. SLAUGHTER. Mr. Speaker, I yield 2 minutes to the gentlewoman from
California (Ms. Pelosi), the Democratic whip.
Ms. PELOSI. Mr. Speaker, I thank the gentlewoman for yielding me this
time.
Mr. Speaker, 37 years ago when Medicare first came into existence,
there was a big fight over it. The Democrats wholeheartedly supported
it. The Republicans opposed it. They still oppose Medicare.
Over the years, they have made statements to that effect. Newt
Gingrich when he was Speaker said that he would like to see Medicare,
in his words, wither on the vine. And the Republican leader of the
House, the gentleman from Texas (Mr. Armey) said that Medicare should
be no part of a free world. In the debate in the Committee on Rules
last night, the gentleman from Georgia (Mr. Linder) referred to it as a
Soviet-style model, what the Democrats were proposing. A Soviet-style
model.
They did not support it then. They do not support it now. It is no
wonder they have proposed this cruel hoax on America's seniors. To
pretend they have a prescription drug benefit that is a guarantee is
simply not true. They offer no guarantee, merely a suggestion.
The Republican bill does not contain any defined premium or
assurances that prescription drugs will be affordable. In the one State
where such a program exists, the monthly premium is $85 per month. That
is in Nevada.
[[Page H4180]]
Less than one-fifth of the estimated cost of Medicare beneficiaries
over the next 10 years will be covered in this bill. The Republican
bill does not provide guaranteed access to the drugs seniors need or
access to their local pharmacy.
If we had been allowed to present a substitute tonight, which this
rule prevents, the Democratic substitute would have provided a
guaranteed, affordable prescription drug benefit for all seniors that
will amount to an entitlement under Medicare. The gentleman from Texas
(Mr. Barton) said before this is optional; it is not mandatory. He said
that himself on the floor here.
Mr. Speaker, imagine a situation where we could have prescription
drug benefits for all of our seniors, the quality of life that it would
produce, and the cost savings to our budget.
Mr. LINDER. Mr. Speaker, I yield myself 30 seconds to point out a
couple of things in the previous statement.
Mr. Speaker, Mr. Gingrich did not ever say Medicare would wither on
the vine. This was played out on CNN very clearly when they played the
whole statement, not the botched statement the Democrats have been
running. He said if we bring competition into the system, the Health
Care Financing Administration would wither on the vine.
Secondly, I will point out that the Democrats had a majority here for
40 years. When I first came here, they had a huge majority in both
bodies, and the President was a Democratic; and they did not even offer
one. I think it is fair to say that the Republicans are making the
effort.
Mr. Speaker, I yield 1 minute to the gentlewoman from Pennsylvania
(Ms. Hart).
(Ms. HART asked and was given permission to revise and extend her
remarks.)
Ms. HART. Mr. Speaker, I rise in support of the rule and urge Members
to also support the bill.
The Centers for Medicaid and Medicare Services did a poll checking
out this bill. They estimated that virtually all of the Medicare
beneficiaries, that is at least 95 percent of them, would opt for this
drug coverage. I doubt that 95 percent of Medicare recipients would be
interested in their proposal, but this proposal provides seniors with
coverage for prescription drugs that they cannot get today. That means
the choice they currently make of leaving that prescription drug bag on
the counter because they cannot afford it or paying for it and taking
it home is no longer a choice they have to make. They pay for it
because they have coverage, they take it home, and their health
improves.
All of the senior citizens that I have met with in my district have
been asking me to please help them get the coverage for the
prescription drugs they need to stay healthy and out of the hospital.
That is all they ask. The women and the men. That is what we give them
in our bill. I urge support.
Ms. SLAUGHTER. Mr. Speaker, I yield 1 minute to the gentleman from
New York (Mr. Nadler).
Mr. NADLER. Mr. Speaker, what we have on the floor today is a
pitiful, pathetic, puny, pretend plan; a pretend plan that pretends to
offer seniors prescription drug care, prescription drugs; but what it
really does is gives a lot of money to the insurance companies and says
please, we hope you will do something for our seniors, maybe. That is
all it is.
They are too something, I will not say what because my words might be
taken down, but they will not permit the Democratic plan, which is a
straight plan for Medicare to pay for 80 percent of the cost of
prescription drugs, to be offered on this floor because they do not
have confidence that they could win the debate. They will not permit
the two plans to be offered on this floor to be debated because they
are afraid in the light of day if the American people see it, they
would say, We want a plan. We want what they call the Soviet-style
plan, which is what they characterize Medicare as for the last 40
years.
They did not want it then. They still do not want it. And they
certainly do not want Medicare coverage for prescription drugs. They
want to give more money to the insurance companies and say we hope they
will provide it. Fat chance.
Mr. LINDER. Mr. Speaker, I yield 1 minute to the gentleman from
Kentucky (Mr. Fletcher).
Mr. FLETCHER. Mr. Speaker, this evening we are addressing one of the
most pressing health care issues in America. I am very disappointed
that my colleagues on the other side of the aisle, when we marked up
the budget, they absolutely set aside no amount of money, zippo. They
did nothing to set aside any money for prescription drugs for seniors.
There was no plan in order to provide the funding for the plan that
they offered in the committee; and it was a $973 billion plan offered
in the committee. There was no way of paying for it. This burden was
going to be on our children and grandchildren, and the other side of
the aisle offered no single way of paying for it.
Mr. Speaker, they talked about taxes, but they did not offer the tax
increase that would have been required. Are they taking it from Social
Security? That is where it would have had to come from. Now they talk
about controlling cost.
We eliminated the best prices which eliminated the floor.
Congressional Budget Office estimates this has the most cost-
controlling policy of any plan offered. That means we are going to
provide the most competitive prices for drugs. I encourage Members to
support the rule and the bill.
Ms. SLAUGHTER. Mr. Speaker, I yield 2 minutes to the gentleman from
Arkansas (Mr. Berry).
Mr. BERRY. Mr. Speaker, I thank the gentlewoman for yielding me this
time.
Mr. Speaker, this rule is a fraud. This bill is a fraud. They have
come to the floor and said that they are going to do something about
prescription drugs for our seniors. Not a dime of this money goes to
buy any medicine. It goes to the insurance companies.
I wondered, as I listened to this debate this evening, if my
colleagues on the other side of the aisle have bought into the
philosophy of that old philosopher and spiritual leader, Brother Dave
Gardner, who said, ``When you get a man down, kick him because it gives
him incentive to rise above himself.''
They have got our senior citizens down, and now they want to kick
them. The Greatest Generation that lived through the Depression, fought
World War II and built this Nation, and now we are going to just kick
them one more time. And if we cannot kick them, we are going to trick
them and try to make them think that we are going to buy them some
prescription medicine. This bill does not buy them anything.
Mr. Speaker, this rule should not pass and this bill should not pass
because everyone who votes for it is going to have to live forever with
the fact that they mistreated our senior citizens, the Greatest
Generation one more time.
Mr. LINDER. Mr. Speaker, I yield 2 minutes to the gentleman from
California (Mr. Cunningham).
Mr. CUNNINGHAM. Mr. Speaker, I would like to speak to my colleagues
on the other side of the aisle. The gentlewoman from New York (Ms.
Slaughter) and I have been friends for a long time. I have a mom. I
have a grandmother that is 93 years old. I have a mother-in-law and two
daughters. They just left topside.
What we resent on this side, and they know the gamesmanship when they
had the majority, but the inferences that Republicans do not care about
our families is wrong. We do. I would give my life for my family. And I
would not give a dime to drug companies if I thought it was going to
hurt.
Let me give an example. I had pneumonia a couple of years ago; and
when I went to the doctor, the price of Augmentin was $110. My wife had
prescription drug insurance through the school system where she is a
teacher. That drug instead of $110 was $17. That is the free market
private system, and we want more and more people to be included in
that.
Now, I understand if the other side of the aisle wants a government-
controlled health care plan like the former First Lady tried to do with
health care. That is their prerogative, but we think that is wrong. We
do care about our people. No child should have to apologize because
they go to get a drug, and like the President sat right up here,
President Clinton, and we take care of that. But to give the inference
that Republicans do not care about our families is wrong because we do.
We care very much.
[[Page H4181]]
I would also say that the gentlewoman from California (Ms. Pelosi),
who spoke previously, since 1988, every single year she voted to take
100 percent of the money out of the Social Security trust fund, and
here is the documentation.
Ms. SLAUGHTER. Mr. Speaker, I yield 1 minute to the gentlewoman from
Texas (Ms. Jackson-Lee).
(Ms. JACKSON-LEE of Texas asked and was given permission to revise
and extend her remarks.)
Ms. JACKSON-LEE of Texas. Mr. Speaker, I am told that our physicians
take a Hippocratic oath, and that oath says when someone is in need and
trusts the physician, do no harm.
I am sad to say that the insurance companies and the Republicans have
gotten together, and they are doing great harm. The Republican
insurance protection act: value, zero. Zero benefits. Zero to Mom, zero
to Dad, zero benefits to the disabled. It is a shame. Realize that our
sick seniors are on a roller coaster. Their premiums are not
guaranteed, deductibles are high. She is not assured that she will be
able to buy the drugs at the pharmacy she trusts, and she gets nothing
for a big part of the year, even though she keeps paying premiums.
Mr. Speaker, the Member from Florida said everybody takes money, the
Democrats took money. But the Democrats did not take $31 million 5 days
before we were supposed to come to the floor of the House and deny us a
substitute in order for us to be able to debate this bill on behalf of
the American people.
Mr. LINDER. Mr. Speaker, I yield 1 minute to the gentleman from
Georgia (Mr. Kingston).
Mr. KINGSTON. Mr. Speaker, after looking at this issue from many
different angles and for many different weeks, I am going to support
this rule. There is a lot more left to do that I am going to be a part
of, and I am proud to see that a number of our Members of our
leadership have agreed to in terms of addressing and lowering the cost
of prescription drugs. But as I listen to this rhetoric tonight, and so
much of it is totally uncalled for, one has to believe the statement
made in the New Republic in June that the Democrats want this issue on
the table because it is an election year, they do not want the bill,
they want the issue. I am listening to this, and I know there are a lot
of Democrats who want the policy, but I cannot help but think tonight
that the Democrats want the politics.
{time} 2215
You have to ask yourself, where is your plan? Where is your plan? We
know that Mr. Daschle and some of the folks across the hall have one,
but it is a trillion-dollar plan which will bankrupt Medicare. As you
say, you do not like our plan. Well, our plan does not bankrupt
Medicare. If you want to protect Medicare, why do you want to bankrupt
it?
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (Mr. LaTourette). The Chair would again ask
all Members to yield to the gavel.
Ms. SLAUGHTER. Mr. Speaker, we had a plan. We had a fine plan. We
just could not bring it out here before the American people.
Mr. Speaker, I yield 1\1/2\ minutes to the gentlewoman from
California (Ms. Eshoo).
Ms. ESHOO. I thank the gentlewoman for yielding me this time.
Mr. Speaker, I rise this evening in opposition to this rule. There is
something very, very, very wrong in this House; and my Republican
colleagues know it. You know it because you always speak of choice. You
always speak about competition. You are always talking about new ideas.
But you will not allow them to come to the floor of the House of
Representatives.
I represent 650,000 people. The gentleman that just came to the
podium said, ``Where is your plan?'' It is right here. But you are
afraid to debate it. Why do you not stand up, be men and women, and
debate it? Do not be afraid of ideas. So we will protest.
You know that the Democrats since the 1960s and before that have had
a love affair with Medicare. You will never drive a wedge between us
and Medicare. That is what we wanted to offer. We wanted to bring our
plan to the floor of the House. Perhaps you have the votes to beat
that, but the disgrace is that you waved the flag and then you waived
the democratic rules.
Shame on you. Shame on you for doing that. Go home and explain that
to good Republicans, to good independents and to the Democrats in your
district. They would never, ever accept that. That is why there is
frustration and anger on this side. We can debate these things, but you
are afraid to. You do not want to hear an idea, you do not want to hear
about choice, and you do not want to hear about competition.
Ms. SLAUGHTER. Mr. Speaker, I yield back the balance of my time.
Mr. LINDER. Mr. Speaker, I yield myself the balance of my time.
We have had an interesting debate here. We had a parade of female
Democrats march down citing the mantra that this bill does nothing for
senior women. In fact, not one of them spoke with any particularity to
the bill. We had the gentlewoman from Connecticut (Mrs. Johnson) step
up right after that and list time after time after time where this was
of benefit for women across the country and most particularly low-
income women.
Women have been abused by our social service programs from Social
Security through Medicare. This is the first time that any party or any
Congress has made an effort to fix that. This is a genuine improvement
on this current circumstance.
Facts do not cease to exist just because they are ignored.
It was a fact that, some time ago, the Democrats controlled this body
for 40 years and controlled the White House from time to time in the
midst of that and never once put forth this important program.
It was a fact that when I came here in 1993 they had overwhelming
majorities and a President who was enthusiastic about taking over the
health care system. But they did not ever put on the floor for a
discussion or debate any prescription drug program for either side to
consider.
It is a fact that the Democrats had an opportunity to put forth a
program that fit within the budget agreement that was passed by this
House, a discipline that this body and this side of the House took
seriously. We put forth a bill that fit within the discipline. They did
not. This is our proposal. This is our rule. We urge support for it.
Mr. Speaker, I yield back the balance of my time, and I move the
previous question on the resolution.
The previous question was ordered.
The SPEAKER pro tempore. The question is on the resolution.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Ms. SLAUGHTER. Mr. Speaker, I object to the vote on the ground that a
quorum is not present and make the point of order that a quorum is not
present.
The SPEAKER pro tempore. Evidently, a quorum is not present.
The Sergeant at Arms will notify absent Members.
The vote was taken by electronic device, and there were--yeas 218,
nays 213, not voting 4, as follows:
[Roll No. 280]
YEAS--218
Aderholt
Akin
Armey
Bachus
Baker
Ballenger
Barr
Bartlett
Barton
Bass
Bereuter
Biggert
Bilirakis
Blunt
Boehlert
Boehner
Bonilla
Bono
Boozman
Brady (TX)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Cantor
Capito
Castle
Chabot
Chambliss
Coble
Collins
Combest
Cooksey
Cox
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Diaz-Balart
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Hansen
Hart
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hilleary
Hobson
Hoekstra
Horn
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Jenkins
Johnson (CT)
Johnson (IL)
Johnson, Sam
Keller
Kelly
Kennedy (MN)
Kerns
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (OK)
Manzullo
McCrery
McHugh
[[Page H4182]]
McInnis
McKeon
Mica
Miller, Dan
Miller, Gary
Miller, Jeff
Moran (KS)
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pence
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Riley
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schaffer
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Stump
Sullivan
Sununu
Sweeney
Tancredo
Tauzin
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiahrt
Tiberi
Toomey
Upton
Vitter
Walden
Walsh
Wamp
Watkins (OK)
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)
NAYS--213
Abercrombie
Ackerman
Allen
Andrews
Baca
Baird
Baldacci
Baldwin
Barcia
Barrett
Becerra
Bentsen
Berkley
Berman
Berry
Bishop
Blagojevich
Blumenauer
Bonior
Borski
Boswell
Boucher
Boyd
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (IN)
Carson (OK)
Clayton
Clement
Clyburn
Condit
Conyers
Costello
Coyne
Cramer
Crowley
Cummings
Davis (CA)
Davis (FL)
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Dooley
Doyle
Edwards
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank
Frost
Gephardt
Gonzalez
Gordon
Green (TX)
Gutierrez
Gutknecht
Hall (OH)
Hall (TX)
Harman
Hastings (FL)
Hill
Hilliard
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Istook
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson, E. B.
Jones (NC)
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kind (WI)
Kleczka
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Lucas (KY)
Luther
Lynch
Maloney (CT)
Maloney (NY)
Markey
Mascara
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Mink
Mollohan
Moore
Moran (VA)
Morella
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Peterson (MN)
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roemer
Ross
Rothman
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Shows
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Stark
Stenholm
Strickland
Stupak
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Towns
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Waters
Watson (CA)
Watt (NC)
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn
NOT VOTING--4
Clay
Engel
Roukema
Traficant
{time} 2243
Mr. WEINER, Ms. KAPTUR, and Mr. BECERRA changed their vote from
``yea'' to ``nay.''
So the resolution was agreed to.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
{time} 2245
Mrs. JOHNSON of Connecticut. Mr. Speaker, pursuant to House
Resolution 465, I call up the bill (H.R. 4954) 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 and
reform payments and the regulatory structure of the Medicare Program,
and for other purposes, and ask for its immediate consideration.
The Clerk read the title of the bill.
The SPEAKER pro tempore (Mr. Thornberry). Pursuant to House
Resolution 465, the bill is considered as read for amendment.
The text of H.R. 4954 is as follows:
H.R. 4954
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT;
REFERENCES TO BIPA AND SECRETARY; TABLE OF
CONTENTS.
(a) Short Title.--This Act may be cited as the ``Medicare
Modernization and Prescription Drug Act of 2002''.
(b) Amendments to Social Security Act.--Except as otherwise
specifically provided, whenever in this Act an amendment 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 that section or other provision of the Social
Security Act.
(c) BIPA; Secretary.--In this Act:
(1) BIPA.--The term ``BIPA'' means the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2000, as
enacted into law by section 1(a)(6) of Public Law 106-554.
(2) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(d) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; amendments to Social Security Act; references to
BIPA and Secretary; table of contents.
TITLE I--MEDICARE PRESCRIPTION DRUG BENEFIT
Sec. 101. Establishment of a medicare prescription drug benefit.
``Part D--Voluntary Prescription Drug Benefit Program
``Sec. 1860A. Benefits; eligibility; enrollment; and coverage period.
``Sec. 1860B. Requirements for qualified prescription drug coverage.
``Sec. 1860C. Beneficiary protections for qualified prescription drug
coverage.
``Sec. 1860D. Requirements for prescription drug plan (PDP) sponsors;
contracts; establishment of standards.
``Sec. 1860E. Process for beneficiaries to select qualified
prescription drug coverage.
``Sec. 1860F. Submission of bids.
``Sec. 1860G. Premium and cost-sharing subsidies for low-income
individuals.
``Sec. 1860H. Subsidies for all medicare beneficiaries for qualified
prescription drug coverage.
``Sec. 1860I. Medicare Prescription Drug Trust Fund.
``Sec. 1860J. Definitions; treatment of references to provisions in
part C.
Sec. 102. Offering of qualified prescription drug coverage under the
Medicare+Choice program.
Sec. 103. Medicaid amendments.
Sec. 104. Medigap transition.
Sec. 105. Medicare prescription drug discount card endorsement program.
TITLE II--MEDICARE+CHOICE REVITALIZATION AND MEDICARE+CHOICE
COMPETITION PROGRAM
Subtitle A--Medicare+Choice Revitalization
Sec. 201. Medicare+Choice improvements.
Sec. 202. Making permanent change in Medicare+Choice reporting
deadlines and annual, coordinated election period.
Sec. 203. Avoiding duplicative State regulation.
Sec. 204. Specialized Medicare+Choice plans for special needs
beneficiaries.
Sec. 205. Medicare MSAs.
Sec. 206. Extension of reasonable cost and SHMO contracts.
Subtitle B--Medicare+Choice Competition Program
Sec. 211. Medicare+Choice competition program.
Sec. 212. Demonstration program for competitive-demonstration areas.
Sec. 213. Conforming amendments.
TITLE III--RURAL HEALTH CARE IMPROVEMENTS
Sec. 301. Reference to full market basket increase for sole community
hospitals.
Sec. 302. Enhanced disproportionate share hospital (DSH) treatment for
rural hospitals and urban hospitals with fewer than 100
beds.
Sec. 303. 2-year phased-in increase in the standardized amount in rural
and small urban areas to achieve a single, uniform
standardized amount.
Sec. 304. More frequent update in weights used in hospital market
basket.
Sec. 305. Improvements to critical access hospital program.
Sec. 306. Extension of temporary increase for home health services
furnished in a rural area.
Sec. 307. Reference to 10 percent increase in payment for hospice care
furnished in a frontier area and rural hospice
demonstration project.
Sec. 308. Reference to priority for hospitals located in rural or small
urban areas in redistribution of unused graduate medical
education residencies.
Sec. 309. GAO study of geographic differences in payments for
physicians' services.
Sec. 310. Providing safe harbor for certain collaborative efforts that
benefit medically underserved populations.
[[Page H4183]]
TITLE IV--PROVISIONS RELATING TO PART A
Subtitle A--Inpatient Hospital Services
Sec. 401. Revision of acute care hospital payment updates.
Sec. 402. 2-year increase in level of adjustment for indirect costs of
medical education (IME).
Sec. 403. Recognition of new medical technologies under inpatient
hospital PPS.
Sec. 404. Phase-in of Federal rate for hospitals in Puerto Rico.
Sec. 405. Reference to provision relating to enhanced disproportionate
share hospital (DSH) payments for rural hospitals and
urban hospitals with fewer than 100 beds.
Sec. 406. Reference to provision relating to 2-year phased-in increase
in the standardized amount in rural and small urban areas
to achieve a single, uniform standardized amount.
Sec. 407. Reference to provision for more frequent updates in the
weights used in hospital market basket.
Sec. 408. Reference to provision making improvements to critical access
hospital program.for more frequent updates in the weights
used in hospital market basket.
Subtitle B--Skilled Nursing Facility Services
Sec. 411. Payment for covered skilled nursing facility services.
Subtitle C--Hospice
Sec. 421. Coverage of hospice consultation services.
Sec. 422. 10 percent increase in payment for hospice care furnished in
a frontier area.
Sec. 423. Rural hospice demonstration project.
Subtitle D--Other Provisions
Sec. 431. Demonstration project for use of recovery audit contractors
for part A services.
TITLE V--PROVISIONS RELATING TO PART B
Subtitle A--Physicians' Services
Sec. 501. Revision of updates for physicians' services.
Sec. 502. Studies on access to physicians' services.
Sec. 503. MedPAC report on payment for physicians' services.
Subtitle B--Other Services
Sec. 511. Competitive acquisition of certain items and services.
Sec. 512. Payment for ambulance services.
Sec. 513. 1-year extension of moratorium on therapy caps; provisions
relating to reports.
Sec. 514. Accelerated implementation of 20 percent coinsurance for
hospital outpatient department (OPD) services; other OPD
provisions.
Sec. 515. Coverage of an initial preventive physical examination.
Sec. 516. Renal dialysis services.
TITLE VI--PROVISIONS RELATING TO PARTS A AND B
Subtitle A--Home Health Services
Sec. 601. Elimination of 15 percent reduction in payment rates under
the prospective payment system.
Sec. 602. Establishment of reduced copayment for a home health service
episode of care for certain beneficiaries.
Sec. 603. Update in home health services.
Sec. 604. OASIS Task Force; suspension of certain OASIS data collection
requirements pending Task Force submittal of report.
Sec. 605. MedPAC study on medicare margins of home health agencies.
Subtitle B--Direct Graduate Medical Education
Sec. 611. Extension of update limitation on high cost programs.
Sec. 612. Redistribution of unused resident positions.
Subtitle C--Other Provisions
Sec. 621. Modifications to Medicare Payment Advisory Commission
(MedPAC).
Sec. 622. Demonstration project for disease management for certain
medicare beneficiaries with diabetes.
Sec. 623. Demonstration project for medical adult day care services.
TITLE VII--MEDICARE BENEFITS ADMINISTRATION
Sec. 701. Establishment of Medicare Benefits Administration.
TITLE VIII--REGULATORY REDUCTION AND CONTRACTING REFORM
Subtitle A--Regulatory Reform
Sec. 801. Construction; definition of supplier.
Sec. 802. Issuance of regulations.
Sec. 803. Compliance with changes in regulations and policies.
Sec. 804. Reports and studies relating to regulatory reform.
Subtitle B--Contracting Reform
Sec. 811. Increased flexibility in medicare administration.
Sec. 812. Requirements for information security for medicare
administrative contractors.
Subtitle C--Education and Outreach
Sec. 821. Provider education and technical assistance.
Sec. 822. Small provider technical assistance demonstration program.
Sec. 823. Medicare provider ombudsman; medicare beneficiary ombudsman.
Sec. 824. Beneficiary outreach demonstration program.
Subtitle D--Appeals and Recovery
Sec. 831. Transfer of responsibility for medicare appeals.
Sec. 832. Process for expedited access to review.
Sec. 833. Revisions to medicare appeals process.
Sec. 834. Prepayment review.
Sec. 835. Recovery of overpayments.
Sec. 836. Provider enrollment process; right of appeal.
Sec. 837. Process for correction of minor errors and omissions on
claims without pursuing appeals process.
Sec. 838. Prior determination process for certain items and services;
advance beneficiary notices.
Subtitle E--Miscellaneous Provisions
Sec. 841. Policy development regarding evaluation and management (E &
M) documentation guidelines.
Sec. 842. Improvement in oversight of technology and coverage.
Sec. 843. Treatment of hospitals for certain services under medicare
secondary payor (MSP) provisions.
Sec. 844. EMTALA improvements.
Sec. 845. Emergency Medical Treatment and Active Labor Act (EMTALA)
Technical Advisory Group.
Sec. 846. Authorizing use of arrangements with other hospice programs
to provide core hospice services in certain
circumstances.
Sec. 847. Application of OSHA bloodborne pathogens standard to certain
hospitals.
Sec. 848. BIPA-related technical amendments and corrections.
Sec. 849. Conforming authority to waive a program exclusion.
Sec. 850. Treatment of certain dental claims.
Sec. 851. Annual publication of list of national coverage
determinations.
TITLE IX--MEDICAID, PUBLIC HEALTH, AND OTHER HEALTH PROVISIONS
Subtitle A--Medicaid Provisions
Sec. 901. National Bipartisan Commission on the Future of Medicaid.
Sec. 902. GAO study on medicaid drug payment system.
Subtitle B--Internet Pharmacies
Sec. 911. Findings.
Sec. 912. Amendment to Federal Food, Drug, and Cosmetic Act.
Sec. 913. Public education.
Sec. 914. Study regarding coordination of regulatory activities.
Sec. 915. Effective date.
Subtitle C--Promotion of Electronic Prescription
Sec. 921. Program of grants to health care providers to implement
electronic prescription drug programs.
Subtitle D--Treatment of Rare Diseases
Sec. 931. NIH Office of Rare Diseases at National Institutes of Health.
Sec. 932. Rare disease regional centers of excellence.
Subtitle E--Other Provisions Relating to Drugs
Sec. 941. GAO study regarding direct-to-consumer advertising of
prescription drugs.
Sec. 942. Certain health professions programs regarding practice of
pharmacy.
``Subpart 3--Pharmacist Workforce Programs
``Sec. 771. Public service announcements.
``Sec. 772. Demonstration project.
``Sec. 773. Information technology.
``Sec. 774. Authorization of appropriations.
TITLE X--HEALTH-CARE RELATED TAX PROVISIONS
Sec. 1001. Eligibility for Archer MSA's extended to account holders of
Medicare+Choice MSA's.
Sec. 1002. Adjustment of employer contributions to Combined Benefit
Fund to reflect medicare prescription drug subsidy
payments.
Sec. 1003. Expansion of human clinical trials qualifying for orphan
drug credit.
TITLE I--MEDICARE PRESCRIPTION DRUG BENEFIT
SEC. 101. ESTABLISHMENT OF A 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--Voluntary Prescription Drug Benefit Program
``SEC. 1860A. BENEFITS; ELIGIBILITY; ENROLLMENT; AND COVERAGE
PERIOD.
``(a) Provision of Qualified Prescription Drug Coverage
Through Enrollment in
[[Page H4184]]
Plans.--Subject to the succeeding provisions of this part,
each individual who is entitled to benefits under part A or
is enrolled under part B is entitled to obtain qualified
prescription drug coverage (described in section 1860B(a)) as
follows:
``(1) Medicare+choice plan.--If the individual is eligible
to enroll in a Medicare+Choice plan that provides qualified
prescription drug coverage under section 1851(j), the
individual may enroll in the plan and obtain coverage through
such plan.
``(2) Prescription drug plan.--If the individual is not
enrolled in a Medicare+Choice plan that provides qualified
prescription drug coverage, the individual may enroll under
this part in a prescription drug plan (as defined in section
1860J(a)(5)).
Such individuals shall have a choice of such plans under
section 1860E(d).
``(b) General Election Procedures.--
``(1) In general.--An individual eligible to make an
election under subsection (a) may elect to enroll in a
prescription drug plan under this part, or elect the option
of qualified prescription drug coverage under a
Medicare+Choice plan under part C, and to change such
election only in such manner and form as may be prescribed by
regulations of the Administrator of the Medicare Benefits
Administration (appointed under section 1808(b)) (in this
part referred to as the `Medicare Benefits Administrator')
and only during an election period prescribed in or under
this subsection.
``(2) Election periods.--
``(A) In general.--Except as provided in this paragraph,
the election periods under this subsection shall be the same
as the coverage election periods under the Medicare+Choice
program under section 1851(e), including--
``(i) annual coordinated election periods; and
``(ii) special election periods.
In applying the last sentence of section 1851(e)(4) (relating
to discontinuance of a Medicare+Choice election during the
first year of eligibility) under this subparagraph, in the
case of an election described in such section in which the
individual had elected or is provided qualified prescription
drug coverage at the time of such first enrollment, the
individual shall be permitted to enroll in a prescription
drug plan under this part at the time of the election of
coverage under the original fee-for-service plan.
``(B) Initial election periods.--
``(i) Individuals currently covered.--In the case of an
individual who is entitled to benefits under part A or
enrolled under part B as of November 1, 2004, there shall be
an initial election period of 6 months beginning on that
date.
``(ii) Individual covered in future.--In the case of an
individual who is first entitled to benefits under part A or
enrolled under part B after such date, there shall be an
initial election period which is the same as the initial
enrollment period under section 1837(d).
``(C) Additional special election periods.--The
Administrator shall establish special election periods--
``(i) in cases of individuals who have and involuntarily
lose prescription drug coverage described in subsection
(c)(2)(C);
``(ii) in cases described in section 1837(h) (relating to
errors in enrollment), in the same manner as such section
applies to part B;
``(iii) in the case of an individual who meets such
exceptional conditions (including conditions provided under
section 1851(e)(4)(D)) as the Administrator may provide; and
``(iv) in cases of individuals (as determined by the
Administrator) who become eligible for prescription drug
assistance under title XIX under section 1935(d).
``(c) Guaranteed Issue; Community Rating; and
Nondiscrimination.--
``(1) Guaranteed issue.--
``(A) In general.--An eligible individual who is eligible
to elect qualified prescription drug coverage under a
prescription drug plan or Medicare+Choice plan at a time
during which elections are accepted under this part with
respect to the plan shall not be denied enrollment based on
any health status-related factor (described in section
2702(a)(1) of the Public Health Service Act) or any other
factor.
``(B) Medicare+choice limitations permitted.--The
provisions of paragraphs (2) and (3) (other than subparagraph
(C)(i), relating to default enrollment) of section 1851(g)
(relating to priority and limitation on termination of
election) shall apply to PDP sponsors under this subsection.
``(2) Community-rated premium.--
``(A) In general.--In the case of an individual who
maintains (as determined under subparagraph (C)) continuous
prescription drug coverage since the date the individual
first qualifies to elect prescription drug coverage under
this part, a PDP sponsor or Medicare+Choice organization
offering a prescription drug plan or Medicare+Choice plan
that provides qualified prescription drug coverage and in
which the individual is enrolled may not deny, limit, or
condition the coverage or provision of covered prescription
drug benefits or increase the premium under the plan based on
any health status-related factor described in section
2702(a)(1) of the Public Health Service Act or any other
factor.
``(B) Late enrollment penalty.--In the case of an
individual who does not maintain such continuous prescription
drug coverage (as described in subparagraph (C)), a PDP
sponsor or Medicare+Choice organization may (notwithstanding
any provision in this title) adjust the premium otherwise
applicable or impose a pre-existing condition exclusion with
respect to qualified prescription drug coverage in a manner
that reflects additional actuarial risk involved. Such a risk
shall be established through an appropriate actuarial opinion
of the type described in subparagraphs (A) through (C) of
section 2103(c)(4).
``(C) Continuous prescription drug coverage.--An individual
is considered for purposes of this part to be maintaining
continuous prescription drug coverage on and after the date
the individual first qualifies to elect prescription drug
coverage under this part if the individual establishes that
as of such date the individual is covered under any of the
following prescription drug coverage and before the date that
is the last day of the 63-day period that begins on the date
of termination of the particular prescription drug coverage
involved (regardless of whether the individual subsequently
obtains any of the following prescription drug coverage):
``(i) Coverage under prescription drug plan or
medicare+choice plan.--Qualified prescription drug coverage
under a prescription drug plan or under a Medicare+Choice
plan.
``(ii) Medicaid prescription drug coverage.--Prescription
drug coverage under a medicaid plan under title XIX,
including through the Program of All-inclusive Care for the
Elderly (PACE) under section 1934, through a social health
maintenance organization (referred to in section 4104(c) of
the Balanced Budget Act of 1997), or through a
Medicare+Choice project that demonstrates the application of
capitation payment rates for frail elderly medicare
beneficiaries through the use of a interdisciplinary team and
through the provision of primary care services to such
beneficiaries by means of such a team at the nursing facility
involved.
``(iii) Prescription drug coverage under group health
plan.--Any outpatient prescription drug coverage under a
group health plan, including a health benefits plan under the
Federal Employees Health Benefit Plan under chapter 89 of
title 5, United States Code, and a qualified retiree
prescription drug plan as defined in section 1860H(f)(1), but
only if (subject to subparagraph (E)(ii)) the coverage
provides benefits at least equivalent to the benefits under a
qualified prescription drug plan.
``(iv) Prescription drug coverage under certain medigap
policies.--Coverage under a medicare supplemental policy
under section 1882 that provides benefits for prescription
drugs (whether or not such coverage conforms to the standards
for packages of benefits under section 1882(p)(1)), but only
if the policy was in effect on January 1, 2005, and if
(subject to subparagraph (E)(ii)) the coverage provides
benefits at least equivalent to the benefits under a
qualified prescription drug plan.
``(v) State pharmaceutical assistance program.--Coverage of
prescription drugs under a State pharmaceutical assistance
program, but only if (subject to subparagraph (E)(ii)) the
coverage provides benefits at least equivalent to the
benefits under a qualified prescription drug plan.
``(vi) Veterans' coverage of prescription drugs.--Coverage
of prescription drugs for veterans under chapter 17 of title
38, United States Code, but only if (subject to subparagraph
(E)(ii)) the coverage provides benefits at least equivalent
to the benefits under a qualified prescription drug plan.
``(D) Certification.--For purposes of carrying out this
paragraph, the certifications of the type described in
sections 2701(e) of the Public Health Service Act and in
section 9801(e) of the Internal Revenue Code shall also
include a statement for the period of coverage of whether the
individual involved had prescription drug coverage described
in subparagraph (C).
``(E) Disclosure.--
``(i) In general.--Each entity that offers coverage of the
type described in clause (iii), (iv), (v), or (vi) of
subparagraph (C) shall provide for disclosure, consistent
with standards established by the Administrator, of whether
such coverage provides benefits at least equivalent to the
benefits under a qualified prescription drug plan.
``(ii) Waiver of limitations.--An individual may apply to
the Administrator to waive the requirement that coverage of
such type provide benefits at least equivalent to the
benefits under a qualified prescription drug plan, if the
individual establishes that the individual was not adequately
informed that such coverage did not provide such level of
benefits.
``(F) 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
Administrator shall provide that elections under subsection
(b) take effect at the same time as the Administrator
[[Page H4185]]
provides that similar elections under section 1851(e) take
effect under section 1851(f).
``(2) No election effective before 2005.--In no case shall
any election take effect before January 1, 2005.
``(3) Termination.--The Administrator shall provide for the
termination of an election in the case of--
``(A) termination of coverage under both part A and part B;
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), but only if it is approved by the
Administrator, as provided under subsection (c).
``(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 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 engaged in
activities intended to discourage enrollment of classes of
eligible medicare beneficiaries obtaining coverage through
the plan on the basis of their higher likelihood of utilizing
prescription drug coverage, 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 2005, 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 $10 shall be rounded to the nearest multiple of
$10.
``(2) Limits on cost-sharing.--
``(A) In general.--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)) as
follows:
``(i) First copayment range.--For costs above the annual
deductible specified in paragraph (1) and up to amount
specified in subparagraph (C), the cost-sharing--
``(I) is equal to 20 percent; or
``(II) is actuarially equivalent (using processes
established under subsection (e)) to an average expected
payment of 20 percent of such costs.
``(ii) Secondary copayment range.--For costs above the
amount specified in subparagraph (C) and up to the initial
coverage limit, the cost-sharing--
``(I) is equal to 50 percent; or
``(II) is actuarially consistent (using processes
established under subsection (e)) with an average expected
payment of 50 percent of such costs.
``(B) Use of tiered copayments.--Nothing in this part shall
be construed as preventing a PDP sponsor from applying tiered
copayments, so long as such tiered copayments are consistent
with subparagraph (A).
``(C) Initial copayment threshold.--The amount specified in
this subparagraph--
``(i) for 2005, is equal to $1,000; 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 $10 shall be rounded to the nearest multiple of
$10.
``(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 2005, that is equal to $2,000; 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) Catastrophic protection.--
``(A) In general.--Notwithstanding paragraph (3), the
coverage provides benefits with no 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 threshold specified in subparagraph (B).
``(B) Annual out-of-pocket threshold.--For purposes of this
part, the `annual out-of-pocket threshold' specified in this
subparagraph--
``(i) for 2005, is equal to $4,500; 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 only if they
are paid by the individual, under section 1860G, or under
title XIX and the individual is not reimbursed (through
insurance or otherwise) by another person 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 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 and the plan applies for, and receives,
the approval of the Administrator for such benefit design:
``(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 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 initial
coverage limit under subsection (b)(3), of an amount equal to
at least the sum of the following products:
``(i) First copayment range.--The product of--
``(I) the amount by which the initial copayment threshold
described in subsection (b)(2)(C) exceeds the deductible
described in subsection (b)(1); and
``(II) 100 percent minus the cost-sharing percentage
specified in subsection (b)(2)(A)(i)(I).
``(ii) Secondary copayment range.--The product of--
``(I) the amount by which the initial coverage limit
described in subsection (b)(3) exceeds the initial copayment
threshold described in subsection (b)(2)(C); and
``(II) 100 percent minus the cost-sharing percentage
specified in subsection (b)(2)(A)(ii)(I).
``(2) Catastrophic protection.--The coverage provides for
beneficiaries the catastrophic protection described in
subsection (b)(4).
``(d) Access to Negotiated Prices.--
``(1) In general.--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.
``(2) Disclosure.--The PDP sponsor or Medicare+Choice
organization shall disclose to the Administrator (in a manner
specified by the Administrator) the extent to which discounts
or rebates made available to the sponsor or organization by a
manufacturer are passed through to enrollees through
[[Page H4186]]
pharmacies and other dispensers or otherwise. The provisions
of section 1927(b)(3)(D) shall apply to information disclosed
to the Administrator under this paragraph in the same manner
as such provisions apply to information disclosed under such
section.
``(e) Actuarial Valuation; Determination of Annual
Percentage Increases.--
``(1) Processes.--For purposes of this section, the
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 a vaccine licensed under section 351
of the Public Health Service Act and 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), or under section 1927(d)(3).
``(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 for an
individual entitled to benefits under part A and 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 and such exclusion is not successfully appealed
under section 1860C(f)(2).
``(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).
``SEC. 1860C. BENEFICIARY PROTECTIONS FOR QUALIFIED
PRESCRIPTION DRUG COVERAGE.
``(a) Guaranteed Issue, Community-Related Premiums, Access
to Negotiated Prices, and Nondiscrimination.--For provisions
requiring guaranteed issue, community-rated premiums, access
to negotiated prices, and nondiscrimination, see sections
1860A(c)(1), 1860A(c)(2), 1860B(d), and 1860F(b),
respectively.
``(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, including
the identification of the tiered or other co-payment level
applicable to each drug (or class of drugs).
``(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 on a timely basis, 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 initial coverage limit and annual out-of-pocket
threshold for the current year, whenever prescription drug
benefits are provided under this part (except that such
notice need not be provided more often than monthly).
``(c) Access to Covered Benefits.--
``(1) Assuring pharmacy access.--
``(A) In general.--The PDP sponsor of the prescription drug
plan shall secure the participation in its network of a
sufficient number of pharmacies that dispense (other than by
mail order) drugs directly to patients to ensure convenient
access (as determined by the Administrator and including
adequate emergency access) for enrolled beneficiaries, in
accordance with standards established under section 1860D(e)
that ensure such convenient access.
``(B) Use of point-of-service system.--A PDP sponsor shall
establish an optional point-of-service method of operation
under which--
``(i) the plan provides access to any or all pharmacies
that are not participating pharmacies in its network; and
``(ii) the plan may charge beneficiaries through
adjustments in premiums and copayments any additional costs
associated with the point-of-service option.
The additional copayments so charged shall not count toward
the application of section 1860B(b).
``(2) Use of standardized technology.--
``(A) In general.--The PDP sponsor of a prescription drug
plan shall issue (and reissue, as appropriate) such a card
(or other technology) that may be used by an enrolled
beneficiary to assure access to negotiated prices under
section 1860B(d) for the purchase of prescription drugs for
which coverage is not otherwise provided under the
prescription drug plan.
``(B) Standards.--
``(i) Development.--The Administrator shall provide for the
development of national standards relating to a standardized
format for the card or other technology referred to in
subparagraph (A). Such standards shall be compatible with
standards established under part C of title XI.
``(ii) Application of advisory task force.--The advisory
task force established under subsection (d)(3)(B)(ii) shall
provide recommendations to the Administrator under such
subsection regarding the standards developed under clause
(i).
``(3) Requirements on development and application of
formularies.--If a PDP sponsor of a prescription drug plan
uses a formulary, the following requirements must be met:
``(A) Pharmacy and therapeutic (p&t) committee.--The
sponsor must establish a pharmacy and therapeutic committee
that develops and reviews the formulary. Such committee shall
include at least one physician and at least one pharmacist
both with expertise in the care of elderly or disabled
persons and a majority of its members shall consist of
individuals who are a physician or a pharmacist (or both).
``(B) Formulary development.--In developing and reviewing
the formulary, the committee shall base clinical decisions on
the strength of scientific evidence and standards of
practice, including assessing peer-reviewed medical
literature, such as randomized clinical trials,
pharmacoeconomic studies, outcomes research data, and such
other information as the committee determines to be
appropriate.
``(C) Inclusion of drugs in all therapeutic categories.--
The formulary must include drugs within each therapeutic
category and class of covered outpatient drugs (although not
necessarily for all drugs within such categories and
classes).
``(D) Provider education.--The committee shall establish
policies and procedures to educate and inform health care
providers concerning the formulary.
``(E) Notice before removing drugs from formulary.--Any
removal of a drug from a formulary shall take effect only
after appropriate notice is made available to beneficiaries
and physicians.
``(F) Grievances and appeals relating to application of
formularies.--For provisions relating to grievances and
appeals of coverage, see subsections (e) and (f).
``(d) Cost and Utilization Management; Quality Assurance;
Medication Therapy Management Program.--
``(1) In general.--The PDP sponsor shall have in place with
respect to covered outpatient drugs--
``(A) an effective cost and drug utilization management
program, including medically appropriate incentives to use
generic drugs and therapeutic interchange, when appropriate;
``(B) quality assurance measures and systems to reduce
medical errors and adverse drug interactions, including a
medication therapy management program described in paragraph
(2) and for years beginning with 2006, an electronic
prescription program described in paragraph (3); and
``(C) a program to control fraud, abuse, and waste.
[[Page H4187]]
Nothing in this section shall be construed as impairing a PDP
sponsor from applying cost management tools (including
differential payments) under all methods of operation.
``(2) Medication therapy management program.--
``(A) In general.--A medication therapy management program
described in this paragraph is a program of drug therapy
management and medication administration that is designed to
assure, with respect to beneficiaries with chronic diseases
(such as diabetes, asthma, hypertension, and congestive heart
failure) or multiple prescriptions, that covered outpatient
drugs under the prescription drug plan are appropriately used
to achieve therapeutic goals and reduce the risk of adverse
events, including adverse drug interactions.
``(B) Elements.--Such program may include--
``(i) enhanced beneficiary understanding of such
appropriate use through beneficiary education, counseling,
and other appropriate means;
``(ii) increased beneficiary adherence with prescription
medication regimens through medication refill reminders,
special packaging, and other appropriate means; and
``(iii) detection of patterns of overuse and underuse of
prescription drugs.
``(C) Development of program in cooperation with licensed
pharmacists.--The program shall be developed in cooperation
with licensed pharmacists and physicians.
``(D) Considerations in pharmacy fees.--The PDP sponsor of
a prescription drug program shall take into account, in
establishing fees for pharmacists and others providing
services under the medication therapy management program, the
resources and time used in implementing the program.
``(3) Electronic prescription program.--
``(A) In general.--An electronic prescription drug program
described in this paragraph is a program that includes at
least the following components, consistent with national
standards established under subparagraph (B):
``(i) Electronic transmittal of prescriptions.--
Prescriptions are only received electronically, except in
emergency cases and other exceptional circumstances
recognized by the Administrator.
``(ii) Provision of information to prescribing health care
professional.--The program provides, upon transmittal of a
prescription by a prescribing health care professional, for
transmittal by the pharmacist to the professional of
information that includes--
``(I) information (to the extent available and feasible) on
the drugs being prescribed for that patient and other
information relating to the medical history or condition of
the patient that may be relevant to the appropriate
prescription for that patient;
``(II) cost-effective alternatives (if any) for the use of
the drug prescribed; and
``(III) information on the drugs included in the applicable
formulary.
To the extent feasible, such program shall permit the
prescribing health care professional to provide (and be
provided) related information on an interactive, real-time
basis.
``(B) Standards.--
``(i) Development.--The Administrator shall provide for the
development of national standards relating to the electronic
prescription drug program described in subparagraph (A). Such
standards shall be compatible with standards established
under part C of title XI.
``(ii) Advisory task force.--In developing such standards
and the standards described in subsection (c)(2)(B)(i) the
Administrator shall establish a task force that includes
representatives of physicians, hospitals, pharmacists, and
technology experts and representatives of the Departments of
Veterans Affairs and Defense and other appropriate Federal
agencies to provide recommendations to the Administrator on
such standards, including recommendations relating to the
following:
``(I) The range of available computerized prescribing
software and hardware and their costs to develop and
implement.
``(II) The extent to which such systems reduce medication
errors and can be readily implemented by physicians and
hospitals.
``(III) Efforts to develop a common software platform for
computerized prescribing.
``(IV) The cost of implementing such systems in the range
of hospital and physician office settings, including
hardware, software, and training costs.
``(V) Implementation issues as they relate to part C of
title XI, and current Federal and State prescribing laws and
regulations and their impact on implementation of
computerized prescribing.
``(iii) Deadlines.--
``(I) The Administrator shall constitute the task force
under clause (ii) by not later than April 1, 2003.
``(II) Such task force shall submit recommendations to
Administrator by not later than January 1, 2004.
``(III) The Administrator shall develop and promulgate the
national standards referred to in clause (ii) by not later
than July 1, 2004.
``(C) Reference to availability of grant funds.--Grant
funds are authorized under section 399O of the Public Health
Service Act to provide assistance to health care providers in
implementing electronic prescription drug programs.
``(4) Treatment of accreditation.--Section 1852(e)(4)
(relating to treatment of accreditation) shall apply to
prescription drug plans under this part with respect to the
following requirements, in the same manner as they apply to
Medicare+Choice plans under part C with respect to the
requirements described in a clause of section 1852(e)(4)(B):
``(A) Paragraph (1) (including quality assurance),
including medication therapy management program under
paragraph (2).
``(B) Subsection (c)(1) (relating to access to covered
benefits).
``(C) Subsection (g) (relating to confidentiality and
accuracy of enrollee records).
``(5) Public disclosure of pharmaceutical prices for
equivalent drugs.--Each PDP sponsor shall provide that each
pharmacy or other dispenser that arranges for the dispensing
of a covered outpatient drug shall inform the beneficiary at
the time of purchase of the drug of any differential between
the price of the prescribed drug to the enrollee and the
price of the lowest cost generic drug covered under the plan
that is therapeutically equivalent and bioequivalent.
``(e) Grievance Mechanism, Coverage Determinations, and
Reconsiderations.--
``(1) In general.--Each PDP sponsor shall provide
meaningful procedures for hearing and resolving grievances
between the organization (including any entity or individual
through which the sponsor provides covered benefits) and
enrollees with prescription drug plans of the sponsor under
this part in accordance with section 1852(f).
``(2) Application of coverage determination and
reconsideration provisions.--A PDP sponsor shall meet the
requirements of paragraphs (1) through (3) of section 1852(g)
with respect to covered benefits under the prescription drug
plan it offers under this part in the same manner as such
requirements apply to a Medicare+Choice organization with
respect to benefits it offers under a Medicare+Choice plan
under part C.
``(3) Request for review of tiered formulary
determinations.--In the case of a prescription drug plan
offered by a PDP sponsor that provides for tiered cost-
sharing for drugs included within a formulary and provides
lower cost-sharing for preferred drugs included within the
formulary, an individual who is enrolled in the plan may
request coverage of a nonpreferred drug under the terms
applicable for preferred drugs if the prescribing physician
determines that the preferred drug for treatment of the same
condition is not as effective for the individual or has
adverse effects for the individual.
``(f) Appeals.--
``(1) In general.--Subject to paragraph (2), a PDP sponsor
shall meet the requirements of paragraphs (4) and (5) of
section 1852(g) with respect to drugs not included on any
formulary in the same manner as such requirements apply to a
Medicare+Choice organization with respect to benefits it
offers under a Medicare+Choice plan under part C.
``(2) Formulary determinations.--An individual who is
enrolled in a prescription drug plan offered by a PDP sponsor
may appeal to obtain coverage for a covered outpatient drug
that is not on a formulary of the sponsor if the prescribing
physician determines that the formulary drug for treatment of
the same condition is not as effective for the individual or
has adverse effects for the individual.
``(g) Confidentiality and Accuracy of Enrollee Records.--A
PDP sponsor shall meet the requirements of section 1852(h)
with respect to enrollees under this part in the same manner
as such requirements apply to a Medicare+Choice organization
with respect to enrollees under part C.
``SEC. 1860D. REQUIREMENTS FOR PRESCRIPTION DRUG PLAN (PDP)
SPONSORS; CONTRACTS; ESTABLISHMENT OF
STANDARDS.
``(a) General Requirements.--Each PDP sponsor of a
prescription drug plan shall meet the following requirements:
``(1) Licensure.--Subject to subsection (c), the sponsor is
organized and licensed under State law as a risk-bearing
entity eligible to offer health insurance or health benefits
coverage in each State in which it offers a prescription drug
plan.
``(2) Assumption of financial risk.--
``(A) In general.--Subject to subparagraph (B) and section
1860E(d)(2), the entity assumes full financial risk on a
prospective basis for qualified prescription drug coverage
that it offers under a prescription drug plan and that is not
covered under section 1860H.
``(B) Reinsurance permitted.--The entity may obtain
insurance or make other arrangements for the cost of coverage
provided to any enrolled member under this part.
``(3) Solvency for unlicensed sponsors.--In the case of a
sponsor that is not described in paragraph (1), the sponsor
shall meet solvency standards established by the
Administrator under subsection (d).
``(b) Contract Requirements.--
``(1) In general.--The Administrator shall not permit the
election under section 1860A of a prescription drug plan
offered by a PDP sponsor under this part, and the sponsor
shall not be eligible for payments under section 1860G or
1860H, unless the Administrator has entered into a contract
under this subsection with the sponsor with respect to the
offering of such plan. Such a contract with a sponsor may
cover more than one prescription drug plan. Such contract
shall provide that the sponsor agrees to comply with the
applicable requirements and standards of this part and the
terms and conditions of payment as provided for in this part.
[[Page H4188]]
``(2) Negotiation regarding terms and conditions.--The
Administrator shall have the same authority to negotiate the
terms and conditions of prescription drug plans under this
part as the Director of the Office of Personnel Management
has with respect to health benefits plans under chapter 89 of
title 5, United States Code. In negotiating the terms and
conditions regarding premiums for which information is
submitted under section 1860F(a)(2), the Administrator shall
take into account the subsidy payments under section 1860H
and the adjusted community rate (as defined in section
1854(f)(3)) for the benefits covered.
``(3) Incorporation of certain medicare+choice contract
requirements.--The following provisions of section 1857 shall
apply, subject to subsection (c)(5), to contracts under this
section in the same manner as they apply to contracts under
section 1857(a):
``(A) Minimum enrollment.--Paragraphs (1) and (3) of
section 1857(b).
``(B) Contract period and effectiveness.--Paragraphs (1)
through (3) and (5) of section 1857(c).
``(C) Protections against fraud and beneficiary
protections.--Section 1857(d).
``(D) Additional contract terms.--Section 1857(e); except
that in applying section 1857(e)(2) under this part--
``(i) such section shall be applied separately to costs
relating to this part (from costs under part C);
``(ii) in no case shall the amount of the fee established
under this subparagraph for a plan exceed 20 percent of the
maximum amount of the fee that may be established under
subparagraph (B) of such section; and
``(iii) no fees shall be applied under this subparagraph
with respect to Medicare+Choice plans.
``(E) Intermediate sanctions.--Section 1857(g).
``(F) Procedures for termination.--Section 1857(h).
``(4) Rules of application for intermediate sanctions.--In
applying paragraph (3)(E)--
``(A) the reference in section 1857(g)(1)(B) to section
1854 is deemed a reference to this part; and
``(B) the reference in section 1857(g)(1)(F) to section
1852(k)(2)(A)(ii) shall not be applied.
``(c) Waiver of Certain Requirements to Expand Choice.--
``(1) In general.--In the case of an entity that seeks to
offer a prescription drug plan in a State, the Administrator
shall waive the requirement of subsection (a)(1) that the
entity be licensed in that State if the Administrator
determines, based on the application and other evidence
presented to the Administrator, that any of the grounds for
approval of the application described in paragraph (2) has
been met.
``(2) Grounds for approval.--The grounds for approval under
this paragraph are the grounds for approval described in
subparagraph (B), (C), and (D) of section 1855(a)(2), and
also include the application by a State of any grounds other
than those required under Federal law.
``(3) Application of waiver procedures.--With respect to an
application for a waiver (or a waiver granted) under this
subsection, the provisions of subparagraphs (E), (F), and (G)
of section 1855(a)(2) shall apply.
``(4) Licensure does not substitute for or constitute
certification.--The fact that an entity is licensed in
accordance with subsection (a)(1) does not deem the entity to
meet other requirements imposed under this part for a PDP
sponsor.
``(5) References to certain provisions.--For purposes of
this subsection, in applying provisions of section 1855(a)(2)
under this subsection to prescription drug plans and PDP
sponsors--
``(A) any reference to a waiver application under section
1855 shall be treated as a reference to a waiver application
under paragraph (1); and
``(B) any reference to solvency standards shall be treated
as a reference to solvency standards established under
subsection (d).
``(d) Solvency Standards for Non-Licensed Sponsors.--
``(1) Establishment.--The Administrator shall establish, by
not later than October 1, 2003, financial solvency and
capital adequacy standards that an entity that does not meet
the requirements of subsection (a)(1) must meet to qualify as
a PDP sponsor under this part.
``(2) Compliance with standards.--Each PDP sponsor that is
not licensed by a State under subsection (a)(1) and for which
a waiver application has been approved under subsection (c)
shall meet solvency and capital adequacy standards
established under paragraph (1). The Administrator shall
establish certification procedures for such PDP sponsors with
respect to such solvency standards in the manner described in
section 1855(c)(2).
``(e) Other Standards.--The Administrator shall establish
by regulation other standards (not described in subsection
(d)) for PDP sponsors and plans consistent with, and to carry
out, this part. The Administrator shall publish such
regulations by October 1, 2003.
``(f) Relation to State Laws.--
``(1) In general.--The standards established under this
part shall supersede any State law or regulation (other than
State licensing laws or State laws relating to plan solvency,
except as provided in subsection (d)) with respect to
prescription drug plans which are offered by PDP sponsors
under this part.
``(2) Prohibition of state imposition of premium taxes.--No
State may impose a premium tax or similar tax with respect to
premiums paid to PDP sponsors for prescription drug plans
under this part, or with respect to any payments made to such
a sponsor by the Administrator under this part.
``SEC. 1860E. PROCESS FOR BENEFICIARIES TO SELECT QUALIFIED
PRESCRIPTION DRUG COVERAGE.
``(a) In General.--The Administrator shall establish a
process for the selection of the prescription drug plan or
Medicare+Choice plan which offer qualified prescription drug
coverage through which eligible individuals elect qualified
prescription drug coverage under this part.
``(b) Elements.--Such process shall include the following:
``(1) Annual, coordinated election periods, in which such
individuals can change the qualifying plans through which
they obtain coverage, in accordance with section 1860A(b)(2).
``(2) Active dissemination of information to promote an
informed selection among qualifying plans based upon price,
quality, and other features, in the manner described in (and
in coordination with) section 1851(d), including the
provision of annual comparative information, maintenance of a
toll-free hotline, and the use of non-Federal entities.
``(3) Coordination of elections through filing with a
Medicare+Choice organization or a PDP sponsor, in the manner
described in (and in coordination with) section 1851(c)(2).
``(c) Medicare+Choice Enrollee In Plan Offering
Prescription Drug Coverage May Only Obtain Benefits Through
the Plan.--An individual who is enrolled under a
Medicare+Choice plan that offers qualified prescription drug
coverage may only elect to receive qualified prescription
drug coverage under this part through such plan.
``(d) Assuring Access to a Choice of Qualified Prescription
Drug Coverage.--
``(1) Choice of at least two plans in each area.--
``(A) In general.--The Administrator shall assure that each
individual who is entitled to benefits under part A or
enrolled under part B and who is residing in an area in the
United States has available, consistent with subparagraph
(B), a choice of enrollment in at least two qualifying plans
(as defined in paragraph (5)) in the area in which the
individual resides, at least one of which is a prescription
drug plan.
``(B) Requirement for different plan sponsors.--The
requirement in subparagraph (A) is not satisfied with respect
to an area if only one PDP sponsor or Medicare+Choice
organization offers all the qualifying plans in the area.
``(2) Guaranteeing access to coverage.--In order to assure
access under paragraph (1) and consistent with paragraph (3),
the Administrator may provide financial incentives (including
partial underwriting of risk) for a PDP sponsor to expand the
service area under an existing prescription drug plan to
adjoining or additional areas or to establish such a plan
(including offering such a plan on a regional or nationwide
basis), but only so long as (and to the extent) necessary to
assure the access guaranteed under paragraph (1).
``(3) Limitation on authority.--In exercising authority
under this subsection, the Administrator--
``(A) shall not provide for the full underwriting of
financial risk for any PDP sponsor;
``(B) shall not provide for any underwriting of financial
risk for a public PDP sponsor with respect to the offering of
a nationwide prescription drug plan; and
``(C) shall seek to maximize the assumption of financial
risk by PDP sponsors or Medicare+Choice organizations.
``(4) Reports.--The Administrator shall, in each annual
report to Congress under section 1808(f), include information
on the exercise of authority under this subsection. The
Administrator also shall include such recommendations as may
be appropriate to minimize the exercise of such authority,
including minimizing the assumption of financial risk.
``(5) Qualifying plan defined.--For purposes of this
subsection, the term `qualifying plan' means a prescription
drug plan or a Medicare+Choice plan that includes qualified
prescription drug coverage.
``SEC. 1860F. SUBMISSION OF BIDS.
``(a) Submission of Bids and Related Information.--
``(1) In general.--Each PDP sponsor shall submit to the
Administrator information of the type described in paragraph
(2) in the same manner as information is submitted by a
Medicare+Choice organization under section 1854(a)(1).
``(2) Type of information.--The information described in
this paragraph is the following:
``(A) Information on the qualified prescription drug
coverage to be provided.
``(B) Information on the actuarial value of the coverage.
``(C) Information on the bid for the coverage, including an
actuarial certification of--
``(i) the actuarial basis for such bid;
``(ii) the portion of such bid attributable to benefits in
excess of standard coverage; and
``(iii) the reduction in such bid resulting from the
subsidy payments provided under section 1860H.
``(D) Such other information as the Administrator may
require to carry out this part.
[[Page H4189]]
``(3) Review.--The Administrator shall review the
information filed under paragraph (2) for the purpose of
conducting negotiations under section 1860D(b)(2).
``(b) Uniform Bid.--
``(1) In general.--The bid for a prescription drug plan
under this section may not vary among individuals enrolled in
the plan in the same service area.
``(2) Construction.--Nothing in paragraph (1) shall be
construed as preventing the imposition of a late enrollment
penalty under section 1860A(c)(2)(B).
``(c) Collection.--
``(1) Use of electronic funds transfer mechanism or, at
beneficiary's option, withholding from social security
payment.--In accordance with regulations, a PDP sponsor may
encourage that enrollees under a plan make payment of the
premium established by the plan under this part through an
electronic funds transfer mechanism, such as automatic
charges of an account at a financial institution or a credit
or debit card account, or, at the option of an enrollee,
through withholding from benefit payments in the manner
provided under section 1840 with respect to monthly premiums
under section 1839. All such amounts shall be credited to the
Medicare Prescription Drug Trust Fund.
``(2) Offsetting.--Reductions in premiums for coverage
under parts A and B as a result of a selection of a
Medicare+Choice plan may be used to reduce the premium
otherwise imposed under paragraph (1).
``(3) Payment of plans.--PDP plans shall receive payment
based on bid amounts in the same manner as Medicare+Choice
organizations receive payment based on bid amounts under
section 1853(a)(1)(A)(ii) except that such payment shall be
made from the Medicare Prescription Drug Trust Fund.
``(d) Acceptance of Benchmark Amount as Full Premium for
Subsidized Low-Income Individuals if No Standard (or
Equivalent) Coverage in an Area.--
``(1) In general.--If there is no standard prescription
drug coverage (as defined in paragraph (2)) offered in an
area, in the case of an individual who is eligible for a
premium subsidy under section 1860G and resides in the area,
the PDP sponsor of any prescription drug plan offered in the
area (and any Medicare+Choice organization that offers
qualified prescription drug coverage in the area) shall
accept the benchmark bid amount (under section 1860G(b)(2))
as payment in full for the premium charge for qualified
prescription drug coverage.
``(2) Standard prescription drug coverage defined.--For
purposes of this subsection, the term `standard prescription
drug coverage' means qualified prescription drug coverage
that is standard coverage or that has an actuarial value
equivalent to the actuarial value for standard coverage.
``SEC. 1860G. PREMIUM AND COST-SHARING SUBSIDIES FOR LOW-
INCOME INDIVIDUALS.
``(a) Income-Related Subsidies for Individuals With Income
Below 150 Percent of Federal Poverty Level.--
``(1) Full premium subsidy and reduction of cost-sharing
for individuals with income below 150 percent of federal
poverty level.--In the case of a subsidy eligible individual
(as defined in paragraph (4)) who is determined to have
income that does not exceed 150 percent of the Federal
poverty level, the individual is entitled under this
section--
``(A) to an income-related premium subsidy equal to 100
percent of the amount described in subsection (b)(1); and
``(B) subject to subsection (c), to the substitution for
the beneficiary cost-sharing described in paragraphs (1) and
(2) of section 1860B(b) (up to the initial coverage limit
specified in paragraph (3) of such section) of amounts that
do not exceed $2 for a multiple source or generic drug (as
described in section 1927(k)(7)(A)) and $5 for a non-
preferred drug.
``(2) Sliding scale premium subsidy and reduction of cost-
sharing for individuals with income above 150, but below 175
percent, of federal poverty level.--In the case of a subsidy
eligible individual who is determined to have income that
exceeds 150 percent, but does not exceed 175 percent, of the
Federal poverty level, the individual is entitled under this
section to--
``(A) an income-related premium subsidy determined on a
linear sliding scale ranging from 100 percent of the amount
described in subsection (b)(1) for individuals with incomes
at 150 percent of such level to 0 percent of such amount for
individuals with incomes at 175 percent of such level; and
``(B) subject to subsection (c), to the substitution for
the beneficiary cost-sharing described in paragraphs (1) and
(2) of section 1860B(b) (up to the initial coverage limit
specified in paragraph (3) of such section) of amounts that
do not exceed $2 for a multiple source or generic drug (as
described in section 1927(k)(7)(A)) and $5 for a non-
preferred drug.
``(3) Construction.--Nothing in this section shall be
construed as preventing a PDP sponsor from reducing to 0 the
cost-sharing otherwise applicable to generic drugs.
``(4) Determination of eligibility.--
``(A) Subsidy eligible individual defined.--For purposes of
this section, subject to subparagraph (D), the term `subsidy
eligible individual' means an individual who--
``(i) is eligible to elect, and has elected, to obtain
qualified prescription drug coverage under this part;
``(ii) has income below 175 percent of the Federal poverty
line; and
``(iii) meets the resources requirement described in
section 1905(p)(1)(C).
``(B) Determinations.--The determination of whether an
individual residing in a State is a subsidy eligible
individual and the amount of such individual's income shall
be determined under the State medicaid plan for the State
under section 1935(a). In the case of a State that does not
operate such a medicaid plan (either under title XIX or under
a statewide waiver granted under section 1115), such
determination shall be made under arrangements made by the
Administrator.
``(C) Income determinations.--For purposes of applying this
section--
``(i) income shall be determined in the manner described in
section 1905(p)(1)(B); and
``(ii) the term `Federal poverty line' means the official
poverty line (as defined by the Office of Management and
Budget, and revised annually in accordance with section
673(2) of the Omnibus Budget Reconciliation Act of 1981)
applicable to a family of the size involved.
``(D) Treatment of territorial residents.--In the case of
an individual who is not a resident of the 50 States or the
District of Columbia, the individual is not eligible to be a
subsidy eligible individual but may be eligible for financial
assistance with prescription drug expenses under section
1935(e).
``(E) Treatment of conforming medigap policies.--For
purposes of this section, the term `qualified prescription
drug coverage' includes a medicare supplemental policy
described in section 1860H(b)(4).
``(5) Indexing dollar amounts.--
``(A) For 2006.--The dollar amounts applied under
paragraphs (1)(B) and (2)(B) for 2006 shall be the dollar
amounts specified in such paragraph increased by the annual
percentage increase described in section 1860B(b)(5) for
2006.
``(B) For subsequent years.--The dollar amounts applied
under paragraphs (1)(B) and (2)(B) for a year after 2006
shall be the amounts (under this paragraph) applied under
paragraph (1)(B) or (2)(B) for the preceding year increased
by the annual percentage increase described in section
1860B(b)(5) (relating to growth in medicare prescription drug
costs per beneficiary) for the year involved.
``(b) Premium Subsidy Amount.--
``(1) In general.--The premium subsidy amount described in
this subsection for an individual residing in an area is the
benchmark bid amount (as defined in paragraph (2)) for
qualified prescription drug coverage offered by the
prescription drug plan or the Medicare+Choice plan in which
the individual is enrolled.
``(2) Benchmark bid amount defined.--For purposes of this
subsection, the term `benchmark bid amount' means, with
respect to qualified prescription drug coverage offered
under--
``(A) a prescription drug plan that--
``(i) provides standard coverage (or alternative
prescription drug coverage the actuarial value is equivalent
to that of standard coverage), the bid amount for enrollment
under the plan under this part (determined without regard to
any subsidy under this section or any late enrollment penalty
under section 1860A(c)(2)(B)); or
``(ii) provides alternative prescription drug coverage the
actuarial value of which is greater than that of standard
coverage, the bid amount described in clause (i) multiplied
by the ratio of (I) the actuarial value of standard coverage,
to (II) the actuarial value of the alternative coverage; or
``(B) a Medicare+Choice plan, the portion of the bid amount
that is attributable to statutory drug benefits (described in
section 1853(a)(1)(A)(ii)(II)).
``(c) Rules in Applying Cost-Sharing Subsidies.--
``(1) In general.--In applying subsections (a)(1)(B) and
(a)(2)(B), nothing in this part shall be construed as
preventing a plan or provider from waiving or reducing the
amount of cost-sharing otherwise applicable.
``(2) Limitation on charges.--In the case of an individual
receiving cost-sharing subsidies under subsection (a)(1)(B)
or (a)(2)(B), the PDP sponsor may not charge more than $5 per
prescription.
``(3) Application of indexing rules.--The provisions of
subsection (a)(4) shall apply to the dollar amount specified
in paragraph (2) in the same manner as they apply to the
dollar amounts specified in subsections (a)(1)(B) and
(a)(2)(B).
``(d) Administration of Subsidy Program.--The Administrator
shall provide a process whereby, in the case of an individual
who is determined to be a subsidy eligible individual and who
is enrolled in prescription drug plan or is enrolled in a
Medicare+Choice plan under which qualified prescription drug
coverage is provided--
``(1) the Administrator provides for a notification of the
PDP sponsor or Medicare+Choice organization involved that the
individual is eligible for a subsidy and the amount of the
subsidy under subsection (a);
``(2) the sponsor or organization involved reduces the
premiums or cost-sharing otherwise imposed by the amount of
the applicable subsidy and submits to the Administrator
information on the amount of such reduction; and
``(3) the Administrator periodically and on a timely basis
reimburses the sponsor or organization for the amount of such
reductions.
[[Page H4190]]
The reimbursement under paragraph (3) with respect to cost-
sharing subsidies may be computed on a capitated basis,
taking into account the actuarial value of the subsidies and
with appropriate adjustments to reflect differences in the
risks actually involved.
``(e) Relation to Medicaid Program.--
``(1) In general.--For provisions providing for eligibility
determinations, and additional financing, under the medicaid
program, see section 1935.
``(2) Medicaid providing wrap around benefits.--The
coverage provided under this part is primary payor to
benefits for prescribed drugs provided under the medicaid
program under title XIX.
``(3) Coordination.--The Administrator shall develop and
implement a plan for the coordination of prescription drug
benefits under this part with the benefits provided under the
medicaid program under title XIX, with particular attention
to insuring coordination of payments and prevention of fraud
and abuse. In developing and implementing such plan, the
Administrator shall involve the Secretary, the States, the
data processing industry, pharmacists, and pharmaceutical
manufacturers, and other experts.
``SEC. 1860H. SUBSIDIES FOR ALL MEDICARE BENEFICIARIES FOR
QUALIFIED PRESCRIPTION DRUG COVERAGE.
``(a) Subsidy Payment.--In order to reduce premium levels
applicable to qualified prescription drug coverage for all
medicare beneficiaries, to reduce adverse selection among
prescription drug plans and Medicare+Choice plans that
provide qualified prescription drug coverage, and to promote
the participation of PDP sponsors under this part, the
Administrator shall provide in accordance with this section
for payment to a qualifying entity (as defined in subsection
(b)) of the following subsidies:
``(1) Direct subsidy.--In the case of an individual
enrolled in a prescription drug plan, Medicare+Choice plan,
or qualified retiree prescription drug plan, a direct subsidy
equal to a percentage (specified by the Administrator
consistent with subsection (d)(2)) of an amount equal to the
actuarial value of the standard drug coverage provided under
the respective plan.
``(2) Subsidy through reinsurance.--The reinsurance payment
amount (as defined in subsection (c)) for excess costs
incurred in providing qualified prescription drug coverage--
``(A) for individuals enrolled with a prescription drug
plan under this part;
``(B) for individuals enrolled with a Medicare+Choice plan
that provides qualified prescription drug coverage under part
C; and
``(C) for individuals who are enrolled in a qualified
retiree prescription drug plan.
This section constitutes budget authority in advance of
appropriations Acts and represents the obligation of the
Administrator to provide for the payment of amounts provided
under this section.
``(b) Qualifying Entity Defined.--For purposes of this
section, the term `qualifying entity' means any of the
following that has entered into an agreement with the
Administrator to provide the Administrator with such
information as may be required to carry out this section:
``(1) A PDP sponsor offering a prescription drug plan under
this part.
``(2) A Medicare+Choice organization that provides
qualified prescription drug coverage under a Medicare+Choice
plan under part C.
``(3) The sponsor of a qualified retiree prescription drug
plan (as defined in subsection (f)).
``(c) Reinsurance Payment Amount.--
``(1) In general.--Subject to subsection (d)(2) and
paragraph (4), the reinsurance payment amount under this
subsection for a qualifying covered individual (as defined in
subsection (g)(1)) for a coverage year (as defined in
subsection (g)(2)) is equal to the sum of the following:
``(A) For the portion of the individual's gross covered
prescription drug costs (as defined in paragraph (3)) for the
year that exceeds the initial copayment threshold specified
in section 1860B(b)(2)(C), but does not exceed the initial
coverage limit specified in section 1860B(b)(3), an amount
equal to 30 percent of the allowable costs (as defined in
paragraph (2)) attributable to such gross covered
prescription drug costs.
``(B) For the portion of the individual's gross covered
prescription drug costs for the year that exceeds the annual
out-of-pocket threshold specified in 1860B(b)(4)(B), an
amount equal to 80 percent of the allowable costs
attributable to such gross covered prescription drug costs.
``(2) Allowable costs.--For purposes of this section, the
term `allowable costs' means, with respect to gross covered
prescription drug costs under a plan described in subsection
(b) offered by a qualifying entity, the part of such costs
that are actually paid (net of average percentage rebates)
under the plan, but in no case more than the part of such
costs that would have been paid under the plan if the
prescription drug coverage under the plan were standard
coverage.
``(3) Gross covered prescription drug costs.--For purposes
of this section, the term `gross covered prescription drug
costs' means, with respect to an enrollee with a qualifying
entity under a plan described in subsection (b) during a
coverage year, the costs incurred under the plan (including
costs attributable to administrative costs) for covered
prescription drugs dispensed during the year, including costs
relating to the deductible, whether paid by the enrollee or
under the plan, regardless of whether the coverage under the
plan exceeds standard coverage and regardless of when the
payment for such drugs is made.
``(4) Indexing dollar amounts.--
``(A) Amounts for 2005.--The dollar amounts applied under
paragraph (1) for 2005 shall be the dollar amounts specified
in such paragraph.
``(B) For 2006.--The dollar amounts applied under paragraph
(1) for 2006 shall be the dollar amounts specified in such
paragraph increased by the annual percentage increase
described in section 1860B(b)(5) for 2006.
``(C) For subsequent years.--The dollar amounts applied
under paragraph (1) for a year after 2006 shall be the
amounts (under this paragraph) applied under paragraph (1)
for the preceding year increased by the annual percentage
increase described in section 1860B(b)(5) (relating to growth
in medicare prescription drug costs per beneficiary) for the
year involved.
``(D) Rounding.--Any amount, determined under the preceding
provisions of this paragraph for a year, which is not a
multiple of $10 shall be rounded to the nearest multiple of
$10.
``(d) Adjustment of Payments.--
``(1) Estimation of payments.--The Administrator shall
estimate--
``(A) the total payments to be made (without regard to this
subsection) during a year under this section; and
``(B) the total payments to be made by qualifying entities
for standard coverage under plans described in subsection (b)
during the year.
``(2) Adjustment.--The Administrator shall proportionally
adjust the payments made under this section for a coverage
year in such manner so that--
``(A) the total of the payments made for the year under
this section is equal to 65 percent of the total payments
described in paragraph (1)(B) during the year; and
``(B) the ratio of the total of the payments made for
direct subsidies under subsection (a)(1) for the year to the
total of the payments made for reinsurance subsidies for the
year under subsection (a)(2) is equal to the ratio of 35 to
30.
``(3) Risk adjustment.--To the extent the Administrator
determines it appropriate to avoid risk selection, the
payments made for direct subsidies under subsection (a)(1)
are subject to adjustment based upon risk factors specified
by the Administrator.
``(e) Payment Methods.--
``(1) In general.--Payments under this section shall be
based on such a method as the Administrator determines. The
Administrator may establish a payment method by which interim
payments of amounts under this section are made during a year
based on the Administrator's best estimate of amounts that
will be payable after obtaining all of the information.
``(2) Source of payments.--Payments under this section
shall be made from the Medicare Prescription Drug Trust Fund.
``(f) Qualified Retiree Prescription Drug Plan Defined.--
``(1) In general.--For purposes of this section, the term
`qualified retiree prescription drug plan' means employment-
based retiree health coverage (as defined in paragraph
(3)(A)) if, with respect to an individual enrolled (or
eligible to be enrolled) under this part who is covered under
the plan, the following requirements are met:
``(A) Assurance.--The sponsor of the plan shall annually
attest, and provide such assurances as the Administrator may
require, that the coverage meets or exceeds the requirements
for qualified prescription drug coverage.
``(B) Audits.--The sponsor (and the plan) shall maintain,
and afford the Administrator access to, such records as the
Administrator may require for purposes of audits and other
oversight activities necessary to ensure the adequacy of
prescription drug coverage, and the accuracy of payments
made.
``(C) Provision of certification of prescription drug
coverage.--The sponsor of the plan shall provide for issuance
of certifications of the type described in section
1860A(c)(2)(D).
``(2) Limitation on benefit eligibility.--No payment shall
be provided under this section with respect to an individual
who is enrolled under a qualified retiree prescription drug
plan unless the individual is--
``(A) enrolled under this part;
``(B) is covered under the plan; and
``(C) is eligible to obtain qualified prescription drug
coverage under section 1860A but did not elect such coverage
under this part (either through a prescription drug plan or
through a Medicare+Choice plan).
``(3) Definitions.--As used in this section:
``(A) Employment-based retiree health coverage.--The term
`employment-based retiree health coverage' means health
insurance or other coverage of health care costs for
individuals enrolled under this part (or for such individuals
and their spouses and dependents) based on their status as
former employees or labor union members.
``(B) Sponsor.--The term `sponsor' means a plan sponsor, as
defined in section 3(16)(B) of the Employee Retirement Income
Security Act of 1974.
``(g) General Definitions.--For purposes of this section:
``(1) Qualifying covered individual.--The term `qualifying
covered individual' means an individual who--
``(A) is enrolled with a prescription drug plan under this
part;
[[Page H4191]]
``(B) is enrolled with a Medicare+Choice plan that provides
qualified prescription drug coverage under part C; or
``(C) is enrolled for benefits under this title and is
covered under a qualified retiree prescription drug plan.
``(2) Coverage year.--The term `coverage year' means a
calendar year in which covered outpatient drugs are dispensed
if a claim for payment is made under the plan for such drugs,
regardless of when the claim is paid.
``SEC. 1860I. MEDICARE PRESCRIPTION DRUG TRUST FUND.
``(a) In General.--There is created on the books of the
Treasury of the United States a trust fund to be known as the
`Medicare Prescription Drug Trust Fund' (in this section
referred to as the `Trust Fund'). The Trust Fund shall
consist of such gifts and bequests as may be made as provided
in section 201(i)(1), and such amounts as may be deposited
in, or appropriated to, such fund as provided in this part.
Except as otherwise provided in this section, the provisions
of subsections (b) through (i) of section 1841 shall apply to
the Trust Fund in the same manner as they apply to the
Federal Supplementary Medical Insurance Trust Fund under such
section.
``(b) Payments From Trust Fund.--
``(1) In general.--The Managing Trustee shall pay from time
to time from the Trust Fund such amounts as the Administrator
certifies are necessary to make--
``(A) payments under section 1860G (relating to low-income
subsidy payments);
``(B) payments under section 1860H (relating to subsidy
payments); and
``(C) payments with respect to administrative expenses
under this part in accordance with section 201(g).
``(2) Transfers to medicaid account for increased
administrative costs.--The Managing Trustee shall transfer
from time to time from the Trust Fund to the Grants to States
for Medicaid account amounts the Administrator certifies are
attributable to increases in payment resulting from the
application of a higher Federal matching percentage under
section 1935(b).
``(c) Deposits Into Trust Fund.--
``(1) Low-income transfer.--There is hereby transferred to
the Trust Fund, from amounts appropriated for Grants to
States for Medicaid, amounts equivalent to the aggregate
amount of the reductions in payments under section 1903(a)(1)
attributable to the application of section 1935(c).
``(2) Appropriations to cover government contributions.--
There are authorized to be appropriated from time to time,
out of any moneys in the Treasury not otherwise appropriated,
to the Trust Fund, an amount equivalent to the amount of
payments made from the Trust Fund under subsection (b),
reduced by the amount transferred to the Trust Fund under
paragraph (1).
``(d) Relation to Solvency Requirements.--Any provision of
law that relates to the solvency of the Trust Fund under this
part shall take into account the Trust Fund and amounts
receivable by, or payable from, the Trust Fund.
``SEC. 1860J. DEFINITIONS; TREATMENT OF REFERENCES TO
PROVISIONS IN PART C.
``(a) Definitions.--For purposes of this part:
``(1) Covered outpatient drugs.--The term `covered
outpatient drugs' is defined in section 1860B(f).
``(2) Initial coverage limit.--The term `initial coverage
limit' means such limit as established under section
1860B(b)(3), or, in the case of coverage that is not standard
coverage, the comparable limit (if any) established under the
coverage.
``(3) Medicare prescription drug trust fund.--The term
`Medicare Prescription Drug Trust Fund' means the Trust Fund
created under section 1860I(a).
``(4) PDP sponsor.--The term `PDP sponsor' means an entity
that is certified under this part as meeting the requirements
and standards of this part for such a sponsor.
``(5) Prescription drug plan.--The term `prescription drug
plan' means health benefits coverage that--
``(A) is offered under a policy, contract, or plan by a PDP
sponsor pursuant to, and in accordance with, a contract
between the Administrator and the sponsor under section
1860D(b);
``(B) provides qualified prescription drug coverage; and
``(C) meets the applicable requirements of the section
1860C for a prescription drug plan.
``(6) Qualified prescription drug coverage.--The term
`qualified prescription drug coverage' is defined in section
1860B(a).
``(7) Standard coverage.--The term `standard coverage' is
defined in section 1860B(b).
``(b) Application of Medicare+Choice Provisions Under This
Part.--For purposes of applying provisions of part C under
this part with respect to a prescription drug plan and a PDP
sponsor, unless otherwise provided in this part such
provisions shall be applied as if--
``(1) any reference to a Medicare+Choice plan included a
reference to a prescription drug plan;
``(2) any reference to a provider-sponsored organization
included a reference to a PDP sponsor;
``(3) any reference to a contract under section 1857
included a reference to a contract under section 1860D(b);
and
``(4) any reference to part C included a reference to this
part.''.
(b) Additional Conforming Changes.--
(1) Conforming references to previous part d.--Any
reference in law (in effect before the date of the enactment
of this Act) to part D of title XVIII of the Social Security
Act is deemed a reference to part E of such title (as in
effect after such date).
(2) Conforming amendment permitting waiver of cost-
sharing.--Section 1128B(b)(3) (42 U.S.C. 1320a-7b(b)(3)) is
amended--
(A) by striking ``and'' at the end of subparagraph (E);
(B) by striking the period at the end of subparagraph (F)
and inserting ``; and''; and
(C) by adding at the end the following new subparagraph:
``(G) the waiver or reduction of any cost-sharing imposed
under part D of title XVIII.''.
(3) Submission of legislative proposal.--Not later than 6
months after the date of the enactment of this Act, the
Secretary of Health and Human Services shall submit to the
appropriate committees of Congress a legislative proposal
providing for such technical and conforming amendments in the
law as are required by the provisions of this subtitle.
(c) Study on Transitioning Part B Prescription Drug
Coverage.--Not later than January 1, 2004, the Medicare
Benefits Administrator shall submit a report to Congress that
makes recommendations regarding methods for providing
benefits under part D of title XVIII of the Social Security
Act for outpatient prescription drugs for which benefits are
provided under part B of such title.
SEC. 102. OFFERING OF QUALIFIED PRESCRIPTION DRUG COVERAGE
UNDER THE MEDICARE+CHOICE PROGRAM.
(a) In General.--Section 1851 (42 U.S.C. 1395w-21) is
amended by adding at the end the following new subsection:
``(j) Availability of Prescription Drug Benefits.--
``(1) Offer of qualified prescription drug coverage.--
``(A) In general.--A Medicare+Choice organization may not
offer prescription drug coverage (other than that required
under parts A and B) to an enrollee under a Medicare+Choice
plan unless such drug coverage is at least qualified
prescription drug coverage and unless the requirements of
this subsection with respect to such coverage are met.
``(B) Construction.--Nothing in this subsection shall be
construed as--
``(i) requiring a Medicare+Choice plan to include coverage
of qualified prescription drug coverage; or
``(ii) permitting a Medicare+Choice organization from
providing such coverage to an individual who has not elected
such coverage under section 1860A(b).
For purposes of this part, an individual who has not elected
qualified prescription drug coverage under section 1860A(b)
shall be treated as being ineligible to enroll in a
Medicare+Choice plan under this part that offers such
coverage.
``(2) Compliance with additional beneficiary protections.--
With respect to the offering of qualified prescription drug
coverage by a Medicare+Choice organization under a
Medicare+Choice plan, the organization and plan shall meet
the requirements of section 1860C, including requirements
relating to information dissemination and grievance and
appeals, in the same manner as they apply to a PDP sponsor
and a prescription drug plan under part D and shall submit to
the Administrator the information described in section
1860F(a)(2). The Administrator shall waive such requirements
to the extent the Administrator determines that such
requirements duplicate requirements otherwise applicable to
the organization or plan under this part.
``(3) Availability of premium and cost-sharing subsidies
for low-income enrollees and direct and reinsurance subsidy
payments for organizations.--For provisions--
``(A) providing premium and cost-sharing subsidies to low-
income individuals receiving qualified prescription drug
coverage through a Medicare+Choice plan, see section 1860G;
and
``(B) providing a Medicare+Choice organization with direct
and insurance subsidy payments for providing qualified
prescription drug coverage under this part, see section
1860H.
``(4) Transition in initial enrollment period.--
Notwithstanding any other provision of this part, the annual,
coordinated election period under subsection (e)(3)(B) for
2005 shall be the 6-month period beginning with November
2004.
``(5) Qualified prescription drug coverage; standard
coverage.--For purposes of this part, the terms `qualified
prescription drug coverage' and `standard coverage' have the
meanings given such terms in section 1860B.''.
(b) Conforming Amendments.--Section 1851 (42 U.S.C. 1395w-
21) is amended--
(1) in subsection (a)(1)--
(A) by inserting ``(other than qualified prescription drug
benefits)'' after ``benefits'';
(B) by striking the period at the end of subparagraph (B)
and inserting a comma; and
(C) by adding after and below subparagraph (B) the
following:
``and may elect qualified prescription drug coverage in
accordance with section 1860A.''; and
[[Page H4192]]
(2) in subsection (g)(1), by inserting ``and section
1860A(c)(2)(B)'' after ``in this subsection''.
(c) Effective Date.--The amendments made by this section
apply to coverage provided on or after January 1, 2005.
SEC. 103. MEDICAID AMENDMENTS.
(a) Determinations of Eligibility for Low-Income
Subsidies.--
(1) Requirement.--Section 1902(a) (42 U.S.C. 1396a(a)) is
amended--
(A) by striking ``and'' at the end of paragraph (64);
(B) by striking the period at the end of paragraph (65) and
inserting ``; and''; and
(C) by inserting after paragraph (65) the following new
paragraph:
``(66) provide for making eligibility determinations under
section 1935(a).''.
(2) New section.--Title XIX is further amended--
(A) by redesignating section 1935 as section 1936; and
(B) by inserting after section 1934 the following new
section:
``special provisions relating to medicare prescription drug benefit
``Sec. 1935. (a) Requirement for Making Eligibility
Determinations for Low-Income Subsidies.--As a condition of
its State plan under this title under section 1902(a)(66) and
receipt of any Federal financial assistance under section
1903(a), a State shall--
``(1) make determinations of eligibility for premium and
cost-sharing subsidies under (and in accordance with) section
1860G;
``(2) inform the Administrator of the Medicare Benefits
Administration of such determinations in cases in which such
eligibility is established; and
``(3) otherwise provide such Administrator with such
information as may be required to carry out part D of title
XVIII (including section 1860G).
``(b) Payments for Additional Administrative Costs.--
``(1) In general.--The amounts expended by a State in
carrying out subsection (a) are, subject to paragraph (2),
expenditures reimbursable under the appropriate paragraph of
section 1903(a); except that, notwithstanding any other
provision of such section, the applicable Federal matching
rates with respect to such expenditures under such section
shall be increased as follows (but in no case shall the rate
as so increased exceed 100 percent):
``(A) For expenditures attributable to costs incurred
during 2005, the otherwise applicable Federal matching rate
shall be increased by 10 percent of the percentage otherwise
payable (but for this subsection) by the State.
``(B)(i) For expenditures attributable to costs incurred
during 2006 and each subsequent year through 2013, the
otherwise applicable Federal matching rate shall be increased
by the applicable percent (as defined in clause (ii)) of the
percentage otherwise payable (but for this subsection) by the
State.
``(ii) For purposes of clause (i), the `applicable percent'
for--
``(I) 2006 is 20 percent; or
``(II) a subsequent year is the applicable percent under
this clause for the previous year increased by 10 percentage
points.
``(C) For expenditures attributable to costs incurred after
2013, the otherwise applicable Federal matching rate shall be
increased to 100 percent.
``(2) Coordination.--The State shall provide the
Administrator with such information as may be necessary to
properly allocate administrative expenditures described in
paragraph (1) that may otherwise be made for similar
eligibility determinations.''.
(b) Phased-In Federal Assumption of Medicaid Responsibility
for Premium and Cost-Sharing Subsidies for Dually Eligible
Individuals.--
(1) In general.--Section 1903(a)(1) (42 U.S.C. 1396b(a)(1))
is amended by inserting before the semicolon the following:
``, reduced by the amount computed under section 1935(c)(1)
for the State and the quarter''.
(2) Amount described.--Section 1935, as inserted by
subsection (a)(2), is amended by adding at the end the
following new subsection:
``(c) Federal Assumption of Medicaid Prescription Drug
Costs for Dually-Eligible Beneficiaries.--
``(1) In general.--For purposes of section 1903(a)(1), for
a State that is one of the 50 States or the District of
Columbia for a calendar quarter in a year (beginning with
2005) the amount computed under this subsection is equal to
the product of the following:
``(A) Medicare subsidies.--The total amount of payments
made in the quarter under section 1860G (relating to premium
and cost-sharing prescription drug subsidies for low-income
medicare beneficiaries) that are attributable to individuals
who are residents of the State and are entitled to benefits
with respect to prescribed drugs under the State plan under
this title (including such a plan operating under a waiver
under section 1115).
``(B) State matching rate.--A proportion computed by
subtracting from 100 percent the Federal medical assistance
percentage (as defined in section 1905(b)) applicable to the
State and the quarter.
``(C) Phase-out proportion.--The phase-out proportion (as
defined in paragraph (2)) for the quarter.
``(2) Phase-out proportion.--For purposes of paragraph
(1)(C), the `phase-out proportion' for a calendar quarter
in--
``(A) 2005 is 90 percent;
``(B) a subsequent year before 2014, is the phase-out
proportion for calendar quarters in the previous year
decreased by 10 percentage points; or
``(C) a year after 2013 is 0 percent.''.
(c) Medicaid Providing Wrap-Around Benefits.--Section 1935,
as so inserted and amended, is further amended by adding at
the end the following new subsection:
``(d) Additional Provisions.--
``(1) Medicaid as secondary payor.--In the case of an
individual who is entitled to qualified prescription drug
coverage under a prescription drug plan under part D of title
XVIII (or under a Medicare+Choice plan under part C of such
title) and medical assistance for prescribed drugs under this
title, medical assistance shall continue to be provided under
this title for prescribed drugs to the extent payment is not
made under the prescription drug plan or the Medicare+Choice
plan selected by the individual.
``(2) Condition.--A State may require, as a condition for
the receipt of medical assistance under this title with
respect to prescription drug benefits for an individual
eligible to obtain qualified prescription drug coverage
described in paragraph (1), that the individual elect
qualified prescription drug coverage under section 1860A.''.
(d) Treatment of Territories.--
(1) In general.--Section 1935, as so inserted and amended,
is further amended--
(A) in subsection (a) in the matter preceding paragraph
(1), by inserting ``subject to subsection (e)'' after
``section 1903(a)'';
(B) in subsection (c)(1), by inserting ``subject to
subsection (e)'' after ``1903(a)(1)''; and
(C) by adding at the end the following new subsection:
``(e) Treatment of Territories.--
``(1) In general.--In the case of a State, other than the
50 States and the District of Columbia--
``(A) the previous provisions of this section shall not
apply to residents of such State; and
``(B) if the State establishes a plan described in
paragraph (2) (for providing medical assistance with respect
to the provision of prescription drugs to medicare
beneficiaries), the amount otherwise determined under section
1108(f) (as increased under section 1108(g)) for the State
shall be increased by the amount specified in paragraph (3).
``(2) Plan.--The plan described in this paragraph is a plan
that--
``(A) provides medical assistance with respect to the
provision of covered outpatient drugs (as defined in section
1860B(f)) to low-income medicare beneficiaries; and
``(B) assures that additional amounts received by the State
that are attributable to the operation of this subsection are
used only for such assistance.
``(3) Increased amount.--
``(A) In general.--The amount specified in this paragraph
for a State for a year is equal to the product of--
``(i) the aggregate amount specified in subparagraph (B);
and
``(ii) the amount specified in section 1108(g)(1) for that
State, divided by the sum of the amounts specified in such
section for all such States.
``(B) Aggregate amount.--The aggregate amount specified in
this subparagraph for--
``(i) 2005, is equal to $20,000,000; or
``(ii) a subsequent year, is equal to the aggregate amount
specified in this subparagraph for the previous year
increased by annual percentage increase specified in section
1860B(b)(5) for the year involved.
``(4) Report.--The Administrator shall submit to Congress a
report on the application of this subsection and may include
in the report such recommendations as the Administrator deems
appropriate.''.
(2) Conforming amendment.--Section 1108(f) (42 U.S.C.
1308(f)) is amended by inserting ``and section
1935(e)(1)(B)'' after ``Subject to subsection (g)''.
SEC. 104. MEDIGAP TRANSITION.
(a) In General.--Section 1882 (42 U.S.C. 1395ss) is amended
by adding at the end the following new subsection:
``(v) Coverage of Prescription Drugs.--
``(1) In general.--Notwithstanding any other provision of
law, except as provided in paragraph (3) no new medicare
supplemental policy that provides coverage of expenses for
prescription drugs may be issued under this section on or
after January 1, 2005, to an individual unless it replaces a
medicare supplemental policy that was issued to that
individual and that provided some coverage of expenses for
prescription drugs.
``(2) Issuance of substitute policies if obtain
prescription drug coverage under part d.--
``(A) In general.--The issuer of a medicare supplemental
policy--
``(i) may not deny or condition the issuance or
effectiveness of a medicare supplemental policy that has a
benefit package classified as `A', `B', `C', `D', `E', `F',
or `G' (under the standards established under subsection
(p)(2)) and that is offered and is available for issuance to
new enrollees by such issuer;
``(ii) may not discriminate in the pricing of such policy,
because of health status, claims experience, receipt of
health care, or medical condition; and
``(iii) may not impose an exclusion of benefits based on a
pre-existing condition under such policy,
in the case of an individual described in subparagraph (B)
who seeks to enroll under the
[[Page H4193]]
policy not later than 63 days after the date of the
termination of enrollment described in such paragraph and who
submits evidence of the date of termination or disenrollment
along with the application for such medicare supplemental
policy.
``(B) Individual covered.--An individual described in this
subparagraph is an individual who--
``(i) enrolls in a prescription drug plan under part D; and
``(ii) at the time of such enrollment was enrolled and
terminates enrollment in a medicare supplemental policy which
has a benefit package classified as `H', `I', or `J' under
the standards referred to in subparagraph (A)(i) or
terminates enrollment in a policy to which such standards do
not apply but which provides benefits for prescription drugs.
``(C) Enforcement.--The provisions of paragraph (4) of
subsection (s) shall apply with respect to the requirements
of this paragraph in the same manner as they apply to the
requirements of such subsection.
``(3) New standards.--In applying subsection (p)(1)(E)
(including permitting the NAIC to revise its model
regulations in response to changes in law) with respect to
the change in benefits resulting from title I of the Medicare
Modernization and Prescription Drug Act of 2002, with respect
to policies issued to individuals who are enrolled under part
D, the changes in standards shall provide for at least two
benefit packages (other than the core benefit package) that
may provide for coverage of cost-sharing with respect to
qualified prescription drug coverage under such part, except
that such coverage may not cover the prescription drug
deductible under such part. Two benefit packages shall be
consistent with the following:
``(A) First new policy.--The policy described in this
subparagraph has the following benefits, notwithstanding any
other provision of this section relating to a core benefit
package:
``(i) Coverage of 50 percent of the cost-sharing otherwise
applicable, except coverage of 100 percent of any cost-
sharing otherwise applicable for preventive benefits.
``(ii) No coverage of the part B deductible.
``(iii) Coverage for all hospital coinsurance for long
stays (as in the current core benefit package).
``(iv) A limitation on annual out-of-pocket expenditures to
$4,000 in 2005 (or, in a subsequent year, to such limitation
for the previous year increased by an appropriate inflation
adjustment specified by the Secretary).
``(B) Second new policy.--The policy described in this
subparagraph has the same benefits as the policy described in
subparagraph (A), except as follows:
``(i) Substitute `75 percent' for `50 percent' in clause
(i) of such subparagraph.
``(ii) Substitute `$2,000' for `$4,000' in clause (iv) of
such subparagraph.
``(4) Construction.--Any provision in this section or in a
medicare supplemental policy relating to guaranteed
renewability of coverage shall be deemed to have been met
through the offering of other coverage under this
subsection.''.
SEC. 105. MEDICARE PRESCRIPTION DRUG DISCOUNT CARD
ENDORSEMENT PROGRAM.
Title XVIII is amended by inserting after section 1806 the
following new section:
``medicare prescription drug discount card endorsement program
``Sec. 1807. (a) In General.--The Secretary (or the
Medicare Benefits Administrator pursuant to section
1808(c)(3)(C)) shall establish a program--
``(1) to endorse prescription drug discount card programs
that meet the requirements of this section; and
``(2) to make available to medicare beneficiaries
information regarding such endorsed programs.
``(b) Requirements for Endorsement.--The Secretary may not
endorse a prescription drug discount card program under this
section unless the program meets the following requirements:
``(1) Savings to medicare beneficiaries.--The program
passes on to medicare beneficiaries who enroll in the program
discounts on prescription drugs, including discounts
negotiated with manufacturers.
``(2) Prohibition on application only to mail order.--The
program applies to drugs that are available other than solely
through mail order.
``(3) Beneficiary services.--The program provides
pharmaceutical support services, such as education and
counseling, and services to prevent adverse drug
interactions.
``(4) Information.--The program makes available to medicare
beneficiaries through the Internet and otherwise information,
including information on enrollment fees, prices charged to
beneficiaries, and services offered under the program, that
the Secretary identifies as being necessary to provide for
informed choice by beneficiaries among endorsed programs.
``(5) Demonstrated experience.--The entity operating the
program has demonstrated experience and expertise in
operating such a program or a similar program.
``(6) Quality assurance.--The entity has in place adequate
procedures for assuring quality service under the program.
``(7) Additional beneficiary protections.--The program
meets such additional requirements as the Secretary
identifies to protect and promote the interest of medicare
beneficiaries, including requirements that ensure that
beneficiaries are not charged more than the lower of the
negotiated retail price or the usual and customary price.
``(c) Program Operation.--The Secretary shall operate the
program under this section consistent with the following:
``(1) Promotion of informed choice.--In order to promote
informed choice among endorsed prescription drug discount
card programs, the Secretary shall provide for the
dissemination of information which compares the costs and
benefits of such programs in a manner coordinated with the
dissemination of educational information on Medicare+Choice
plans under part C.
``(2) Oversight.--The Secretary shall provide appropriate
oversight to ensure compliance of endorsed programs with the
requirements of this section, including verification of the
discounts and services provided.
``(3) Use of medicare toll-free number.--The Secretary
shall provide through the 1-800-medicare toll free telephone
number for the receipt and response to inquiries and
complaints concerning the program and programs endorsed under
this section.
``(4) Disqualification for abusive practices.--The
Secretary shall revoke the endorsement of a program that the
Secretary determines no longer meets the requirements of this
section or that has engaged in false or misleading marketing
practices.
``(5) Enrollment practices.--A medicare beneficiary may not
be enrolled in more than one endorsed program at any time.
``(d) Transition.--The Secretary shall provide for an
appropriate transition and discontinuation of the program
under this section at the time prescription drug benefits
first become available under part D.
``(e) Authorization of Appropriations.--There are
authorized to be appropriated such sums as may be necessary
to carry out the program under this section.''.
TITLE II--MEDICARE+CHOICE REVITALIZATION AND MEDICARE+CHOICE
COMPETITION PROGRAM
Subtitle A--Medicare+Choice Revitalization
SEC. 201. MEDICARE+CHOICE IMPROVEMENTS.
(a) Equalizing Payments Between Fee-For-Service and
Medicare+Choice.--
(1) In general.--Section 1853(c)(1) (42 U.S.C. 1395w-
23(c)(1)) is amended by adding at the end the following:
``(D) Based on 100 percent of fee-for-service costs.--
``(i) In general.--For 2003 and 2004, the adjusted average
per capita cost for the year involved, determined under
section 1876(a)(4) for the Medicare+Choice payment area for
services covered under parts A and B for individuals entitled
to benefits under part A and enrolled under part B who are
not enrolled in a Medicare+Choice plan under this part for
the year, but adjusted to exclude costs attributable to
payments under section 1886(h).
``(ii) Inclusion of costs of va and dod military facility
services to medicare-eligible beneficiaries.--In determining
the adjusted average per capita cost under clause (i) for a
year, such cost shall be adjusted to include the Secretary's
estimate, on a per capita basis, of the amount of additional
payments that would have been made in the area involved under
this title if individuals entitled to benefits under this
title had not received services from facilities of the
Department of Veterans Affairs or the Department of
Defense.''.
(2) Conforming amendment.--Such section is further amended,
in the matter before subparagraph (A), by striking ``or (C)''
and inserting ``(C), or (D)''.
(b) Revision of Blend.--
(1) Revision of national average used in calculation of
blend.--Section 1853(c)(4)(B)(i)(II) (42 U.S.C. 1395w-
23(c)(4)(B)(i)(II)) is amended by inserting ``who (with
respect to determinations for 2003 and for 2004) are enrolled
in a Medicare+Choice plan'' after ``the average number of
medicare beneficiaries''.
(2) Change in budget neutrality.--Section 1853(c) (42
U.S.C. 1395w-23(c)) is amended--
(A) in paragraph (1)(A), by inserting ``(for a year before
2003)'' after ``multiplied''; and
(B) in paragraph (5), by inserting ``(before 2003)'' after
``for each year''.
(c) Revision in Minimum Percentage Increase for 2003 and
2004.--Section 1853(c)(1)(C) (42 U.S.C. 1395w-23(c)(1)(C)) is
amended by striking clause (iv) and inserting the following:
``(iv) For 2002, 102 percent of the annual Medicare+Choice
capitation rate under this paragraph for the area for 2001.
``(v) For 2003 and 2004, 103 percent of the annual
Medicare+Choice capitation rate under this paragraph for the
area for the previous year.
``(iv) For 2005 and each succeeding year, 102 percent of
the annual Medicare+Choice capitation rate under this
paragraph for the area for the previous year.''.
(d) Inclusion of Costs of DOD and VA Military Facility
Services to Medicare-eligible Beneficiaries in Calculation of
Medicare+Choice Payment Rates.--Section 1853(c)(3) (42 U.S.C.
1395w-23(c)(3)) is amended--
(1) in subparagraph (A), by striking ``subparagraph (B)''
and inserting ``subparagraphs (B) and (E)'', and
(2) by adding at the end the following new subparagraph:
``(E) Inclusion of costs of dod and va military facility
services to medicare-eligible beneficiaries.--In determining
the
[[Page H4194]]
area-specific Medicare+Choice capitation rate under
subparagraph (A) for a year (beginning with 2003), the annual
per capita rate of payment for 1997 determined under section
1876(a)(1)(C) shall be adjusted to include in the rate the
Secretary's estimate, on a per capita basis, of the amount of
additional payments that would have been made in the area
involved under this title if individuals entitled to benefits
under this title had not received services from facilities of
the Department of Defense or the Department of Veterans
Affairs.''.
(e) Announcement of Revised Medicare+Choice Payment
Rates.--Within 2 weeks after the date of the enactment of
this Act, the Secretary shall determine, and shall announce
(in a manner intended to provide notice to interested
parties) Medicare+Choice capitation rates under section 1853
of the Social Security Act (42 U.S.C. 1395w-23) for 2003,
revised in accordance with the provisions of this section.
(f) MedPAC Study of AAPCC.--
(1) Study.--The Medicare Payment Advisory Commission shall
conduct a study that assesses the method used for determining
the adjusted average per capita cost (AAPCC) under section
1876(a)(4) of the Social Security Act (42 U.S.C.
1395mm(a)(4)). Such study shall examine--
(A) the bases for variation in such costs between different
areas, including differences in input prices, utilization,
and practice patterns;
(B) the appropriate geographic area for payment under the
Medicare+Choice program under part C of title XVIII of such
Act; and
(C) the accuracy of risk adjustment methods in reflecting
differences in costs of providing care to different groups of
beneficiaries served under such program.
(2) Report.--Not later than 9 months after the date of the
enactment of this Act, the Commission shall submit to
Congress a report on the study conducted under paragraph (1).
Such report shall include recommendations regarding changes
in the methods for computing the adjusted average per capita
cost among different areas.
SEC. 202. MAKING PERMANENT CHANGE IN MEDICARE+CHOICE
REPORTING DEADLINES AND ANNUAL, COORDINATED
ELECTION PERIOD.
(a) Change in Reporting Deadline.--Section 1854(a)(1) (42
U.S.C. 1395w-24(a)(1)), as amended by section 532(b)(1) of
the Public Health Security and Bioterrorism Preparedness and
Response Act of 2002, is amended by striking ``2002, 2003,
and 2004 (or July 1 of each other year)'' and inserting
``2002 and each subsequent year (or July 1 of each year
before 2002)''.
(b) Delay in Annual, Coordinated Election Period.--Section
1851(e)(3)(B) (42 U.S.C. 1395w-21(e)(3)(B)), as amended by
section 532(c)(1)(A) of the Public Health Security and
Bioterrorism Preparedness and Response Act of 2002, is
amended by striking ``and after 2005, the month of November
before such year and with respect to 2003, 2004, and 2005''
and inserting ``, the month of November before such year and
with respect to 2003 and any subsequent year''.
(c) Annual Announcement of Payment Rates.--Section
1853(b)(1) (42 U.S.C. 1395w-23(b)(1)), as amended by section
532(d)(1) of the Public Health Security and Bioterrorism
Preparedness and Response Act of 2002, is amended by striking
``and after 2005 not later than March 1 before the calendar
year concerned and for 2004 and 2005'' and inserting ``not
later than March 1 before the calendar year concerned and for
2004 and each subsequent year''.
(d) Requiring Provision of Available Information Comparing
Plan Options.--The first sentence of section
1851(d)(2)(A)(ii) (42 U.S.C. 1395w-21(d)(2)(A)(ii)) is
amended by inserting before the period the following: ``to
the extent such information is available at the time of
preparation of materials for the mailing''.
SEC. 203. AVOIDING DUPLICATIVE STATE REGULATION.
(a) In General.--Section 1856(b)(3) (42 U.S.C. 1395w-
26(b)(3)) is amended to read as follows:
``(3) Relation to state laws.--The standards established
under this subsection shall supersede any State law or
regulation (other than State licensing laws or State laws
relating to plan solvency) with respect to Medicare+Choice
plans which are offered by Medicare+Choice organizations
under this part.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act.
SEC. 204. SPECIALIZED MEDICARE+CHOICE PLANS FOR SPECIAL NEEDS
BENEFICIARIES.
(a) Treatment as Coordinated Care Plan.--Section
1851(a)(2)(A) (42 U.S.C. 1395w-21(a)(2)(A)) is amended by
adding at the end the following new sentence: ``Specialized
Medicare+Choice plans for special needs beneficiaries (as
defined in section 1859(b)(4)) may be any type of coordinated
care plan.''.
(b) Specialized Medicare+Choice Plan for Special Needs
Beneficiaries Defined.--Section 1859(b) (42 U.S.C. 1395w-
29(b)) is amended by adding at the end the following new
paragraph:
``(4) Specialized medicare+choice plans for special needs
beneficiaries.--
``(A) In general.--The term `specialized Medicare+Choice
plan for special needs beneficiaries' means a Medicare+Choice
plan that exclusively serves special needs beneficiaries (as
defined in subparagraph (B)).
``(B) Special needs beneficiary.--The term `special needs
beneficiary' means a Medicare+Choice eligible individual
who--
``(i) is institutionalized (as defined by the Secretary);
``(ii) is entitled to medical assistance under a State plan
under title XIX; or
``(iii) meets such requirements as the Secretary may
determine would benefit from enrollment in such a specialized
Medicare+Choice plan described in subparagraph (A) for
individuals with severe or disabling chronic conditions.''.
(c) Restriction on Enrollment Permitted.--Section 1859 (42
U.S.C. 1395w-29) is amended by adding at the end the
following new subsection:
``(f) Restriction on Enrollment for Specialized
Medicare+Choice Plans for Special Needs Beneficiaries.--In
the case of a specialized Medicare+Choice plan (as defined in
subsection (b)(4)), notwithstanding any other provision of
this part and in accordance with regulations of the Secretary
and for periods before January 1, 2007, the plan may restrict
the enrollment of individuals under the plan to individuals
who are within one or more classes of special needs
beneficiaries.''.
(d) Report to Congress.--Not later than December 31, 2005,
the Medicare Benefits Administrator shall submit to Congress
a report that assesses the impact of specialized
Medicare+Choice plans for special needs beneficiaries on the
cost and quality of services provided to enrollees. Such
report shall include an assessment of the costs and savings
to the medicare program as a result of amendments made by
subsections (a), (b), and (c).
(e) Effective Dates.--
(1) In general.--The amendments made by subsections (a),
(b), and (c) shall take effect upon the date of the enactment
of this Act.
(2) Deadline for issuance of requirements for special needs
beneficiaries; transition.--No later than 6 months after the
date of the enactment of this Act, the Secretary of Health
and Human Services shall issue final regulations to establish
requirements for special needs beneficiaries under section
1859(b)(4)(B)(iii) of the Social Security Act, as added by
subsection (b).
SEC. 205. MEDICARE MSAS.
(a) Exemption from Quality Assurance Program Requirement.--
(1) In general.--Section 1852(e)(1) (42 U.S.C. 1395w-
22(e)(1)) is amended by inserting ``(other than MSA plans)''
after ``Medicare+Choice plans''.
(2) Conforming amendments.--Section 1852 (42 U.S.C. 1395w-
22) is amended--
(A) in subsection (c)(1)(I), by inserting before the period
at the end the following: ``if required under such section'';
and
(B) in subparagraphs (A) and (B) of subsection (e)(2), by
striking ``, a non-network MSA plan,'' and ``, non-network
msa plans,'' each place it appears.
(b) Making Program Permanent and Eliminating Cap.--Section
1851(b)(4) (42 U.S.C. 1395w-21(b)(4)) is amended--
(1) in the heading of subparagraph (A), by striking ``on a
demonstration basis'';
(2) by striking the first sentence of subparagraph (A); and
(3) by striking the second sentence of subparagraph (C).
(c) Applying Limitations on Balance Billing.--Section
1852(k)(1) (42 U.S.C. 1395w-22(k)(1)) is amended by inserting
``or with an organization offering a MSA plan'' after
``section 1851(a)(2)(A)''.
(d) Additional Amendment.--Section 1851(e)(5)(A) (42 U.S.C.
1395w-21(e)(5)(A)) is amended--
(1) by adding ``or'' at the end of clause (i);
(2) by striking ``, or'' at the end of clause (ii) and
inserting a semicolon; and
(3) by striking clause (iii).
SEC. 206. EXTENSION OF REASONABLE COST AND SHMO CONTRACTS.
(a) Reasonable Cost Contracts.--
(1) In general.--Section 1876(h)(5)(C) (42 U.S.C.
1395mm(h)(5)(C)) is amended--
(A) by inserting ``(i)'' after ``(C)'';
(B) by inserting before the period the following: ``,
except (subject to clause (ii)) in the case of a contract for
an area which is not covered in the service area of 1 or more
coordinated care Medicare+Choice plans under part C''; and
(C) by adding at the end the following new clause:
``(ii) In the case in which--
``(I) a reasonable cost reimbursement contract includes an
area in its service area as of a date that is after December
31, 2003;
``(II) such area is no longer included in such service area
after such date by reason of the operation of clause (i)
because of the inclusion of such area within the service area
of a Medicare+Choice plan; and
``(III) all Medicare+Choice plans subsequently terminate
coverage in such area;
such reasonable cost reimbursement contract may be extended
and renewed to cover such area (so long as it is not included
in the service area of any Medicare+Choice plan).''.
(2) Study.--The Medicare Benefits Administrator shall
conduct a study of an appropriate transition for plans
offered under reasonable cost contracts under section 1876 of
the Social Security Act on and after January 1, 2005. Such a
transition may take into account whether there are one or
more coordinated care Medicare+Choice plans being offered in
the areas involved. Not later than February 1, 2004, the
Administrator shall submit to Congress a report on such study
and shall include recommendations regarding any changes in
the amendment made by
[[Page H4195]]
paragraph (1) as the Administrator determines to be
appropriate.
(b) Extension of Social Health Maintenance Organization
(SHMO) Demonstration Project.--
(1) In general.--Section 4018(b)(1) of the Omnibus Budget
Reconciliation Act of 1987 is amended by striking ``the date
that is 30 months after the date that the Secretary submits
to Congress the report described in section 4014(c) of the
Balanced Budget Act of 1997'' and inserting ``December 31,
2004''.
(2) SHMOs offering medicare+choice plans.--Nothing in such
section 4018 shall be construed as preventing a social health
maintenance organization from offering a Medicare+Choice plan
under part C of title XVIII of the Social Security Act.
Subtitle B--Medicare+Choice Competition Program
SEC. 211. MEDICARE+CHOICE COMPETITION PROGRAM.
(a) Submission of Bid Amounts.--Section 1854 (42 U.S.C.
1395w-24) is amended--
(1) by amending the heading to read as follows:
``submission of bid amounts'';
(2) in subsection (a)(1)(A)--
(A) by striking ``(A)'' and inserting ``(A)(i) if the
following year is before 2005,''; and
(B) by inserting before the semicolon at the end the
following: `` or (ii) if the following year is 2005 or later,
the information described in paragraph (6)(A)''; and
(3) by adding at the end of subsection (a) the following:
``(6) Submission of bid amounts by medicare+choice
organizations.--
``(A) Information to be submitted.--The information
described in this subparagraph is as follows:
``(i) The monthly aggregate bid amount for provision of all
items and services under this part and the actuarial basis
for determining such amount.
``(ii) The proportions of such bid amount that are
attributable to--
``(I) the provision of statutory non-drug benefits (such
portion referred to in this part as the `unadjusted non-drug
monthly bid amount');
``(II) the provision of statutory prescription drug
benefits; and
``(III) the provision of non-statutory benefits;
and the actuarial basis for determining such proportions.
``(iii) Such additional information as the Administrator
may require to verify the actuarial bases described in
clauses (i) and (ii).
``(B) Statutory benefits defined.--For purposes of this
part:
``(i) The term `statutory non-drug benefits' means benefits
under parts A and B.
``(ii) The term `statutory prescription drug benefits'
means benefits under part D.
``(iii) The term `statutory benefits' means statutory
prescription drug benefits and statutory non-drug benefits.
``(C) Acceptance and negotiation of bid amounts.--The
Administrator has the authority to negotiate regarding
monthly bid amounts submitted under subparagraph (A) (and the
proportion described in subparagraph (A)(ii)). The
Administrator may reject such a bid amount or proportion if
the Administrator determines that such amount or proportion
is not supported by the actuarial bases provided under
subparagraph (A).''.
(b) Providing for Beneficiary Savings for Certain Plans.--
(1) In general.--Section 1854(b) (42 U.S.C. 1395w-24(b)) is
amended--
(A) by adding at the end of paragraph (1) the following new
subparagraph:
``(C) Beneficiary rebate rule.--
``(i) Requirement.--The Medicare+Choice plan shall provide
to the enrollee a monthly rebate equal to 75 percent of the
average per capita savings (if any) described in paragraph
(3) applicable to the plan and year involved.
``(iii) Form of rebate.--A rebate required under this
subparagraph shall be provided--
``(I) through the crediting of the amount of the rebate
towards the Medicare+Choice monthly supplementary beneficiary
premium or the premium imposed for prescription drug coverage
under part D;
``(II) through a direct monthly payment (through electronic
funds transfer or otherwise); or
``(III) through other means approved by the Medicare
Benefits Administrator,
or any combination thereof.''; and
(B) by adding at the end the following new paragraph:
``(3) Computation of average per capita monthly savings.--
For purposes of paragraph (1)(C)(i), the average per capita
monthly savings referred to in such paragraph for a
Medicare+Choice plan and year is computed as follows:
``(A) Determination of state-wide average risk
adjustment.--
``(i) In general.--The Medicare Benefits Administrator
shall determine, at the same time rates are promulgated under
section 1853(b)(1) (beginning with 2005), for each State the
average of the risk adjustment factors to be applied to
enrollees under section 1853(a)(1)(A) in that State. In the
case of a State in which a Medicare+Choice plan was offered
in the previous year, the Administrator may compute such
average based upon risk adjustment factors applied in that
State in a previous year.
``(ii) Treatment of new states.--In the case of a State in
which no Medicare+Choice plan was offered in the previous
year, the Administrator shall estimate such average. In
making such estimate, the Administrator may use average risk
adjustment factors applied to comparable States or applied on
a national basis.
``(B) Determination of risk adjusted benchmark and risk-
adjusted bid.--For each Medicare+Choice plan offered in a
State, the Administrator shall--
``(i) adjust the fee-for-service area-specific non-drug
benchmark amount by the applicable average risk adjustment
factor computed under subparagraph (A); and
``(ii) adjust the unadjusted non-drug monthly bid amount by
such applicable average risk adjustment factor.
``(C) Determination of average per capita monthly
savings.--The average per capita monthly savings described in
this subparagraph is equal to the amount (if any) by which--
``(i) the risk-adjusted benchmark amount computed under
subparagraph (B)(i), exceeds
``(ii) the risk-adjusted bid computed under subparagraph
(B)(ii).
``(D) Authority to determine risk adjustment for areas
other than states.--The Administrator may provide for the
determination and application of risk adjustment factors
under this paragraph on the basis of areas other than
States.''.
(2) Computation of fee-for-service area-specific non-drug
benchmark.--Section 1853 (42 U.S.C. 1395w-23) is amended by
adding at the end the following new subsection:
``(j) Computation of Fee-for-Service Area-Specific Non-Drug
Benchmark Amount.--For purposes of this part, the term `fee-
for-service area-specific non-drug benchmark amount' means,
with respect to a Medicare+Choice payment area for a month in
a year, an amount equal to the greater of the following (but
in no case less than \1/12\ of the rate computed under
subsection (c)(1), without regard to subparagraph (A), for
the year):
``(1) Based on 100 percent of fee-for-service costs in the
area.--An amount equal to \1/12\ of 100 percent (for 2005
through 2007, or 95 percent for 2008 and years thereafter) of
the adjusted average per capita cost for the year involved,
determined under section 1876(a)(4) for the Medicare+Choice
payment area, for the area and the year involved, for
services covered under parts A and B for individuals entitled
to benefits under part A and enrolled under part B who are
not enrolled in a Medicare+Choice plan under this part for
the year, and adjusted to exclude from such cost the amount
the Medicare Benefits Administrator estimates is payable for
costs described in subclauses (I) and (II) of subsection
(c)(3)(C)(i) for the year involved and also adjusted in the
manner described in subsection (c)(1)(D)(ii) (relating to
inclusion of costs of VA and DOD military facility services
to medicare-eligible beneficiaries).
``(2) Minimum monthly amount.--The minimum amount specified
in this paragraph is the amount specified in subsection
(c)(1)(B)(iv) for the year involved.''.
(c) Payment of Plans Based on Bid Amounts.--
(1) In general.--Section 1853(a)(1)(A) (42 U.S.C. 1395w-23)
is amended by striking ``in an amount'' and all that follows
and inserting the following: ``in an amount determined as
follows:
``(i) Payment before 2005.--For years before 2005, the
payment amount shall be equal to \1/12\ of the annual
Medicare+Choice capitation rate (as calculated under
subsection (c)) with respect to that individual for that
area, reduced by the amount of any reduction elected under
section 1854(f )(1)(E) and adjusted under clause (iii).
``(ii) Payment for statutory non-drug benefits beginning
with 2005.--For years beginning with 2005--
``(I) Plans with bids below benchmark.--In the case of a
plan for which there are average per capita monthly savings
described in section 1854(b)(3)(C), the payment under this
subsection is equal to the unadjusted non-drug monthly bid
amount, adjusted under clause (iii), plus the amount of the
monthly rebate computed under section 1854(b)(1)(C)(i) for
that plan and year.
``(II) Plans with bids at or above benchmark.--In the case
of a plan for which there are no average per capita monthly
savings described in section 1854(b)(3)(C), the payment
amount under this subsection is equal to the fee-for-service
area-specific non-drug benchmark amount, adjusted under
clause (iii).
``(iii) Demographic adjustment, including adjustment for
health status.--The Administrator shall adjust the payment
amount under clause (i), the unadjusted non-drug monthly bid
amount under clause (ii)(I), and the fee-for-service area-
specific non-drug benchmark amount under clause (ii)(II) for
such risk factors as age, disability status, gender,
institutional status, and such other factors as the
Administrator determines to be appropriate, including
adjustment for health status under paragraph (3), so as to
ensure actuarial equivalence. The Administrator may add to,
modify, or substitute for such adjustment factors if such
changes will improve the determination of actuarial
equivalence.
``(iv) Reference to subsidy payment for statutory drug
benefits.--In the case in which an enrollee is enrolled under
part D, the Medicare+Choice organization also is entitled to
a subsidy payment amount under section 1860H.''.
(d) Conforming Amendments.--
[[Page H4196]]
(1) Protection against beneficiary selection.--Section
1852(b)(1)(A) (42 U.S.C. 1395w-22(b)(1)(A)) is amended by
adding at the end the following: ``The Administrator shall
not approve a plan of an organization if the Administrator
determines that the benefits are designed to substantially
discourage enrollment by certain Medicare+Choice eligible
individuals with the organization.''.
(2) Conforming amendment to premium terminology.--
Subparagraphs (A) and (B) of section 1854(b)(2) (42 U.S.C.
1395w-24(b)(2)) are amended to read as follows:
``(A) Medicare+Choice monthly basic beneficiary premium.--
The term `Medicare+Choice monthly basic beneficiary premium'
means, with respect to a Medicare+Choice plan--
``(i) described in section 1853(a)(1)(A)(ii)(I) (relating
to plans providing rebates), zero; or
``(ii) described in section 1853(a)(1)(A)(ii)(II), the
amount (if any) by which the unadjusted non-drug monthly bid
amount exceeds the fee-for-service area-specific non-drug
benchmark amount.
``(B) Medicare+Choice monthly supplemental beneficiary
premium.--The term `Medicare+Choice monthly supplemental
beneficiary premium' means, with respect to a Medicare+Choice
plan, the portion of the aggregate monthly bid amount
submitted under clause (i) of subsection (a)(6)(A) for the
year that is attributable under such section to the provision
of nonstatutory benefits.''.
(3) Requirement for uniform bid amounts.--Section 1854(c)
(42 U.S.C. 1395w-24(c)) is amended to read as follows:
``(c) Uniform Bid Amounts.--The Medicare+Choice monthly bid
amount submitted under subsection (a)(6) of a Medicare+Choice
organization under this part may not vary among individuals
enrolled in the plan.''.
(4) Permitting beneficiary rebates.--
(A) Section 1851(h)(4)(A) (42 U.S.C. 1395w-21(h)(4)(A)) is
amended by inserting ``except as provided under section
1854(b)(1)(C)'' after ``or otherwise''.
(B) Section 1854(d) (42 U.S.C. 1395w-24(d)) is amended by
inserting ``, except as provided under subsection
(b)(1)(C),'' after ``and may not provide''.
(e) Effective Date.--The amendments made by this section
shall apply to payments and premiums for months beginning
with January 2005.
SEC. 212. DEMONSTRATION PROGRAM FOR COMPETITIVE-DEMONSTRATION
AREAS.
(a) Identification of Competitive-Demonstration Areas for
Demonstration Program; Computation of Choice Non-Drug
Benchmarks.--Section 1853, as amended by section 211(b)(2),
is amended by adding at the end the following new subsection:
``(k) Establishment of Competitive Demonstration Program.--
``(1) Designation of competitive-demonstration areas as
part of program.--
``(A) In general.--For purposes of this part, the
Administrator shall establish a demonstration program under
which the Administrator designates Medicare+Choice areas as
competitive-demonstration areas consistent with the following
limitations:
``(i) Limitation on number of areas that may be
designated.--The Administrator may not designate more than 4
areas as competitive-demonstration areas.
``(ii) Limitation on period of designation of any area.--
The Administrator may not designate any area as a
competitive-demonstration area for a period of more than 2
years.
The Administrator has the discretion to decide whether or not
to designate as a competitive-demonstration area an area that
qualifies for such designation.
``(B) Qualifications for designation.--For purposes of this
title, a Medicare+Choice area (which is a metropolitan
statistical area or other area with a substantial number of
Medicare+Choice enrollees) may not be designated as a
`competitive-demonstration area' for a 2-year period
beginning with a year unless the Administrator determines, by
such date before the beginning of the year as the
Administrator determines appropriate, that--
``(i) there will be offered during the open enrollment
period under this part before the beginning of the year at
least 2 Medicare+Choice plans (in addition to the fee-for-
service program under parts A and B), each offered by a
different Medicare+Choice organization; and
``(ii) during March of the previous year at least 50
percent of the number of Medicare+Choice eligible individuals
who reside in the area were enrolled in a Medicare+Choice
plan.
``(2) Choice non-drug benchmark amount.--For purposes of
this part, the term `choice non-drug benchmark amount' means,
with respect to a Medicare+Choice payment area for a month in
a year, the sum of the 2 components described in paragraph
(3) for the area and year. The Administrator shall compute
such benchmark amount for each competitive-demonstration area
before the beginning of each annual, coordinated election
period under section 1851(e)(3)(B) for each year (beginning
with 2005) in which it is designated as such an area.
``(3) 2 components.--For purposes of paragraph (2), the 2
components described in this paragraph for an area and a year
are the following:
``(A) Fee-for-service component weighted by national fee-
for-service market share.--The product of the following:
``(i) National fee-for-service market share.--The national
fee-for-service market share percentage (determined under
paragraph (5)) for the year.
``(ii) Fee-for-service area-specific non-drug bid.--The
fee-for-service area-specific non-drug bid (as defined in
paragraph (6)) for the area and year.
``(B) M+C component weighted by national medicare+choice
market share.--The product of the following:
``(i) National medicare+choice market share.--1 minus the
national fee-for-service market share percentage for the
year.
``(ii) Weighted average of plan bids in area.--The weighted
average of the plan bids for the area and year (as determined
under paragraph (4)(A)).
``(4) Determination of weighted average bids for an area.--
``(A) In general.--For purposes of paragraph (3)(B)(ii),
the weighted average of plan bids for an area and a year is
the sum of the following products for Medicare+Choice plans
described in subparagraph (C) in the area and year:
``(i) Proportion of each plan's enrollees in the area.--The
number of individuals described in subparagraph (B), divided
by the total number of such individuals for all
Medicare+Choice plans described in subparagraph (C) for that
area and year.
``(ii) Monthly non-drug bid amount.--The unadjusted non-
drug monthly bid amount.
``(B) Counting of individuals.--The Administrator shall
count, for each Medicare+Choice plan described in
subparagraph (C) for an area and year, the number of
individuals who reside in the area and who were enrolled
under such plan under this part during March of the previous
year.
``(C) Exclusion of plans not offered in previous year.--For
an area and year, the Medicare+Choice plans described in this
subparagraph are plans that are offered in the area and year
and were offered in the area in March of the previous year.
``(5) Computation of national fee-for-service market share
percentage.--The Administrator shall determine, for a year,
the proportion (in this subsection referred to as the
`national fee-for-service market share percentage') of
Medicare+Choice eligible individuals who during March of the
previous year were not enrolled in a Medicare+Choice plan.
``(6) Fee-for-service area-specific non-drug bid.--For
purposes of this part, the term `fee-for-service area-
specific non-drug bid' means, for an area and year, the
amount described in section 1853(j)(1) for the area and year,
except that any reference to a percent of less than 100
percent shall be deemed a reference to 100 percent.''.
(b) Application of Choice Non-Drug Benchmark in
Competitive-Demonstration Areas.--
(1) In general.--Section 1854 is amended--
(A) in subsection (b)(1)(C)(i), as added by section
211(b)(1)(A), by striking ``(i) Requirement.--If'' and
inserting ``(i) Requirement for non-competitive-demonstration
areas.--In the case of a Medicare+Choice payment area that is
not a competitive-demonstration area designated under section
1853(k)(1), if'';
(B) in subsection (b)(1)(C), as so added, by inserting
after clause (i) the following new clause:
``(ii) Requirement for competitive-demonstration areas.--In
the case of a Medicare+Choice payment area that is designated
as a competitive-demonstration area under section 1853(k)(1),
if there are average per capita monthly savings described in
paragraph (4) for a Medicare+Choice plan and year, the
Medicare+Choice plan shall provide to the enrollee a monthly
rebate equal to 75 percent of such savings.'';
(C) by adding at the end of subsection (b), as amended by
section 211(b)(1), the following new paragraph:
``(4) Computation of average per capita monthly savings for
competitive-demonstration areas.--For purposes of paragraph
(1)(C)(ii), the average per capita monthly savings referred
to in such paragraph for a Medicare+Choice plan and year
shall be computed in the same manner as the average per
capita monthly savings is computed under paragraph (3) except
that the reference to the fee-for-service area-specific non-
drug benchmark in paragraph (3)(B)(i) (or to the benchmark
amount as adjusted under paragraph (3)(C)(i)) is deemed to be
a reference to the choice non-drug benchmark amount (or such
amount as adjusted in the manner described in paragraph
(3)(B)(i)).''; and
(D) in subsection (d), as amended by section 211(d)(4), by
inserting ``and subsection (b)(1)(D)'' after ``subsection
(b)(1)(C),''.
(2) Conforming amendments.--
(A) Payment of plans.--Section 1853(a)(1)(A)(ii), as
amended by section 211(c)(1), is amended--
(i) in subclause (I), by inserting ``(or, in the case of a
competitive-demonstration area, the choice non-drug benchmark
amount)'' after ``benchmark amount''; and
(ii) in subclauses (I) and (II), by inserting ``(or, in the
case of a competitive-demonstration area, described in
section 1854(b)(4))'' after ``section 1854(b)(1)(C)''.
(B) Definition of monthly basic premium.--Section
1854(b)(2)(A)(ii), as amended by section 211(d)(2), is
amended by inserting ``(or, in the case of a competitive-
demonstration area, the choice non-drug benchmark amount)''
after ``benchmark amount''.
(c) Premium Adjustment.--Section 1839 (42 U.S.C. 1395r) is
amended by adding at the end the following new subsection:
[[Page H4197]]
``(h)(1) In the case of an individual who resides in a
competitive-demonstration area designated under section
1851(k)(1) and who is not enrolled in a Medicare+Choice plan
under part C, the monthly premium otherwise applied under
this part (determined without regard to subsections (b) and
(f) or any adjustment under this subsection) shall be
adjusted as follows: If the fee-for-service area-specific
non-drug bid (as defined in section 1853(k)(6)) for the
Medicare+Choice area in which the individual resides for a
month--
``(A) does not exceed the choice non-drug benchmark (as
determined under section 1853(k)(2)) for such area, the
amount of the premium for the individual for the month shall
be reduced by an amount equal to 75 percent of the amount by
which such benchmark exceeds such fee-for-service bid; or
``(B) exceeds such choice non-drug benchmark, the amount of
the premium for the individual for the month shall be
adjusted to ensure that--
``(i) the sum of the amount of the adjusted premium and the
choice non-drug benchmark for the area, is equal to
``(ii) the sum of the unadjusted premium plus amount of the
fee-for-service area-specific non-drug bid for the area.
``(2) Nothing in this subsection shall be construed as
preventing a reduction under paragraph (1)(A) in the premium
otherwise applicable under this part to zero or from
requiring the provision of a rebate to the extent such
premium would otherwise be required to be less than zero.
``(3) The adjustment in the premium under this subsection
shall be effected in such manner as the Medicare Benefits
Administrator determines appropriate.
``(4) In order to carry out this subsection (insofar as it
is effected through the manner of collection of premiums
under 1840(a)), the Medicare Benefits Administrator shall
transmit to the Commissioner of Social Security--
``(A) at the beginning of each year, the name, social
security account number, and the amount of the adjustment (if
any) under this subsection for each individual enrolled under
this part for each month during the year; and
``(B) periodically throughout the year, information to
update the information previously transmitted under this
paragraph for the year.''.
(d) Conforming Amendment.--Section 1844(c) (42 U.S.C.
1395w(c)) is amended by inserting ``and without regard to any
premium adjustment effected under section 1839(h)'' before
the period at the end.
(e) Report on Demonstration Program.--Not later than 6
months after the date on which the designation of the 4th
competitive-demonstration area under section 1851(k)(1) of
the Social Security Act ends, the Medicare Payment Advisory
Commission shall submit to Congress a report on the impact of
the demonstration program under the amendments made by this
section, including such impact on premiums of medicare
beneficiaries, savings to the medicare program, and on
adverse selection.
(f) Effective Date.--The amendments made by this section
shall apply to payments and premiums for periods beginning on
or after January 1, 2005.
SEC. 213. CONFORMING AMENDMENTS.
(a) Conforming Amendments Relating to Bids.--
(1) Section 1854 (42 U.S.C. 1395w-24) is amended--
(A) in the heading by inserting ``and bid amounts'' after
``premiums'';
(B) in the heading of subsection (a), by inserting ``and
Bid Amounts'' after ``Premiums''; and
(C) in subsection (a)(5)(A), by inserting ``paragraphs (2),
(3), and (4) of'' after ``filed under''.
(b) Additional Conforming Amendments.--
(1) Annual determination and announcement of certain
factors.--Section 1853(b) (42 U.S.C. 1395w-23(b)) is
amended--
(A) in paragraph (1), by striking ``the calendar year
concerned'' and all that follows and inserting the following:
``the calendar year concerned with respect to each
Medicare+Choice payment area, the following:
``(A) Pre-competition information.--For years before 2005,
the following:
``(i) Medicare+choice capitation rates.--The annual
Medicare+Choice capitation rate for each Medicare+Choice
payment area for the year.
``(ii) Adjustment factors.--The risk and other factors to
be used in adjusting such rates under subsection (a)(1)(A)
for payments for months in that year.
``(B) Competition information.--For years beginning with
2005, the following:
``(i) Benchmarks.--The fee-for-service area-specific non-
drug benchmark under section 1853(j) and, if applicable, the
choice non-drug benchmark under section 1853(k)(2), for the
year involved and, if applicable, the national fee-for-
service market share percentage.
``(ii) Adjustment factors.--The adjustment factors applied
under section 1853(a)(1)(A)(iii) (relating to demographic
adjustment), section 1853(a)(1)(B) (relating to adjustment
for end-stage renal disease), and section 1853(a)(3)
(relating to health status adjustment).
``(iii) Projected fee-for-service bid.--In the case of a
competitive area, the projected fee-for-service area-specific
non-drug bid (as determined under subsection (k)(6)) for the
area.
``(iv) Individuals.--The number of individuals counted
under subsection (k)(4)(B) and enrolled in each
Medicare+Choice plan in the area.''; and
(B) in paragraph (3), by striking ``in sufficient detail''
and all that follows up to the period at the end.
(2) Repeal of provisions relating to adjusted community
rate (acr).--
(A) In general.--Subsections (e) and (f) of section 1854
(42 U.S.C. 1395w-24) are repealed.
(B) Conforming amendment.--Section 1839(a)(2) (42 U.S.C.
1395r(a)(2)) is amended by striking ``, and to reflect'' and
all that follows and inserting a period.
(3) Prospective implementation of national coverage
determinations.--Section 1852(a)(5) (42 U.S.C. 1395w-
22(a)(5)) is amended to read as follows:
``(5) Prospective implementation of national coverage
determinations.--The Secretary shall only implement a
national coverage determination that will result in a
significant change in the costs to a Medicare+Choice
organization in a prospective manner that applies to
announcements made under section 1853(b) after the date of
the implementation of the determination.''.
(4) Permitting geographic adjustment to consolidate
multiple medicare+choice payment areas in a state into a
single statewide medicare+choice payment area.--Section
1853(d)(3) (42 U.S.C. 1395w-23(e)(3)) is amended--
(A) by amending clause (i) of subparagraph (A) to read as
follows:
``(i) to a single statewide Medicare+Choice payment
area,''; and
(B) by amending subparagraph (B) to read as follows:
``(B) Budget neutrality adjustment.--In the case of a State
requesting an adjustment under this paragraph, the Medicare
Benefits Administrator shall initially (and annually
thereafter) adjust the payment rates otherwise established
under this section for Medicare+Choice payment areas in the
State in a manner so that the aggregate of the payments under
this section in the State shall not exceed the aggregate
payments that would have been made under this section for
Medicare+Choice payment areas in the State in the absence of
the adjustment under this paragraph.''.
(d) Effective Date.--The amendments made by this section
shall apply to payments and premiums for periods beginning on
or after January 1, 2005.
TITLE III--RURAL HEALTH CARE IMPROVEMENTS
SEC. 301. REFERENCE TO FULL MARKET BASKET INCREASE FOR SOLE
COMMUNITY HOSPITALS.
For provision eliminating any reduction from full market
basket in the update for inpatient hospital services for sole
community hospitals, see section 401.
SEC. 302. ENHANCED DISPROPORTIONATE SHARE HOSPITAL (DSH)
TREATMENT FOR RURAL HOSPITALS AND URBAN
HOSPITALS WITH FEWER THAN 100 BEDS.
(a) Blending of Payment Amounts.--
(1) In general.--Section 1886(d)(5)(F) (42 U.S.C.
1395ww(d)(5)(F)) is amended by adding at the end the
following new clause:
``(xiv)(I) In the case of discharges in a fiscal year
beginning on or after October 1, 2002, subject to subclause
(II), there shall be substituted for the disproportionate
share adjustment percentage otherwise determined under clause
(iv) (other than subclause (I)) or under clause (viii), (x),
(xi), (xii), or (xiii), the old blend proportion (specified
under subclause (III)) of the disproportionate share
adjustment percentage otherwise determined under the
respective clause and 100 percent minus such old blend
proportion of the disproportionate share adjustment
percentage determined under clause (vii) (relating to large,
urban hospitals).
``(II) Under subclause (I), the disproportionate share
adjustment percentage shall not exceed 10 percent for a
hospital that is not classified as a rural referral center
under subparagraph (C).
``(III) For purposes of subclause (I), the old blend
proportion for fiscal year 2003 is 80 percent, for each
subsequent year (through 2006) is the old blend proportion
under this subclause for the previous year minus 20
percentage points, and for each year beginning with 2007 is 0
percent.''.
(2) Conforming amendments.--Section 1886(d)(5)(F) (42
U.S.C. 1395ww(d)(5)(F)) is amended--
(A) in each of subclauses (II), (III), (IV), (V), and (VI)
of clause (iv), by inserting ``subject to clause (xiv) and''
before ``for discharges occurring'';
(B) in clause (viii), by striking ``The formula'' and
inserting ``Subject to clause (xiv), the formula''; and
(C) in each of clauses (x), (xi), (xii), and (xiii), by
striking ``For purposes'' and inserting ``Subject to clause
(xiv), for purposes''.
(b) Effective Date.--The amendments made by this section
shall apply with respect to discharges occurring on or after
October 1, 2002.
SEC. 303. 2-YEAR PHASED-IN INCREASE IN THE STANDARDIZED
AMOUNT IN RURAL AND SMALL URBAN AREAS TO
ACHIEVE A SINGLE, UNIFORM STANDARDIZED AMOUNT.
Section 1886(d)(3)(A)(iv) (42 U.S.C. 1395ww(d)(3)(A)(iv))
is amended--
(1) by striking ``(iv) For discharges'' and inserting
``(iv)(I) Subject to the succeeding provisions of this
clause, for discharges''; and
(2) by adding at the end the following new subclauses:
[[Page H4198]]
``(II) For discharges occurring during fiscal year 2003,
the average standardized amount for hospitals located other
than in a large urban area shall be increased by \1/2\ of the
difference between the average standardized amount determined
under subclause (I) for hospitals located in large urban
areas for such fiscal year and such amount determined
(without regard to this subclause) for other hospitals for
such fiscal year.
``(III) For discharges occurring in a fiscal year beginning
with fiscal year 2004, the Secretary shall compute an average
standardized amount for hospitals located in any area within
the United States and within each region equal to the average
standardized amount computed for the previous fiscal year
under this subparagraph for hospitals located in a large
urban area (or, beginning with fiscal year 2005, for
hospitals located in any area) increased by the applicable
percentage increase under subsection (b)(3)(B)(i).''.
SEC. 304. MORE FREQUENT UPDATE IN WEIGHTS USED IN HOSPITAL
MARKET BASKET.
(a) More Frequent Updates in Weights.--After revising the
weights used in the hospital market basket under section
1886(b)(3)(B)(iii) of the Social Security Act (42 U.S.C.
1395ww(b)(3)(B)(iii)) to reflect the most current data
available, the Secretary shall establish a frequency for
revising such weights in such market basket to reflect the
most current data available more frequently than once every 5
years.
(b) Report.--Not later than October 1, 2003, the Secretary
shall submit a report to Congress on the frequency
established under subsection (a), including an explanation of
the reasons for, and options considered, in determining such
frequency.
SEC. 305. IMPROVEMENTS TO CRITICAL ACCESS HOSPITAL PROGRAM.
(a) Reinstatement of Periodic Interim Payment (PIP).--
Section 1815(e)(2) (42 U.S.C. 1395g(e)(2)) is amended--
(1) by striking ``and'' at the end of subparagraph (C);
(2) by adding ``and'' at the end of subparagraph (D); and
(3) by inserting after subparagraph (D) the following new
subparagraph:
``(E) inpatient critical access hospital services;''.
(b) Condition for Application of Special Physician Payment
Adjustment.--Section 1834(g)(2) (42 U.S.C. 1395m(g)(2)) is
amended by adding after and below subparagraph (B) the
following:
``The Secretary may not require, as a condition for applying
subparagraph (B) with respect to a critical access hospital,
that each physician providing professional services in the
hospital must assign billing rights with respect to such
services, except that such subparagraph shall not apply to
those physicians who have not assigned such billing
rights.''.
(c) Flexibility in Bed Limitation for Hospitals with Strong
Seasonal Census Fluctuations.--Section 1820 (42 U.S.C. 1395i-
4) is amended--
(1) in subsection (c)(2)(B)(iii), by inserting ``subject to
paragraph (3)'' after ``(iii) provides'';
(2) by adding at the end of subsection (c) the following
new paragraph:
``(3) Increase in maximum number of beds for hospitals with
strong seasonal census fluctuations.--
``(A) In general.--In the case of a hospital that
demonstrates that it meets the standards established under
subparagraph (B), the bed limitations otherwise applicable
under paragraph (2)(B)(iii) and subsection (f) shall be
increased by 5 beds.
``(B) Standards.--The Secretary shall specify standards for
determining whether a critical access hospital has
sufficiently strong seasonal variations in patient admissions
to justify the increase in bed limitation provided under
subparagraph (A).''; and
(3) in subsection (f), by adding at the end the following
new sentence: ``The limitations in numbers of beds under the
first sentence are subject to adjustment under subsection
(c)(3).''.
(d) 5-Year Extension of the Authorization for
Appropriations for Grant Program.--Section 1820(j) (42 U.S.C.
1395i-4(j)) is amended by striking ``through 2002'' and
inserting ``through 2007''.
(e) Effective Dates.--
(1) Reinstatement of pip.--The amendments made by
subsection (a) shall apply to payments made on or after
January 1, 2003.
(2) Physician payment adjustment condition.--The amendment
made by subsection (b) shall be effective as if included in
the enactment of section 403(d) of the Medicare, Medicaid,
and SCHIP Balanced Budget Refinement Act of 1999 (113 Stat.
1501A-371).
(3) Flexibility in bed limitation.--The amendments made by
subsection (c) shall apply to designations made on or after
January 1, 2003, but shall not apply to critical access
hospitals that were designated as of such date.
SEC. 306. EXTENSION OF TEMPORARY INCREASE FOR HOME HEALTH
SERVICES FURNISHED IN A RURAL AREA.
(a) In General.--Section 508(a) BIPA (114 Stat. 2763A-533)
is amended--
(1) by striking ``24-Month Increase Beginning April 1,
2001'' and inserting ``In General''; and
(2) by striking ``April 1, 2003'' and inserting ``January
1, 2005''.
(b) Conforming Amendment.--Section 547(c)(2) of BIPA (114
Stat. 2763A-553) is amended by striking ``the period
beginning on April 1, 2001, and ending on September 30,
2002,'' and inserting ``a period under such section''.
SEC. 307. REFERENCE TO 10 PERCENT INCREASE IN PAYMENT FOR
HOSPICE CARE FURNISHED IN A FRONTIER AREA AND
RURAL HOSPICE DEMONSTRATION PROJECT.
For--
(1) provision of 10 percent increase in payment for hospice
care furnished in a frontier area, see section 422; and
(2) provision of a rural hospice demonstration project, see
section 423.
SEC. 308. REFERENCE TO PRIORITY FOR HOSPITALS LOCATED IN
RURAL OR SMALL URBAN AREAS IN REDISTRIBUTION OF
UNUSED GRADUATE MEDICAL EDUCATION RESIDENCIES.
For provision providing priority for hospitals located in
rural or small urban areas in redistribution of unused
graduate medical education residencies, see section 612.
SEC. 309. GAO STUDY OF GEOGRAPHIC DIFFERENCES IN PAYMENTS FOR
PHYSICIANS' SERVICES.
(a) Study.--The Comptroller General of the United States
shall conduct a study of differences in payment amounts under
the physician fee schedule under section 1848 of the Social
Security Act (42 U.S.C. 1395w-4) for physicians' services in
different geographic areas. Such study shall include--
(1) an assessment of the validity of the geographic
adjustment factors used for each component of the fee
schedule;
(2) an evaluation of the measures used for such adjustment,
including the frequency of revisions; and
(3) an evaluation of the methods used to determine
professional liability insurance costs used in computing the
malpractice component, including a review of increases in
professional liability insurance premiums and variation in
such increases by State and physician specialty and methods
used to update the geographic cost of practice index and
relative weights for the malpractice component.
(b) Report.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under subsection
(a). The report shall include recommendations regarding the
use of more current data in computing geographic cost of
practice indices as well as the use of data directly
representative of physicians' costs (rather than proxy
measures of such costs).
SEC. 310. PROVIDING SAFE HARBOR FOR CERTAIN COLLABORATIVE
EFFORTS THAT BENEFIT MEDICALLY UNDERSERVED
POPULATIONS.
(a) In General.--Section 1128B(b)(3) (42 U.S.C. 1320a-
7(b)(3)) is amended--
(1) in subparagraph (E), by striking ``and'' after the
semicolon at the end;
(2) in subparagraph (F), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(G) any remuneration between a public or nonprofit
private health center entity described under clause (i) or
(ii) of section 1905(l)(2)(B) and any individual or entity
providing goods, items, services, donations or loans, or a
combination thereof, to such health center entity pursuant to
a contract, lease, grant, loan, or other agreement, if such
agreement contributes to the ability of the health center
entity to maintain or increase the availability, or enhance
the quality, of services provided to a medically underserved
population served by the health center entity.''.
(b) Rulemaking for Exception for Health Center Entity
Arrangements.--
(1) Establishment.--
(A) In general.--The Secretary of Health and Human Services
(in this subsection referred to as the ``Secretary'') shall
establish, on an expedited basis, standards relating to the
exception described in section 1128B(b)(3)(G) of the Social
Security Act, as added by subsection (a), for health center
entity arrangements to the antikickback penalties.
(B) Factors to consider.--The Secretary shall consider the
following factors, among others, in establishing standards
relating to the exception for health center entity
arrangements under subparagraph (A):
(i) Whether the arrangement between the health center
entity and the other party results in savings of Federal
grant funds or increased revenues to the health center
entity.
(ii) Whether the arrangement between the health center
entity and the other party expands or enhances a patient's
freedom of choice.
(iii) Whether the arrangement between the health center
entity and the other party protects a health care
professional's independent medical judgment regarding
medically appropriate treatment.
The Secretary may also include other standards and criteria
that are consistent with the intent of Congress in enacting
the exception established under this section.
(2) Interim final effect.--No later than 180 days after the
date of enactment of this Act, the Secretary shall publish a
rule in the Federal Register consistent with the factors
under paragraph (1)(B). Such rule shall be effective and
final immediately on an interim basis, subject to such change
and revision, after public notice and opportunity (for a
period of not more than 60 days) for public comment, as is
consistent with this subsection.
[[Page H4199]]
TITLE IV--PROVISIONS RELATING TO PART A
Subtitle A--Inpatient Hospital Services
SEC. 401. REVISION OF ACUTE CARE HOSPITAL PAYMENT UPDATES.
Subclause (XVIII) of section 1886(b)(3)(B)(i) (42 U.S.C.
1395ww(b)(3)(B)(i)) is amended to read as follows:
``(XVIII) for fiscal year 2003, the market basket
percentage increase for sole community hospitals and such
increase minus 0.25 percentage points for other hospitals,
and''.
SEC. 402. 2-YEAR INCREASE IN LEVEL OF ADJUSTMENT FOR INDIRECT
COSTS OF MEDICAL EDUCATION (IME).
Section 1886(d)(5)(B)(ii) (42 U.S.C. 1395ww(d)(5)(B)(ii))
is amended--
(1) in subclause (VI) by striking ``and'' at the end;
(2) by redesignating subclause (VII) as subclause (IX);
(3) in subclause (VIII) as so redesignated, by striking
``2002'' and inserting ``2004''; and
(4) by inserting after subclause (VI) the following new
subclause:
``(VII) during fiscal year 2003, `c' is equal to 1.47;
``(VIII) during fiscal year 2004, `c' is equal to 1.45;
and''.
SEC. 403. RECOGNITION OF NEW MEDICAL TECHNOLOGIES UNDER
INPATIENT HOSPITAL PPS.
(a) Improving Timeliness of Data Collection.--Section
1886(d)(5)(K) (42 U.S.C. 1395ww(d)(5)(K)) is amended by
adding at the end the following new clause:
``(vii) Under the mechanism under this subparagraph, the
Secretary shall provide for the addition of new diagnosis and
procedure codes in April 1 of each year, but the addition of
such codes shall not require the Secretary to adjust the
payment (or diagnosis-related group classification) under
this subsection until the fiscal year that begins after such
date.''.
(b) Eligibility Standard.--
(1) Minimum period for recognition of new technologies.--
Section 1886(d)(5)(K)(vi) (42 U.S.C. 1395ww(d)(5)(K)(vi)) is
amended--
(A) by inserting ``(I)'' after ``(vi)''; and
(B) by adding at the end the following new subclause:
``(II) Under such criteria, a service or technology shall
not be denied treatment as a new service or technology on the
basis of the period of time in which the service or
technology has been in use if such period ends before the end
of the 2-to-3-year period that begins on the effective date
of implementation of a code under ICD-9-CM (or a successor
coding methodology) that enables the identification of a
significant sample of specific discharges in which the
service or technology has been used.''.
(2) Adjustment of threshold.--Section 1886(d)(5)(K)(ii)(I)
(42 U.S.C. 1395ww(d)(5)(K)(ii)(I)) is amended by inserting
``(applying a threshold specified by the Secretary that is
the lesser of 50 percent of the national average standardized
amount for operating costs of inpatient hospital services for
all hospitals and all diagnosis-related groups or one
standard deviation for the diagnosis-related group
involved)'' after ``is inadequate''.
(3) Criterion for substantial improvement.--Section
1886(d)(5)(K)(vi) (42 U.S.C. 1395ww(d)(5)(K)(vi)), as amended
by paragraph (1), is further amended by adding at the end the
following subclause:
``(III) The Secretary shall by regulation provide for
further clarification of the criteria applied to determine
whether a new service or technology represents an advance in
medical technology that substantially improves the diagnosis
or treatment of beneficiaries. Under such criteria, in
determining whether a new service or technology represents an
advance in medical technology that substantially improves the
diagnosis or treatment of beneficiaries, the Secretary shall
deem a service or technology as meeting such requirement if
the service or technology is a drug or biological that is
designated under section 506 or 526 of the Federal Food,
Drug, and Cosmetic Act, approved under section 314.510 or
601.41 of title 21, Code of Federal Regulations, or
designated for priority review when the marketing application
for such drug or biological was filed or is a medical device
for which an exemption has been granted under section 520(m)
of such Act, for which priority review has been provided
under section 515(d)(5) of such Act, or is a substantially
equivalent device for which an expedited review is provided
under section 513(f) of such Act.''.
(4) Process for public input.--Section 1886(d)(5)(K) (42
U.S.C. 1395ww(d)(5)(K)), as amended by paragraph (1), is
amended--
(A) in clause (i), by adding at the end the following:
``Such mechanism shall be modified to meet the requirements
of clause (viii).''; and
(B) by adding at the end the following new clause:
``(viii) The mechanism established pursuant to clause (i)
shall be adjusted to provide, before publication of a
proposed rule, for public input regarding whether a new
service or technology not described in the second sentence of
clause (vi)(III) represents an advance in medical technology
that substantially improves the diagnosis or treatment of
beneficiaries as follows:
``(I) The Secretary shall make public and periodically
update a list of all the services and technologies for which
an application for additional payment under this subparagraph
is pending.
``(II) The Secretary shall accept comments,
recommendations, and data from the public regarding whether
the service or technology represents a substantial
improvement.
``(III) The Secretary shall provide for a meeting at which
organizations representing hospitals, physicians, medicare
beneficiaries, manufacturers, and any other interested party
may present comments, recommendations, and data to the
clinical staff of the Centers for Medicare & Medicaid
Services before publication of a notice of proposed
rulemaking regarding whether service or technology represents
a substantial improvement.''.
(c) Preference for Use of DRG Adjustment.--Section
1886(d)(5)(K) (42 U.S.C. 1395ww(d)(5)(K)) is further amended
by adding at the end the following new clause:
``(ix) Before establishing any add-on payment under this
subparagraph with respect to a new technology, the Secretary
shall seek to identify one or more diagnosis-related groups
associated with such technology, based on similar clinical or
anatomical characteristics and the cost of the technology.
Within such groups the Secretary shall assign an eligible new
technology into a diagnosis-related group where the average
costs of care most closely approximate the costs of care of
using the new technology. In such case, no add-on payment
under this subparagraph shall be made with respect to such
new technology and this clause shall not affect the
application of paragraph (4)(C)(iii).''.
(d) Improvement in Payment for New Technology.--Section
1886(d)(5)(K)(ii)(III) (42 U.S.C. 1395ww(d)(5)(K)(ii)(III))
is amended by inserting after ``the estimated average cost of
such service or technology'' the following: ``(based on the
marginal rate applied to costs under subparagraph (A))''.
(e) Effective Date.--
(1) In general.--The Secretary shall implement the
amendments made by this section so that they apply to
classification for fiscal years beginning with fiscal year
2004.
(2) Reconsiderations of applications for fiscal year 2003
that are denied.--In the case of an application for a
classification of a medical service or technology as a new
medical service or technology under section 1886(d)(5)(K) of
the Social Security Act (42 U.S.C. 1395ww(d)(5)(K)) that was
filed for fiscal year 2003 and that is denied--
(A) the Secretary shall automatically reconsider the
application as an application for fiscal year 2004 under the
amendments made by this section; and
(B) the maximum time period otherwise permitted for such
classification of the service or technology shall be extended
by 12 months.
SEC. 404. PHASE-IN OF FEDERAL RATE FOR HOSPITALS IN PUERTO
RICO.
Section 1886(d)(9) (42 U.S.C. 1395ww(d)(9)) is amended--
(1) in subparagraph (A)--
(A) in clause (i), by striking ``for discharges beginning
on or after October 1, 1997, 50 percent (and for discharges
between October 1, 1987, and September 30, 1997, 75
percent)'' and inserting ``the applicable Puerto Rico
percentage (specified in subparagraph (E))''; and
(B) in clause (ii), by striking ``for discharges beginning
in a fiscal year beginning on or after October 1, 1997, 50
percent (and for discharges between October 1, 1987, and
September 30, 1997, 25 percent)'' and inserting ``the
applicable Federal percentage (specified in subparagraph
(E))''; and
(2) by adding at the end the following new subparagraph:
``(E) For purposes of subparagraph (A), for discharges
occurring--
``(i) between October 1, 1987, and September 30, 1997, the
applicable Puerto Rico percentage is 75 percent and the
applicable Federal percentage is 25 percent;
``(ii) on or after October 1, 1997, and before October 1,
2003, the applicable Puerto Rico percentage is 50 percent and
the applicable Federal percentage is 50 percent;
``(iii) during fiscal year 2004, the applicable Puerto Rico
percentage is 45 percent and the applicable Federal
percentage is 55 percent;
``(iv) during fiscal year 2005, the applicable Puerto Rico
percentage is 40 percent and the applicable Federal
percentage is 60 percent;
``(v) during fiscal year 2006, the applicable Puerto Rico
percentage is 35 percent and the applicable Federal
percentage is 65 percent;
``(vi) during fiscal year 2007, the applicable Puerto Rico
percentage is 30 percent and the applicable Federal
percentage is 70 percent; and
``(vii) on or after October 1, 2007, the applicable Puerto
Rico percentage is 25 percent and the applicable Federal
percentage is 75 percent.''.
SEC. 405. REFERENCE TO PROVISION RELATING TO ENHANCED
DISPROPORTIONATE SHARE HOSPITAL (DSH) PAYMENTS
FOR RURAL HOSPITALS AND URBAN HOSPITALS WITH
FEWER THAN 100 BEDS.
For provision enhancing disproportionate share hospital
(DSH) treatment for rural hospitals and urban hospitals with
fewer than 100 beds, see section 302.
SEC. 406. REFERENCE TO PROVISION RELATING TO 2-YEAR PHASED-IN
INCREASE IN THE STANDARDIZED AMOUNT IN RURAL
AND SMALL URBAN AREAS TO ACHIEVE A SINGLE,
UNIFORM STANDARDIZED AMOUNT.
For provision phasing in over a 2-year period an increase
in the standardized amount for rural and small urban areas to
achieve a single, uniform, standardized amount, see section
303.
[[Page H4200]]
SEC. 407. REFERENCE TO PROVISION FOR MORE FREQUENT UPDATES IN
THE WEIGHTS USED IN HOSPITAL MARKET BASKET.
For provision providing for more frequent updates in the
weights used in hospital market basket, see section 304.
SEC. 408. REFERENCE TO PROVISION MAKING IMPROVEMENTS TO
CRITICAL ACCESS HOSPITAL PROGRAM.
For provision providing making improvements to critical
access hospital program, see section 305.
Subtitle B--Skilled Nursing Facility Services
SEC. 411. PAYMENT FOR COVERED SKILLED NURSING FACILITY
SERVICES.
(a) Temporary Increase in Nursing Component of PPS Federal
Rate.--Section 312(a) of BIPA is amended by adding at the end
the following new sentence: ``The Secretary of Health and
Human Services shall increase by 8 percent the nursing
component of the case-mix adjusted Federal prospective
payment rate specified in Tables 3 and 4 of the final rule
published in the Federal Register by the Health Care
Financing Administration on July 31, 2000 (65 Fed. Reg.
46770) and as subsequently updated under section
1888(e)(4)(E)(ii) of the Social Security Act (42 U.S.C.
1395yy(e)(4)(E)(ii)), effective for services furnished on or
after October 1, 2002, and before October 1, 2005.''.
(b) Adjustment to RUGs for AIDS Residents.--
(1) In general.--Paragraph (12) of section 1888(e) (42
U.S.C. 1395yy(e)) is amended to read as follows:
``(12) Adjustment for residents with aids.--
``(A) In general.--Subject to subparagraph (B), in the case
of a resident of a skilled nursing facility who is afflicted
with acquired immune deficiency syndrome (AIDS), the per diem
amount of payment otherwise applicable shall be increased by
128 percent to reflect increased costs associated with such
residents.
``(B) Sunset.--Subparagraph (A) shall not apply on and
after such date as the Secretary certifies that there is an
appropriate adjustment in the case mix under paragraph
(4)(G)(i) to compensate for the increased costs associated
with residents described in such subparagraph.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to services furnished on or after October 1,
2003.
Subtitle C--Hospice
SEC. 421. COVERAGE OF HOSPICE CONSULTATION SERVICES.
(a) Coverage of Hospice Consultation Services.--Section
1812(a) (42 U.S.C. 1395d(a)) is amended--
(1) by striking ``and'' at the end of paragraph (3);
(2) by striking the period at the end of paragraph (4) and
inserting ``; and''; and
(3) by inserting after paragraph (4) the following new
paragraph:
``(5) for individuals who are terminally ill, have not made
an election under subsection (d)(1), and have not have
previously received services under this paragraph, services
that are furnished by a physician who is the medical director
or an employee of a hospice program and that consist of--
``(A) an evaluation of the individual's need for pain and
symptom management;
``(B) counseling the individual with respect to end-of-life
issues and care options; and
``(C) advising the individual regarding advanced care
planning.''.
(b) Payment.--Section 1814(i) (42 U.S.C. l395f(i)) is
amended by adding at the end the following new paragraph:
``(4) The amount paid to a hospice program with respect to
the services under section 1812(a)(5) for which payment may
be made under this part shall be equal to an amount
equivalent to the amount established for an office or other
outpatient visit for evaluation and management associated
with presenting problems of moderate severity under the fee
schedule established under section 1848(b), other than the
portion of such amount attributable to the practice expense
component.''.
(c) Conforming Amendment.--Section 1861(dd)(2)(A)(i) (42
U.S.C. 1395x(dd)(2)(A)(i)) is amended by inserting before the
comma at the end the following: ``and services described in
section 1812(a)(5)''.
(d) Effective Date.--The amendments made by this section
shall apply to services provided by a hospice program on or
after January 1, 2004.
SEC. 422. 10 PERCENT INCREASE IN PAYMENT FOR HOSPICE CARE
FURNISHED IN A FRONTIER AREA.
(a) In General.--Section 1814(i)(1) (42 U.S.C. 1395f(i)(1))
is amended by adding at the end the following new
subparagraph:
``(D) With respect to hospice care furnished in a frontier
area on or after January 1, 2003, and before January 1, 2008,
the payment rates otherwise established for such care shall
be increased by 10 percent. For purposes of this
subparagraph, the term `frontier area' means a county in
which the population density is less than 7 persons per
square mile.''.
(b) Report on Costs.--Not later than January 1, 2007, the
Comptroller General of the United States shall submit to
Congress a report on the costs of furnishing hospice care in
frontier areas. Such report shall include recommendations
regarding the appropriateness of extending, and modifying,
the payment increase provided under the amendment made by
subsection (a).
SEC. 423. RURAL HOSPICE DEMONSTRATION PROJECT.
(a) In General.--The Secretary shall conduct a
demonstration project for the delivery of hospice care to
medicare beneficiaries in rural areas. Under the project
medicare beneficiaries who are unable to receive hospice care
in the home for lack of an appropriate caregiver are provided
such care in a facility of 20 or fewer beds which offers,
within its walls, the full range of services provided by
hospice programs under section 1861(dd) of the Social
Security Act (42 U.S.C. 1395x(dd)).
(b) Scope of Project.--The Secretary shall conduct the
project under this section with respect to no more than 3
hospice programs over a period of not longer than 5 years
each.
(c) Compliance with Conditions.--Under the demonstration
project--
(1) the hospice program shall comply with otherwise
applicable requirements, except that it shall not be required
to offer services outside of the home or to meet the
requirements of section 1861(dd)(2)(A)(iii) of the Social
Security Act; and
(2) payments for hospice care shall be made at the rates
otherwise applicable to such care under title XVIII of such
Act.
The Secretary may require the program to comply with such
additional quality assurance standards for its provision of
services in its facility as the Secretary deems appropriate.
(d) Report.--Upon completion of the project, the Secretary
shall submit a report to Congress on the project and shall
include in the report recommendations regarding extension of
such project to hospice programs serving rural areas.
Subtitle D--Other Provisions
SEC. 431. DEMONSTRATION PROJECT FOR USE OF RECOVERY AUDIT
CONTRACTORS.
(a) In General.--The Secretary of Health and Human Services
shall conduct a demonstration project under this section (in
this section referred to as the ``project'') to demonstrate
the use of recovery audit contractors under the Medicare
Integrity Program in identifying and recouping overpayments
under the medicare program for services for which payment is
made under part A of title XVIII of the Social Security Act.
Under the project--
(1) payment may be made to such a contractor on a
contingent basis;
(2) a percentage of the amount recovered may be retained by
the Secretary and shall be available to the program
management account of the Centers for Medicare & Medicaid
Services; and
(3) the Secretary shall examine the efficacy of such use
with respect to duplicative payments, accuracy of coding, and
other payment policies in which overpayments arise.
(b) Scope and Duration.--The project shall cover at least 2
States and at least 3 contractors and shall last for not
longer than 3 years.
(c) Waiver.--The Secretary of Health and Human Services
shall waive such provisions of title XVIII of the Social
Security Act as may be necessary to provide for payment for
services under the project in accordance with subsection (a).
(d) Qualifications of Contractors.--
(1) In general.--The Secretary shall enter into a recovery
audit contract under this section with an entity only if the
entity has staff that has knowledge of and experience with
the payment rules and regulations under the medicare program
or the entity has or will contract with another entity that
has such knowledgeable and experienced staff.
(2) Ineligibility of certain contractors.--The Secretary
may not enter into a recovery audit contract under this
section with an entity to the extent that the entity is a
fiscal intermediary under section 1816 of the Social Security
Act (42 U.S.C. 1395h), a carrier under section 1842 of such
Act (42 U.S.C. 1395u), or a Medicare Administrative
Contractor under section 1874A of such Act, or any other
entity that carries out the type of activities with respect
to providers of services under part A that would constitute a
conflict of interest, as determined by the Secretary.
(3) Preference for entities with demonstrated proficiency
with private insurers.--In awarding contracts to recovery
audit contractors under this section, the Secretary shall
give preference to those entities that the Secretary
determines have demonstrated proficiency in recovery audits
with private insurers or under the medicaid program under
title XIX of such Act.
(e) Report.--The Secretary of Health and Human Services
shall submit to Congress a report on the project not later
than 6 months after the date of its completion. Such reports
shall include information on the impact of the project on
savings to the medicare program and recommendations on the
cost-effectiveness of extending or expanding the project.
TITLE V--PROVISIONS RELATING TO PART B
Subtitle A--Physicians' Services
SEC. 501. REVISION OF UPDATES FOR PHYSICIANS' SERVICES.
(a) Update for 2003 through 2005.--
(1) In general.--Section 1848(d) (42 U.S.C. 1395w-4(d)) is
amended by adding at the end the following new paragraphs:
``(5) Update for 2003.--The update to the single conversion
factor established in paragraph (1)(C) for 2003 is 2 percent.
[[Page H4201]]
``(6) Special rules for update for 2004 and 2005.--The
following rules apply in determining the update adjustment
factors under paragraph (4)(B) for 2004 and 2005:
``(A) Use of 2002 data in determining allowable costs.--
``(i) The reference in clause (ii)(I) of such paragraph to
April 1, 1996, is deemed to be a reference to January 1,
2002.
``(ii) The allowed expenditures for 2002 is deemed to be
equal to the actual expenditures for physicians' services
furnished during 2002, as estimated by the Secretary.
``(B) 1 percentage point increase in gdp under sgr.--The
annual average percentage growth in real gross domestic
product per capita under subsection (f)(2)(C) for each of
2003, 2004, and 2005 is deemed to be increased by 1
percentage point.''.
(2) Conforming amendment.--Paragraph (4)(B) of such section
is amended, in the matter before clause (i), by inserting
``and paragraph (6)'' after ``subparagraph (D)''.
(b) Use of 10-Year Rolling Average in Computing Gross
Domestic Product.--
(1) In general.--Section 1848(f)(2)(C) (42 U.S.C. 1395w-
4(f)(2)(C)) is amended--
(A) by striking ``projected'' and inserting ``annual
average''; and
(B) by striking ``from the previous applicable period to
the applicable period involved'' and inserting ``during the
10-year period ending with the applicable period involved''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to computations of the sustainable growth rate
for years beginning with 2002.
(c) Elimination of Transitional Adjustment.--Section
1848(d)(4)(F) (42 U.S.C. 1395w-4(d)(4)(F)) is amended by
striking ``subparagraph (A)'' and all that follows and
inserting ``subparagraph (A), for each of 2001 and 2002, of
-0.2 percent.''
SEC. 502. STUDIES ON ACCESS TO PHYSICIANS' SERVICES.
(a) GAO Study on Beneficiary Access to Physicians'
Services.--
(1) Study.--The Comptroller General of the United States
shall conduct a study on access of medicare beneficiaries to
physicians' services under the medicare program. The study
shall include--
(A) an assessment of the use by beneficiaries of such
services through an analysis of claims submitted by
physicians for such services under part B of the medicare
program;
(B) an examination of changes in the use by beneficiaries
of physicians' services over time;
(C) an examination of the extent to which physicians are
not accepting new medicare beneficiaries as patients.
(2) Report.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under paragraph
(1). The report shall include a determination whether--
(A) data from claims submitted by physicians under part B
of the medicare program indicate potential access problems
for medicare beneficiaries in certain geographic areas; and
(B) access by medicare beneficiaries to physicians'
services may have improved, remained constant, or
deteriorated over time.
(b) Study and Report on Supply of Physicians.--
(1) Study.--The Secretary shall request the Institute of
Medicine of the National Academy of Sciences to conduct a
study on the adequacy of the supply of physicians (including
specialists) in the United States and the factors that affect
such supply.
(2) Report to congress.--Not later than 2 years after the
date of enactment of this section, the Secretary shall submit
to Congress a report on the results of the study described in
paragraph (1), including any recommendations for legislation.
SEC. 503. MEDPAC REPORT ON PAYMENT FOR PHYSICIANS' SERVICES.
Not later than 1 year after the date of the enactment of
this Act, the Medicare Payment Advisory Commission shall
submit to Congress a report on the effect of refinements to
the practice expense component of payments for physicians'
services in the case of services for which there are no
physician work relative value units, after the transition to
a full resource-based payment system in 2002, under section
1848 of the Social Security Act (42 U.S.C. 1395w-4). Such
report shall examine the following matters by physician
specialty:
(1) The effect of such refinements on payment for
physicians' services.
(2) The interaction of the practice expense component with
other components of and adjustments to payment for
physicians' services under such section.
(3) The appropriateness of the amount of compensation by
reason of such refinements.
(4) The effect of such refinements on access to care by
medicare beneficiaries to physicians' services.
(5) The effect of such refinements on physician
participation under the medicare program.
Subtitle B--Other Services
SEC. 511. COMPETITIVE ACQUISITION OF CERTAIN ITEMS AND
SERVICES.
(a) In General.--Section 1847 (42 U.S.C. 1395w-3) is
amended to read as follows:
``competitive acquisition of certain items and services
``Sec. 1847. (a) Establishment of Competitive Acquisition
Programs.--
``(1) Implementation of programs.--
``(A) In general.--The Secretary shall establish and
implement programs under which competitive acquisition areas
are established throughout the United States for contract
award purposes for the furnishing under this part of
competitively priced items and services (described in
paragraph (2)) for which payment is made under this part.
Such areas may differ for different items and services.
``(B) Phased-in implementation.--The programs shall be
phased-in among competitive acquisition areas over a period
of not longer than 3 years in a manner so that the
competition under the programs occurs in--
``(i) at least \1/3\ of such areas in 2004; and
``(ii) at least \2/3\ of such areas in 2005.
``(C) Waiver of certain provisions.--In carrying out the
programs, the Secretary may waive such provisions of the
Federal Acquisition Regulation as are necessary for the
efficient implementation of this section, other than
provisions relating to confidentiality of information and
such other provisions as the Secretary determines
appropriate.
``(2) Items and services described.--The items and services
referred to in paragraph (1) are the following:
``(A) Durable medical equipment and inhalation drugs used
in connection with durable medical equipment.--Covered items
(as defined in section 1834(a)(13)) for which payment is
otherwise made under section 1834(a), other than items used
in infusion, and inhalation drugs used in conjunction with
durable medical equipment.
``(B) Off-the-shelf orthotics.--Orthotics (described in
section 1861(s)(9)) for which payment is otherwise made under
section 1834(h) which require minimal self-adjustment for
appropriate use and does not require expertise in trimming,
bending, molding, assembling, or customizing to fit to the
patient.
``(3) Exemption authority.--In carrying out the programs
under this section, the Secretary may exempt--
``(A) areas that are not competitive due to low population
density; and
``(B) items and services for which the application of
competitive acquisition is not likely to result in
significant savings.
``(b) Program Requirements.--
``(1) In general.--The Secretary shall conduct a
competition among entities supplying items and services
described in subsection (a)(2) for each competitive
acquisition area in which the program is implemented under
subsection (a) with respect to such items and services.
``(2) Conditions for awarding contract.--
``(A) In general.--The Secretary may not award a contract
to any entity under the competition conducted in an
competitive acquisition area pursuant to paragraph (1) to
furnish such items or services unless the Secretary finds all
of the following:
``(i) The entity meets quality and financial standards
specified by the Secretary or developed by accreditation
entities or organizations recognized by the Secretary.
``(ii) The total amounts to be paid under the contract
(including costs associated with the administration of the
contract) are expected to be less than the total amounts that
would otherwise be paid.
``(iii) Beneficiary access to a choice of multiple
suppliers in the area is maintained.
``(iv) Beneficiary liability is limited to the applicable
percentage of contract award price.
``(B) Quality standards.--The quality standards specified
under subparagraph (A)(i) shall not be less than the quality
standards that would otherwise apply if this section did not
apply and shall include consumer services standards. The
Secretary shall consult with an expert outside advisory panel
composed of an appropriate selection of representatives of
physicians, practitioners, and suppliers to review (and
advise the Secretary concerning) such quality standards.
``(3) Contents of contract.--
``(A) In general.--A contract entered into with an entity
under the competition conducted pursuant to paragraph (1) is
subject to terms and conditions that the Secretary may
specify.
``(B) Term of contracts.--The Secretary shall rebid
contracts under this section not less often than once every 3
years.
``(4) Limit on number of contractors.--
``(A) In general.--The Secretary may limit the number of
contractors in a competitive acquisition area to the number
needed to meet projected demand for items and services
covered under the contracts. In awarding contracts, the
Secretary shall take into account the ability bidding
entities to furnish items or services in sufficient
quantities to meet the anticipated needs of beneficiaries for
such items or services in the geographic area covered under
the contract on a timely basis.
``(B) Multiple winners.--The Secretary shall award
contracts to more than one entity submitting a bid in each
area for an item or service.
``(5) Participating contractors.--Payment shall not be made
for items and services described in subsection (a)(2)
furnished by a contractor and for which competition is
conducted under this section unless--
``(A) the contractor has submitted a bid for such items and
services under this section; and
``(B) the Secretary has awarded a contract to the
contractor for such items and services under this section.
``(6) Authority to contract for education, outreach and
complaint services.--
[[Page H4202]]
The Secretary may enter into a contract with an appropriate
entity to address complaints from beneficiaries who receive
items and services from an entity with a contract under this
section and to conduct appropriate education of and outreach
to such beneficiaries with respect to the program.
``(c) Annual Reports.--The Secretary shall submit to
Congress an annual management report on the programs under
this section. Each such report shall include information on
savings, reductions in cost-sharing, access to items and
services, and beneficiary satisfaction.
``(d) Demonstration Project for Clinical Laboratory
Services.--
``(1) In general.--The Secretary shall conduct a
demonstration project on the application of competitive
acquisition under this section to clinical diagnostic
laboratory tests--
``(A) for which payment is otherwise made under section
1833(h) or 1834(d)(1) (relating to colorectal cancer
screening tests); and
``(B) which are furnished without a face-to-face encounter
between the individual and the hospital or physician ordering
the tests.
``(2) Terms and conditions.--Such project shall be under
the same conditions as are applicable to items and services
described in subsection (a)(2).
``(3) Report.--The Secretary shall submit to Congress--
``(A) an initial report on the project not later than
December 31, 2004; and
``(B) such progress and final reports on the project after
such date as the Secretary determines appropriate.''.
(b) Continuation of Certain Demonstration Projects.--
Notwithstanding the amendment made by subsection (a), with
respect to demonstration projects implemented by the
Secretary under section 1847 of the Social Security Act (42
U.S.C. 1395w-3) (relating to the establishment of competitive
acquisition areas) that was in effect on the day before the
date of the enactment of this Act, each such demonstration
project may continue under the same terms and conditions
applicable under that section as in effect on that date.
(c) Report on Differences in Payment for Laboratory
Services.--Not later than 18 months after the date of the
enactment of this Act, the Comptroller General of the United
States shall submit to Congress a report that analyzes
differences in reimbursement between public and private
payors for clinical diagnostic laboratory services.
SEC. 512. PAYMENT FOR AMBULANCE SERVICES.
(a) Phase-In Providing Floor Using Blend of Fee Schedule
and Regional Fee Schedules.--Section 1834(l) (42 U.S.C.
1395m(l)) is amended--
(1) in paragraph (2)(E), by inserting ``consistent with
paragraph (10)'' after ``in an efficient and fair manner'';
(2) by redesignating the paragraph (8) added by section
221(a) of BIPA as paragraph (9); and
(3) by adding at the end the following new paragraph:
``(10) Phase-in providing floor using blend of fee schedule
and regional fee schedules.--In carrying out the phase-in
under paragraph (2)(E) for each level of service furnished in
a year before January 1, 2007, the portion of the payment
amount that is based on the fee schedule shall not be less
than the following blended rate of the fee schedule under
paragraph (1) and of a regional fee schedule for the region
involved:
``(A) For 2003, the blended rate shall be based 20 percent
on the fee schedule under paragraph (1) and 80 percent on the
regional fee schedule.
``(B) For 2004, the blended rate shall be based 40 percent
on the fee schedule under paragraph (1) and 60 percent on the
regional fee schedule.
``(C) For 2005, the blended rate shall be based 60 percent
on the fee schedule under paragraph (1) and 40 percent on the
regional fee schedule.
``(D) For 2006, the blended rate shall be based 80 percent
on the fee schedule under paragraph (1) and 20 percent on the
regional fee schedule.
For purposes of this paragraph, the Secretary shall establish
a regional fee schedule for each of the 9 Census divisions
using the methodology (used in establishing the fee schedule
under paragraph (1)) to calculate a regional conversion
factor and a regional mileage payment rate and using the same
payment adjustments and the same relative value units as used
in the fee schedule under such paragraph.''.
(b) Adjustment in Payment for Certain Long Trips.--Section
1834(l), as amended by subsection (a), is further amended by
adding at the end the following new paragraph:
``(11) Adjustment in payment for certain long trips.--In
the case of ground ambulance services furnished on or after
January 1, 2003, and before January 1, 2008, regardless of
where the transportation originates, the fee schedule
established under this subsection shall provide that, with
respect to the payment rate for mileage for a trip above 50
miles the per mile rate otherwise established shall be
increased by \1/4\ of the payment per mile otherwise
applicable to such miles.''.
(c) Effective Date.--The amendments made by this section
shall apply to ambulance services furnished on or after
January 1, 2003.
SEC. 513. 1-YEAR EXTENSION OF MORATORIUM ON THERAPY CAPS;
PROVISIONS RELATING TO REPORTS.
(a) 1-Year Extension of Moratorium on Therapy Caps.--
Section 1833(g)(4) (42 U.S.C. 1395l(g)(4)) is amended by
striking ``and 2002'' and inserting ``2002 and 2003''.
(b) Prompt Submission of Overdue Reports on Payment and
Utilization of Outpatient Therapy Services.--Not later than
December 31, 2002, the Secretary shall submit to Congress the
reports required under section 4541(d)(2) of the Balanced
Budget Act of 1997 (relating to alternatives to a single
annual dollar cap on outpatient therapy) and under section
221(d) of the Medicare, Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999 (relating to utilization patterns for
outpatient therapy).
(c) Identification of Conditions and Diseases Justifying
Waiver of Therapy Cap.--
(1) Study.--The Secretary shall request the Institute of
Medicine of the National Academy of Sciences to identify
conditions or diseases that should justify conducting an
assessment of the need to waive the therapy caps under
section 1833(g)(4) of the Social Security Act (42 U.S.C.
1395l(g)(4)).
(2) Reports to congress.--Not later than July 1, 2003, the
Secretary shall submit to Congress a preliminary report on
the conditions and diseases identified under paragraph (1)
and not later than September 1, 2003, a final report on the
conditions and diseases so identified.
(d) GAO Study of Patient Access to Physical Therapist
Services.--
(1) Study.--The Comptroller General of the United States
shall conduct a study on access to physical therapist
services in States authorizing such services without a
physician referral and in States that require such a
physician referral. The study shall--
(A) examine the use of and referral patterns for physical
therapist services for patients age 50 and older in States
that authorize such services without a physician referral and
in States that require such a physician referral;
(B) examine the use of and referral patterns for physical
therapist services for patients who are medicare
beneficiaries; and
(C) examine the delivery of physical therapists' services
within the facilities of Department of Defense; and
(D) analyze the potential impact on medicare beneficiaries
and on expenditures under the medicare program of eliminating
the need for a physician referral for physical therapist
services under the medicare program.
(2) Report.--The Comptroller General shall submit to
Congress a report on the study conducted under paragraph (1)
by not later than 1 year after the date of the enactment of
this Act.
SEC. 514. ACCELERATED IMPLEMENTATION OF 20 PERCENT
COINSURANCE FOR HOSPITAL OUTPATIENT DEPARTMENT
(OPD) SERVICES; OTHER OPD PROVISIONS.
(a) Accelerated Implementation of Coinsurance Reductions.--
Section 1833(t)(8)(C)(ii) (42 U.S.C. 1395l(t)(8)(C)(ii)) is
amended by striking subclauses (III) through (V) and
inserting the following:
``(III) For procedures performed in 2004, 45 percent.
``(IV) For procedures performed in 2005, 40 percent.
``(V) For procedures performed in 2006, 2007, 2008 and
2009, 35 percent.
``(VI) For procedures performed in 2010, 30 percent.
``(VII) For procedures performed in 2011, 25 percent.
``(VIII) For procedures performed in 2012 and thereafter,
20 percent.''.
(b) Treatment of Temperature Monitored Cryoablation.--
(1) In general.--Section 1833(t)(6)(A)(ii) (42 U.S.C.
1395l(t)(6)(A)(ii)) is amended by striking ``or temperature
monitored cryoablation''.
(2) Effective date.--The amendment made by paragraph (1)
applies to payment for services furnished on or after January
1, 2003.
SEC. 515. COVERAGE OF AN INITIAL PREVENTIVE PHYSICAL
EXAMINATION.
(a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)),
is amended--
(1) in subparagraph (U), by striking ``and'' at the end;
(2) in subparagraph (V), by inserting ``and'' at the end;
and
(3) by adding at the end the following new subparagraph:
``(W) an initial preventive physical examination (as
defined in subsection (ww));''.
(b) Services Described.--Section 1861 (42 U.S.C. 1395x) is
amended by adding at the end the following new subsection:
``Initial Preventive Physical Examination
``(ww) The term `initial preventive physical examination'
means physicians' services consisting of a physical
examination with the goal of health promotion and disease
detection and includes items and services specified by the
Secretary in regulations.''.
(c) Payment as Physicians' Services.--Section 1848(j)(3)
(42 U.S.C. 1395w-4(j)(3)) by inserting ``(2)(W),'' after
``(2)(S),''.
(d) Other Conforming Amendments.--Section 1862(a) (42
U.S.C. 1395y(a)) is amended--
(1) in paragraph (1)--
(A) by striking ``and'' at the end of subparagraph (H);
(B) by striking the semicolon at the end of subparagraph
(I) and inserting ``, and''; and
(C) by adding at the end the following new subparagraph:
``(J) in the case of an initial preventive physical
examination, which is performed not later than 6 months after
the date the individual's first coverage period begins under
part B;''; and
[[Page H4203]]
(2) in paragraph (7), by striking ``or (H)'' and inserting
``(H), or (J)''.
(e) Effective Date.--The amendments made by this section
shall apply to services furnished on or after January 1,
2004, but only for individuals whose coverage period begins
on or after such date.
SEC. 516. RENAL DIALYSIS SERVICES.
(a) Report on Differences in Costs in Different Settings.--
Not later than 1 year after the date of the enactment of this
Act, the Comptroller General of the United States shall
submit to Congress a report containing--
(1) an analysis of the differences in costs of providing
renal dialysis services under the medicare program in home
settings and in facility settings;
(2) an assessment of the percentage of overhead costs in
home settings and in facility settings; and
(3) an evaluation of whether the charges for home dialysis
supplies and equipment are reasonable and necessary.
(b) Restoring Composite Rate Exceptions for Pediatric
Facilities.--
(1) In general.--Section 422(a)(2) of BIPA is amended--
(A) in subparagraph (A), by striking ``and (C)'' and
inserting ``, (C), and (D)'';
(B) in subparagraph (B), by striking ``In the case'' and
inserting ``Subject to subparagraph (D), in the case''; and
(C) by adding at the end the following new subparagraph:
``(D) Inapplicability to pediatric facilities.--
Subparagraphs (A) and (B) shall not apply, as of October 1,
2002, to pediatric facilities that do not have an exception
rate described in subparagraph (C) in effect on such date.
For purposes of this subparagraph, the term `pediatric
facility' means a renal facility at least 50 percent of whose
patients are individuals under 18 years of age.''.
(2) Conforming amendment.--The fourth sentence of section
1881(b)(7) (42 U.S.C. 1395rr(b)(7)) is amended by striking
``The Secretary'' and inserting ``Subject to section
422(a)(2) of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000, the Secretary''.
(c) Increase in Renal Dialysis Composite Rate for Services
Furnished in 2004.--Notwithstanding any other provision of
law, with respect to payment under part B of title XVIII of
the Social Security Act for renal dialysis services furnished
in 2004, the composite payment rate otherwise established
under section 1881(b)(7) of such Act (42 U.S.C. 1395rr(b)(7))
shall be increased by 1.2 percent.
TITLE VI--PROVISIONS RELATING TO PARTS A AND B
Subtitle A--Home Health Services
SEC. 601. ELIMINATION OF 15 PERCENT REDUCTION IN PAYMENT
RATES UNDER THE PROSPECTIVE PAYMENT SYSTEM.
(a) In General.--Section 1895(b)(3)(A) (42 U.S.C.
1395fff(b)(3)(A)) is amended to read as follows:
``(A) Initial basis.--Under such system the Secretary shall
provide for computation of a standard prospective payment
amount (or amounts) as follows:
``(i) Such amount (or amounts) shall initially be based on
the most current audited cost report data available to the
Secretary and shall be computed in a manner so that the total
amounts payable under the system for fiscal year 2001 shall
be equal to the total amount that would have been made if the
system had not been in effect and if section
1861(v)(1)(L)(ix) had not been enacted.
``(ii) For fiscal year 2002 and for the first quarter of
fiscal year 2003, such amount (or amounts) shall be equal to
the amount (or amounts) determined under this paragraph for
the previous fiscal year, updated under subparagraph (B).
``(iii) For 2003, such amount (or amounts) shall be equal
to the amount (or amounts) determined under this paragraph
for fiscal year 2002, updated under subparagraph (B) for
2003.
``(iv) For 2004 and each subsequent year, such amount (or
amounts) shall be equal to the amount (or amounts) determined
under this paragraph for the previous year, updated under
subparagraph (B).
Each such amount shall be standardized in a manner that
eliminates the effect of variations in relative case mix and
area wage adjustments among different home health agencies in
a budget neutral manner consistent with the case mix and wage
level adjustments provided under paragraph (4)(A). Under the
system, the Secretary may recognize regional differences or
differences based upon whether or not the services or agency
are in an urbanized area.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect as if included in the amendments made by
section 501 of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (as enacted into law
by section 1(a)(6) of Public Law 106-554).
SEC. 602. ESTABLISHMENT OF REDUCED COPAYMENT FOR A HOME
HEALTH SERVICE EPISODE OF CARE FOR CERTAIN
BENEFICIARIES.
(a) Part A.--
(1) In general.--Section 1813(a) (42 U.S.C. 1395e(a)) is
amended by adding at the end the following new paragraph:
``(5)(A)(i) Subject to clause (ii), the amount payable for
home health services furnished to the individual under this
title for each episode of care beginning in a year (beginning
with 2003) shall be reduced by a copayment equal to the
copayment amount specified in subparagraph (B)(ii) such year.
``(ii) The copayment under clause (i) shall not apply--
``(I) in the case of an individual who has been determined
to be a qualified medicare beneficiary (as defined in section
1905(p)(1)) or otherwise to be entitled to medical assistance
under section 1902(a)(10)(A) or 1902(a)(10)(C); and
``(II) in the case of an episode of care which consists of
4 or fewer visits.
``(B)(i) The Secretary shall estimate, before the beginning
of each year (beginning with 2003), the national average
payment under this title per episode for home health services
projected for the year involved.
``(ii) For each year the copayment amount under this clause
is equal to 1.5 percent of the national average payment
estimated for the year involved under clause (i). Any amount
determined under the preceding sentence which is not a
multiple of $5 shall be rounded to the nearest multiple of
$5.
``(iii) There shall be no administrative or judicial review
under section 1869, 1878, or otherwise of the estimation of
average payment under clause (i).''.
(2) Timely implementation.--Unless the Secretary of Health
and Human Services otherwise provides on a timely basis, the
copayment amount specified under section 1813(a)(5)(B)(ii) of
the Social Security Act (as added by paragraph (1)) for 2003
shall be deemed to be $40.
(b) Conforming Provisions.--
(1) Section 1833(a)(2)(A) (42 U.S.C. 1395l(a)(2)(A)) is
amended by inserting ``less the copayment amount applicable
under section 1813(a)(5)'' after ``1895''.
(2) Section 1866(a)(2)(A)(i) (42 U.S.C. 1395cc(a)(2)(A)(i))
is amended--
(A) by striking ``or coinsurance'' and inserting ``,
coinsurance, or copayment''; and
(B) by striking ``or (a)(4)'' and inserting ``(a)(4), or
(a)(5)''.
SEC. 603. UPDATE IN HOME HEALTH SERVICES.
(a) Change to Calendar Year Update.--
(1) In general.--Section 1895(b) (42 U.S.C. 1395fff(b)(3))
is amended--
(A) in paragraph (3)(B)(i)--
(i) by striking ``each fiscal year (beginning with fiscal
year 2002)'' and inserting ``fiscal year 2002 and for each
subsequent year (beginning with 2003)''; and
(ii) by inserting ``or year'' after ``the fiscal year'';
(B) in paragraph (3)(B)(ii)--
(i) in subclause (II), by striking ``fiscal year'' and
inserting ``year'' and by redesignating such subclause as
subclause (III); and
(ii) in subclause (I), by striking ``each of fiscal years
2002 and 2003'' and inserting the following: ``fiscal year
2002, the home health market basket percentage increase (as
defined in clause (iii)) minus 1.1 percentage points;
``(II) 2003'';
(C) in paragraph (3)(B)(iii), by inserting ``or year''
after ``fiscal year'' each place it appears;
(D) in paragraph (3)(B)(iv)--
(i) by inserting ``or year'' after ``fiscal year'' each
place it appears; and
(ii) by inserting ``or years'' after ``fiscal years''; and
(E) in paragraph (5), by inserting ``or year'' after
``fiscal year''.
(2) Transition rule.--The standard prospective payment
amount (or amounts) under section 1895(b)(3) of the Social
Security Act for the calendar quarter beginning on October 1,
2002, shall be such amount (or amounts) for the previous
calendar quarter.
(b) Changes in Updates for 2003, 2004, and 2005.--Section
1895(b)(3)(B)(ii) (42 U.S.C. 1395fff(b)(3)(B)(ii)), as
amended by subsection (a)(1)(B), is amended--
(1) in subclause (II), by striking ``the home health market
basket percentage increase (as defined in clause (iii)) minus
1.1 percentage points'' and inserting ``2.0 percentage
points'';
(2) by striking ``or'' at the end of subclause (II);
(3) by redesignating subclause (III) as subclause (V); and
(4) by inserting after subclause (II) the following new
subclause:
``(III) 2004, 1.0 percentage points;
``(IV) 2005, the home health market basket percentage
increase (as defined in clause (iii)) minus 0.8 percentage
points; or''.
(c) Payment Adjustment.--
(1) In general.--Section 1895(b)(5) (42 U.S.C.
1395fff(b)(5)) is amended ``5 percent'' and inserting ``3
percent''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to years beginning with 2003.
SEC. 604. OASIS TASK FORCE; SUSPENSION OF CERTAIN OASIS DATA
COLLECTION REQUIREMENTS PENDING TASK FORCE
SUBMITTAL OF REPORT.
(a) Establishment.--The Secretary of Health and Human
Services shall establish and appoint a task force (to be
known as the ``OASIS Task Force'') to examine the data
collection and reporting requirements under OASIS. For
purposes of this section, the term ``OASIS'' means the
Outcome and Assessment Information Set required by reason of
section 4602(e) of Balanced Budget Act of 1997 (42 U.S.C.
1395fff note).
(b) Composition.--The OASIS Task Force shall be composed of
the following:
(1) Staff of the Centers for Medicare & Medicaid Services
with expertise in post-acute care.
(2) Representatives of home health agencies.
(3) Health care professionals and research and health care
quality experts outside the Federal Government with expertise
in post-acute care.
[[Page H4204]]
(4) Advocates for individuals requiring home health
services.
(c) Duties.--
(1) Review and recommendations.--The OASIS Task Force shall
review and make recommendations to the Secretary regarding
changes in OASIS to improve and simplify data collection for
purposes of--
(A) assessing the quality of home health services; and
(B) providing consistency in classification of patients
into home health resource groups (HHRGs) for payment under
section 1895 of the Social Security Act (42 U.S.C. 1395fff).
(2) Specific items.--In conducting the review under
paragraph (1), the OASIS Task Force shall specifically
examine--
(A) the 41 outcome measures currently in use;
(B) the timing and frequency of data collection; and
(C) the collection of information on comorbidities and
clinical indicators.
(3) Report.--The OASIS Task Force shall submit a report to
the Secretary containing its findings and recommendations for
changes in OASIS by not later than 18 months after the date
of the enactment of this Act.
(d) Sunset.--The OASIS Task Force shall terminate 60 days
after the date on which the report is submitted under
subsection (c)(2).
(e) Nonapplication of FACA.--The provisions of the Federal
Advisory Committee Act shall not apply to the OASIS Task
Force.
(f) Suspension of OASIS Requirement for Collection of Data
on Non-Medicare and Non-Medicaid Patients Pending Task Force
Report.--
(1) In general.--During the period described in paragraph
(2), the Secretary of Health and Human Services may not
require, under section 4602(e) of the Balanced Budget Act of
1997 or otherwise under OASIS, a home health agency to gather
or submit information that relates to an individual who is
not eligible for benefits under either title XVIII or title
XIX of the Social Security Act.
(2) Period of suspension.--The period described in this
paragraph--
(A) begins on January 1, 2003, and
(B) ends on the last day of the 2nd month beginning after
the date the report is submitted under subsection (c)(2).
SEC. 605. MEDPAC STUDY ON MEDICARE MARGINS OF HOME HEALTH
AGENCIES.
(a) Study.--The Medicare Payment Advisory Commission shall
conduct a study of payment margins of home health agencies
under the home health prospective payment system under
section 1895 of the Social Security Act (42 U.S.C. 1395fff).
Such study shall examine whether systematic differences in
payment margins are related to differences in case mix (as
measured by home health resource groups (HHRGs)) among such
agencies. The study shall use the partial or full-year cost
reports filed by home health agencies.
(b) Report.--Not later than 2 years after the date of the
enactment of this Act, the Commission shall submit to
Congress a report on the study under subsection (a).
Subtitle B--Direct Graduate Medical Education
SEC. 611. EXTENSION OF UPDATE LIMITATION ON HIGH COST
PROGRAMS.
Section 1886(h)(2)(D)(iv) (42 U.S.C. 1395ww(h)(2)(D)(iv))
is amended--
(1) in subclause (I)--
(A) by striking ``and 2002'' and inserting ``through
2012'';
(B) by striking ``during fiscal year 2001 or fiscal year
2002'' and inserting ``during the period beginning with
fiscal year 2001 and ending with fiscal year 2012''; and
(C) by striking ``subject to subclause (III),'';
(2) by striking subclause (II); and
(3) in subclause (III)--
(A) by redesignating such subclause as subclause (II); and
(B) by striking ``or (II)''.
SEC. 612. REDISTRIBUTION OF UNUSED RESIDENT POSITIONS.
(a) In General.--Section 1886(h)(4) (42 U.S.C.
1395ww(h)(4)) is amended--
(1) in subparagraph (F), by inserting ``subject to
subparagraph (I),'' after ``October 1, 1997,'';
(2) in subparagraph (H), by inserting ``subject to
subparagraph (I),'' after ``subparagraphs (F) and (G),''; and
(3) by adding at the end the following new subparagraph:
``(I) Redistribution of unused resident positions.--
``(i) Reduction in limit based on unused positions.--
``(I) In general.--If a hospital's resident level (as
defined in clause (iii)(I)) is less than the otherwise
applicable resident limit (as defined in clause (iii)(II))
for each of the reference periods (as defined in subclause
(II)), effective for cost reporting periods beginning on or
after January 1, 2003, the otherwise applicable resident
limit shall be reduced by 75 percent of the difference
between such limit and the reference resident level specified
in subclause (III) (or subclause (IV) if applicable).
``(II) Reference periods defined.--In this clause, the term
`reference periods' means, for a hospital, the 3 most recent
consecutive cost reporting periods of the hospital for which
cost reports have been settled (or, if not, submitted) on or
before September 30, 2001.
``(III) Reference resident level.--Subject to subclause
(IV), the reference resident level specified in this
subclause for a hospital is the highest resident level for
the hospital during any of the reference periods.
``(IV) Adjustment process.--Upon the timely request of a
hospital, the Secretary may adjust the reference resident
level for a hospital to be the resident level for the
hospital for the cost reporting period that includes July 1,
2002.
``(ii) Redistribution.--
``(I) In general.--The Secretary is authorized to increase
the otherwise applicable resident limits for hospitals by an
aggregate number estimated by the Secretary that does not
exceed the aggregate reduction in such limits attributable to
clause (i) (without taking into account any adjustment under
subclause (IV) of such clause).
``(II) Effective date.--No increase under subclause (I)
shall be permitted or taken into account for a hospital for
any portion of a cost reporting period that occurs before
July 1, 2003, or before the date of the hospital's
application for an increase under this clause. No such
increase shall be permitted for a hospital unless the
hospital has applied to the Secretary for such increase by
December 31, 2004.
``(III) Considerations in redistribution.--In determining
for which hospitals the increase in the otherwise applicable
resident limit is provided under subclause (I), the Secretary
shall take into account the need for such an increase by
specialty and location involved, consistent with subclause
(IV).
``(IV) Priority for rural and small urban areas.--In
determining for which hospitals and residency training
programs an increase in the otherwise applicable resident
limit is provided under subclause (I), the Secretary shall
first distribute the increase to programs of hospitals
located in rural areas or in urban areas that are not large
urban areas (as defined for purposes of subsection (d)) on a
first-come-first-served basis (as determined by the
Secretary) based on a demonstration that the hospital will
fill the positions made available under this clause and not
to exceed an increase of 25 full-time equivalent positions
with respect to any hospital.
``(V) Application of locality adjusted national average per
resident amount.--With respect to additional residency
positions in a hospital attributable to the increase provided
under this clause, notwithstanding any other provision of
this subsection, the approved FTE resident amount is deemed
to be equal to the locality adjusted national average per
resident amount computed under subparagraph (E) for that
hospital.
``(VI) Construction.--Nothing in this clause shall be
construed as permitting the redistribution of reductions in
residency positions attributable to voluntary reduction
programs under paragraph (6) or as affecting the ability of a
hospital to establish new medical residency training programs
under subparagraph (H).
``(iii) Resident level and limit defined.--In this
subparagraph:
``(I) Resident level.--The term `resident level' means,
with respect to a hospital, the total number of full-time
equivalent residents, before the application of weighting
factors (as determined under this paragraph), in the fields
of allopathic and osteopathic medicine for the hospital.
``(II) Otherwise applicable resident limit.--The term
`otherwise applicable resident limit' means, with respect to
a hospital, the limit otherwise applicable under
subparagraphs (F)(i) and (H) on the resident level for the
hospital determined without regard to this subparagraph.''.
(b) No Application of Increase to IME.--Section
1886(d)(5)(B)(v) (42 U.S.C. 1395ww(d)(5)(B)(v)) is amended by
adding at the end the following: ``The provisions of clause
(i) of subparagraph (I) of subsection (h)(4) shall apply with
respect to the first sentence of this clause in the same
manner as it applies with respect to subparagraph (F) of such
subsection, but the provisions of clause (ii) of such
subparagraph shall not apply.''.
(c) Report on Extension of Applications Under
Redistribution Program.--Not later than July 1, 2004, the
Secretary shall submit to Congress a report containing
recommendations regarding whether to extend the deadline for
applications for an increase in resident limits under section
1886(h)(4)(I)(ii)(II) of the Social Security Act (as added by
subsection (a)).
Subtitle C--Other Provisions
SEC. 621. MODIFICATIONS TO MEDICARE PAYMENT ADVISORY
COMMISSION (MEDPAC).
(a) Examination of Budget Consequences.--Section 1805(b)
(42 U.S.C. 1395b-6(b)) is amended by adding at the end the
following new paragraph:
``(8) Examination of budget consequences.--Before making
any recommendations, the Commission shall examine the budget
consequences of such recommendations, directly or through
consultation with appropriate expert entities.''.
(b) Consideration of Efficient Provision of Services.--
Section 1805(b)(2)(B)(i) (42 U.S.C. 1395b-6(b)(2)(B)(i)) is
amended by inserting ``the efficient provision of'' after
``expenditures for''.
(c) Additional Reports.--
(1) Data needs and sources.--The Medicare Payment Advisory
Commission shall conduct a study, and submit a report to
Congress by not later than June 1, 2003, on the need for
current data, and sources of current
[[Page H4205]]
data available, to determine the solvency and financial
circumstances of hospitals and other medicare providers of
services.
(2) Use of tax-related returns.--Using return information
provided under Form 990 of the Internal Revenue Service, the
Commission shall submit to Congress, by not later than June
1, 2003, a report on the following:
(A) Investments and capital financing of hospitals
participating under the medicare program and related
foundations.
(B) Access to capital financing for private and for not-
for-profit hospitals.
SEC. 622. DEMONSTRATION PROJECT FOR DISEASE MANAGEMENT FOR
CERTAIN MEDICARE BENEFICIARIES WITH DIABETES.
(a) In General.--The Secretary of Health and Human Services
shall conduct a demonstration project under this section (in
this section referred to as the ``project'') to demonstrate
the impact on costs and health outcomes of applying disease
management to certain medicare beneficiaries with diagnosed
diabetes. In no case may the number of participants in the
project exceed 30,000 at any time.
(b) Voluntary Participation.--
(1) Eligibility.--Medicare beneficiaries are eligible to
participate in the project only if--
(a) they are Hispanic, as determined by the Secretary;
(A) they meet specific medical criteria demonstrating the
appropriate diagnosis and the advanced nature of their
disease;
(B) their physicians approve of participation in the
project; and
(C) they are not enrolled in a Medicare+Choice plan.
(2) Benefits.--A medicare beneficiary who is enrolled in
the project shall be eligible--
(A) for disease management services related to their
diabetes; and
(B) for payment for all costs for prescription drugs
without regard to whether or not they relate to the diabetes,
except that the project may provide for modest cost-sharing
with respect to prescription drug coverage.
(c) Contracts With Disease Management Organizations.--
(1) In general.--The Secretary of Health and Human Services
shall carry out the project through contracts with up to
three disease management organizations. The Secretary shall
not enter into such a contract with an organization unless
the organization demonstrates that it can produce improved
health outcomes and reduce aggregate medicare expenditures
consistent with paragraph (2).
(2) Contract provisions.--Under such contracts--
(A) such an organization shall be required to provide for
prescription drug coverage described in subsection (b)(2)(B);
(B) such an organization shall be paid a fee negotiated and
established by the Secretary in a manner so that (taking into
account savings in expenditures under parts A and B of the
medicare program under title XVIII of the Social Security
Act) there will be no net increase, and to the extent
practicable, there will be a net reduction in expenditures
under the medicare program as a result of the project; and
(C) such an organization shall guarantee, through an
appropriate arrangement with a reinsurance company or
otherwise, the prohibition on net increases in expenditures
described in subparagraph (B).
(3) Payments.--Payments to such organizations shall be made
in appropriate proportion from the Trust Funds established
under title XVIII of the Social Security Act.
(4) Working group.--The Secretary shall establish within
the Department of Health and Human Services a working group
consisting of employees of the Department to carry out the
following:
(A) To oversee the project.
(B) To establish policy and criteria for medicare disease
management programs within the Department, including the
establishment of policy and criteria for such programs.
(C) To identify targeted medical conditions and targeted
individuals.
(D) To select areas in which such programs are carried out.
(E) To monitor health outcomes under such programs.
(F) To measure the effectiveness of such programs in
meeting any budget neutrality requirements.
(G) Otherwise to serve as a central focal point within the
Department for dissemination of information on medicare
disease management programs.
(d) Application of Medigap Protections to Demonstration
Project Enrollees.--(1) Subject to paragraph (2), the
provisions of section 1882(s)(3) (other than clauses (i)
through (iv) of subparagraph (B)) and 1882(s)(4) of the
Social Security Act shall apply to enrollment (and
termination of enrollment) in the demonstration project under
this section, in the same manner as they apply to enrollment
(and termination of enrollment) with a Medicare+Choice
organization in a Medicare+Choice plan.
(2) In applying paragraph (1)--
(A) any reference in clause (v) or (vi) of section
1882(s)(3)(B) of such Act to 12 months is deemed a reference
to the period of the demonstration project; and
(B) the notification required under section 1882(s)(3)(D)
of such Act shall be provided in a manner specified by the
Secretary of Health and Human Services.
(e) Duration.--The project shall last for not longer than 3
years.
(f) Waiver.--The Secretary of Health and Human Services
shall waive such provisions of title XVIII of the Social
Security Act as may be necessary to provide for payment for
services under the project in accordance with subsection
(c)(3).
(g) Report.--The Secretary of Health and Human Services
shall submit to Congress an interim report on the project not
later than 2 years after the date it is first implemented and
a final report on the project not later than 6 months after
the date of its completion. Such reports shall include
information on the impact of the project on costs and health
outcomes and recommendations on the cost-effectiveness of
extending or expanding the project.
(h) GAO Study on Disease Management Programs.--The
Comptroller General of the United States shall conduct a
study that compares disease management programs under title
XVIII of the Social Security Act with such programs conducted
in the private sector, including the prevalence of such
programs and programs for case management. The study shall
identify the cost-effectiveness of such programs and any
savings achieved by such programs. The Comptroller General
shall submit a report on such study to Congress by not later
than 18 months after the date of the enactment of this Act.
SEC. 623. DEMONSTRATION PROJECT FOR MEDICAL ADULT DAY CARE
SERVICES.
(a) Establishment.--Subject to the succeeding provisions of
this section, the Secretary of Health and Human Services
shall establish a demonstration project (in this section
referred to as the ``demonstration project'') under which the
Secretary shall, as part of a plan of an episode of care for
home health services established for a medicare beneficiary,
permit a home health agency, directly or under arrangements
with a medical adult day care facility, to provide medical
adult day care services as a substitute for a portion of home
health services that would otherwise be provided in the
beneficiary's home.
(b) Payment.--
(1) In general.--The amount of payment for an episode of
care for home health services, a portion of which consists of
substitute medical adult day care services, under the
demonstration project shall be made at a rate equal to 95
percent of the amount that would otherwise apply for such
home health services under section 1895 of the Social
Security Act (42 u.s.c. 1395fff). In no case may a home
health agency, or a medical adult day care facility under
arrangements with a home health agency, separately charge a
beneficiary for medical adult day care services furnished
under the plan of care.
(2) Budget neutrality for demonstration project.--
Notwithstanding any other provision of law, the Secretary
shall provide for an appropriate reduction in the aggregate
amount of additional payments made under section 1895 of the
Social Security Act (42 U.S.C. 1395fff) to reflect any
increase in amounts expended from the Trust Funds as a result
of the demonstration project conducted under this section.
(c) Demonstration Project Sites.--The project established
under this section shall be conducted in not more than 5
sites in States selected by the Secretary that license or
certify providers of services that furnish medical adult day
care services.
(d) Duration.--The Secretary shall conduct the
demonstration project for a period of 3 years.
(e) Voluntary Participation.--Participation of medicare
beneficiaries in the demonstration project shall be
voluntary. The total number of such beneficiaries that may
participate in the project at any given time may not exceed
15,000.
(f) Preference in Selecting Agencies.--In selecting home
health agencies to participate under the demonstration
project, the Secretary shall give preference to those
agencies that--
(1) are currently licensed or certified to furnish medical
adult day care services; and
(2) have furnished medical adult day care services to
medicare beneficiaries for a continuous 2-year period before
the beginning of the demonstration project.
(g) Waiver Authority.--The Secretary may waive such
requirements of title XVIII of the Social Security Act as may
be necessary for the purposes of carrying out the
demonstration project, other than waiving the requirement
that an individual be homebound in order to be eligible for
benefits for home health services.
(h) Evaluation and Report.--The Secretary shall conduct an
evaluation of the clinical and cost effectiveness of the
demonstration project. Not later 30 months after the
commencement of the project, the Secretary shall submit to
Congress a report on the evaluation, and shall include in the
report the following:
(1) An analysis of the patient outcomes and costs of
furnishing care to the medicare beneficiaries participating
in the project as compared to such outcomes and costs to
beneficiaries receiving only home health services for the
same health conditions.
(2) Such recommendations regarding the extension,
expansion, or termination of the project as the Secretary
determines appropriate.
(i) Definitions.--In this section:
(1) Home health agency.--The term ``home health agency''
has the meaning given such term in section 1861(o) of the
Social Security Act (42 U.S.C. 1395x(o)).
(2) Medical adult day care facility.--The term ``medical
adult day care facility'' means a facility that--
[[Page H4206]]
(A) has been licensed or certified by a State to furnish
medical adult day care services in the State for a continuous
2-year period;
(B) is engaged in providing skilled nursing services and
other therapeutic services directly or under arrangement with
a home health agency;
(C) meets such standards established by the Secretary to
assure quality of care and such other requirements as the
Secretary finds necessary in the interest of the health and
safety of individuals who are furnished services in the
facility; and
(D) provides medical adult day care services.
(3) Medical adult day care services.--The term ``medical
adult day care services'' means--
(A) home health service items and services described in
paragraphs (1) through (7) of section 1861(m) furnished in a
medical adult day care facility;
(B) a program of supervised activities furnished in a group
setting in the facility that--
(i) meet such criteria as the Secretary determines
appropriate; and
(ii) is designed to promote physical and mental health of
the individuals; and
(C) such other services as the Secretary may specify.
(4) Medicare beneficiary.--The term ``medicare
beneficiary'' means an individual entitled to benefits under
part A of this title, enrolled under part B of this title, or
both.
TITLE VII--MEDICARE BENEFITS ADMINISTRATION
SEC. 701. ESTABLISHMENT OF MEDICARE BENEFITS ADMINISTRATION.
(a) In General.--Title XVIII (42 U.S.C. 1395 et seq.), as
amended by section 105, is amended by inserting after 1806
the following new section:
``medicare benefits administration
``Sec. 1808. (a) Establishment.--There is established
within the Department of Health and Human Services an agency
to be known as the Medicare Benefits Administration.
``(b) Administrator; Deputy Administrator; Chief Actuary.--
``(1) Administrator.--
``(A) In general.--The Medicare Benefits Administration
shall be headed by an administrator to be known as the
`Medicare Benefits Administrator' (in this section referred
to as the `Administrator') who shall be appointed by the
President, by and with the advice and consent of the Senate.
The Administrator shall be in direct line of authority to the
Secretary.
``(B) Compensation.--The Administrator shall be paid at the
rate of basic pay payable for level III of the Executive
Schedule under section 5314 of title 5, United States Code.
``(C) Term of office.--The Administrator shall be appointed
for a term of 5 years. In any case in which a successor does
not take office at the end of an Administrator's term of
office, that Administrator may continue in office until the
entry upon office of such a successor. An Administrator
appointed to a term of office after the commencement of such
term may serve under such appointment only for the remainder
of such term.
``(D) General authority.--The Administrator shall be
responsible for the exercise of all powers and the discharge
of all duties of the Administration, and shall have authority
and control over all personnel and activities thereof.
``(E) Rulemaking authority.--The Administrator may
prescribe such rules and regulations as the Administrator
determines necessary or appropriate to carry out the
functions of the Administration. The regulations prescribed
by the Administrator shall be subject to the rulemaking
procedures established under section 553 of title 5, United
States Code.
``(F) Authority to establish organizational units.--The
Administrator may establish, alter, consolidate, or
discontinue such organizational units or components within
the Administration as the Administrator considers necessary
or appropriate, except as specified in this section.
``(G) Authority to delegate.--The Administrator may assign
duties, and delegate, or authorize successive redelegations
of, authority to act and to render decisions, to such
officers and employees of the Administration as the
Administrator may find necessary. Within the limitations of
such delegations, redelegations, or assignments, all official
acts and decisions of such officers and employees shall have
the same force and effect as though performed or rendered by
the Administrator.
``(2) Deputy administrator.--
``(A) In general.--There shall be a Deputy Administrator of
the Medicare Benefits Administration who shall be appointed
by the President, by and with the advice and consent of the
Senate.
``(B) Compensation.--The Deputy Administrator shall be paid
at the rate of basic pay payable for level IV of the
Executive Schedule under section 5315 of title 5, United
States Code.
``(C) Term of office.--The Deputy Administrator shall be
appointed for a term of 5 years. In any case in which a
successor does not take office at the end of a Deputy
Administrator's term of office, such Deputy Administrator may
continue in office until the entry upon office of such a
successor. A Deputy Administrator appointed to a term of
office after the commencement of such term may serve under
such appointment only for the remainder of such term.
``(D) Duties.--The Deputy Administrator shall perform such
duties and exercise such powers as the Administrator shall
from time to time assign or delegate. The Deputy
Administrator shall be Acting Administrator of the
Administration during the absence or disability of the
Administrator and, unless the President designates another
officer of the Government as Acting Administrator, in the
event of a vacancy in the office of the Administrator.
``(3) Chief actuary.--
``(A) In general.--There is established in the
Administration the position of Chief Actuary. The Chief
Actuary shall be appointed by, and in direct line of
authority to, the Administrator of such Administration. The
Chief Actuary shall be appointed from among individuals who
have demonstrated, by their education and experience,
superior expertise in the actuarial sciences. The Chief
Actuary may be removed only for cause.
``(B) Compensation.--The Chief Actuary shall be compensated
at the highest rate of basic pay for the Senior Executive
Service under section 5382(b) of title 5, United States Code.
``(C) Duties.--The Chief Actuary shall exercise such duties
as are appropriate for the office of the Chief Actuary and in
accordance with professional standards of actuarial
independence.
``(4) Secretarial coordination of program administration.--
The Secretary shall ensure appropriate coordination between
the Administrator and the Administrator of the Centers for
Medicare & Medicaid Services in carrying out the programs
under this title.
``(c) Duties; Administrative Provisions.--
``(1) Duties.--
``(A) General duties.--The Administrator shall carry out
parts C and D, including--
``(i) negotiating, entering into, and enforcing, contracts
with plans for the offering of Medicare+Choice plans under
part C, including the offering of qualified prescription drug
coverage under such plans; and
``(ii) negotiating, entering into, and enforcing, contracts
with PDP sponsors for the offering of prescription drug plans
under part D.
``(B) Other duties.--The Administrator shall carry out any
duty provided for under part C or part D, including
demonstration projects carried out in part or in whole under
such parts, the programs of all-inclusive care for the
elderly (PACE program) under section 1894, the social health
maintenance organization (SHMO) demonstration projects
(referred to in section 4104(c) of the Balanced Budget Act of
1997), and through a Medicare+Choice project that
demonstrates the application of capitation payment rates for
frail elderly medicare beneficiaries through the use of a
interdisciplinary team and through the provision of primary
care services to such beneficiaries by means of such a team
at the nursing facility involved).
``(C) Prescription drug card.--The Administrator shall
carry out section 1807 (relating to the medicare prescription
drug discount card endorsement program).
``(D) Noninterference.--In carrying out its duties with
respect to the provision of qualified prescription drug
coverage to beneficiaries under this title, the Administrator
may not--
``(i) require a particular formulary or institute a price
structure for the reimbursement of covered outpatient drugs;
``(ii) interfere in any way with negotiations between PDP
sponsors and Medicare+Choice organizations and drug
manufacturers, wholesalers, or other suppliers of covered
outpatient drugs; and
``(iii) otherwise interfere with the competitive nature of
providing such coverage through such sponsors and
organizations.
``(E) Annual reports.--Not later March 31 of each year, the
Administrator shall submit to Congress and the President a
report on the administration of parts C and D during the
previous fiscal year.
``(2) Staff.--
``(A) In general.--The Administrator, with the approval of
the Secretary, may employ, without regard to chapter 31 of
title 5, United States Code, other than sections 3110 and
3112, such officers and employees as are necessary to
administer the activities to be carried out through the
Medicare Benefits Administration. The Administrator shall
employ staff with appropriate and necessary expertise in
negotiating contracts in the private sector.
``(B) Flexibility with respect to compensation.--
``(i) In general.--The staff of the Medicare Benefits
Administration shall, subject to clause (ii), be paid without
regard to the provisions of chapter 51 (other than section
5101) and chapter 53 (other than section 5301) of such title
(relating to classification and schedule pay rates).
``(ii) Maximum rate.--In no case may the rate of
compensation determined under clause (i) exceed the rate of
basic pay payable for level IV of the Executive Schedule
under section 5315 of title 5, United States Code.
``(C) Limitation on full-time equivalent staffing for
current cms functions being transferred.--The Administrator
may not employ under this paragraph a number of full-time
equivalent employees, to carry out functions that were
previously conducted by the Centers for Medicare & Medicaid
Services and that are conducted by the Administrator by
reason of this section, that exceeds the number of such full-
time equivalent employees authorized to be employed by the
Centers for Medicare & Medicaid Services to
[[Page H4207]]
conduct such functions as of the date of the enactment of
this Act.
``(3) Redelegation of certain functions of the centers for
medicare & medicaid services.--
``(A) In general.--The Secretary, the Administrator, and
the Administrator of the Centers for Medicare & Medicaid
Services shall establish an appropriate transition of
responsibility in order to redelegate the administration of
part C from the Secretary and the Administrator of the
Centers for Medicare & Medicaid Services to the Administrator
as is appropriate to carry out the purposes of this section.
``(B) Transfer of data and information.--The Secretary
shall ensure that the Administrator of the Centers for
Medicare & Medicaid Services transfers to the Administrator
of the Medicare Benefits Administration such information and
data in the possession of the Administrator of the Centers
for Medicare & Medicaid Services as the Administrator of the
Medicare Benefits Administration requires to carry out the
duties described in paragraph (1).
``(C) Construction.--Insofar as a responsibility of the
Secretary or the Administrator of the Centers for Medicare &
Medicaid Services is redelegated to the Administrator under
this section, any reference to the Secretary or the
Administrator of the Centers for Medicare & Medicaid Services
in this title or title XI with respect to such responsibility
is deemed to be a reference to the Administrator.
``(d) Office of Beneficiary Assistance.--
``(1) Establishment.--The Secretary shall establish within
the Medicare Benefits Administration an Office of Beneficiary
Assistance to coordinate functions relating to outreach and
education of medicare beneficiaries under this title,
including the functions described in paragraph (2). The
Office shall be separate operating division within the
Administration.
``(2) Dissemination of information on benefits and appeals
rights.--
``(A) Dissemination of benefits information.--The Office of
Beneficiary Assistance shall disseminate, directly or through
contract, to medicare beneficiaries, by mail, by posting on
the Internet site of the Medicare Benefits Administration and
through a toll-free telephone number, information with
respect to the following:
``(i) Benefits, and limitations on payment (including cost-
sharing, stop-loss provisions, and formulary restrictions)
under parts C and D.
``(ii) Benefits, and limitations on payment under parts A
and B, including information on medicare supplemental
policies under section 1882.
Such information shall be presented in a manner so that
medicare beneficiaries may compare benefits under parts A, B,
D, and medicare supplemental policies with benefits under
Medicare+Choice plans under part C.
``(B) Dissemination of appeals rights information.--The
Office of Beneficiary Assistance shall disseminate to
medicare beneficiaries in the manner provided under
subparagraph (A) a description of procedural rights
(including grievance and appeals procedures) of beneficiaries
under the original medicare fee-for-service program under
parts A and B, the Medicare+Choice program under part C, and
the Voluntary Prescription Drug Benefit Program under part D.
``(e) Medicare Policy Advisory Board.--
``(1) Establishment.--There is established within the
Medicare Benefits Administration the Medicare Policy Advisory
Board (in this section referred to the `Board'). The Board
shall advise, consult with, and make recommendations to the
Administrator of the Medicare Benefits Administration with
respect to the administration of parts C and D, including the
review of payment policies under such parts.
``(2) Reports.--
``(A) In general.--With respect to matters of the
administration of parts C and D, the Board shall submit to
Congress and to the Administrator of the Medicare Benefits
Administration such reports as the Board determines
appropriate. Each such report may contain such
recommendations as the Board determines appropriate for
legislative or administrative changes to improve the
administration of such parts, including the topics described
in subparagraph (B). Each such report shall be published in
the Federal Register.
``(B) Topics described.--Reports required under
subparagraph (A) may include the following topics:
``(i) Fostering competition.--Recommendations or proposals
to increase competition under parts C and D for services
furnished to medicare beneficiaries.
``(ii) Education and enrollment.--Recommendations for the
improvement to efforts to provide medicare beneficiaries
information and education on the program under this title,
and specifically parts C and D, and the program for
enrollment under the title.
``(iii) Implementation of risk-adjustment.--Evaluation of
the implementation under section 1853(a)(3)(C) of the risk
adjustment methodology to payment rates under that section to
Medicare+Choice organizations offering Medicare+Choice plans
that accounts for variations in per capita costs based on
health status and other demographic factors.
``(iv) Disease management programs.--Recommendations on the
incorporation of disease management programs under parts C
and D.
``(v) Rural access.--Recommendations to improve competition
and access to plans under parts C and D in rural areas.
``(C) Maintaining independence of board.--The Board shall
directly submit to Congress reports required under
subparagraph (A). No officer or agency of the United States
may require the Board to submit to any officer or agency of
the United States for approval, comments, or review, prior to
the submission to Congress of such reports.
``(3) Duty of administrator of medicare benefits
administration.--With respect to any report submitted by the
Board under paragraph (2)(A), not later than 90 days after
the report is submitted, the Administrator of the Medicare
Benefits Administration shall submit to Congress and the
President an analysis of recommendations made by the Board in
such report. Each such analysis shall be published in the
Federal Register.
``(4) Membership.--
``(A) Appointment.--Subject to the succeeding provisions of
this paragraph, the Board shall consist of seven members to
be appointed as follows:
``(i) Three members shall be appointed by the President.
``(ii) Two members shall be appointed by the Speaker of the
House of Representatives, with the advice of the chairmen and
the ranking minority members of the Committees on Ways and
Means and on Energy and Commerce of the House of
Representatives.
``(iii) Two members shall be appointed by the President pro
tempore of the Senate with the advice of the chairman and the
ranking minority member of the Senate Committee on Finance.
``(B) Qualifications.--The members shall be chosen on the
basis of their integrity, impartiality, and good judgment,
and shall be individuals who are, by reason of their
education and experience in health care benefits management,
exceptionally qualified to perform the duties of members of
the Board.
``(C) Prohibition on inclusion of federal employees.--No
officer or employee of the United States may serve as a
member of the Board.
``(5) Compensation.--Members of the Board shall receive,
for each day (including travel time) they are engaged in the
performance of the functions of the board, compensation at
rates not to exceed the daily equivalent to the annual rate
in effect for level IV of the Executive Schedule under
section 5315 of title 5, United States Code.
``(6) Terms of office.--
``(A) In general.--The term of office of members of the
Board shall be 3 years.
``(B) Terms of initial appointees.--As designated by the
President at the time of appointment, of the members first
appointed--
``(i) one shall be appointed for a term of 1 year;
``(ii) three shall be appointed for terms of 2 years; and
``(iii) three shall be appointed for terms of 3 years.
``(C) Reappointments.--Any person appointed as a member of
the Board may not serve for more than 8 years.
``(D) Vacancy.--Any member appointed to fill a vacancy
occurring before the expiration of the term for which the
member's predecessor was appointed shall be appointed only
for the remainder of that term. A member may serve after the
expiration of that member's term until a successor has taken
office. A vacancy in the Board shall be filled in the manner
in which the original appointment was made.
``(7) Chair.--The Chair of the Board shall be elected by
the members. The term of office of the Chair shall be 3
years.
``(8) Meetings.--The Board shall meet at the call of the
Chair, but in no event less than three times during each
fiscal year.
``(9) Director and staff.--
``(A) Appointment of director.--The Board shall have a
Director who shall be appointed by the Chair.
``(B) In general.--With the approval of the Board, the
Director may appoint, without regard to chapter 31 of title
5, United States Code, such additional personnel as the
Director considers appropriate.
``(C) Flexibility with respect to compensation.--
``(i) In general.--The Director and staff of the Board
shall, subject to clause (ii), be paid without regard to the
provisions of chapter 51 and chapter 53 of such title
(relating to classification and schedule pay rates).
``(ii) Maximum rate.--In no case may the rate of
compensation determined under clause (i) exceed the rate of
basic pay payable for level IV of the Executive Schedule
under section 5315 of title 5, United States Code.
``(D) Assistance from the administrator of the medicare
benefits administration.--The Administrator of the Medicare
Benefits Administration shall make available to the Board
such information and other assistance as it may require to
carry out its functions.
``(10) Contract authority.--The Board may contract with and
compensate government and private agencies or persons to
carry out its duties under this subsection, without regard to
section 3709 of the Revised Statutes (41 U.S.C. 5).
``(f) Funding.--There is authorized to be appropriated, in
appropriate part from the Federal Hospital Insurance Trust
Fund and from the Federal Supplementary Medical Insurance
Trust Fund (including the Medicare Prescription Drug
Account), such sums as are necessary to carry out this
section.''.
(b) Effective Date.--
[[Page H4208]]
(1) In general.--The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act.
(2) Timing of initial appointments.--The Administrator and
Deputy Administrator of the Medicare Benefits Administration
may not be appointed before March 1, 2003.
(3) Duties with respect to eligibility determinations and
enrollment.--The Administrator of the Medicare Benefits
Administration shall carry out enrollment under title XVIII
of the Social Security Act, make eligibility determinations
under such title, and carry out part C of such title for
years beginning or after January 1, 2005.
(4) Transition.--Before the date the Administrator of the
Medicare Benefits Administration is appointed and assumes
responsibilities under this section and section 1807 of the
Social Security Act, the Secretary of Health and Human
Services shall provide for the conduct of any
responsibilities of such Administrator that are otherwise
provided under law.
(c) Miscellaneous Administrative Provisions.--
(1) Administrator as member of the board of trustees of the
medicare trust funds.--Section 1817(b) and section 1841(b)
(42 U.S.C. 1395i(b), 1395t(b)) are each amended by striking
``and the Secretary of Health and Human Services, all ex
officio,'' and inserting ``the Secretary of Health and Human
Services, and the Administrator of the Medicare Benefits
Administration, all ex officio,''.
(2) Increase in grade to executive level iii for the
administrator of the centers for medicare & medicaid
services; level for medicare benefits administrator.--
(A) In general.--Section 5314 of title 5, United States
Code, by adding at the end the following:
``Administrator of the Centers for Medicare & Medicaid
Services .
``Administrator of the Medicare Benefits Administration.''.
(B) Conforming amendment.--Section 5315 of such title is
amended by striking ``Administrator of the Health Care
Financing Administration.''.
(C) Effective date.--The amendments made by this paragraph
take effect on January 1, 2003.
TITLE VIII--REGULATORY REDUCTION AND CONTRACTING REFORM
Subtitle A--Regulatory Reform
SEC. 801. CONSTRUCTION; DEFINITION OF SUPPLIER.
(a) Construction.--Nothing in this title shall be
construed--
(1) to compromise or affect existing legal remedies for
addressing fraud or abuse, whether it be criminal
prosecution, civil enforcement, or administrative remedies,
including under sections 3729 through 3733 of title 31,
United States Code (known as the False Claims Act); or
(2) to prevent or impede the Department of Health and Human
Services in any way from its ongoing efforts to eliminate
waste, fraud, and abuse in the medicare program.
Furthermore, the consolidation of medicare administrative
contracting set forth in this Act does not constitute
consolidation of the Federal Hospital Insurance Trust Fund
and the Federal Supplementary Medical Insurance Trust Fund or
reflect any position on that issue.
(b) Definition of Supplier.--Section 1861 (42 U.S.C. 1395x)
is amended by inserting after subsection (c) the following
new subsection:
``Supplier
``(d) The term `supplier' means, unless the context
otherwise requires, a physician or other practitioner, a
facility, or other entity (other than a provider of services)
that furnishes items or services under this title.''.
SEC. 802. ISSUANCE OF REGULATIONS.
(a) Consolidation of Promulgation to Once a Month.--
(1) In general.--Section 1871 (42 U.S.C. 1395hh) is amended
by adding at the end the following new subsection:
``(d)(1) Subject to paragraph (2), the Secretary shall
issue proposed or final (including interim final) regulations
to carry out this title only on one business day of every
month.
``(2) The Secretary may issue a proposed or final
regulation described in paragraph (1) on any other day than
the day described in paragraph (1) if the Secretary--
``(A) finds that issuance of such regulation on another day
is necessary to comply with requirements under law; or
``(B) finds that with respect to that regulation the
limitation of issuance on the date described in paragraph (1)
is contrary to the public interest.
If the Secretary makes a finding under this paragraph, the
Secretary shall include such finding, and brief statement of
the reasons for such finding, in the issuance of such
regulation.
``(3) The Secretary shall coordinate issuance of new
regulations described in paragraph (1) relating to a category
of provider of services or suppliers based on an analysis of
the collective impact of regulatory changes on that category
of providers or suppliers.''.
(2) GAO report on publication of regulations on a quarterly
basis.--Not later than 3 years after the date of the
enactment of this Act, the Comptroller General of the United
States shall submit to Congress a report on the feasibility
of requiring that regulations described in section 1871(d) of
the Social Security Act be promulgated on a quarterly basis
rather than on a monthly basis.
(3) Effective date.--The amendment made by paragraph (1)
shall apply to regulations promulgated on or after the date
that is 30 days after the date of the enactment of this Act.
(b) Regular Timeline for Publication of Final Rules.--
(1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)) is
amended by adding at the end the following new paragraph:
``(3)(A) The Secretary, in consultation with the Director
of the Office of Management and Budget, shall establish and
publish a regular timeline for the publication of final
regulations based on the previous publication of a proposed
regulation or an interim final regulation.
``(B) Such timeline may vary among different regulations
based on differences in the complexity of the regulation, the
number and scope of comments received, and other relevant
factors, but shall not be longer than 3 years except under
exceptional circumstances. If the Secretary intends to vary
such timeline with respect to the publication of a final
regulation, the Secretary shall cause to have published in
the Federal Register notice of the different timeline by not
later than the timeline previously established with respect
to such regulation. Such notice shall include a brief
explanation of the justification for such variation.
``(C) In the case of interim final regulations, upon the
expiration of the regular timeline established under this
paragraph for the publication of a final regulation after
opportunity for public comment, the interim final regulation
shall not continue in effect unless the Secretary publishes
(at the end of the regular timeline and, if applicable, at
the end of each succeeding 1-year period) a notice of
continuation of the regulation that includes an explanation
of why the regular timeline (and any subsequent 1-year
extension) was not complied with. If such a notice is
published, the regular timeline (or such timeline as
previously extended under this paragraph) for publication of
the final regulation shall be treated as having been extended
for 1 additional year.
``(D) The Secretary shall annually submit to Congress a
report that describes the instances in which the Secretary
failed to publish a final regulation within the applicable
regular timeline under this paragraph and that provides an
explanation for such failures.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
The Secretary shall provide for an appropriate transition to
take into account the backlog of previously published interim
final regulations.
(c) Limitations on New Matter in Final Regulations.--
(1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)), as
amended by subsection (b), is further amended by adding at
the end the following new paragraph:
``(4) If the Secretary publishes notice of proposed
rulemaking relating to a regulation (including an interim
final regulation), insofar as such final regulation includes
a provision that is not a logical outgrowth of such notice of
proposed rulemaking, that provision shall be treated as a
proposed regulation and shall not take effect until there is
the further opportunity for public comment and a publication
of the provision again as a final regulation.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to final regulations published on or after the
date of the enactment of this Act.
SEC. 803. COMPLIANCE WITH CHANGES IN REGULATIONS AND
POLICIES.
(a) No Retroactive Application of Substantive Changes.--
(1) In general.--Section 1871 (42 U.S.C. 1395hh), as
amended by section 802(a), is amended by adding at the end
the following new subsection:
``(e)(1)(A) A substantive change in regulations, manual
instructions, interpretative rules, statements of policy, or
guidelines of general applicability under this title shall
not be applied (by extrapolation or otherwise) retroactively
to items and services furnished before the effective date of
the change, unless the Secretary determines that--
``(i) such retroactive application is necessary to comply
with statutory requirements; or
``(ii) failure to apply the change retroactively would be
contrary to the public interest.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to substantive changes issued on or after the
date of the enactment of this Act.
(b) Timeline for Compliance With Substantive Changes After
Notice.--
(1) In general.--Section 1871(e)(1), as added by subsection
(a), is amended by adding at the end the following:
``(B)(i) Except as provided in clause (ii), a substantive
change referred to in subparagraph (A) shall not become
effective before the end of the 30-day period that begins on
the date that the Secretary has issued or published, as the
case may be, the substantive change.
``(ii) The Secretary may provide for such a substantive
change to take effect on a date that precedes the end of the
30-day period under clause (i) if the Secretary finds that
waiver of such 30-day period is necessary to
[[Page H4209]]
comply with statutory requirements or that the application of
such 30-day period is contrary to the public interest. If the
Secretary provides for an earlier effective date pursuant to
this clause, the Secretary shall include in the issuance or
publication of the substantive change a finding described in
the first sentence, and a brief statement of the reasons for
such finding.
``(C) No action shall be taken against a provider of
services or supplier with respect to noncompliance with such
a substantive change for items and services furnished before
the effective date of such a change.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to compliance actions undertaken on or after the
date of the enactment of this Act.
(c) Reliance on Guidance.--
(1) In general.--Section 1871(e), as added by subsection
(a), is further amended by adding at the end the following
new paragraph:
``(2)(A) If--
``(i) a provider of services or supplier follows the
written guidance (which may be transmitted electronically)
provided by the Secretary or by a medicare contractor (as
defined in section 1889(g)) acting within the scope of the
contractor's contract authority, with respect to the
furnishing of items or services and submission of a claim for
benefits for such items or services with respect to such
provider or supplier;
``(ii) the Secretary determines that the provider of
services or supplier has accurately presented the
circumstances relating to such items, services, and claim to
the contractor in writing; and
``(iii) the guidance was in error;
the provider of services or supplier shall not be subject to
any sanction (including any penalty or requirement for
repayment of any amount) if the provider of services or
supplier reasonably relied on such guidance.
``(B) Subparagraph (A) shall not be construed as preventing
the recoupment or repayment (without any additional penalty)
relating to an overpayment insofar as the overpayment was
solely the result of a clerical or technical operational
error.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act
but shall not apply to any sanction for which notice was
provided on or before the date of the enactment of this Act.
SEC. 804. REPORTS AND STUDIES RELATING TO REGULATORY REFORM.
(a) GAO Study on Advisory Opinion Authority.--
(1) Study.--The Comptroller General of the United States
shall conduct a study to determine the feasibility and
appropriateness of establishing in the Secretary authority to
provide legally binding advisory opinions on appropriate
interpretation and application of regulations to carry out
the medicare program under title XVIII of the Social Security
Act. Such study shall examine the appropriate timeframe for
issuing such advisory opinions, as well as the need for
additional staff and funding to provide such opinions.
(2) Report.--The Comptroller General shall submit to
Congress a report on the study conducted under paragraph (1)
by not later than January 1, 2004.
(b) Report on Legal and Regulatory Inconsistencies.--
Section 1871 (42 U.S.C. 1395hh), as amended by section
803(a), is amended by adding at the end the following new
subsection:
``(f)(1) Not later than 2 years after the date of the
enactment of this subsection, and every 2 years thereafter,
the Secretary shall submit to Congress a report with respect
to the administration of this title and areas of
inconsistency or conflict among the various provisions under
law and regulation.
``(2) In preparing a report under paragraph (1), the
Secretary shall collect--
``(A) information from individuals entitled to benefits
under part A or enrolled under part B, or both, providers of
services, and suppliers and from the Medicare Beneficiary
Ombudsman and the Medicare Provider Ombudsman with respect to
such areas of inconsistency and conflict; and
``(B) information from medicare contractors that tracks the
nature of written and telephone inquiries.
``(3) A report under paragraph (1) shall include a
description of efforts by the Secretary to reduce such
inconsistency or conflicts, and recommendations for
legislation or administrative action that the Secretary
determines appropriate to further reduce such inconsistency
or conflicts.''.
Subtitle B--Contracting Reform
SEC. 811. INCREASED FLEXIBILITY IN MEDICARE ADMINISTRATION.
(a) Consolidation and Flexibility in Medicare
Administration.--
(1) In general.--Title XVIII is amended by inserting after
section 1874 the following new section:
``contracts with medicare administrative contractors
``Sec. 1874A. (a) Authority.--
``(1) Authority to enter into contracts.--The Secretary may
enter into contracts with any eligible entity to serve as a
medicare administrative contractor with respect to the
performance of any or all of the functions described in
paragraph (4) or parts of those functions (or, to the extent
provided in a contract, to secure performance thereof by
other entities).
``(2) Eligibility of entities.--An entity is eligible to
enter into a contract with respect to the performance of a
particular function described in paragraph (4) only if--
``(A) the entity has demonstrated capability to carry out
such function;
``(B) the entity complies with such conflict of interest
standards as are generally applicable to Federal acquisition
and procurement;
``(C) the entity has sufficient assets to financially
support the performance of such function; and
``(D) the entity meets such other requirements as the
Secretary may impose.
``(3) Medicare administrative contractor defined.--For
purposes of this title and title XI--
``(A) In general.--The term `medicare administrative
contractor' means an agency, organization, or other person
with a contract under this section.
``(B) Appropriate medicare administrative contractor.--With
respect to the performance of a particular function in
relation to an individual entitled to benefits under part A
or enrolled under part B, or both, a specific provider of
services or supplier (or class of such providers of services
or suppliers), the `appropriate' medicare administrative
contractor is the medicare administrative contractor that has
a contract under this section with respect to the performance
of that function in relation to that individual, provider of
services or supplier or class of provider of services or
supplier.
``(4) Functions described.--The functions referred to in
paragraphs (1) and (2) are payment functions, provider
services functions, and functions relating to services
furnished to individuals entitled to benefits under part A or
enrolled under part B, or both, as follows:
``(A) Determination of payment amounts.--Determining
(subject to the provisions of section 1878 and to such review
by the Secretary as may be provided for by the contracts) the
amount of the payments required pursuant to this title to be
made to providers of services, suppliers and individuals.
``(B) Making payments.--Making payments described in
subparagraph (A) (including receipt, disbursement, and
accounting for funds in making such payments).
``(C) Beneficiary education and assistance.--Providing
education and outreach to individuals entitled to benefits
under part A or enrolled under part B, or both, and providing
assistance to those individuals with specific issues,
concerns or problems.
``(D) Provider consultative services.--Providing
consultative services to institutions, agencies, and other
persons to enable them to establish and maintain fiscal
records necessary for purposes of this title and otherwise to
qualify as providers of services or suppliers.
``(E) Communication with providers.--Communicating to
providers of services and suppliers any information or
instructions furnished to the medicare administrative
contractor by the Secretary, and facilitating communication
between such providers and suppliers and the Secretary.
``(F) Provider education and technical assistance.--
Performing the functions relating to provider education,
training, and technical assistance.
``(G) Additional functions.--Performing such other
functions as are necessary to carry out the purposes of this
title.
``(5) Relationship to mip contracts.--
``(A) Nonduplication of duties.--In entering into contracts
under this section, the Secretary shall assure that functions
of medicare administrative contractors in carrying out
activities under parts A and B do not duplicate activities
carried out under the Medicare Integrity Program under
section 1893. The previous sentence shall not apply with
respect to the activity described in section 1893(b)(5)
(relating to prior authorization of certain items of durable
medical equipment under section 1834(a)(15)).
``(B) Construction.--An entity shall not be treated as a
medicare administrative contractor merely by reason of having
entered into a contract with the Secretary under section
1893.
``(6) Application of federal acquisition regulation.--
Except to the extent inconsistent with a specific requirement
of this title, the Federal Acquisition Regulation applies to
contracts under this title.
``(b) Contracting Requirements.--
``(1) Use of competitive procedures.--
``(A) In general.--Except as provided in laws with general
applicability to Federal acquisition and procurement or in
subparagraph (B), the Secretary shall use competitive
procedures when entering into contracts with medicare
administrative contractors under this section, taking into
account performance quality as well as price and other
factors.
``(B) Renewal of contracts.--The Secretary may renew a
contract with a medicare administrative contractor under this
section from term to term without regard to section 5 of
title 41, United States Code, or any other provision of law
requiring competition, if the medicare administrative
contractor has met or exceeded the performance requirements
applicable with respect to the contract and contractor,
except that the Secretary shall provide for the application
of competitive procedures under such a contract not less
frequently than once every five years.
``(C) Transfer of functions.--The Secretary may transfer
functions among medicare administrative contractors
consistent with the provisions of this paragraph. The
Secretary shall ensure that performance quality is considered
in such transfers. The
[[Page H4210]]
Secretary shall provide public notice (whether in the Federal
Register or otherwise) of any such transfer (including a
description of the functions so transferred, a description of
the providers of services and suppliers affected by such
transfer, and contact information for the contractors
involved).
``(D) Incentives for quality.--The Secretary shall provide
incentives for medicare administrative contractors to provide
quality service and to promote efficiency.
``(2) Compliance with requirements.--No contract under this
section shall be entered into with any medicare
administrative contractor unless the Secretary finds that
such medicare administrative contractor will perform its
obligations under the contract efficiently and effectively
and will meet such requirements as to financial
responsibility, legal authority, quality of services
provided, and other matters as the Secretary finds pertinent.
``(3) Performance requirements.--
``(A) Development of specific performance requirements.--In
developing contract performance requirements, the Secretary
shall develop performance requirements applicable to
functions described in subsection (a)(4).
``(B) Consultation.-- In developing such requirements, the
Secretary may consult with providers of services and
suppliers, organizations representing individuals entitled to
benefits under part A or enrolled under part B, or both, and
organizations and agencies performing functions necessary to
carry out the purposes of this section with respect to such
performance requirements.
``(C) Inclusion in contracts.--All contractor performance
requirements shall be set forth in the contract between the
Secretary and the appropriate medicare administrative
contractor. Such performance requirements--
``(i) shall reflect the performance requirements developed
under subparagraph (A), but may include additional
performance requirements;
``(ii) shall be used for evaluating contractor performance
under the contract; and
``(iii) shall be consistent with the written statement of
work provided under the contract.
``(4) Information requirements.--The Secretary shall not
enter into a contract with a medicare administrative
contractor under this section unless the contractor agrees--
``(A) to furnish to the Secretary such timely information
and reports as the Secretary may find necessary in performing
his functions under this title; and
``(B) to maintain such records and afford such access
thereto as the Secretary finds necessary to assure the
correctness and verification of the information and reports
under subparagraph (A) and otherwise to carry out the
purposes of this title.
``(5) Surety bond.--A contract with a medicare
administrative contractor under this section may require the
medicare administrative contractor, and any of its officers
or employees certifying payments or disbursing funds pursuant
to the contract, or otherwise participating in carrying out
the contract, to give surety bond to the United States in
such amount as the Secretary may deem appropriate.
``(c) Terms and Conditions.--
``(1) In general.--A contract with any medicare
administrative contractor under this section may contain such
terms and conditions as the Secretary finds necessary or
appropriate and may provide for advances of funds to the
medicare administrative contractor for the making of payments
by it under subsection (a)(4)(B).
``(2) Prohibition on mandates for certain data
collection.--The Secretary may not require, as a condition of
entering into, or renewing, a contract under this section,
that the medicare administrative contractor match data
obtained other than in its activities under this title with
data used in the administration of this title for purposes of
identifying situations in which the provisions of section
1862(b) may apply.
``(d) Limitation on Liability of Medicare Administrative
Contractors and Certain Officers.--
``(1) Certifying officer.--No individual designated
pursuant to a contract under this section as a certifying
officer shall, in the absence of gross negligence or intent
to defraud the United States, be liable with respect to any
payments certified by the individual under this section.
``(2) Disbursing officer.--No disbursing officer shall, in
the absence of gross negligence or intent to defraud the
United States, be liable with respect to any payment by such
officer under this section if it was based upon an
authorization (which meets the applicable requirements for
such internal controls established by the Comptroller
General) of a certifying officer designated as provided in
paragraph (1) of this subsection.
``(3) Liability of medicare administrative contractor.--No
medicare administrative contractor shall be liable to the
United States for a payment by a certifying or disbursing
officer unless in connection with such payment or in the
supervision of or selection of such officer the medicare
administrative contractor acted with gross negligence.
``(4) Indemnification by secretary.--
``(A) In general.--Subject to subparagraphs (B) and (D), in
the case of a medicare administrative contractor (or a person
who is a director, officer, or employee of such a contractor
or who is engaged by the contractor to participate directly
in the claims administration process) who is made a party to
any judicial or administrative proceeding arising from or
relating directly to the claims administration process under
this title, the Secretary may, to the extent the Secretary
determines to be appropriate and as specified in the contract
with the contractor, indemnify the contractor and such
persons.
``(B) Conditions.--The Secretary may not provide
indemnification under subparagraph (A) insofar as the
liability for such costs arises directly from conduct that is
determined by the judicial proceeding or by the Secretary to
be criminal in nature, fraudulent, or grossly negligent. If
indemnification is provided by the Secretary with respect to
a contractor before a determination that such costs arose
directly from such conduct, the contractor shall reimburse
the Secretary for costs of indemnification.
``(C) Scope of indemnification.--Indemnification by the
Secretary under subparagraph (A) may include payment of
judgments, settlements (subject to subparagraph (D)), awards,
and costs (including reasonable legal expenses).
``(D) Written approval for settlements.--A contractor or
other person described in subparagraph (A) may not propose to
negotiate a settlement or compromise of a proceeding
described in such subparagraph without the prior written
approval of the Secretary to negotiate such settlement or
compromise. Any indemnification under subparagraph (A) with
respect to amounts paid under a settlement or compromise of a
proceeding described in such subparagraph are conditioned
upon prior written approval by the Secretary of the final
settlement or compromise.
``(E) Construction.--Nothing in this paragraph shall be
construed--
``(i) to change any common law immunity that may be
available to a medicare administrative contractor or person
described in subparagraph (A); or
``(ii) to permit the payment of costs not otherwise
allowable, reasonable, or allocable under the Federal
Acquisition Regulations.''.
(2) Consideration of incorporation of current law
standards.--In developing contract performance requirements
under section 1874A(b) of the Social Security Act, as
inserted by paragraph (1), the Secretary shall consider
inclusion of the performance standards described in sections
1816(f)(2) of such Act (relating to timely processing of
reconsiderations and applications for exemptions) and section
1842(b)(2)(B) of such Act (relating to timely review of
determinations and fair hearing requests), as such sections
were in effect before the date of the enactment of this Act.
(b) Conforming Amendments to Section 1816 (Relating to
Fiscal Intermediaries).--Section 1816 (42 U.S.C. 1395h) is
amended as follows:
(1) The heading is amended to read as follows:
``provisions relating to the administration of part a''.
(2) Subsection (a) is amended to read as follows:
``(a) The administration of this part shall be conducted
through contracts with medicare administrative contractors
under section 1874A.''.
(3) Subsection (b) is repealed.
(4) Subsection (c) is amended--
(A) by striking paragraph (1); and
(B) in each of paragraphs (2)(A) and (3)(A), by striking
``agreement under this section'' and inserting ``contract
under section 1874A that provides for making payments under
this part''.
(5) Subsections (d) through (i) are repealed.
(6) Subsections (j) and (k) are each amended--
(A) by striking ``An agreement with an agency or
organization under this section'' and inserting ``A contract
with a medicare administrative contractor under section 1874A
with respect to the administration of this part''; and
(B) by striking ``such agency or organization'' and
inserting ``such medicare administrative contractor'' each
place it appears.
(7) Subsection (l) is repealed.
(c) Conforming Amendments to Section 1842 (Relating to
Carriers).--Section 1842 (42 U.S.C. 1395u) is amended as
follows:
(1) The heading is amended to read as follows:
``provisions relating to the administration of part b''.
(2) Subsection (a) is amended to read as follows:
``(a) The administration of this part shall be conducted
through contracts with medicare administrative contractors
under section 1874A.''.
(3) Subsection (b) is amended--
(A) by striking paragraph (1);
(B) in paragraph (2)--
(i) by striking subparagraphs (A) and (B);
(ii) in subparagraph (C), by striking ``carriers'' and
inserting ``medicare administrative contractors''; and
(iii) by striking subparagraphs (D) and (E);
(C) in paragraph (3)--
(i) in the matter before subparagraph (A), by striking
``Each such contract shall provide that the carrier'' and
inserting ``The Secretary'';
(ii) by striking ``will'' the first place it appears in
each of subparagraphs (A), (B), (F), (G), (H), and (L) and
inserting ``shall'';
(iii) in subparagraph (B), in the matter before clause (i),
by striking ``to the policyholders and subscribers of the
carrier'' and
[[Page H4211]]
inserting ``to the policyholders and subscribers of the
medicare administrative contractor'';
(iv) by striking subparagraphs (C), (D), and (E);
(v) in subparagraph (H)--
(I) by striking ``if it makes determinations or payments
with respect to physicians' services,''; and
(II) by striking ``carrier'' and inserting ``medicare
administrative contractor'';
(vi) by striking subparagraph (I);
(vii) in subparagraph (L), by striking the semicolon and
inserting a period;
(viii) in the first sentence, after subparagraph (L), by
striking ``and shall contain'' and all that follows through
the period; and
(ix) in the seventh sentence, by inserting ``medicare
administrative contractor,'' after ``carrier,''; and
(D) by striking paragraph (5);
(E) in paragraph (6)(D)(iv), by striking ``carrier'' and
inserting ``medicare administrative contractor''; and
(F) in paragraph (7), by striking ``the carrier'' and
inserting ``the Secretary'' each place it appears.
(4) Subsection (c) is amended--
(A) by striking paragraph (1);
(B) in paragraph (2), by striking ``contract under this
section which provides for the disbursement of funds, as
described in subsection (a)(1)(B),'' and inserting ``contract
under section 1874A that provides for making payments under
this part'';
(C) in paragraph (3)(A), by striking ``subsection
(a)(1)(B)'' and inserting ``section 1874A(a)(3)(B)'';
(D) in paragraph (4), by striking ``carrier'' and inserting
``medicare administrative contractor''; and
(E) by striking paragraphs (5) and (6).
(5) Subsections (d), (e), and (f) are repealed.
(6) Subsection (g) is amended by striking ``carrier or
carriers'' and inserting ``medicare administrative contractor
or contractors''.
(7) Subsection (h) is amended--
(A) in paragraph (2)--
(i) by striking ``Each carrier having an agreement with the
Secretary under subsection (a)'' and inserting ``The
Secretary''; and
(ii) by striking ``Each such carrier'' and inserting ``The
Secretary'';
(B) in paragraph (3)(A)--
(i) by striking ``a carrier having an agreement with the
Secretary under subsection (a)'' and inserting ``medicare
administrative contractor having a contract under section
1874A that provides for making payments under this part'';
and
(ii) by striking ``such carrier'' and inserting ``such
contractor'';
(C) in paragraph (3)(B)--
(i) by striking ``a carrier'' and inserting ``a medicare
administrative contractor'' each place it appears; and
(ii) by striking ``the carrier'' and inserting ``the
contractor'' each place it appears; and
(D) in paragraphs (5)(A) and (5)(B)(iii), by striking
``carriers'' and inserting ``medicare administrative
contractors'' each place it appears.
(8) Subsection (l) is amended--
(A) in paragraph (1)(A)(iii), by striking ``carrier'' and
inserting ``medicare administrative contractor''; and
(B) in paragraph (2), by striking ``carrier'' and inserting
``medicare administrative contractor''.
(9) Subsection (p)(3)(A) is amended by striking ``carrier''
and inserting ``medicare administrative contractor''.
(10) Subsection (q)(1)(A) is amended by striking
``carrier''.
(d) Effective Date; Transition Rule.--
(1) Effective date.--
(A) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall take
effect on October 1, 2004, and the Secretary is authorized to
take such steps before such date as may be necessary to
implement such amendments on a timely basis.
(B) Construction for current contracts.--Such amendments
shall not apply to contracts in effect before the date
specified under subparagraph (A) that continue to retain the
terms and conditions in effect on such date (except as
otherwise provided under this Act, other than under this
section) until such date as the contract is let out for
competitive bidding under such amendments.
(C) Deadline for competitive bidding.--The Secretary shall
provide for the letting by competitive bidding of all
contracts for functions of medicare administrative
contractors for annual contract periods that begin on or
after October 1, 2009.
(D) Waiver of provider nomination provisions during
transition.--During the period beginning on the date of the
enactment of this Act and before the date specified under
subparagraph (A), the Secretary may enter into new agreements
under section 1816 of the Social Security Act (42 U.S.C.
1395h) without regard to any of the provider nomination
provisions of such section.
(2) General transition rules.--The Secretary shall take
such steps, consistent with paragraph (1)(B) and (1)(C), as
are necessary to provide for an appropriate transition from
contracts under section 1816 and section 1842 of the Social
Security Act (42 U.S.C. 1395h, 1395u) to contracts under
section 1874A, as added by subsection (a)(1).
(3) Authorizing continuation of mip functions under current
contracts and agreements and under rollover contracts.--The
provisions contained in the exception in section 1893(d)(2)
of the Social Security Act (42 U.S.C. 1395ddd(d)(2)) shall
continue to apply notwithstanding the amendments made by this
section, and any reference in such provisions to an agreement
or contract shall be deemed to include a contract under
section 1874A of such Act, as inserted by subsection (a)(1),
that continues the activities referred to in such provisions.
(e) References.--On and after the effective date provided
under subsection (d)(1), any reference to a fiscal
intermediary or carrier under title XI or XVIII of the Social
Security Act (or any regulation, manual instruction,
interpretative rule, statement of policy, or guideline issued
to carry out such titles) shall be deemed a reference to an
appropriate medicare administrative contractor (as provided
under section 1874A of the Social Security Act).
(f) Reports on Implementation.--
(1) Plan for implementation.--By not later than October 1,
2003, the Secretary shall submit a report to Congress and the
Comptroller General of the United States that describes the
plan for implementation of the amendments made by this
section. The Comptroller General shall conduct an evaluation
of such plan and shall submit to Congress, not later than 6
months after the date the report is received, a report on
such evaluation and shall include in such report such
recommendations as the Comptroller General deems appropriate.
(2) Status of implementation.--The Secretary shall submit a
report to Congress not later than October 1, 2007, that
describes the status of implementation of such amendments and
that includes a description of the following:
(A) The number of contracts that have been competitively
bid as of such date.
(B) The distribution of functions among contracts and
contractors.
(C) A timeline for complete transition to full competition.
(D) A detailed description of how the Secretary has
modified oversight and management of medicare contractors to
adapt to full competition.
SEC. 812. REQUIREMENTS FOR INFORMATION SECURITY FOR MEDICARE
ADMINISTRATIVE CONTRACTORS.
(a) In General.--Section 1874A, as added by section
811(a)(1), is amended by adding at the end the following new
subsection:
``(e) Requirements for Information Security.--
``(1) Development of information security program.--A
medicare administrative contractor that performs the
functions referred to in subparagraphs (A) and (B) of
subsection (a)(4) (relating to determining and making
payments) shall implement a contractor-wide information
security program to provide information security for the
operation and assets of the contractor with respect to such
functions under this title. An information security program
under this paragraph shall meet the requirements for
information security programs imposed on Federal agencies
under section 3534(b)(2) of title 44, United States Code
(other than requirements under subparagraphs (B)(ii),
(F)(iii), and (F)(iv) of such section).
``(2) Independent audits.--
``(A) Performance of annual evaluations.--Each year a
medicare administrative contractor that performs the
functions referred to in subparagraphs (A) and (B) of
subsection (a)(4) (relating to determining and making
payments) shall undergo an evaluation of the information
security of the contractor with respect to such functions
under this title. The evaluation shall--
``(i) be performed by an entity that meets such
requirements for independence as the Inspector General of the
Department of Health and Human Services may establish; and
``(ii) test the effectiveness of information security
control techniques for an appropriate subset of the
contractor's information systems (as defined in section
3502(8) of title 44, United States Code) relating to such
functions under this title and an assessment of compliance
with the requirements of this subsection and related
information security policies, procedures, standards and
guidelines.
``(B) Deadline for initial evaluation.--
``(i) New contractors.--In the case of a medicare
administrative contractor covered by this subsection that has
not previously performed the functions referred to in
subparagraphs (A) and (B) of subsection (a)(4) (relating to
determining and making payments) as a fiscal intermediary or
carrier under section 1816 or 1842, the first independent
evaluation conducted pursuant subparagraph (A) shall be
completed prior to commencing such functions.
``(ii) Other contractors.--In the case of a medicare
administrative contractor covered by this subsection that is
not described in clause (i), the first independent evaluation
conducted pursuant subparagraph (A) shall be completed within
1 year after the date the contractor commences functions
referred to in clause (i) under this section.
``(C) Reports on evaluations.--
``(i) To the inspector general.--The results of independent
evaluations under subparagraph (A) shall be submitted
promptly to the Inspector General of the Department of Health
and Human Services.
``(ii) To congress.--The Inspector General of Department of
Health and Human Services shall submit to Congress annual
reports on the results of such evaluations.''.
(b) Application of Requirements to Fiscal Intermediaries
and Carriers.--
[[Page H4212]]
(1) In general.--The provisions of section 1874A(e)(2) of
the Social Security Act (other than subparagraph (B)), as
added by subsection (a), shall apply to each fiscal
intermediary under section 1816 of the Social Security Act
(42 U.S.C. 1395h) and each carrier under section 1842 of such
Act (42 U.S.C. 1395u) in the same manner as they apply to
medicare administrative contractors under such provisions.
(2) Deadline for initial evaluation.--In the case of such a
fiscal intermediary or carrier with an agreement or contract
under such respective section in effect as of the date of the
enactment of this Act, the first evaluation under section
1874A(e)(2)(A) of the Social Security Act (as added by
subsection (a)), pursuant to paragraph (1), shall be
completed (and a report on the evaluation submitted to the
Secretary) by not later than 1 year after such date.
Subtitle C--Education and Outreach
SEC. 821. PROVIDER EDUCATION AND TECHNICAL ASSISTANCE.
(a) Coordination of Education Funding.--
(1) In general.--The Social Security Act is amended by
inserting after section 1888 the following new section:
``provider education and technical assistance
``Sec. 1889. (a) Coordination of Education Funding.--The
Secretary shall coordinate the educational activities
provided through medicare contractors (as defined in
subsection (g), including under section 1893) in order to
maximize the effectiveness of Federal education efforts for
providers of services and suppliers.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
(3) Report.--Not later than October 1, 2003, the Secretary
shall submit to Congress a report that includes a description
and evaluation of the steps taken to coordinate the funding
of provider education under section 1889(a) of the Social
Security Act, as added by paragraph (1).
(b) Incentives To Improve Contractor Performance.--
(1) In general.--Section 1874A, as added by section
811(a)(1) and as amended by section 812(a), is amended by
adding at the end the following new subsection:
``(f) Incentives To Improve Contractor Performance in
Provider Education and Outreach.--In order to give medicare
administrative contractors an incentive to implement
effective education and outreach programs for providers of
services and suppliers, the Secretary shall develop and
implement a methodology to measure the specific claims
payment error rates of such contractors in the processing or
reviewing of medicare claims.''.
(2) Application to fiscal intermediaries and carriers.--The
provisions of section 1874A(f) of the Social Security Act, as
added by paragraph (1), shall apply to each fiscal
intermediary under section 1816 of the Social Security Act
(42 U.S.C. 1395h) and each carrier under section 1842 of such
Act (42 U.S.C. 1395u) in the same manner as they apply to
medicare administrative contractors under such provisions.
(3) GAO report on adequacy of methodology.--Not later than
October 1, 2003, the Comptroller General of the United States
shall submit to Congress and to the Secretary a report on the
adequacy of the methodology under section 1874A(f)) of the
Social Security Act, as added by paragraph (1), and shall
include in the report such recommendations as the Comptroller
General determines appropriate with respect to the
methodology.
(4) Report on Use of methodology in assessing contractor
performance.--Not later than October 1, 2003, the Secretary
shall submit to Congress a report that describes how the
Secretary intends to use such methodology in assessing
medicare contractor performance in implementing effective
education and outreach programs, including whether to use
such methodology as a basis for performance bonuses. The
report shall include an analysis of the sources of identified
errors and potential changes in systems of contractors and
rules of the Secretary that could reduce claims error rates.
(c) Provision of Access to and Prompt Responses From
Medicare Administrative Contractors.--
(1) In general.--Section 1874A, as added by section
811(a)(1) and as amended by section 812(a) and subsection
(b), is further amended by adding at the end the following
new subsection:
``(g) Communications with Beneficiaries, Providers of
Services and Suppliers.--
``(1) Communication strategy.--The Secretary shall develop
a strategy for communications with individuals entitled to
benefits under part A or enrolled under part B, or both, and
with providers of services and suppliers under this title.
``(2) Response to written inquiries.--Each medicare
administrative contractor shall, for those providers of
services and suppliers which submit claims to the contractor
for claims processing and for those individuals entitled to
benefits under part A or enrolled under part B, or both, with
respect to whom claims are submitted for claims processing,
provide general written responses (which may be through
electronic transmission) in a clear, concise, and accurate
manner to inquiries of providers of services, suppliers and
individuals entitled to benefits under part A or enrolled
under part B, or both, concerning the programs under this
title within 45 business days of the date of receipt of such
inquiries.
``(3) Response to toll-free lines.--The Secretary shall
ensure that each medicare administrative contractor shall
provide, for those providers of services and suppliers which
submit claims to the contractor for claims processing and for
those individuals entitled to benefits under part A or
enrolled under part B, or both, with respect to whom claims
are submitted for claims processing, a toll-free telephone
number at which such individuals, providers of services and
suppliers may obtain information regarding billing, coding,
claims, coverage, and other appropriate information under
this title.
``(4) Monitoring of contractor responses.--
``(A) In general.--Each medicare administrative contractor
shall, consistent with standards developed by the Secretary
under subparagraph (B)--
``(i) maintain a system for identifying who provides the
information referred to in paragraphs (2) and (3); and
``(ii) monitor the accuracy, consistency, and timeliness of
the information so provided.
``(B) Development of standards.--
``(i) In general.--The Secretary shall establish and make
public standards to monitor the accuracy, consistency, and
timeliness of the information provided in response to written
and telephone inquiries under this subsection. Such standards
shall be consistent with the performance requirements
established under subsection (b)(3).
``(ii) Evaluation.--In conducting evaluations of individual
medicare administrative contractors, the Secretary shall take
into account the results of the monitoring conducted under
subparagraph (A) taking into account as performance
requirements the standards established under clause (i). The
Secretary shall, in consultation with organizations
representing providers of services, suppliers, and
individuals entitled to benefits under part A or enrolled
under part B, or both, establish standards relating to the
accuracy, consistency, and timeliness of the information so
provided.''.
``(C) Direct monitoring.--Nothing in this paragraph shall
be construed as preventing the Secretary from directly
monitoring the accuracy, consistency, and timeliness of the
information so provided.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect October 1, 2003.
(3) Application to fiscal intermediaries and carriers.--The
provisions of section 1874A(g) of the Social Security Act, as
added by paragraph (1), shall apply to each fiscal
intermediary under section 1816 of the Social Security Act
(42 U.S.C. 1395h) and each carrier under section 1842 of such
Act (42 U.S.C. 1395u) in the same manner as they apply to
medicare administrative contractors under such provisions.
(d) Improved Provider Education and Training.--
(1) In general.--Section 1889, as added by subsection (a),
is amended by adding at the end the following new
subsections:
``(b) Enhanced Education and Training.--
``(1) Additional resources.--There are authorized to be
appropriated to the Secretary (in appropriate part from the
Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund) $25,000,000 for
each of fiscal years 2004 and 2005 and such sums as may be
necessary for succeeding fiscal years.
``(2) Use.--The funds made available under paragraph (1)
shall be used to increase the conduct by medicare contractors
of education and training of providers of services and
suppliers regarding billing, coding, and other appropriate
items and may also be used to improve the accuracy,
consistency, and timeliness of contractor responses.
``(c) Tailoring Education and Training Activities for Small
Providers or Suppliers.--
``(1) In general.--Insofar as a medicare contractor
conducts education and training activities, it shall tailor
such activities to meet the special needs of small providers
of services or suppliers (as defined in paragraph (2)).
``(2) Small provider of services or supplier.--In this
subsection, the term `small provider of services or supplier'
means--
``(A) a provider of services with fewer than 25 full-time-
equivalent employees; or
``(B) a supplier with fewer than 10 full-time-equivalent
employees.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on October 1, 2003.
(e) Requirement To Maintain Internet Sites.--
(1) In general.--Section 1889, as added by subsection (a)
and as amended by subsection (d), is further amended by
adding at the end the following new subsection:
``(d) Internet Sites; FAQs.--The Secretary, and each
medicare contractor insofar as it provides services
(including claims processing) for providers of services or
suppliers, shall maintain an Internet site which--
``(1) provides answers in an easily accessible format to
frequently asked questions, and
``(2) includes other published materials of the contractor,
that relate to providers of services and suppliers under the
programs under this title (and title XI insofar as it relates
to such programs).''.
[[Page H4213]]
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on October 1, 2003.
(f) Additional Provider Education Provisions.--
(1) In general.--Section 1889, as added by subsection (a)
and as amended by subsections (d) and (e), is further amended
by adding at the end the following new subsections:
``(e) Encouragement of Participation in Education Program
Activities.--A medicare contractor may not use a record of
attendance at (or failure to attend) educational activities
or other information gathered during an educational program
conducted under this section or otherwise by the Secretary to
select or track providers of services or suppliers for the
purpose of conducting any type of audit or prepayment review.
``(f) Construction.--Nothing in this section or section
1893(g) shall be construed as providing for disclosure by a
medicare contractor of information that would compromise
pending law enforcement activities or reveal findings of law
enforcement-related audits.
``(g) Definitions.--For purposes of this section, the term
`medicare contractor' includes the following:
``(1) A medicare administrative contractor with a contract
under section 1874A, including a fiscal intermediary with a
contract under section 1816 and a carrier with a contract
under section 1842.
``(2) An eligible entity with a contract under section
1893.
Such term does not include, with respect to activities of a
specific provider of services or supplier an entity that has
no authority under this title or title IX with respect to
such activities and such provider of services or supplier.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
SEC. 822. SMALL PROVIDER TECHNICAL ASSISTANCE DEMONSTRATION
PROGRAM.
(a) Establishment.--
(1) In general.--The Secretary shall establish a
demonstration program (in this section referred to as the
``demonstration program'') under which technical assistance
described in paragraph (2) is made available, upon request
and on a voluntary basis, to small providers of services or
suppliers in order to improve compliance with the applicable
requirements of the programs under medicare program under
title XVIII of the Social Security Act (including provisions
of title XI of such Act insofar as they relate to such title
and are not administered by the Office of the Inspector
General of the Department of Health and Human Services).
(2) Forms of technical assistance.--The technical
assistance described in this paragraph is--
(A) evaluation and recommendations regarding billing and
related systems; and
(B) information and assistance regarding policies and
procedures under the medicare program, including coding and
reimbursement.
(3) Small providers of services or suppliers.--In this
section, the term ``small providers of services or
suppliers'' means--
(A) a provider of services with fewer than 25 full-time-
equivalent employees; or
(B) a supplier with fewer than 10 full-time-equivalent
employees.
(b) Qualification of Contractors.--In conducting the
demonstration program, the Secretary shall enter into
contracts with qualified organizations (such as peer review
organizations or entities described in section 1889(g)(2) of
the Social Security Act, as inserted by section 5(f)(1)) with
appropriate expertise with billing systems of the full range
of providers of services and suppliers to provide the
technical assistance. In awarding such contracts, the
Secretary shall consider any prior investigations of the
entity's work by the Inspector General of Department of
Health and Human Services or the Comptroller General of the
United States.
(c) Description of Technical Assistance.--The technical
assistance provided under the demonstration program shall
include a direct and in-person examination of billing systems
and internal controls of small providers of services or
suppliers to determine program compliance and to suggest more
efficient or effective means of achieving such compliance.
(d) Avoidance of Recovery Actions for Problems Identified
as Corrected.--The Secretary shall provide that, absent
evidence of fraud and notwithstanding any other provision of
law, any errors found in a compliance review for a small
provider of services or supplier that participates in the
demonstration program shall not be subject to recovery action
if the technical assistance personnel under the program
determine that--
(1) the problem that is the subject of the compliance
review has been corrected to their satisfaction within 30
days of the date of the visit by such personnel to the small
provider of services or supplier; and
(2) such problem remains corrected for such period as is
appropriate.
The previous sentence applies only to claims filed as part of
the demonstration program and lasts only for the duration of
such program and only as long as the small provider of
services or supplier is a participant in such program.
(e) GAO Evaluation.--Not later than 2 years after the date
of the date the demonstration program is first implemented,
the Comptroller General, in consultation with the Inspector
General of the Department of Health and Human Services, shall
conduct an evaluation of the demonstration program. The
evaluation shall include a determination of whether claims
error rates are reduced for small providers of services or
suppliers who participated in the program and the extent of
improper payments made as a result of the demonstration
program. The Comptroller General shall submit a report to the
Secretary and the Congress on such evaluation and shall
include in such report recommendations regarding the
continuation or extension of the demonstration program.
(f) Financial Participation by Providers.--The provision of
technical assistance to a small provider of services or
supplier under the demonstration program is conditioned upon
the small provider of services or supplier paying an amount
estimated (and disclosed in advance of a provider's or
supplier's participation in the program) to be equal to 25
percent of the cost of the technical assistance.
(g) Authorization of Appropriations.--There are authorized
to be appropriated to the Secretary (in appropriate part from
the Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund) to carry out the
demonstration program--
(1) for fiscal year 2004, $1,000,000, and
(2) for fiscal year 2005, $6,000,000.
SEC. 823. MEDICARE PROVIDER OMBUDSMAN; MEDICARE BENEFICIARY
OMBUDSMAN.
(a) Medicare Provider Ombudsman.--Section 1868 (42 U.S.C.
1395ee) is amended--
(1) by adding at the end of the heading the following: ``;
medicare provider ombudsman'';
(2) by inserting ``Practicing Physicians Advisory
Council.--(1)'' after ``(a)'';
(3) in paragraph (1), as so redesignated under paragraph
(2), by striking ``in this section'' and inserting ``in this
subsection'';
(4) by redesignating subsections (b) and (c) as paragraphs
(2) and (3), respectively; and
(5) by adding at the end the following new subsection:
``(b) Medicare Provider Ombudsman.--The Secretary shall
appoint within the Department of Health and Human Services a
Medicare Provider Ombudsman. The Ombudsman shall--
``(1) provide assistance, on a confidential basis, to
providers of services and suppliers with respect to
complaints, grievances, and requests for information
concerning the programs under this title (including
provisions of title XI insofar as they relate to this title
and are not administered by the Office of the Inspector
General of the Department of Health and Human Services) and
in the resolution of unclear or conflicting guidance given by
the Secretary and medicare contractors to such providers of
services and suppliers regarding such programs and provisions
and requirements under this title and such provisions; and
``(2) submit recommendations to the Secretary for
improvement in the administration of this title and such
provisions, including--
``(A) recommendations to respond to recurring patterns of
confusion in this title and such provisions (including
recommendations regarding suspending imposition of sanctions
where there is widespread confusion in program
administration), and
``(B) recommendations to provide for an appropriate and
consistent response (including not providing for audits) in
cases of self-identified overpayments by providers of
services and suppliers.
The Ombudsman shall not serve as an advocate for any
increases in payments or new coverage of services, but may
identify issues and problems in payment or coverage
policies.''.
(b) Medicare Beneficiary Ombudsman.--Title XVIII, as
amended by sections 105 and 701, is amended by inserting
after section 1808 the following new section:
``medicare beneficiary ombudsman
``Sec. 1809. (a) In General.--The Secretary shall appoint
within the Department of Health and Human Services a Medicare
Beneficiary Ombudsman who shall have expertise and experience
in the fields of health care and education of (and assistance
to) individuals entitled to benefits under this title.
``(b) Duties.--The Medicare Beneficiary Ombudsman shall--
``(1) receive complaints, grievances, and requests for
information submitted by individuals entitled to benefits
under part A or enrolled under part B, or both, with respect
to any aspect of the medicare program;
``(2) provide assistance with respect to complaints,
grievances, and requests referred to in paragraph (1),
including--
``(A) assistance in collecting relevant information for
such individuals, to seek an appeal of a decision or
determination made by a fiscal intermediary, carrier,
Medicare+Choice organization, or the Secretary; and
``(B) assistance to such individuals with any problems
arising from disenrollment from a Medicare+Choice plan under
part C; and
``(3) submit annual reports to Congress and the Secretary
that describe the activities of the Office and that include
such recommendations for improvement in the administration of
this title as the Ombudsman determines appropriate.
The Ombudsman shall not serve as an advocate for any
increases in payments or new
[[Page H4214]]
coverage of services, but may identify issues and problems in
payment or coverage policies.
``(c) Working with Health Insurance Counseling Programs.--
To the extent possible, the Ombudsman shall work with health
insurance counseling programs (receiving funding under
section 4360 of Omnibus Budget Reconciliation Act of 1990) to
facilitate the provision of information to individuals
entitled to benefits under part A or enrolled under part B,
or both regarding Medicare+Choice plans and changes to those
plans. Nothing in this subsection shall preclude further
collaboration between the Ombudsman and such programs.''.
(c) Deadline for Appointment.--The Secretary shall appoint
the Medicare Provider Ombudsman and the Medicare Beneficiary
Ombudsman, under the amendments made by subsections (a) and
(b), respectively, by not later than 1 year after the date of
the enactment of this Act.
(d) Funding.--There are authorized to be appropriated to
the Secretary (in appropriate part from the Federal Hospital
Insurance Trust Fund and the Federal Supplementary Medical
Insurance Trust Fund) to carry out the provisions of
subsection (b) of section 1868 of the Social Security Act
(relating to the Medicare Provider Ombudsman), as added by
subsection (a)(5) and section 1809 of such Act (relating to
the Medicare Beneficiary Ombudsman), as added by subsection
(b), such sums as are necessary for fiscal year 2003 and each
succeeding fiscal year.
(e) Use of Central, Toll-Free Number (1-800-MEDICARE).--
(1) Phone triage system; listing in medicare handbook
instead of other toll-free numbers.--Section 1804(b) (42
U.S.C. 1395b-2(b)) is amended by adding at the end the
following: ``The Secretary shall provide, through the toll-
free number 1-800-MEDICARE, for a means by which individuals
seeking information about, or assistance with, such programs
who phone such toll-free number are transferred (without
charge) to appropriate entities for the provision of such
information or assistance. Such toll-free number shall be the
toll-free number listed for general information and
assistance in the annual notice under subsection (a) instead
of the listing of numbers of individual contractors.''.
(2) Monitoring accuracy.--
(A) Study.--The Comptroller General of the United States
shall conduct a study to monitor the accuracy and consistency
of information provided to individuals entitled to benefits
under part A or enrolled under part B, or both, through the
toll-free number 1-800-MEDICARE, including an assessment of
whether the information provided is sufficient to answer
questions of such individuals. In conducting the study, the
Comptroller General shall examine the education and training
of the individuals providing information through such number.
(B) Report.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under
subparagraph (A).
SEC. 824. BENEFICIARY OUTREACH DEMONSTRATION PROGRAM.
(a) In General.--The Secretary shall establish a
demonstration program (in this section referred to as the
``demonstration program'') under which medicare specialists
employed by the Department of Health and Human Services
provide advice and assistance to individuals entitled to
benefits under part A of title XVIII of the Social Security
Act, or enrolled under part B of such title, or both,
regarding the medicare program at the location of existing
local offices of the Social Security Administration.
(b) Locations.--
(1) In general.--The demonstration program shall be
conducted in at least 6 offices or areas. Subject to
paragraph (2), in selecting such offices and areas, the
Secretary shall provide preference for offices with a high
volume of visits by individuals referred to in subsection
(a).
(2) Assistance for rural beneficiaries.--The Secretary
shall provide for the selection of at least 2 rural areas to
participate in the demonstration program. In conducting the
demonstration program in such rural areas, the Secretary
shall provide for medicare specialists to travel among local
offices in a rural area on a scheduled basis.
(c) Duration.--The demonstration program shall be conducted
over a 3-year period.
(d) Evaluation and Report.--
(1) Evaluation.--The Secretary shall provide for an
evaluation of the demonstration program. Such evaluation
shall include an analysis of--
(A) utilization of, and satisfaction of those individuals
referred to in subsection (a) with, the assistance provided
under the program; and
(B) the cost-effectiveness of providing beneficiary
assistance through out-stationing medicare specialists at
local offices of the Social Security Administration.
(2) Report.--The Secretary shall submit to Congress a
report on such evaluation and shall include in such report
recommendations regarding the feasibility of permanently out-
stationing medicare specialists at local offices of the
Social Security Administration.
Subtitle D--Appeals and Recovery
SEC. 831. TRANSFER OF RESPONSIBILITY FOR MEDICARE APPEALS.
(a) Transition Plan.--
(1) In general.--Not later than October 1, 2003, the
Commissioner of Social Security and the Secretary shall
develop and transmit to Congress and the Comptroller General
of the United States a plan under which the functions of
administrative law judges responsible for hearing cases under
title XVIII of the Social Security Act (and related
provisions in title XI of such Act) are transferred from the
responsibility of the Commissioner and the Social Security
Administration to the Secretary and the Department of Health
and Human Services.
(2) GAO evaluation.--The Comptroller General of the United
States shall evaluate the plan and, not later than the date
that is 6 months after the date on which the plan is received
by the Comptroller General, shall submit to Congress a report
on such evaluation.
(b) Transfer of Adjudication Authority.--
(1) In general.--Not earlier than July 1, 2004, and not
later than October 1, 2004, the Commissioner of Social
Security and the Secretary shall implement the transition
plan under subsection (a) and transfer the administrative law
judge functions described in such subsection from the Social
Security Administration to the Secretary.
(2) Assuring independence of judges.--The Secretary shall
assure the independence of administrative law judges
performing the administrative law judge functions transferred
under paragraph (1) from the Centers for Medicare & Medicaid
Services and its contractors.
(3) Geographic distribution.--The Secretary shall provide
for an appropriate geographic distribution of administrative
law judges performing the administrative law judge functions
transferred under paragraph (1) throughout the United States
to ensure timely access to such judges.
(4) Hiring authority.--Subject to the amounts provided in
advance in appropriations Act, the Secretary shall have
authority to hire administrative law judges to hear such
cases, giving priority to those judges with prior experience
in handling medicare appeals and in a manner consistent with
paragraph (3), and to hire support staff for such judges.
(5) Financing.--Amounts payable under law to the
Commissioner for administrative law judges performing the
administrative law judge functions transferred under
paragraph (1) from the Federal Hospital Insurance Trust Fund
and the Federal Supplementary Medical Insurance Trust Fund
shall become payable to the Secretary for the functions so
transferred.
(6) Shared resources.--The Secretary shall enter into such
arrangements with the Commissioner as may be appropriate with
respect to transferred functions of administrative law judges
to share office space, support staff, and other resources,
with appropriate reimbursement from the Trust Funds described
in paragraph (5).
(c) Increased Financial Support.--In addition to any
amounts otherwise appropriated, to ensure timely action on
appeals before administrative law judges and the Departmental
Appeals Board consistent with section 1869 of the Social
Security Act (as amended by section 521 of BIPA, 114 Stat.
2763A-534), there are authorized to be appropriated (in
appropriate part from the Federal Hospital Insurance Trust
Fund and the Federal Supplementary Medical Insurance Trust
Fund) to the Secretary such sums as are necessary for fiscal
year 2004 and each subsequent fiscal year to--
(1) increase the number of administrative law judges (and
their staffs) under subsection (b)(4);
(2) improve education and training opportunities for
administrative law judges (and their staffs); and
(3) increase the staff of the Departmental Appeals Board.
(d) Conforming Amendment.--Section 1869(f)(2)(A)(i) (42
U.S.C. 1395ff(f)(2)(A)(i)), as added by section 522(a) of
BIPA (114 Stat. 2763A-543), is amended by striking ``of the
Social Security Administration''.
SEC. 832. PROCESS FOR EXPEDITED ACCESS TO REVIEW.
(a) Expedited Access to Judicial Review.--Section 1869(b)
(42 U.S.C. 1395ff(b)) as amended by BIPA, is amended--
(1) in paragraph (1)(A), by inserting ``, subject to
paragraph (2),'' before ``to judicial review of the
Secretary's final decision'';
(2) in paragraph (1)(F)--
(A) by striking clause (ii);
(B) by striking ``proceeding'' and all that follows through
``determination'' and inserting ``determinations and
reconsiderations''; and
(C) by redesignating subclauses (I) and (II) as clauses (i)
and (ii) and by moving the indentation of such subclauses
(and the matter that follows) 2 ems to the left; and
(3) by adding at the end the following new paragraph:
``(2) Expedited access to judicial review.--
``(A) In general.--The Secretary shall establish a process
under which a provider of services or supplier that furnishes
an item or service or an individual entitled to benefits
under part A or enrolled under part B, or both, who has filed
an appeal under paragraph (1) may obtain access to judicial
review when a review panel (described in subparagraph (D)),
on its own motion or at the request of the appellant,
determines that no entity in the administrative appeals
process has the authority to decide the question of law or
regulation relevant to the matters in controversy and that
there is no material issue of fact in dispute. The appellant
may
[[Page H4215]]
make such request only once with respect to a question of law
or regulation in a case of an appeal.
``(B) Prompt determinations.--If, after or coincident with
appropriately filing a request for an administrative hearing,
the appellant requests a determination by the appropriate
review panel that no review panel has the authority to decide
the question of law or regulations relevant to the matters in
controversy and that there is no material issue of fact in
dispute and if such request is accompanied by the documents
and materials as the appropriate review panel shall require
for purposes of making such determination, such review panel
shall make a determination on the request in writing within
60 days after the date such review panel receives the request
and such accompanying documents and materials. Such a
determination by such review panel shall be considered a
final decision and not subject to review by the Secretary.
``(C) Access to judicial review.--
``(i) In general.--If the appropriate review panel--
``(I) determines that there are no material issues of fact
in dispute and that the only issue is one of law or
regulation that no review panel has the authority to decide;
or
``(II) fails to make such determination within the period
provided under subparagraph (B);
then the appellant may bring a civil action as described in
this subparagraph.
``(ii) Deadline for filing.--Such action shall be filed, in
the case described in--
``(I) clause (i)(I), within 60 days of date of the
determination described in such subparagraph; or
``(II) clause (i)(II), within 60 days of the end of the
period provided under subparagraph (B) for the determination.
``(iii) Venue.--Such action shall be brought in the
district court of the United States for the judicial district
in which the appellant is located (or, in the case of an
action brought jointly by more than one applicant, the
judicial district in which the greatest number of applicants
are located) or in the district court for the District of
Columbia.
``(iv) Interest on amounts in controversy.--Where a
provider of services or supplier seeks judicial review
pursuant to this paragraph, the amount in controversy shall
be subject to annual interest beginning on the first day of
the first month beginning after the 60-day period as
determined pursuant to clause (ii) and equal to the rate of
interest on obligations issued for purchase by the Federal
Hospital Insurance Trust Fund and by the Federal
Supplementary Medical Insurance Trust Fund for the month in
which the civil action authorized under this paragraph is
commenced, to be awarded by the reviewing court in favor of
the prevailing party. No interest awarded pursuant to the
preceding sentence shall be deemed income or cost for the
purposes of determining reimbursement due providers of
services or suppliers under this Act.
``(D) Review panels.--For purposes of this subsection, a
`review panel' is a panel consisting of 3 members (who shall
be administrative law judges, members of the Departmental
Appeals Board, or qualified individuals associated with a
qualified independent contractor (as defined in subsection
(c)(2)) or with another independent entity) designated by the
Secretary for purposes of making determinations under this
paragraph.''.
(b) Application to Provider Agreement Determinations.--
Section 1866(h)(1) (42 U.S.C. 1395cc(h)(1)) is amended--
(1) by inserting ``(A)'' after ``(h)(1)''; and
(2) by adding at the end the following new subparagraph:
``(B) An institution or agency described in subparagraph
(A) that has filed for a hearing under subparagraph (A) shall
have expedited access to judicial review under this
subparagraph in the same manner as providers of services,
suppliers, and individuals entitled to benefits under part A
or enrolled under part B, or both, may obtain expedited
access to judicial review under the process established under
section 1869(b)(2). Nothing in this subparagraph shall be
construed to affect the application of any remedy imposed
under section 1819 during the pendency of an appeal under
this subparagraph.''.
(c) Effective Date.--The amendments made by this section
shall apply to appeals filed on or after October 1, 2003.
(d) Expedited Review of Certain Provider Agreement
Determinations.--
(1) Termination and certain other immediate remedies.--The
Secretary shall develop and implement a process to expedite
proceedings under sections 1866(h) of the Social Security Act
(42 U.S.C. 1395cc(h)) in which the remedy of termination of
participation, or a remedy described in clause (i) or (iii)
of section 1819(h)(2)(B) of such Act (42 U.S.C. 1395i-
3(h)(2)(B)) which is applied on an immediate basis, has been
imposed. Under such process priority shall be provided in
cases of termination.
(2) Increased financial support.--In addition to any
amounts otherwise appropriated, to reduce by 50 percent the
average time for administrative determinations on appeals
under section 1866(h) of the Social Security Act (42 U.S.C.
1395cc(h)), there are authorized to be appropriated (in
appropriate part from the Federal Hospital Insurance Trust
Fund and the Federal Supplementary Medical Insurance Trust
Fund) to the Secretary such additional sums for fiscal year
2004 and each subsequent fiscal year as may be necessary. The
purposes for which such amounts are available include
increasing the number of administrative law judges (and their
staffs) and the appellate level staff at the Departmental
Appeals Board of the Department of Health and Human Services
and educating such judges and staffs on long-term care
issues.
SEC. 833. REVISIONS TO MEDICARE APPEALS PROCESS.
(a) Requiring Full and Early Presentation of Evidence.--
(1) In general.--Section 1869(b) (42 U.S.C. 1395ff(b)), as
amended by BIPA and as amended by section 832(a), is further
amended by adding at the end the following new paragraph:
``(3) Requiring full and early presentation of evidence by
providers.--A provider of services or supplier may not
introduce evidence in any appeal under this section that was
not presented at the reconsideration conducted by the
qualified independent contractor under subsection (c), unless
there is good cause which precluded the introduction of such
evidence at or before that reconsideration.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on October 1, 2003.
(b) Use of Patients' Medical Records.--Section
1869(c)(3)(B)(i) (42 U.S.C. 1395ff(c)(3)(B)(i)), as amended
by BIPA, is amended by inserting ``(including the medical
records of the individual involved)'' after ``clinical
experience''.
(c) Notice Requirements for Medicare Appeals.--
(1) Initial determinations and redeterminations.--Section
1869(a) (42 U.S.C. 1395ff(a)), as amended by BIPA, is amended
by adding at the end the following new paragraph:
``(4) Requirements of notice of determinations and
redeterminations.--A written notice of a determination on an
initial determination or on a redetermination, insofar as
such determination or redetermination results in a denial of
a claim for benefits, shall include--
``(A) the specific reasons for the determination,
including--
``(i) upon request, the provision of the policy, manual, or
regulation used in making the determination; and
``(ii) as appropriate in the case of a redetermination, a
summary of the clinical or scientific evidence used in making
the determination;
``(B) the procedures for obtaining additional information
concerning the determination or redetermination; and
``(C) notification of the right to seek a redetermination
or otherwise appeal the determination and instructions on how
to initiate such a redetermination or appeal under this
section.
The written notice on a redetermination shall be provided in
printed form and written in a manner calculated to be
understood by the individual entitled to benefits under part
A or enrolled under part B, or both.''.
(2) Reconsiderations.--Section 1869(c)(3)(E) (42 U.S.C.
1395ff(c)(3)(E)), as amended by BIPA, is amended--
(A) by inserting ``be written in a manner calculated to be
understood by the individual entitled to benefits under part
A or enrolled under part B, or both, and shall include (to
the extent appropriate)'' after ``in writing, ''; and
(B) by inserting ``and a notification of the right to
appeal such determination and instructions on how to initiate
such appeal under this section'' after ``such decision, ''.
(3) Appeals.--Section 1869(d) (42 U.S.C. 1395ff(d)), as
amended by BIPA, is amended--
(A) in the heading, by inserting ``; Notice'' after
``Secretary''; and
(B) by adding at the end the following new paragraph:
``(4) Notice.--Notice of the decision of an administrative
law judge shall be in writing in a manner calculated to be
understood by the individual entitled to benefits under part
A or enrolled under part B, or both, and shall include--
``(A) the specific reasons for the determination
(including, to the extent appropriate, a summary of the
clinical or scientific evidence used in making the
determination);
``(B) the procedures for obtaining additional information
concerning the decision; and
``(C) notification of the right to appeal the decision and
instructions on how to initiate such an appeal under this
section.''.
(4) Submission of record for appeal.--Section
1869(c)(3)(J)(i) (42 U.S.C. 1395ff(c)(3)(J)(i)) by striking
``prepare'' and inserting ``submit'' and by striking ``with
respect to'' and all that follows through ``and relevant
policies''.
(d) Qualified Independent Contractors.--
(1) Eligibility requirements of qualified independent
contractors.--Section 1869(c)(3) (42 U.S.C. 1395ff(c)(3)), as
amended by BIPA, is amended--
(A) in subparagraph (A), by striking ``sufficient training
and expertise in medical science and legal matters'' and
inserting ``sufficient medical, legal, and other expertise
(including knowledge of the program under this title) and
sufficient staffing''; and
(B) by adding at the end the following new subparagraph:
``(K) Independence requirements.--
``(i) In general.--Subject to clause (ii), a qualified
independent contractor shall not conduct any activities in a
case unless the entity--
[[Page H4216]]
``(I) is not a related party (as defined in subsection
(g)(5));
``(II) does not have a material familial, financial, or
professional relationship with such a party in relation to
such case; and
``(III) does not otherwise have a conflict of interest with
such a party.
``(ii) Exception for reasonable compensation.--Nothing in
clause (i) shall be construed to prohibit receipt by a
qualified independent contractor of compensation from the
Secretary for the conduct of activities under this section if
the compensation is provided consistent with clause (iii).
``(iii) Limitations on entity compensation.--Compensation
provided by the Secretary to a qualified independent
contractor in connection with reviews under this section
shall not be contingent on any decision rendered by the
contractor or by any reviewing professional.''.
(2) Eligibility requirements for reviewers.--Section 1869
(42 U.S.C. 1395ff), as amended by BIPA, is amended--
(A) by amending subsection (c)(3)(D) to read as follows:
``(D) Qualifications for reviewers.--The requirements of
subsection (g) shall be met (relating to qualifications of
reviewing professionals).''; and
(B) by adding at the end the following new subsection:
``(g) Qualifications of Reviewers.--
``(1) In general.--In reviewing determinations under this
section, a qualified independent contractor shall assure
that--
``(A) each individual conducting a review shall meet the
qualifications of paragraph (2);
``(B) compensation provided by the contractor to each such
reviewer is consistent with paragraph (3); and
``(C) in the case of a review by a panel described in
subsection (c)(3)(B) composed of physicians or other health
care professionals (each in this subsection referred to as a
`reviewing professional'), each reviewing professional meets
the qualifications described in paragraph (4) and, where a
claim is regarding the furnishing of treatment by a physician
(allopathic or osteopathic) or the provision of items or
services by a physician (allopathic or osteopathic), each
reviewing professional shall be a physician (allopathic or
osteopathic).
``(2) Independence.--
``(A) In general.--Subject to subparagraph (B), each
individual conducting a review in a case shall--
``(i) not be a related party (as defined in paragraph (5));
``(ii) not have a material familial, financial, or
professional relationship with such a party in the case under
review; and
``(iii) not otherwise have a conflict of interest with such
a party.
``(B) Exception.--Nothing in subparagraph (A) shall be
construed to--
``(i) prohibit an individual, solely on the basis of a
participation agreement with a fiscal intermediary, carrier,
or other contractor, from serving as a reviewing professional
if--
``(I) the individual is not involved in the provision of
items or services in the case under review;
``(II) the fact of such an agreement is disclosed to the
Secretary and the individual entitled to benefits under part
A or enrolled under part B, or both, (or authorized
representative) and neither party objects; and
``(III) the individual is not an employee of the
intermediary, carrier, or contractor and does not provide
services exclusively or primarily to or on behalf of such
intermediary, carrier, or contractor;
``(ii) prohibit an individual who has staff privileges at
the institution where the treatment involved takes place from
serving as a reviewer merely on the basis of having such
staff privileges if the existence of such privileges is
disclosed to the Secretary and such individual (or authorized
representative), and neither party objects; or
``(iii) prohibit receipt of compensation by a reviewing
professional from a contractor if the compensation is
provided consistent with paragraph (3).
For purposes of this paragraph, the term `participation
agreement' means an agreement relating to the provision of
health care services by the individual and does not include
the provision of services as a reviewer under this
subsection.
``(3) Limitations on reviewer compensation.--Compensation
provided by a qualified independent contractor to a reviewer
in connection with a review under this section shall not be
contingent on the decision rendered by the reviewer.
``(4) Licensure and expertise.--Each reviewing professional
shall be--
``(A) a physician (allopathic or osteopathic) who is
appropriately credentialed or licensed in one or more States
to deliver health care services and has medical expertise in
the field of practice that is appropriate for the items or
services at issue; or
``(B) a health care professional who is legally authorized
in one or more States (in accordance with State law or the
State regulatory mechanism provided by State law) to furnish
the health care items or services at issue and has medical
expertise in the field of practice that is appropriate for
such items or services.
``(5) Related party defined.--For purposes of this section,
the term `related party' means, with respect to a case under
this title involving a specific individual entitled to
benefits under part A or enrolled under part B, or both, any
of the following:
``(A) The Secretary, the medicare administrative contractor
involved, or any fiduciary, officer, director, or employee of
the Department of Health and Human Services, or of such
contractor.
``(B) The individual (or authorized representative).
``(C) The health care professional that provides the items
or services involved in the case.
``(D) The institution at which the items or services (or
treatment) involved in the case are provided.
``(E) The manufacturer of any drug or other item that is
included in the items or services involved in the case.
``(F) Any other party determined under any regulations to
have a substantial interest in the case involved.''.
(3) Effective date.--The amendments made by paragraphs (1)
and (2) shall be effective as if included in the enactment of
the respective provisions of subtitle C of title V of BIPA,
(114 Stat. 2763A-534).
(4) Transition.--In applying section 1869(g) of the Social
Security Act (as added by paragraph (2)), any reference to a
medicare administrative contractor shall be deemed to include
a reference to a fiscal intermediary under section 1816 of
the Social Security Act (42 U.S.C. 1395h) and a carrier under
section 1842 of such Act (42 U.S.C. 1395u).
SEC. 834. PREPAYMENT REVIEW.
(a) In General.--Section 1874A, as added by section
811(a)(1) and as amended by sections 812(b), 821(b)(1), and
831(c)(1), is further amended by adding at the end the
following new subsection:
``(h) Conduct of Prepayment Review.--
``(1) Conduct of random prepayment review.--
``(A) In general.--A medicare administrative contractor may
conduct random prepayment review only to develop a
contractor-wide or program-wide claims payment error rates or
under such additional circumstances as may be provided under
regulations, developed in consultation with providers of
services and suppliers.
``(B) Use of standard protocols when conducting prepayment
reviews.--When a medicare administrative contractor conducts
a random prepayment review, the contractor may conduct such
review only in accordance with a standard protocol for random
prepayment audits developed by the Secretary.
``(C) Construction.--Nothing in this paragraph shall be
construed as preventing the denial of payments for claims
actually reviewed under a random prepayment review.
``(D) Random prepayment review.--For purposes of this
subsection, the term `random prepayment review' means a
demand for the production of records or documentation absent
cause with respect to a claim.
``(2) Limitations on non-random prepayment review.--
``(A) Limitations on initiation of non-random prepayment
review.--A medicare administrative contractor may not
initiate non-random prepayment review of a provider of
services or supplier based on the initial identification by
that provider of services or supplier of an improper billing
practice unless there is a likelihood of sustained or high
level of payment error (as defined in subsection (i)(3)(A)).
``(B) Termination of non-random prepayment review.--The
Secretary shall issue regulations relating to the
termination, including termination dates, of non-random
prepayment review. Such regulations may vary such a
termination date based upon the differences in the
circumstances triggering prepayment review.''.
(b) Effective Date.--
(1) In general.--Except as provided in this subsection, the
amendment made by subsection (a) shall take effect 1 year
after the date of the enactment of this Act.
(2) Deadline for promulgation of certain regulations.--The
Secretary shall first issue regulations under section
1874A(h) of the Social Security Act, as added by subsection
(a), by not later than 1 year after the date of the enactment
of this Act.
(3) Application of standard protocols for random prepayment
review.--Section 1874A(h)(1)(B) of the Social Security Act,
as added by subsection (a), shall apply to random prepayment
reviews conducted on or after such date (not later than 1
year after the date of the enactment of this Act) as the
Secretary shall specify.
(c) Application to Fiscal Intermediaries and Carriers.--The
provisions of section 1874A(h) of the Social Security Act, as
added by subsection (a), shall apply to each fiscal
intermediary under section 1816 of the Social Security Act
(42 U.S.C. 1395h) and each carrier under section 1842 of such
Act (42 U.S.C. 1395u) in the same manner as they apply to
medicare administrative contractors under such provisions.
SEC. 835. RECOVERY OF OVERPAYMENTS.
(a) In General.--Section 1893 (42 U.S.C. 1395ddd) is
amended by adding at the end the following new subsection:
``(f) Recovery of Overpayments.--
``(1) Use of repayment plans.--
``(A) In general.--If the repayment, within 30 days by a
provider of services or supplier, of an overpayment under
this title would constitute a hardship (as defined in
subparagraph (B)), subject to subparagraph (C), upon request
of the provider of services or supplier the Secretary shall
enter into a plan with the provider of services or supplier
for the repayment (through offset or otherwise) of
[[Page H4217]]
such overpayment over a period of at least 6 months but not
longer than 3 years (or not longer than 5 years in the case
of extreme hardship, as determined by the Secretary).
Interest shall accrue on the balance through the period of
repayment. Such plan shall meet terms and conditions
determined to be appropriate by the Secretary.
``(B) Hardship.--
``(i) In general.--For purposes of subparagraph (A), the
repayment of an overpayment (or overpayments) within 30 days
is deemed to constitute a hardship if--
``(I) in the case of a provider of services that files cost
reports, the aggregate amount of the overpayments exceeds 10
percent of the amount paid under this title to the provider
of services for the cost reporting period covered by the most
recently submitted cost report; or
``(II) in the case of another provider of services or
supplier, the aggregate amount of the overpayments exceeds 10
percent of the amount paid under this title to the provider
of services or supplier for the previous calendar year.
``(ii) Rule of application.--The Secretary shall establish
rules for the application of this subparagraph in the case of
a provider of services or supplier that was not paid under
this title during the previous year or was paid under this
title only during a portion of that year.
``(iii) Treatment of previous overpayments.--If a provider
of services or supplier has entered into a repayment plan
under subparagraph (A) with respect to a specific overpayment
amount, such payment amount under the repayment plan shall
not be taken into account under clause (i) with respect to
subsequent overpayment amounts.
``(C) Exceptions.--Subparagraph (A) shall not apply if--
``(i) the Secretary has reason to suspect that the provider
of services or supplier may file for bankruptcy or otherwise
cease to do business or discontinue participation in the
program under this title; or
``(ii) there is an indication of fraud or abuse committed
against the program.
``(D) Immediate collection if violation of repayment
plan.--If a provider of services or supplier fails to make a
payment in accordance with a repayment plan under this
paragraph, the Secretary may immediately seek to offset or
otherwise recover the total balance outstanding (including
applicable interest) under the repayment plan.
``(E) Relation to no fault provision.--Nothing in this
paragraph shall be construed as affecting the application of
section 1870(c) (relating to no adjustment in the cases of
certain overpayments).
``(2) Limitation on recoupment.--
``(A) In general.--In the case of a provider of services or
supplier that is determined to have received an overpayment
under this title and that seeks a reconsideration by a
qualified independent contractor on such determination under
section 1869(b)(1), the Secretary may not take any action (or
authorize any other person, including any medicare
contractor, as defined in subparagraph (C) to recoup the
overpayment until the date the decision on the
reconsideration has been rendered. If the provisions of
section 1869(b)(1) (providing for such a reconsideration by a
qualified independent contractor) are not in effect, in
applying the previous sentence any reference to such a
reconsideration shall be treated as a reference to a
redetermination by the fiscal intermediary or carrier
involved.
``(B) Collection with interest.--Insofar as the
determination on such appeal is against the provider of
services or supplier, interest on the overpayment shall
accrue on and after the date of the original notice of
overpayment. Insofar as such determination against the
provider of services or supplier is later reversed, the
Secretary shall provide for repayment of the amount recouped
plus interest at the same rate as would apply under the
previous sentence for the period in which the amount was
recouped.
``(C) Medicare contractor defined.--For purposes of this
subsection, the term `medicare contractor' has the meaning
given such term in section 1889(g).
``(3) Limitation on use of extrapolation.--A medicare
contractor may not use extrapolation to determine overpayment
amounts to be recovered by recoupment, offset, or otherwise
unless--
``(A) there is a sustained or high level of payment error
(as defined by the Secretary by regulation); or
``(B) documented educational intervention has failed to
correct the payment error (as determined by the Secretary).
``(4) Provision of supporting documentation.--In the case
of a provider of services or supplier with respect to which
amounts were previously overpaid, a medicare contractor may
request the periodic production of records or supporting
documentation for a limited sample of submitted claims to
ensure that the previous practice is not continuing.
``(5) Consent settlement reforms.--
``(A) In general.--The Secretary may use a consent
settlement (as defined in subparagraph (D)) to settle a
projected overpayment.
``(B) Opportunity to submit additional information before
consent settlement offer.--Before offering a provider of
services or supplier a consent settlement, the Secretary
shall--
``(i) communicate to the provider of services or supplier--
``(I) that, based on a review of the medical records
requested by the Secretary, a preliminary evaluation of those
records indicates that there would be an overpayment;
``(II) the nature of the problems identified in such
evaluation; and
``(III) the steps that the provider of services or supplier
should take to address the problems; and
``(ii) provide for a 45-day period during which the
provider of services or supplier may furnish additional
information concerning the medical records for the claims
that had been reviewed.
``(C) Consent settlement offer.--The Secretary shall review
any additional information furnished by the provider of
services or supplier under subparagraph (B)(ii). Taking into
consideration such information, the Secretary shall determine
if there still appears to be an overpayment. If so, the
Secretary--
``(i) shall provide notice of such determination to the
provider of services or supplier, including an explanation of
the reason for such determination; and
``(ii) in order to resolve the overpayment, may offer the
provider of services or supplier--
``(I) the opportunity for a statistically valid random
sample; or
``(II) a consent settlement.
The opportunity provided under clause (ii)(I) does not waive
any appeal rights with respect to the alleged overpayment
involved.
``(D) Consent settlement defined.--For purposes of this
paragraph, the term `consent settlement' means an agreement
between the Secretary and a provider of services or supplier
whereby both parties agree to settle a projected overpayment
based on less than a statistically valid sample of claims and
the provider of services or supplier agrees not to appeal the
claims involved.
``(6) Notice of over-utilization of codes.--The Secretary
shall establish, in consultation with organizations
representing the classes of providers of services and
suppliers, a process under which the Secretary provides for
notice to classes of providers of services and suppliers
served by the contractor in cases in which the contractor has
identified that particular billing codes may be overutilized
by that class of providers of services or suppliers under the
programs under this title (or provisions of title XI insofar
as they relate to such programs).
``(7) Payment audits.--
``(A) Written notice for post-payment audits.--Subject to
subparagraph (C), if a medicare contractor decides to conduct
a post-payment audit of a provider of services or supplier
under this title, the contractor shall provide the provider
of services or supplier with written notice (which may be in
electronic form) of the intent to conduct such an audit.
``(B) Explanation of findings for all audits.--Subject to
subparagraph (C), if a medicare contractor audits a provider
of services or supplier under this title, the contractor
shall--
``(i) give the provider of services or supplier a full
review and explanation of the findings of the audit in a
manner that is understandable to the provider of services or
supplier and permits the development of an appropriate
corrective action plan;
``(ii) inform the provider of services or supplier of the
appeal rights under this title as well as consent settlement
options (which are at the discretion of the Secretary);
``(iii) give the provider of services or supplier an
opportunity to provide additional information to the
contractor; and
``(iv) take into account information provided, on a timely
basis, by the provider of services or supplier under clause
(iii).
``(C) Exception.--Subparagraphs (A) and (B) shall not apply
if the provision of notice or findings would compromise
pending law enforcement activities, whether civil or
criminal, or reveal findings of law enforcement-related
audits.
``(8) Standard methodology for probe sampling.--The
Secretary shall establish a standard methodology for medicare
contractors to use in selecting a sample of claims for review
in the case of an abnormal billing pattern.''.
(b) Effective Dates and Deadlines.--
(1) Use of repayment plans.--Section 1893(f)(1) of the
Social Security Act, as added by subsection (a), shall apply
to requests for repayment plans made after the date of the
enactment of this Act.
(2) Limitation on recoupment.--Section 1893(f)(2) of the
Social Security Act, as added by subsection (a), shall apply
to actions taken after the date of the enactment of this Act.
(3) Use of extrapolation.--Section 1893(f)(3) of the Social
Security Act, as added by subsection (a), shall apply to
statistically valid random samples initiated after the date
that is 1 year after the date of the enactment of this Act.
(4) Provision of supporting documentation.--Section
1893(f)(4) of the Social Security Act, as added by subsection
(a), shall take effect on the date of the enactment of this
Act.
(5) Consent settlement.--Section 1893(f)(5) of the Social
Security Act, as added by subsection (a), shall apply to
consent settlements entered into after the date of the
enactment of this Act.
(6) Notice of overutilization.--Not later than 1 year after
the date of the enactment of this Act, the Secretary shall
first establish the process for notice of overutilization of
billing codes under section 1893A(f)(6) of the Social
Security Act, as added by subsection (a).
[[Page H4218]]
(7) Payment audits.--Section 1893A(f)(7) of the Social
Security Act, as added by subsection (a), shall apply to
audits initiated after the date of the enactment of this Act.
(8) Standard for abnormal billing patterns.--Not later than
1 year after the date of the enactment of this Act, the
Secretary shall first establish a standard methodology for
selection of sample claims for abnormal billing patterns
under section 1893(f)(8) of the Social Security Act, as added
by subsection (a).
SEC. 836. PROVIDER ENROLLMENT PROCESS; RIGHT OF APPEAL.
(a) In General.--Section 1866 (42 U.S.C. 1395cc) is
amended--
(1) by adding at the end of the heading the following: ``;
enrollment processes''; and
(2) by adding at the end the following new subsection:
``(j) Enrollment Process for Providers of Services and
Suppliers.--
``(1) Enrollment process.--
``(A) In general.--The Secretary shall establish by
regulation a process for the enrollment of providers of
services and suppliers under this title.
``(B) Deadlines.--The Secretary shall establish by
regulation procedures under which there are deadlines for
actions on applications for enrollment (and, if applicable,
renewal of enrollment). The Secretary shall monitor the
performance of medicare administrative contractors in meeting
the deadlines established under this subparagraph.
``(C) Consultation before changing provider enrollment
forms.--The Secretary shall consult with providers of
services and suppliers before making changes in the provider
enrollment forms required of such providers and suppliers to
be eligible to submit claims for which payment may be made
under this title.
``(2) Hearing rights in cases of denial or non-renewal.--A
provider of services or supplier whose application to enroll
(or, if applicable, to renew enrollment) under this title is
denied may have a hearing and judicial review of such denial
under the procedures that apply under subsection (h)(1)(A) to
a provider of services that is dissatisfied with a
determination by the Secretary.''.
(b) Effective Dates.--
(1) Enrollment process.--The Secretary shall provide for
the establishment of the enrollment process under section
1866(j)(1) of the Social Security Act, as added by subsection
(a)(2), within 6 months after the date of the enactment of
this Act.
(2) Consultation.--Section 1866(j)(1)(C) of the Social
Security Act, as added by subsection (a)(2), shall apply with
respect to changes in provider enrollment forms made on or
after January 1, 2003.
(3) Hearing rights.--Section 1866(j)(2) of the Social
Security Act, as added by subsection (a)(2), shall apply to
denials occurring on or after such date (not later than 1
year after the date of the enactment of this Act) as the
Secretary specifies.
SEC. 837. PROCESS FOR CORRECTION OF MINOR ERRORS AND
OMISSIONS ON CLAIMS WITHOUT PURSUING APPEALS
PROCESS.
The Secretary shall develop, in consultation with
appropriate medicare contractors (as defined in section
1889(g) of the Social Security Act, as inserted by section
821(a)(1)) and representatives of providers of services and
suppliers, a process whereby, in the case of minor errors or
omissions (as defined by the Secretary) that are detected in
the submission of claims under the programs under title XVIII
of such Act, a provider of services or supplier is given an
opportunity to correct such an error or omission without the
need to initiate an appeal. Such process shall include the
ability to resubmit corrected claims.
SEC. 838. PRIOR DETERMINATION PROCESS FOR CERTAIN ITEMS AND
SERVICES; ADVANCE BENEFICIARY NOTICES.
(a) In General.--Section 1869 (42 U.S.C. 1395ff(b)), as
amended by sections 521 and 522 of BIPA and section
833(d)(2)(B), is further amended by adding at the end the
following new subsection:
``(h) Prior Determination Process for Certain Items and
Services.--
``(1) Establishment of process.--
``(A) In general.--With respect to a medicare
administrative contractor that has a contract under section
1874A that provides for making payments under this title with
respect to eligible items and services described in
subparagraph (C), the Secretary shall establish a prior
determination process that meets the requirements of this
subsection and that shall be applied by such contractor in
the case of eligible requesters.
``(B) Eligible requester.--For purposes of this subsection,
each of the following shall be an eligible requester:
``(i) A physician, but only with respect to eligible items
and services for which the physician may be paid directly.
``(ii) An individual entitled to benefits under this title,
but only with respect to an item or service for which the
individual receives, from the physician who may be paid
directly for the item or service, an advance beneficiary
notice under section 1879(a) that payment may not be made (or
may no longer be made) for the item or service under this
title.
``(C) Eligible items and services.--For purposes of this
subsection and subject to paragraph (2), eligible items and
services are items and services which are physicians'
services (as defined in paragraph (4)(A) of section 1848(f)
for purposes of calculating the sustainable growth rate under
such section).
``(2) Secretarial flexibility.--The Secretary shall
establish by regulation reasonable limits on the categories
of eligible items and services for which a prior
determination of coverage may be requested under this
subsection. In establishing such limits, the Secretary may
consider the dollar amount involved with respect to the item
or service, administrative costs and burdens, and other
relevant factors.
``(3) Request for prior determination.--
``(A) In general.--Subject to paragraph (2), under the
process established under this subsection an eligible
requester may submit to the contractor a request for a
determination, before the furnishing of an eligible item or
service involved as to whether the item or service is covered
under this title consistent with the applicable requirements
of section 1862(a)(1)(A) (relating to medical necessity).
``(B) Accompanying documentation.--The Secretary may
require that the request be accompanied by a description of
the item or service, supporting documentation relating to the
medical necessity for the item or service, and any other
appropriate documentation. In the case of a request submitted
by an eligible requester who is described in paragraph
(1)(B)(ii), the Secretary may require that the request also
be accompanied by a copy of the advance beneficiary notice
involved.
``(4) Response to request.--
``(A) In general.--Under such process, the contractor shall
provide the eligible requester with written notice of a
determination as to whether--
``(i) the item or service is so covered;
``(ii) the item or service is not so covered; or
``(iii) the contractor lacks sufficient information to make
a coverage determination.
If the contractor makes the determination described in clause
(iii), the contractor shall include in the notice a
description of the additional information required to make
the coverage determination.
``(B) Deadline to respond.--Such notice shall be provided
within the same time period as the time period applicable to
the contractor providing notice of initial determinations on
a claim for benefits under subsection (a)(2)(A).
``(C) Informing beneficiary in case of physician request.--
In the case of a request in which an eligible requester is
not the individual described in paragraph (1)(B)(ii), the
process shall provide that the individual to whom the item or
service is proposed to be furnished shall be informed of any
determination described in clause (ii) (relating to a
determination of non-coverage) and the right (referred to in
paragraph (6)(B)) to obtain the item or service and have a
claim submitted for the item or service.
``(5) Effect of determinations.--
``(A) Binding nature of positive determination.--If the
contractor makes the determination described in paragraph
(4)(A)(i), such determination shall be binding on the
contractor in the absence of fraud or evidence of
misrepresentation of facts presented to the contractor.
``(B) Notice and right to redetermination in case of a
denial.--
``(i) In general.--If the contractor makes the
determination described in paragraph (4)(A)(ii)--
``(I) the eligible requester has the right to a
redetermination by the contractor on the determination that
the item or service is not so covered; and
``(II) the contractor shall include in notice under
paragraph (4)(A) a brief explanation of the basis for the
determination, including on what national or local coverage
or noncoverage determination (if any) the determination is
based, and the right to such a redetermination.
``(ii) Deadline for redeterminations.--The contractor shall
complete and provide notice of such redetermination within
the same time period as the time period applicable to the
contractor providing notice of redeterminations relating to a
claim for benefits under subsection (a)(3)(C)(ii).
``(6) Limitation on further review.--
``(A) In general.--Contractor determinations described in
paragraph (4)(A)(ii) or (4)(A)(iii) (and redeterminations
made under paragraph (5)(B)), relating to pre-service claims
are not subject to further administrative appeal or judicial
review under this section or otherwise.
``(B) Decision not to seek prior determination or negative
determination does not impact right to obtain services, seek
reimbursement, or appeal rights.--Nothing in this subsection
shall be construed as affecting the right of an individual
who--
``(i) decides not to seek a prior determination under this
subsection with respect to items or services; or
``(ii) seeks such a determination and has received a
determination described in paragraph (4)(A)(ii)),
from receiving (and submitting a claim for) such items
services and from obtaining administrative or judicial review
respecting such claim under the other applicable provisions
of this section. Failure to seek a prior determination under
this subsection with respect to items and services shall not
be taken into account in such administrative or judicial
review.
``(C) No prior determination after receipt of services.--
Once an individual is provided items and services, there
shall be no prior determination under this subsection with
respect to such items or services.''.
(b) Effective Date; Transition.--
(1) Effective date.--The Secretary shall establish the
prior determination process
[[Page H4219]]
under the amendment made by subsection (a) in such a manner
as to provide for the acceptance of requests for
determinations under such process filed not later than 18
months after the date of the enactment of this Act.
(2) Transition.--During the period in which the amendment
made by subsection (a) has become effective but contracts are
not provided under section 1874A of the Social Security Act
with medicare administrative contractors, any reference in
section 1869(g) of such Act (as added by such amendment) to
such a contractor is deemed a reference to a fiscal
intermediary or carrier with an agreement under section 1816,
or contract under section 1842, respectively, of such Act.
(3) Limitation on application to sgr.--For purposes of
applying section 1848(f)(2)(D) of the Social Security Act (42
U.S.C. 1395w-4(f)(2)(D)), the amendment made by subsection
(a) shall not be considered to be a change in law or
regulation.
(c) Provisions Relating to Advance Beneficiary Notices;
Report on Prior Determination Process.--
(1) Data collection.--The Secretary shall establish a
process for the collection of information on the instances in
which an advance beneficiary notice (as defined in paragraph
(4)) has been provided and on instances in which a
beneficiary indicates on such a notice that the beneficiary
does not intend to seek to have the item or service that is
the subject of the notice furnished.
(2) Outreach and education.--The Secretary shall establish
a program of outreach and education for beneficiaries and
providers of services and other persons on the appropriate
use of advance beneficiary notices and coverage policies
under the medicare program.
(3) GAO report report on use of advance beneficiary
notices.--Not later than 18 months after the date on which
section 1869(g) of the Social Security Act (as added by
subsection (a)) takes effect, the Comptroller General of the
United States shall submit to Congress a report on the use of
advance beneficiary notices under title XVIII of such Act.
Such report shall include information concerning the
providers of services and other persons that have provided
such notices and the response of beneficiaries to such
notices.
(4) GAO report on use of prior determination process.--Not
later than 18 months after the date on which section 1869(g)
of the Social Security Act (as added by subsection (a)) takes
effect, the Comptroller General of the United States shall
submit to Congress a report on the use of the prior
determination process under such section. Such report shall
include--
(A) information concerning the types of procedures for
which a prior determination has been sought, determinations
made under the process, and changes in receipt of services
resulting from the application of such process; and
(B) an evaluation of whether the process was useful for
physicians (and other suppliers) and beneficiaries, whether
it was timely, and whether the amount of information required
was burdensome to physicians and beneficiaries.
(5) Advance beneficiary notice defined.--In this
subsection, the term ``advance beneficiary notice'' means a
written notice provided under section 1879(a) of the Social
Security Act (42 U.S.C. 1395pp(a)) to an individual entitled
to benefits under part A or B of title XVIII of such Act
before items or services are furnished under such part in
cases where a provider of services or other person that would
furnish the item or service believes that payment will not be
made for some or all of such items or services under such
title.
Subtitle E--Miscellaneous Provisions
SEC. 841. POLICY DEVELOPMENT REGARDING EVALUATION AND
MANAGEMENT (E & M) DOCUMENTATION GUIDELINES.
(a) In General.--The Secretary may not implement any new
documentation guidelines for evaluation and management
physician services under the title XVIII of the Social
Security Act on or after the date of the enactment of this
Act unless the Secretary--
(1) has developed the guidelines in collaboration with
practicing physicians (including both generalists and
specialists) and provided for an assessment of the proposed
guidelines by the physician community;
(2) has established a plan that contains specific goals,
including a schedule, for improving the use of such
guidelines;
(3) has conducted appropriate and representative pilot
projects under subsection (b) to test modifications to the
evaluation and management documentation guidelines;
(4) finds that the objectives described in subsection (c)
will be met in the implementation of such guidelines; and
(5) has established, and is implementing, a program to
educate physicians on the use of such guidelines and that
includes appropriate outreach.
The Secretary shall make changes to the manner in which
existing evaluation and management documentation guidelines
are implemented to reduce paperwork burdens on physicians.
(b) Pilot Projects to Test Evaluation and Management
Documentation Guidelines.--
(1) In general.--The Secretary shall conduct under this
subsection appropriate and representative pilot projects to
test new evaluation and management documentation guidelines
referred to in subsection (a).
(2) Length and consultation.--Each pilot project under this
subsection shall--
(A) be voluntary;
(B) be of sufficient length as determined by the Secretary
to allow for preparatory physician and medicare contractor
education, analysis, and use and assessment of potential
evaluation and management guidelines; and
(C) be conducted, in development and throughout the
planning and operational stages of the project, in
consultation with practicing physicians (including both
generalists and specialists).
(3) Range of pilot projects.--Of the pilot projects
conducted under this subsection--
(A) at least one shall focus on a peer review method by
physicians (not employed by a medicare contractor) which
evaluates medical record information for claims submitted by
physicians identified as statistical outliers relative to
definitions published in the Current Procedures Terminology
(CPT) code book of the American Medical Association;
(B) at least one shall focus on an alternative method to
detailed guidelines based on physician documentation of face
to face encounter time with a patient;
(C) at least one shall be conducted for services furnished
in a rural area and at least one for services furnished
outside such an area; and
(D) at least one shall be conducted in a setting where
physicians bill under physicians' services in teaching
settings and at least one shall be conducted in a setting
other than a teaching setting.
(4) Banning of targeting of pilot project participants.--
Data collected under this subsection shall not be used as the
basis for overpayment demands or post-payment audits. Such
limitation applies only to claims filed as part of the pilot
project and lasts only for the duration of the pilot project
and only as long as the provider is a participant in the
pilot project.
(5) Study of impact.--Each pilot project shall examine the
effect of the new evaluation and management documentation
guidelines on--
(A) different types of physician practices, including those
with fewer than 10 full-time-equivalent employees (including
physicians); and
(B) the costs of physician compliance, including education,
implementation, auditing, and monitoring.
(6) Periodic reports.--The Secretary shall submit to
Congress periodic reports on the pilot projects under this
subsection.
(c) Objectives for Evaluation and Management Guidelines.--
The objectives for modified evaluation and management
documentation guidelines developed by the Secretary shall be
to--
(1) identify clinically relevant documentation needed to
code accurately and assess coding levels accurately;
(2) decrease the level of non-clinically pertinent and
burdensome documentation time and content in the physician's
medical record;
(3) increase accuracy by reviewers; and
(4) educate both physicians and reviewers.
(d) Study of Simpler, Alternative Systems of Documentation
for Physician Claims.--
(1) Study.--The Secretary shall carry out a study of the
matters described in paragraph (2).
(2) Matters described.--The matters referred to in
paragraph (1) are--
(A) the development of a simpler, alternative system of
requirements for documentation accompanying claims for
evaluation and management physician services for which
payment is made under title XVIII of the Social Security Act;
and
(B) consideration of systems other than current coding and
documentation requirements for payment for such physician
services.
(3) Consultation with practicing physicians.--In designing
and carrying out the study under paragraph (1), the Secretary
shall consult with practicing physicians, including
physicians who are part of group practices and including both
generalists and specialists.
(4) Application of hipaa uniform coding requirements.--In
developing an alternative system under paragraph (2), the
Secretary shall consider requirements of administrative
simplification under part C of title XI of the Social
Security Act.
(5) Report to congress.--(A) Not later than October 1,
2004, the Secretary shall submit to Congress a report on the
results of the study conducted under paragraph (1).
(B) The Medicare Payment Advisory Commission shall conduct
an analysis of the results of the study included in the
report under subparagraph (A) and shall submit a report on
such analysis to Congress.
(e) Study on Appropriate Coding of Certain Extended Office
Visits.--The Secretary shall conduct a study of the
appropriateness of coding in cases of extended office visits
in which there is no diagnosis made. Not later than October
1, 2004, the Secretary shall submit a report to Congress on
such study and shall include recommendations on how to code
appropriately for such visits in a manner that takes into
account the amount of time the physician spent with the
patient.
(f) Definitions.--In this section--
(1) the term ``rural area'' has the meaning given that term
in section 1886(d)(2)(D) of the Social Security Act, 42
U.S.C. 1395ww(d)(2)(D); and
[[Page H4220]]
(2) the term ``teaching settings'' are those settings
described in section 415.150 of title 42, Code of Federal
Regulations.
SEC. 842. IMPROVEMENT IN OVERSIGHT OF TECHNOLOGY AND
COVERAGE.
(a) Improved Coordination Between FDA and CMS on Coverage
of Breakthrough Medical Devices.--
(1) In general.--Upon request by an applicant and to the
extent feasible (as determined by the Secretary), the
Secretary shall, in the case of a class III medical device
that is subject to premarket approval under section 515 of
the Federal Food, Drug, and Cosmetic Act, ensure the sharing
of appropriate information from the review for application
for premarket approval conducted by the Food and Drug
Administration for coverage decisions under title XVIII of
the Social Security Act.
(2) Publication of plan.--Not later than 6 months after the
date of the enactment of this Act, the Secretary shall submit
to appropriate Committees of Congress a report that contains
the plan for improving such coordination and for shortening
the time lag between the premarket approval by the Food and
Drug Administration and coding and coverage decisions by the
Centers for Medicare & Medicaid Services.
(3) Construction.--Nothing in this subsection shall be
construed as changing the criteria for coverage of a medical
device under title XVIII of the Social Security Act nor
premarket approval by the Food and Drug Administration and
nothing in this subsection shall be construed to increase
premarket approval application requirements under the Federal
Food, Drug, and Cosmetic Act.
(b) Council for Technology and Innovation.--Section 1868
(42 U.S.C. 1395ee), as amended by section 821(a), is amended
by adding at the end the following new subsection:
``(c) Council for Technology and Innovation.--
``(1) Establishment.--The Secretary shall establish a
Council for Technology and Innovation within the Centers for
Medicare & Medicaid Services (in this section referred to as
`CMS').
``(2) Composition.--The Council shall be composed of senior
CMS staff and clinicians and shall be chaired by the
Executive Coordinator for Technology and Innovation
(appointed or designated under paragraph (4)).
``(3) Duties.--The Council shall coordinate the activities
of coverage, coding, and payment processes under this title
with respect to new technologies and procedures, including
new drug therapies, and shall coordinate the exchange of
information on new technologies between CMS and other
entities that make similar decisions.
``(4) Executive coordinator for technology and
innovation.--The Secretary shall appoint (or designate) a
noncareer appointee (as defined in section 3132(a)(7) of
title 5, United States Code) who shall serve as the Executive
Coordinator for Technology and Innovation. Such executive
coordinator shall report to the Administrator of CMS, shall
chair the Council, shall oversee the execution of its duties,
and shall serve as a single point of contact for outside
groups and entities regarding the coverage, coding, and
payment processes under this title.''.
(c) GAO Study on Improvements in External Data Collection
for Use in the Medicare Inpatient Payment System.--
(1) Study.--The Comptroller General of the United States
shall conduct a study that analyzes which external data can
be collected in a shorter time frame by the Centers for
Medicare & Medicaid Services for use in computing payments
for inpatient hospital services. The study may include an
evaluation of the feasibility and appropriateness of using of
quarterly samples or special surveys or any other methods.
The study shall include an analysis of whether other
executive agencies, such as the Bureau of Labor Statistics in
the Department of Commerce, are best suited to collect this
information.
(2) Report.--By not later than October 1, 2003, the
Comptroller General shall submit a report to Congress on the
study under paragraph (1).
(d) IOM Study on Local Coverage Determinations.--
(1) Study.--The Secretary shall enter into an arrangement
with the Institute of Medicine of the National Academy of
Sciences under which the Institute shall conduct a study on
local coverage determinations (including the application of
local medical review policies) under the medicare program
under title XVIII of the Social Security Act. Such study
shall examine--
(A) the consistency of the definitions used in such
determinations;
(B) the types of evidence on which such determinations are
based, including medical and scientific evidence;
(C) the advantages and disadvantages of local coverage
decisionmaking, including the flexibility it offers for
ensuring timely patient access to new medical technology for
which data are still be collected;
(D) the manner in which the local coverage determination
process is used to develop data needed for a national
coverage determination, including the need for collection of
such data within a protocol and informed consent by
individuals entitled to benefits under part A of title XVIII
of the Social Security Act, or enrolled under part B of such
title, or both; and
(E) the advantages and disadvantages of maintaining local
medicare contractor advisory committees that can advise on
local coverage decisions based on an open, collaborative
public process.
(2) Report.--Such arrangement shall provide that the
Institute shall submit to the Secretary a report on such
study by not later than 3 years after the date of the
enactment of this Act. The Secretary shall promptly transmit
a copy of such report to Congress.
(e) Methods for Determining Payment Basis For New Lab
Tests.--Section 1833(h) (42 U.S.C. 1395l(h)) is amended by
adding at the end the following:
``(8)(A) The Secretary shall establish by regulation
procedures for determining the basis for, and amount of,
payment under this subsection for any clinical diagnostic
laboratory test with respect to which a new or substantially
revised HCPCS code is assigned on or after January 1, 2004
(in this paragraph referred to as `new tests').
``(B) Determinations under subparagraph (A) shall be made
only after the Secretary--
``(i) makes available to the public (through an Internet
site and other appropriate mechanisms) a list that includes
any such test for which establishment of a payment amount
under this subsection is being considered for a year;
``(ii) on the same day such list is made available, causes
to have published in the Federal Register notice of a meeting
to receive comments and recommendations (and data on which
recommendations are based) from the public on the appropriate
basis under this subsection for establishing payment amounts
for the tests on such list;
``(iii) not less than 30 days after publication of such
notice convenes a meeting, that includes representatives of
officials of the Centers for Medicare & Medicaid Services
involved in determining payment amounts, to receive such
comments and recommendations (and data on which the
recommendations are based);
``(iv) taking into account the comments and recommendations
(and accompanying data) received at such meeting, develops
and makes available to the public (through an Internet site
and other appropriate mechanisms) a list of proposed
determinations with respect to the appropriate basis for
establishing a payment amount under this subsection for each
such code, together with an explanation of the reasons for
each such determination, the data on which the determinations
are based, and a request for public written comments on the
proposed determination; and
``(v) taking into account the comments received during the
public comment period, develops and makes available to the
public (through an Internet site and other appropriate
mechanisms) a list of final determinations of the payment
amounts for such tests under this subsection, together with
the rationale for each such determination, the data on which
the determinations are based, and responses to comments and
suggestions received from the public.
``(C) Under the procedures established pursuant to
subparagraph (A), the Secretary shall--
``(i) set forth the criteria for making determinations
under subparagraph (A); and
``(ii) make available to the public the data (other than
proprietary data) considered in making such determinations.
``(D) The Secretary may convene such further public
meetings to receive public comments on payment amounts for
new tests under this subsection as the Secretary deems
appropriate.
``(E) For purposes of this paragraph:
``(i) The term `HCPCS' refers to the Health Care Procedure
Coding System.
``(ii) A code shall be considered to be `substantially
revised' if there is a substantive change to the definition
of the test or procedure to which the code applies (such as a
new analyte or a new methodology for measuring an existing
analyte-specific test).''.
SEC. 843. TREATMENT OF HOSPITALS FOR CERTAIN SERVICES UNDER
MEDICARE SECONDARY PAYOR (MSP) PROVISIONS.
(a) In General.--The Secretary shall not require a hospital
(including a critical access hospital) to ask questions (or
obtain information) relating to the application of section
1862(b) of the Social Security Act (relating to medicare
secondary payor provisions) in the case of reference
laboratory services described in subsection (b), if the
Secretary does not impose such requirement in the case of
such services furnished by an independent laboratory.
(b) Reference Laboratory Services Described.--Reference
laboratory services described in this subsection are clinical
laboratory diagnostic tests (or the interpretation of such
tests, or both) furnished without a face-to-face encounter
between the individual entitled to benefits under part A or
enrolled under part B, or both, and the hospital involved and
in which the hospital submits a claim only for such test or
interpretation.
SEC. 844. EMTALA IMPROVEMENTS.
(a) Payment for EMTALA-Mandated Screening and Stabilization
Services.--
(1) In general.--Section 1862 (42 U.S.C. 1395y) is amended
by inserting after subsection (c) the following new
subsection:
``(d) For purposes of subsection (a)(1)(A), in the case of
any item or service that is required to be provided pursuant
to section 1867 to an individual who is entitled to benefits
under this title, determinations as to whether the item or
service is reasonable and necessary shall be made on the
basis of the information available to the treating physician
or practitioner (including the patient's presenting symptoms
or complaint)
[[Page H4221]]
at the time the item or service was ordered or furnished by
the physician or practitioner (and not on the patient's
principal diagnosis). When making such determinations with
respect to such an item or service, the Secretary shall not
consider the frequency with which the item or service was
provided to the patient before or after the time of the
admission or visit.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to items and services furnished on or after
January 1, 2003.
(b) Notification of Providers When EMTALA Investigation
Closed.--Section 1867(d) (42 U.S.C. 42 U.S.C. 1395dd(d)) is
amended by adding at the end the following new paragraph:
``(4) Notice upon closing an investigation.--The Secretary
shall establish a procedure to notify hospitals and
physicians when an investigation under this section is
closed.''.
(c) Prior Review by Peer Review Organizations in EMTALA
Cases Involving Termination of Participation.--
(1) In general.--Section 1867(d)(3) (42 U.S.C.
1395dd(d)(3)) is amended--
(A) in the first sentence, by inserting ``or in terminating
a hospital's participation under this title'' after ``in
imposing sanctions under paragraph (1)''; and
(B) by adding at the end the following new sentences:
``Except in the case in which a delay would jeopardize the
health or safety of individuals, the Secretary shall also
request such a review before making a compliance
determination as part of the process of terminating a
hospital's participation under this title for violations
related to the appropriateness of a medical screening
examination, stabilizing treatment, or an appropriate
transfer as required by this section, and shall provide a
period of 5 days for such review. The Secretary shall provide
a copy of the report on the organization's report to the
hospital or physician consistent with confidentiality
requirements imposed on the organization under such part
B.''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to terminations of participation initiated on or
after the date of the enactment of this Act.
SEC. 845. EMERGENCY MEDICAL TREATMENT AND ACTIVE LABOR ACT
(EMTALA) TECHNICAL ADVISORY GROUP.
(a) Establishment.--The Secretary shall establish a
Technical Advisory Group (in this section referred to as the
``Advisory Group'') to review issues related to the Emergency
Medical Treatment and Active Labor Act (EMTALA) and its
implementation. In this section, the term ``EMTALA'' refers
to the provisions of section 1867 of the Social Security Act
(42 U.S.C. 1395dd).
(b) Membership.--The Advisory Group shall be composed of 19
members, including the Administrator of the Centers for
Medicare & Medicaid Services and the Inspector General of the
Department of Health and Human Services and of which--
(1) 4 shall be representatives of hospitals, including at
least one public hospital, that have experience with the
application of EMTALA and at least 2 of which have not been
cited for EMTALA violations;
(2) 7 shall be practicing physicians drawn from the fields
of emergency medicine, cardiology or cardiothoracic surgery,
orthopedic surgery, neurosurgery, obstetrics-gynecology, and
psychiatry, with not more than one physician from any
particular field;
(3) 2 shall represent patients;
(4) 2 shall be staff involved in EMTALA investigations from
different regional offices of the Centers for Medicare &
Medicaid Services; and
(5) 1 shall be from a State survey office involved in
EMTALA investigations and 1 shall be from a peer review
organization, both of whom shall be from areas other than the
regions represented under paragraph (4).
In selecting members described in paragraphs (1) through (3),
the Secretary shall consider qualified individuals nominated
by organizations representing providers and patients.
(c) General Responsibilities.--The Advisory Group--
(1) shall review EMTALA regulations;
(2) may provide advice and recommendations to the Secretary
with respect to those regulations and their application to
hospitals and physicians;
(3) shall solicit comments and recommendations from
hospitals, physicians, and the public regarding the
implementation of such regulations; and
(4) may disseminate information on the application of such
regulations to hospitals, physicians, and the public.
(d) Administrative Matters.--
(1) Chairperson.--The members of the Advisory Group shall
elect a member to serve as chairperson of the Advisory Group
for the life of the Advisory Group.
(2) Meetings.--The Advisory Group shall first meet at the
direction of the Secretary. The Advisory Group shall then
meet twice per year and at such other times as the Advisory
Group may provide.
(e) Termination.--The Advisory Group shall terminate 30
months after the date of its first meeting.
(f) Waiver of Administrative Limitation.--The Secretary
shall establish the Advisory Group notwithstanding any
limitation that may apply to the number of advisory
committees that may be established (within the Department of
Health and Human Services or otherwise).
SEC. 846. AUTHORIZING USE OF ARRANGEMENTS WITH OTHER HOSPICE
PROGRAMS TO PROVIDE CORE HOSPICE SERVICES IN
CERTAIN CIRCUMSTANCES.
(a) In General.--Section 1861(dd)(5) (42 U.S.C.
1395x(dd)(5)) is amended by adding at the end the following
new subparagraph:
``(D) In extraordinary, exigent, or other non-routine
circumstances, such as unanticipated periods of high patient
loads, staffing shortages due to illness or other events, or
temporary travel of a patient outside a hospice program's
service area, a hospice program may enter into arrangements
with another hospice program for the provision by that other
program of services described in paragraph (2)(A)(ii)(I). The
provisions of paragraph (2)(A)(ii)(II) shall apply with
respect to the services provided under such arrangements.''.
(b) Conforming Payment Provision.--Section 1814(i) (42
U.S.C. 1395f(i)) is amended by adding at the end the
following new paragraph:
``(4) In the case of hospice care provided by a hospice
program under arrangements under section 1861(dd)(5)(D) made
by another hospice program, the hospice program that made the
arrangements shall bill and be paid for the hospice care.''.
(c) Effective Date.--The amendments made by this section
shall apply to hospice care provided on or after the date of
the enactment of this Act.
SEC. 847. APPLICATION OF OSHA BLOODBORNE PATHOGENS STANDARD
TO CERTAIN HOSPITALS.
(a) In General.--Section 1866 (42 U.S.C. 1395cc) is
amended--
(1) in subsection (a)(1)--
(A) in subparagraph (R), by striking ``and'' at the end;
(B) in subparagraph (S), by striking the period at the end
and inserting ``, and''; and
(C) by inserting after subparagraph (S) the following new
subparagraph:
``(T) in the case of hospitals that are not otherwise
subject to the Occupational Safety and Health Act of 1970, to
comply with the Bloodborne Pathogens standard under section
1910.1030 of title 29 of the Code of Federal Regulations (or
as subsequently redesignated).''; and
(B) by adding at the end of subsection (b) the following
new paragraph:
``(4)(A) A hospital that fails to comply with the
requirement of subsection (a)(1)(T) (relating to the
Bloodborne Pathogens standard) is subject to a civil money
penalty in an amount described in subparagraph (B), but is
not subject to termination of an agreement under this
section.
``(B) The amount referred to in subparagraph (A) is an
amount that is similar to the amount of civil penalties that
may be imposed under section 17 of the Occupational Safety
and Health Act of 1970 for a violation of the Bloodborne
Pathogens standard referred to in subsection (a)(1)(T) by a
hospital that is subject to the provisions of such Act.
``(C) A civil money penalty under this paragraph shall be
imposed and collected in the same manner as civil money
penalties under subsection (a) of section 1128A are imposed
and collected under that section.''.
(b) Effective Date.--The amendments made by this subsection
(a) shall apply to hospitals as of July 1, 2003.
SEC. 848. BIPA-RELATED TECHNICAL AMENDMENTS AND CORRECTIONS.
(a) Technical Amendments Relating to Advisory Committee
under BIPA Section 522.--(1) Subsection (i) of section 1114
(42 U.S.C. 1314)--
(A) is transferred to section 1862 and added at the end of
such section; and
(B) is redesignated as subsection (j).
(2) Section 1862 (42 U.S.C. 1395y) is amended--
(A) in the last sentence of subsection (a), by striking
``established under section 1114(f)''; and
(B) in subsection (j), as so transferred and redesignated--
(i) by striking ``under subsection (f)''; and
(ii) by striking ``section 1862(a)(1)'' and inserting
``subsection (a)(1)''.
(b) Terminology Corrections.--(1) Section 1869(c)(3)(I)(ii)
(42 U.S.C. 1395ff(c)(3)(I)(ii)), as amended by section 521 of
BIPA, is amended--
(A) in subclause (III), by striking ``policy'' and
inserting ``determination''; and
(B) in subclause (IV), by striking ``medical review --
policies'' and inserting ``coverage determinations''.
(2) Section 1852(a)(2)(C) (42 U.S.C. 1395w-22(a)(2)(C)) is
amended by striking ``policy'' and ``policy'' and inserting
``determination'' each place it appears and
``determination'', respectively.
(c) Reference Corrections.--Section 1869(f)(4) (42 U.S.C.
1395ff(f)(4)), as added by section 522 of BIPA, is amended--
(1) in subparagraph (A)(iv), by striking ``subclause -(I),
(II), or (III)'' and inserting ``clause (i), (ii), or
(iii)'';
(2) in subparagraph (B), by striking ``clause (i)(IV)'' and
``clause (i)(III)'' and inserting ``subparagraph (A)(iv)''
and ``subparagraph (A)(iii)'', respectively; and
(3) in subparagraph (C), by striking ``clause (i)'',
``subclause (IV)'' and ``subparagraph (A)'' and inserting
``subparagraph (A)'', ``clause (iv)'' and ``paragraph
(1)(A)'', respectively each place it appears.
(d) Other Corrections.--Effective as if included in the
enactment of section 521(c) of BIPA, section 1154(e) (42
U.S.C. 1320c-3(e)) is amended by striking paragraph (5).
(e) Effective Date.--Except as otherwise provided, the
amendments made by this section shall be effective as if
included in the enactment of BIPA.
[[Page H4222]]
SEC. 849. CONFORMING AUTHORITY TO WAIVE A PROGRAM EXCLUSION.
The first sentence of section 1128(c)(3)(B) (42 U.S.C.
1320a-7(c)(3)(B)) is amended to read as follows: ``Subject to
subparagraph (G), in the case of an exclusion under
subsection (a), the minimum period of exclusion shall be not
less than five years, except that, upon the request of the
administrator of a Federal health care program (as defined in
section 1128B(f)) who determines that the exclusion would
impose a hardship on individuals entitled to benefits under
part A of title XVIII or enrolled under part B of such title,
or both, the Secretary may waive the exclusion under
subsection (a)(1), (a)(3), or (a)(4) with respect to that
program in the case of an individual or entity that is the
sole community physician or sole source of essential
specialized services in a community.''.
SEC. 850. TREATMENT OF CERTAIN DENTAL CLAIMS.
(a) In General.--Section 1862 (42 U.S.C. 1395y) is amended
by inserting after subsection (c) the following new
subsection:
``(d)(1) Subject to paragraph (2), a group health plan (as
defined in subsection (a)(1)(A)(v)) providing supplemental or
secondary coverage to individuals also entitled to services
under this title shall not require a medicare claims
determination under this title for dental benefits
specifically excluded under subsection (a)(12) as a condition
of making a claims determination for such benefits under the
group health plan.
``(2) A group health plan may require a claims
determination under this title in cases involving or
appearing to involve inpatient dental hospital services or
dental services expressly covered under this title pursuant
to actions taken by the Secretary.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on the date that is 60 days after the date
of the enactment of this Act.
SEC. 851. ANNUAL PUBLICATION OF LIST OF NATIONAL COVERAGE
DETERMINATIONS.
The Secretary shall provide, in an appropriate annual
publication available to the public, a list of national
coverage determinations made under title XVIII of the Social
Security Act in the previous year and information on how to
get more information with respect to such determinations.
TITLE IX--MEDICAID, PUBLIC HEALTH, AND OTHER HEALTH PROVISIONS
Subtitle A--Medicaid Provisions
SEC. 901. NATIONAL BIPARTISAN COMMISSION ON THE FUTURE OF
MEDICAID.
(a) Establishment.--There is established a commission to be
known as the National Bipartisan Commission on the Future of
Medicaid (in this section referred to as the ``Commission'').
(b) Duties of the Commission.--The Commission shall--
(1) review and analyze the long-term financial condition of
the medicaid program under title XIX of the Social Security
Act (42 U.S.C. 1396 et seq.);
(2) identify the factors that are causing, and the
consequences of, increases in costs under the medicaid
program, including--
(A) the impact of these cost increases upon State budgets,
funding for other State programs, and levels of State taxes
necessary to fund growing expenditures under the medicaid
program;
(B) the financial obligations of the Federal government
arising from the Federal matching requirement for
expenditures under the medicaid program; and
(C) the size and scope of the current program and how the
program has evolved over time;
(3) analyze potential policies that will ensure both the
financial integrity of the medicaid program and the provision
of appropriate benefits under such program;
(4) make recommendations for establishing incentives and
structures to promote enhanced efficiencies and ways of
encouraging innovative State policies under the medicaid
program;
(5) make recommendations for establishing the appropriate
balance between benefits covered, payments to providers,
State and Federal contributions and, where appropriate,
recipient cost-sharing obligations;
(6) make recommendations on the impact of promoting
increased utilization of competitive, private enterprise
models to contain program cost growth, through enhanced
utilization of private plans, pharmacy benefit managers, and
other methods currently being used to contain private sector
health-care costs;
(7) make recommendations on the financing of prescription
drug benefits currently covered under medicaid programs,
including analysis of the current Federal manufacturer rebate
program, its impact upon both private market prices as well
as those paid by other government purchasers, recent State
efforts to negotiate additional supplemental manufacturer
rebates and the ability of pharmacy benefit managers to lower
drug costs;
(8) review and analyze such other matters relating to the
medicaid program as the Commission deems appropriate; and
(9) analyze the impact of impending demographic changes
upon medicaid benefits, including long term care services,
and make recommendations for how best to appropriately divide
State and Federal responsibilities for funding these
benefits.
(c) Membership.--
(1) Number and appointment.--The Commission shall be
composed of 17 members, of whom--
(A) four shall be appointed by the President;
(B) six shall be appointed by the Majority Leader of the
Senate, in consultation with the Minority Leader of the
Senate, of whom not more than 4 shall be of the same
political party;
(C) six shall be appointed by the Speaker of the House of
Representatives, in consultation with the Minority Leader of
the House of Representatives, of whom not more than 4 shall
be of the same political party; and
(D) one, who shall serve as Chairman of the Commission,
appointed jointly by the President, Majority Leader of the
Senate, and the Speaker of the House of Representatives.
(2) Deadline for appointment.--Members of the Commission
shall be appointed by not later than December 1, 2002.
(3) Terms of appointment.--The term of any appointment
under paragraph (1) to the Commission shall be for the life
of the Commission.
(4) Meetings.--The Commission shall meet at the call of its
Chairman or a majority of its members.
(5) Quorum.--A quorum shall consist of 8 members of the
Commission, except that 4 members may conduct a hearing under
subsection (e).
(6) Vacancies.--A vacancy on the Commission shall be filled
in the same manner in which the original appointment was made
not later than 30 days after the Commission is given notice
of the vacancy and shall not affect the power of the
remaining members to execute the duties of the Commission.
(7) Compensation.--Members of the Commission shall receive
no additional pay, allowances, or benefits by reason of their
service on the Commission.
(8) Expenses.--Each member of the Commission shall receive
travel expenses and per diem in lieu of subsistence in
accordance with sections 5702 and 5703 of title 5, United
States Code.
(d) Staff and Support Services.--
(1) Executive director.--
(A) Appointment.--The Chairman shall appoint an executive
director of the Commission.
(B) Compensation.--The executive director shall be paid the
rate of basic pay for level V of the Executive Schedule.
(2) Staff.--With the approval of the Commission, the
executive director may appoint such personnel as the
executive director considers appropriate.
(3) Applicability of civil service laws.--The staff of the
Commission shall be appointed without regard to the
provisions of title 5, United States Code, governing
appointments in the competitive service, and shall be paid
without regard to the provisions of chapter 51 and subchapter
III of chapter 53 of such title (relating to classification
and General Schedule pay rates).
(4) Experts and consultants.--With the approval of the
Commission, the executive director may procure temporary and
intermittent services under section 3109(b) of title 5,
United States Code.
(5) Physical facilities.--The Administrator of the General
Services Administration shall locate suitable office space
for the operation of the Commission. The facilities shall
serve as the headquarters of the Commission and shall include
all necessary equipment and incidentals required for the
proper functioning of the Commission.
(e) Powers of Commission.--
(1) Hearings and other activities.--For the purpose of
carrying out its duties, the Commission may hold such
hearings and undertake such other activities as the
Commission determines to be necessary to carry out its
duties.
(2) Studies by gao.--Upon the request of the Commission,
the Comptroller General shall conduct such studies or
investigations as the Commission determines to be necessary
to carry out its duties.
(3) Cost estimates by congressional budget office and
office of the chief actuary of hcfa.--
(A) The Director of the Congressional Budget Office or the
Chief Actuary of the Centers for Medicare & Medicaid
Services, or both, shall provide to the Commission, upon the
request of the Commission, such cost estimates as the
Commission determines to be necessary to carry out its
duties.
(B) The Commission shall reimburse the Director of the
Congressional Budget Office for expenses relating to the
employment in the office of the Director of such additional
staff as may be necessary for the Director to comply with
requests by the Commission under subparagraph (A).
(4) Detail of federal employees.--Upon the request of the
Commission, the head of any Federal agency is authorized to
detail, without reimbursement, any of the personnel of such
agency to the Commission to assist the Commission in carrying
out its duties. Any such detail shall not interrupt or
otherwise affect the civil service status or privileges of
the Federal employee.
(5) Technical assistance.--Upon the request of the
Commission, the head of a Federal agency shall provide such
technical assistance to the Commission as the Commission
determines to be necessary to carry out its duties.
(6) Use of mails.--The Commission may use the United States
mails in the same manner and under the same conditions as
Federal agencies and shall, for purposes of the frank, be
considered a commission of Congress as described in section
3215 of title 39, United States Code.
[[Page H4223]]
(7) Obtaining information.--The Commission may secure
directly from any Federal agency information necessary to
enable it to carry out its duties, if the information may be
disclosed under section 552 of title 5, United States Code.
Upon request of the Chairman of the Commission, the head of
such agency shall furnish such information to the Commission.
(8) Administrative support services.--Upon the request of
the Commission, the Administrator of General Services shall
provide to the Commission on a reimbursable basis such
administrative support services as the Commission may
request.
(9) Printing.--For purposes of costs relating to printing
and binding, including the cost of personnel detailed from
the Government Printing Office, the Commission shall be
deemed to be a committee of the Congress.
(f) Report.--Not later than March 1, 2004, the Commission
shall submit a report to the President and Congress which
shall contain a detailed statement of only those
recommendations, findings, and conclusions of the Commission.
(g) Termination.--The Commission shall terminate 30 days
after the date of submission of the report required in
subsection (f).
(h) Authorization of Appropriations.--There are authorized
to be appropriated $1,500,000 to carry out this section.
SEC. 902. GAO STUDY ON MEDICAID DRUG PAYMENT SYSTEM.
(a) Study.--The Comptroller General of the United States
shall conduct a study on the reimbursement under the medicaid
program for covered outpatient drugs. Such study shall
examine--
(1) the extent to which such reimbursements for a drug
exceed the acquisition costs for that drug;
(2) the services and resources associated with dispensing a
prescription and any additional payments available to
compensate for expenses for these services and resources; and
(3) efforts undertaken by States to change the levels of
such reimbursement and the price data they use in effecting
such change.
(b) Report.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under subsection
(a) and shall include in such report such recommendations for
changes for legislative or administrative action regarding
medicaid reimbursement methodologies for outpatient
prescription drugs, and their application to the medicare
program, as the Comptroller General deems appropriate.
Subtitle B--Internet Pharmacies
SEC. 911. FINDINGS.
The Congress finds as follows:
(1) Legitimate Internet sellers of prescription drugs can
offer substantial benefits to consumers. These potential
benefits include convenience, privacy, valuable information,
competitive prices, and personalized services.
(2) Unlawful Internet sellers of prescription drugs may
dispense inappropriate, contaminated, counterfeit, or
subpotent prescription drugs that could put at risk the
health and safety of consumers.
(3) Unlawful Internet sellers have exposed consumers to
significant health risks by knowingly filling invalid
prescriptions, such as prescriptions based solely on an
online questionnaire, or by dispensing prescription drugs
without any prescription.
(4) Consumers may have difficulty distinguishing legitimate
from unlawful Internet sellers, as well as foreign from
domestic Internet sellers, of prescription drugs.
SEC. 912. AMENDMENT TO FEDERAL FOOD, DRUG, AND COSMETIC ACT.
(a) In General.--Chapter V of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 351 et seq.) is amended by inserting
after section 503A the following:
``SEC. 503B. INTERNET PRESCRIPTION DRUG SALES.
``(a) Definitions.--For purposes of this section:
``(1) Consumer.--The term `consumer' means a person (other
than an entity licensed or otherwise authorized under Federal
or State law as a pharmacy or to dispense or distribute
prescription drugs) that purchases or seeks to purchase
prescription drugs through the Internet.
``(2) Home page.--The term `home page' means the entry
point or main web page for an Internet site.
``(3) Internet.--The term `Internet' means collectively the
myriad of computer and telecommunications facilities,
including equipment and operating software, which comprise
the interconnected worldwide network of networks that employ
the Transmission Control Protocol/Internet Protocol, or any
predecessor or successor protocols to such protocol, to
communicate information of all kinds by wire or radio,
including electronic mail.
``(4) Interstate internet seller.--
``(A) In general.--The term `interstate Internet seller'
means a person whether in the United States or abroad, that
engages in, offers to engage in, or causes the delivery or
sale of a prescription drug through the Internet and has such
drug delivered directly to the consumer via the Postal
Service, or any private or commercial interstate carrier to a
consumer in the United States who is residing in a State
other than the State in which the seller's place of business
is located. This definition excludes a person who only
delivers a prescription drug to a consumer, such as an
interstate carrier service.
``(B) Exemption.--With respect to the consumer involved,
the term `interstate Internet seller' does not include a
person described in subparagraph (A) whose place of business
is located within 75 miles of the consumer.
``(5) Link.--The term `link' means either a textual or
graphical marker on a web page that, when clicked on, takes
the consumer to another part of the Internet, such as to
another web page or a different area on the same web page, or
from an electronic message to a web page.
``(6) Pharmacy.--The term `pharmacy' means any place
licensed or otherwise authorized as a pharmacy under State
law.
``(7) Prescriber.--The term `prescriber' means an
individual, licensed or otherwise authorized under applicable
Federal and State law to issue prescriptions for prescription
drugs.
``(8) Prescription drug.--The term `prescription drug'
means a drug under section 503(b)(1).
``(9) Valid prescription.--The term `valid prescription'
means a prescription that meets the requirements of section
503(b)(1) and other applicable Federal and State law.
``(10) Web site; site.--The terms `web site' and `site'
mean a specific location on the Internet that is determined
by Internet protocol numbers or by a domain name.
``(b) Requirements for Interstate Internet Sellers.--
``(1) In general.--Each interstate Internet seller shall
comply with the requirements of this subsection with respect
to the sale of, or the offer to sell, prescription drugs
through the Internet and shall at all times display on its
web site information in accordance with paragraph (2).
``(2) Web site disclosure information.--An interstate
Internet seller shall post in a visible and clear manner (as
determined by regulation) on the home page of its web site,
or on a page directly linked to such home page--
``(A) the street address of the interstate Internet
seller's place of business, and the telephone number of such
place of business;
``(B) each State in which the interstate Internet seller is
licensed or otherwise authorized as a pharmacy, or if the
interstate Internet seller is not licensed or otherwise
authorized by a State as a pharmacy, each State in which the
interstate Internet seller is licensed or otherwise
authorized to dispense prescription drugs, and the type of
State license or authorization;
``(C) in the case of an interstate Internet seller that
makes referrals to or solicits on behalf of a prescriber, the
name of each prescriber, the street address of each such
prescriber's place of business, the telephone number of such
place of business, each State in which each such prescriber
is licensed or otherwise authorized to prescribe prescription
drugs, and the type of such license or authorization; and
``(D) a statement that the interstate Internet seller will
dispense prescription drugs only upon a valid prescription.
``(3) Date of posting.--Information required to be posted
under paragraph (2) shall be posted by an interstate Internet
seller--
``(A) not later than 90 days after the effective date of
this section if the web site of such seller is in operation
as of such date; or
``(B) on the date of the first day of operation of such
seller's web site if such site goes into operation after such
date.
``(4) Qualifying statements.--An interstate Internet seller
shall not indicate in any manner that posting disclosure
information on its web site signifies that the Federal
Government has made any determination on the legitimacy of
the interstate Internet seller or its business.
``(5) Disclosure to state licensing boards.--An interstate
Internet seller licensed or otherwise authorized to dispense
prescription drugs in accordance with applicable State law
shall notify each State entity that granted such licensure or
authorization that it is an interstate Internet seller, the
name of its business, the Internet address of its business,
the street address of its place of business, and the
telephone number of such place of business.
``(6) Regulations.--The Secretary is authorized to
promulgate such regulations as are necessary to carry out the
provisions of this subsection. In issuing such regulations,
the Secretary--
``(A) shall take into consideration disclosure formats used
by existing interstate Internet seller certification
programs; and
``(B) shall in defining the term `place of business'
include provisions providing that such place is a single
location at which employees of the business perform job
functions, and not a post office box or similar locale.''.
(b) Prohibited Acts.--Section 301 of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 331) is amended by adding
at the end the following:
``(bb) The failure to post information required under
section 503B(b)(2) or for knowingly making a materially false
statement when posting such information as required under
such section or violating section 503B(b)(4).''.
SEC. 913. PUBLIC EDUCATION.
The Secretary of Health and Human Services shall engage in
activities to educate the public about the dangers of
purchasing prescription drugs from unlawful Internet
[[Page H4224]]
sources. The Secretary should educate the public about
effective public and private sector consumer protection
efforts, as appropriate, with input from the public and
private sectors, as appropriate.
SEC. 914. STUDY REGARDING COORDINATION OF REGULATORY
ACTIVITIES.
Not later than 180 days after the date of enactment of this
Act, the Secretary of Health and Human Services, after
consultation with the Attorney General, shall submit to
Congress a report providing recommendations for coordinating
the activities of Federal agencies regarding interstate
Internet sellers that operate from foreign countries and for
coordinating the activities of the Federal Government with
the activities of governments of foreign countries regarding
such interstate Internet sellers.
SEC. 915. EFFECTIVE DATE.
The amendments made by this subtitle shall take effect 1
year after the date of enactment of this Act, except that the
authority of the Secretary of Health and Human Services to
commence the process of rulemaking is effective on the date
of enactment of this Act.
Subtitle C--Promotion of Electronic Prescription
SEC. 921. PROGRAM OF GRANTS TO HEALTH CARE PROVIDERS TO
IMPLEMENT ELECTRONIC PRESCRIPTION DRUG
PROGRAMS.
Part P of title III of the Public Health Service Act is
amended by inserting after section 399N the following new
section:
``SEC. 399O. GRANTS TO HEALTH CARE PROVIDERS TO IMPLEMENT
ELECTRONIC PRESCRIPTION DRUG PROGRAMS
``(a) In General.--The Secretary is authorized to make
grants for the purpose of assisting health care providers who
prescribe drugs and biologicals in implementing electronic
prescription programs described in section 1860C(d)(3) of the
Social Security Act.
``(b) Application.--No grant may be made under this section
except pursuant to a grant application that is submitted in a
time, manner, and form approved by the Secretary.
``(c) Authorization of Appropriations.--There are
authorized to be appropriated for fiscal year 2004, such sums
as may be appropriate to carry out this section.''.
Subtitle D--Treatment of Rare Diseases
SEC. 931. NIH OFFICE OF RARE DISEASES AT NATIONAL INSTITUTES
OF HEALTH.
Title IV of the Public Health Service Act (42 U.S.C. 281 et
seq.), as amended by Public Law 107-84, is amended by
inserting after section 404E the following:
``office of rare diseases
``Sec. 404F. (a) Establishment.--There is established
within the Office of the Director of NIH an office to be
known as the Office of Rare Diseases (in this section
referred to as the `Office'), which shall be headed by a
Director (in this section referred to as the `Director'),
appointed by the Director of NIH.
``(b) Duties.--
``(1) In general.--The Director of the Office shall carry
out the following:
``(A) The Director shall recommend an agenda for conducting
and supporting research on rare diseases through the national
research institutes and centers. The agenda shall provide for
a broad range of research and education activities, including
scientific workshops and symposia to identify research
opportunities for rare diseases.
``(B) The Director shall, with respect to rare diseases,
promote coordination and cooperation among the national
research institutes and centers and entities whose research
is supported by such institutes.
``(C) The Director, in collaboration with the directors of
the other relevant institutes and centers of the National
Institutes of Health, may enter into cooperative agreements
with and make grants for regional centers of excellence on
rare diseases in accordance with section 404G.
``(D) The Director shall promote the sufficient allocation
of the resources of the National Institutes of Health for
conducting and supporting research on rare diseases.
``(E) The Director shall promote and encourage the
establishment of a centralized clearinghouse for rare and
genetic disease information that will provide understandable
information about these diseases to the public, medical
professionals, patients and families.
``(F) The Director shall biennially prepare a report that
describes the research and education activities on rare
diseases being conducted or supported through the national
research institutes and centers, and that identifies
particular projects or types of projects that should in the
future be conducted or supported by the national research
institutes and centers or other entities in the field of
research on rare diseases.
``(G) The Director shall prepare the NIH Director's annual
report to Congress on rare disease research conducted by or
supported through the national research institutes and
centers.
``(2) Principal advisor regarding orphan diseases.--With
respect to rare diseases, the Director shall serve as the
principal advisor to the Director of NIH and shall provide
advice to other relevant agencies. The Director shall provide
liaison with national and international patient, health and
scientific organizations concerned with rare diseases.
``(c) Definition.--For purposes of this section, the term
`rare disease' means any disease or condition that affects
less than 200,000 persons in the United States.
``(d) Authorization of Appropriations.--For the purpose of
carrying out this section, there are authorized to be
appropriated such sums as already have been appropriated for
fiscal year 2002, and $4,000,000 for each of the fiscal years
2003 through 2006.''.
SEC. 932. RARE DISEASE REGIONAL CENTERS OF EXCELLENCE.
Title IV of the Public Health Service Act (42 U.S.C. 281 et
seq.), as amended by section 1021, is further amended by
inserting after section 404F the following:
``rare disease regional centers of excellence
``Sec. 404G. (a) Cooperative Agreements and Grants.--
``(1) In general.--The Director of the Office of Rare
Diseases (in this section referred to as the `Director'), in
collaboration with the directors of the other relevant
institutes and centers of the National Institutes of Health,
may enter into cooperative agreements with and make grants to
public or private nonprofit entities to pay all or part of
the cost of planning, establishing, or strengthening, and
providing basic operating support for regional centers of
excellence for clinical research into, training in, and
demonstration of diagnostic, prevention, control, and
treatment methods for rare diseases.
``(2) Policies.--A cooperative agreement or grant under
paragraph (1) shall be entered into in accordance with
policies established by the Director of NIH.
``(b) Coordination With Other Institutes.--The Director
shall coordinate the activities under this section with
similar activities conducted by other national research
institutes, centers and agencies of the National Institutes
of Health and by the Food and Drug Administration to the
extent that such institutes, centers and agencies have
responsibilities that are related to rare diseases.
``(c) Uses for Federal Payments Under Cooperative
Agreements or Grants.--Federal payments made under a
cooperative agreement or grant under subsection (a) may be
used for--
``(1) staffing, administrative, and other basic operating
costs, including such patient care costs as are required for
research;
``(2) clinical training, including training for allied
health professionals, continuing education for health
professionals and allied health professions personnel, and
information programs for the public with respect to rare
diseases; and
``(3) clinical research and demonstration programs.
``(d) Period of Support; Additional Periods.--Support of a
center under subsection (a) may be for a period of not to
exceed 5 years. Such period may be extended by the Director
for additional periods of not more than 5 years if the
operations of such center have been reviewed by an
appropriate technical and scientific peer review group
established by the Director and if such group has recommended
to the Director that such period should be extended.
``(e) Authorization of Appropriations.--For the purpose of
carrying out this section, there are authorized to be
appropriated such sums as already have been appropriated for
fiscal year 2002, and $20,000,000 for each of the fiscal
years 2003 through 2006.''.
Subtitle E--Other Provisions Relating to Drugs
SEC. 941. GAO STUDY REGARDING DIRECT-TO-CONSUMER ADVERTISING
OF PRESCRIPTION DRUGS.
(a) In General.--The Comptroller General of the United
States shall conduct a study for the purpose of determining--
(1) whether and to what extent there have been increases in
utilization rates of prescription drugs that are attributable
to guidance regarding direct-to-consumer advertising of such
drugs that has been issued by the Food and Drug
Administration under section 502(n) of the Federal Food,
Drug, and Cosmetic Act; and
(2) if so, whether and to what extent such increased
utilization rates have resulted in increases in the costs of
public or private health plans, health insurance, or other
health programs.
(b) Certain Determinations.--The study under subsection (a)
shall include determinations of the following:
(1) The extent to which advertisements referred to in such
subsection have resulted in effective consumer education
about the prescription drugs involved, including an
understanding of the risks of the drugs relative to the
benefits.
(2) The extent of consumer satisfaction with such
advertisements.
(3) The extent of physician satisfaction with the
advertisements, including determining whether physicians
believe that the advertisements interfere with the exercise
of their medical judgment by influencing consumers to prefer
advertised drugs over alternative therapies.
(4) The extent to which the advertisements have resulted in
increases in health care costs for taxpayers, for employers,
or for consumers due to consumer decisions to seek advertised
drugs rather than lower-costs alternative therapies.
(5) The extent to which the advertisements have resulted in
decreases in health care costs for taxpayers, for employers,
or for consumers due to decreased hospitalization rates,
fewer physician visits (not related to hospitalization),
lower treatment costs, or reduced instances of employee
absences to
[[Page H4225]]
care for family members with diseases or disorders.
(c) Report.--Not later than two years after the date of the
enactment of this Act, the Comptroller General of the United
States shall submit to the Congress a report providing the
findings of the study under subsection (a).
SEC. 942. CERTAIN HEALTH PROFESSIONS PROGRAMS REGARDING
PRACTICE OF PHARMACY.
Part E of title VII of the Public Health Service Act (42
U.S.C. 294n et seq.) is amended by adding at the end the
following subpart:
``Subpart 3--Pharmacist Workforce Programs
``SEC. 771. PUBLIC SERVICE ANNOUNCEMENTS.
``(a) Public Service Announcements.--
``(1) In general.--The Secretary shall develop and issue
public service announcements that advertise and promote the
pharmacist profession, highlight the advantages and rewards
of being a pharmacist, and encourage individuals to enter the
pharmacist profession.
``(2) Method.--The public service announcements described
in subsection (a) shall be broadcast through appropriate
media outlets, including television or radio, in a manner
intended to reach as wide and diverse an audience as
possible.
``(b) State and Local Public Service Announcements.--
``(1) In general.--The Secretary shall award grants to
entities to support State and local advertising campaigns
through appropriate media outlets to promote the pharmacist
profession, highlight the advantages and rewards of being a
pharmacist, and encourage individuals to enter the pharmacist
profession.
``(2) Use of funds.--An entity that receives a grant under
subsection (a) shall use funds received through such grant to
acquire local television and radio time, place advertisements
in local newspapers, and post information on billboards or on
the Internet, in order to--
``(A) advertise and promote the pharmacist profession;
``(B) promote pharmacist education programs;
``(C) inform the public of public assistance regarding such
education programs;
``(D) highlight individuals in the community that are
presently practicing as pharmacists to recruit new
pharmacists; and
``(E) provide any other information to recruit individuals
for the pharmacist profession.
``(3) Method.--The campaigns described in subsection (a)
shall be broadcast on television or radio, placed in
newspapers as advertisements, or posted on billboards or the
Internet, in a manner intended to reach as wide and diverse
an audience as possible.
``SEC. 772. DEMONSTRATION PROJECT.
``(a) In General.--The Secretary shall establish a
demonstration project to enhance the participation of
individuals who are pharmacists in the National Health
Service Corps Loan Repayment Program described in section
338B.
``(b) Services.--Services that may be provided by
pharmacists pursuant to the demonstration project established
under this section include medication therapy management
services to assure that medications are used appropriately by
patients, to enhance patients' understanding of the
appropriate use of medications, to increase patients'
adherence to prescription medication regimens, to reduce the
risk of adverse events associated with medications, and to
reduce the need for other costly medical services through
better management of medication therapy. Such services may
include case management, disease management, drug therapy
management, patient training and education, counseling, drug
therapy problem resolution, medication administration, the
provision of special packaging, or other services that
enhance the use of prescription medications.
``(c) Procedure.--The Secretary may not provide assistance
to an individual under this section unless the individual
agrees to comply with all requirements described in sections
338B and 338D.
``(d) Limitations.--The demonstration project described in
this section shall provide for the participation of--
``(1) individuals to provide services in rural and urban
areas; and
``(2) enough individuals to allow the Secretary to properly
analyze the effectiveness of such project.
``(e) Designations.--The demonstration project described in
this section, and any pharmacists who are selected to
participate in such project, shall not be considered by the
Secretary in the designation of a health professional
shortage area under section 332 during fiscal years 2003
through 2005.
``(f) Rule of Construction.--This section shall not be
construed to require any State to participate in the project
described in this section.
``(g) Report.--The Secretary shall prepare and submit a
report on the project to--
``(A) the Committee on Health, Education, Labor, and
Pensions of the Senate;
``(B) the Subcommittee on Labor, Health and Human Services,
and Education of the Committee on Appropriations of the
Senate;
``(C) the Committee on Energy and Commerce of the House of
Representatives; and
``(D) the Subcommittee on Labor, Health and Human Services,
and Education of the Committee on Appropriations of the House
of Representatives.
``SEC. 773. INFORMATION TECHNOLOGY.
``(a) Grants and Contracts.--The Secretary may make awards
of grants or contracts to qualifying schools of pharmacy for
the purpose of assisting such schools in acquiring and
installing computer-based systems to provide pharmaceutical
education. Education provided through such systems may be
graduate education, professional education, or continuing
education. The computer-based systems may be designed to
provide on-site education, or education at remote sites
(commonly referred to as distance learning), or both.
``(b) Qualifying School of Pharmacy.--For purposes of this
section, the term `qualifying school of pharmacy' means a
school of pharmacy (as defined in section 799B) that requires
students to serve in a clinical rotation in which pharmacist
services are part of the curriculum.
``SEC. 774. AUTHORIZATION OF APPROPRIATIONS.
``For the purpose of carrying out this subpart, there are
authorized to be appropriated such sums as may be necessary
for each of the fiscal years 2003 through 2006.''.
TITLE X--HEALTH-CARE RELATED TAX PROVISIONS
SEC. 1001. ELIGIBILITY FOR ARCHER MSA'S EXTENDED TO ACCOUNT
HOLDERS OF MEDICARE+CHOICE MSA'S.
(a) In General.--Subparagraph (B) of section 220(c)(2) of
the Internal Revenue Code of 1986 is amended by adding at the
end the following new clause:
``(iii) Medicare+choice msa's.--In the case of an
individual who is covered under an MSA plan (as defined in
section 1859(b)(3) of the Social Security Act) which such
individual elected under section 1851(a)(2)(B) of such Act--
``(I) such plan shall be treated as a high deductible
health plan for purposes of this section,
``(II) subsection (b)(2)(A) shall be applied by
substituting `100 percent' for `65 percent' with respect to
such individual,
``(III) with respect to such individual, the limitation
under subsection (d)(1)(A)(ii) shall be 100 percent of the
highest annual deductible limitation under section
1859(b)(3)(B) of the Social Security Act,
``(IV) paragraphs (4), (5), and (7) of subsection (b) and
paragraph (1)(A)(iii) of this subsection shall not apply with
respect to such individual, and
``(V) the limitation which would (but for this subclause)
apply under subsection (b)(1) with respect to such individual
for any taxable year shall be reduced (but not below zero) by
the amount which would (but for subsection 106(b)) be
includible in such individual's gross income for the taxable
year.''.
(b) Accounts not Counted Against Numerical Limits.--
(1) In general.--Paragraph (3) of section 220(j) of such
Code is amended--
(A) in the heading, by striking ``Previously uninsured''
and inserting ``Certain'',
(B) in subparagraph (A), by striking ``by not counting the
Archer MSA of any previously uninsured individual.'' and
inserting ``by not counting--
``(i) the Archer MSA of any previously uninsured
individual, and
``(ii) the Archer MSA of any eligible individual who
qualifies as such an individual by reason of subsection
(c)(2)(B)(iii).''.
(2) Reporting requirement.--Subparagraph (A) of section
220(j)(4) of such Code is amended in clause (ii) by striking
``and'' at the end, in clause (iii) by striking the period
and inserting ``, and'', and by adding at the end the
following new clause:
``(iv) the number of such accounts which are accounts of
eligible individuals who qualify as such individuals by
reason of subsection (c)(2)(B)(iii).''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2002.
SEC. 1002. ADJUSTMENT OF EMPLOYER CONTRIBUTIONS TO COMBINED
BENEFIT FUND TO REFLECT MEDICARE PRESCRIPTION
DRUG SUBSIDY PAYMENTS.
Section 9704(b) of the Internal Revenue Code of 1986
(relating to health benefit premium) is amended by adding at
the end the following new paragraph:
``(4) Adjustments for medicare prescription drug
subsidies.--The trustees of the Combined Fund shall decrease
the per beneficiary premium for each plan year in which a
subsidy payment is provided to it under section 1860H of the
Social Security Act by the amount which would place the
Combined Fund in the same financial position as if such
subsidy payment had not been received.''.
SEC. 1003. EXPANSION OF HUMAN CLINICAL TRIALS QUALIFYING FOR
ORPHAN DRUG CREDIT.
(a) In General.--Paragraph (2) of section 45C(b) of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new subparagraph:
``(C) Treatment of certain expenses incurred before
designation.--For purposes of subparagraph (A)(ii)(I), if a
drug is designated under section 526 of the Federal Food,
Drug, and Cosmetic Act not later than the due date (including
extensions) for filing the return of tax under this subtitle
for the taxable year in which the application for such
designation of such drug was filed, such drug shall be
treated as having been designated on the date that such
application was filed.''.
[[Page H4226]]
(b) Effective Date.--The amendment made by subsection (a)
shall apply to expenses incurred after the date of the
enactment of this Act.
The SPEAKER pro tempore. In lieu of the amendment recommended by the
Committee on Ways and Means, the amendment in the nature of a
substitute printed in House Report 107-553 is adopted.
The text of the amendment in the nature of a substitute printed in
House Report 107-553 is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT;
REFERENCES TO BIPA AND SECRETARY; TABLE OF
CONTENTS.
(a) Short Title.--This Act may be cited as the ``Medicare
Modernization and Prescription Drug Act of 2002''.
(b) Amendments to Social Security Act.--Except as otherwise
specifically provided, whenever in this Act an amendment 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 that section or other provision of the Social
Security Act.
(c) BIPA; Secretary.--In this Act:
(1) BIPA.--The term ``BIPA'' means the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2000, as
enacted into law by section 1(a)(6) of Public Law 106-554.
(2) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(d) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; amendments to Social Security Act; references to
BIPA and Secretary; table of contents.
TITLE I--MEDICARE PRESCRIPTION DRUG BENEFIT
Sec. 101. Establishment of a medicare prescription drug benefit.
``Part D--Voluntary Prescription Drug Benefit Program
``Sec. 1860A. Benefits; eligibility; enrollment; and coverage period.
``Sec. 1860B. Requirements for qualified prescription drug coverage.
``Sec. 1860C. Beneficiary protections for qualified prescription drug
coverage.
``Sec. 1860D. Requirements for prescription drug plan (PDP) sponsors;
contracts; establishment of standards.
``Sec. 1860E. Process for beneficiaries to select qualified
prescription drug coverage.
``Sec. 1860F. Submission of bids and premiums.
``Sec. 1860G. Premium and cost-sharing subsidies for low-income
individuals.
``Sec. 1860H. Subsidies for all medicare beneficiaries for qualified
prescription drug coverage.
``Sec. 1860I. Medicare Prescription Drug Trust Fund.
``Sec. 1860J. Definitions; treatment of references to provisions in
part C.
Sec. 102. Offering of qualified prescription drug coverage under the
Medicare+Choice program.
Sec. 103. Medicaid amendments.
Sec. 104. Medigap transition.
Sec. 105. Medicare prescription drug discount card endorsement program.
Sec. 106. GAO study of the effectiveness of the new prescription drug
program.
TITLE II--MEDICARE+CHOICE REVITALIZATION AND MEDICARE+CHOICE
COMPETITION PROGRAM
Subtitle A--Medicare+Choice Revitalization
Sec. 201. Medicare+Choice improvements.
Sec. 202. Making permanent change in Medicare+Choice reporting
deadlines and annual, coordinated election period.
Sec. 203. Avoiding duplicative State regulation.
Sec. 204. Specialized Medicare+Choice plans for special needs
beneficiaries.
Sec. 205. Medicare MSAs.
Sec. 206. Extension of reasonable cost and SHMO contracts.
Subtitle B--Medicare+Choice Competition Program
Sec. 211. Medicare+Choice competition program.
Sec. 212. Demonstration program for competitive-demonstration areas.
Sec. 213. Conforming amendments.
TITLE III--RURAL HEALTH CARE IMPROVEMENTS
Sec. 301. Reference to full market basket increase for sole community
hospitals.
Sec. 302. Enhanced disproportionate share hospital (DSH) treatment for
rural hospitals and urban hospitals with fewer than 100
beds.
Sec. 303. 2-year phased-in increase in the standardized amount in rural
and small urban areas to achieve a single, uniform
standardized amount.
Sec. 304. More frequent update in weights used in hospital market
basket.
Sec. 305. Improvements to critical access hospital program.
Sec. 306. Extension of temporary increase for home health services
furnished in a rural area.
Sec. 307. Reference to 10 percent increase in payment for hospice care
furnished in a frontier area and rural hospice
demonstration project.
Sec. 308. Reference to priority for hospitals located in rural or small
urban areas in redistribution of unused graduate medical
education residencies.
Sec. 309. GAO study of geographic differences in payments for
physicians' services.
Sec. 310. Providing safe harbor for certain collaborative efforts that
benefit medically underserved populations.
Sec. 311. Relief for certain non-teaching hospitals.
TITLE IV--PROVISIONS RELATING TO PART A
Subtitle A--Inpatient Hospital Services
Sec. 401. Revision of acute care hospital payment updates.
Sec. 402. 2-year increase in level of adjustment for indirect costs of
medical education (IME).
Sec. 403. Recognition of new medical technologies under inpatient
hospital PPS.
Sec. 404. Phase-in of Federal rate for hospitals in Puerto Rico.
Sec. 405. Reference to provision relating to enhanced disproportionate
share hospital (DSH) payments for rural hospitals and
urban hospitals with fewer than 100 beds.
Sec. 406. Reference to provision relating to 2-year phased-in increase
in the standardized amount in rural and small urban areas
to achieve a single, uniform standardized amount.
Sec. 407. Reference to provision for more frequent updates in the
weights used in hospital market basket.
Sec. 408. Reference to provision making improvements to critical access
hospital program.
Sec. 409. GAO study on improving the hospital wage index.
Subtitle B--Skilled Nursing Facility Services
Sec. 411. Payment for covered skilled nursing facility services.
Subtitle C--Hospice
Sec. 421. Coverage of hospice consultation services.
Sec. 422. 10 percent increase in payment for hospice care furnished in
a frontier area.
Sec. 423. Rural hospice demonstration project.
Subtitle D--Other Provisions
Sec. 431. Demonstration project for use of recovery audit contractors
for part A services.
TITLE V--PROVISIONS RELATING TO PART B
Subtitle A--Physicians' Services
Sec. 501. Revision of updates for physicians' services.
Sec. 502. Studies on access to physicians' services.
Sec. 503. MedPAC report on payment for physicians' services.
Sec. 504. 1-year extension of treatment of certain physician pathology
services under medicare.
Sec. 505. Physician fee schedule wage index revision.
Subtitle B--Other Services
Sec. 511. Competitive acquisition of certain items and services.
Sec. 512. Payment for ambulance services.
Sec. 513. 2-year extension of moratorium on therapy caps; provisions
relating to reports.
Sec. 514. Coverage of an initial preventive physical examination.
Sec. 515. Renal dialysis services.
Sec. 516. Improved payment for certain mammography services.
Sec. 517. Waiver of part B late enrollment penalty for certain military
retirees; special enrollment period.
Sec. 518. Coverage of cholesterol and blood lipid screening.
TITLE VI--PROVISIONS RELATING TO PARTS A AND B
Subtitle A--Home Health Services
Sec. 601. Elimination of 15 percent reduction in payment rates under
the prospective payment system.
Sec. 602. Update in home health services.
Sec. 603. OASIS Task Force; suspension of certain OASIS data collection
requirements pending Task Force submittal of report.
Sec. 604. MedPAC study on medicare margins of home health agencies.
Sec. 605. Clarification of treatment of occasional absences in
determining whether an individual is confined to the
home.
Subtitle B--Direct Graduate Medical Education
Sec. 611. Extension of update limitation on high cost programs.
Sec. 612. Redistribution of unused resident positions.
[[Page H4227]]
Subtitle C--Other Provisions
Sec. 621. Modifications to Medicare Payment Advisory Commission
(MedPAC).
Sec. 622. Demonstration project for disease management for certain
medicare beneficiaries with diabetes.
Sec. 623. Demonstration project for medical adult day care services.
Sec. 624. Publication on final written guidance concerning prohibitions
against discrimination by national origin with respect to
health care services.
TITLE VII--MEDICARE BENEFITS ADMINISTRATION
Sec. 701. Establishment of Medicare Benefits Administration.
TITLE VIII--REGULATORY REDUCTION AND CONTRACTING REFORM
Subtitle A--Regulatory Reform
Sec. 801. Construction; definition of supplier.
Sec. 802. Issuance of regulations.
Sec. 803. Compliance with changes in regulations and policies.
Sec. 804. Reports and studies relating to regulatory reform.
Subtitle B--Contracting Reform
Sec. 811. Increased flexibility in medicare administration.
Sec. 812. Requirements for information security for medicare
administrative contractors.
Subtitle C--Education and Outreach
Sec. 821. Provider education and technical assistance.
Sec. 822. Small provider technical assistance demonstration program.
Sec. 823. Medicare provider ombudsman; medicare beneficiary ombudsman.
Sec. 824. Beneficiary outreach demonstration program.
Subtitle D--Appeals and Recovery
Sec. 831. Transfer of responsibility for medicare appeals.
Sec. 832. Process for expedited access to review.
Sec. 833. Revisions to medicare appeals process.
Sec. 834. Prepayment review.
Sec. 835. Recovery of overpayments.
Sec. 836. Provider enrollment process; right of appeal.
Sec. 837. Process for correction of minor errors and omissions on
claims without pursuing appeals process.
Sec. 838. Prior determination process for certain items and services;
advance beneficiary notices.
Subtitle E--Miscellaneous Provisions
Sec. 841. Policy development regarding evaluation and management (E &
M) documentation guidelines.
Sec. 842. Improvement in oversight of technology and coverage.
Sec. 843. Treatment of hospitals for certain services under medicare
secondary payor (MSP) provisions.
Sec. 844. EMTALA improvements.
Sec. 845. Emergency Medical Treatment and Labor Act (EMTALA) Technical
Advisory Group.
Sec. 846. Authorizing use of arrangements with other hospice programs
to provide core hospice services in certain
circumstances.
Sec. 847. Application of OSHA bloodborne pathogens standard to certain
hospitals.
Sec. 848. BIPA-related technical amendments and corrections.
Sec. 849. Conforming authority to waive a program exclusion.
Sec. 850. Treatment of certain dental claims.
Sec. 851. Annual publication of list of national coverage
determinations.
TITLE IX--MEDICAID PROVISIONS
Sec. 901. National Bipartisan Commission on the Future of Medicaid.
Sec. 902. Disproportionate share hospital (DSH) payments.
Sec. 903. Medicaid pharmacy assistance program.
TITLE I--MEDICARE PRESCRIPTION DRUG BENEFIT
SEC. 101. ESTABLISHMENT OF A 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--Voluntary Prescription Drug Benefit Program
``SEC. 1860A. BENEFITS; ELIGIBILITY; ENROLLMENT; AND COVERAGE
PERIOD.
``(a) Provision of Qualified Prescription Drug Coverage
Through Enrollment in Plans.--Subject to the succeeding
provisions of this part, each individual who is entitled to
benefits under part A or is enrolled under part B is entitled
to obtain qualified prescription drug coverage (described in
section 1860B(a)) as follows:
``(1) Medicare+choice plan.--If the individual is eligible
to enroll in a Medicare+Choice plan that provides qualified
prescription drug coverage under section 1851(j), the
individual may enroll in the plan and obtain coverage through
such plan.
``(2) Prescription drug plan.--If the individual is not
enrolled in a Medicare+Choice plan that provides qualified
prescription drug coverage, the individual may enroll under
this part in a prescription drug plan (as defined in section
1860J(a)(5)).
Such individuals shall have a choice of such plans under
section 1860E(d).
``(b) General Election Procedures.--
``(1) In general.--An individual eligible to make an
election under subsection (a) may elect to enroll in a
prescription drug plan under this part, or elect the option
of qualified prescription drug coverage under a
Medicare+Choice plan under part C, and to change such
election only in such manner and form as may be prescribed by
regulations of the Administrator of the Medicare Benefits
Administration (appointed under section 1808(b)) (in this
part referred to as the `Medicare Benefits Administrator')
and only during an election period prescribed in or under
this subsection.
``(2) Election periods.--
``(A) In general.--Except as provided in this paragraph,
the election periods under this subsection shall be the same
as the coverage election periods under the Medicare+Choice
program under section 1851(e), including--
``(i) annual coordinated election periods; and
``(ii) special election periods.
In applying the last sentence of section 1851(e)(4) (relating
to discontinuance of a Medicare+Choice election during the
first year of eligibility) under this subparagraph, in the
case of an election described in such section in which the
individual had elected or is provided qualified prescription
drug coverage at the time of such first enrollment, the
individual shall be permitted to enroll in a prescription
drug plan under this part at the time of the election of
coverage under the original fee-for-service plan.
``(B) Initial election periods.--
``(i) Individuals currently covered.--In the case of an
individual who is entitled to benefits under part A or
enrolled under part B as of November 1, 2004, there shall be
an initial election period of 6 months beginning on that
date.
``(ii) Individual covered in future.--In the case of an
individual who is first entitled to benefits under part A or
enrolled under part B after such date, there shall be an
initial election period which is the same as the initial
enrollment period under section 1837(d).
``(C) Additional special election periods.--The
Administrator shall establish special election periods--
``(i) in cases of individuals who have and involuntarily
lose prescription drug coverage described in subsection
(c)(2)(C);
``(ii) in cases described in section 1837(h) (relating to
errors in enrollment), in the same manner as such section
applies to part B;
``(iii) in the case of an individual who meets such
exceptional conditions (including conditions provided under
section 1851(e)(4)(D)) as the Administrator may provide; and
``(iv) in cases of individuals (as determined by the
Administrator) who become eligible for prescription drug
assistance under title XIX under section 1935(d).
``(3) Information on plans.--Information described in
section 1860C(b)(1) on prescription drug plans shall be made
available during open enrollment periods.
``(c) Guaranteed Issue; Community Rating; and
Nondiscrimination.--
``(1) Guaranteed issue.--
``(A) In general.--An eligible individual who is eligible
to elect qualified prescription drug coverage under a
prescription drug plan or Medicare+Choice plan at a time
during which elections are accepted under this part with
respect to the plan shall not be denied enrollment based on
any health status-related factor (described in section
2702(a)(1) of the Public Health Service Act) or any other
factor.
``(B) Medicare+choice limitations permitted.--The
provisions of paragraphs (2) and (3) (other than subparagraph
(C)(i), relating to default enrollment) of section 1851(g)
(relating to priority and limitation on termination of
election) shall apply to PDP sponsors under this subsection.
``(2) Community-rated premium.--
``(A) In general.--In the case of an individual who
maintains (as determined under subparagraph (C)) continuous
prescription drug coverage since the date the individual
first qualifies to elect prescription drug coverage under
this part, a PDP sponsor or Medicare+Choice organization
offering a prescription drug plan or Medicare+Choice plan
that provides qualified prescription drug coverage and in
which the individual is enrolled may not deny, limit, or
condition the coverage or provision of covered prescription
drug benefits or vary or increase the premium under the plan
based on any health status-related factor described in
section 2702(a)(1) of the Public Health Service Act or any
other factor.
``(B) Late enrollment penalty.--In the case of an
individual who does not maintain such continuous prescription
drug coverage (as described in subparagraph (C)), a PDP
sponsor or Medicare+Choice organization may (notwithstanding
any provision in this title) adjust the premium otherwise
applicable or impose a pre-existing condition exclusion with
respect to qualified prescription drug coverage in a manner
that reflects additional actuarial risk involved. Such a risk
shall be established through an appropriate actuarial opinion
of the type described in subparagraphs (A) through (C) of
section 2103(c)(4).
[[Page H4228]]
``(C) Continuous prescription drug coverage.--An individual
is considered for purposes of this part to be maintaining
continuous prescription drug coverage on and after the date
the individual first qualifies to elect prescription drug
coverage under this part if the individual establishes that
as of such date the individual is covered under any of the
following prescription drug coverage and before the date that
is the last day of the 63-day period that begins on the date
of termination of the particular prescription drug coverage
involved (regardless of whether the individual subsequently
obtains any of the following prescription drug coverage):
``(i) Coverage under prescription drug plan or
medicare+choice plan.--Qualified prescription drug coverage
under a prescription drug plan or under a Medicare+Choice
plan.
``(ii) Medicaid prescription drug coverage.--Prescription
drug coverage under a medicaid plan under title XIX,
including through the Program of All-inclusive Care for the
Elderly (PACE) under section 1934, through a social health
maintenance organization (referred to in section 4104(c) of
the Balanced Budget Act of 1997), or through a
Medicare+Choice project that demonstrates the application of
capitation payment rates for frail elderly medicare
beneficiaries through the use of a interdisciplinary team and
through the provision of primary care services to such
beneficiaries by means of such a team at the nursing facility
involved.
``(iii) Prescription drug coverage under group health
plan.--Any outpatient prescription drug coverage under a
group health plan, including a health benefits plan under the
Federal Employees Health Benefit Plan under chapter 89 of
title 5, United States Code, and a qualified retiree
prescription drug plan as defined in section 1860H(f)(1), but
only if (subject to subparagraph (E)(ii)) the coverage
provides benefits at least equivalent to the benefits under a
qualified prescription drug plan.
``(iv) Prescription drug coverage under certain medigap
policies.--Coverage under a medicare supplemental policy
under section 1882 that provides benefits for prescription
drugs (whether or not such coverage conforms to the standards
for packages of benefits under section 1882(p)(1)), but only
if the policy was in effect on January 1, 2005, and if
(subject to subparagraph (E)(ii)) the coverage provides
benefits at least equivalent to the benefits under a
qualified prescription drug plan.
``(v) State pharmaceutical assistance program.--Coverage of
prescription drugs under a State pharmaceutical assistance
program, but only if (subject to subparagraph (E)(ii)) the
coverage provides benefits at least equivalent to the
benefits under a qualified prescription drug plan.
``(vi) Veterans' coverage of prescription drugs.--Coverage
of prescription drugs for veterans under chapter 17 of title
38, United States Code, but only if (subject to subparagraph
(E)(ii)) the coverage provides benefits at least equivalent
to the benefits under a qualified prescription drug plan.
``(D) Certification.--For purposes of carrying out this
paragraph, the certifications of the type described in
sections 2701(e) of the Public Health Service Act and in
section 9801(e) of the Internal Revenue Code shall also
include a statement for the period of coverage of whether the
individual involved had prescription drug coverage described
in subparagraph (C).
``(E) Disclosure.--
``(i) In general.--Each entity that offers coverage of the
type described in clause (iii), (iv), (v), or (vi) of
subparagraph (C) shall provide for disclosure, consistent
with standards established by the Administrator, of whether
such coverage provides benefits at least equivalent to the
benefits under a qualified prescription drug plan.
``(ii) Waiver of limitations.--An individual may apply to
the Administrator to waive the requirement that coverage of
such type provide benefits at least equivalent to the
benefits under a qualified prescription drug plan, if the
individual establishes that the individual was not adequately
informed that such coverage did not provide such level of
benefits.
``(F) 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
Administrator shall provide that elections under subsection
(b) take effect at the same time as the Administrator
provides that similar elections under section 1851(e) take
effect under section 1851(f).
``(2) No election effective before 2005.--In no case shall
any election take effect before January 1, 2005.
``(3) Termination.--The Administrator shall provide for the
termination of an election in the case of--
``(A) termination of coverage under both part A and part B;
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), but only if it is approved by the
Administrator, as provided under subsection (c).
``(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 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 engaged in
activities intended to discourage enrollment of classes of
eligible medicare beneficiaries obtaining coverage through
the plan on the basis of their higher likelihood of utilizing
prescription drug coverage, 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 2005, 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 $10 shall be rounded to the nearest multiple of
$10.
``(2) Limits on cost-sharing.--
``(A) In general.--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)) as
follows:
``(i) First copayment range.--For costs above the annual
deductible specified in paragraph (1) and up to amount
specified in subparagraph (C), the cost-sharing--
``(I) is equal to 20 percent; or
``(II) is actuarially equivalent (using processes
established under subsection (e)) to an average expected
payment of 20 percent of such costs.
``(ii) Secondary copayment range.--For costs above the
amount specified in subparagraph (C) and up to the initial
coverage limit, the cost-sharing--
``(I) is equal to 50 percent; or
``(II) is actuarially consistent (using processes
established under subsection (e)) with an average expected
payment of 50 percent of such costs.
``(B) Use of tiered copayments.--Nothing in this part shall
be construed as preventing a PDP sponsor from applying tiered
copayments, so long as such tiered copayments are consistent
with subparagraph (A).
``(C) Initial copayment threshold.--The amount specified in
this subparagraph--
``(i) for 2005, is equal to $1,000; 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 $10 shall be rounded to the nearest multiple of
$10.
``(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--
``(A) for 2005, that is equal to $2,000; 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) Catastrophic protection.--
``(A) In general.--Notwithstanding paragraph (3), the
coverage provides benefits with no 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 threshold specified in subparagraph (B).
``(B) Annual out-of-pocket threshold.--For purposes of this
part, the `annual out-of-pocket threshold' specified in this
subparagraph--
[[Page H4229]]
``(i) for 2005, is equal to $3,700; 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 only if they
are paid by the individual (or by another individual, such as
a family member, on behalf of the individual), under section
1860G, or under title XIX and the individual (or other
individual) is not reimbursed through insurance or otherwise,
a group health plan, or other third-party payment arrangement
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 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 Administrator
determines (based on an actuarial analysis by the
Administrator) that the following requirements are met and
the plan applies for, and receives, the approval of the
Administrator for such benefit design:
``(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 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 initial
coverage limit under subsection (b)(3), of an amount equal to
at least the sum of the following products:
``(i) First copayment range.--The product of--
``(I) the amount by which the initial copayment threshold
described in subsection (b)(2)(C) exceeds the deductible
described in subsection (b)(1); and
``(II) 100 percent minus the cost-sharing percentage
specified in subsection (b)(2)(A)(i)(I).
``(ii) Secondary copayment range.--The product of--
``(I) the amount by which the initial coverage limit
described in subsection (b)(3) exceeds the initial copayment
threshold described in subsection (b)(2)(C); and
``(II) 100 percent minus the cost-sharing percentage
specified in subsection (b)(2)(A)(ii)(I).
``(2) Catastrophic protection.--The coverage provides for
beneficiaries the catastrophic protection described in
subsection (b)(4).
``(d) Access to Negotiated Prices.--
``(1) In general.--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. The prices negotiated by a prescription
drug plan under this part, by a Medicare+Choice plan with
respect to covered outpatient drugs, or by a qualified
retiree prescription drug plan (as defined in section
1860H(f)(1)) with respect to such drugs on behalf of
individuals entitled to benefits under part A or enrolled
under part B, shall (notwithstanding any other provision of
law) not be taken into account for the purposes of
establishing the best price under section 1927(c)(1)(C).
``(2) Disclosure.--The PDP sponsor or Medicare+Choice
organization shall disclose to the Administrator (in a manner
specified by the Administrator) the extent to which discounts
or rebates made available to the sponsor or organization by a
manufacturer are passed through to enrollees through
pharmacies and other dispensers or otherwise. The provisions
of section 1927(b)(3)(D) shall apply to information disclosed
to the Administrator under this paragraph in the same manner
as such provisions apply to information disclosed under such
section.
``(e) Actuarial Valuation; Determination of Annual
Percentage Increases.--
``(1) Processes.--For purposes of this section, the
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, but the Administrator shall determine whether such
actuarial values meet the requirements under subsection
(c)(1).
``(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 a vaccine licensed under section 351
of the Public Health Service Act and 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), or under section 1927(d)(3).
``(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 for an
individual entitled to benefits under part A and 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 and such exclusion is not successfully appealed
under section 1860C(f)(2).
``(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).
``SEC. 1860C. BENEFICIARY PROTECTIONS FOR QUALIFIED
PRESCRIPTION DRUG COVERAGE.
``(a) Guaranteed Issue, Community-Rated Premiums, Access to
Negotiated Prices, and Nondiscrimination.--For provisions
requiring guaranteed issue, community-rated premiums, access
to negotiated prices, and nondiscrimination, see sections
1860A(c)(1), 1860A(c)(2), 1860B(d), and 1860F(b),
respectively.
``(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,
including the drugs included in the formulary.
``(C) Co-payments and deductible requirements, including
the identification of the tiered or other co-payment level
applicable to each drug (or class of drugs).
``(D) Grievance and appeals procedures.
Such information shall also be made available on request to
prospective enrollees during annual open enrollment periods.
``(2) Disclosure upon request of general coverage,
utilization, and grievance information.--Upon request of an
individual
[[Page H4230]]
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 on a timely basis, 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 initial coverage limit and annual out-of-pocket
threshold for the current year, whenever prescription drug
benefits are provided under this part (except that such
notice need not be provided more often than monthly).
``(c) Access to Covered Benefits.--
``(1) Assuring pharmacy access.--
``(A) In general.--The PDP sponsor of the prescription drug
plan shall secure the participation in its network of a
sufficient number of pharmacies that dispense (other than by
mail order) drugs directly to patients to ensure convenient
access (as determined by the Administrator and including
adequate emergency access) for enrolled beneficiaries, in
accordance with standards established under section 1860D(e)
that ensure such convenient access.
``(B) Use of point-of-service system.--A PDP sponsor shall
establish an optional point-of-service method of operation
under which--
``(i) the plan provides access to any or all pharmacies
that are not participating pharmacies in its network; and
``(ii) the plan may charge beneficiaries through
adjustments in premiums and copayments any additional costs
associated with the point-of-service option.
The additional copayments so charged shall not count toward
the application of section 1860B(b).
``(2) Use of standardized technology.--
``(A) In general.--The PDP sponsor of a prescription drug
plan shall issue (and reissue, as appropriate) such a card
(or other technology) that may be used by an enrolled
beneficiary to assure access to negotiated prices under
section 1860B(d) for the purchase of prescription drugs for
which coverage is not otherwise provided under the
prescription drug plan.
``(B) Standards.--
``(i) Development.--The Administrator shall provide for the
development of national standards relating to a standardized
format for the card or other technology referred to in
subparagraph (A). Such standards shall be compatible with
standards established under part C of title XI.
``(ii) Application of advisory task force.--The advisory
task force established under subsection (d)(3)(B)(ii) shall
provide recommendations to the Administrator under such
subsection regarding the standards developed under clause
(i).
``(3) Requirements on development and application of
formularies.--If a PDP sponsor of a prescription drug plan
uses a formulary, the following requirements must be met:
``(A) Pharmacy and therapeutic (p&t) committee.--The
sponsor must establish a pharmacy and therapeutic committee
that develops and reviews the formulary. Such committee shall
include at least one practicing physician and at least one
practicing pharmacist both with expertise in the care of
elderly or disabled persons and a majority of its members
shall consist of individuals who are a practicing physician
or a practicing pharmacist (or both).
``(B) Formulary development.--In developing and reviewing
the formulary, the committee shall base clinical decisions on
the strength of scientific evidence and standards of
practice, including assessing peer-reviewed medical
literature, such as randomized clinical trials,
pharmacoeconomic studies, outcomes research data, and such
other information as the committee determines to be
appropriate.
``(C) Inclusion of drugs in all therapeutic categories.--
The formulary must include drugs within each therapeutic
category and class of covered outpatient drugs (although not
necessarily for all drugs within such categories and
classes).
``(D) Provider education.--The committee shall establish
policies and procedures to educate and inform health care
providers concerning the formulary.
``(E) Notice before removing drugs from formulary.--Any
removal of a drug from a formulary shall take effect only
after appropriate notice is made available to beneficiaries
and physicians.
``(F) Grievances and appeals relating to application of
formularies.--For provisions relating to grievances and
appeals of coverage, see subsections (e) and (f).
``(d) Cost and Utilization Management; Quality Assurance;
Medication Therapy Management Program.--
``(1) In general.--The PDP sponsor shall have in place with
respect to covered outpatient drugs--
``(A) an effective cost and drug utilization management
program, including medically appropriate incentives to use
generic drugs and therapeutic interchange, when appropriate;
``(B) quality assurance measures and systems to reduce
medical errors and adverse drug interactions, including a
medication therapy management program described in paragraph
(2) and for years beginning with 2006, an electronic
prescription program described in paragraph (3); and
``(C) a program to control fraud, abuse, and waste.
Nothing in this section shall be construed as impairing a PDP
sponsor from applying cost management tools (including
differential payments) under all methods of operation.
``(2) Medication therapy management program.--
``(A) In general.--A medication therapy management program
described in this paragraph is a program of drug therapy
management and medication administration that is designed to
assure, with respect to beneficiaries with chronic diseases
(such as diabetes, asthma, hypertension, and congestive heart
failure) or multiple prescriptions, that covered outpatient
drugs under the prescription drug plan are appropriately used
to achieve therapeutic goals and reduce the risk of adverse
events, including adverse drug interactions.
``(B) Elements.--Such program may include--
``(i) enhanced beneficiary understanding of such
appropriate use through beneficiary education, counseling,
and other appropriate means;
``(ii) increased beneficiary adherence with prescription
medication regimens through medication refill reminders,
special packaging, and other appropriate means; and
``(iii) detection of patterns of overuse and underuse of
prescription drugs.
``(C) Development of program in cooperation with licensed
pharmacists.--The program shall be developed in cooperation
with licensed and practicing pharmacists and physicians.
``(D) Considerations in pharmacy fees.--The PDP sponsor of
a prescription drug program shall take into account, in
establishing fees for pharmacists and others providing
services under the medication therapy management program, the
resources and time used in implementing the program.
``(3) Electronic prescription program.--
``(A) In general.--An electronic prescription drug program
described in this paragraph is a program that includes at
least the following components, consistent with national
standards established under subparagraph (B):
``(i) Electronic transmittal of prescriptions.--
Prescriptions are only received electronically, except in
emergency cases and other exceptional circumstances
recognized by the Administrator.
``(ii) Provision of information to prescribing health care
professional.--The program provides, upon transmittal of a
prescription by a prescribing health care professional, for
transmittal by the pharmacist to the professional of
information that includes--
``(I) information (to the extent available and feasible) on
the drugs being prescribed for that patient and other
information relating to the medical history or condition of
the patient that may be relevant to the appropriate
prescription for that patient;
``(II) cost-effective alternatives (if any) for the use of
the drug prescribed; and
``(III) information on the drugs included in the applicable
formulary.
To the extent feasible, such program shall permit the
prescribing health care professional to provide (and be
provided) related information on an interactive, real-time
basis.
``(B) Standards.--
``(i) Development.--The Administrator shall provide for the
development of national standards relating to the electronic
prescription drug program described in subparagraph (A). Such
standards shall be compatible with standards established
under part C of title XI.
``(ii) Advisory task force.--In developing such standards
and the standards described in subsection (c)(2)(B)(i) the
Administrator shall establish a task force that includes
representatives of physicians, hospitals, pharmacists, and
technology experts and representatives of the Departments of
Veterans Affairs and Defense and other appropriate Federal
agencies to provide recommendations to the Administrator on
such standards, including recommendations relating to the
following:
``(I) The range of available computerized prescribing
software and hardware and their costs to develop and
implement.
``(II) The extent to which such systems reduce medication
errors and can be readily implemented by physicians and
hospitals.
``(III) Efforts to develop a common software platform for
computerized prescribing.
``(IV) The cost of implementing such systems in the range
of hospital and physician office settings, including
hardware, software, and training costs.
``(V) Implementation issues as they relate to part C of
title XI, and current Federal and State prescribing laws and
regulations and their impact on implementation of
computerized prescribing.
``(iii) Deadlines.--
``(I) The Administrator shall constitute the task force
under clause (ii) by not later than April 1, 2003.
``(II) Such task force shall submit recommendations to
Administrator by not later than January 1, 2004.
[[Page H4231]]
``(III) The Administrator shall develop and promulgate the
national standards referred to in clause (ii) by not later
than January 1, 2005.
``(C) Reference to availability of grant funds.--Grant
funds are authorized under section 399O of the Public Health
Service Act to provide assistance to health care providers in
implementing electronic prescription drug programs.
``(4) Treatment of accreditation.--Section 1852(e)(4)
(relating to treatment of accreditation) shall apply to
prescription drug plans under this part with respect to the
following requirements, in the same manner as they apply to
Medicare+Choice plans under part C with respect to the
requirements described in a clause of section 1852(e)(4)(B):
``(A) Paragraph (1) (including quality assurance),
including medication therapy management program under
paragraph (2).
``(B) Subsection (c)(1) (relating to access to covered
benefits).
``(C) Subsection (g) (relating to confidentiality and
accuracy of enrollee records).
``(5) Public disclosure of pharmaceutical prices for
equivalent drugs.--Each PDP sponsor shall provide that each
pharmacy or other dispenser that arranges for the dispensing
of a covered outpatient drug shall inform the beneficiary at
the time of purchase of the drug of any differential between
the price of the prescribed drug to the enrollee and the
price of the lowest cost generic drug covered under the plan
that is therapeutically equivalent and bioequivalent.
``(e) Grievance Mechanism, Coverage Determinations, and
Reconsiderations.--
``(1) In general.--Each PDP sponsor shall provide
meaningful procedures for hearing and resolving grievances
between the organization (including any entity or individual
through which the sponsor provides covered benefits) and
enrollees with prescription drug plans of the sponsor under
this part in accordance with section 1852(f).
``(2) Application of coverage determination and
reconsideration provisions.--A PDP sponsor shall meet the
requirements of paragraphs (1) through (3) of section 1852(g)
with respect to covered benefits under the prescription drug
plan it offers under this part in the same manner as such
requirements apply to a Medicare+Choice organization with
respect to benefits it offers under a Medicare+Choice plan
under part C.
``(3) Request for review of tiered formulary
determinations.--In the case of a prescription drug plan
offered by a PDP sponsor that provides for tiered cost-
sharing for drugs included within a formulary and provides
lower cost-sharing for preferred drugs included within the
formulary, an individual who is enrolled in the plan may
request coverage of a nonpreferred drug under the terms
applicable for preferred drugs if the prescribing physician
determines that the preferred drug for treatment of the same
condition is not as effective for the individual or has
adverse effects for the individual.
``(f) Appeals.--
``(1) In general.--Subject to paragraph (2), a PDP sponsor
shall meet the requirements of paragraphs (4) and (5) of
section 1852(g) with respect to drugs not included on any
formulary in the same manner as such requirements apply to a
Medicare+Choice organization with respect to benefits it
offers under a Medicare+Choice plan under part C.
``(2) Formulary determinations.--An individual who is
enrolled in a prescription drug plan offered by a PDP sponsor
may appeal to obtain coverage for a covered outpatient drug
that is not on a formulary of the sponsor if the prescribing
physician determines that the formulary drug for treatment of
the same condition is not as effective for the individual or
has adverse effects for the individual.
``(g) Confidentiality and Accuracy of Enrollee Records.--A
PDP sponsor shall meet the requirements of section 1852(h)
with respect to enrollees under this part in the same manner
as such requirements apply to a Medicare+Choice organization
with respect to enrollees under part C.
``SEC. 1860D. REQUIREMENTS FOR PRESCRIPTION DRUG PLAN (PDP)
SPONSORS; CONTRACTS; ESTABLISHMENT OF
STANDARDS.
``(a) General Requirements.--Each PDP sponsor of a
prescription drug plan shall meet the following requirements:
``(1) Licensure.--Subject to subsection (c), the sponsor is
organized and licensed under State law as a risk-bearing
entity eligible to offer health insurance or health benefits
coverage in each State in which it offers a prescription drug
plan.
``(2) Assumption of financial risk for unsubsidized
coverage.--
``(A) In general.--Subject to subparagraph (B) and section
1860E(d)(2), the entity assumes full financial risk on a
prospective basis for qualified prescription drug coverage
that it offers under a prescription drug plan and that is not
covered under section 1860H.
``(B) Reinsurance permitted.--The entity may obtain
insurance or make other arrangements for the cost of coverage
provided to any enrolled member under this part.
``(3) Solvency for unlicensed sponsors.--In the case of a
sponsor that is not described in paragraph (1), the sponsor
shall meet solvency standards established by the
Administrator under subsection (d).
``(b) Contract Requirements.--
``(1) In general.--The Administrator shall not permit the
election under section 1860A of a prescription drug plan
offered by a PDP sponsor under this part, and the sponsor
shall not be eligible for payments under section 1860G or
1860H, unless the Administrator has entered into a contract
under this subsection with the sponsor with respect to the
offering of such plan. Such a contract with a sponsor may
cover more than one prescription drug plan. Such contract
shall provide that the sponsor agrees to comply with the
applicable requirements and standards of this part and the
terms and conditions of payment as provided for in this part.
``(2) Negotiation regarding terms and conditions.--The
Administrator shall have the same authority to negotiate the
terms and conditions of prescription drug plans under this
part as the Director of the Office of Personnel Management
has with respect to health benefits plans under chapter 89 of
title 5, United States Code. In negotiating the terms and
conditions regarding premiums for which information is
submitted under section 1860F(a)(2), the Administrator shall
take into account the subsidy payments under section 1860H
and the adjusted community rate (as defined in section
1854(f)(3)) for the benefits covered.
``(3) Incorporation of certain medicare+choice contract
requirements.--The following provisions of section 1857 shall
apply, subject to subsection (c)(5), to contracts under this
section in the same manner as they apply to contracts under
section 1857(a):
``(A) Minimum enrollment.--Paragraphs (1) and (3) of
section 1857(b).
``(B) Contract period and effectiveness.--Paragraphs (1)
through (3) and (5) of section 1857(c).
``(C) Protections against fraud and beneficiary
protections.--Section 1857(d).
``(D) Additional contract terms.--Section 1857(e); except
that in applying section 1857(e)(2) under this part--
``(i) such section shall be applied separately to costs
relating to this part (from costs under part C);
``(ii) in no case shall the amount of the fee established
under this subparagraph for a plan exceed 20 percent of the
maximum amount of the fee that may be established under
subparagraph (B) of such section; and
``(iii) no fees shall be applied under this subparagraph
with respect to Medicare+Choice plans.
``(E) Intermediate sanctions.--Section 1857(g).
``(F) Procedures for termination.--Section 1857(h).
``(4) Rules of application for intermediate sanctions.--In
applying paragraph (3)(E)--
``(A) the reference in section 1857(g)(1)(B) to section
1854 is deemed a reference to this part; and
``(B) the reference in section 1857(g)(1)(F) to section
1852(k)(2)(A)(ii) shall not be applied.
``(c) Waiver of Certain Requirements to Expand Choice.--
``(1) In general.--In the case of an entity that seeks to
offer a prescription drug plan in a State, the Administrator
shall waive the requirement of subsection (a)(1) that the
entity be licensed in that State if the Administrator
determines, based on the application and other evidence
presented to the Administrator, that any of the grounds for
approval of the application described in paragraph (2) has
been met.
``(2) Grounds for approval.--The grounds for approval under
this paragraph are the grounds for approval described in
subparagraph (B), (C), and (D) of section 1855(a)(2), and
also include the application by a State of any grounds other
than those required under Federal law.
``(3) Application of waiver procedures.--With respect to an
application for a waiver (or a waiver granted) under this
subsection, the provisions of subparagraphs (E), (F), and (G)
of section 1855(a)(2) shall apply.
``(4) Licensure does not substitute for or constitute
certification.--The fact that an entity is licensed in
accordance with subsection (a)(1) does not deem the entity to
meet other requirements imposed under this part for a PDP
sponsor.
``(5) References to certain provisions.--For purposes of
this subsection, in applying provisions of section 1855(a)(2)
under this subsection to prescription drug plans and PDP
sponsors--
``(A) any reference to a waiver application under section
1855 shall be treated as a reference to a waiver application
under paragraph (1); and
``(B) any reference to solvency standards shall be treated
as a reference to solvency standards established under
subsection (d).
``(d) Solvency Standards for Non-Licensed Sponsors.--
``(1) Establishment.--The Administrator shall establish, by
not later than October 1, 2003, financial solvency and
capital adequacy standards that an entity that does not meet
the requirements of subsection (a)(1) must meet to qualify as
a PDP sponsor under this part.
``(2) Compliance with standards.--Each PDP sponsor that is
not licensed by a State under subsection (a)(1) and for which
a waiver application has been approved under subsection (c)
shall meet solvency and capital adequacy standards
established under paragraph (1). The Administrator shall
establish certification procedures for such PDP sponsors with
respect to such solvency standards in the manner described in
section 1855(c)(2).
``(e) Other Standards.--The Administrator shall establish
by regulation other standards (not described in subsection
(d))
[[Page H4232]]
for PDP sponsors and plans consistent with, and to carry out,
this part. The Administrator shall publish such regulations
by October 1, 2003.
``(f) Relation to State Laws.--
``(1) In general.--The standards established under this
part shall supersede any State law or regulation (other than
State licensing laws or State laws relating to plan solvency,
except as provided in subsection (d)) with respect to
prescription drug plans which are offered by PDP sponsors
under this part.
``(2) Prohibition of state imposition of premium taxes.--No
State may impose a premium tax or similar tax with respect to
premiums paid to PDP sponsors for prescription drug plans
under this part, or with respect to any payments made to such
a sponsor by the Administrator under this part.
``SEC. 1860E. PROCESS FOR BENEFICIARIES TO SELECT QUALIFIED
PRESCRIPTION DRUG COVERAGE.
``(a) In General.--The Administrator shall establish a
process for the selection of the prescription drug plan or
Medicare+Choice plan which offer qualified prescription drug
coverage through which eligible individuals elect qualified
prescription drug coverage under this part.
``(b) Elements.--Such process shall include the following:
``(1) Annual, coordinated election periods, in which such
individuals can change the qualifying plans through which
they obtain coverage, in accordance with section 1860A(b)(2).
``(2) Active dissemination of information to promote an
informed selection among qualifying plans based upon price,
quality, and other features, in the manner described in (and
in coordination with) section 1851(d), including the
provision of annual comparative information, maintenance of a
toll-free hotline, and the use of non-Federal entities.
``(3) Coordination of elections through filing with a
Medicare+Choice organization or a PDP sponsor, in the manner
described in (and in coordination with) section 1851(c)(2).
``(c) Medicare+Choice Enrollee In Plan Offering
Prescription Drug Coverage May Only Obtain Benefits Through
the Plan.--An individual who is enrolled under a
Medicare+Choice plan that offers qualified prescription drug
coverage may only elect to receive qualified prescription
drug coverage under this part through such plan.
``(d) Assuring Access to a Choice of Qualified Prescription
Drug Coverage.--
``(1) Choice of at least two plans in each area.--
``(A) In general.--The Administrator shall assure that each
individual who is entitled to benefits under part A or
enrolled under part B and who is residing in an area in the
United States has available, consistent with subparagraph
(B), a choice of enrollment in at least two qualifying plans
(as defined in paragraph (5)) in the area in which the
individual resides, at least one of which is a prescription
drug plan.
``(B) Requirement for different plan sponsors.--The
requirement in subparagraph (A) is not satisfied with respect
to an area if only one PDP sponsor or Medicare+Choice
organization offers all the qualifying plans in the area.
``(2) Guaranteeing access to coverage.--In order to assure
access under paragraph (1) and consistent with paragraph (3),
the Administrator may provide financial incentives (including
partial underwriting of risk) for a PDP sponsor to expand the
service area under an existing prescription drug plan to
adjoining or additional areas or to establish such a plan
(including offering such a plan on a regional or nationwide
basis), but only so long as (and to the extent) necessary to
assure the access guaranteed under paragraph (1).
``(3) Limitation on authority.--In exercising authority
under this subsection, the Administrator--
``(A) shall not provide for the full underwriting of
financial risk for any PDP sponsor;
``(B) shall not provide for any underwriting of financial
risk for a public PDP sponsor with respect to the offering of
a nationwide prescription drug plan; and
``(C) shall seek to maximize the assumption of financial
risk by PDP sponsors or Medicare+Choice organizations.
``(4) Reports.--The Administrator shall, in each annual
report to Congress under section 1808(f), include information
on the exercise of authority under this subsection. The
Administrator also shall include such recommendations as may
be appropriate to minimize the exercise of such authority,
including minimizing the assumption of financial risk.
``(5) Qualifying plan defined.--For purposes of this
subsection, the term `qualifying plan' means a prescription
drug plan or a Medicare+Choice plan that includes qualified
prescription drug coverage.
``SEC. 1860F. SUBMISSION OF BIDS AND PREMIUMS.
``(a) Submission of Bids, Premiums, and Related
Information.--
``(1) In general.--Each PDP sponsor shall submit to the
Administrator the information described in paragraph (2) in
the same manner as information is submitted by a
Medicare+Choice organization under section 1854(a)(1).
``(2) Information submitted.--The information described in
this paragraph is the following:
``(A) Coverage provided.--Information on the qualified
prescription drug coverage to be provided.
``(B) Actuarial value.--Information on the actuarial value
of the coverage.
``(C) Bid and premium.--Information on the bid and the
premium for the coverage, including an actuarial
certification of--
``(i) the actuarial basis for such bid and premium;
``(ii) the portion of such bid and premium attributable to
benefits in excess of standard coverage; and
``(iii) the reduction in such bid and premium resulting
from the subsidy payments provided under section 1860H.
``(D) Additional information.--Such other information as
the Administrator may require to carry out this part.
``(3) Review of information and approval of premiums.--The
Administrator shall review the information filed under
paragraph (2) for the purpose of conducting negotiations
under section 1860D(b)(2). The Administrator, using the
information provided (including the actuarial certification
under paragraph (2)(C)) shall approve the premium submitted
under this subsection only if the premium accurately reflects
both (A) the actuarial value of the benefits provided, and
(B) the 67 percent subsidy provided under section 1860H for
the standard benefit. The Administrator shall apply actuarial
principles to approval of a premium under this part in a
manner similar to the manner in which those principles are
applied in establishing the monthly part B premium under
section 1839.
``(b) Uniform Bid and Premium.--
``(1) In general.--The bid and premium for a prescription
drug plan under this section may not vary among individuals
enrolled in the plan in the same service area.
``(2) Construction.--Nothing in paragraph (1) shall be
construed as preventing the imposition of a late enrollment
penalty under section 1860A(c)(2)(B).
``(c) Collection.--
``(1) Beneficiary's option of payment through withholding
from social security payment or use of electronic funds
transfer mechanism.--In accordance with regulations, a PDP
sponsor shall permit each enrollee, at the enrollee's option,
to make payment of premiums under this part through
withholding from benefit payments in the manner provided
under section 1840 with respect to monthly premiums under
section 1839 or through an electronic funds transfer
mechanism (such as automatic charges of an account at a
financial institution or a credit or debit card account) or
otherwise. All such amounts shall be credited to the Medicare
Prescription Drug Trust Fund.
``(2) Offsetting.--Reductions in premiums for coverage
under parts A and B as a result of a selection of a
Medicare+Choice plan may be used to reduce the premium
otherwise imposed under paragraph (1).
``(3) Payment of plans.--PDP plans shall receive payment
based on bid amounts in the same manner as Medicare+Choice
organizations receive payment based on bid amounts under
section 1853(a)(1)(A)(ii) except that such payment shall be
made from the Medicare Prescription Drug Trust Fund.
``(d) Acceptance of Benchmark Amount as Full Premium for
Subsidized Low-Income Individuals if No Standard (or
Equivalent) Coverage in an Area.--
``(1) In general.--If there is no standard prescription
drug coverage (as defined in paragraph (2)) offered in an
area, in the case of an individual who is eligible for a
premium subsidy under section 1860G and resides in the area,
the PDP sponsor of any prescription drug plan offered in the
area (and any Medicare+Choice organization that offers
qualified prescription drug coverage in the area) shall
accept the benchmark bid amount (under section 1860G(b)(2))
as payment in full for the premium charge for qualified
prescription drug coverage.
``(2) Standard prescription drug coverage defined.--For
purposes of this subsection, the term `standard prescription
drug coverage' means qualified prescription drug coverage
that is standard coverage or that has an actuarial value
equivalent to the actuarial value for standard coverage.
``SEC. 1860G. PREMIUM AND COST-SHARING SUBSIDIES FOR LOW-
INCOME INDIVIDUALS.
``(a) Income-Related Subsidies for Individuals With Income
Below 175 Percent of Federal Poverty Level.--
``(1) Full premium subsidy and reduction of cost-sharing
for individuals with income below 150 percent of federal
poverty level.--In the case of a subsidy eligible individual
(as defined in paragraph (4)) who is determined to have
income that does not exceed 150 percent of the Federal
poverty level, the individual is entitled under this
section--
``(A) to an income-related premium subsidy equal to 100
percent of the amount described in subsection (b)(1); and
``(B) subject to subsection (c), to the substitution for
the beneficiary cost-sharing described in paragraphs (1) and
(2) of section 1860B(b) (up to the initial coverage limit
specified in paragraph (3) of such section) of amounts that
do not exceed $2 for a multiple source or generic drug (as
described in section 1927(k)(7)(A)) and $5 for a non-
preferred drug.
``(2) Sliding scale premium subsidy and reduction of cost-
sharing for individuals with income above 150, but below 175
percent, of federal poverty level.--In the case of a subsidy
eligible individual who is determined to have income that
exceeds 150
[[Page H4233]]
percent, but does not exceed 175 percent, of the Federal
poverty level, the individual is entitled under this section
to--
``(A) an income-related premium subsidy determined on a
linear sliding scale ranging from 100 percent of the amount
described in subsection (b)(1) for individuals with incomes
at 150 percent of such level to 0 percent of such amount for
individuals with incomes at 175 percent of such level; and
``(B) subject to subsection (c), to the substitution for
the beneficiary cost-sharing described in paragraphs (1) and
(2) of section 1860B(b) (up to the initial coverage limit
specified in paragraph (3) of such section) of amounts that
do not exceed $2 for a multiple source or generic drug (as
described in section 1927(k)(7)(A)) and $5 for a non-
preferred drug.
``(3) Construction.--Nothing in this section shall be
construed as preventing a PDP sponsor from reducing to 0 the
cost-sharing otherwise applicable to generic drugs.
``(4) Determination of eligibility.--
``(A) Subsidy eligible individual defined.--For purposes of
this section, subject to subparagraph (D), the term `subsidy
eligible individual' means an individual who--
``(i) is eligible to elect, and has elected, to obtain
qualified prescription drug coverage under this part;
``(ii) has income below 175 percent of the Federal poverty
line; and
``(iii) meets the resources requirement described in
section 1905(p)(1)(C).
``(B) Determinations.--The determination of whether an
individual residing in a State is a subsidy eligible
individual and the amount of such individual's income shall
be determined under the State medicaid plan for the State
under section 1935(a) or by the Social Security
Administration. In the case of a State that does not operate
such a medicaid plan (either under title XIX or under a
statewide waiver granted under section 1115), such
determination shall be made under arrangements made by the
Administrator. There are authorized to be appropriated to the
Social Security Administration such sums as may be necessary
for the determination of eligibility under this subparagraph.
``(C) Income determinations.--For purposes of applying this
section--
``(i) income shall be determined in the manner described in
section 1905(p)(1)(B); and
``(ii) the term `Federal poverty line' means the official
poverty line (as defined by the Office of Management and
Budget, and revised annually in accordance with section
673(2) of the Omnibus Budget Reconciliation Act of 1981)
applicable to a family of the size involved.
``(D) Treatment of territorial residents.--In the case of
an individual who is not a resident of the 50 States or the
District of Columbia, the individual is not eligible to be a
subsidy eligible individual but may be eligible for financial
assistance with prescription drug expenses under section
1935(e).
``(E) Treatment of conforming medigap policies.--For
purposes of this section, the term `qualified prescription
drug coverage' includes a medicare supplemental policy
described in section 1860H(b)(4).
``(5) Indexing dollar amounts.--
``(A) For 2006.--The dollar amounts applied under
paragraphs (1)(B) and (2)(B) for 2006 shall be the dollar
amounts specified in such paragraph increased by the annual
percentage increase described in section 1860B(b)(5) for
2006.
``(B) For subsequent years.--The dollar amounts applied
under paragraphs (1)(B) and (2)(B) for a year after 2006
shall be the amounts (under this paragraph) applied under
paragraph (1)(B) or (2)(B) for the preceding year increased
by the annual percentage increase described in section
1860B(b)(5) (relating to growth in medicare prescription drug
costs per beneficiary) for the year involved.
``(b) Premium Subsidy Amount.--
``(1) In general.--The premium subsidy amount described in
this subsection for an individual residing in an area is the
benchmark bid amount (as defined in paragraph (2)) for
qualified prescription drug coverage offered by the
prescription drug plan or the Medicare+Choice plan in which
the individual is enrolled.
``(2) Benchmark bid amount defined.--For purposes of this
subsection, the term `benchmark bid amount' means, with
respect to qualified prescription drug coverage offered
under--
``(A) a prescription drug plan that--
``(i) provides standard coverage (or alternative
prescription drug coverage the actuarial value is equivalent
to that of standard coverage), the bid amount for enrollment
under the plan under this part (determined without regard to
any subsidy under this section or any late enrollment penalty
under section 1860A(c)(2)(B)); or
``(ii) provides alternative prescription drug coverage the
actuarial value of which is greater than that of standard
coverage, the bid amount described in clause (i) multiplied
by the ratio of (I) the actuarial value of standard coverage,
to (II) the actuarial value of the alternative coverage; or
``(B) a Medicare+Choice plan, the portion of the bid amount
that is attributable to statutory drug benefits (described in
section 1853(a)(1)(A)(ii)(II)).
``(c) Rules in Applying Cost-Sharing Subsidies.--
``(1) In general.--In applying subsections (a)(1)(B) and
(a)(2)(B), nothing in this part shall be construed as
preventing a plan or provider from waiving or reducing the
amount of cost-sharing otherwise applicable.
``(2) Limitation on charges.--In the case of an individual
receiving cost-sharing subsidies under subsection (a)(1)(B)
or (a)(2)(B), the PDP sponsor may not charge more than $5 per
prescription.
``(3) Application of indexing rules.--The provisions of
subsection (a)(4) shall apply to the dollar amount specified
in paragraph (2) in the same manner as they apply to the
dollar amounts specified in subsections (a)(1)(B) and
(a)(2)(B).
``(d) Administration of Subsidy Program.--The Administrator
shall provide a process whereby, in the case of an individual
who is determined to be a subsidy eligible individual and who
is enrolled in prescription drug plan or is enrolled in a
Medicare+Choice plan under which qualified prescription drug
coverage is provided--
``(1) the Administrator provides for a notification of the
PDP sponsor or Medicare+Choice organization involved that the
individual is eligible for a subsidy and the amount of the
subsidy under subsection (a);
``(2) the sponsor or organization involved reduces the
premiums or cost-sharing otherwise imposed by the amount of
the applicable subsidy and submits to the Administrator
information on the amount of such reduction; and
``(3) the Administrator periodically and on a timely basis
reimburses the sponsor or organization for the amount of such
reductions.
The reimbursement under paragraph (3) with respect to cost-
sharing subsidies may be computed on a capitated basis,
taking into account the actuarial value of the subsidies and
with appropriate adjustments to reflect differences in the
risks actually involved.
``(e) Relation to Medicaid Program.--
``(1) In general.--For provisions providing for eligibility
determinations, and additional financing, under the medicaid
program, see section 1935.
``(2) Medicaid providing wrap around benefits.--The
coverage provided under this part is primary payor to
benefits for prescribed drugs provided under the medicaid
program under title XIX.
``(3) Coordination.--The Administrator shall develop and
implement a plan for the coordination of prescription drug
benefits under this part with the benefits provided under the
medicaid program under title XIX, with particular attention
to insuring coordination of payments and prevention of fraud
and abuse. In developing and implementing such plan, the
Administrator shall involve the Secretary, the States, the
data processing industry, pharmacists, and pharmaceutical
manufacturers, and other experts.
``SEC. 1860H. SUBSIDIES FOR ALL MEDICARE BENEFICIARIES FOR
QUALIFIED PRESCRIPTION DRUG COVERAGE.
``(a) Subsidy Payment.--In order to reduce premium levels
applicable to qualified prescription drug coverage for all
medicare beneficiaries consistent with an overall subsidy
level of 67 percent, to reduce adverse selection among
prescription drug plans and Medicare+Choice plans that
provide qualified prescription drug coverage, and to promote
the participation of PDP sponsors under this part, the
Administrator shall provide in accordance with this section
for payment to a qualifying entity (as defined in subsection
(b)) of the following subsidies:
``(1) Direct subsidy.--In the case of an individual
enrolled in a prescription drug plan, Medicare+Choice plan
that provides qualified prescription drug coverage, or
qualified retiree prescription drug plan, a direct subsidy
equal to 37 percent of the total payments made by a
qualifying entity for standard coverage under the respective
plan.
``(2) Subsidy through reinsurance.--The reinsurance payment
amount (as defined in subsection (c)), which in the aggregate
is 30 percent of such total payments, for excess costs
incurred in providing qualified prescription drug coverage--
``(A) for individuals enrolled with a prescription drug
plan under this part;
``(B) for individuals enrolled with a Medicare+Choice plan
that provides qualified prescription drug coverage; and
``(C) for individuals who are enrolled in a qualified
retiree prescription drug plan.
This section constitutes budget authority in advance of
appropriations Acts and represents the obligation of the
Administrator to provide for the payment of amounts provided
under this section.
``(b) Qualifying Entity Defined.--For purposes of this
section, the term `qualifying entity' means any of the
following that has entered into an agreement with the
Administrator to provide the Administrator with such
information as may be required to carry out this section:
``(1) A PDP sponsor offering a prescription drug plan under
this part.
``(2) A Medicare+Choice organization that provides
qualified prescription drug coverage under a Medicare+Choice
plan under part C.
``(3) The sponsor of a qualified retiree prescription drug
plan (as defined in subsection (f)).
``(c) Reinsurance Payment Amount.--
``(1) In general.--Subject to subsection (d)(1)(B) and
paragraph (4), the reinsurance payment amount under this
subsection for a qualifying covered individual (as defined in
subsection (g)(1)) for a coverage year (as defined in
subsection (g)(2)) is equal to the sum of the following:
[[Page H4234]]
``(A) For the portion of the individual's gross covered
prescription drug costs (as defined in paragraph (3)) for the
year that exceeds the initial copayment threshold specified
in section 1860B(b)(2)(C), but does not exceed the initial
coverage limit specified in section 1860B(b)(3), an amount
equal to 30 percent of the allowable costs (as defined in
paragraph (2)) attributable to such gross covered
prescription drug costs.
``(B) For the portion of the individual's gross covered
prescription drug costs for the year that exceeds the annual
out-of-pocket threshold specified in 1860B(b)(4)(B), an
amount equal to 80 percent of the allowable costs
attributable to such gross covered prescription drug costs.
``(2) Allowable costs.--For purposes of this section, the
term `allowable costs' means, with respect to gross covered
prescription drug costs under a plan described in subsection
(b) offered by a qualifying entity, the part of such costs
that are actually paid (net of average percentage rebates)
under the plan, but in no case more than the part of such
costs that would have been paid under the plan if the
prescription drug coverage under the plan were standard
coverage.
``(3) Gross covered prescription drug costs.--For purposes
of this section, the term `gross covered prescription drug
costs' means, with respect to an enrollee with a qualifying
entity under a plan described in subsection (b) during a
coverage year, the costs incurred under the plan (including
costs attributable to administrative costs) for covered
prescription drugs dispensed during the year, including costs
relating to the deductible, whether paid by the enrollee or
under the plan, regardless of whether the coverage under the
plan exceeds standard coverage and regardless of when the
payment for such drugs is made.
``(4) Indexing dollar amounts.--
``(A) Amounts for 2005.--The dollar amounts applied under
paragraph (1) for 2005 shall be the dollar amounts specified
in such paragraph.
``(B) For 2006.--The dollar amounts applied under paragraph
(1) for 2006 shall be the dollar amounts specified in such
paragraph increased by the annual percentage increase
described in section 1860B(b)(5) for 2006.
``(C) For subsequent years.--The dollar amounts applied
under paragraph (1) for a year after 2006 shall be the
amounts (under this paragraph) applied under paragraph (1)
for the preceding year increased by the annual percentage
increase described in section 1860B(b)(5) (relating to growth
in medicare prescription drug costs per beneficiary) for the
year involved.
``(D) Rounding.--Any amount, determined under the preceding
provisions of this paragraph for a year, which is not a
multiple of $10 shall be rounded to the nearest multiple of
$10.
``(d) Adjustment of Payments.--
``(1) Adjustment of reinsurance payments to assure 30
percent level of subsidy through reinsurance.--
``(A) Estimation of payments.--The Administrator shall
estimate--
``(i) the total payments to be made (without regard to this
subsection) during a year under subsections (a)(2) and (c);
and
``(ii) the total payments to be made by qualifying entities
for standard coverage under plans described in subsection (b)
during the year.
``(B) Adjustment.--The Administrator shall proportionally
adjust the payments made under subsections (a)(2) and (c) for
a coverage year in such manner so that the total of the
payments made under such subsections for the year is equal to
30 percent of the total payments described in subparagraph
(A)(ii).
``(2) Risk adjustment for direct subsidies.--To the extent
the Administrator determines it appropriate to avoid risk
selection, the payments made for direct subsidies under
subsection (a)(1) are subject to adjustment based upon risk
factors specified by the Administrator. Any such risk
adjustment shall be designed in a manner as to not result in
a change in the aggregate payments made under such
subsection.
``(e) Payment Methods.--
``(1) In general.--Payments under this section shall be
based on such a method as the Administrator determines. The
Administrator may establish a payment method by which interim
payments of amounts under this section are made during a year
based on the Administrator's best estimate of amounts that
will be payable after obtaining all of the information.
``(2) Source of payments.--Payments under this section
shall be made from the Medicare Prescription Drug Trust Fund.
``(f) Qualified Retiree Prescription Drug Plan Defined.--
``(1) In general.--For purposes of this section, the term
`qualified retiree prescription drug plan' means employment-
based retiree health coverage (as defined in paragraph
(3)(A)) if, with respect to an individual enrolled (or
eligible to be enrolled) under this part who is covered under
the plan, the following requirements are met:
``(A) Assurance.--The sponsor of the plan shall annually
attest, and provide such assurances as the Administrator may
require, that the coverage meets or exceeds the requirements
for qualified prescription drug coverage.
``(B) Audits.--The sponsor (and the plan) shall maintain,
and afford the Administrator access to, such records as the
Administrator may require for purposes of audits and other
oversight activities necessary to ensure the adequacy of
prescription drug coverage, and the accuracy of payments
made.
``(C) Provision of certification of prescription drug
coverage.--The sponsor of the plan shall provide for issuance
of certifications of the type described in section
1860A(c)(2)(D).
``(2) Limitation on benefit eligibility.--No payment shall
be provided under this section with respect to an individual
who is enrolled under a qualified retiree prescription drug
plan unless the individual is--
``(A) enrolled under this part;
``(B) is covered under the plan; and
``(C) is eligible to obtain qualified prescription drug
coverage under section 1860A but did not elect such coverage
under this part (either through a prescription drug plan or
through a Medicare+Choice plan).
``(3) Definitions.--As used in this section:
``(A) Employment-based retiree health coverage.--The term
`employment-based retiree health coverage' means health
insurance or other coverage of health care costs for
individuals enrolled under this part (or for such individuals
and their spouses and dependents) based on their status as
former employees or labor union members.
``(B) Sponsor.--The term `sponsor' means a plan sponsor, as
defined in section 3(16)(B) of the Employee Retirement Income
Security Act of 1974.
``(g) General Definitions.--For purposes of this section:
``(1) Qualifying covered individual.--The term `qualifying
covered individual' means an individual who--
``(A) is enrolled with a prescription drug plan under this
part;
``(B) is enrolled with a Medicare+Choice plan that provides
qualified prescription drug coverage under part C; or
``(C) is enrolled for benefits under this title and is
covered under a qualified retiree prescription drug plan.
``(2) Coverage year.--The term `coverage year' means a
calendar year in which covered outpatient drugs are dispensed
if a claim for payment is made under the plan for such drugs,
regardless of when the claim is paid.
``SEC. 1860I. MEDICARE PRESCRIPTION DRUG TRUST FUND.
``(a) In General.--There is created on the books of the
Treasury of the United States a trust fund to be known as the
`Medicare Prescription Drug Trust Fund' (in this section
referred to as the `Trust Fund'). The Trust Fund shall
consist of such gifts and bequests as may be made as provided
in section 201(i)(1), and such amounts as may be deposited
in, or appropriated to, such fund as provided in this part.
Except as otherwise provided in this section, the provisions
of subsections (b) through (i) of section 1841 shall apply to
the Trust Fund in the same manner as they apply to the
Federal Supplementary Medical Insurance Trust Fund under such
section.
``(b) Payments From Trust Fund.--
``(1) In general.--The Managing Trustee shall pay from time
to time from the Trust Fund such amounts as the Administrator
certifies are necessary to make--
``(A) payments under section 1860G (relating to low-income
subsidy payments);
``(B) payments under section 1860H (relating to subsidy
payments); and
``(C) payments with respect to administrative expenses
under this part in accordance with section 201(g).
``(2) Transfers to medicaid account for increased
administrative costs.--The Managing Trustee shall transfer
from time to time from the Trust Fund to the Grants to States
for Medicaid account amounts the Administrator certifies are
attributable to increases in payment resulting from the
application of a higher Federal matching percentage under
section 1935(b).
``(c) Deposits Into Trust Fund.--
``(1) Low-income transfer.--There is hereby transferred to
the Trust Fund, from amounts appropriated for Grants to
States for Medicaid, amounts equivalent to the aggregate
amount of the reductions in payments under section 1903(a)(1)
attributable to the application of section 1935(c).
``(2) Appropriations to cover government contributions.--
There are authorized to be appropriated from time to time,
out of any moneys in the Treasury not otherwise appropriated,
to the Trust Fund, an amount equivalent to the amount of
payments made from the Trust Fund under subsection (b),
reduced by the amount transferred to the Trust Fund under
paragraph (1).
``(d) Relation to Solvency Requirements.--Any provision of
law that relates to the solvency of the Trust Fund under this
part shall take into account the Trust Fund and amounts
receivable by, or payable from, the Trust Fund.
``SEC. 1860J. DEFINITIONS; TREATMENT OF REFERENCES TO
PROVISIONS IN PART C.
``(a) Definitions.--For purposes of this part:
``(1) Covered outpatient drugs.--The term `covered
outpatient drugs' is defined in section 1860B(f).
``(2) Initial coverage limit.--The term `initial coverage
limit' means such limit as established under section
1860B(b)(3), or, in the case of coverage that is not standard
coverage, the comparable limit (if any) established under the
coverage.
``(3) Medicare prescription drug trust fund.--The term
`Medicare Prescription Drug Trust Fund' means the Trust Fund
created under section 1860I(a).
[[Page H4235]]
``(4) PDP sponsor.--The term `PDP sponsor' means an entity
that is certified under this part as meeting the requirements
and standards of this part for such a sponsor.
``(5) Prescription drug plan.--The term `prescription drug
plan' means health benefits coverage that--
``(A) is offered under a policy, contract, or plan by a PDP
sponsor pursuant to, and in accordance with, a contract
between the Administrator and the sponsor under section
1860D(b);
``(B) provides qualified prescription drug coverage; and
``(C) meets the applicable requirements of the section
1860C for a prescription drug plan.
``(6) Qualified prescription drug coverage.--The term
`qualified prescription drug coverage' is defined in section
1860B(a).
``(7) Standard coverage.--The term `standard coverage' is
defined in section 1860B(b).
``(b) Application of Medicare+Choice Provisions Under This
Part.--For purposes of applying provisions of part C under
this part with respect to a prescription drug plan and a PDP
sponsor, unless otherwise provided in this part such
provisions shall be applied as if--
``(1) any reference to a Medicare+Choice plan included a
reference to a prescription drug plan;
``(2) any reference to a provider-sponsored organization
included a reference to a PDP sponsor;
``(3) any reference to a contract under section 1857
included a reference to a contract under section 1860D(b);
and
``(4) any reference to part C included a reference to this
part.''.
(b) Additional Conforming Changes.--
(1) Conforming references to previous part d.--Any
reference in law (in effect before the date of the enactment
of this Act) to part D of title XVIII of the Social Security
Act is deemed a reference to part E of such title (as in
effect after such date).
(2) Conforming amendment permitting waiver of cost-
sharing.--Section 1128B(b)(3) (42 U.S.C. 1320a-7b(b)(3)) is
amended--
(A) by striking ``and'' at the end of subparagraph (E);
(B) by striking the period at the end of subparagraph (F)
and inserting ``; and''; and
(C) by adding at the end the following new subparagraph:
``(G) the waiver or reduction of any cost-sharing imposed
under part D of title XVIII.''.
(3) Submission of legislative proposal.--Not later than 6
months after the date of the enactment of this Act, the
Secretary of Health and Human Services shall submit to the
appropriate committees of Congress a legislative proposal
providing for such technical and conforming amendments in the
law as are required by the provisions of this subtitle.
(c) Study on Transitioning Part B Prescription Drug
Coverage.--Not later than January 1, 2004, the Medicare
Benefits Administrator shall submit a report to Congress that
makes recommendations regarding methods for providing
benefits under part D of title XVIII of the Social Security
Act for outpatient prescription drugs for which benefits are
provided under part B of such title.
SEC. 102. OFFERING OF QUALIFIED PRESCRIPTION DRUG COVERAGE
UNDER THE MEDICARE+CHOICE PROGRAM.
(a) In General.--Section 1851 (42 U.S.C. 1395w-21) is
amended by adding at the end the following new subsection:
``(j) Availability of Prescription Drug Benefits.--
``(1) Offer of qualified prescription drug coverage.--
``(A) In general.--A Medicare+Choice organization may not
offer prescription drug coverage (other than that required
under parts A and B) to an enrollee under a Medicare+Choice
plan unless such drug coverage is at least qualified
prescription drug coverage and unless the requirements of
this subsection with respect to such coverage are met.
``(B) Construction.--Nothing in this subsection shall be
construed as--
``(i) requiring a Medicare+Choice plan to include coverage
of qualified prescription drug coverage; or
``(ii) permitting a Medicare+Choice organization from
providing such coverage to an individual who has not elected
such coverage under section 1860A(b).
For purposes of this part, an individual who has not elected
qualified prescription drug coverage under section 1860A(b)
shall be treated as being ineligible to enroll in a
Medicare+Choice plan under this part that offers such
coverage.
``(2) Compliance with additional beneficiary protections.--
With respect to the offering of qualified prescription drug
coverage by a Medicare+Choice organization under a
Medicare+Choice plan, the organization and plan shall meet
the requirements of section 1860C, including requirements
relating to information dissemination and grievance and
appeals, in the same manner as they apply to a PDP sponsor
and a prescription drug plan under part D and shall submit to
the Administrator the information described in section
1860F(a)(2). The Administrator shall waive such requirements
to the extent the Administrator determines that such
requirements duplicate requirements otherwise applicable to
the organization or plan under this part.
``(3) Availability of premium and cost-sharing subsidies
for low-income enrollees and direct and reinsurance subsidy
payments for organizations.--For provisions--
``(A) providing premium and cost-sharing subsidies to low-
income individuals receiving qualified prescription drug
coverage through a Medicare+Choice plan, see section 1860G;
and
``(B) providing a Medicare+Choice organization with direct
and insurance subsidy payments for providing qualified
prescription drug coverage under this part, see section
1860H.
``(4) Transition in initial enrollment period.--
Notwithstanding any other provision of this part, the annual,
coordinated election period under subsection (e)(3)(B) for
2005 shall be the 6-month period beginning with November
2004.
``(5) Qualified prescription drug coverage; standard
coverage.--For purposes of this part, the terms `qualified
prescription drug coverage' and `standard coverage' have the
meanings given such terms in section 1860B.''.
(b) Conforming Amendments.--Section 1851 (42 U.S.C. 1395w-
21) is amended--
(1) in subsection (a)(1)--
(A) by inserting ``(other than qualified prescription drug
benefits)'' after ``benefits'';
(B) by striking the period at the end of subparagraph (B)
and inserting a comma; and
(C) by adding after and below subparagraph (B) the
following:
``and may elect qualified prescription drug coverage in
accordance with section 1860A.''; and
(2) in subsection (g)(1), by inserting ``and section
1860A(c)(2)(B)'' after ``in this subsection''.
(c) Effective Date.--The amendments made by this section
apply to coverage provided on or after January 1, 2005.
SEC. 103. MEDICAID AMENDMENTS.
(a) Determinations of Eligibility for Low-Income
Subsidies.--
(1) Requirement.--Section 1902(a) (42 U.S.C. 1396a(a)) is
amended--
(A) by striking ``and'' at the end of paragraph (64);
(B) by striking the period at the end of paragraph (65) and
inserting ``; and''; and
(C) by inserting after paragraph (65) the following new
paragraph:
``(66) provide for making eligibility determinations under
section 1935(a).''.
(2) New section.--Title XIX is further amended--
(A) by redesignating section 1935 as section 1936; and
(B) by inserting after section 1934 the following new
section:
``special provisions relating to medicare prescription drug benefit
``Sec. 1935. (a) Requirement for Making Eligibility
Determinations for Low-Income Subsidies.--As a condition of
its State plan under this title under section 1902(a)(66) and
receipt of any Federal financial assistance under section
1903(a), a State shall--
``(1) make determinations of eligibility for premium and
cost-sharing subsidies under (and in accordance with) section
1860G;
``(2) inform the Administrator of the Medicare Benefits
Administration of such determinations in cases in which such
eligibility is established; and
``(3) otherwise provide such Administrator with such
information as may be required to carry out part D of title
XVIII (including section 1860G).
``(b) Payments for Additional Administrative Costs.--
``(1) In general.--The amounts expended by a State in
carrying out subsection (a) are, subject to paragraph (2),
expenditures reimbursable under the appropriate paragraph of
section 1903(a); except that, notwithstanding any other
provision of such section, the applicable Federal matching
rates with respect to such expenditures under such section
shall be increased as follows (but in no case shall the rate
as so increased exceed 100 percent):
``(A) For expenditures attributable to costs incurred
during 2005, the otherwise applicable Federal matching rate
shall be increased by 10 percent of the percentage otherwise
payable (but for this subsection) by the State.
``(B)(i) For expenditures attributable to costs incurred
during 2006 and each subsequent year through 2013, the
otherwise applicable Federal matching rate shall be increased
by the applicable percent (as defined in clause (ii)) of the
percentage otherwise payable (but for this subsection) by the
State.
``(ii) For purposes of clause (i), the `applicable percent'
for--
``(I) 2006 is 20 percent; or
``(II) a subsequent year is the applicable percent under
this clause for the previous year increased by 10 percentage
points.
``(C) For expenditures attributable to costs incurred after
2013, the otherwise applicable Federal matching rate shall be
increased to 100 percent.
``(2) Coordination.--The State shall provide the
Administrator with such information as may be necessary to
properly allocate administrative expenditures described in
paragraph (1) that may otherwise be made for similar
eligibility determinations.''.
(b) Phased-In Federal Assumption of Medicaid Responsibility
for Premium and Cost-Sharing Subsidies for Dually Eligible
Individuals.--
(1) In general.--Section 1903(a)(1) (42 U.S.C. 1396b(a)(1))
is amended by inserting
[[Page H4236]]
before the semicolon the following: ``, reduced by the amount
computed under section 1935(c)(1) for the State and the
quarter''.
(2) Amount described.--Section 1935, as inserted by
subsection (a)(2), is amended by adding at the end the
following new subsection:
``(c) Federal Assumption of Medicaid Prescription Drug
Costs for Dually-Eligible Beneficiaries.--
``(1) In general.--For purposes of section 1903(a)(1), for
a State that is one of the 50 States or the District of
Columbia for a calendar quarter in a year (beginning with
2005) the amount computed under this subsection is equal to
the product of the following:
``(A) Medicare subsidies.--The total amount of payments
made in the quarter under section 1860G (relating to premium
and cost-sharing prescription drug subsidies for low-income
medicare beneficiaries) that are attributable to individuals
who are residents of the State and are entitled to benefits
with respect to prescribed drugs under the State plan under
this title (including such a plan operating under a waiver
under section 1115).
``(B) State matching rate.--A proportion computed by
subtracting from 100 percent the Federal medical assistance
percentage (as defined in section 1905(b)) applicable to the
State and the quarter.
``(C) Phase-out proportion.--The phase-out proportion (as
defined in paragraph (2)) for the quarter.
``(2) Phase-out proportion.--For purposes of paragraph
(1)(C), the `phase-out proportion' for a calendar quarter
in--
``(A) 2005 is 90 percent;
``(B) a subsequent year before 2014, is the phase-out
proportion for calendar quarters in the previous year
decreased by 10 percentage points; or
``(C) a year after 2013 is 0 percent.''.
(c) Medicaid Providing Wrap-Around Benefits.--Section 1935,
as so inserted and amended, is further amended by adding at
the end the following new subsection:
``(d) Additional Provisions.--
``(1) Medicaid as secondary payor.--In the case of an
individual who is entitled to qualified prescription drug
coverage under a prescription drug plan under part D of title
XVIII (or under a Medicare+Choice plan under part C of such
title) and medical assistance for prescribed drugs under this
title, medical assistance shall continue to be provided under
this title for prescribed drugs to the extent payment is not
made under the prescription drug plan or the Medicare+Choice
plan selected by the individual.
``(2) Condition.--A State may require, as a condition for
the receipt of medical assistance under this title with
respect to prescription drug benefits for an individual
eligible to obtain qualified prescription drug coverage
described in paragraph (1), that the individual elect
qualified prescription drug coverage under section 1860A.''.
(d) Treatment of Territories.--
(1) In general.--Section 1935, as so inserted and amended,
is further amended--
(A) in subsection (a) in the matter preceding paragraph
(1), by inserting ``subject to subsection (e)'' after
``section 1903(a)'';
(B) in subsection (c)(1), by inserting ``subject to
subsection (e)'' after ``1903(a)(1)''; and
(C) by adding at the end the following new subsection:
``(e) Treatment of Territories.--
``(1) In general.--In the case of a State, other than the
50 States and the District of Columbia--
``(A) the previous provisions of this section shall not
apply to residents of such State; and
``(B) if the State establishes a plan described in
paragraph (2) (for providing medical assistance with respect
to the provision of prescription drugs to medicare
beneficiaries), the amount otherwise determined under section
1108(f) (as increased under section 1108(g)) for the State
shall be increased by the amount specified in paragraph (3).
``(2) Plan.--The plan described in this paragraph is a plan
that--
``(A) provides medical assistance with respect to the
provision of covered outpatient drugs (as defined in section
1860B(f)) to low-income medicare beneficiaries; and
``(B) assures that additional amounts received by the State
that are attributable to the operation of this subsection are
used only for such assistance.
``(3) Increased amount.--
``(A) In general.--The amount specified in this paragraph
for a State for a year is equal to the product of--
``(i) the aggregate amount specified in subparagraph (B);
and
``(ii) the amount specified in section 1108(g)(1) for that
State, divided by the sum of the amounts specified in such
section for all such States.
``(B) Aggregate amount.--The aggregate amount specified in
this subparagraph for--
``(i) 2005, is equal to $20,000,000; or
``(ii) a subsequent year, is equal to the aggregate amount
specified in this subparagraph for the previous year
increased by annual percentage increase specified in section
1860B(b)(5) for the year involved.
``(4) Report.--The Administrator shall submit to Congress a
report on the application of this subsection and may include
in the report such recommendations as the Administrator deems
appropriate.''.
(2) Conforming amendment.--Section 1108(f) (42 U.S.C.
1308(f)) is amended by inserting ``and section
1935(e)(1)(B)'' after ``Subject to subsection (g)''.
(e) Amendment to Best Price.--Section 1927(c)(1)(C)(i) (42
U.S.C. 1396r-8(c)(1)(C)(i)) is amended--
(1) by striking ``and'' at the end of subclause (III);
(2) by striking the period at the end of subclause (IV) and
inserting ``; and''; and
(3) by adding at the end the following new subclause:
``(V) any prices charged which are negotiated by a
prescription drug plan under part D of title XVIII, by a
Medicare+Choice plan under part C of such title with respect
to covered outpatient drugs, or by a qualified retiree
prescription drug plan (as defined in section 1860H(f)(1))
with respect to such drugs on behalf of individuals entitled
to benefits under part A or enrolled under part B of such
title.''.
SEC. 104. MEDIGAP TRANSITION.
(a) In General.--Section 1882 (42 U.S.C. 1395ss) is amended
by adding at the end the following new subsection:
``(v) Coverage of Prescription Drugs.--
``(1) In general.--Notwithstanding any other provision of
law, except as provided in paragraph (3) no new medicare
supplemental policy that provides coverage of expenses for
prescription drugs may be issued under this section on or
after January 1, 2005, to an individual unless it replaces a
medicare supplemental policy that was issued to that
individual and that provided some coverage of expenses for
prescription drugs.
``(2) Issuance of substitute policies if obtain
prescription drug coverage under part d.--
``(A) In general.--The issuer of a medicare supplemental
policy--
``(i) may not deny or condition the issuance or
effectiveness of a medicare supplemental policy that has a
benefit package classified as `A', `B', `C', `D', `E', `F',
or `G' (under the standards established under subsection
(p)(2)) and that is offered and is available for issuance to
new enrollees by such issuer;
``(ii) may not discriminate in the pricing of such policy,
because of health status, claims experience, receipt of
health care, or medical condition; and
``(iii) may not impose an exclusion of benefits based on a
pre-existing condition under such policy,
in the case of an individual described in subparagraph (B)
who seeks to enroll under the policy not later than 63 days
after the date of the termination of enrollment described in
such paragraph and who submits evidence of the date of
termination or disenrollment along with the application for
such medicare supplemental policy.
``(B) Individual covered.--An individual described in this
subparagraph is an individual who--
``(i) enrolls in a prescription drug plan under part D; and
``(ii) at the time of such enrollment was enrolled and
terminates enrollment in a medicare supplemental policy which
has a benefit package classified as `H', `I', or `J' under
the standards referred to in subparagraph (A)(i) or
terminates enrollment in a policy to which such standards do
not apply but which provides benefits for prescription drugs.
``(C) Enforcement.--The provisions of paragraph (4) of
subsection (s) shall apply with respect to the requirements
of this paragraph in the same manner as they apply to the
requirements of such subsection.
``(3) New standards.--In applying subsection (p)(1)(E)
(including permitting the NAIC to revise its model
regulations in response to changes in law) with respect to
the change in benefits resulting from title I of the Medicare
Modernization and Prescription Drug Act of 2002, with respect
to policies issued to individuals who are enrolled under part
D, the changes in standards shall only provide for
substituting for the benefit packages that included coverage
for prescription drugs two benefit packages that may provide
for coverage of cost-sharing with respect to qualified
prescription drug coverage under such part, except that such
coverage may not cover the prescription drug deductible under
such part. The two benefit packages shall be consistent with
the following:
``(A) First new policy.--The policy described in this
subparagraph has the following benefits, notwithstanding any
other provision of this section relating to a core benefit
package:
``(i) Coverage of 50 percent of the cost-sharing otherwise
applicable, except coverage of 100 percent of any cost-
sharing otherwise applicable for preventive benefits.
``(ii) No coverage of the part B deductible.
``(iii) Coverage for all hospital coinsurance for long
stays (as in the current core benefit package).
``(iv) A limitation on annual out-of-pocket expenditures to
$4,000 in 2005 (or, in a subsequent year, to such limitation
for the previous year increased by an appropriate inflation
adjustment specified by the Secretary).
``(B) Second new policy.--The policy described in this
subparagraph has the same benefits as the policy described in
subparagraph (A), except as follows:
``(i) Substitute `75 percent' for `50 percent' in clause
(i) of such subparagraph.
``(ii) Substitute `$2,000' for `$4,000' in clause (iv) of
such subparagraph.
``(4) Construction.--Any provision in this section or in a
medicare supplemental policy relating to guaranteed
renewability of coverage shall be deemed to have been met
[[Page H4237]]
through the offering of other coverage under this
subsection.''.
SEC. 105. MEDICARE PRESCRIPTION DRUG DISCOUNT CARD
ENDORSEMENT PROGRAM.
(a) In General.--Title XVIII is amended by inserting after
section 1806 the following new sections:
``medicare prescription drug discount card endorsement program
``Sec. 1807. (a) In General.--The Secretary (or the
Medicare Benefits Administrator pursuant to section
1808(c)(3)(C)) shall establish a program--
``(1) to endorse prescription drug discount card programs
that meet the requirements of this section; and
``(2) to make available to medicare beneficiaries
information regarding such endorsed programs.
``(b) Requirements for Endorsement.--The Secretary may not
endorse a prescription drug discount card program under this
section unless the program meets the following requirements:
``(1) Savings to medicare beneficiaries.--The program
passes on to medicare beneficiaries who enroll in the program
discounts on prescription drugs, including discounts
negotiated with manufacturers.
``(2) Prohibition on application only to mail order.--The
program applies to drugs that are available other than solely
through mail order.
``(3) Beneficiary services.--The program provides
pharmaceutical support services, such as education and
counseling, and services to prevent adverse drug
interactions.
``(4) Information.--The program makes available to medicare
beneficiaries through the Internet and otherwise information,
including information on enrollment fees, prices charged to
beneficiaries, and services offered under the program, that
the Secretary identifies as being necessary to provide for
informed choice by beneficiaries among endorsed programs.
``(5) Demonstrated experience.--The entity operating the
program has demonstrated experience and expertise in
operating such a program or a similar program.
``(6) Quality assurance.--The entity has in place adequate
procedures for assuring quality service under the program.
``(7) Operation of assistance program.--The entity meets
such requirements relating to solvency, compliance with
financial reporting requirements, audit compliance, and
contractual guarantees as the Secretary finds necessary for
the participation of the sponsor in the low-income assistance
program under section 1807A.
``(8) Enrollment fees.--The program may charge an annual
enrollment fee, but the amount of such annual fee may not
exceed $25.
``(9) Additional beneficiary protections.--The program
meets such additional requirements as the Secretary
identifies to protect and promote the interest of medicare
beneficiaries, including requirements that ensure that
beneficiaries are not charged more than the lower of the
negotiated retail price or the usual and customary price.
The prices negotiated by a prescription drug discount card
program endorsed under this section shall (notwithstanding
any other provision of law) not be taken into account for the
purposes of establishing the best price under section
1927(c)(1)(C).
``(c) Program Operation.--The Secretary shall operate the
program under this section consistent with the following:
``(1) Promotion of informed choice.--In order to promote
informed choice among endorsed prescription drug discount
card programs, the Secretary shall provide for the
dissemination of information which compares the prices and
services of such programs in a manner coordinated with the
dissemination of educational information on Medicare+Choice
plans under part C.
``(2) Oversight.--The Secretary shall provide appropriate
oversight to ensure compliance of endorsed programs with the
requirements of this section, including verification of the
discounts and services provided.
``(3) Use of medicare toll-free number.--The Secretary
shall provide through the 1-800-medicare toll free telephone
number for the receipt and response to inquiries and
complaints concerning the program and programs endorsed under
this section.
``(4) Sanctions for abusive practices.--The Secretary may
implement intermediate sanctions or may revoke the
endorsement of a program in the case of a program that the
Secretary determines no longer meets the requirements of this
section or that has engaged in false or misleading marketing
practices.
``(5) Enrollment practices.--A medicare beneficiary may not
be enrolled in more than one endorsed program at any time. A
medicare beneficiary may change the endorsed program in which
the beneficiary is enrolled, but may not make such change
until the beneficiary has been enrolled in a program for a
minimum period of time specified by the Secretary.
``(d) Transition.--The Secretary shall provide for an
appropriate transition and discontinuation of the program
under this section at the time prescription drug benefits
first become available under part D.
``(e) Endorsement Condition.--The Secretary shall require,
as condition of endorsement under of a prescription drug
discount card program under this section that the program
implement policies and procedures to safeguard the use and
disclosure of program beneficiaries' individually
identifiable health information in a manner consistent with
the Federal regulations (concerning the privacy of
individually identifiable health information) promulgated
under section 264(c) of the Health Insurance Portability and
Accountability Act of 1996.
``(f) Authorization of Appropriations.--There are
authorized to be appropriated such sums as may be necessary
to carry out the program under this section and section
1807A.
``transitional prescription drug assistance program for low-income
beneficiaries
``Sec. 1807A. (a) Purpose.--The purpose of this section is
to provide low-income medicare beneficiaries with immediate
assistance in the purchase of covered outpatient prescription
drugs during the period before the program under part D
becomes effective.
``(b) Funds Available; Allotments.--
``(1) Appropriations; total allotments.--
``(A) Appropriations.--For the purpose of carrying out this
section, there is appropriated, out of any money in the
Treasury not otherwise appropriated--
``(i) for fiscal year 2003, $300,000,000;
``(ii) for fiscal year 2004, $2,100,000,000; and
``(iii) for fiscal year 2005, $500,000,000.
``(2) Allotments.--
``(A) Among residents of 50 states and the district of
columbia.--Subject to subparagraph (B), the amount
appropriated under subparagraph (A) for each fiscal year
shall be allotted among the 50 States and the District of
Columbia based upon the Secretary's estimate of each State's
or District's proportion of the total number of medicare
beneficiaries with income below 175 percent of the Federal
poverty line residing in all such States and the District.
The Secretary shall determine the amount of the allotment for
each such State and District not later than July 1, 2003.
``(B) Among residents of territories.--Of the amount
appropriated under subparagraph (A) for a fiscal year, the
Secretary shall allot a percentage (determined consistent
with the allotment provided to territories under the State
children's health insurance program under section 2104(c))
among the commonwealths and territories described in section
2104(c)(3) in the same proportion as the allotment proportion
under such program is allowed among such commonwealths and
territories.
``(3) Availability of amounts allotted.--Amounts allotted
with respect to a State pursuant to this subsection for a
fiscal year shall remain available for expenditure through
the end of the fiscal year in which benefits are first
available under part D. Any funds allotted to States that are
not obligated revert to the General Fund of the Treasury.
``(4) Limitation.--In no case shall the total amount of
payments for assistance to eligible individuals (and
administrative costs) in a State for a fiscal year (and
previous fiscal years) under this section exceed the amount
of the allotments with respect to that State in that year
(and previous fiscal years). Nothing in this section shall be
construed as preventing a State from providing, with its own
funds, pharmaceutical assistance that is in addition to the
assistance funded under this section.
``(c) Eligibility.--
``(1) In general.--Taking into account the amounts allotted
with respect to each State under subsection (b) and the
minimum dollar value on assistance per eligible individual
specified by the Secretary under subsection (d)(3), the
Secretary shall establish guidelines for the establishment by
each State of eligibility standards consistent with paragraph
(2).
``(2) Eligibility restrictions.--In no case shall an
individual residing in a State be eligible for assistance
under this section unless the individual--
``(A) is entitled to benefits under part A or enrolled
under part B;
``(B) has income that is at or below a percentage
(specified under the State eligibility plan under paragraph
(1), but not to exceed 175 percent) of the Federal poverty
line; and
``(C) meets the resources requirement described in section
1905(p)(1)(C);
``(D) is enrolled under a prescription drug discount card
program (or under an alternative program authorized under
subsection (d)(1)(B)); and
``(E) is not eligible for coverage of, or assistance for,
outpatient prescription drugs under any of the following:
``(i) A medicaid plan under title XIX (including under any
waiver approved under section 1115).
``(ii) Enrollment under a group health plan or health
insurance coverage.
``(iii) Enrollment under a medicare supplemental insurance
policy.
``(iv) Chapter 55 of title 10, United States Code (relating
to medical and dental care for members of the uniformed
services).
``(v) Chapter 17 of title 38, United States Code (relating
to Veterans' medical care).
``(vi) Enrollment under a plan under chapter 89 of title 5,
United States Code (relating to the Federal employees' health
benefits program).
``(vii) The Indian Health Care Improvement Act (25 U.S.C.
1601 et seq.).
``(3) Income determinations.--The provisions of section
1860G(4)(C) shall apply for purposes of applying this
subsection.
``(d) Form of Assistance and Amount of Benefits.--
``(1) In general.--
[[Page H4238]]
``(A) Through program sponsor.--Subject to subparagraph
(B), the assistance under this section to an eligible
individual shall be in the form of a discount (as identified
by the sponsor to the Secretary) provided by the sponsor of a
prescription drug discount card program to eligible
individuals who are enrolled in such program.
``(B) Through alternative state program.--A State may apply
to the Secretary for authorization to provide the assistance
under this section to an eligible individual through a State
pharmaceutical assistance program or private program of
pharmaceutical assistance. The Secretary shall not authorize
the use of such a program unless the Secretary finds that the
program--
``(i) was in existence before the date of the enactment of
this section; and
``(ii) is reasonably designed to provide for pharmaceutical
assistance for a number of individuals, and in a scope, that
is not less than the number of individuals, and minimum
required amount, that would occur if the provisions of this
subparagraph had not applied in the State.
``(2) Guidance; minimum level of assistance.--The Secretary
shall establish guidelines for how the program under this
section will operate. Based upon the aggregate amount
appropriated in each fiscal year and other relevant factors,
the Secretary shall establish a minimum amount of assistance
that is available, subject to paragraph (4)(B), to each
eligible individual for each calendar quarter (or other
period specified by the Secretary) and provide guidance to
sponsors regarding how assistance funds may be provided to
eligible individuals consistent with such amount and funding
limitations.
``(3) Relationship to discounts.--The assistance provided
under this section is in addition to the discount otherwise
available to individuals enrolled in prescription drug
discount card programs who are not eligible individuals.
``(4) Limitation on assistance.--
``(A) In general.--The assistance under this section for an
eligible individual shall be limited to assistance--
``(i) for covered outpatient drugs (as defined in section
1860B(f)) and for enrollment fees imposed under prescription
drug discount card programs; and
``(ii) for expenses incurred--
``(I) on and after the date the individual is both enrolled
in the prescription drug discount card program and determined
to be an eligible individual under this section; and
``(II) before the date benefits are first available under
the program under part D.
``(B) Authority.--The Secretary shall take such steps as
may be necessary to assure compliance with the expenditure
limitations described in subsection (b)(4).
``(e) Payment of Federal Subsidy to Sponsors.--
``(1) In general.--The Secretary shall make payment (within
the allotments for each State, less the administrative
payments made subsection (f)(2) to each State) to the sponsor
of the prescription drug discount card program (or to a State
or other entity operating a program under subsection
(d)(1)(B)) in which an eligible individual is enrolled of the
amount of the assistance provided by the sponsor pursuant to
this section.
``(2) Periodic payments.--Payments under this subsection
(and subsection (f)(2)) shall be made on a monthly or other
periodic installment basis, based upon estimates of the
Secretary and shall be reduced or increased to the extent of
any overpayment or underpayment which the Secretary
determines was made under this section for any prior period
and with respect to which adjustment has not already been
made under this paragraph.
``(f) State Responsibilities.--
``(1) Eligibility determinations.--As a condition for the
payment of Federal financial participation to a State under
section 1903(a) for periods during which assistance is
available under this section, the State must submit to the
Secretary an eligibility plan under which the State--
``(A) establishes eligibility standards consistent with the
provisions of this section;
``(B) conducts determinations of eligibility and income in
the same manner as the State is required to make eligibility
and income determinations described in section 1860G(a)(4);
and
``(C) communicates to the Secretary (or the Secretary's
designee) determinations of eligibility or discontinuation of
eligibility under this section.
The Secretary shall provide a method for communicating with
sponsors concerning the identity of eligible individuals.
``(2) Coverage of administrative costs.--Of the amount
allotted with respect to a State under subsection (b), the
Secretary shall pay to the State the amount of its
administrative costs in carrying out this subsection, but not
to exceed 10 percent of the amount of such allotment to the
State. The provisions of subsection (e)(2) shall apply to
such payments.
``(g) Definitions.--For purposes of this section:
``(1) Eligible individual.--The term `eligible individual'
means an individual who is determined by a State to be
eligible for assistance under this section.
``(2) Prescription drug discount card program.--The term
`prescription drug discount card program' means such a
program that is endorsed under section 1807.
``(3) Sponsor.--The term `sponsor' means the sponsor of a
prescription drug discount card program, or, in the case of a
program authorized under subsection (d)(1)(B), the State or
other entity operating the program.
``(4) State.--The term `State' has the meaning given such
term for purposes of title XIX.''.
(b) Conforming Amendment.--Section 1927(c)(1)(C)(i)(V) (42
U.S.C. 1396r-8(c)(1)(C)(i)(V)), as added by section 103(e),
is amended by striking ``or by a qualified retiree
prescription drug plan (as defined in section 1860H(f)(1))''
and inserting ``by a qualified retiree prescription drug plan
(as defined in section 1860H(f)(1)), or by a prescription
drug discount card program endorsed under section 1807''.
SEC. 106. GAO STUDY OF THE EFFECTIVENESS OF THE NEW
PRESCRIPTION DRUG PROGRAM.
(a) Study.--The Comptroller General of the United States
shall conduct a study on the effectiveness of the
prescription drug program provided under part D of title
XVIII of the Social Security Act. Such study shall--
(1) report--
(A) the percentage of eligible individuals who enrolled in
the program;
(B) the demographic characteristics (including health
status) of such enrollees;
(C) the number and type of qualified prescription drug
coverage available to such individuals; and
(D) the premiums imposed for enrollment in different areas;
(2) evaluate the processes and methods developed by the
Administrator and the decisions reached by outside actuaries
to determine the actuarial valuation of prescription drug
coverage; and
(3) assess whether the subsidy payments under such part
accomplished its stated goals of reducing premium levels for
all beneficiaries, reducing adverse selection, and promoting
participation of PDP sponsors.
(b) Report.--Not later January 1, 2006, the Comptroller
General shall submit a report to Congress on the study
conducted under subsection (a).
TITLE II--MEDICARE+CHOICE REVITALIZATION AND MEDICARE+CHOICE
COMPETITION PROGRAM
Subtitle A--Medicare+Choice Revitalization
SEC. 201. MEDICARE+CHOICE IMPROVEMENTS.
(a) Equalizing Payments Between Fee-For-Service and
Medicare+Choice.--
(1) In general.--Section 1853(c)(1) (42 U.S.C. 1395w-
23(c)(1)) is amended by adding at the end the following:
``(D) Based on 100 percent of fee-for-service costs.--
``(i) In general.--For 2003 and 2004, the adjusted average
per capita cost for the year involved, determined under
section 1876(a)(4) for the Medicare+Choice payment area for
services covered under parts A and B for individuals entitled
to benefits under part A and enrolled under part B who are
not enrolled in a Medicare+Choice plan under this part for
the year, but adjusted to exclude costs attributable to
payments under section 1886(h).
``(ii) Inclusion of costs of va and dod military facility
services to medicare-eligible beneficiaries.--In determining
the adjusted average per capita cost under clause (i) for a
year, such cost shall be adjusted to include the Secretary's
estimate, on a per capita basis, of the amount of additional
payments that would have been made in the area involved under
this title if individuals entitled to benefits under this
title had not received services from facilities of the
Department of Veterans Affairs or the Department of
Defense.''.
(2) Conforming amendment.--Such section is further amended,
in the matter before subparagraph (A), by striking ``or (C)''
and inserting ``(C), or (D)''.
(b) Revision of Blend.--
(1) Revision of national average used in calculation of
blend.--Section 1853(c)(4)(B)(i)(II) (42 U.S.C. 1395w-
23(c)(4)(B)(i)(II)) is amended by inserting ``who (with
respect to determinations for 2003 and for 2004) are enrolled
in a Medicare+Choice plan'' after ``the average number of
medicare beneficiaries''.
(2) Change in budget neutrality.--Section 1853(c) (42
U.S.C. 1395w-23(c)) is amended--
(A) in paragraph (1)(A), by inserting ``(for a year before
2003)'' after ``multiplied''; and
(B) in paragraph (5), by inserting ``(before 2003)'' after
``for each year''.
(c) Revision in Minimum Percentage Increase for 2003 and
2004.--Section 1853(c)(1)(C) (42 U.S.C. 1395w-23(c)(1)(C)) is
amended by striking clause (iv) and inserting the following:
``(iv) For 2002, 102 percent of the annual Medicare+Choice
capitation rate under this paragraph for the area for 2001.
``(v) For 2003 and 2004, 103 percent of the annual
Medicare+Choice capitation rate under this paragraph for the
area for the previous year.
``(vi) For 2005 and each succeeding year, 102 percent of
the annual Medicare+Choice capitation rate under this
paragraph for the area for the previous year.''.
(d) Inclusion of Costs of DOD and VA Military Facility
Services to Medicare-eligible Beneficiaries in Calculation of
Medicare+Choice Payment Rates.--Section 1853(c)(3) (42 U.S.C.
1395w-23(c)(3)) is amended--
(1) in subparagraph (A), by striking ``subparagraph (B)''
and inserting ``subparagraphs (B) and (E)'', and
[[Page H4239]]
(2) by adding at the end the following new subparagraph:
``(E) Inclusion of costs of dod and va military facility
services to medicare-eligible beneficiaries.--In determining
the area-specific Medicare+Choice capitation rate under
subparagraph (A) for a year (beginning with 2003), the annual
per capita rate of payment for 1997 determined under section
1876(a)(1)(C) shall be adjusted to include in the rate the
Secretary's estimate, on a per capita basis, of the amount of
additional payments that would have been made in the area
involved under this title if individuals entitled to benefits
under this title had not received services from facilities of
the Department of Defense or the Department of Veterans
Affairs.''.
(e) Announcement of Revised Medicare+Choice Payment
Rates.--Within 4 weeks after the date of the enactment of
this Act, the Secretary shall determine, and shall announce
(in a manner intended to provide notice to interested
parties) Medicare+Choice capitation rates under section 1853
of the Social Security Act (42 U.S.C. 1395w-23) for 2003,
revised in accordance with the provisions of this section.
(f) MedPAC Study of AAPCC.--
(1) Study.--The Medicare Payment Advisory Commission shall
conduct a study that assesses the method used for determining
the adjusted average per capita cost (AAPCC) under section
1876(a)(4) of the Social Security Act (42 U.S.C.
1395mm(a)(4)). Such study shall examine--
(A) the bases for variation in such costs between different
areas, including differences in input prices, utilization,
and practice patterns;
(B) the appropriate geographic area for payment under the
Medicare+Choice program under part C of title XVIII of such
Act; and
(C) the accuracy of risk adjustment methods in reflecting
differences in costs of providing care to different groups of
beneficiaries served under such program.
(2) Report.--Not later than 9 months after the date of the
enactment of this Act, the Commission shall submit to
Congress a report on the study conducted under paragraph (1).
Such report shall include recommendations regarding changes
in the methods for computing the adjusted average per capita
cost among different areas.
(g) Report on Impact of Increased Financial Assistance to
Medicare+Choice Plans.--Not later than July 1, 2003, the
Secretary of Health and Human Services shall submit to
Congress a report that describes the impact of additional
financing provided under this Act and other Acts (including
the Medicare, Medicaid, and SCHIP Balanced Budget Refinement
Act of 1999 and BIPA) on the availability of Medicare+Choice
plans in different areas and its impact on lowering premiums
and increasing benefits under such plans.
SEC. 202. MAKING PERMANENT CHANGE IN MEDICARE+CHOICE
REPORTING DEADLINES AND ANNUAL, COORDINATED
ELECTION PERIOD.
(a) Change in Reporting Deadline.--Section 1854(a)(1) (42
U.S.C. 1395w-24(a)(1)), as amended by section 532(b)(1) of
the Public Health Security and Bioterrorism Preparedness and
Response Act of 2002, is amended by striking ``2002, 2003,
and 2004 (or July 1 of each other year)'' and inserting
``2002 and each subsequent year (or July 1 of each year
before 2002)''.
(b) Delay in Annual, Coordinated Election Period.--Section
1851(e)(3)(B) (42 U.S.C. 1395w-21(e)(3)(B)), as amended by
section 532(c)(1)(A) of the Public Health Security and
Bioterrorism Preparedness and Response Act of 2002, is
amended by striking ``and after 2005, the month of November
before such year and with respect to 2003, 2004, and 2005''
and inserting ``, the month of November before such year and
with respect to 2003 and any subsequent year''.
(c) Annual Announcement of Payment Rates.--Section
1853(b)(1) (42 U.S.C. 1395w-23(b)(1)), as amended by section
532(d)(1) of the Public Health Security and Bioterrorism
Preparedness and Response Act of 2002, is amended by striking
``and after 2005 not later than March 1 before the calendar
year concerned and for 2004 and 2005'' and inserting ``not
later than March 1 before the calendar year concerned and for
2004 and each subsequent year''.
(d) Requiring Provision of Available Information Comparing
Plan Options.--The first sentence of section
1851(d)(2)(A)(ii) (42 U.S.C. 1395w-21(d)(2)(A)(ii)) is
amended by inserting before the period the following: ``to
the extent such information is available at the time of
preparation of materials for the mailing''.
SEC. 203. AVOIDING DUPLICATIVE STATE REGULATION.
(a) In General.--Section 1856(b)(3) (42 U.S.C. 1395w-
26(b)(3)) is amended to read as follows:
``(3) Relation to state laws.--The standards established
under this subsection shall supersede any State law or
regulation (other than State licensing laws or State laws
relating to plan solvency) with respect to Medicare+Choice
plans which are offered by Medicare+Choice organizations
under this part.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act.
SEC. 204. SPECIALIZED MEDICARE+CHOICE PLANS FOR SPECIAL NEEDS
BENEFICIARIES.
(a) Treatment as Coordinated Care Plan.--Section
1851(a)(2)(A) (42 U.S.C. 1395w-21(a)(2)(A)) is amended by
adding at the end the following new sentence: ``Specialized
Medicare+Choice plans for special needs beneficiaries (as
defined in section 1859(b)(4)) may be any type of coordinated
care plan.''.
(b) Specialized Medicare+Choice Plan for Special Needs
Beneficiaries Defined.--Section 1859(b) (42 U.S.C. 1395w-
29(b)) is amended by adding at the end the following new
paragraph:
``(4) Specialized medicare+choice plans for special needs
beneficiaries.--
``(A) In general.--The term `specialized Medicare+Choice
plan for special needs beneficiaries' means a Medicare+Choice
plan that exclusively serves special needs beneficiaries (as
defined in subparagraph (B)).
``(B) Special needs beneficiary.--The term `special needs
beneficiary' means a Medicare+Choice eligible individual
who--
``(i) is institutionalized (as defined by the Secretary);
``(ii) is entitled to medical assistance under a State plan
under title XIX; or
``(iii) meets such requirements as the Secretary may
determine would benefit from enrollment in such a specialized
Medicare+Choice plan described in subparagraph (A) for
individuals with severe or disabling chronic conditions.''.
(c) Restriction on Enrollment Permitted.--Section 1859 (42
U.S.C. 1395w-29) is amended by adding at the end the
following new subsection:
``(f) Restriction on Enrollment for Specialized
Medicare+Choice Plans for Special Needs Beneficiaries.--In
the case of a specialized Medicare+Choice plan (as defined in
subsection (b)(4)), notwithstanding any other provision of
this part and in accordance with regulations of the Secretary
and for periods before January 1, 2007, the plan may restrict
the enrollment of individuals under the plan to individuals
who are within one or more classes of special needs
beneficiaries.''.
(d) Report to Congress.--Not later than December 31, 2005,
the Medicare Benefits Administrator shall submit to Congress
a report that assesses the impact of specialized
Medicare+Choice plans for special needs beneficiaries on the
cost and quality of services provided to enrollees. Such
report shall include an assessment of the costs and savings
to the medicare program as a result of amendments made by
subsections (a), (b), and (c).
(e) Effective Dates.--
(1) In general.--The amendments made by subsections (a),
(b), and (c) shall take effect upon the date of the enactment
of this Act.
(2) Deadline for issuance of requirements for special needs
beneficiaries; transition.--No later than 6 months after the
date of the enactment of this Act, the Secretary of Health
and Human Services shall issue final regulations to establish
requirements for special needs beneficiaries under section
1859(b)(4)(B)(iii) of the Social Security Act, as added by
subsection (b).
SEC. 205. MEDICARE MSAS.
(a) Exemption from Reporting Enrollee Encounter Data.--
(1) In general.--Section 1852(e)(1) (42 U.S.C. 1395w-
22(e)(1)) is amended by inserting ``(other than MSA plans)''
after ``Medicare+Choice plans''.
(2) Conforming amendments.--Section 1852 (42 U.S.C. 1395w-
22) is amended--
(A) in subsection (c)(1)(I), by inserting before the period
at the end the following: ``if required under such section'';
and
(B) in subparagraphs (A) and (B) of subsection (e)(2), by
striking ``, a non-network MSA plan,'' and ``, non-network
msa plans,'' each place it appears.
(b) Making Program Permanent and Eliminating Cap.--Section
1851(b)(4) (42 U.S.C. 1395w-21(b)(4)) is amended--
(1) in the heading, by striking ``on a demonstration
basis'';
(2) by striking the first sentence of subparagraph (A); and
(3) by striking the second sentence of subparagraph (C).
(c) Applying Limitations on Balance Billing.--Section
1852(k)(1) (42 U.S.C. 1395w-22(k)(1)) is amended by inserting
``or with an organization offering a MSA plan'' after
``section 1851(a)(2)(A)''.
(d) Additional Amendment.--Section 1851(e)(5)(A) (42 U.S.C.
1395w-21(e)(5)(A)) is amended--
(1) by adding ``or'' at the end of clause (i);
(2) by striking ``, or'' at the end of clause (ii) and
inserting a semicolon; and
(3) by striking clause (iii).
SEC. 206. EXTENSION OF REASONABLE COST AND SHMO CONTRACTS.
(a) Reasonable Cost Contracts.--
(1) In general.--Section 1876(h)(5)(C) (42 U.S.C.
1395mm(h)(5)(C)) is amended--
(A) by inserting ``(i)'' after ``(C)'';
(B) by inserting before the period the following: ``,
except (subject to clause (ii)) in the case of a contract for
an area which is not covered in the service area of 1 or more
coordinated care Medicare+Choice plans under part C''; and
(C) by adding at the end the following new clause:
``(ii) In the case in which--
``(I) a reasonable cost reimbursement contract includes an
area in its service area as of a date that is after December
31, 2003;
``(II) such area is no longer included in such service area
after such date by reason of the operation of clause (i)
because of the inclusion of such area within the service area
of a Medicare+Choice plan; and
[[Page H4240]]
``(III) all Medicare+Choice plans subsequently terminate
coverage in such area;
such reasonable cost reimbursement contract may be extended
and renewed to cover such area (so long as it is not included
in the service area of any Medicare+Choice plan).''.
(2) Study.--The Medicare Benefits Administrator shall
conduct a study of an appropriate transition for plans
offered under reasonable cost contracts under section 1876 of
the Social Security Act on and after January 1, 2005. Such a
transition may take into account whether there are one or
more coordinated care Medicare+Choice plans being offered in
the areas involved. Not later than February 1, 2004, the
Administrator shall submit to Congress a report on such study
and shall include recommendations regarding any changes in
the amendment made by paragraph (1) as the Administrator
determines to be appropriate.
(b) Extension of Social Health Maintenance Organization
(SHMO) Demonstration Project.--
(1) In general.--Section 4018(b)(1) of the Omnibus Budget
Reconciliation Act of 1987 is amended by striking ``the date
that is 30 months after the date that the Secretary submits
to Congress the report described in section 4014(c) of the
Balanced Budget Act of 1997'' and inserting ``December 31,
2004''.
(2) SHMOs offering medicare+choice plans.--Nothing in such
section 4018 shall be construed as preventing a social health
maintenance organization from offering a Medicare+Choice plan
under part C of title XVIII of the Social Security Act.
Subtitle B--Medicare+Choice Competition Program
SEC. 211. MEDICARE+CHOICE COMPETITION PROGRAM.
(a) Submission of Bid Amounts.--Section 1854 (42 U.S.C.
1395w-24) is amended--
(1) in the heading by inserting ``and bid amounts'' after
``premiums'';
(2) in subsection (a)(1)(A)--
(A) by striking ``(A)'' and inserting ``(A)(i) if the
following year is before 2005,''; and
(B) by inserting before the semicolon at the end the
following: ``or (ii) if the following year is 2005 or later,
the information described in paragraph (6)(A)''; and
(3) by adding at the end of subsection (a) the following:
``(6) Submission of bid amounts by medicare+choice
organizations.--
``(A) Information to be submitted.--The information
described in this subparagraph is as follows:
``(i) The monthly aggregate bid amount for provision of all
items and services under this part and the actuarial basis
for determining such amount.
``(ii) The proportions of such bid amount that are
attributable to--
``(I) the provision of statutory non-drug benefits (such
portion referred to in this part as the `unadjusted non-drug
monthly bid amount');
``(II) the provision of statutory prescription drug
benefits; and
``(III) the provision of non-statutory benefits;
and the actuarial basis for determining such proportions.
``(iii) Such additional information as the Administrator
may require to verify the actuarial bases described in
clauses (i) and (ii).
``(B) Statutory benefits defined.--For purposes of this
part:
``(i) The term `statutory non-drug benefits' means benefits
under parts A and B.
``(ii) The term `statutory prescription drug benefits'
means benefits under part D.
``(iii) The term `statutory benefits' means statutory
prescription drug benefits and statutory non-drug benefits.
``(C) Acceptance and negotiation of bid amounts.--The
Administrator has the authority to negotiate regarding
monthly bid amounts submitted under subparagraph (A) (and the
proportion described in subparagraph (A)(ii)). The
Administrator may reject such a bid amount or proportion if
the Administrator determines that such amount or proportion
is not supported by the actuarial bases provided under
subparagraph (A).''.
(b) Providing for Beneficiary Savings for Certain Plans.--
(1) In general.--Section 1854(b) (42 U.S.C. 1395w-24(b)) is
amended--
(A) by adding at the end of paragraph (1) the following new
subparagraph:
``(C) Beneficiary rebate rule.--
``(i) Requirement.--The Medicare+Choice plan shall provide
to the enrollee a monthly rebate equal to 75 percent of the
average per capita savings (if any) described in paragraph
(3) applicable to the plan and year involved.
``(iii) Form of rebate.--A rebate required under this
subparagraph shall be provided--
``(I) through the crediting of the amount of the rebate
towards the Medicare+Choice monthly supplementary beneficiary
premium or the premium imposed for prescription drug coverage
under part D;
``(II) through a direct monthly payment (through electronic
funds transfer or otherwise); or
``(III) through other means approved by the Medicare
Benefits Administrator,
or any combination thereof.''; and
(B) by adding at the end the following new paragraph:
``(3) Computation of average per capita monthly savings.--
For purposes of paragraph (1)(C)(i), the average per capita
monthly savings referred to in such paragraph for a
Medicare+Choice plan and year is computed as follows:
``(A) Determination of state-wide average risk
adjustment.--
``(i) In general.--The Medicare Benefits Administrator
shall determine, at the same time rates are promulgated under
section 1853(b)(1) (beginning with 2005), for each State the
average of the risk adjustment factors to be applied to
enrollees under section 1853(a)(1)(A) in that State. In the
case of a State in which a Medicare+Choice plan was offered
in the previous year, the Administrator may compute such
average based upon risk adjustment factors applied in that
State in a previous year.
``(ii) Treatment of new states.--In the case of a State in
which no Medicare+Choice plan was offered in the previous
year, the Administrator shall estimate such average. In
making such estimate, the Administrator may use average risk
adjustment factors applied to comparable States or applied on
a national basis.
``(B) Determination of risk adjusted benchmark and risk-
adjusted bid.--For each Medicare+Choice plan offered in a
State, the Administrator shall--
``(i) adjust the fee-for-service area-specific non-drug
benchmark amount by the applicable average risk adjustment
factor computed under subparagraph (A); and
``(ii) adjust the unadjusted non-drug monthly bid amount by
such applicable average risk adjustment factor.
``(C) Determination of average per capita monthly
savings.--The average per capita monthly savings described in
this subparagraph is equal to the amount (if any) by which--
``(i) the risk-adjusted benchmark amount computed under
subparagraph (B)(i), exceeds
``(ii) the risk-adjusted bid computed under subparagraph
(B)(ii).
``(D) Authority to determine risk adjustment for areas
other than states.--The Administrator may provide for the
determination and application of risk adjustment factors
under this paragraph on the basis of areas other than
States.''.
(2) Computation of fee-for-service area-specific non-drug
benchmark.--Section 1853 (42 U.S.C. 1395w-23) is amended by
adding at the end the following new subsection:
``(j) Computation of Fee-for-Service Area-Specific Non-Drug
Benchmark Amount.--For purposes of this part, the term `fee-
for-service area-specific non-drug benchmark amount' means,
with respect to a Medicare+Choice payment area for a month in
a year, an amount equal to the greater of the following (but
in no case less than \1/12\ of the rate computed under
subsection (c)(1), without regard to subparagraph (A), for
the year):
``(1) Based on 100 percent of fee-for-service costs in the
area.--An amount equal to \1/12\ of 100 percent (for 2005
through 2007, or 95 percent for 2008 and years thereafter) of
the adjusted average per capita cost for the year involved,
determined under section 1876(a)(4) for the Medicare+Choice
payment area, for the area and the year involved, for
services covered under parts A and B for individuals entitled
to benefits under part A and enrolled under part B who are
not enrolled in a Medicare+Choice plan under this part for
the year, and adjusted to exclude from such cost the amount
the Medicare Benefits Administrator estimates is payable for
costs described in subclauses (I) and (II) of subsection
(c)(3)(C)(i) for the year involved and also adjusted in the
manner described in subsection (c)(1)(D)(ii) (relating to
inclusion of costs of VA and DOD military facility services
to medicare-eligible beneficiaries).
``(2) Minimum monthly amount.--The minimum amount specified
in this paragraph is the amount specified in subsection
(c)(1)(B)(iv) for the year involved.''.
(c) Payment of Plans Based on Bid Amounts.--
(1) In general.--Section 1853(a)(1)(A) (42 U.S.C. 1395w-23)
is amended by striking ``in an amount'' and all that follows
and inserting the following: ``in an amount determined as
follows:
``(i) Payment before 2005.--For years before 2005, the
payment amount shall be equal to \1/12\ of the annual
Medicare+Choice capitation rate (as calculated under
subsection (c)) with respect to that individual for that
area, reduced by the amount of any reduction elected under
section 1854(f )(1)(E) and adjusted under clause (iii).
``(ii) Payment for statutory non-drug benefits beginning
with 2005.--For years beginning with 2005--
``(I) Plans with bids below benchmark.--In the case of a
plan for which there are average per capita monthly savings
described in section 1854(b)(3)(C), the payment under this
subsection is equal to the unadjusted non-drug monthly bid
amount, adjusted under clause (iii), plus the amount of the
monthly rebate computed under section 1854(b)(1)(C)(i) for
that plan and year.
``(II) Plans with bids at or above benchmark.--In the case
of a plan for which there are no average per capita monthly
savings described in section 1854(b)(3)(C), the payment
amount under this subsection is equal to the fee-for-service
area-specific non-drug benchmark amount, adjusted under
clause (iii).
``(iii) Demographic adjustment, including adjustment for
health status.--The Administrator shall adjust the payment
amount under clause (i), the unadjusted non-drug monthly bid
amount under clause (ii)(I), and the fee-for-service area-
specific non-drug benchmark amount under clause (ii)(II) for
such risk factors as age, disability status, gender,
institutional status, and such
[[Page H4241]]
other factors as the Administrator determines to be
appropriate, including adjustment for health status under
paragraph (3), so as to ensure actuarial equivalence. The
Administrator may add to, modify, or substitute for such
adjustment factors if such changes will improve the
determination of actuarial equivalence.
``(iv) Reference to subsidy payment for statutory drug
benefits.--In the case in which an enrollee is enrolled under
part D, the Medicare+Choice organization also is entitled to
a subsidy payment amount under section 1860H.''.
(d) Conforming Amendments.--
(1) Protection against beneficiary selection.--Section
1852(b)(1)(A) (42 U.S.C. 1395w-22(b)(1)(A)) is amended by
adding at the end the following: ``The Administrator shall
not approve a plan of an organization if the Administrator
determines that the benefits are designed to substantially
discourage enrollment by certain Medicare+Choice eligible
individuals with the organization.''.
(2) Conforming amendment to premium terminology.--
Subparagraphs (A) and (B) of section 1854(b)(2) (42 U.S.C.
1395w-24(b)(2)) are amended to read as follows:
``(A) Medicare+Choice monthly basic beneficiary premium.--
The term `Medicare+Choice monthly basic beneficiary premium'
means, with respect to a Medicare+Choice plan--
``(i) described in section 1853(a)(1)(A)(ii)(I) (relating
to plans providing rebates), zero; or
``(ii) described in section 1853(a)(1)(A)(ii)(II), the
amount (if any) by which the unadjusted non-drug monthly bid
amount exceeds the fee-for-service area-specific non-drug
benchmark amount.
``(B) Medicare+Choice monthly supplemental beneficiary
premium.--The term `Medicare+Choice monthly supplemental
beneficiary premium' means, with respect to a Medicare+Choice
plan, the portion of the aggregate monthly bid amount
submitted under clause (i) of subsection (a)(6)(A) for the
year that is attributable under such section to the provision
of nonstatutory benefits.''.
(3) Requirement for uniform bid amounts.--Section 1854(c)
(42 U.S.C. 1395w-24(c)) is amended to read as follows:
``(c) Uniform Bid Amounts.--The Medicare+Choice monthly bid
amount submitted under subsection (a)(6) of a Medicare+Choice
organization under this part may not vary among individuals
enrolled in the plan.''.
(4) Permitting beneficiary rebates.--
(A) Section 1851(h)(4)(A) (42 U.S.C. 1395w-21(h)(4)(A)) is
amended by inserting ``except as provided under section
1854(b)(1)(C)'' after ``or otherwise''.
(B) Section 1854(d) (42 U.S.C. 1395w-24(d)) is amended by
inserting ``, except as provided under subsection
(b)(1)(C),'' after ``and may not provide''.
(e) Effective Date.--The amendments made by this section
shall apply to payments and premiums for months beginning
with January 2005.
SEC. 212. DEMONSTRATION PROGRAM FOR COMPETITIVE-DEMONSTRATION
AREAS.
(a) Identification of Competitive-Demonstration Areas for
Demonstration Program; Computation of Choice Non-Drug
Benchmarks.--Section 1853, as amended by section 211(b)(2),
is amended by adding at the end the following new subsection:
``(k) Establishment of Competitive Demonstration Program.--
``(1) Designation of competitive-demonstration areas as
part of program.--
``(A) In general.--For purposes of this part, the
Administrator shall establish a demonstration program under
which the Administrator designates Medicare+Choice areas as
competitive-demonstration areas consistent with the following
limitations:
``(i) Limitation on number of areas that may be
designated.--The Administrator may not designate more than 4
areas as competitive-demonstration areas.
``(ii) Limitation on period of designation of any area.--
The Administrator may not designate any area as a
competitive-demonstration area for a period of more than 2
years.
The Administrator has the discretion to decide whether or not
to designate as a competitive-demonstration area an area that
qualifies for such designation.
``(B) Qualifications for designation.--For purposes of this
title, a Medicare+Choice area (which is a metropolitan
statistical area or other area with a substantial number of
Medicare+Choice enrollees) may not be designated as a
`competitive-demonstration area' for a 2-year period
beginning with a year unless the Administrator determines, by
such date before the beginning of the year as the
Administrator determines appropriate, that--
``(i) there will be offered during the open enrollment
period under this part before the beginning of the year at
least 2 Medicare+Choice plans (in addition to the fee-for-
service program under parts A and B), each offered by a
different Medicare+Choice organization; and
``(ii) during March of the previous year at least 50
percent of the number of Medicare+Choice eligible individuals
who reside in the area were enrolled in a Medicare+Choice
plan.
``(2) Choice non-drug benchmark amount.--For purposes of
this part, the term `choice non-drug benchmark amount' means,
with respect to a Medicare+Choice payment area for a month in
a year, the sum of the 2 components described in paragraph
(3) for the area and year. The Administrator shall compute
such benchmark amount for each competitive-demonstration area
before the beginning of each annual, coordinated election
period under section 1851(e)(3)(B) for each year (beginning
with 2005) in which it is designated as such an area.
``(3) 2 components.--For purposes of paragraph (2), the 2
components described in this paragraph for an area and a year
are the following:
``(A) Fee-for-service component weighted by national fee-
for-service market share.--The product of the following:
``(i) National fee-for-service market share.--The national
fee-for-service market share percentage (determined under
paragraph (5)) for the year.
``(ii) Fee-for-service area-specific non-drug bid.--The
fee-for-service area-specific non-drug bid (as defined in
paragraph (6)) for the area and year.
``(B) M+C component weighted by national medicare+choice
market share.--The product of the following:
``(i) National medicare+choice market share.--1 minus the
national fee-for-service market share percentage for the
year.
``(ii) Weighted average of plan bids in area.--The weighted
average of the plan bids for the area and year (as determined
under paragraph (4)(A)).
``(4) Determination of weighted average bids for an area.--
``(A) In general.--For purposes of paragraph (3)(B)(ii),
the weighted average of plan bids for an area and a year is
the sum of the following products for Medicare+Choice plans
described in subparagraph (C) in the area and year:
``(i) Proportion of each plan's enrollees in the area.--The
number of individuals described in subparagraph (B), divided
by the total number of such individuals for all
Medicare+Choice plans described in subparagraph (C) for that
area and year.
``(ii) Monthly non-drug bid amount.--The unadjusted non-
drug monthly bid amount.
``(B) Counting of individuals.--The Administrator shall
count, for each Medicare+Choice plan described in
subparagraph (C) for an area and year, the number of
individuals who reside in the area and who were enrolled
under such plan under this part during March of the previous
year.
``(C) Exclusion of plans not offered in previous year.--For
an area and year, the Medicare+Choice plans described in this
subparagraph are plans that are offered in the area and year
and were offered in the area in March of the previous year.
``(5) Computation of national fee-for-service market share
percentage.--The Administrator shall determine, for a year,
the proportion (in this subsection referred to as the
`national fee-for-service market share percentage') of
Medicare+Choice eligible individuals who during March of the
previous year were not enrolled in a Medicare+Choice plan.
``(6) Fee-for-service area-specific non-drug bid.--For
purposes of this part, the term `fee-for-service area-
specific non-drug bid' means, for an area and year, the
amount described in section 1853(j)(1) for the area and year,
except that any reference to a percent of less than 100
percent shall be deemed a reference to 100 percent.''.
(b) Application of Choice Non-Drug Benchmark in
Competitive-Demonstration Areas.--
(1) In general.--Section 1854 is amended--
(A) in subsection (b)(1)(C)(i), as added by section
211(b)(1)(A), by striking ``(i) Requirement.--The'' and
inserting ``(i) Requirement for non-competitive-demonstration
areas.--In the case of a Medicare+Choice payment area that is
not a competitive-demonstration area designated under section
1853(k)(1), the'';
(B) in subsection (b)(1)(C), as so added, by inserting
after clause (i) the following new clause:
``(ii) Requirement for competitive-demonstration areas.--In
the case of a Medicare+Choice payment area that is designated
as a competitive-demonstration area under section 1853(k)(1),
if there are average per capita monthly savings described in
paragraph (4) for a Medicare+Choice plan and year, the
Medicare+Choice plan shall provide to the enrollee a monthly
rebate equal to 75 percent of such savings.'';
(C) by adding at the end of subsection (b), as amended by
section 211(b)(1), the following new paragraph:
``(4) Computation of average per capita monthly savings for
competitive-demonstration areas.--For purposes of paragraph
(1)(C)(ii), the average per capita monthly savings referred
to in such paragraph for a Medicare+Choice plan and year
shall be computed in the same manner as the average per
capita monthly savings is computed under paragraph (3) except
that the reference to the fee-for-service area-specific non-
drug benchmark amount in paragraph (3)(B)(i) (or to the
benchmark amount as adjusted under paragraph (3)(C)(i)) is
deemed to be a reference to the choice non-drug benchmark
amount (or such amount as adjusted in the manner described in
paragraph (3)(B)(i)).''; and
(D) in subsection (d), as amended by section 211(d)(4), by
inserting ``and subsection (b)(1)(D)'' after ``subsection
(b)(1)(C)''.
(2) Conforming amendments.--
(A) Payment of plans.--Section 1853(a)(1)(A)(ii), as
amended by section 211(c)(1), is amended--
[[Page H4242]]
(i) in subclause (I), by inserting ``(or, in the case of a
competitive-demonstration area, the choice non-drug benchmark
amount)'' after ``unadjusted non-drug monthly bid amount'';
and
(ii) in subclauses (I) and (II), by inserting ``(or, in the
case of a competitive-demonstration area, described in
section 1854(b)(4))'' after ``section 1854(b)(3)(C)''.
(B) Definition of monthly basic premium.--Section
1854(b)(2)(A)(ii), as amended by section 211(d)(2), is
amended by inserting ``(or, in the case of a competitive-
demonstration area, the choice non-drug benchmark amount)''
after ``benchmark amount''.
(c) Premium Adjustment.--Section 1839 (42 U.S.C. 1395r) is
amended by adding at the end the following new subsection:
``(h)(1) In the case of an individual who resides in a
competitive-demonstration area designated under section
1851(k)(1) and who is not enrolled in a Medicare+Choice plan
under part C, the monthly premium otherwise applied under
this part (determined without regard to subsections (b) and
(f) or any adjustment under this subsection) shall be
adjusted as follows: If the fee-for-service area-specific
non-drug bid (as defined in section 1853(k)(6)) for the
Medicare+Choice area in which the individual resides for a
month--
``(A) does not exceed the choice non-drug benchmark (as
determined under section 1853(k)(2)) for such area, the
amount of the premium for the individual for the month shall
be reduced by an amount equal to 75 percent of the amount by
which such benchmark exceeds such fee-for-service bid; or
``(B) exceeds such choice non-drug benchmark, the amount of
the premium for the individual for the month shall be
adjusted to ensure that--
``(i) the sum of the amount of the adjusted premium and the
choice non-drug benchmark for the area, is equal to
``(ii) the sum of the unadjusted premium plus amount of the
fee-for-service area-specific non-drug bid for the area.
``(2) Nothing in this subsection shall be construed as
preventing a reduction under paragraph (1)(A) in the premium
otherwise applicable under this part to zero or from
requiring the provision of a rebate to the extent such
premium would otherwise be required to be less than zero.
``(3) The adjustment in the premium under this subsection
shall be effected in such manner as the Medicare Benefits
Administrator determines appropriate.
``(4) In order to carry out this subsection (insofar as it
is effected through the manner of collection of premiums
under 1840(a)), the Medicare Benefits Administrator shall
transmit to the Commissioner of Social Security--
``(A) at the beginning of each year, the name, social
security account number, and the amount of the adjustment (if
any) under this subsection for each individual enrolled under
this part for each month during the year; and
``(B) periodically throughout the year, information to
update the information previously transmitted under this
paragraph for the year.''.
(d) Conforming Amendment.--Section 1844(c) (42 U.S.C.
1395w(c)) is amended by inserting ``and without regard to any
premium adjustment effected under section 1839(h)'' before
the period at the end.
(e) Report on Demonstration Program.--Not later than 6
months after the date on which the designation of the 4th
competitive-demonstration area under section 1851(k)(1) of
the Social Security Act ends, the Medicare Payment Advisory
Commission shall submit to Congress a report on the impact of
the demonstration program under the amendments made by this
section, including such impact on premiums of medicare
beneficiaries, savings to the medicare program, and on
adverse selection.
(f) Effective Date.--The amendments made by this section
shall apply to payments and premiums for periods beginning on
or after January 1, 2005.
SEC. 213. CONFORMING AMENDMENTS.
(a) Conforming Amendments Relating to Bids.--
(1) Section 1854 (42 U.S.C. 1395w-24) is amended--
(A) in the heading of subsection (a), by inserting ``and
Bid Amounts'' after ``Premiums''; and
(B) in subsection (a)(5)(A), by inserting ``paragraphs (2),
(3), and (4) of'' after ``filed under''.
(b) Additional Conforming Amendments.--
(1) Annual determination and announcement of certain
factors.--Section 1853(b) (42 U.S.C. 1395w-23(b)) is
amended--
(A) in paragraph (1), by striking ``the respective calendar
year'' and all that follows and inserting the following:
``the calendar year concerned with respect to each
Medicare+Choice payment area, the following:
``(A) Pre-competition information.--For years before 2005,
the following:
``(i) Medicare+choice capitation rates.--The annual
Medicare+Choice capitation rate for each Medicare+Choice
payment area for the year.
``(ii) Adjustment factors.--The risk and other factors to
be used in adjusting such rates under subsection (a)(1)(A)
for payments for months in that year.
``(B) Competition information.--For years beginning with
2005, the following:
``(i) Benchmarks.--The fee-for-service area-specific non-
drug benchmark under section 1853(j) and, if applicable, the
choice non-drug benchmark under section 1853(k)(2), for the
year involved and, if applicable, the national fee-for-
service market share percentage.
``(ii) Adjustment factors.--The adjustment factors applied
under section 1853(a)(1)(A)(iii) (relating to demographic
adjustment), section 1853(a)(1)(B) (relating to adjustment
for end-stage renal disease), and section 1853(a)(3)
(relating to health status adjustment).
``(iii) Projected fee-for-service bid.--In the case of a
competitive area, the projected fee-for-service area-specific
non-drug bid (as determined under subsection (k)(6)) for the
area.
``(iv) Individuals.--The number of individuals counted
under subsection (k)(4)(B) and enrolled in each
Medicare+Choice plan in the area.''; and
(B) in paragraph (3), by striking ``in sufficient detail''
and all that follows up to the period at the end.
(2) Repeal of provisions relating to adjusted community
rate (acr).--
(A) In general.--Subsections (e) and (f) of section 1854
(42 U.S.C. 1395w-24) are repealed.
(B) Conforming amendment.--Section 1839(a)(2) (42 U.S.C.
1395r(a)(2)) is amended by striking ``, and to reflect'' and
all that follows and inserting a period.
(3) Prospective implementation of national coverage
determinations.--Section 1852(a)(5) (42 U.S.C. 1395w-
22(a)(5)) is amended to read as follows:
``(5) Prospective implementation of national coverage
determinations.--The Secretary shall only implement a
national coverage determination that will result in a
significant change in the costs to a Medicare+Choice
organization in a prospective manner that applies to
announcements made under section 1853(b) after the date of
the implementation of the determination.''.
(4) Permitting geographic adjustment to consolidate
multiple medicare+choice payment areas in a state into a
single statewide medicare+choice payment area.--Section
1853(d)(3) (42 U.S.C. 1395w-23(e)(3)) is amended--
(A) by amending clause (i) of subparagraph (A) to read as
follows:
``(i) to a single statewide Medicare+Choice payment
area,''; and
(B) by amending subparagraph (B) to read as follows:
``(B) Budget neutrality adjustment.--In the case of a State
requesting an adjustment under this paragraph, the Medicare
Benefits Administrator shall initially (and annually
thereafter) adjust the payment rates otherwise established
under this section for Medicare+Choice payment areas in the
State in a manner so that the aggregate of the payments under
this section in the State shall not exceed the aggregate
payments that would have been made under this section for
Medicare+Choice payment areas in the State in the absence of
the adjustment under this paragraph.''.
(d) Effective Date.--The amendments made by this section
shall apply to payments and premiums for periods beginning on
or after January 1, 2005.
TITLE III--RURAL HEALTH CARE IMPROVEMENTS
SEC. 301. REFERENCE TO FULL MARKET BASKET INCREASE FOR SOLE
COMMUNITY HOSPITALS.
For provision eliminating any reduction from full market
basket in the update for inpatient hospital services for sole
community hospitals, see section 401.
SEC. 302. ENHANCED DISPROPORTIONATE SHARE HOSPITAL (DSH)
TREATMENT FOR RURAL HOSPITALS AND URBAN
HOSPITALS WITH FEWER THAN 100 BEDS.
(a) Blending of Payment Amounts.--
(1) In general.--Section 1886(d)(5)(F) (42 U.S.C.
1395ww(d)(5)(F)) is amended by adding at the end the
following new clause:
``(xiv)(I) In the case of discharges in a fiscal year
beginning on or after October 1, 2002, subject to subclause
(II), there shall be substituted for the disproportionate
share adjustment percentage otherwise determined under clause
(iv) (other than subclause (I)) or under clause (viii), (x),
(xi), (xii), or (xiii), the old blend proportion (specified
under subclause (III)) of the disproportionate share
adjustment percentage otherwise determined under the
respective clause and 100 percent minus such old blend
proportion of the disproportionate share adjustment
percentage determined under clause (vii) (relating to large,
urban hospitals).
``(II) Under subclause (I), the disproportionate share
adjustment percentage shall not exceed 10 percent for a
hospital that is not classified as a rural referral center
under subparagraph (C).
``(III) For purposes of subclause (I), the old blend
proportion for fiscal year 2003 is 80 percent, for each
subsequent year (through 2006) is the old blend proportion
under this subclause for the previous year minus 20
percentage points, and for each year beginning with 2007 is 0
percent.''.
(2) Conforming amendments.--Section 1886(d)(5)(F) (42
U.S.C. 1395ww(d)(5)(F)) is amended--
(A) in each of subclauses (II), (III), (IV), (V), and (VI)
of clause (iv), by inserting ``subject to clause (xiv) and''
before ``for discharges occurring'';
(B) in clause (viii), by striking ``The formula'' and
inserting ``Subject to clause (xiv), the formula''; and
(C) in each of clauses (x), (xi), (xii), and (xiii), by
striking ``For purposes'' and inserting ``Subject to clause
(xiv), for purposes''.
[[Page H4243]]
(b) Effective Date.--The amendments made by this section
shall apply with respect to discharges occurring on or after
October 1, 2002.
SEC. 303. 2-YEAR PHASED-IN INCREASE IN THE STANDARDIZED
AMOUNT IN RURAL AND SMALL URBAN AREAS TO
ACHIEVE A SINGLE, UNIFORM STANDARDIZED AMOUNT.
Section 1886(d)(3)(A)(iv) (42 U.S.C. 1395ww(d)(3)(A)(iv))
is amended--
(1) by striking ``(iv) For discharges'' and inserting
``(iv)(I) Subject to the succeeding provisions of this
clause, for discharges''; and
(2) by adding at the end the following new subclauses:
``(II) For discharges occurring during fiscal year 2003,
the average standardized amount for hospitals located other
than in a large urban area shall be increased by \1/2\ of the
difference between the average standardized amount determined
under subclause (I) for hospitals located in large urban
areas for such fiscal year and such amount determined
(without regard to this subclause) for other hospitals for
such fiscal year.
``(III) For discharges occurring in a fiscal year beginning
with fiscal year 2004, the Secretary shall compute an average
standardized amount for hospitals located in any area within
the United States and within each region equal to the average
standardized amount computed for the previous fiscal year
under this subparagraph for hospitals located in a large
urban area (or, beginning with fiscal year 2005, for
hospitals located in any area) increased by the applicable
percentage increase under subsection (b)(3)(B)(i).''.
SEC. 304. MORE FREQUENT UPDATE IN WEIGHTS USED IN HOSPITAL
MARKET BASKET.
(a) More Frequent Updates in Weights.--After revising the
weights used in the hospital market basket under section
1886(b)(3)(B)(iii) of the Social Security Act (42 U.S.C.
1395ww(b)(3)(B)(iii)) to reflect the most current data
available, the Secretary shall establish a frequency for
revising such weights in such market basket to reflect the
most current data available more frequently than once every 5
years.
(b) Report.--Not later than October 1, 2003, the Secretary
shall submit a report to Congress on the frequency
established under subsection (a), including an explanation of
the reasons for, and options considered, in determining such
frequency.
SEC. 305. IMPROVEMENTS TO CRITICAL ACCESS HOSPITAL PROGRAM.
(a) Reinstatement of Periodic Interim Payment (PIP).--
Section 1815(e)(2) (42 U.S.C. 1395g(e)(2)) is amended--
(1) by striking ``and'' at the end of subparagraph (C);
(2) by adding ``and'' at the end of subparagraph (D); and
(3) by inserting after subparagraph (D) the following new
subparagraph:
``(E) inpatient critical access hospital services;''.
(b) Condition for Application of Special Physician Payment
Adjustment.--Section 1834(g)(2) (42 U.S.C. 1395m(g)(2)) is
amended by adding after and below subparagraph (B) the
following:
``The Secretary may not require, as a condition for applying
subparagraph (B) with respect to a critical access hospital,
that each physician providing professional services in the
hospital must assign billing rights with respect to such
services, except that such subparagraph shall not apply to
those physicians who have not assigned such billing
rights.''.
(c) Flexibility in Bed Limitation for Hospitals.--Section
1820 (42 U.S.C. 1395i-4) is amended--
(1) in subsection (c)(2)(B)(iii), by inserting ``subject to
paragraph (3)'' after ``(iii) provides'';
(2) by adding at the end of subsection (c) the following
new paragraph:
``(3) Increase in maximum number of beds for hospitals with
strong seasonal census fluctuations.--
``(A) In general.--Subject to subparagraph (C), in the case
of a hospital that demonstrates that it meets the standards
established under subparagraph (B) and has not made the
election described in subsection (f)(2)(A), the bed
limitations otherwise applicable under paragraph (2)(B)(iii)
and subsection (f) shall be increased by 5 beds.
``(B) Standards.--The Secretary shall specify standards for
determining whether a critical access hospital has
sufficiently strong seasonal variations in patient admissions
to justify the increase in bed limitation provided under
subparagraph (A).''; and
(3) in subsection (f)--
(A) by inserting ``(1)'' after ``(f)''; and
(B) by adding at the end the following new paragraph:
``(2)(A) A hospital may elect to treat the reference in
paragraph (1) to `15 beds' as a reference to `25 beds', but
only if no more than 10 beds in the hospital are at any time
used for non-acute care services. A hospital that makes such
an election is not eligible for the increase provided under
subsection (c)(3)(A).
``(B) The limitations in numbers of beds under the first
sentence of paragraph (1) are subject to adjustment under
subsection (c)(3).''.
(d) 5-Year Extension of the Authorization for
Appropriations for Grant Program.--Section 1820(j) (42 U.S.C.
1395i-4(j)) is amended by striking ``through 2002'' and
inserting ``through 2007''.
(e) Prohibition of Retroactive Recoupment.--The Secretary
shall not recoup (or otherwise seek to recover) overpayments
made for outpatient critical access hospital services under
part B of title XVIII of the Social Security Act, for
services furnished in cost reporting periods that began
before October 1, 2002, insofar as such overpayments are
attributable to payment being based on 80 percent of
reasonable costs (instead of 100 percent of reasonable costs
minus 20 percent of charges).
(f) Effective Dates.--
(1) Reinstatement of pip.--The amendments made by
subsection (a) shall apply to payments made on or after
January 1, 2003.
(2) Physician payment adjustment condition.--The amendment
made by subsection (b) shall be effective as if included in
the enactment of section 403(d) of the Medicare, Medicaid,
and SCHIP Balanced Budget Refinement Act of 1999 (113 Stat.
1501A-371).
(3) Flexibility in bed limitation.--The amendments made by
subsection (c) shall apply to designations made on or after
January 1, 2003, but shall not apply to critical access
hospitals that were designated as of such date.
SEC. 306. EXTENSION OF TEMPORARY INCREASE FOR HOME HEALTH
SERVICES FURNISHED IN A RURAL AREA.
(a) In General.--Section 508(a) BIPA (114 Stat. 2763A-533)
is amended--
(1) by striking ``24-Month Increase Beginning April 1,
2001'' and inserting ``In General''; and
(2) by striking ``April 1, 2003'' and inserting ``January
1, 2005''.
(b) Conforming Amendment.--Section 547(c)(2) of BIPA (114
Stat. 2763A-553) is amended by striking ``the period
beginning on April 1, 2001, and ending on September 30,
2002,'' and inserting ``a period under such section''.
SEC. 307. REFERENCE TO 10 PERCENT INCREASE IN PAYMENT FOR
HOSPICE CARE FURNISHED IN A FRONTIER AREA AND
RURAL HOSPICE DEMONSTRATION PROJECT.
For--
(1) provision of 10 percent increase in payment for hospice
care furnished in a frontier area, see section 422; and
(2) provision of a rural hospice demonstration project, see
section 423.
SEC. 308. REFERENCE TO PRIORITY FOR HOSPITALS LOCATED IN
RURAL OR SMALL URBAN AREAS IN REDISTRIBUTION OF
UNUSED GRADUATE MEDICAL EDUCATION RESIDENCIES.
For provision providing priority for hospitals located in
rural or small urban areas in redistribution of unused
graduate medical education residencies, see section 612.
SEC. 309. GAO STUDY OF GEOGRAPHIC DIFFERENCES IN PAYMENTS FOR
PHYSICIANS' SERVICES.
(a) Study.--The Comptroller General of the United States
shall conduct a study of differences in payment amounts under
the physician fee schedule under section 1848 of the Social
Security Act (42 U.S.C. 1395w-4) for physicians' services in
different geographic areas. Such study shall include--
(1) an assessment of the validity of the geographic
adjustment factors used for each component of the fee
schedule;
(2) an evaluation of the measures used for such adjustment,
including the frequency of revisions; and
(3) an evaluation of the methods used to determine
professional liability insurance costs used in computing the
malpractice component, including a review of increases in
professional liability insurance premiums and variation in
such increases by State and physician specialty and methods
used to update the geographic cost of practice index and
relative weights for the malpractice component.
(b) Report.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under subsection
(a). The report shall include recommendations regarding the
use of more current data in computing geographic cost of
practice indices as well as the use of data directly
representative of physicians' costs (rather than proxy
measures of such costs).
SEC. 310. PROVIDING SAFE HARBOR FOR CERTAIN COLLABORATIVE
EFFORTS THAT BENEFIT MEDICALLY UNDERSERVED
POPULATIONS.
(a) In General.--Section 1128B(b)(3) (42 U.S.C. 1320a-
7(b)(3)), as amended by section 101(b)(2), is amended--
(1) in subparagraph (F), by striking ``and'' after the
semicolon at the end;
(2) in subparagraph (G), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(H) any remuneration between a public or nonprofit
private health center entity described under clause (i) or
(ii) of section 1905(l)(2)(B) and any individual or entity
providing goods, items, services, donations or loans, or a
combination thereof, to such health center entity pursuant to
a contract, lease, grant, loan, or other agreement, if such
agreement contributes to the ability of the health center
entity to maintain or increase the availability, or enhance
the quality, of services provided to a medically underserved
population served by the health center entity.''.
(b) Rulemaking for Exception for Health Center Entity
Arrangements.--
(1) Establishment.--
(A) In general.--The Secretary of Health and Human Services
(in this subsection referred to as the ``Secretary'') shall
establish,
[[Page H4244]]
on an expedited basis, standards relating to the exception
described in section 1128B(b)(3)(H) of the Social Security
Act, as added by subsection (a), for health center entity
arrangements to the antikickback penalties.
(B) Factors to consider.--The Secretary shall consider the
following factors, among others, in establishing standards
relating to the exception for health center entity
arrangements under subparagraph (A):
(i) Whether the arrangement between the health center
entity and the other party results in savings of Federal
grant funds or increased revenues to the health center
entity.
(ii) Whether the arrangement between the health center
entity and the other party restricts or limits a patient's
freedom of choice.
(iii) Whether the arrangement between the health center
entity and the other party protects a health care
professional's independent medical judgment regarding
medically appropriate treatment.
The Secretary may also include other standards and criteria
that are consistent with the intent of Congress in enacting
the exception established under this section.
(2) Interim final effect.--No later than 180 days after the
date of enactment of this Act, the Secretary shall publish a
rule in the Federal Register consistent with the factors
under paragraph (1)(B). Such rule shall be effective and
final immediately on an interim basis, subject to such change
and revision, after public notice and opportunity (for a
period of not more than 60 days) for public comment, as is
consistent with this subsection.
SEC. 311. RELIEF FOR CERTAIN NON-TEACHING HOSPITALS.
(a) In General.--In the case of a non-teaching hospital
that meets the condition of subsection (b), in each of fiscal
years 2003, 2004, and 2005 the amount of payment made to the
hospital under section 1886(d) of the Social Security Act for
discharges occurring during such fiscal year only shall be
increased as though the applicable percentage increase
(otherwise applicable to discharges occurring during such
fiscal year under section 1886(b)(3)(B)(i) of the Social
Security Act (42 U.S.C. 1395ww(b)(3)(B)(i)) had been
increased by 5 percentage points. The previous sentence shall
be applied for each such fiscal year separately without
regard to its application in a previous fiscal year and shall
not affect payment for discharges for any hospital occurring
during a fiscal year after fiscal year 2005.
(b) Condition.--A non-teaching hospital meets the condition
of this subsection if--
(1) it is located in a rural area and the amount of the
aggregate payments under subsection (d) of section 1886 of
the Social Security Act for hospitals located in rural areas
in the State for their cost reporting periods beginning
during fiscal year 1999 is less than the aggregate allowable
operating costs of inpatient hospital services (as defined in
subsection (a)(4) of such section) for all subsection (d)
hospitals in such areas in such State with respect to such
cost reporting periods; or
(2) it is located in an urban area and the amount of the
aggregate payments under subsection (d) of such section for
hospitals located in urban areas in the State for their cost
reporting periods beginning during fiscal year 1999 is less
than 103 percent of the aggregate allowable operating costs
of inpatient hospital services (as defined in subsection
(a)(4) of such section) for all subsection (d) hospitals in
such areas in such State with respect to such cost reporting
periods.
The amounts under paragraphs (1) and (2) shall be determined
by the Secretary of Health and Human Services based on data
of the Medicare Payment Advisory Commission.
(c) Definitions.--For purposes of this section:
(1) Non-teaching hospital.--The term ``non-teaching
hospital'' means, for a cost reporting period, a subsection
(d) hospital (as defined in subsection (d)(1)(B) of section
1886 of the Social Security Act, 42 U.S.C. 1395ww)) that is
not receiving any additional payment under subsection
(d)(5)(B) of such section or a payment under subsection (h)
of such section for discharges occurring during the period. A
subsection (d) hospital that receives additional payments
under subsection (d)(5)(B) or (h) of such section shall, for
purposes of this section, also be treated as a non-teaching
hospital unless a chairman of a department in the medical
school with which the hospital is affiliated is serving or
has been appointed as a clinical chief of service in the
hospital.
(2) Rural; urban.--The terms ``rural'' and ``urban'' have
the meanings given such terms for purposes of section 1886(d)
of the Social Security Act (42 U.S.C. 1395ww(d)).
TITLE IV--PROVISIONS RELATING TO PART A
Subtitle A--Inpatient Hospital Services
SEC. 401. REVISION OF ACUTE CARE HOSPITAL PAYMENT UPDATES.
Subclause (XVIII) of section 1886(b)(3)(B)(i) (42 U.S.C.
1395ww(b)(3)(B)(i)) is amended to read as follows:
``(XVIII) for fiscal year 2003, the market basket
percentage increase for sole community hospitals and such
increase minus 0.25 percentage points for other hospitals,
and''.
SEC. 402. 2-YEAR INCREASE IN LEVEL OF ADJUSTMENT FOR INDIRECT
COSTS OF MEDICAL EDUCATION (IME).
Section 1886(d)(5)(B)(ii) (42 U.S.C. 1395ww(d)(5)(B)(ii))
is amended--
(1) in subclause (VI) by striking ``and'' at the end;
(2) by redesignating subclause (VII) as subclause (IX);
(3) in subclause (IX) as so redesignated, by striking
``2002'' and inserting ``2004''; and
(4) by inserting after subclause (VI) the following new
subclause:
``(VII) during fiscal year 2003, `c' is equal to 1.47;
``(VIII) during fiscal year 2004, `c' is equal to 1.45;
and''.
SEC. 403. RECOGNITION OF NEW MEDICAL TECHNOLOGIES UNDER
INPATIENT HOSPITAL PPS.
(a) Improving Timeliness of Data Collection.--Section
1886(d)(5)(K) (42 U.S.C. 1395ww(d)(5)(K)) is amended by
adding at the end the following new clause:
``(vii) Under the mechanism under this subparagraph, the
Secretary shall provide for the addition of new diagnosis and
procedure codes in April 1 of each year, but the addition of
such codes shall not require the Secretary to adjust the
payment (or diagnosis-related group classification) under
this subsection until the fiscal year that begins after such
date.''.
(b) Eligibility Standard.--
(1) Minimum period for recognition of new technologies.--
Section 1886(d)(5)(K)(vi) (42 U.S.C. 1395ww(d)(5)(K)(vi)) is
amended--
(A) by inserting ``(I)'' after ``(vi)''; and
(B) by adding at the end the following new subclause:
``(II) Under such criteria, a service or technology shall
not be denied treatment as a new service or technology on the
basis of the period of time in which the service or
technology has been in use if such period ends before the end
of the 2-to-3-year period that begins on the effective date
of implementation of a code under ICD-9-CM (or a successor
coding methodology) that enables the identification of a
significant sample of specific discharges in which the
service or technology has been used.''.
(2) Adjustment of threshold.--Section 1886(d)(5)(K)(ii)(I)
(42 U.S.C. 1395ww(d)(5)(K)(ii)(I)) is amended by inserting
``(applying a threshold specified by the Secretary that is
the lesser of 50 percent of the national average standardized
amount for operating costs of inpatient hospital services for
all hospitals and all diagnosis-related groups or one
standard deviation for the diagnosis-related group
involved)'' after ``is inadequate''.
(3) Criterion for substantial improvement.--Section
1886(d)(5)(K)(vi) (42 U.S.C. 1395ww(d)(5)(K)(vi)), as amended
by paragraph (1), is further amended by adding at the end the
following subclause:
``(III) The Secretary shall by regulation provide for
further clarification of the criteria applied to determine
whether a new service or technology represents an advance in
medical technology that substantially improves the diagnosis
or treatment of beneficiaries. Under such criteria, in
determining whether a new service or technology represents an
advance in medical technology that substantially improves the
diagnosis or treatment of beneficiaries, the Secretary shall
deem a service or technology as meeting such requirement if
the service or technology is a drug or biological that is
designated under section 506 or 526 of the Federal Food,
Drug, and Cosmetic Act, approved under section 314.510 or
601.41 of title 21, Code of Federal Regulations, or
designated for priority review when the marketing application
for such drug or biological was filed or is a medical device
for which an exemption has been granted under section 520(m)
of such Act, or for which priority review has been provided
under section 515(d)(5) of such Act.''.
(4) Process for public input.--Section 1886(d)(5)(K) (42
U.S.C. 1395ww(d)(5)(K)), as amended by paragraph (1), is
amended--
(A) in clause (i), by adding at the end the following:
``Such mechanism shall be modified to meet the requirements
of clause (viii).''; and
(B) by adding at the end the following new clause:
``(viii) The mechanism established pursuant to clause (i)
shall be adjusted to provide, before publication of a
proposed rule, for public input regarding whether a new
service or technology not described in the second sentence of
clause (vi)(III) represents an advance in medical technology
that substantially improves the diagnosis or treatment of
beneficiaries as follows:
``(I) The Secretary shall make public and periodically
update a list of all the services and technologies for which
an application for additional payment under this subparagraph
is pending.
``(II) The Secretary shall accept comments,
recommendations, and data from the public regarding whether
the service or technology represents a substantial
improvement.
``(III) The Secretary shall provide for a meeting at which
organizations representing hospitals, physicians, medicare
beneficiaries, manufacturers, and any other interested party
may present comments, recommendations, and data to the
clinical staff of the Centers for Medicare & Medicaid
Services before publication of a notice of proposed
rulemaking regarding whether service or technology represents
a substantial improvement.''.
(c) Preference for Use of DRG Adjustment.--Section
1886(d)(5)(K) (42 U.S.C. 1395ww(d)(5)(K)) is further amended
by adding at the end the following new clause:
``(ix) Before establishing any add-on payment under this
subparagraph with respect
[[Page H4245]]
to a new technology, the Secretary shall seek to identify one
or more diagnosis-related groups associated with such
technology, based on similar clinical or anatomical
characteristics and the cost of the technology. Within such
groups the Secretary shall assign an eligible new technology
into a diagnosis-related group where the average costs of
care most closely approximate the costs of care of using the
new technology. In such case, no add-on payment under this
subparagraph shall be made with respect to such new
technology and this clause shall not affect the application
of paragraph (4)(C)(iii).''.
(d) Improvement in Payment for New Technology.--Section
1886(d)(5)(K)(ii)(III) (42 U.S.C. 1395ww(d)(5)(K)(ii)(III))
is amended by inserting after ``the estimated average cost of
such service or technology'' the following: ``(based on the
marginal rate applied to costs under subparagraph (A))''.
(e) Effective Date.--
(1) In general.--The Secretary shall implement the
amendments made by this section so that they apply to
classification for fiscal years beginning with fiscal year
2004.
(2) Reconsiderations of applications for fiscal year 2003
that are denied.--In the case of an application for a
classification of a medical service or technology as a new
medical service or technology under section 1886(d)(5)(K) of
the Social Security Act (42 U.S.C. 1395ww(d)(5)(K)) that was
filed for fiscal year 2003 and that is denied--
(A) the Secretary shall automatically reconsider the
application as an application for fiscal year 2004 under the
amendments made by this section; and
(B) the maximum time period otherwise permitted for such
classification of the service or technology shall be extended
by 12 months.
SEC. 404. PHASE-IN OF FEDERAL RATE FOR HOSPITALS IN PUERTO
RICO.
Section 1886(d)(9) (42 U.S.C. 1395ww(d)(9)) is amended--
(1) in subparagraph (A)--
(A) in clause (i), by striking ``for discharges beginning
on or after October 1, 1997, 50 percent (and for discharges
between October 1, 1987, and September 30, 1997, 75
percent)'' and inserting ``the applicable Puerto Rico
percentage (specified in subparagraph (E))''; and
(B) in clause (ii), by striking ``for discharges beginning
in a fiscal year beginning on or after October 1, 1997, 50
percent (and for discharges between October 1, 1987, and
September 30, 1997, 25 percent)'' and inserting ``the
applicable Federal percentage (specified in subparagraph
(E))''; and
(2) by adding at the end the following new subparagraph:
``(E) For purposes of subparagraph (A), for discharges
occurring--
``(i) between October 1, 1987, and September 30, 1997, the
applicable Puerto Rico percentage is 75 percent and the
applicable Federal percentage is 25 percent;
``(ii) on or after October 1, 1997, and before October 1,
2003, the applicable Puerto Rico percentage is 50 percent and
the applicable Federal percentage is 50 percent;
``(iii) during fiscal year 2004, the applicable Puerto Rico
percentage is 45 percent and the applicable Federal
percentage is 55 percent;
``(iv) during fiscal year 2005, the applicable Puerto Rico
percentage is 40 percent and the applicable Federal
percentage is 60 percent;
``(v) during fiscal year 2006, the applicable Puerto Rico
percentage is 35 percent and the applicable Federal
percentage is 65 percent;
``(vi) during fiscal year 2007, the applicable Puerto Rico
percentage is 30 percent and the applicable Federal
percentage is 70 percent; and
``(vii) on or after October 1, 2007, the applicable Puerto
Rico percentage is 25 percent and the applicable Federal
percentage is 75 percent.''.
SEC. 405. REFERENCE TO PROVISION RELATING TO ENHANCED
DISPROPORTIONATE SHARE HOSPITAL (DSH) PAYMENTS
FOR RURAL HOSPITALS AND URBAN HOSPITALS WITH
FEWER THAN 100 BEDS.
For provision enhancing disproportionate share hospital
(DSH) treatment for rural hospitals and urban hospitals with
fewer than 100 beds, see section 302.
SEC. 406. REFERENCE TO PROVISION RELATING TO 2-YEAR PHASED-IN
INCREASE IN THE STANDARDIZED AMOUNT IN RURAL
AND SMALL URBAN AREAS TO ACHIEVE A SINGLE,
UNIFORM STANDARDIZED AMOUNT.
For provision phasing in over a 2-year period an increase
in the standardized amount for rural and small urban areas to
achieve a single, uniform, standardized amount, see section
303.
SEC. 407. REFERENCE TO PROVISION FOR MORE FREQUENT UPDATES IN
THE WEIGHTS USED IN HOSPITAL MARKET BASKET.
For provision providing for more frequent updates in the
weights used in hospital market basket, see section 304.
SEC. 408. REFERENCE TO PROVISION MAKING IMPROVEMENTS TO
CRITICAL ACCESS HOSPITAL PROGRAM.
For provision providing making improvements to critical
access hospital program, see section 305.
SEC. 409. GAO STUDY ON IMPROVING THE HOSPITAL WAGE INDEX.
(a) Study.--
(1) In general.--The Comptroller General of the United
States shall conduct a study on the improvements that can be
made in the measurement of regional differences in hospital
wages reflected in the hospital wage index under section
1886(d) of the Social Security Act (42 U.S.C. 1395ww(d)).
(2) Examination of use of metropolitan statistical areas
(msas).--The study shall specifically examine the use of
metropolitan statistical areas for purposes of computing and
applying the wage index and whether the boundaries of such
areas accurately reflect local labor markets. In addition,
the study shall examine whether regional inequities are
created as a result of infrequent updates of such boundaries
and policies of the Bureau of the Census relating to
commuting criteria.
(3) Wage data.--The study shall specifically examine the
portions of the hospital cost reports relating to wages, and
methods for improving the accuracy of the wage data and for
reducing inequities resulting from differences among
hospitals in the reporting of wage data.
(b) Consultation with OMB.--The Comptroller General shall
consult with the Director of Office of Management and Budget
in conducting the study under subsection (a)(2).
(c) Report.--Not later than May 1, 2003, the Comptroller
General shall submit to Congress a report on the study
conducted under subsection (a) and shall include in the
report such recommendations as may be appropriate on--
(1) changes in the definition of labor market areas used
for purposes of the area wage index under section 1886 of the
Social Security Act; and
(2) improvements in methods for the collection of wage
data.
Subtitle B--Skilled Nursing Facility Services
SEC. 411. PAYMENT FOR COVERED SKILLED NURSING FACILITY
SERVICES.
(a) Temporary Increase in Nursing Component of PPS Federal
Rate.--Section 312(a) of BIPA is amended by adding at the end
the following new sentence: ``The Secretary of Health and
Human Services shall increase by 12, 10, and 8 percent the
nursing component of the case-mix adjusted Federal
prospective payment rate specified in Tables 3 and 4 of the
final rule published in the Federal Register by the Health
Care Financing Administration on July 31, 2000 (65 Fed. Reg.
46770) and as subsequently updated under section
1888(e)(4)(E)(ii) of the Social Security Act (42 U.S.C.
1395yy(e)(4)(E)(ii)), effective for services furnished during
fiscal years 2003, 2004, and 2005, respectively.''.
(b) Adjustment to RUGs for AIDS Residents.--
(1) In general.--Paragraph (12) of section 1888(e) (42
U.S.C. 1395yy(e)) is amended to read as follows:
``(12) Adjustment for residents with aids.--
``(A) In general.--Subject to subparagraph (B), in the case
of a resident of a skilled nursing facility who is afflicted
with acquired immune deficiency syndrome (AIDS), the per diem
amount of payment otherwise applicable shall be increased by
128 percent to reflect increased costs associated with such
residents.
``(B) Sunset.--Subparagraph (A) shall not apply on and
after such date as the Secretary certifies that there is an
appropriate adjustment in the case mix under paragraph
(4)(G)(i) to compensate for the increased costs associated
with residents described in such subparagraph.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to services furnished on or after October 1,
2003.
Subtitle C--Hospice
SEC. 421. COVERAGE OF HOSPICE CONSULTATION SERVICES.
(a) Coverage of Hospice Consultation Services.--Section
1812(a) (42 U.S.C. 1395d(a)) is amended--
(1) by striking ``and'' at the end of paragraph (3);
(2) by striking the period at the end of paragraph (4) and
inserting ``; and''; and
(3) by inserting after paragraph (4) the following new
paragraph:
``(5) for individuals who are terminally ill, have not made
an election under subsection (d)(1), and have not previously
received services under this paragraph, services that are
furnished by a physician who is either the medical director
or an employee of a hospice program and that consist of--
``(A) an evaluation of the individual's need for pain and
symptom management;
``(B) counseling the individual with respect to end-of-life
issues and care options; and
``(C) advising the individual regarding advanced care
planning.''.
(b) Payment.--Section 1814(i) (42 U.S.C. l395f(i)) is
amended by adding at the end the following new paragraph:
``(4) The amount paid to a hospice program with respect to
the services under section 1812(a)(5) for which payment may
be made under this part shall be equal to an amount
equivalent to the amount established for an office or other
outpatient visit for evaluation and management associated
with presenting problems of moderate severity under the fee
schedule established under section 1848(b), other than the
portion of such amount attributable to the practice expense
component.''.
(c) Conforming Amendment.--Section 1861(dd)(2)(A)(i) (42
U.S.C. 1395x(dd)(2)(A)(i)) is amended by inserting before the
comma at the end the following: ``and services described in
section 1812(a)(5)''.
(d) Effective Date.--The amendments made by this section
shall apply to services provided by a hospice program on or
after January 1, 2004.
[[Page H4246]]
SEC. 422. 10 PERCENT INCREASE IN PAYMENT FOR HOSPICE CARE
FURNISHED IN A FRONTIER AREA.
(a) In General.--Section 1814(i)(1) (42 U.S.C. 1395f(i)(1))
is amended by adding at the end the following new
subparagraph:
``(D) With respect to hospice care furnished in a frontier
area on or after January 1, 2003, and before January 1, 2008,
the payment rates otherwise established for such care shall
be increased by 10 percent. For purposes of this
subparagraph, the term `frontier area' means a county in
which the population density is less than 7 persons per
square mile.''.
(b) Report on Costs.--Not later than January 1, 2007, the
Comptroller General of the United States shall submit to
Congress a report on the costs of furnishing hospice care in
frontier areas. Such report shall include recommendations
regarding the appropriateness of extending, and modifying,
the payment increase provided under the amendment made by
subsection (a).
SEC. 423. RURAL HOSPICE DEMONSTRATION PROJECT.
(a) In General.--The Secretary shall conduct a
demonstration project for the delivery of hospice care to
medicare beneficiaries in rural areas. Under the project
medicare beneficiaries who are unable to receive hospice care
in the home for lack of an appropriate caregiver are provided
such care in a facility of 20 or fewer beds which offers,
within its walls, the full range of services provided by
hospice programs under section 1861(dd) of the Social
Security Act (42 U.S.C. 1395x(dd)).
(b) Scope of Project.--The Secretary shall conduct the
project under this section with respect to no more than 3
hospice programs over a period of not longer than 5 years
each.
(c) Compliance with Conditions.--Under the demonstration
project--
(1) the hospice program shall comply with otherwise
applicable requirements, except that it shall not be required
to offer services outside of the home or to meet the
requirements of section 1861(dd)(2)(A)(iii) of the Social
Security Act; and
(2) payments for hospice care shall be made at the rates
otherwise applicable to such care under title XVIII of such
Act.
The Secretary may require the program to comply with such
additional quality assurance standards for its provision of
services in its facility as the Secretary deems appropriate.
(d) Report.--Upon completion of the project, the Secretary
shall submit a report to Congress on the project and shall
include in the report recommendations regarding extension of
such project to hospice programs serving rural areas.
Subtitle D--Other Provisions
SEC. 431. DEMONSTRATION PROJECT FOR USE OF RECOVERY AUDIT
CONTRACTORS.
(a) In General.--The Secretary of Health and Human Services
shall conduct a demonstration project under this section (in
this section referred to as the ``project'') to demonstrate
the use of recovery audit contractors under the Medicare
Integrity Program in identifying underpayments and
overpayments and recouping overpayments under the medicare
program for services for which payment is made under part A
of title XVIII of the Social Security Act. Under the
project--
(1) payment may be made to such a contractor on a
contingent basis;
(2) a percentage of the amount recovered may be retained by
the Secretary and shall be available to the program
management account of the Centers for Medicare & Medicaid
Services; and
(3) the Secretary shall examine the efficacy of such use
with respect to duplicative payments, accuracy of coding, and
other payment policies in which inaccurate payments arise.
(b) Scope and Duration.--The project shall cover at least 2
States and at least 3 contractors and shall last for not
longer than 3 years.
(c) Waiver.--The Secretary of Health and Human Services
shall waive such provisions of title XVIII of the Social
Security Act as may be necessary to provide for payment for
services under the project in accordance with subsection (a).
(d) Qualifications of Contractors.--
(1) In general.--The Secretary shall enter into a recovery
audit contract under this section with an entity only if the
entity has staff that has knowledge of and experience with
the payment rules and regulations under the medicare program
or the entity has or will contract with another entity that
has such knowledgeable and experienced staff.
(2) Ineligibility of certain contractors.--The Secretary
may not enter into a recovery audit contract under this
section with an entity to the extent that the entity is a
fiscal intermediary under section 1816 of the Social Security
Act (42 U.S.C. 1395h), a carrier under section 1842 of such
Act (42 U.S.C. 1395u), or a Medicare Administrative
Contractor under section 1874A of such Act.
(3) Preference for entities with demonstrated proficiency
with private insurers.--In awarding contracts to recovery
audit contractors under this section, the Secretary shall
give preference to those entities that the Secretary
determines have demonstrated proficiency in recovery audits
with private insurers or under the medicaid program under
title XIX of such Act.
(e) Report.--The Secretary of Health and Human Services
shall submit to Congress a report on the project not later
than 6 months after the date of its completion. Such reports
shall include information on the impact of the project on
savings to the medicare program and recommendations on the
cost-effectiveness of extending or expanding the project.
TITLE V--PROVISIONS RELATING TO PART B
Subtitle A--Physicians' Services
SEC. 501. REVISION OF UPDATES FOR PHYSICIANS' SERVICES.
(a) Update for 2003 through 2005.--
(1) In general.--Section 1848(d) (42 U.S.C. 1395w-4(d)) is
amended by adding at the end the following new paragraphs:
``(5) Update for 2003.--The update to the single conversion
factor established in paragraph (1)(C) for 2003 is 2 percent.
``(6) Special rules for update for 2004 and 2005.--The
following rules apply in determining the update adjustment
factors under paragraph (4)(B) for 2004 and 2005:
``(A) Use of 2002 data in determining allowable costs.--
``(i) The reference in clause (ii)(I) of such paragraph to
April 1, 1996, is deemed to be a reference to January 1,
2002.
``(ii) The allowed expenditures for 2002 is deemed to be
equal to the actual expenditures for physicians' services
furnished during 2002, as estimated by the Secretary.
``(B) 1 percentage point increase in gdp under sgr.--The
annual average percentage growth in real gross domestic
product per capita under subsection (f)(2)(C) for each of
2003, 2004, and 2005 is deemed to be increased by 1
percentage point.''.
(2) Conforming amendment.--Paragraph (4)(B) of such section
is amended, in the matter before clause (i), by inserting
``and paragraph (6)'' after ``subparagraph (D)''.
(3) Not treated as change in law and regulation in
sustainable growth rate determination.--The amendments made
by this subsection shall not be treated as a change in law
for purposes of applying section 1848(f)(2)(D) of the Social
Security Act (42 U.S.C. 1395w-4(f)(2)(D)).
(b) Use of 10-Year Rolling Average in Computing Gross
Domestic Product.--
(1) In general.--Section 1848(f)(2)(C) (42 U.S.C. 1395w-
4(f)(2)(C)) is amended--
(A) by striking ``projected'' and inserting ``annual
average''; and
(B) by striking ``from the previous applicable period to
the applicable period involved'' and inserting ``during the
10-year period ending with the applicable period involved''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to computations of the sustainable growth rate
for years beginning with 2002.
(c) Elimination of Transitional Adjustment.--Section
1848(d)(4)(F) (42 U.S.C. 1395w-4(d)(4)(F)) is amended by
striking ``subparagraph (A)'' and all that follows and
inserting ``subparagraph (A), for each of 2001 and 2002, of
-0.2 percent.''
(d) GAO Study of Medicare Payment for Inhalation Therapy.--
(1) Study.--The Comptroller General of the United States
shall conduct a study to examine the adequacy of current
reimbursements for inhalation therapy under the medicare
program.
(2) Report.--Not later than May 1, 2003, the Comptroller
General shall submit to Congress a report on the study
conducted under paragraph (1).
SEC. 502. STUDIES ON ACCESS TO PHYSICIANS' SERVICES.
(a) GAO Study on Beneficiary Access to Physicians'
Services.--
(1) Study.--The Comptroller General of the United States
shall conduct a study on access of medicare beneficiaries to
physicians' services under the medicare program. The study
shall include--
(A) an assessment of the use by beneficiaries of such
services through an analysis of claims submitted by
physicians for such services under part B of the medicare
program;
(B) an examination of changes in the use by beneficiaries
of physicians' services over time;
(C) an examination of the extent to which physicians are
not accepting new medicare beneficiaries as patients.
(2) Report.--Not later than 18 months after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under paragraph
(1). The report shall include a determination whether--
(A) data from claims submitted by physicians under part B
of the medicare program indicate potential access problems
for medicare beneficiaries in certain geographic areas; and
(B) access by medicare beneficiaries to physicians'
services may have improved, remained constant, or
deteriorated over time.
(b) Study and Report on Supply of Physicians.--
(1) Study.--The Secretary shall request the Institute of
Medicine of the National Academy of Sciences to conduct a
study on the adequacy of the supply of physicians (including
specialists) in the United States and the factors that affect
such supply.
(2) Report to congress.--Not later than 2 years after the
date of enactment of this section, the Secretary shall submit
to Congress a report on the results of the study described in
paragraph (1), including any recommendations for legislation.
[[Page H4247]]
SEC. 503. MEDPAC REPORT ON PAYMENT FOR PHYSICIANS' SERVICES.
Not later than 1 year after the date of the enactment of
this Act, the Medicare Payment Advisory Commission shall
submit to Congress a report on the effect of refinements to
the practice expense component of payments for physicians'
services, after the transition to a full resource-based
payment system in 2002, under section 1848 of the Social
Security Act (42 U.S.C. 1395w-4). Such report shall examine
the following matters by physician specialty:
(1) The effect of such refinements on payment for
physicians' services.
(2) The interaction of the practice expense component with
other components of and adjustments to payment for
physicians' services under such section.
(3) The appropriateness of the amount of compensation by
reason of such refinements.
(4) The effect of such refinements on access to care by
medicare beneficiaries to physicians' services.
(5) The effect of such refinements on physician
participation under the medicare program.
SEC. 504. 1-YEAR EXTENSION OF TREATMENT OF CERTAIN PHYSICIAN
PATHOLOGY SERVICES UNDER MEDICARE.
Section 542(c) of BIPA is amended by striking ``2-year
period'' and inserting ``3-year period''.
SEC. 505. PHYSICIAN FEE SCHEDULE WAGE INDEX REVISION.
(a) Index Revision.--
(1) In general.--Subject to paragraph (2), notwithstanding
any other provision of law, for purposes of payment under the
physician fee schedule under section 1848 of the Social
Security Act (42 U.S.C. 1395w-4) for physicians' services
furnished during 2004, in no case may the work geographic
index otherwise calculated under subsection (e)(1)(A)(iii) of
such section be less than 0.985.
(2) Secretarial discretion.--Paragraph (1) shall not take
effect or be in force if the Secretary determines, taking
into account the report of the Comptroller General under
subsection (b)(2), that there is no sound economic rationale
for the implementation of such paragraph.
(3) Exemption from limitation on annual adjustments.--Any
increase in expenditures attributable to paragraph (1) during
2004 shall not be taken into account in applying section
1848(c)(2)(B)(ii)(II) of the Social Security Act (42 U.S.C.
1395w-4(c)(2)(B)(ii)(II)) for that year.
(b) GAO Report.--
(1) Evaluation.--As part of the study on geographic
differences in payments for physicians' services conducted
under section 309, the Comptroller General shall evaluate the
following:
(A) Whether there is a sound economic basis for the
implementation of the adjustment under subsection (a)(1) in
those areas in which the adjustment applies.
(B) The effect of such adjustment on physician location and
retention in areas affected by such adjustment, taking into
account--
(i) differences in recruitment costs and retention rates
for physicians, including specialists, between large urban
areas and other areas; and
(ii) the mobility of physicians, including specialists,
over the last decade.
(C) The appropriateness of establishing a floor of 1.0 for
the work geographic index.
(2) Report.--By not later than September 1, 2003, the
Comptroller General shall submit to Congress and to the
Secretary a report on the evaluation conducted under
paragraph (1).
Subtitle B--Other Services
SEC. 511. COMPETITIVE ACQUISITION OF CERTAIN ITEMS AND
SERVICES.
(a) In General.--Section 1847 (42 U.S.C. 1395w-3) is
amended to read as follows:
``competitive acquisition of certain items and services
``Sec. 1847. (a) Establishment of Competitive Acquisition
Programs.--
``(1) Implementation of programs.--
``(A) In general.--The Secretary shall establish and
implement programs under which competitive acquisition areas
are established throughout the United States for contract
award purposes for the furnishing under this part of
competitively priced items and services (described in
paragraph (2)) for which payment is made under this part.
Such areas may differ for different items and services.
``(B) Phased-in implementation.--The programs shall be
phased-in among competitive acquisition areas over a period
of not longer than 3 years in a manner so that the
competition under the programs occurs in--
``(i) at least \1/3\ of such areas in 2004; and
``(ii) at least \2/3\ of such areas in 2005.
``(C) Waiver of certain provisions.--In carrying out the
programs, the Secretary may waive such provisions of the
Federal Acquisition Regulation as are necessary for the
efficient implementation of this section, other than
provisions relating to confidentiality of information and
such other provisions as the Secretary determines
appropriate.
``(2) Items and services described.--The items and services
referred to in paragraph (1) are the following:
``(A) Durable medical equipment and inhalation drugs used
in connection with durable medical equipment.--Covered items
(as defined in section 1834(a)(13)) for which payment is
otherwise made under section 1834(a), other than items used
in infusion, and inhalation drugs used in conjunction with
durable medical equipment.
``(B) Off-the-shelf orthotics.--Orthotics (described in
section 1861(s)(9)) for which payment is otherwise made under
section 1834(h) which require minimal self-adjustment for
appropriate use and does not require expertise in trimming,
bending, molding, assembling, or customizing to fit to the
patient.
``(3) Exemption authority.--In carrying out the programs
under this section, the Secretary may exempt--
``(A) areas that are not competitive due to low population
density; and
``(B) items and services for which the application of
competitive acquisition is not likely to result in
significant savings.
``(b) Program Requirements.--
``(1) In general.--The Secretary shall conduct a
competition among entities supplying items and services
described in subsection (a)(2) for each competitive
acquisition area in which the program is implemented under
subsection (a) with respect to such items and services.
``(2) Conditions for awarding contract.--
``(A) In general.--The Secretary may not award a contract
to any entity under the competition conducted in an
competitive acquisition area pursuant to paragraph (1) to
furnish such items or services unless the Secretary finds all
of the following:
``(i) The entity meets quality and financial standards
specified by the Secretary or developed by accreditation
entities or organizations recognized by the Secretary.
``(ii) The total amounts to be paid under the contract
(including costs associated with the administration of the
contract) are expected to be less than the total amounts that
would otherwise be paid.
``(iii) Beneficiary access to a choice of multiple
suppliers in the area is maintained.
``(iv) Beneficiary liability is limited to the applicable
percentage of contract award price.
``(B) Quality standards.--The quality standards specified
under subparagraph (A)(i) shall not be less than the quality
standards that would otherwise apply if this section did not
apply and shall include consumer services standards. The
Secretary shall consult with an expert outside advisory panel
composed of an appropriate selection of representatives of
physicians, practitioners, and suppliers to review (and
advise the Secretary concerning) such quality standards.
``(3) Contents of contract.--
``(A) In general.--A contract entered into with an entity
under the competition conducted pursuant to paragraph (1) is
subject to terms and conditions that the Secretary may
specify.
``(B) Term of contracts.--The Secretary shall rebid
contracts under this section not less often than once every 3
years.
``(4) Limit on number of contractors.--
``(A) In general.--The Secretary may limit the number of
contractors in a competitive acquisition area to the number
needed to meet projected demand for items and services
covered under the contracts. In awarding contracts, the
Secretary shall take into account the ability of bidding
entities to furnish items or services in sufficient
quantities to meet the anticipated needs of beneficiaries for
such items or services in the geographic area covered under
the contract on a timely basis.
``(B) Multiple winners.--The Secretary shall award
contracts to more than one entity submitting a bid in each
area for an item or service.
``(5) Participating contractors.--Payment shall not be made
for items and services described in subsection (a)(2)
furnished by a contractor and for which competition is
conducted under this section unless--
``(A) the contractor has submitted a bid for such items and
services under this section; and
``(B) the Secretary has awarded a contract to the
contractor for such items and services under this section.
``(6) Authority to contract for education, outreach and
complaint services.--The Secretary may enter into a contract
with an appropriate entity to address complaints from
beneficiaries who receive items and services from an entity
with a contract under this section and to conduct appropriate
education of and outreach to such beneficiaries with respect
to the program.
``(c) Annual Reports.--The Secretary shall submit to
Congress an annual management report on the programs under
this section. Each such report shall include information on
savings, reductions in cost-sharing, access to items and
services, and beneficiary satisfaction.
``(d) Demonstration Project for Clinical Laboratory
Services.--
``(1) In general.--The Secretary shall conduct a
demonstration project on the application of competitive
acquisition under this section to clinical diagnostic
laboratory tests--
``(A) for which payment is otherwise made under section
1833(h) or 1834(d)(1) (relating to colorectal cancer
screening tests); and
``(B) which are furnished without a face-to-face encounter
between the individual and the hospital or physician ordering
the tests.
``(2) Terms and conditions.--Such project shall be under
the same conditions as are applicable to items and services
described in subsection (a)(2).
[[Page H4248]]
``(3) Report.--The Secretary shall submit to Congress--
``(A) an initial report on the project not later than
December 31, 2004; and
``(B) such progress and final reports on the project after
such date as the Secretary determines appropriate.''.
(b) Continuation of Certain Demonstration Projects.--
Notwithstanding the amendment made by subsection (a), with
respect to demonstration projects implemented by the
Secretary under section 1847 of the Social Security Act (42
U.S.C. 1395w-3) (relating to the establishment of competitive
acquisition areas) that was in effect on the day before the
date of the enactment of this Act, each such demonstration
project may continue under the same terms and conditions
applicable under that section as in effect on that date.
(c) Report on Differences in Payment for Laboratory
Services.--Not later than 18 months after the date of the
enactment of this Act, the Comptroller General of the United
States shall submit to Congress a report that analyzes
differences in reimbursement between public and private
payors for clinical diagnostic laboratory services.
SEC. 512. PAYMENT FOR AMBULANCE SERVICES.
(a) Phase-In Providing Floor Using Blend of Fee Schedule
and Regional Fee Schedules.--Section 1834(l) (42 U.S.C.
1395m(l)) is amended--
(1) in paragraph (2)(E), by inserting ``consistent with
paragraph (10)'' after ``in an efficient and fair manner'';
(2) by redesignating the paragraph (8) added by section
221(a) of BIPA as paragraph (9); and
(3) by adding at the end the following new paragraph:
``(10) Phase-in providing floor using blend of fee schedule
and regional fee schedules.--In carrying out the phase-in
under paragraph (2)(E) for each level of service furnished in
a year before January 1, 2007, the portion of the payment
amount that is based on the fee schedule shall not be less
than the following blended rate of the fee schedule under
paragraph (1) and of a regional fee schedule for the region
involved:
``(A) For 2003, the blended rate shall be based 20 percent
on the fee schedule under paragraph (1) and 80 percent on the
regional fee schedule.
``(B) For 2004, the blended rate shall be based 40 percent
on the fee schedule under paragraph (1) and 60 percent on the
regional fee schedule.
``(C) For 2005, the blended rate shall be based 60 percent
on the fee schedule under paragraph (1) and 40 percent on the
regional fee schedule.
``(D) For 2006, the blended rate shall be based 80 percent
on the fee schedule under paragraph (1) and 20 percent on the
regional fee schedule.
For purposes of this paragraph, the Secretary shall establish
a regional fee schedule for each of the 9 Census divisions
using the methodology (used in establishing the fee schedule
under paragraph (1)) to calculate a regional conversion
factor and a regional mileage payment rate and using the same
payment adjustments and the same relative value units as used
in the fee schedule under such paragraph.''.
(b) Adjustment in Payment for Certain Long Trips.--Section
1834(l), as amended by subsection (a), is further amended by
adding at the end the following new paragraph:
``(11) Adjustment in payment for certain long trips.--In
the case of ground ambulance services furnished on or after
January 1, 2003, and before January 1, 2008, regardless of
where the transportation originates, the fee schedule
established under this subsection shall provide that, with
respect to the payment rate for mileage for a trip above 50
miles the per mile rate otherwise established shall be
increased by \1/4\ of the payment per mile otherwise
applicable to such miles.''.
(c) Effective Date.--The amendments made by this section
shall apply to ambulance services furnished on or after
January 1, 2003.
SEC. 513. 2-YEAR EXTENSION OF MORATORIUM ON THERAPY CAPS;
PROVISIONS RELATING TO REPORTS.
(a) 2-Year Extension of Moratorium on Therapy Caps.--
Section 1833(g)(4) (42 U.S.C. 1395l(g)(4)) is amended by
striking ``and 2002'' and inserting ``2002, 2003, and 2004''.
(b) Prompt Submission of Overdue Reports on Payment and
Utilization of Outpatient Therapy Services.--Not later than
December 31, 2002, the Secretary shall submit to Congress the
reports required under section 4541(d)(2) of the Balanced
Budget Act of 1997 (relating to alternatives to a single
annual dollar cap on outpatient therapy) and under section
221(d) of the Medicare, Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999 (relating to utilization patterns for
outpatient therapy).
(c) Identification of Conditions and Diseases Justifying
Waiver of Therapy Cap.--
(1) Study.--The Secretary shall request the Institute of
Medicine of the National Academy of Sciences to identify
conditions or diseases that should justify conducting an
assessment of the need to waive the therapy caps under
section 1833(g)(4) of the Social Security Act (42 U.S.C.
1395l(g)(4)).
(2) Reports to congress.--Not later than September 1, 2003,
the Secretary shall submit to Congress a preliminary report
on the conditions and diseases identified under paragraph (1)
and not later than December 31, 2003, a final report on the
conditions and diseases so identified.
(d) GAO Study of Patient Access to Physical Therapist
Services.--
(1) Study.--The Comptroller General of the United States
shall conduct a study on access to physical therapist
services in States authorizing such services without a
physician referral and in States that require such a
physician referral. The study shall--
(A) examine the use of and referral patterns for physical
therapist services for patients age 50 and older in States
that authorize such services without a physician referral and
in States that require such a physician referral;
(B) examine the use of and referral patterns for physical
therapist services for patients who are medicare
beneficiaries;
(C) examine the potential effect of prohibiting a physician
from referring patients to physical therapy services owned by
the physician and provided in the physician's office;
(D) examine the delivery of physical therapists' services
within the facilities of Department of Defense; and
(E) analyze the potential impact on medicare beneficiaries
and on expenditures under the medicare program of eliminating
the need for a physician referral and physician certification
for physical therapist services under the medicare program.
(2) Report.--The Comptroller General shall submit to
Congress a report on the study conducted under paragraph (1)
by not later than 1 year after the date of the enactment of
this Act.
SEC. 514. COVERAGE OF AN INITIAL PREVENTIVE PHYSICAL
EXAMINATION.
(a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2))
is amended--
(1) in subparagraph (U), by striking ``and'' at the end;
(2) in subparagraph (V), by inserting ``and'' at the end;
and
(3) by adding at the end the following new subparagraph:
``(W) an initial preventive physical examination (as
defined in subsection (ww));''.
(b) Services Described.--Section 1861 (42 U.S.C. 1395x) is
amended by adding at the end the following new subsection:
``Initial Preventive Physical Examination
``(ww) The term `initial preventive physical examination'
means physicians' services consisting of a physical
examination with the goal of health promotion and disease
detection and includes items and services (excluding clinical
laboratory tests), as determined by the Secretary, consistent
with the recommendations of the United States Preventive
Services Task Force.''.
(c) Waiver of Deductible and Coinsurance.--
(1) Deductible.--The first sentence of section 1833(b) (42
U.S.C. 1395l(b)) is amended--
(A) by striking ``and'' before ``(6)'', and
(B) by inserting before the period at the end the
following: ``, and (7) such deductible shall not apply with
respect to an initial preventive physical examination (as
defined in section 1861(ww))''.
(2) Coinsurance.--Section 1833(a)(1) (42 U.S.C.
1395l(a)(1)) is amended--
(A) in clause (N), by inserting ``(or 100 percent in the
case of an initial preventive physical examination, as
defined in section 1861(ww))'' after ``80 percent''; and
(B) in clause (O), by inserting ``(or 100 percent in the
case of an initial preventive physical examination, as
defined in section 1861(ww))'' after ``80 percent''.
(d) Payment as Physicians' Services.--Section 1848(j)(3)
(42 U.S.C. 1395w-4(j)(3)) is amended by inserting ``(2)(W),''
after ``(2)(S),''.
(e) Other Conforming Amendments.--Section 1862(a) (42
U.S.C. 1395y(a)) is amended--
(1) in paragraph (1)--
(A) by striking ``and'' at the end of subparagraph (H);
(B) by striking the semicolon at the end of subparagraph
(I) and inserting ``, and''; and
(C) by adding at the end the following new subparagraph:
``(J) in the case of an initial preventive physical
examination, which is performed not later than 6 months after
the date the individual's first coverage period begins under
part B;''; and
(2) in paragraph (7), by striking ``or (H)'' and inserting
``(H), or (J)''.
(f) Effective Date.--The amendments made by this section
shall apply to services furnished on or after January 1,
2004, but only for individuals whose coverage period begins
on or after such date.
SEC. 515. RENAL DIALYSIS SERVICES.
(a) Report on Differences in Costs in Different Settings.--
Not later than 1 year after the date of the enactment of this
Act, the Comptroller General of the United States shall
submit to Congress a report containing--
(1) an analysis of the differences in costs of providing
renal dialysis services under the medicare program in home
settings and in facility settings;
(2) an assessment of the percentage of overhead costs in
home settings and in facility settings; and
(3) an evaluation of whether the charges for home dialysis
supplies and equipment are reasonable and necessary.
(b) Restoring Composite Rate Exceptions for Pediatric
Facilities.--
(1) In general.--Section 422(a)(2) of BIPA is amended--
(A) in subparagraph (A), by striking ``and (C)'' and
inserting ``, (C), and (D)'';
(B) in subparagraph (B), by striking ``In the case'' and
inserting ``Subject to subparagraph (D), in the case''; and
[[Page H4249]]
(C) by adding at the end the following new subparagraph:
``(D) Inapplicability to pediatric facilities.--
Subparagraphs (A) and (B) shall not apply, as of October 1,
2002, to pediatric facilities that do not have an exception
rate described in subparagraph (C) in effect on such date.
For purposes of this subparagraph, the term `pediatric
facility' means a renal facility at least 50 percent of whose
patients are individuals under 18 years of age.''.
(2) Conforming amendment.--The fourth sentence of section
1881(b)(7) (42 U.S.C. 1395rr(b)(7)) is amended by striking
``The Secretary'' and inserting ``Subject to section
422(a)(2) of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000, the Secretary''.
(c) Increase in Renal Dialysis Composite Rate for Services
Furnished in 2004.--Notwithstanding any other provision of
law, with respect to payment under part B of title XVIII of
the Social Security Act for renal dialysis services furnished
in 2004, the composite payment rate otherwise established
under section 1881(b)(7) of such Act (42 U.S.C. 1395rr(b)(7))
shall be increased by 1.2 percent.
SEC. 516. IMPROVED PAYMENT FOR CERTAIN MAMMOGRAPHY SERVICES.
(a) Exclusion from OPD Fee Schedule.--Section
1833(t)(1)(B)(iv) (42 U.S.C. 1395l(t)(1)(B)(iv)) is amended
by inserting before the period at the end the following:
``and does not include screening mammography (as defined in
section 1861(jj)) and unilateral and bilateral diagnostic
mammography''.
(b) Adjustment to Technical Component.--For diagnostic
mammography performed on or after January 1, 2004, for which
payment is made under the physician fee schedule under
section 1848 of the Social Security Act (42 U.S.C. 1395w-4),
the Secretary, based on the most recent cost data available,
shall provide for an appropriate adjustment in the payment
amount for the technical component of the diagnostic
mammography.
(c) Effective Date.--The amendment made by subsection (a)
shall apply to mammography performed on or after January 1,
2004.
SEC. 517. WAIVER OF PART B LATE ENROLLMENT PENALTY FOR
CERTAIN MILITARY RETIREES; SPECIAL ENROLLMENT
PERIOD.
(a) Waiver of Penalty.--
(1) In general.--Section 1839(b) (42 U.S.C. 1395r(b)) is
amended by adding at the end the following new sentence: ``No
increase in the premium shall be effected for a month in the
case of an individual who is 65 years of age or older, who
enrolls under this part during 2001, 2002, or 2003, and who
demonstrates to the Secretary before December 31, 2003, that
the individual is a covered beneficiary (as defined in
section 1072(5) of title 10, United States Code). The
Secretary of Health and Human Services shall consult with the
Secretary of Defense in identifying individuals described in
the previous sentence.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to premiums for months beginning with January
2003. The Secretary of Health and Human Services shall
establish a method for providing rebates of premium penalties
paid for months on or after January 2003 for which a penalty
does not apply under such amendment but for which a penalty
was previously collected.
(b) Medicare Part B Special Enrollment Period.--
(1) In general.--In the case of any individual who, as of
the date of the enactment of this Act, is 65 years of age or
older, is eligible to enroll but is not enrolled under part B
of title XVIII of the Social Security Act, and is a covered
beneficiary (as defined in section 1072(5) of title 10,
United States Code), the Secretary of Health and Human
Services shall provide for a special enrollment period during
which the individual may enroll under such part. Such period
shall begin as soon as possible after the date of the
enactment of this Act and shall end on December 31, 2003.
(2) Coverage period.--In the case of an individual who
enrolls during the special enrollment period provided under
paragraph (1), the coverage period under part B of title
XVIII of the Social Security Act shall begin on the first day
of the month following the month in which the individual
enrolls.
SEC. 518. COVERAGE OF CHOLESTEROL AND BLOOD LIPID SCREENING.
(a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)),
as amended by section 514(a), is amended--
(1) in subparagraph (V), by striking ``and'' at the end;
(2) in subparagraph (W), by inserting ``and'' at the end;
and
(3) by adding at the end the following new subparagraph:
``(X) cholesterol and other blood lipid screening tests (as
defined in subsection (XX));''.
(b) Services Described.--Section 1861 (42 U.S.C. 1395x), as
amended by section 514(b), is amended by adding at the end
the following new subsection:
``Cholesterol and Other Blood Lipid Screening Test
``(xx)(1) The term `cholesterol and other blood lipid
screening test' means diagnostic testing of cholesterol and
other lipid levels of the blood for the purpose of early
detection of abnormal cholesterol and other lipid levels.
``(2) The Secretary shall establish standards, in
consultation with appropriate organizations, regarding the
frequency and type of cholesterol and other blood lipid
screening tests, except that such frequency may not be more
often than once every 2 years.''.
(c) Frequency.--Section 1862(a)(1) (42 U.S.C. 1395y(a)(1)),
as amended by section 514(e), is amended
(1) by striking ``and'' at the end of subparagraph (I);
(2) by striking the semicolon at the end of subparagraph
(J) and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(K) in the case of a cholesterol and other blood lipid
screening test (as defined in section 1861(xx)(1)), which is
performed more frequently than is covered under section
1861(xx)(2).''.
(d) Effective Date.--The amendments made by this section
shall apply to tests furnished on or after January 1, 2004.
TITLE VI--PROVISIONS RELATING TO PARTS A AND B
Subtitle A--Home Health Services
SEC. 601. ELIMINATION OF 15 PERCENT REDUCTION IN PAYMENT
RATES UNDER THE PROSPECTIVE PAYMENT SYSTEM.
(a) In General.--Section 1895(b)(3)(A) (42 U.S.C.
1395fff(b)(3)(A)) is amended to read as follows:
``(A) Initial basis.--Under such system the Secretary shall
provide for computation of a standard prospective payment
amount (or amounts) as follows:
``(i) Such amount (or amounts) shall initially be based on
the most current audited cost report data available to the
Secretary and shall be computed in a manner so that the total
amounts payable under the system for fiscal year 2001 shall
be equal to the total amount that would have been made if the
system had not been in effect and if section
1861(v)(1)(L)(ix) had not been enacted.
``(ii) For fiscal year 2002 and for the first quarter of
fiscal year 2003, such amount (or amounts) shall be equal to
the amount (or amounts) determined under this paragraph for
the previous fiscal year, updated under subparagraph (B).
``(iii) For 2003, such amount (or amounts) shall be equal
to the amount (or amounts) determined under this paragraph
for fiscal year 2002, updated under subparagraph (B) for
2003.
``(iv) For 2004 and each subsequent year, such amount (or
amounts) shall be equal to the amount (or amounts) determined
under this paragraph for the previous year, updated under
subparagraph (B).
Each such amount shall be standardized in a manner that
eliminates the effect of variations in relative case mix and
area wage adjustments among different home health agencies in
a budget neutral manner consistent with the case mix and wage
level adjustments provided under paragraph (4)(A). Under the
system, the Secretary may recognize regional differences or
differences based upon whether or not the services or agency
are in an urbanized area.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect as if included in the amendments made by
section 501 of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (as enacted into law
by section 1(a)(6) of Public Law 106-554).
SEC. 602. UPDATE IN HOME HEALTH SERVICES.
(a) Change to Calendar Year Update.--
(1) In general.--Section 1895(b) (42 U.S.C. 1395fff(b)(3))
is amended--
(A) in paragraph (3)(B)(i)--
(i) by striking ``each fiscal year (beginning with fiscal
year 2002)'' and inserting ``fiscal year 2002 and for each
subsequent year (beginning with 2003)''; and
(ii) by inserting ``or year'' after ``the fiscal year'';
(B) in paragraph (3)(B)(ii)--
(i) in subclause (II), by striking ``fiscal year'' and
inserting ``year'' and by redesignating such subclause as
subclause (III); and
(ii) in subclause (I), by striking ``each of fiscal years
2002 and 2003'' and inserting the following: ``fiscal year
2002, the home health market basket percentage increase (as
defined in clause (iii)) minus 1.1 percentage points;
``(II) 2003'';
(C) in paragraph (3)(B)(iii), by inserting ``or year''
after ``fiscal year'' each place it appears;
(D) in paragraph (3)(B)(iv)--
(i) by inserting ``or year'' after ``fiscal year'' each
place it appears; and
(ii) by inserting ``or years'' after ``fiscal years''; and
(E) in paragraph (5), by inserting ``or year'' after
``fiscal year''.
(2) Transition rule.--The standard prospective payment
amount (or amounts) under section 1895(b)(3) of the Social
Security Act for the calendar quarter beginning on October 1,
2002, shall be such amount (or amounts) for the previous
calendar quarter.
(b) Changes in Updates for 2003, 2004, and 2005.--Section
1895(b)(3)(B)(ii) (42 U.S.C. 1395fff(b)(3)(B)(ii)), as
amended by subsection (a)(1)(B), is amended--
(1) in subclause (II), by striking ``the home health market
basket percentage increase (as defined in clause (iii)) minus
1.1 percentage points'' and inserting ``2.0 percentage
points'';
(2) by striking ``or'' at the end of subclause (II);
(3) by redesignating subclause (III) as subclause (V); and
(4) by inserting after subclause (II) the following new
subclause:
``(III) 2004, 1.1 percentage points;
``(IV) 2005, 2.7 percentage points; or''.
[[Page H4250]]
(c) Payment Adjustment.--
(1) In general.--Section 1895(b)(5) (42 U.S.C.
1395fff(b)(5)) is amended by striking ``5 percent'' and
inserting ``3 percent''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to years beginning with 2003.
SEC. 603. OASIS TASK FORCE; SUSPENSION OF CERTAIN OASIS DATA
COLLECTION REQUIREMENTS PENDING TASK FORCE
SUBMITTAL OF REPORT.
(a) Establishment.--The Secretary of Health and Human
Services shall establish and appoint a task force (to be
known as the ``OASIS Task Force'') to examine the data
collection and reporting requirements under OASIS. For
purposes of this section, the term ``OASIS'' means the
Outcome and Assessment Information Set required by reason of
section 4602(e) of Balanced Budget Act of 1997 (42 U.S.C.
1395fff note).
(b) Composition.--The OASIS Task Force shall be composed of
the following:
(1) Staff of the Centers for Medicare & Medicaid Services
with expertise in post-acute care.
(2) Representatives of home health agencies.
(3) Health care professionals and research and health care
quality experts outside the Federal Government with expertise
in post-acute care.
(4) Advocates for individuals requiring home health
services.
(c) Duties.--
(1) Review and recommendations.--The OASIS Task Force shall
review and make recommendations to the Secretary regarding
changes in OASIS to improve and simplify data collection for
purposes of--
(A) assessing the quality of home health services; and
(B) providing consistency in classification of patients
into home health resource groups (HHRGs) for payment under
section 1895 of the Social Security Act (42 U.S.C. 1395fff).
(2) Specific items.--In conducting the review under
paragraph (1), the OASIS Task Force shall specifically
examine--
(A) the 41 outcome measures currently in use;
(B) the timing and frequency of data collection; and
(C) the collection of information on comorbidities and
clinical indicators.
(3) Report.--The OASIS Task Force shall submit a report to
the Secretary containing its findings and recommendations for
changes in OASIS by not later than 18 months after the date
of the enactment of this Act.
(d) Sunset.--The OASIS Task Force shall terminate 60 days
after the date on which the report is submitted under
subsection (c)(2).
(e) Nonapplication of FACA.--The provisions of the Federal
Advisory Committee Act shall not apply to the OASIS Task
Force.
(f) Suspension of OASIS Requirement for Collection of Data
on Non-Medicare and Non-Medicaid Patients Pending Task Force
Report.--
(1) In general.--During the period described in paragraph
(2), the Secretary of Health and Human Services may not
require, under section 4602(e) of the Balanced Budget Act of
1997 or otherwise under OASIS, a home health agency to gather
or submit information that relates to an individual who is
not eligible for benefits under either title XVIII or title
XIX of the Social Security Act.
(2) Period of suspension.--The period described in this
paragraph--
(A) begins on January 1, 2003, and
(B) ends on the last day of the 2nd month beginning after
the date the report is submitted under subsection (c)(2).
SEC. 604. MEDPAC STUDY ON MEDICARE MARGINS OF HOME HEALTH
AGENCIES.
(a) Study.--The Medicare Payment Advisory Commission shall
conduct a study of payment margins of home health agencies
under the home health prospective payment system under
section 1895 of the Social Security Act (42 U.S.C. 1395fff).
Such study shall examine whether systematic differences in
payment margins are related to differences in case mix (as
measured by home health resource groups (HHRGs)) among such
agencies. The study shall use the partial or full-year cost
reports filed by home health agencies.
(b) Report.--Not later than 2 years after the date of the
enactment of this Act, the Commission shall submit to
Congress a report on the study under subsection (a).
SEC. 605. CLARIFICATION OF TREATMENT OF OCCASIONAL ABSENCES
IN DETERMINING WHETHER AN INDIVIDUAL IS
CONFINED TO THE HOME.
(a) In General.--The penultimate sentence of section
1814(a) (42 U.S.C. 1395f(a) and the penultimate sentence of
section 1835(a) (42 U.S.C. 1395n(a)) are each amended to read
as follows: ``Any other absence of an individual from the
home shall not so disqualify the individual if the absence is
infrequent or of relatively short duration, such as an
occasional trip to the barber or a walk around the block, and
is not inconsistent with the assessment underlying the
individual's plan of care for home health services.''.
(b) Effective Date.--The amendments made by subsection (a)
shall take effect on the date of the enactment of this Act.
Subtitle B--Direct Graduate Medical Education
SEC. 611. EXTENSION OF UPDATE LIMITATION ON HIGH COST
PROGRAMS.
Section 1886(h)(2)(D)(iv) (42 U.S.C. 1395ww(h)(2)(D)(iv))
is amended--
(1) in subclause (I)--
(A) by striking ``and 2002'' and inserting ``through
2012'';
(B) by striking ``during fiscal year 2001 or fiscal year
2002'' and inserting ``during the period beginning with
fiscal year 2001 and ending with fiscal year 2012''; and
(C) by striking ``subject to subclause (III),'';
(2) by striking subclause (II); and
(3) in subclause (III)--
(A) by redesignating such subclause as subclause (II); and
(B) by striking ``or (II)''.
SEC. 612. REDISTRIBUTION OF UNUSED RESIDENT POSITIONS.
(a) In General.--Section 1886(h)(4) (42 U.S.C.
1395ww(h)(4)) is amended--
(1) in subparagraph (F)(i), by inserting ``subject to
subparagraph (I),'' after ``October 1, 1997,'';
(2) in subparagraph (H)(i), by inserting ``subject to
subparagraph (I),'' after ``subparagraphs (F) and (G),''; and
(3) by adding at the end the following new subparagraph:
``(I) Redistribution of unused resident positions.--
``(i) Reduction in limit based on unused positions.--
``(I) In general.--If a hospital's resident level (as
defined in clause (iii)(I)) is less than the otherwise
applicable resident limit (as defined in clause (iii)(II))
for each of the reference periods (as defined in subclause
(II)), effective for cost reporting periods beginning on or
after January 1, 2003, the otherwise applicable resident
limit shall be reduced by 75 percent of the difference
between such limit and the reference resident level specified
in subclause (III) (or subclause (IV) if applicable).
``(II) Reference periods defined.--In this clause, the term
`reference periods' means, for a hospital, the 3 most recent
consecutive cost reporting periods of the hospital for which
cost reports have been settled (or, if not, submitted) on or
before September 30, 2001.
``(III) Reference resident level.--Subject to subclause
(IV), the reference resident level specified in this
subclause for a hospital is the highest resident level for
the hospital during any of the reference periods.
``(IV) Adjustment process.--Upon the timely request of a
hospital, the Secretary may adjust the reference resident
level for a hospital to be the resident level for the
hospital for the cost reporting period that includes July 1,
2002.
``(ii) Redistribution.--
``(I) In general.--The Secretary is authorized to increase
the otherwise applicable resident limits for hospitals by an
aggregate number estimated by the Secretary that does not
exceed the aggregate reduction in such limits attributable to
clause (i) (without taking into account any adjustment under
subclause (IV) of such clause).
``(II) Effective date.--No increase under subclause (I)
shall be permitted or taken into account for a hospital for
any portion of a cost reporting period that occurs before
July 1, 2003, or before the date of the hospital's
application for an increase under this clause. No such
increase shall be permitted for a hospital unless the
hospital has applied to the Secretary for such increase by
December 31, 2004.
``(III) Considerations in redistribution.--In determining
for which hospitals the increase in the otherwise applicable
resident limit is provided under subclause (I), the Secretary
shall take into account the need for such an increase by
specialty and location involved, consistent with subclause
(IV).
``(IV) Priority for rural and small urban areas.--In
determining for which hospitals and residency training
programs an increase in the otherwise applicable resident
limit is provided under subclause (I), the Secretary shall
first distribute the increase to programs of hospitals
located in rural areas or in urban areas that are not large
urban areas (as defined for purposes of subsection (d)) on a
first-come-first-served basis (as determined by the
Secretary) based on a demonstration that the hospital will
fill the positions made available under this clause and not
to exceed an increase of 25 full-time equivalent positions
with respect to any hospital.
``(V) Application of locality adjusted national average per
resident amount.--With respect to additional residency
positions in a hospital attributable to the increase provided
under this clause, notwithstanding any other provision of
this subsection, the approved FTE resident amount is deemed
to be equal to the locality adjusted national average per
resident amount computed under subparagraph (E) for that
hospital.
``(VI) Construction.--Nothing in this clause shall be
construed as permitting the redistribution of reductions in
residency positions attributable to voluntary reduction
programs under paragraph (6) or as affecting the ability of a
hospital to establish new medical residency training programs
under subparagraph (H).
``(iii) Resident level and limit defined.--In this
subparagraph:
``(I) Resident level.--The term `resident level' means,
with respect to a hospital, the total number of full-time
equivalent residents, before the application of weighting
factors (as determined under this paragraph), in the fields
of allopathic and osteopathic medicine for the hospital.
[[Page H4251]]
``(II) Otherwise applicable resident limit.--The term
`otherwise applicable resident limit' means, with respect to
a hospital, the limit otherwise applicable under
subparagraphs (F)(i) and (H) on the resident level for the
hospital determined without regard to this subparagraph.''.
(b) No Application of Increase to IME.--Section
1886(d)(5)(B)(v) (42 U.S.C. 1395ww(d)(5)(B)(v)) is amended by
adding at the end the following: ``The provisions of clause
(i) of subparagraph (I) of subsection (h)(4) shall apply with
respect to the first sentence of this clause in the same
manner as it applies with respect to subparagraph (F) of such
subsection, but the provisions of clause (ii) of such
subparagraph shall not apply.''.
(c) Report on Extension of Applications Under
Redistribution Program.--Not later than July 1, 2004, the
Secretary shall submit to Congress a report containing
recommendations regarding whether to extend the deadline for
applications for an increase in resident limits under section
1886(h)(4)(I)(ii)(II) of the Social Security Act (as added by
subsection (a)).
Subtitle C--Other Provisions
SEC. 621. MODIFICATIONS TO MEDICARE PAYMENT ADVISORY
COMMISSION (MEDPAC).
(a) Examination of Budget Consequences.--Section 1805(b)
(42 U.S.C. 1395b-6(b)) is amended by adding at the end the
following new paragraph:
``(8) Examination of budget consequences.--Before making
any recommendations, the Commission shall examine the budget
consequences of such recommendations, directly or through
consultation with appropriate expert entities.''.
(b) Consideration of Efficient Provision of Services.--
Section 1805(b)(2)(B)(i) (42 U.S.C. 1395b-6(b)(2)(B)(i)) is
amended by inserting ``the efficient provision of'' after
``expenditures for''.
(c) Additional Reports.--
(1) Data needs and sources.--The Medicare Payment Advisory
Commission shall conduct a study, and submit a report to
Congress by not later than June 1, 2003, on the need for
current data, and sources of current data available, to
determine the solvency and financial circumstances of
hospitals and other medicare providers of services. The
Commission shall examine data on uncompensated care, as well
as the share of uncompensated care accounted for by the
expenses for treating illegal aliens.
(2) Use of tax-related returns.--Using return information
provided under Form 990 of the Internal Revenue Service, the
Commission shall submit to Congress, by not later than June
1, 2003, a report on the following:
(A) Investments and capital financing of hospitals
participating under the medicare program and related
foundations.
(B) Access to capital financing for private and for not-
for-profit hospitals.
SEC. 622. DEMONSTRATION PROJECT FOR DISEASE MANAGEMENT FOR
CERTAIN MEDICARE BENEFICIARIES WITH DIABETES.
(a) In General.--The Secretary of Health and Human Services
shall conduct a demonstration project under this section (in
this section referred to as the ``project'') to demonstrate
the impact on costs and health outcomes of applying disease
management to certain medicare beneficiaries with diagnosed
diabetes. In no case may the number of participants in the
project exceed 30,000 at any time.
(b) Voluntary Participation.--
(1) Eligibility.--Medicare beneficiaries are eligible to
participate in the project only if--
(A) they are a member of a health disparity population (as
defined in section 485E(d) of the Public Health Service Act),
such as Hispanics;
(B) they meet specific medical criteria demonstrating the
appropriate diagnosis and the advanced nature of their
disease;
(C) their physicians approve of participation in the
project; and
(D) they are not enrolled in a Medicare+Choice plan.
(2) Benefits.--A medicare beneficiary who is enrolled in
the project shall be eligible--
(A) for disease management services related to their
diabetes; and
(B) for payment for all costs for prescription drugs
without regard to whether or not they relate to the diabetes,
except that the project may provide for modest cost-sharing
with respect to prescription drug coverage.
(c) Contracts With Disease Management Organizations.--
(1) In general.--The Secretary of Health and Human Services
shall carry out the project through contracts with up to
three disease management organizations. The Secretary shall
not enter into such a contract with an organization unless
the organization demonstrates that it can produce improved
health outcomes and reduce aggregate medicare expenditures
consistent with paragraph (2).
(2) Contract provisions.--Under such contracts--
(A) such an organization shall be required to provide for
prescription drug coverage described in subsection (b)(2)(B);
(B) such an organization shall be paid a fee negotiated and
established by the Secretary in a manner so that (taking into
account savings in expenditures under parts A and B of the
medicare program under title XVIII of the Social Security
Act) there will be no net increase, and to the extent
practicable, there will be a net reduction in expenditures
under the medicare program as a result of the project; and
(C) such an organization shall guarantee, through an
appropriate arrangement with a reinsurance company or
otherwise, the prohibition on net increases in expenditures
described in subparagraph (B).
(3) Payments.--Payments to such organizations shall be made
in appropriate proportion from the Trust Funds established
under title XVIII of the Social Security Act.
(d) Application of Medigap Protections to Demonstration
Project Enrollees.--(1) Subject to paragraph (2), the
provisions of section 1882(s)(3) (other than clauses (i)
through (iv) of subparagraph (B)) and 1882(s)(4) of the
Social Security Act shall apply to enrollment (and
termination of enrollment) in the demonstration project under
this section, in the same manner as they apply to enrollment
(and termination of enrollment) with a Medicare+Choice
organization in a Medicare+Choice plan.
(2) In applying paragraph (1)--
(A) any reference in clause (v) or (vi) of section
1882(s)(3)(B) of such Act to 12 months is deemed a reference
to the period of the demonstration project; and
(B) the notification required under section 1882(s)(3)(D)
of such Act shall be provided in a manner specified by the
Secretary of Health and Human Services.
(e) Duration.--The project shall last for not longer than 3
years.
(f) Waiver.--The Secretary of Health and Human Services
shall waive such provisions of title XVIII of the Social
Security Act as may be necessary to provide for payment for
services under the project in accordance with subsection
(c)(3).
(g) Report.--The Secretary of Health and Human Services
shall submit to Congress an interim report on the project not
later than 2 years after the date it is first implemented and
a final report on the project not later than 6 months after
the date of its completion. Such reports shall include
information on the impact of the project on costs and health
outcomes and recommendations on the cost-effectiveness of
extending or expanding the project.
(h) Working Group on Medicare Disease Management
Programs.--The Secretary shall establish within the
Department of Health and Human Services a working group
consisting of employees of the Department to carry out the
following:
(1) To oversee the project.
(2) To establish policy and criteria for medicare disease
management programs within the Department, including the
establishment of policy and criteria for such programs.
(3) To identify targeted medical conditions and targeted
individuals.
(4) To select areas in which such programs are carried out.
(5) To monitor health outcomes under such programs.
(6) To measure the effectiveness of such programs in
meeting any budget neutrality requirements.
(7) Otherwise to serve as a central focal point within the
Department for dissemination of information on medicare
disease management programs.
(i) GAO Study on Disease Management Programs.--The
Comptroller General of the United States shall conduct a
study that compares disease management programs under title
XVIII of the Social Security Act with such programs conducted
in the private sector, including the prevalence of such
programs and programs for case management. The study shall
identify the cost-effectiveness of such programs and any
savings achieved by such programs. The Comptroller General
shall submit a report on such study to Congress by not later
than 18 months after the date of the enactment of this Act.
SEC. 623. DEMONSTRATION PROJECT FOR MEDICAL ADULT DAY CARE
SERVICES.
(a) Establishment.--Subject to the succeeding provisions of
this section, the Secretary of Health and Human Services
shall establish a demonstration project (in this section
referred to as the ``demonstration project'') under which the
Secretary shall, as part of a plan of an episode of care for
home health services established for a medicare beneficiary,
permit a home health agency, directly or under arrangements
with a medical adult day care facility, to provide medical
adult day care services as a substitute for a portion of home
health services that would otherwise be provided in the
beneficiary's home.
(b) Payment.--
(1) In general.--The amount of payment for an episode of
care for home health services, a portion of which consists of
substitute medical adult day care services, under the
demonstration project shall be made at a rate equal to 95
percent of the amount that would otherwise apply for such
home health services under section 1895 of the Social
Security Act (42 u.s.c. 1395fff). In no case may a home
health agency, or a medical adult day care facility under
arrangements with a home health agency, separately charge a
beneficiary for medical adult day care services furnished
under the plan of care.
(2) Budget neutrality for demonstration project.--
Notwithstanding any other provision of law, the Secretary
shall provide for an appropriate reduction in the aggregate
amount of additional payments made under section 1895 of the
Social Security Act (42 U.S.C. 1395fff) to reflect any
increase in amounts expended from the Trust Funds as a result
of the demonstration project conducted under this section.
[[Page H4252]]
(c) Demonstration Project Sites.--The project established
under this section shall be conducted in not more than 5
States selected by the Secretary that license or certify
providers of services that furnish medical adult day care
services.
(d) Duration.--The Secretary shall conduct the
demonstration project for a period of 3 years.
(e) Voluntary Participation.--Participation of medicare
beneficiaries in the demonstration project shall be
voluntary. The total number of such beneficiaries that may
participate in the project at any given time may not exceed
15,000.
(f) Preference in Selecting Agencies.--In selecting home
health agencies to participate under the demonstration
project, the Secretary shall give preference to those
agencies that are currently licensed or certified through
common ownership and control to furnish medical adult day
care services.
(g) Waiver Authority.--The Secretary may waive such
requirements of title XVIII of the Social Security Act as may
be necessary for the purposes of carrying out the
demonstration project, other than waiving the requirement
that an individual be homebound in order to be eligible for
benefits for home health services.
(h) Evaluation and Report.--The Secretary shall conduct an
evaluation of the clinical and cost effectiveness of the
demonstration project. Not later 30 months after the
commencement of the project, the Secretary shall submit to
Congress a report on the evaluation, and shall include in the
report the following:
(1) An analysis of the patient outcomes and costs of
furnishing care to the medicare beneficiaries participating
in the project as compared to such outcomes and costs to
beneficiaries receiving only home health services for the
same health conditions.
(2) Such recommendations regarding the extension,
expansion, or termination of the project as the Secretary
determines appropriate.
(i) Definitions.--In this section:
(1) Home health agency.--The term ``home health agency''
has the meaning given such term in section 1861(o) of the
Social Security Act (42 U.S.C. 1395x(o)).
(2) Medical adult day care facility.--The term ``medical
adult day care facility'' means a facility that--
(A) has been licensed or certified by a State to furnish
medical adult day care services in the State for a continuous
2-year period;
(B) is engaged in providing skilled nursing services and
other therapeutic services directly or under arrangement with
a home health agency;
(C) meets such standards established by the Secretary to
assure quality of care and such other requirements as the
Secretary finds necessary in the interest of the health and
safety of individuals who are furnished services in the
facility; and
(D) provides medical adult day care services.
(3) Medical adult day care services.--The term ``medical
adult day care services'' means--
(A) home health service items and services described in
paragraphs (1) through (7) of section 1861(m) furnished in a
medical adult day care facility;
(B) a program of supervised activities furnished in a group
setting in the facility that--
(i) meet such criteria as the Secretary determines
appropriate; and
(ii) is designed to promote physical and mental health of
the individuals; and
(C) such other services as the Secretary may specify.
(4) Medicare beneficiary.--The term ``medicare
beneficiary'' means an individual entitled to benefits under
part A of this title, enrolled under part B of this title, or
both.
SEC. 624. PUBLICATION ON FINAL WRITTEN GUIDANCE CONCERNING
PROHIBITIONS AGAINST DISCRIMINATION BY NATIONAL
ORIGIN WITH RESPECT TO HEALTH CARE SERVICES.
Not later than January 1, 2003, the Secretary shall issue
final written guidance concerning the application of the
prohibition in title VI of the Civil Rights Act of 1964
against national origin discrimination as it affects persons
with limited English proficiency with respect to access to
health care services under the medicare program.
TITLE VII--MEDICARE BENEFITS ADMINISTRATION
SEC. 701. ESTABLISHMENT OF MEDICARE BENEFITS ADMINISTRATION.
(a) In General.--Title XVIII (42 U.S.C. 1395 et seq.), as
amended by section 105, is amended by inserting after 1806
the following new section:
``medicare benefits administration
``Sec. 1808. (a) Establishment.--There is established
within the Department of Health and Human Services an agency
to be known as the Medicare Benefits Administration.
``(b) Administrator; Deputy Administrator; Chief Actuary.--
``(1) Administrator.--
``(A) In general.--The Medicare Benefits Administration
shall be headed by an administrator to be known as the
`Medicare Benefits Administrator' (in this section referred
to as the `Administrator') who shall be appointed by the
President, by and with the advice and consent of the Senate.
The Administrator shall be in direct line of authority to the
Secretary.
``(B) Compensation.--The Administrator shall be paid at the
rate of basic pay payable for level III of the Executive
Schedule under section 5314 of title 5, United States Code.
``(C) Term of office.--The Administrator shall be appointed
for a term of 5 years. In any case in which a successor does
not take office at the end of an Administrator's term of
office, that Administrator may continue in office until the
entry upon office of such a successor. An Administrator
appointed to a term of office after the commencement of such
term may serve under such appointment only for the remainder
of such term.
``(D) General authority.--The Administrator shall be
responsible for the exercise of all powers and the discharge
of all duties of the Administration, and shall have authority
and control over all personnel and activities thereof.
``(E) Rulemaking authority.--The Administrator may
prescribe such rules and regulations as the Administrator
determines necessary or appropriate to carry out the
functions of the Administration. The regulations prescribed
by the Administrator shall be subject to the rulemaking
procedures established under section 553 of title 5, United
States Code.
``(F) Authority to establish organizational units.--The
Administrator may establish, alter, consolidate, or
discontinue such organizational units or components within
the Administration as the Administrator considers necessary
or appropriate, except as specified in this section.
``(G) Authority to delegate.--The Administrator may assign
duties, and delegate, or authorize successive redelegations
of, authority to act and to render decisions, to such
officers and employees of the Administration as the
Administrator may find necessary. Within the limitations of
such delegations, redelegations, or assignments, all official
acts and decisions of such officers and employees shall have
the same force and effect as though performed or rendered by
the Administrator.
``(2) Deputy administrator.--
``(A) In general.--There shall be a Deputy Administrator of
the Medicare Benefits Administration who shall be appointed
by the President, by and with the advice and consent of the
Senate.
``(B) Compensation.--The Deputy Administrator shall be paid
at the rate of basic pay payable for level IV of the
Executive Schedule under section 5315 of title 5, United
States Code.
``(C) Term of office.--The Deputy Administrator shall be
appointed for a term of 5 years. In any case in which a
successor does not take office at the end of a Deputy
Administrator's term of office, such Deputy Administrator may
continue in office until the entry upon office of such a
successor. A Deputy Administrator appointed to a term of
office after the commencement of such term may serve under
such appointment only for the remainder of such term.
``(D) Duties.--The Deputy Administrator shall perform such
duties and exercise such powers as the Administrator shall
from time to time assign or delegate. The Deputy
Administrator shall be Acting Administrator of the
Administration during the absence or disability of the
Administrator and, unless the President designates another
officer of the Government as Acting Administrator, in the
event of a vacancy in the office of the Administrator.
``(3) Chief actuary.--
``(A) In general.--There is established in the
Administration the position of Chief Actuary. The Chief
Actuary shall be appointed by, and in direct line of
authority to, the Administrator of such Administration. The
Chief Actuary shall be appointed from among individuals who
have demonstrated, by their education and experience,
superior expertise in the actuarial sciences. The Chief
Actuary may be removed only for cause.
``(B) Compensation.--The Chief Actuary shall be compensated
at the highest rate of basic pay for the Senior Executive
Service under section 5382(b) of title 5, United States Code.
``(C) Duties.--The Chief Actuary shall exercise such duties
as are appropriate for the office of the Chief Actuary and in
accordance with professional standards of actuarial
independence.
``(4) Secretarial coordination of program administration.--
The Secretary shall ensure appropriate coordination between
the Administrator and the Administrator of the Centers for
Medicare & Medicaid Services in carrying out the programs
under this title.
``(c) Duties; Administrative Provisions.--
``(1) Duties.--
``(A) General duties.--The Administrator shall carry out
parts C and D, including--
``(i) negotiating, entering into, and enforcing, contracts
with plans for the offering of Medicare+Choice plans under
part C, including the offering of qualified prescription drug
coverage under such plans; and
``(ii) negotiating, entering into, and enforcing, contracts
with PDP sponsors for the offering of prescription drug plans
under part D.
``(B) Other duties.--The Administrator shall carry out any
duty provided for under part C or part D, including
demonstration projects carried out in part or in whole under
such parts, the programs of all-inclusive care for the
elderly (PACE program) under section 1894, the social health
maintenance organization (SHMO) demonstration projects
(referred to in section 4104(c) of the Balanced Budget Act of
1997), and through a Medicare+Choice project that
demonstrates the application of capitation payment rates
[[Page H4253]]
for frail elderly medicare beneficiaries through the use of a
interdisciplinary team and through the provision of primary
care services to such beneficiaries by means of such a team
at the nursing facility involved).
``(C) Prescription drug card.--The Administrator shall
carry out section 1807 (relating to the medicare prescription
drug discount card endorsement program).
``(D) Noninterference.--In carrying out its duties with
respect to the provision of qualified prescription drug
coverage to beneficiaries under this title, the Administrator
may not--
``(i) require a particular formulary or institute a price
structure for the reimbursement of covered outpatient drugs;
``(ii) interfere in any way with negotiations between PDP
sponsors and Medicare+Choice organizations and drug
manufacturers, wholesalers, or other suppliers of covered
outpatient drugs; and
``(iii) otherwise interfere with the competitive nature of
providing such coverage through such sponsors and
organizations.
``(E) Annual reports.--Not later March 31 of each year, the
Administrator shall submit to Congress and the President a
report on the administration of parts C and D during the
previous fiscal year.
``(2) Staff.--
``(A) In general.--The Administrator, with the approval of
the Secretary, may employ, without regard to chapter 31 of
title 5, United States Code, other than sections 3110 and
3112, such officers and employees as are necessary to
administer the activities to be carried out through the
Medicare Benefits Administration. The Administrator shall
employ staff with appropriate and necessary expertise in
negotiating contracts in the private sector.
``(B) Flexibility with respect to compensation.--
``(i) In general.--The staff of the Medicare Benefits
Administration shall, subject to clause (ii), be paid without
regard to the provisions of chapter 51 (other than section
5101) and chapter 53 (other than section 5301) of such title
(relating to classification and schedule pay rates).
``(ii) Maximum rate.--In no case may the rate of
compensation determined under clause (i) exceed the rate of
basic pay payable for level IV of the Executive Schedule
under section 5315 of title 5, United States Code.
``(C) Limitation on full-time equivalent staffing for
current cms functions being transferred.--The Administrator
may not employ under this paragraph a number of full-time
equivalent employees, to carry out functions that were
previously conducted by the Centers for Medicare & Medicaid
Services and that are conducted by the Administrator by
reason of this section, that exceeds the number of such full-
time equivalent employees authorized to be employed by the
Centers for Medicare & Medicaid Services to conduct such
functions as of the date of the enactment of this Act.
``(3) Redelegation of certain functions of the centers for
medicare & medicaid services.--
``(A) In general.--The Secretary, the Administrator, and
the Administrator of the Centers for Medicare & Medicaid
Services shall establish an appropriate transition of
responsibility in order to redelegate the administration of
part C from the Secretary and the Administrator of the
Centers for Medicare & Medicaid Services to the Administrator
as is appropriate to carry out the purposes of this section.
``(B) Transfer of data and information.--The Secretary
shall ensure that the Administrator of the Centers for
Medicare & Medicaid Services transfers to the Administrator
of the Medicare Benefits Administration such information and
data in the possession of the Administrator of the Centers
for Medicare & Medicaid Services as the Administrator of the
Medicare Benefits Administration requires to carry out the
duties described in paragraph (1).
``(C) Construction.--Insofar as a responsibility of the
Secretary or the Administrator of the Centers for Medicare &
Medicaid Services is redelegated to the Administrator under
this section, any reference to the Secretary or the
Administrator of the Centers for Medicare & Medicaid Services
in this title or title XI with respect to such responsibility
is deemed to be a reference to the Administrator.
``(d) Office of Beneficiary Assistance.--
``(1) Establishment.--The Secretary shall establish within
the Medicare Benefits Administration an Office of Beneficiary
Assistance to coordinate functions relating to outreach and
education of medicare beneficiaries under this title,
including the functions described in paragraph (2). The
Office shall be separate operating division within the
Administration.
``(2) Dissemination of information on benefits and appeals
rights.--
``(A) Dissemination of benefits information.--The Office of
Beneficiary Assistance shall disseminate, directly or through
contract, to medicare beneficiaries, by mail, by posting on
the Internet site of the Medicare Benefits Administration and
through a toll-free telephone number, information with
respect to the following:
``(i) Benefits, and limitations on payment (including cost-
sharing, stop-loss provisions, and formulary restrictions)
under parts C and D.
``(ii) Benefits, and limitations on payment under parts A
and B, including information on medicare supplemental
policies under section 1882.
Such information shall be presented in a manner so that
medicare beneficiaries may compare benefits under parts A, B,
D, and medicare supplemental policies with benefits under
Medicare+Choice plans under part C.
``(B) Dissemination of appeals rights information.--The
Office of Beneficiary Assistance shall disseminate to
medicare beneficiaries in the manner provided under
subparagraph (A) a description of procedural rights
(including grievance and appeals procedures) of beneficiaries
under the original medicare fee-for-service program under
parts A and B, the Medicare+Choice program under part C, and
the Voluntary Prescription Drug Benefit Program under part D.
``(e) Medicare Policy Advisory Board.--
``(1) Establishment.--There is established within the
Medicare Benefits Administration the Medicare Policy Advisory
Board (in this section referred to the `Board'). The Board
shall advise, consult with, and make recommendations to the
Administrator of the Medicare Benefits Administration with
respect to the administration of parts C and D, including the
review of payment policies under such parts.
``(2) Reports.--
``(A) In general.--With respect to matters of the
administration of parts C and D, the Board shall submit to
Congress and to the Administrator of the Medicare Benefits
Administration such reports as the Board determines
appropriate. Each such report may contain such
recommendations as the Board determines appropriate for
legislative or administrative changes to improve the
administration of such parts, including the topics described
in subparagraph (B). Each such report shall be published in
the Federal Register.
``(B) Topics described.--Reports required under
subparagraph (A) may include the following topics:
``(i) Fostering competition.--Recommendations or proposals
to increase competition under parts C and D for services
furnished to medicare beneficiaries.
``(ii) Education and enrollment.--Recommendations for the
improvement to efforts to provide medicare beneficiaries
information and education on the program under this title,
and specifically parts C and D, and the program for
enrollment under the title.
``(iii) Implementation of risk-adjustment.--Evaluation of
the implementation under section 1853(a)(3)(C) of the risk
adjustment methodology to payment rates under that section to
Medicare+Choice organizations offering Medicare+Choice plans
that accounts for variations in per capita costs based on
health status and other demographic factors.
``(iv) Disease management programs.--Recommendations on the
incorporation of disease management programs under parts C
and D.
``(v) Rural access.--Recommendations to improve competition
and access to plans under parts C and D in rural areas.
``(C) Maintaining independence of board.--The Board shall
directly submit to Congress reports required under
subparagraph (A). No officer or agency of the United States
may require the Board to submit to any officer or agency of
the United States for approval, comments, or review, prior to
the submission to Congress of such reports.
``(3) Duty of administrator of medicare benefits
administration.--With respect to any report submitted by the
Board under paragraph (2)(A), not later than 90 days after
the report is submitted, the Administrator of the Medicare
Benefits Administration shall submit to Congress and the
President an analysis of recommendations made by the Board in
such report. Each such analysis shall be published in the
Federal Register.
``(4) Membership.--
``(A) Appointment.--Subject to the succeeding provisions of
this paragraph, the Board shall consist of seven members to
be appointed as follows:
``(i) Three members shall be appointed by the President.
``(ii) Two members shall be appointed by the Speaker of the
House of Representatives, with the advice of the chairmen and
the ranking minority members of the Committees on Ways and
Means and on Energy and Commerce of the House of
Representatives.
``(iii) Two members shall be appointed by the President pro
tempore of the Senate with the advice of the chairman and the
ranking minority member of the Senate Committee on Finance.
``(B) Qualifications.--The members shall be chosen on the
basis of their integrity, impartiality, and good judgment,
and shall be individuals who are, by reason of their
education and experience in health care benefits management,
exceptionally qualified to perform the duties of members of
the Board.
``(C) Prohibition on inclusion of federal employees.--No
officer or employee of the United States may serve as a
member of the Board.
``(5) Compensation.--Members of the Board shall receive,
for each day (including travel time) they are engaged in the
performance of the functions of the board, compensation at
rates not to exceed the daily equivalent to the annual rate
in effect for level IV of the Executive Schedule under
section 5315 of title 5, United States Code.
``(6) Terms of office.--
``(A) In general.--The term of office of members of the
Board shall be 3 years.
[[Page H4254]]
``(B) Terms of initial appointees.--As designated by the
President at the time of appointment, of the members first
appointed--
``(i) one shall be appointed for a term of 1 year;
``(ii) three shall be appointed for terms of 2 years; and
``(iii) three shall be appointed for terms of 3 years.
``(C) Reappointments.--Any person appointed as a member of
the Board may not serve for more than 8 years.
``(D) Vacancy.--Any member appointed to fill a vacancy
occurring before the expiration of the term for which the
member's predecessor was appointed shall be appointed only
for the remainder of that term. A member may serve after the
expiration of that member's term until a successor has taken
office. A vacancy in the Board shall be filled in the manner
in which the original appointment was made.
``(7) Chair.--The Chair of the Board shall be elected by
the members. The term of office of the Chair shall be 3
years.
``(8) Meetings.--The Board shall meet at the call of the
Chair, but in no event less than three times during each
fiscal year.
``(9) Director and staff.--
``(A) Appointment of director.--The Board shall have a
Director who shall be appointed by the Chair.
``(B) In general.--With the approval of the Board, the
Director may appoint, without regard to chapter 31 of title
5, United States Code, such additional personnel as the
Director considers appropriate.
``(C) Flexibility with respect to compensation.--
``(i) In general.--The Director and staff of the Board
shall, subject to clause (ii), be paid without regard to the
provisions of chapter 51 and chapter 53 of such title
(relating to classification and schedule pay rates).
``(ii) Maximum rate.--In no case may the rate of
compensation determined under clause (i) exceed the rate of
basic pay payable for level IV of the Executive Schedule
under section 5315 of title 5, United States Code.
``(D) Assistance from the administrator of the medicare
benefits administration.--The Administrator of the Medicare
Benefits Administration shall make available to the Board
such information and other assistance as it may require to
carry out its functions.
``(10) Contract authority.--The Board may contract with and
compensate government and private agencies or persons to
carry out its duties under this subsection, without regard to
section 3709 of the Revised Statutes (41 U.S.C. 5).
``(f) Funding.--There is authorized to be appropriated, in
appropriate part from the Federal Hospital Insurance Trust
Fund and from the Federal Supplementary Medical Insurance
Trust Fund (including the Medicare Prescription Drug
Account), such sums as are necessary to carry out this
section.''.
(b) Effective Date.--
(1) In general.--The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act.
(2) Timing of initial appointments.--The Administrator and
Deputy Administrator of the Medicare Benefits Administration
may not be appointed before March 1, 2003.
(3) Duties with respect to eligibility determinations and
enrollment.--The Administrator of the Medicare Benefits
Administration shall carry out enrollment under title XVIII
of the Social Security Act, make eligibility determinations
under such title, and carry out part C of such title for
years beginning or after January 1, 2005.
(4) Transition.--Before the date the Administrator of the
Medicare Benefits Administration is appointed and assumes
responsibilities under this section and section 1807 of the
Social Security Act, the Secretary of Health and Human
Services shall provide for the conduct of any
responsibilities of such Administrator that are otherwise
provided under law.
(c) Miscellaneous Administrative Provisions.--
(1) Administrator as member of the board of trustees of the
medicare trust funds.--Section 1817(b) and section 1841(b)
(42 U.S.C. 1395i(b), 1395t(b)) are each amended by striking
``and the Secretary of Health and Human Services, all ex
officio,'' and inserting ``the Secretary of Health and Human
Services, and the Administrator of the Medicare Benefits
Administration, all ex officio,''.
(2) Increase in grade to executive level iii for the
administrator of the centers for medicare & medicaid
services; level for medicare benefits administrator.--
(A) In general.--Section 5314 of title 5, United States
Code, by adding at the end the following:
``Administrator of the Centers for Medicare & Medicaid
Services .
``Administrator of the Medicare Benefits Administration.''.
(B) Conforming amendment.--Section 5315 of such title is
amended by striking ``Administrator of the Health Care
Financing Administration.''.
(C) Effective date.--The amendments made by this paragraph
take effect on January 1, 2003.
TITLE VIII--REGULATORY REDUCTION AND CONTRACTING REFORM
Subtitle A--Regulatory Reform
SEC. 801. CONSTRUCTION; DEFINITION OF SUPPLIER.
(a) Construction.--Nothing in this title shall be
construed--
(1) to compromise or affect existing legal remedies for
addressing fraud or abuse, whether it be criminal
prosecution, civil enforcement, or administrative remedies,
including under sections 3729 through 3733 of title 31,
United States Code (known as the False Claims Act); or
(2) to prevent or impede the Department of Health and Human
Services in any way from its ongoing efforts to eliminate
waste, fraud, and abuse in the medicare program.
Furthermore, the consolidation of medicare administrative
contracting set forth in this Act does not constitute
consolidation of the Federal Hospital Insurance Trust Fund
and the Federal Supplementary Medical Insurance Trust Fund or
reflect any position on that issue.
(b) Definition of Supplier.--Section 1861 (42 U.S.C. 1395x)
is amended by inserting after subsection (c) the following
new subsection:
``Supplier
``(d) The term `supplier' means, unless the context
otherwise requires, a physician or other practitioner, a
facility, or other entity (other than a provider of services)
that furnishes items or services under this title.''.
SEC. 802. ISSUANCE OF REGULATIONS.
(a) Consolidation of Promulgation to Once a Month.--
(1) In general.--Section 1871 (42 U.S.C. 1395hh) is amended
by adding at the end the following new subsection:
``(d)(1) Subject to paragraph (2), the Secretary shall
issue proposed or final (including interim final) regulations
to carry out this title only on one business day of every
month.
``(2) The Secretary may issue a proposed or final
regulation described in paragraph (1) on any other day than
the day described in paragraph (1) if the Secretary--
``(A) finds that issuance of such regulation on another day
is necessary to comply with requirements under law; or
``(B) finds that with respect to that regulation the
limitation of issuance on the date described in paragraph (1)
is contrary to the public interest.
If the Secretary makes a finding under this paragraph, the
Secretary shall include such finding, and brief statement of
the reasons for such finding, in the issuance of such
regulation.
``(3) The Secretary shall coordinate issuance of new
regulations described in paragraph (1) relating to a category
of provider of services or suppliers based on an analysis of
the collective impact of regulatory changes on that category
of providers or suppliers.''.
(2) GAO report on publication of regulations on a quarterly
basis.--Not later than 3 years after the date of the
enactment of this Act, the Comptroller General of the United
States shall submit to Congress a report on the feasibility
of requiring that regulations described in section 1871(d) of
the Social Security Act be promulgated on a quarterly basis
rather than on a monthly basis.
(3) Effective date.--The amendment made by paragraph (1)
shall apply to regulations promulgated on or after the date
that is 30 days after the date of the enactment of this Act.
(b) Regular Timeline for Publication of Final Rules.--
(1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)) is
amended by adding at the end the following new paragraph:
``(3)(A) The Secretary, in consultation with the Director
of the Office of Management and Budget, shall establish and
publish a regular timeline for the publication of final
regulations based on the previous publication of a proposed
regulation or an interim final regulation.
``(B) Such timeline may vary among different regulations
based on differences in the complexity of the regulation, the
number and scope of comments received, and other relevant
factors, but shall not be longer than 3 years except under
exceptional circumstances. If the Secretary intends to vary
such timeline with respect to the publication of a final
regulation, the Secretary shall cause to have published in
the Federal Register notice of the different timeline by not
later than the timeline previously established with respect
to such regulation. Such notice shall include a brief
explanation of the justification for such variation.
``(C) In the case of interim final regulations, upon the
expiration of the regular timeline established under this
paragraph for the publication of a final regulation after
opportunity for public comment, the interim final regulation
shall not continue in effect unless the Secretary publishes
(at the end of the regular timeline and, if applicable, at
the end of each succeeding 1-year period) a notice of
continuation of the regulation that includes an explanation
of why the regular timeline (and any subsequent 1-year
extension) was not complied with. If such a notice is
published, the regular timeline (or such timeline as
previously extended under this paragraph) for publication of
the final regulation shall be treated as having been extended
for 1 additional year.
``(D) The Secretary shall annually submit to Congress a
report that describes the instances in which the Secretary
failed to publish a final regulation within the applicable
regular timeline under this paragraph and that provides an
explanation for such failures.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on
[[Page H4255]]
the date of the enactment of this Act. The Secretary shall
provide for an appropriate transition to take into account
the backlog of previously published interim final
regulations.
(c) Limitations on New Matter in Final Regulations.--
(1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)), as
amended by subsection (b), is further amended by adding at
the end the following new paragraph:
``(4) If the Secretary publishes notice of proposed
rulemaking relating to a regulation (including an interim
final regulation), insofar as such final regulation includes
a provision that is not a logical outgrowth of such notice of
proposed rulemaking, that provision shall be treated as a
proposed regulation and shall not take effect until there is
the further opportunity for public comment and a publication
of the provision again as a final regulation.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to final regulations published on or after the
date of the enactment of this Act.
SEC. 803. COMPLIANCE WITH CHANGES IN REGULATIONS AND
POLICIES.
(a) No Retroactive Application of Substantive Changes.--
(1) In general.--Section 1871 (42 U.S.C. 1395hh), as
amended by section 802(a), is amended by adding at the end
the following new subsection:
``(e)(1)(A) A substantive change in regulations, manual
instructions, interpretative rules, statements of policy, or
guidelines of general applicability under this title shall
not be applied (by extrapolation or otherwise) retroactively
to items and services furnished before the effective date of
the change, unless the Secretary determines that--
``(i) such retroactive application is necessary to comply
with statutory requirements; or
``(ii) failure to apply the change retroactively would be
contrary to the public interest.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to substantive changes issued on or after the
date of the enactment of this Act.
(b) Timeline for Compliance With Substantive Changes After
Notice.--
(1) In general.--Section 1871(e)(1), as added by subsection
(a), is amended by adding at the end the following:
``(B)(i) Except as provided in clause (ii), a substantive
change referred to in subparagraph (A) shall not become
effective before the end of the 30-day period that begins on
the date that the Secretary has issued or published, as the
case may be, the substantive change.
``(ii) The Secretary may provide for such a substantive
change to take effect on a date that precedes the end of the
30-day period under clause (i) if the Secretary finds that
waiver of such 30-day period is necessary to comply with
statutory requirements or that the application of such 30-day
period is contrary to the public interest. If the Secretary
provides for an earlier effective date pursuant to this
clause, the Secretary shall include in the issuance or
publication of the substantive change a finding described in
the first sentence, and a brief statement of the reasons for
such finding.
``(C) No action shall be taken against a provider of
services or supplier with respect to noncompliance with such
a substantive change for items and services furnished before
the effective date of such a change.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to compliance actions undertaken on or after the
date of the enactment of this Act.
(c) Reliance on Guidance.--
(1) In general.--Section 1871(e), as added by subsection
(a), is further amended by adding at the end the following
new paragraph:
``(2)(A) If--
``(i) a provider of services or supplier follows the
written guidance (which may be transmitted electronically)
provided by the Secretary or by a medicare contractor (as
defined in section 1889(g)) acting within the scope of the
contractor's contract authority, with respect to the
furnishing of items or services and submission of a claim for
benefits for such items or services with respect to such
provider or supplier;
``(ii) the Secretary determines that the provider of
services or supplier has accurately presented the
circumstances relating to such items, services, and claim to
the contractor in writing; and
``(iii) the guidance was in error;
the provider of services or supplier shall not be subject to
any sanction (including any penalty or requirement for
repayment of any amount) if the provider of services or
supplier reasonably relied on such guidance.
``(B) Subparagraph (A) shall not be construed as preventing
the recoupment or repayment (without any additional penalty)
relating to an overpayment insofar as the overpayment was
solely the result of a clerical or technical operational
error.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act
but shall not apply to any sanction for which notice was
provided on or before the date of the enactment of this Act.
SEC. 804. REPORTS AND STUDIES RELATING TO REGULATORY REFORM.
(a) GAO Study on Advisory Opinion Authority.--
(1) Study.--The Comptroller General of the United States
shall conduct a study to determine the feasibility and
appropriateness of establishing in the Secretary authority to
provide legally binding advisory opinions on appropriate
interpretation and application of regulations to carry out
the medicare program under title XVIII of the Social Security
Act. Such study shall examine the appropriate timeframe for
issuing such advisory opinions, as well as the need for
additional staff and funding to provide such opinions.
(2) Report.--The Comptroller General shall submit to
Congress a report on the study conducted under paragraph (1)
by not later than January 1, 2004.
(b) Report on Legal and Regulatory Inconsistencies.--
Section 1871 (42 U.S.C. 1395hh), as amended by section
803(a), is amended by adding at the end the following new
subsection:
``(f)(1) Not later than 2 years after the date of the
enactment of this subsection, and every 2 years thereafter,
the Secretary shall submit to Congress a report with respect
to the administration of this title and areas of
inconsistency or conflict among the various provisions under
law and regulation.
``(2) In preparing a report under paragraph (1), the
Secretary shall collect--
``(A) information from individuals entitled to benefits
under part A or enrolled under part B, or both, providers of
services, and suppliers and from the Medicare Beneficiary
Ombudsman and the Medicare Provider Ombudsman with respect to
such areas of inconsistency and conflict; and
``(B) information from medicare contractors that tracks the
nature of written and telephone inquiries.
``(3) A report under paragraph (1) shall include a
description of efforts by the Secretary to reduce such
inconsistency or conflicts, and recommendations for
legislation or administrative action that the Secretary
determines appropriate to further reduce such inconsistency
or conflicts.''.
Subtitle B--Contracting Reform
SEC. 811. INCREASED FLEXIBILITY IN MEDICARE ADMINISTRATION.
(a) Consolidation and Flexibility in Medicare
Administration.--
(1) In general.--Title XVIII is amended by inserting after
section 1874 the following new section:
``contracts with medicare administrative contractors
``Sec. 1874A. (a) Authority.--
``(1) Authority to enter into contracts.--The Secretary may
enter into contracts with any eligible entity to serve as a
medicare administrative contractor with respect to the
performance of any or all of the functions described in
paragraph (4) or parts of those functions (or, to the extent
provided in a contract, to secure performance thereof by
other entities).
``(2) Eligibility of entities.--An entity is eligible to
enter into a contract with respect to the performance of a
particular function described in paragraph (4) only if--
``(A) the entity has demonstrated capability to carry out
such function;
``(B) the entity complies with such conflict of interest
standards as are generally applicable to Federal acquisition
and procurement;
``(C) the entity has sufficient assets to financially
support the performance of such function; and
``(D) the entity meets such other requirements as the
Secretary may impose.
``(3) Medicare administrative contractor defined.--For
purposes of this title and title XI--
``(A) In general.--The term `medicare administrative
contractor' means an agency, organization, or other person
with a contract under this section.
``(B) Appropriate medicare administrative contractor.--With
respect to the performance of a particular function in
relation to an individual entitled to benefits under part A
or enrolled under part B, or both, a specific provider of
services or supplier (or class of such providers of services
or suppliers), the `appropriate' medicare administrative
contractor is the medicare administrative contractor that has
a contract under this section with respect to the performance
of that function in relation to that individual, provider of
services or supplier or class of provider of services or
supplier.
``(4) Functions described.--The functions referred to in
paragraphs (1) and (2) are payment functions, provider
services functions, and functions relating to services
furnished to individuals entitled to benefits under part A or
enrolled under part B, or both, as follows:
``(A) Determination of payment amounts.--Determining
(subject to the provisions of section 1878 and to such review
by the Secretary as may be provided for by the contracts) the
amount of the payments required pursuant to this title to be
made to providers of services, suppliers and individuals.
``(B) Making payments.--Making payments described in
subparagraph (A) (including receipt, disbursement, and
accounting for funds in making such payments).
``(C) Beneficiary education and assistance.--Providing
education and outreach to individuals entitled to benefits
under part A or enrolled under part B, or both, and providing
assistance to those individuals with specific issues,
concerns or problems.
``(D) Provider consultative services.--Providing
consultative services to institutions, agencies, and other
persons to enable
[[Page H4256]]
them to establish and maintain fiscal records necessary for
purposes of this title and otherwise to qualify as providers
of services or suppliers.
``(E) Communication with providers.--Communicating to
providers of services and suppliers any information or
instructions furnished to the medicare administrative
contractor by the Secretary, and facilitating communication
between such providers and suppliers and the Secretary.
``(F) Provider education and technical assistance.--
Performing the functions relating to provider education,
training, and technical assistance.
``(G) Additional functions.--Performing such other
functions as are necessary to carry out the purposes of this
title.
``(5) Relationship to mip contracts.--
``(A) Nonduplication of duties.--In entering into contracts
under this section, the Secretary shall assure that functions
of medicare administrative contractors in carrying out
activities under parts A and B do not duplicate activities
carried out under the Medicare Integrity Program under
section 1893. The previous sentence shall not apply with
respect to the activity described in section 1893(b)(5)
(relating to prior authorization of certain items of durable
medical equipment under section 1834(a)(15)).
``(B) Construction.--An entity shall not be treated as a
medicare administrative contractor merely by reason of having
entered into a contract with the Secretary under section
1893.
``(6) Application of federal acquisition regulation.--
Except to the extent inconsistent with a specific requirement
of this title, the Federal Acquisition Regulation applies to
contracts under this title.
``(b) Contracting Requirements.--
``(1) Use of competitive procedures.--
``(A) In general.--Except as provided in laws with general
applicability to Federal acquisition and procurement or in
subparagraph (B), the Secretary shall use competitive
procedures when entering into contracts with medicare
administrative contractors under this section, taking into
account performance quality as well as price and other
factors.
``(B) Renewal of contracts.--The Secretary may renew a
contract with a medicare administrative contractor under this
section from term to term without regard to section 5 of
title 41, United States Code, or any other provision of law
requiring competition, if the medicare administrative
contractor has met or exceeded the performance requirements
applicable with respect to the contract and contractor,
except that the Secretary shall provide for the application
of competitive procedures under such a contract not less
frequently than once every five years.
``(C) Transfer of functions.--The Secretary may transfer
functions among medicare administrative contractors
consistent with the provisions of this paragraph. The
Secretary shall ensure that performance quality is considered
in such transfers. The Secretary shall provide public notice
(whether in the Federal Register or otherwise) of any such
transfer (including a description of the functions so
transferred, a description of the providers of services and
suppliers affected by such transfer, and contact information
for the contractors involved).
``(D) Incentives for quality.--The Secretary shall provide
incentives for medicare administrative contractors to provide
quality service and to promote efficiency.
``(2) Compliance with requirements.--No contract under this
section shall be entered into with any medicare
administrative contractor unless the Secretary finds that
such medicare administrative contractor will perform its
obligations under the contract efficiently and effectively
and will meet such requirements as to financial
responsibility, legal authority, quality of services
provided, and other matters as the Secretary finds pertinent.
``(3) Performance requirements.--
``(A) Development of specific performance requirements.--In
developing contract performance requirements, the Secretary
shall develop performance requirements applicable to
functions described in subsection (a)(4).
``(B) Consultation.-- In developing such requirements, the
Secretary may consult with providers of services and
suppliers, organizations representing individuals entitled to
benefits under part A or enrolled under part B, or both, and
organizations and agencies performing functions necessary to
carry out the purposes of this section with respect to such
performance requirements.
``(C) Inclusion in contracts.--All contractor performance
requirements shall be set forth in the contract between the
Secretary and the appropriate medicare administrative
contractor. Such performance requirements--
``(i) shall reflect the performance requirements developed
under subparagraph (A), but may include additional
performance requirements;
``(ii) shall be used for evaluating contractor performance
under the contract; and
``(iii) shall be consistent with the written statement of
work provided under the contract.
``(4) Information requirements.--The Secretary shall not
enter into a contract with a medicare administrative
contractor under this section unless the contractor agrees--
``(A) to furnish to the Secretary such timely information
and reports as the Secretary may find necessary in performing
his functions under this title; and
``(B) to maintain such records and afford such access
thereto as the Secretary finds necessary to assure the
correctness and verification of the information and reports
under subparagraph (A) and otherwise to carry out the
purposes of this title.
``(5) Surety bond.--A contract with a medicare
administrative contractor under this section may require the
medicare administrative contractor, and any of its officers
or employees certifying payments or disbursing funds pursuant
to the contract, or otherwise participating in carrying out
the contract, to give surety bond to the United States in
such amount as the Secretary may deem appropriate.
``(c) Terms and Conditions.--
``(1) In general.--A contract with any medicare
administrative contractor under this section may contain such
terms and conditions as the Secretary finds necessary or
appropriate and may provide for advances of funds to the
medicare administrative contractor for the making of payments
by it under subsection (a)(4)(B).
``(2) Prohibition on mandates for certain data
collection.--The Secretary may not require, as a condition of
entering into, or renewing, a contract under this section,
that the medicare administrative contractor match data
obtained other than in its activities under this title with
data used in the administration of this title for purposes of
identifying situations in which the provisions of section
1862(b) may apply.
``(d) Limitation on Liability of Medicare Administrative
Contractors and Certain Officers.--
``(1) Certifying officer.--No individual designated
pursuant to a contract under this section as a certifying
officer shall, in the absence of gross negligence or intent
to defraud the United States, be liable with respect to any
payments certified by the individual under this section.
``(2) Disbursing officer.--No disbursing officer shall, in
the absence of gross negligence or intent to defraud the
United States, be liable with respect to any payment by such
officer under this section if it was based upon an
authorization (which meets the applicable requirements for
such internal controls established by the Comptroller
General) of a certifying officer designated as provided in
paragraph (1) of this subsection.
``(3) Liability of medicare administrative contractor.--No
medicare administrative contractor shall be liable to the
United States for a payment by a certifying or disbursing
officer unless in connection with such payment or in the
supervision of or selection of such officer the medicare
administrative contractor acted with gross negligence.
``(4) Indemnification by secretary.--
``(A) In general.--Subject to subparagraphs (B) and (D), in
the case of a medicare administrative contractor (or a person
who is a director, officer, or employee of such a contractor
or who is engaged by the contractor to participate directly
in the claims administration process) who is made a party to
any judicial or administrative proceeding arising from or
relating directly to the claims administration process under
this title, the Secretary may, to the extent the Secretary
determines to be appropriate and as specified in the contract
with the contractor, indemnify the contractor and such
persons.
``(B) Conditions.--The Secretary may not provide
indemnification under subparagraph (A) insofar as the
liability for such costs arises directly from conduct that is
determined by the judicial proceeding or by the Secretary to
be criminal in nature, fraudulent, or grossly negligent. If
indemnification is provided by the Secretary with respect to
a contractor before a determination that such costs arose
directly from such conduct, the contractor shall reimburse
the Secretary for costs of indemnification.
``(C) Scope of indemnification.--Indemnification by the
Secretary under subparagraph (A) may include payment of
judgments, settlements (subject to subparagraph (D)), awards,
and costs (including reasonable legal expenses).
``(D) Written approval for settlements.--A contractor or
other person described in subparagraph (A) may not propose to
negotiate a settlement or compromise of a proceeding
described in such subparagraph without the prior written
approval of the Secretary to negotiate such settlement or
compromise. Any indemnification under subparagraph (A) with
respect to amounts paid under a settlement or compromise of a
proceeding described in such subparagraph are conditioned
upon prior written approval by the Secretary of the final
settlement or compromise.
``(E) Construction.--Nothing in this paragraph shall be
construed--
``(i) to change any common law immunity that may be
available to a medicare administrative contractor or person
described in subparagraph (A); or
``(ii) to permit the payment of costs not otherwise
allowable, reasonable, or allocable under the Federal
Acquisition Regulations.''.
(2) Consideration of incorporation of current law
standards.--In developing contract performance requirements
under section 1874A(b) of the Social Security Act, as
inserted by paragraph (1), the Secretary shall consider
inclusion of the performance standards described in sections
1816(f)(2) of
[[Page H4257]]
such Act (relating to timely processing of reconsiderations
and applications for exemptions) and section 1842(b)(2)(B) of
such Act (relating to timely review of determinations and
fair hearing requests), as such sections were in effect
before the date of the enactment of this Act.
(b) Conforming Amendments to Section 1816 (Relating to
Fiscal Intermediaries).--Section 1816 (42 U.S.C. 1395h) is
amended as follows:
(1) The heading is amended to read as follows:
``provisions relating to the administration of part a''.
(2) Subsection (a) is amended to read as follows:
``(a) The administration of this part shall be conducted
through contracts with medicare administrative contractors
under section 1874A.''.
(3) Subsection (b) is repealed.
(4) Subsection (c) is amended--
(A) by striking paragraph (1); and
(B) in each of paragraphs (2)(A) and (3)(A), by striking
``agreement under this section'' and inserting ``contract
under section 1874A that provides for making payments under
this part''.
(5) Subsections (d) through (i) are repealed.
(6) Subsections (j) and (k) are each amended--
(A) by striking ``An agreement with an agency or
organization under this section'' and inserting ``A contract
with a medicare administrative contractor under section 1874A
with respect to the administration of this part''; and
(B) by striking ``such agency or organization'' and
inserting ``such medicare administrative contractor'' each
place it appears.
(7) Subsection (l) is repealed.
(c) Conforming Amendments to Section 1842 (Relating to
Carriers).--Section 1842 (42 U.S.C. 1395u) is amended as
follows:
(1) The heading is amended to read as follows:
``provisions relating to the administration of part b''.
(2) Subsection (a) is amended to read as follows:
``(a) The administration of this part shall be conducted
through contracts with medicare administrative contractors
under section 1874A.''.
(3) Subsection (b) is amended--
(A) by striking paragraph (1);
(B) in paragraph (2)--
(i) by striking subparagraphs (A) and (B);
(ii) in subparagraph (C), by striking ``carriers'' and
inserting ``medicare administrative contractors''; and
(iii) by striking subparagraphs (D) and (E);
(C) in paragraph (3)--
(i) in the matter before subparagraph (A), by striking
``Each such contract shall provide that the carrier'' and
inserting ``The Secretary'';
(ii) by striking ``will'' the first place it appears in
each of subparagraphs (A), (B), (F), (G), (H), and (L) and
inserting ``shall'';
(iii) in subparagraph (B), in the matter before clause (i),
by striking ``to the policyholders and subscribers of the
carrier'' and inserting ``to the policyholders and
subscribers of the medicare administrative contractor'';
(iv) by striking subparagraphs (C), (D), and (E);
(v) in subparagraph (H)--
(I) by striking ``if it makes determinations or payments
with respect to physicians' services,'' in the matter
preceding clause (i); and
(II) by striking ``carrier'' and inserting ``medicare
administrative contractor'' in clause (i);
(vi) by striking subparagraph (I);
(vii) in subparagraph (L), by striking the semicolon and
inserting a period;
(viii) in the first sentence, after subparagraph (L), by
striking ``and shall contain'' and all that follows through
the period; and
(ix) in the seventh sentence, by inserting ``medicare
administrative contractor,'' after ``carrier,''; and
(D) by striking paragraph (5);
(E) in paragraph (6)(D)(iv), by striking ``carrier'' and
inserting ``medicare administrative contractor''; and
(F) in paragraph (7), by striking ``the carrier'' and
inserting ``the Secretary'' each place it appears.
(4) Subsection (c) is amended--
(A) by striking paragraph (1);
(B) in paragraph (2)(A), by striking ``contract under this
section which provides for the disbursement of funds, as
described in subsection (a)(1)(B),'' and inserting ``contract
under section 1874A that provides for making payments under
this part'';
(C) in paragraph (3)(A), by striking ``subsection
(a)(1)(B)'' and inserting ``section 1874A(a)(3)(B)'';
(D) in paragraph (4), in the matter preceding subparagraph
(A), by striking ``carrier'' and inserting ``medicare
administrative contractor''; and
(E) by striking paragraphs (5) and (6).
(5) Subsections (d), (e), and (f) are repealed.
(6) Subsection (g) is amended by striking ``carrier or
carriers'' and inserting ``medicare administrative contractor
or contractors''.
(7) Subsection (h) is amended--
(A) in paragraph (2)--
(i) by striking ``Each carrier having an agreement with the
Secretary under subsection (a)'' and inserting ``The
Secretary''; and
(ii) by striking ``Each such carrier'' and inserting ``The
Secretary'';
(B) in paragraph (3)(A)--
(i) by striking ``a carrier having an agreement with the
Secretary under subsection (a)'' and inserting ``medicare
administrative contractor having a contract under section
1874A that provides for making payments under this part'';
and
(ii) by striking ``such carrier'' and inserting ``such
contractor'';
(C) in paragraph (3)(B)--
(i) by striking ``a carrier'' and inserting ``a medicare
administrative contractor'' each place it appears; and
(ii) by striking ``the carrier'' and inserting ``the
contractor'' each place it appears; and
(D) in paragraphs (5)(A) and (5)(B)(iii), by striking
``carriers'' and inserting ``medicare administrative
contractors'' each place it appears.
(8) Subsection (l) is amended--
(A) in paragraph (1)(A)(iii), by striking ``carrier'' and
inserting ``medicare administrative contractor''; and
(B) in paragraph (2), by striking ``carrier'' and inserting
``medicare administrative contractor''.
(9) Subsection (p)(3)(A) is amended by striking ``carrier''
and inserting ``medicare administrative contractor''.
(10) Subsection (q)(1)(A) is amended by striking
``carrier''.
(d) Effective Date; Transition Rule.--
(1) Effective date.--
(A) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall take
effect on October 1, 2004, and the Secretary is authorized to
take such steps before such date as may be necessary to
implement such amendments on a timely basis.
(B) Construction for current contracts.--Such amendments
shall not apply to contracts in effect before the date
specified under subparagraph (A) that continue to retain the
terms and conditions in effect on such date (except as
otherwise provided under this Act, other than under this
section) until such date as the contract is let out for
competitive bidding under such amendments.
(C) Deadline for competitive bidding.--The Secretary shall
provide for the letting by competitive bidding of all
contracts for functions of medicare administrative
contractors for annual contract periods that begin on or
after October 1, 2009.
(D) Waiver of provider nomination provisions during
transition.--During the period beginning on the date of the
enactment of this Act and before the date specified under
subparagraph (A), the Secretary may enter into new agreements
under section 1816 of the Social Security Act (42 U.S.C.
1395h) without regard to any of the provider nomination
provisions of such section.
(2) General transition rules.--The Secretary shall take
such steps, consistent with paragraph (1)(B) and (1)(C), as
are necessary to provide for an appropriate transition from
contracts under section 1816 and section 1842 of the Social
Security Act (42 U.S.C. 1395h, 1395u) to contracts under
section 1874A, as added by subsection (a)(1).
(3) Authorizing continuation of mip functions under current
contracts and agreements and under rollover contracts.--The
provisions contained in the exception in section 1893(d)(2)
of the Social Security Act (42 U.S.C. 1395ddd(d)(2)) shall
continue to apply notwithstanding the amendments made by this
section, and any reference in such provisions to an agreement
or contract shall be deemed to include a contract under
section 1874A of such Act, as inserted by subsection (a)(1),
that continues the activities referred to in such provisions.
(e) References.--On and after the effective date provided
under subsection (d)(1), any reference to a fiscal
intermediary or carrier under title XI or XVIII of the Social
Security Act (or any regulation, manual instruction,
interpretative rule, statement of policy, or guideline issued
to carry out such titles) shall be deemed a reference to an
appropriate medicare administrative contractor (as provided
under section 1874A of the Social Security Act).
(f) Reports on Implementation.--
(1) Plan for implementation.--By not later than October 1,
2003, the Secretary shall submit a report to Congress and the
Comptroller General of the United States that describes the
plan for implementation of the amendments made by this
section. The Comptroller General shall conduct an evaluation
of such plan and shall submit to Congress, not later than 6
months after the date the report is received, a report on
such evaluation and shall include in such report such
recommendations as the Comptroller General deems appropriate.
(2) Status of implementation.--The Secretary shall submit a
report to Congress not later than October 1, 2007, that
describes the status of implementation of such amendments and
that includes a description of the following:
(A) The number of contracts that have been competitively
bid as of such date.
(B) The distribution of functions among contracts and
contractors.
(C) A timeline for complete transition to full competition.
(D) A detailed description of how the Secretary has
modified oversight and management of medicare contractors to
adapt to full competition.
[[Page H4258]]
SEC. 812. REQUIREMENTS FOR INFORMATION SECURITY FOR MEDICARE
ADMINISTRATIVE CONTRACTORS.
(a) In General.--Section 1874A, as added by section
811(a)(1), is amended by adding at the end the following new
subsection:
``(e) Requirements for Information Security.--
``(1) Development of information security program.--A
medicare administrative contractor that performs the
functions referred to in subparagraphs (A) and (B) of
subsection (a)(4) (relating to determining and making
payments) shall implement a contractor-wide information
security program to provide information security for the
operation and assets of the contractor with respect to such
functions under this title. An information security program
under this paragraph shall meet the requirements for
information security programs imposed on Federal agencies
under section 3534(b)(2) of title 44, United States Code
(other than requirements under subparagraphs (B)(ii),
(F)(iii), and (F)(iv) of such section).
``(2) Independent audits.--
``(A) Performance of annual evaluations.--Each year a
medicare administrative contractor that performs the
functions referred to in subparagraphs (A) and (B) of
subsection (a)(4) (relating to determining and making
payments) shall undergo an evaluation of the information
security of the contractor with respect to such functions
under this title. The evaluation shall--
``(i) be performed by an entity that meets such
requirements for independence as the Inspector General of the
Department of Health and Human Services may establish; and
``(ii) test the effectiveness of information security
control techniques for an appropriate subset of the
contractor's information systems (as defined in section
3502(8) of title 44, United States Code) relating to such
functions under this title and an assessment of compliance
with the requirements of this subsection and related
information security policies, procedures, standards and
guidelines.
``(B) Deadline for initial evaluation.--
``(i) New contractors.--In the case of a medicare
administrative contractor covered by this subsection that has
not previously performed the functions referred to in
subparagraphs (A) and (B) of subsection (a)(4) (relating to
determining and making payments) as a fiscal intermediary or
carrier under section 1816 or 1842, the first independent
evaluation conducted pursuant subparagraph (A) shall be
completed prior to commencing such functions.
``(ii) Other contractors.--In the case of a medicare
administrative contractor covered by this subsection that is
not described in clause (i), the first independent evaluation
conducted pursuant subparagraph (A) shall be completed within
1 year after the date the contractor commences functions
referred to in clause (i) under this section.
``(C) Reports on evaluations.--
``(i) To the inspector general.--The results of independent
evaluations under subparagraph (A) shall be submitted
promptly to the Inspector General of the Department of Health
and Human Services.
``(ii) To congress.--The Inspector General of Department of
Health and Human Services shall submit to Congress annual
reports on the results of such evaluations.''.
(b) Application of Requirements to Fiscal Intermediaries
and Carriers.--
(1) In general.--The provisions of section 1874A(e)(2) of
the Social Security Act (other than subparagraph (B)), as
added by subsection (a), shall apply to each fiscal
intermediary under section 1816 of the Social Security Act
(42 U.S.C. 1395h) and each carrier under section 1842 of such
Act (42 U.S.C. 1395u) in the same manner as they apply to
medicare administrative contractors under such provisions.
(2) Deadline for initial evaluation.--In the case of such a
fiscal intermediary or carrier with an agreement or contract
under such respective section in effect as of the date of the
enactment of this Act, the first evaluation under section
1874A(e)(2)(A) of the Social Security Act (as added by
subsection (a)), pursuant to paragraph (1), shall be
completed (and a report on the evaluation submitted to the
Secretary) by not later than 1 year after such date.
Subtitle C--Education and Outreach
SEC. 821. PROVIDER EDUCATION AND TECHNICAL ASSISTANCE.
(a) Coordination of Education Funding.--
(1) In general.--The Social Security Act is amended by
inserting after section 1888 the following new section:
``provider education and technical assistance
``Sec. 1889. (a) Coordination of Education Funding.--The
Secretary shall coordinate the educational activities
provided through medicare contractors (as defined in
subsection (g), including under section 1893) in order to
maximize the effectiveness of Federal education efforts for
providers of services and suppliers.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
(3) Report.--Not later than October 1, 2003, the Secretary
shall submit to Congress a report that includes a description
and evaluation of the steps taken to coordinate the funding
of provider education under section 1889(a) of the Social
Security Act, as added by paragraph (1).
(b) Incentives To Improve Contractor Performance.--
(1) In general.--Section 1874A, as added by section
811(a)(1) and as amended by section 812(a), is amended by
adding at the end the following new subsection:
``(f) Incentives To Improve Contractor Performance in
Provider Education and Outreach.--In order to give medicare
administrative contractors an incentive to implement
effective education and outreach programs for providers of
services and suppliers, the Secretary shall develop and
implement a methodology to measure the specific claims
payment error rates of such contractors in the processing or
reviewing of medicare claims.''.
(2) Application to fiscal intermediaries and carriers.--The
provisions of section 1874A(f) of the Social Security Act, as
added by paragraph (1), shall apply to each fiscal
intermediary under section 1816 of the Social Security Act
(42 U.S.C. 1395h) and each carrier under section 1842 of such
Act (42 U.S.C. 1395u) in the same manner as they apply to
medicare administrative contractors under such provisions.
(3) GAO report on adequacy of methodology.--Not later than
October 1, 2003, the Comptroller General of the United States
shall submit to Congress and to the Secretary a report on the
adequacy of the methodology under section 1874A(f) of the
Social Security Act, as added by paragraph (1), and shall
include in the report such recommendations as the Comptroller
General determines appropriate with respect to the
methodology.
(4) Report on use of methodology in assessing contractor
performance.--Not later than October 1, 2003, the Secretary
shall submit to Congress a report that describes how the
Secretary intends to use such methodology in assessing
medicare contractor performance in implementing effective
education and outreach programs, including whether to use
such methodology as a basis for performance bonuses. The
report shall include an analysis of the sources of identified
errors and potential changes in systems of contractors and
rules of the Secretary that could reduce claims error rates.
(c) Provision of Access to and Prompt Responses From
Medicare Administrative Contractors.--
(1) In general.--Section 1874A, as added by section
811(a)(1) and as amended by section 812(a) and subsection
(b), is further amended by adding at the end the following
new subsection:
``(g) Communications with Beneficiaries, Providers of
Services and Suppliers.--
``(1) Communication strategy.--The Secretary shall develop
a strategy for communications with individuals entitled to
benefits under part A or enrolled under part B, or both, and
with providers of services and suppliers under this title.
``(2) Response to written inquiries.--Each medicare
administrative contractor shall, for those providers of
services and suppliers which submit claims to the contractor
for claims processing and for those individuals entitled to
benefits under part A or enrolled under part B, or both, with
respect to whom claims are submitted for claims processing,
provide general written responses (which may be through
electronic transmission) in a clear, concise, and accurate
manner to inquiries of providers of services, suppliers and
individuals entitled to benefits under part A or enrolled
under part B, or both, concerning the programs under this
title within 45 business days of the date of receipt of such
inquiries.
``(3) Response to toll-free lines.--The Secretary shall
ensure that each medicare administrative contractor shall
provide, for those providers of services and suppliers which
submit claims to the contractor for claims processing and for
those individuals entitled to benefits under part A or
enrolled under part B, or both, with respect to whom claims
are submitted for claims processing, a toll-free telephone
number at which such individuals, providers of services and
suppliers may obtain information regarding billing, coding,
claims, coverage, and other appropriate information under
this title.
``(4) Monitoring of contractor responses.--
``(A) In general.--Each medicare administrative contractor
shall, consistent with standards developed by the Secretary
under subparagraph (B)--
``(i) maintain a system for identifying who provides the
information referred to in paragraphs (2) and (3); and
``(ii) monitor the accuracy, consistency, and timeliness of
the information so provided.
``(B) Development of standards.--
``(i) In general.--The Secretary shall establish and make
public standards to monitor the accuracy, consistency, and
timeliness of the information provided in response to written
and telephone inquiries under this subsection. Such standards
shall be consistent with the performance requirements
established under subsection (b)(3).
``(ii) Evaluation.--In conducting evaluations of individual
medicare administrative contractors, the Secretary shall take
into account the results of the monitoring conducted under
subparagraph (A) taking into account as performance
requirements the standards established under clause (i). The
Secretary shall, in consultation with organizations
representing providers of services, suppliers, and
individuals entitled to benefits under part A or enrolled
under part B, or
[[Page H4259]]
both, establish standards relating to the accuracy,
consistency, and timeliness of the information so provided.
``(C) Direct monitoring.--Nothing in this paragraph shall
be construed as preventing the Secretary from directly
monitoring the accuracy, consistency, and timeliness of the
information so provided.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect October 1, 2003.
(3) Application to fiscal intermediaries and carriers.--The
provisions of section 1874A(g) of the Social Security Act, as
added by paragraph (1), shall apply to each fiscal
intermediary under section 1816 of the Social Security Act
(42 U.S.C. 1395h) and each carrier under section 1842 of such
Act (42 U.S.C. 1395u) in the same manner as they apply to
medicare administrative contractors under such provisions.
(d) Improved Provider Education and Training.--
(1) In general.--Section 1889, as added by subsection (a),
is amended by adding at the end the following new
subsections:
``(b) Enhanced Education and Training.--
``(1) Additional resources.--There are authorized to be
appropriated to the Secretary (in appropriate part from the
Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund) $25,000,000 for
each of fiscal years 2004 and 2005 and such sums as may be
necessary for succeeding fiscal years.
``(2) Use.--The funds made available under paragraph (1)
shall be used to increase the conduct by medicare contractors
of education and training of providers of services and
suppliers regarding billing, coding, and other appropriate
items and may also be used to improve the accuracy,
consistency, and timeliness of contractor responses.
``(c) Tailoring Education and Training Activities for Small
Providers or Suppliers.--
``(1) In general.--Insofar as a medicare contractor
conducts education and training activities, it shall tailor
such activities to meet the special needs of small providers
of services or suppliers (as defined in paragraph (2)).
``(2) Small provider of services or supplier.--In this
subsection, the term `small provider of services or supplier'
means--
``(A) a provider of services with fewer than 25 full-time-
equivalent employees; or
``(B) a supplier with fewer than 10 full-time-equivalent
employees.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on October 1, 2003.
(e) Requirement To Maintain Internet Sites.--
(1) In general.--Section 1889, as added by subsection (a)
and as amended by subsection (d), is further amended by
adding at the end the following new subsection:
``(d) Internet Sites; FAQs.--The Secretary, and each
medicare contractor insofar as it provides services
(including claims processing) for providers of services or
suppliers, shall maintain an Internet site which--
``(1) provides answers in an easily accessible format to
frequently asked questions, and
``(2) includes other published materials of the contractor,
that relate to providers of services and suppliers under the
programs under this title (and title XI insofar as it relates
to such programs).''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on October 1, 2003.
(f) Additional Provider Education Provisions.--
(1) In general.--Section 1889, as added by subsection (a)
and as amended by subsections (d) and (e), is further amended
by adding at the end the following new subsections:
``(e) Encouragement of Participation in Education Program
Activities.--A medicare contractor may not use a record of
attendance at (or failure to attend) educational activities
or other information gathered during an educational program
conducted under this section or otherwise by the Secretary to
select or track providers of services or suppliers for the
purpose of conducting any type of audit or prepayment review.
``(f) Construction.--Nothing in this section or section
1893(g) shall be construed as providing for disclosure by a
medicare contractor of information that would compromise
pending law enforcement activities or reveal findings of law
enforcement-related audits.
``(g) Definitions.--For purposes of this section, the term
`medicare contractor' includes the following:
``(1) A medicare administrative contractor with a contract
under section 1874A, including a fiscal intermediary with a
contract under section 1816 and a carrier with a contract
under section 1842.
``(2) An eligible entity with a contract under section
1893.
Such term does not include, with respect to activities of a
specific provider of services or supplier an entity that has
no authority under this title or title IX with respect to
such activities and such provider of services or supplier.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
SEC. 822. SMALL PROVIDER TECHNICAL ASSISTANCE DEMONSTRATION
PROGRAM.
(a) Establishment.--
(1) In general.--The Secretary shall establish a
demonstration program (in this section referred to as the
``demonstration program'') under which technical assistance
described in paragraph (2) is made available, upon request
and on a voluntary basis, to small providers of services or
suppliers in order to improve compliance with the applicable
requirements of the programs under medicare program under
title XVIII of the Social Security Act (including provisions
of title XI of such Act insofar as they relate to such title
and are not administered by the Office of the Inspector
General of the Department of Health and Human Services).
(2) Forms of technical assistance.--The technical
assistance described in this paragraph is--
(A) evaluation and recommendations regarding billing and
related systems; and
(B) information and assistance regarding policies and
procedures under the medicare program, including coding and
reimbursement.
(3) Small providers of services or suppliers.--In this
section, the term ``small providers of services or
suppliers'' means--
(A) a provider of services with fewer than 25 full-time-
equivalent employees; or
(B) a supplier with fewer than 10 full-time-equivalent
employees.
(b) Qualification of Contractors.--In conducting the
demonstration program, the Secretary shall enter into
contracts with qualified organizations (such as peer review
organizations or entities described in section 1889(g)(2) of
the Social Security Act, as inserted by section 5(f)(1)) with
appropriate expertise with billing systems of the full range
of providers of services and suppliers to provide the
technical assistance. In awarding such contracts, the
Secretary shall consider any prior investigations of the
entity's work by the Inspector General of Department of
Health and Human Services or the Comptroller General of the
United States.
(c) Description of Technical Assistance.--The technical
assistance provided under the demonstration program shall
include a direct and in-person examination of billing systems
and internal controls of small providers of services or
suppliers to determine program compliance and to suggest more
efficient or effective means of achieving such compliance.
(d) Avoidance of Recovery Actions for Problems Identified
as Corrected.--The Secretary shall provide that, absent
evidence of fraud and notwithstanding any other provision of
law, any errors found in a compliance review for a small
provider of services or supplier that participates in the
demonstration program shall not be subject to recovery action
if the technical assistance personnel under the program
determine that--
(1) the problem that is the subject of the compliance
review has been corrected to their satisfaction within 30
days of the date of the visit by such personnel to the small
provider of services or supplier; and
(2) such problem remains corrected for such period as is
appropriate.
The previous sentence applies only to claims filed as part of
the demonstration program and lasts only for the duration of
such program and only as long as the small provider of
services or supplier is a participant in such program.
(e) GAO Evaluation.--Not later than 2 years after the date
of the date the demonstration program is first implemented,
the Comptroller General, in consultation with the Inspector
General of the Department of Health and Human Services, shall
conduct an evaluation of the demonstration program. The
evaluation shall include a determination of whether claims
error rates are reduced for small providers of services or
suppliers who participated in the program and the extent of
improper payments made as a result of the demonstration
program. The Comptroller General shall submit a report to the
Secretary and the Congress on such evaluation and shall
include in such report recommendations regarding the
continuation or extension of the demonstration program.
(f) Financial Participation by Providers.--The provision of
technical assistance to a small provider of services or
supplier under the demonstration program is conditioned upon
the small provider of services or supplier paying an amount
estimated (and disclosed in advance of a provider's or
supplier's participation in the program) to be equal to 25
percent of the cost of the technical assistance.
(g) Authorization of Appropriations.--There are authorized
to be appropriated to the Secretary (in appropriate part from
the Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund) to carry out the
demonstration program--
(1) for fiscal year 2004, $1,000,000, and
(2) for fiscal year 2005, $6,000,000.
SEC. 823. MEDICARE PROVIDER OMBUDSMAN; MEDICARE BENEFICIARY
OMBUDSMAN.
(a) Medicare Provider Ombudsman.--Section 1868 (42 U.S.C.
1395ee) is amended--
(1) by adding at the end of the heading the following: ``;
medicare provider ombudsman'';
(2) by inserting ``Practicing Physicians Advisory
Council.--(1)'' after ``(a)'';
(3) in paragraph (1), as so redesignated under paragraph
(2), by striking ``in this section'' and inserting ``in this
subsection'';
(4) by redesignating subsections (b) and (c) as paragraphs
(2) and (3), respectively; and
[[Page H4260]]
(5) by adding at the end the following new subsection:
``(b) Medicare Provider Ombudsman.--The Secretary shall
appoint within the Department of Health and Human Services a
Medicare Provider Ombudsman. The Ombudsman shall--
``(1) provide assistance, on a confidential basis, to
providers of services and suppliers with respect to
complaints, grievances, and requests for information
concerning the programs under this title (including
provisions of title XI insofar as they relate to this title
and are not administered by the Office of the Inspector
General of the Department of Health and Human Services) and
in the resolution of unclear or conflicting guidance given by
the Secretary and medicare contractors to such providers of
services and suppliers regarding such programs and provisions
and requirements under this title and such provisions; and
``(2) submit recommendations to the Secretary for
improvement in the administration of this title and such
provisions, including--
``(A) recommendations to respond to recurring patterns of
confusion in this title and such provisions (including
recommendations regarding suspending imposition of sanctions
where there is widespread confusion in program
administration), and
``(B) recommendations to provide for an appropriate and
consistent response (including not providing for audits) in
cases of self-identified overpayments by providers of
services and suppliers.
The Ombudsman shall not serve as an advocate for any
increases in payments or new coverage of services, but may
identify issues and problems in payment or coverage
policies.''.
(b) Medicare Beneficiary Ombudsman.--Title XVIII, as
amended by sections 105 and 701, is amended by inserting
after section 1808 the following new section:
``medicare beneficiary ombudsman
``Sec. 1809. (a) In General.--The Secretary shall appoint
within the Department of Health and Human Services a Medicare
Beneficiary Ombudsman who shall have expertise and experience
in the fields of health care and education of (and assistance
to) individuals entitled to benefits under this title.
``(b) Duties.--The Medicare Beneficiary Ombudsman shall--
``(1) receive complaints, grievances, and requests for
information submitted by individuals entitled to benefits
under part A or enrolled under part B, or both, with respect
to any aspect of the medicare program;
``(2) provide assistance with respect to complaints,
grievances, and requests referred to in paragraph (1),
including--
``(A) assistance in collecting relevant information for
such individuals, to seek an appeal of a decision or
determination made by a fiscal intermediary, carrier,
Medicare+Choice organization, or the Secretary; and
``(B) assistance to such individuals with any problems
arising from disenrollment from a Medicare+Choice plan under
part C; and
``(3) submit annual reports to Congress and the Secretary
that describe the activities of the Office and that include
such recommendations for improvement in the administration of
this title as the Ombudsman determines appropriate.
The Ombudsman shall not serve as an advocate for any
increases in payments or new coverage of services, but may
identify issues and problems in payment or coverage policies.
``(c) Working with Health Insurance Counseling Programs.--
To the extent possible, the Ombudsman shall work with health
insurance counseling programs (receiving funding under
section 4360 of Omnibus Budget Reconciliation Act of 1990) to
facilitate the provision of information to individuals
entitled to benefits under part A or enrolled under part B,
or both regarding Medicare+Choice plans and changes to those
plans. Nothing in this subsection shall preclude further
collaboration between the Ombudsman and such programs.''.
(c) Deadline for Appointment.--The Secretary shall appoint
the Medicare Provider Ombudsman and the Medicare Beneficiary
Ombudsman, under the amendments made by subsections (a) and
(b), respectively, by not later than 1 year after the date of
the enactment of this Act.
(d) Funding.--There are authorized to be appropriated to
the Secretary (in appropriate part from the Federal Hospital
Insurance Trust Fund and the Federal Supplementary Medical
Insurance Trust Fund) to carry out the provisions of
subsection (b) of section 1868 of the Social Security Act
(relating to the Medicare Provider Ombudsman), as added by
subsection (a)(5) and section 1809 of such Act (relating to
the Medicare Beneficiary Ombudsman), as added by subsection
(b), such sums as are necessary for fiscal year 2003 and each
succeeding fiscal year.
(e) Use of Central, Toll-Free Number (1-800-MEDICARE).--
(1) Phone triage system; listing in medicare handbook
instead of other toll-free numbers.--Section 1804(b) (42
U.S.C. 1395b-2(b)) is amended by adding at the end the
following: ``The Secretary shall provide, through the toll-
free number 1-800-MEDICARE, for a means by which individuals
seeking information about, or assistance with, such programs
who phone such toll-free number are transferred (without
charge) to appropriate entities for the provision of such
information or assistance. Such toll-free number shall be the
toll-free number listed for general information and
assistance in the annual notice under subsection (a) instead
of the listing of numbers of individual contractors.''.
(2) Monitoring accuracy.--
(A) Study.--The Comptroller General of the United States
shall conduct a study to monitor the accuracy and consistency
of information provided to individuals entitled to benefits
under part A or enrolled under part B, or both, through the
toll-free number 1-800-MEDICARE, including an assessment of
whether the information provided is sufficient to answer
questions of such individuals. In conducting the study, the
Comptroller General shall examine the education and training
of the individuals providing information through such number.
(B) Report.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under
subparagraph (A).
SEC. 824. BENEFICIARY OUTREACH DEMONSTRATION PROGRAM.
(a) In General.--The Secretary shall establish a
demonstration program (in this section referred to as the
``demonstration program'') under which medicare specialists
employed by the Department of Health and Human Services
provide advice and assistance to individuals entitled to
benefits under part A of title XVIII of the Social Security
Act, or enrolled under part B of such title, or both,
regarding the medicare program at the location of existing
local offices of the Social Security Administration.
(b) Locations.--
(1) In general.--The demonstration program shall be
conducted in at least 6 offices or areas. Subject to
paragraph (2), in selecting such offices and areas, the
Secretary shall provide preference for offices with a high
volume of visits by individuals referred to in subsection
(a).
(2) Assistance for rural beneficiaries.--The Secretary
shall provide for the selection of at least 2 rural areas to
participate in the demonstration program. In conducting the
demonstration program in such rural areas, the Secretary
shall provide for medicare specialists to travel among local
offices in a rural area on a scheduled basis.
(c) Duration.--The demonstration program shall be conducted
over a 3-year period.
(d) Evaluation and Report.--
(1) Evaluation.--The Secretary shall provide for an
evaluation of the demonstration program. Such evaluation
shall include an analysis of--
(A) utilization of, and satisfaction of those individuals
referred to in subsection (a) with, the assistance provided
under the program; and
(B) the cost-effectiveness of providing beneficiary
assistance through out-stationing medicare specialists at
local offices of the Social Security Administration.
(2) Report.--The Secretary shall submit to Congress a
report on such evaluation and shall include in such report
recommendations regarding the feasibility of permanently out-
stationing medicare specialists at local offices of the
Social Security Administration.
Subtitle D--Appeals and Recovery
SEC. 831. TRANSFER OF RESPONSIBILITY FOR MEDICARE APPEALS.
(a) Transition Plan.--
(1) In general.--Not later than October 1, 2003, the
Commissioner of Social Security and the Secretary shall
develop and transmit to Congress and the Comptroller General
of the United States a plan under which the functions of
administrative law judges responsible for hearing cases under
title XVIII of the Social Security Act (and related
provisions in title XI of such Act) are transferred from the
responsibility of the Commissioner and the Social Security
Administration to the Secretary and the Department of Health
and Human Services.
(2) GAO evaluation.--The Comptroller General of the United
States shall evaluate the plan and, not later than the date
that is 6 months after the date on which the plan is received
by the Comptroller General, shall submit to Congress a report
on such evaluation.
(b) Transfer of Adjudication Authority.--
(1) In general.--Not earlier than July 1, 2004, and not
later than October 1, 2004, the Commissioner of Social
Security and the Secretary shall implement the transition
plan under subsection (a) and transfer the administrative law
judge functions described in such subsection from the Social
Security Administration to the Secretary.
(2) Assuring independence of judges.--The Secretary shall
assure the independence of administrative law judges
performing the administrative law judge functions transferred
under paragraph (1) from the Centers for Medicare & Medicaid
Services and its contractors.
(3) Geographic distribution.--The Secretary shall provide
for an appropriate geographic distribution of administrative
law judges performing the administrative law judge functions
transferred under paragraph (1) throughout the United States
to ensure timely access to such judges.
(4) Hiring authority.--Subject to the amounts provided in
advance in appropriations Act, the Secretary shall have
authority to hire administrative law judges to hear such
cases, giving priority to those judges with prior experience
in handling medicare
[[Page H4261]]
appeals and in a manner consistent with paragraph (3), and to
hire support staff for such judges.
(5) Financing.--Amounts payable under law to the
Commissioner for administrative law judges performing the
administrative law judge functions transferred under
paragraph (1) from the Federal Hospital Insurance Trust Fund
and the Federal Supplementary Medical Insurance Trust Fund
shall become payable to the Secretary for the functions so
transferred.
(6) Shared resources.--The Secretary shall enter into such
arrangements with the Commissioner as may be appropriate with
respect to transferred functions of administrative law judges
to share office space, support staff, and other resources,
with appropriate reimbursement from the Trust Funds described
in paragraph (5).
(c) Increased Financial Support.--In addition to any
amounts otherwise appropriated, to ensure timely action on
appeals before administrative law judges and the Departmental
Appeals Board consistent with section 1869 of the Social
Security Act (as amended by section 521 of BIPA, 114 Stat.
2763A-534), there are authorized to be appropriated (in
appropriate part from the Federal Hospital Insurance Trust
Fund and the Federal Supplementary Medical Insurance Trust
Fund) to the Secretary such sums as are necessary for fiscal
year 2004 and each subsequent fiscal year to--
(1) increase the number of administrative law judges (and
their staffs) under subsection (b)(4);
(2) improve education and training opportunities for
administrative law judges (and their staffs); and
(3) increase the staff of the Departmental Appeals Board.
(d) Conforming Amendment.--Section 1869(f)(2)(A)(i) (42
U.S.C. 1395ff(f)(2)(A)(i)), as added by section 522(a) of
BIPA (114 Stat. 2763A-543), is amended by striking ``of the
Social Security Administration''.
SEC. 832. PROCESS FOR EXPEDITED ACCESS TO REVIEW.
(a) Expedited Access to Judicial Review.--Section 1869(b)
(42 U.S.C. 1395ff(b)) as amended by BIPA, is amended--
(1) in paragraph (1)(A), by inserting ``, subject to
paragraph (2),'' before ``to judicial review of the
Secretary's final decision'';
(2) in paragraph (1)(F)--
(A) by striking clause (ii);
(B) by striking ``proceeding'' and all that follows through
``determination'' and inserting ``determinations and
reconsiderations''; and
(C) by redesignating subclauses (I) and (II) as clauses (i)
and (ii) and by moving the indentation of such subclauses
(and the matter that follows) 2 ems to the left; and
(3) by adding at the end the following new paragraph:
``(2) Expedited access to judicial review.--
``(A) In general.--The Secretary shall establish a process
under which a provider of services or supplier that furnishes
an item or service or an individual entitled to benefits
under part A or enrolled under part B, or both, who has filed
an appeal under paragraph (1) may obtain access to judicial
review when a review panel (described in subparagraph (D)),
on its own motion or at the request of the appellant,
determines that no entity in the administrative appeals
process has the authority to decide the question of law or
regulation relevant to the matters in controversy and that
there is no material issue of fact in dispute. The appellant
may make such request only once with respect to a question of
law or regulation in a case of an appeal.
``(B) Prompt determinations.--If, after or coincident with
appropriately filing a request for an administrative hearing,
the appellant requests a determination by the appropriate
review panel that no review panel has the authority to decide
the question of law or regulations relevant to the matters in
controversy and that there is no material issue of fact in
dispute and if such request is accompanied by the documents
and materials as the appropriate review panel shall require
for purposes of making such determination, such review panel
shall make a determination on the request in writing within
60 days after the date such review panel receives the request
and such accompanying documents and materials. Such a
determination by such review panel shall be considered a
final decision and not subject to review by the Secretary.
``(C) Access to judicial review.--
``(i) In general.--If the appropriate review panel--
``(I) determines that there are no material issues of fact
in dispute and that the only issue is one of law or
regulation that no review panel has the authority to decide;
or
``(II) fails to make such determination within the period
provided under subparagraph (B);
then the appellant may bring a civil action as described in
this subparagraph.
``(ii) Deadline for filing.--Such action shall be filed, in
the case described in--
``(I) clause (i)(I), within 60 days of date of the
determination described in such subparagraph; or
``(II) clause (i)(II), within 60 days of the end of the
period provided under subparagraph (B) for the determination.
``(iii) Venue.--Such action shall be brought in the
district court of the United States for the judicial district
in which the appellant is located (or, in the case of an
action brought jointly by more than one applicant, the
judicial district in which the greatest number of applicants
are located) or in the district court for the District of
Columbia.
``(iv) Interest on amounts in controversy.--Where a
provider of services or supplier seeks judicial review
pursuant to this paragraph, the amount in controversy shall
be subject to annual interest beginning on the first day of
the first month beginning after the 60-day period as
determined pursuant to clause (ii) and equal to the rate of
interest on obligations issued for purchase by the Federal
Hospital Insurance Trust Fund and by the Federal
Supplementary Medical Insurance Trust Fund for the month in
which the civil action authorized under this paragraph is
commenced, to be awarded by the reviewing court in favor of
the prevailing party. No interest awarded pursuant to the
preceding sentence shall be deemed income or cost for the
purposes of determining reimbursement due providers of
services or suppliers under this Act.
``(D) Review panels.--For purposes of this subsection, a
`review panel' is a panel consisting of 3 members (who shall
be administrative law judges, members of the Departmental
Appeals Board, or qualified individuals associated with a
qualified independent contractor (as defined in subsection
(c)(2)) or with another independent entity) designated by the
Secretary for purposes of making determinations under this
paragraph.''.
(b) Application to Provider Agreement Determinations.--
Section 1866(h)(1) (42 U.S.C. 1395cc(h)(1)) is amended--
(1) by inserting ``(A)'' after ``(h)(1)''; and
(2) by adding at the end the following new subparagraph:
``(B) An institution or agency described in subparagraph
(A) that has filed for a hearing under subparagraph (A) shall
have expedited access to judicial review under this
subparagraph in the same manner as providers of services,
suppliers, and individuals entitled to benefits under part A
or enrolled under part B, or both, may obtain expedited
access to judicial review under the process established under
section 1869(b)(2). Nothing in this subparagraph shall be
construed to affect the application of any remedy imposed
under section 1819 during the pendency of an appeal under
this subparagraph.''.
(c) Effective Date.--The amendments made by this section
shall apply to appeals filed on or after October 1, 2003.
(d) Expedited Review of Certain Provider Agreement
Determinations.--
(1) Termination and certain other immediate remedies.--The
Secretary shall develop and implement a process to expedite
proceedings under sections 1866(h) of the Social Security Act
(42 U.S.C. 1395cc(h)) in which the remedy of termination of
participation, or a remedy described in clause (i) or (iii)
of section 1819(h)(2)(B) of such Act (42 U.S.C. 1395i-
3(h)(2)(B)) which is applied on an immediate basis, has been
imposed. Under such process priority shall be provided in
cases of termination.
(2) Increased financial support.--In addition to any
amounts otherwise appropriated, to reduce by 50 percent the
average time for administrative determinations on appeals
under section 1866(h) of the Social Security Act (42 U.S.C.
1395cc(h)), there are authorized to be appropriated (in
appropriate part from the Federal Hospital Insurance Trust
Fund and the Federal Supplementary Medical Insurance Trust
Fund) to the Secretary such additional sums for fiscal year
2004 and each subsequent fiscal year as may be necessary. The
purposes for which such amounts are available include
increasing the number of administrative law judges (and their
staffs) and the appellate level staff at the Departmental
Appeals Board of the Department of Health and Human Services
and educating such judges and staffs on long-term care
issues.
SEC. 833. REVISIONS TO MEDICARE APPEALS PROCESS.
(a) Requiring Full and Early Presentation of Evidence.--
(1) In general.--Section 1869(b) (42 U.S.C. 1395ff(b)), as
amended by BIPA and as amended by section 832(a), is further
amended by adding at the end the following new paragraph:
``(3) Requiring full and early presentation of evidence by
providers.--A provider of services or supplier may not
introduce evidence in any appeal under this section that was
not presented at the reconsideration conducted by the
qualified independent contractor under subsection (c), unless
there is good cause which precluded the introduction of such
evidence at or before that reconsideration.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on October 1, 2003.
(b) Use of Patients' Medical Records.--Section
1869(c)(3)(B)(i) (42 U.S.C. 1395ff(c)(3)(B)(i)), as amended
by BIPA, is amended by inserting ``(including the medical
records of the individual involved)'' after ``clinical
experience''.
(c) Notice Requirements for Medicare Appeals.--
(1) Initial determinations and redeterminations.--Section
1869(a) (42 U.S.C. 1395ff(a)), as amended by BIPA, is amended
by adding at the end the following new paragraph:
``(4) Requirements of notice of determinations and
redeterminations.--A written notice of a determination on an
initial
[[Page H4262]]
determination or on a redetermination, insofar as such
determination or redetermination results in a denial of a
claim for benefits, shall include--
``(A) the specific reasons for the determination,
including--
``(i) upon request, the provision of the policy, manual, or
regulation used in making the determination; and
``(ii) as appropriate in the case of a redetermination, a
summary of the clinical or scientific evidence used in making
the determination;
``(B) the procedures for obtaining additional information
concerning the determination or redetermination; and
``(C) notification of the right to seek a redetermination
or otherwise appeal the determination and instructions on how
to initiate such a redetermination or appeal under this
section.
The written notice on a redetermination shall be provided in
printed form and written in a manner calculated to be
understood by the individual entitled to benefits under part
A or enrolled under part B, or both.''.
(2) Reconsiderations.--Section 1869(c)(3)(E) (42 U.S.C.
1395ff(c)(3)(E)), as amended by BIPA, is amended--
(A) by inserting ``be written in a manner calculated to be
understood by the individual entitled to benefits under part
A or enrolled under part B, or both, and shall include (to
the extent appropriate)'' after ``in writing, ''; and
(B) by inserting ``and a notification of the right to
appeal such determination and instructions on how to initiate
such appeal under this section'' after ``such decision, ''.
(3) Appeals.--Section 1869(d) (42 U.S.C. 1395ff(d)), as
amended by BIPA, is amended--
(A) in the heading, by inserting ``; Notice'' after
``Secretary''; and
(B) by adding at the end the following new paragraph:
``(4) Notice.--Notice of the decision of an administrative
law judge shall be in writing in a manner calculated to be
understood by the individual entitled to benefits under part
A or enrolled under part B, or both, and shall include--
``(A) the specific reasons for the determination
(including, to the extent appropriate, a summary of the
clinical or scientific evidence used in making the
determination);
``(B) the procedures for obtaining additional information
concerning the decision; and
``(C) notification of the right to appeal the decision and
instructions on how to initiate such an appeal under this
section.''.
(4) Submission of record for appeal.--Section
1869(c)(3)(J)(i) (42 U.S.C. 1395ff(c)(3)(J)(i)) by striking
``prepare'' and inserting ``submit'' and by striking ``with
respect to'' and all that follows through ``and relevant
policies''.
(d) Qualified Independent Contractors.--
(1) Eligibility requirements of qualified independent
contractors.--Section 1869(c)(3) (42 U.S.C. 1395ff(c)(3)), as
amended by BIPA, is amended--
(A) in subparagraph (A), by striking ``sufficient training
and expertise in medical science and legal matters'' and
inserting ``sufficient medical, legal, and other expertise
(including knowledge of the program under this title) and
sufficient staffing''; and
(B) by adding at the end the following new subparagraph:
``(K) Independence requirements.--
``(i) In general.--Subject to clause (ii), a qualified
independent contractor shall not conduct any activities in a
case unless the entity--
``(I) is not a related party (as defined in subsection
(g)(5));
``(II) does not have a material familial, financial, or
professional relationship with such a party in relation to
such case; and
``(III) does not otherwise have a conflict of interest with
such a party.
``(ii) Exception for reasonable compensation.--Nothing in
clause (i) shall be construed to prohibit receipt by a
qualified independent contractor of compensation from the
Secretary for the conduct of activities under this section if
the compensation is provided consistent with clause (iii).
``(iii) Limitations on entity compensation.--Compensation
provided by the Secretary to a qualified independent
contractor in connection with reviews under this section
shall not be contingent on any decision rendered by the
contractor or by any reviewing professional.''.
(2) Eligibility requirements for reviewers.--Section 1869
(42 U.S.C. 1395ff), as amended by BIPA, is amended--
(A) by amending subsection (c)(3)(D) to read as follows:
``(D) Qualifications for reviewers.--The requirements of
subsection (g) shall be met (relating to qualifications of
reviewing professionals).''; and
(B) by adding at the end the following new subsection:
``(g) Qualifications of Reviewers.--
``(1) In general.--In reviewing determinations under this
section, a qualified independent contractor shall assure
that--
``(A) each individual conducting a review shall meet the
qualifications of paragraph (2);
``(B) compensation provided by the contractor to each such
reviewer is consistent with paragraph (3); and
``(C) in the case of a review by a panel described in
subsection (c)(3)(B) composed of physicians or other health
care professionals (each in this subsection referred to as a
`reviewing professional'), each reviewing professional meets
the qualifications described in paragraph (4) and, where a
claim is regarding the furnishing of treatment by a physician
(allopathic or osteopathic) or the provision of items or
services by a physician (allopathic or osteopathic), each
reviewing professional shall be a physician (allopathic or
osteopathic).
``(2) Independence.--
``(A) In general.--Subject to subparagraph (B), each
individual conducting a review in a case shall--
``(i) not be a related party (as defined in paragraph (5));
``(ii) not have a material familial, financial, or
professional relationship with such a party in the case under
review; and
``(iii) not otherwise have a conflict of interest with such
a party.
``(B) Exception.--Nothing in subparagraph (A) shall be
construed to--
``(i) prohibit an individual, solely on the basis of a
participation agreement with a fiscal intermediary, carrier,
or other contractor, from serving as a reviewing professional
if--
``(I) the individual is not involved in the provision of
items or services in the case under review;
``(II) the fact of such an agreement is disclosed to the
Secretary and the individual entitled to benefits under part
A or enrolled under part B, or both, (or authorized
representative) and neither party objects; and
``(III) the individual is not an employee of the
intermediary, carrier, or contractor and does not provide
services exclusively or primarily to or on behalf of such
intermediary, carrier, or contractor;
``(ii) prohibit an individual who has staff privileges at
the institution where the treatment involved takes place from
serving as a reviewer merely on the basis of having such
staff privileges if the existence of such privileges is
disclosed to the Secretary and such individual (or authorized
representative), and neither party objects; or
``(iii) prohibit receipt of compensation by a reviewing
professional from a contractor if the compensation is
provided consistent with paragraph (3).
For purposes of this paragraph, the term `participation
agreement' means an agreement relating to the provision of
health care services by the individual and does not include
the provision of services as a reviewer under this
subsection.
``(3) Limitations on reviewer compensation.--Compensation
provided by a qualified independent contractor to a reviewer
in connection with a review under this section shall not be
contingent on the decision rendered by the reviewer.
``(4) Licensure and expertise.--Each reviewing professional
shall be--
``(A) a physician (allopathic or osteopathic) who is
appropriately credentialed or licensed in one or more States
to deliver health care services and has medical expertise in
the field of practice that is appropriate for the items or
services at issue; or
``(B) a health care professional who is legally authorized
in one or more States (in accordance with State law or the
State regulatory mechanism provided by State law) to furnish
the health care items or services at issue and has medical
expertise in the field of practice that is appropriate for
such items or services.
``(5) Related party defined.--For purposes of this section,
the term `related party' means, with respect to a case under
this title involving a specific individual entitled to
benefits under part A or enrolled under part B, or both, any
of the following:
``(A) The Secretary, the medicare administrative contractor
involved, or any fiduciary, officer, director, or employee of
the Department of Health and Human Services, or of such
contractor.
``(B) The individual (or authorized representative).
``(C) The health care professional that provides the items
or services involved in the case.
``(D) The institution at which the items or services (or
treatment) involved in the case are provided.
``(E) The manufacturer of any drug or other item that is
included in the items or services involved in the case.
``(F) Any other party determined under any regulations to
have a substantial interest in the case involved.''.
(3) Effective date.--The amendments made by paragraphs (1)
and (2) shall be effective as if included in the enactment of
the respective provisions of subtitle C of title V of BIPA,
(114 Stat. 2763A-534).
(4) Transition.--In applying section 1869(g) of the Social
Security Act (as added by paragraph (2)), any reference to a
medicare administrative contractor shall be deemed to include
a reference to a fiscal intermediary under section 1816 of
the Social Security Act (42 U.S.C. 1395h) and a carrier under
section 1842 of such Act (42 U.S.C. 1395u).
SEC. 834. PREPAYMENT REVIEW.
(a) In General.--Section 1874A, as added by section
811(a)(1) and as amended by sections 812(b), 821(b)(1), and
821(c)(1), is further amended by adding at the end the
following new subsection:
``(h) Conduct of Prepayment Review.--
``(1) Conduct of random prepayment review.--
``(A) In general.--A medicare administrative contractor may
conduct random prepayment review only to develop a
contractor-wide or program-wide claims payment error
[[Page H4263]]
rates or under such additional circumstances as may be
provided under regulations, developed in consultation with
providers of services and suppliers.
``(B) Use of standard protocols when conducting prepayment
reviews.--When a medicare administrative contractor conducts
a random prepayment review, the contractor may conduct such
review only in accordance with a standard protocol for random
prepayment audits developed by the Secretary.
``(C) Construction.--Nothing in this paragraph shall be
construed as preventing the denial of payments for claims
actually reviewed under a random prepayment review.
``(D) Random prepayment review.--For purposes of this
subsection, the term `random prepayment review' means a
demand for the production of records or documentation absent
cause with respect to a claim.
``(2) Limitations on non-random prepayment review.--
``(A) Limitations on initiation of non-random prepayment
review.--A medicare administrative contractor may not
initiate non-random prepayment review of a provider of
services or supplier based on the initial identification by
that provider of services or supplier of an improper billing
practice unless there is a likelihood of sustained or high
level of payment error (as defined in subsection (i)(3)(A)).
``(B) Termination of non-random prepayment review.--The
Secretary shall issue regulations relating to the
termination, including termination dates, of non-random
prepayment review. Such regulations may vary such a
termination date based upon the differences in the
circumstances triggering prepayment review.''.
(b) Effective Date.--
(1) In general.--Except as provided in this subsection, the
amendment made by subsection (a) shall take effect 1 year
after the date of the enactment of this Act.
(2) Deadline for promulgation of certain regulations.--The
Secretary shall first issue regulations under section
1874A(h) of the Social Security Act, as added by subsection
(a), by not later than 1 year after the date of the enactment
of this Act.
(3) Application of standard protocols for random prepayment
review.--Section 1874A(h)(1)(B) of the Social Security Act,
as added by subsection (a), shall apply to random prepayment
reviews conducted on or after such date (not later than 1
year after the date of the enactment of this Act) as the
Secretary shall specify.
(c) Application to Fiscal Intermediaries and Carriers.--The
provisions of section 1874A(h) of the Social Security Act, as
added by subsection (a), shall apply to each fiscal
intermediary under section 1816 of the Social Security Act
(42 U.S.C. 1395h) and each carrier under section 1842 of such
Act (42 U.S.C. 1395u) in the same manner as they apply to
medicare administrative contractors under such provisions.
SEC. 835. RECOVERY OF OVERPAYMENTS.
(a) In General.--Section 1893 (42 U.S.C. 1395ddd) is
amended by adding at the end the following new subsection:
``(f) Recovery of Overpayments.--
``(1) Use of repayment plans.--
``(A) In general.--If the repayment, within 30 days by a
provider of services or supplier, of an overpayment under
this title would constitute a hardship (as defined in
subparagraph (B)), subject to subparagraph (C), upon request
of the provider of services or supplier the Secretary shall
enter into a plan with the provider of services or supplier
for the repayment (through offset or otherwise) of such
overpayment over a period of at least 6 months but not longer
than 3 years (or not longer than 5 years in the case of
extreme hardship, as determined by the Secretary). Interest
shall accrue on the balance through the period of repayment.
Such plan shall meet terms and conditions determined to be
appropriate by the Secretary.
``(B) Hardship.--
``(i) In general.--For purposes of subparagraph (A), the
repayment of an overpayment (or overpayments) within 30 days
is deemed to constitute a hardship if--
``(I) in the case of a provider of services that files cost
reports, the aggregate amount of the overpayments exceeds 10
percent of the amount paid under this title to the provider
of services for the cost reporting period covered by the most
recently submitted cost report; or
``(II) in the case of another provider of services or
supplier, the aggregate amount of the overpayments exceeds 10
percent of the amount paid under this title to the provider
of services or supplier for the previous calendar year.
``(ii) Rule of application.--The Secretary shall establish
rules for the application of this subparagraph in the case of
a provider of services or supplier that was not paid under
this title during the previous year or was paid under this
title only during a portion of that year.
``(iii) Treatment of previous overpayments.--If a provider
of services or supplier has entered into a repayment plan
under subparagraph (A) with respect to a specific overpayment
amount, such payment amount under the repayment plan shall
not be taken into account under clause (i) with respect to
subsequent overpayment amounts.
``(C) Exceptions.--Subparagraph (A) shall not apply if--
``(i) the Secretary has reason to suspect that the provider
of services or supplier may file for bankruptcy or otherwise
cease to do business or discontinue participation in the
program under this title; or
``(ii) there is an indication of fraud or abuse committed
against the program.
``(D) Immediate collection if violation of repayment
plan.--If a provider of services or supplier fails to make a
payment in accordance with a repayment plan under this
paragraph, the Secretary may immediately seek to offset or
otherwise recover the total balance outstanding (including
applicable interest) under the repayment plan.
``(E) Relation to no fault provision.--Nothing in this
paragraph shall be construed as affecting the application of
section 1870(c) (relating to no adjustment in the cases of
certain overpayments).
``(2) Limitation on recoupment.--
``(A) In general.--In the case of a provider of services or
supplier that is determined to have received an overpayment
under this title and that seeks a reconsideration by a
qualified independent contractor on such determination under
section 1869(b)(1), the Secretary may not take any action (or
authorize any other person, including any medicare
contractor, as defined in subparagraph (C)) to recoup the
overpayment until the date the decision on the
reconsideration has been rendered. If the provisions of
section 1869(b)(1) (providing for such a reconsideration by a
qualified independent contractor) are not in effect, in
applying the previous sentence any reference to such a
reconsideration shall be treated as a reference to a
redetermination by the fiscal intermediary or carrier
involved.
``(B) Collection with interest.--Insofar as the
determination on such appeal is against the provider of
services or supplier, interest on the overpayment shall
accrue on and after the date of the original notice of
overpayment. Insofar as such determination against the
provider of services or supplier is later reversed, the
Secretary shall provide for repayment of the amount recouped
plus interest at the same rate as would apply under the
previous sentence for the period in which the amount was
recouped.
``(C) Medicare contractor defined.--For purposes of this
subsection, the term `medicare contractor' has the meaning
given such term in section 1889(g).
``(3) Limitation on use of extrapolation.--A medicare
contractor may not use extrapolation to determine overpayment
amounts to be recovered by recoupment, offset, or otherwise
unless--
``(A) there is a sustained or high level of payment error
(as defined by the Secretary by regulation); or
``(B) documented educational intervention has failed to
correct the payment error (as determined by the Secretary).
``(4) Provision of supporting documentation.--In the case
of a provider of services or supplier with respect to which
amounts were previously overpaid, a medicare contractor may
request the periodic production of records or supporting
documentation for a limited sample of submitted claims to
ensure that the previous practice is not continuing.
``(5) Consent settlement reforms.--
``(A) In general.--The Secretary may use a consent
settlement (as defined in subparagraph (D)) to settle a
projected overpayment.
``(B) Opportunity to submit additional information before
consent settlement offer.--Before offering a provider of
services or supplier a consent settlement, the Secretary
shall--
``(i) communicate to the provider of services or supplier--
``(I) that, based on a review of the medical records
requested by the Secretary, a preliminary evaluation of those
records indicates that there would be an overpayment;
``(II) the nature of the problems identified in such
evaluation; and
``(III) the steps that the provider of services or supplier
should take to address the problems; and
``(ii) provide for a 45-day period during which the
provider of services or supplier may furnish additional
information concerning the medical records for the claims
that had been reviewed.
``(C) Consent settlement offer.--The Secretary shall review
any additional information furnished by the provider of
services or supplier under subparagraph (B)(ii). Taking into
consideration such information, the Secretary shall determine
if there still appears to be an overpayment. If so, the
Secretary--
``(i) shall provide notice of such determination to the
provider of services or supplier, including an explanation of
the reason for such determination; and
``(ii) in order to resolve the overpayment, may offer the
provider of services or supplier--
``(I) the opportunity for a statistically valid random
sample; or
``(II) a consent settlement.
The opportunity provided under clause (ii)(I) does not waive
any appeal rights with respect to the alleged overpayment
involved.
``(D) Consent settlement defined.--For purposes of this
paragraph, the term `consent settlement' means an agreement
between the Secretary and a provider of services or supplier
whereby both parties agree to settle a projected overpayment
based on less than a statistically valid sample of claims and
the provider of services or supplier agrees not to appeal the
claims involved.
``(6) Notice of over-utilization of codes.--The Secretary
shall establish, in consultation with organizations
representing
[[Page H4264]]
the classes of providers of services and suppliers, a process
under which the Secretary provides for notice to classes of
providers of services and suppliers served by the contractor
in cases in which the contractor has identified that
particular billing codes may be overutilized by that class of
providers of services or suppliers under the programs under
this title (or provisions of title XI insofar as they relate
to such programs).
``(7) Payment audits.--
``(A) Written notice for post-payment audits.--Subject to
subparagraph (C), if a medicare contractor decides to conduct
a post-payment audit of a provider of services or supplier
under this title, the contractor shall provide the provider
of services or supplier with written notice (which may be in
electronic form) of the intent to conduct such an audit.
``(B) Explanation of findings for all audits.--Subject to
subparagraph (C), if a medicare contractor audits a provider
of services or supplier under this title, the contractor
shall--
``(i) give the provider of services or supplier a full
review and explanation of the findings of the audit in a
manner that is understandable to the provider of services or
supplier and permits the development of an appropriate
corrective action plan;
``(ii) inform the provider of services or supplier of the
appeal rights under this title as well as consent settlement
options (which are at the discretion of the Secretary);
``(iii) give the provider of services or supplier an
opportunity to provide additional information to the
contractor; and
``(iv) take into account information provided, on a timely
basis, by the provider of services or supplier under clause
(iii).
``(C) Exception.--Subparagraphs (A) and (B) shall not apply
if the provision of notice or findings would compromise
pending law enforcement activities, whether civil or
criminal, or reveal findings of law enforcement-related
audits.
``(8) Standard methodology for probe sampling.--The
Secretary shall establish a standard methodology for medicare
contractors to use in selecting a sample of claims for review
in the case of an abnormal billing pattern.''.
(b) Effective Dates and Deadlines.--
(1) Use of repayment plans.--Section 1893(f)(1) of the
Social Security Act, as added by subsection (a), shall apply
to requests for repayment plans made after the date of the
enactment of this Act.
(2) Limitation on recoupment.--Section 1893(f)(2) of the
Social Security Act, as added by subsection (a), shall apply
to actions taken after the date of the enactment of this Act.
(3) Use of extrapolation.--Section 1893(f)(3) of the Social
Security Act, as added by subsection (a), shall apply to
statistically valid random samples initiated after the date
that is 1 year after the date of the enactment of this Act.
(4) Provision of supporting documentation.--Section
1893(f)(4) of the Social Security Act, as added by subsection
(a), shall take effect on the date of the enactment of this
Act.
(5) Consent settlement.--Section 1893(f)(5) of the Social
Security Act, as added by subsection (a), shall apply to
consent settlements entered into after the date of the
enactment of this Act.
(6) Notice of overutilization.--Not later than 1 year after
the date of the enactment of this Act, the Secretary shall
first establish the process for notice of overutilization of
billing codes under section 1893A(f)(6) of the Social
Security Act, as added by subsection (a).
(7) Payment audits.--Section 1893A(f)(7) of the Social
Security Act, as added by subsection (a), shall apply to
audits initiated after the date of the enactment of this Act.
(8) Standard for abnormal billing patterns.--Not later than
1 year after the date of the enactment of this Act, the
Secretary shall first establish a standard methodology for
selection of sample claims for abnormal billing patterns
under section 1893(f)(8) of the Social Security Act, as added
by subsection (a).
SEC. 836. PROVIDER ENROLLMENT PROCESS; RIGHT OF APPEAL.
(a) In General.--Section 1866 (42 U.S.C. 1395cc) is
amended--
(1) by adding at the end of the heading the following: ``;
enrollment processes''; and
(2) by adding at the end the following new subsection:
``(j) Enrollment Process for Providers of Services and
Suppliers.--
``(1) Enrollment process.--
``(A) In general.--The Secretary shall establish by
regulation a process for the enrollment of providers of
services and suppliers under this title.
``(B) Deadlines.--The Secretary shall establish by
regulation procedures under which there are deadlines for
actions on applications for enrollment (and, if applicable,
renewal of enrollment). The Secretary shall monitor the
performance of medicare administrative contractors in meeting
the deadlines established under this subparagraph.
``(C) Consultation before changing provider enrollment
forms.--The Secretary shall consult with providers of
services and suppliers before making changes in the provider
enrollment forms required of such providers and suppliers to
be eligible to submit claims for which payment may be made
under this title.
``(2) Hearing rights in cases of denial or non-renewal.--A
provider of services or supplier whose application to enroll
(or, if applicable, to renew enrollment) under this title is
denied may have a hearing and judicial review of such denial
under the procedures that apply under subsection (h)(1)(A) to
a provider of services that is dissatisfied with a
determination by the Secretary.''.
(b) Effective Dates.--
(1) Enrollment process.--The Secretary shall provide for
the establishment of the enrollment process under section
1866(j)(1) of the Social Security Act, as added by subsection
(a)(2), within 6 months after the date of the enactment of
this Act.
(2) Consultation.--Section 1866(j)(1)(C) of the Social
Security Act, as added by subsection (a)(2), shall apply with
respect to changes in provider enrollment forms made on or
after January 1, 2003.
(3) Hearing rights.--Section 1866(j)(2) of the Social
Security Act, as added by subsection (a)(2), shall apply to
denials occurring on or after such date (not later than 1
year after the date of the enactment of this Act) as the
Secretary specifies.
SEC. 837. PROCESS FOR CORRECTION OF MINOR ERRORS AND
OMISSIONS ON CLAIMS WITHOUT PURSUING APPEALS
PROCESS.
The Secretary shall develop, in consultation with
appropriate medicare contractors (as defined in section
1889(g) of the Social Security Act, as inserted by section
821(a)(1)) and representatives of providers of services and
suppliers, a process whereby, in the case of minor errors or
omissions (as defined by the Secretary) that are detected in
the submission of claims under the programs under title XVIII
of such Act, a provider of services or supplier is given an
opportunity to correct such an error or omission without the
need to initiate an appeal. Such process shall include the
ability to resubmit corrected claims.
SEC. 838. PRIOR DETERMINATION PROCESS FOR CERTAIN ITEMS AND
SERVICES; ADVANCE BENEFICIARY NOTICES.
(a) In General.--Section 1869 (42 U.S.C. 1395ff(b)), as
amended by sections 521 and 522 of BIPA and section
833(d)(2)(B), is further amended by adding at the end the
following new subsection:
``(h) Prior Determination Process for Certain Items and
Services.--
``(1) Establishment of process.--
``(A) In general.--With respect to a medicare
administrative contractor that has a contract under section
1874A that provides for making payments under this title with
respect to eligible items and services described in
subparagraph (C), the Secretary shall establish a prior
determination process that meets the requirements of this
subsection and that shall be applied by such contractor in
the case of eligible requesters.
``(B) Eligible requester.--For purposes of this subsection,
each of the following shall be an eligible requester:
``(i) A physician, but only with respect to eligible items
and services for which the physician may be paid directly.
``(ii) An individual entitled to benefits under this title,
but only with respect to an item or service for which the
individual receives, from the physician who may be paid
directly for the item or service, an advance beneficiary
notice under section 1879(a) that payment may not be made (or
may no longer be made) for the item or service under this
title.
``(C) Eligible items and services.--For purposes of this
subsection and subject to paragraph (2), eligible items and
services are items and services which are physicians'
services (as defined in paragraph (4)(A) of section 1848(f)
for purposes of calculating the sustainable growth rate under
such section).
``(2) Secretarial flexibility.--The Secretary shall
establish by regulation reasonable limits on the categories
of eligible items and services for which a prior
determination of coverage may be requested under this
subsection. In establishing such limits, the Secretary may
consider the dollar amount involved with respect to the item
or service, administrative costs and burdens, and other
relevant factors.
``(3) Request for prior determination.--
``(A) In general.--Subject to paragraph (2), under the
process established under this subsection an eligible
requester may submit to the contractor a request for a
determination, before the furnishing of an eligible item or
service involved as to whether the item or service is covered
under this title consistent with the applicable requirements
of section 1862(a)(1)(A) (relating to medical necessity).
``(B) Accompanying documentation.--The Secretary may
require that the request be accompanied by a description of
the item or service, supporting documentation relating to the
medical necessity for the item or service, and any other
appropriate documentation. In the case of a request submitted
by an eligible requester who is described in paragraph
(1)(B)(ii), the Secretary may require that the request also
be accompanied by a copy of the advance beneficiary notice
involved.
``(4) Response to request.--
``(A) In general.--Under such process, the contractor shall
provide the eligible requester with written notice of a
determination as to whether--
``(i) the item or service is so covered;
``(ii) the item or service is not so covered; or
``(iii) the contractor lacks sufficient information to make
a coverage determination.
If the contractor makes the determination described in clause
(iii), the contractor shall
[[Page H4265]]
include in the notice a description of the additional
information required to make the coverage determination.
``(B) Deadline to respond.--Such notice shall be provided
within the same time period as the time period applicable to
the contractor providing notice of initial determinations on
a claim for benefits under subsection (a)(2)(A).
``(C) Informing beneficiary in case of physician request.--
In the case of a request in which an eligible requester is
not the individual described in paragraph (1)(B)(ii), the
process shall provide that the individual to whom the item or
service is proposed to be furnished shall be informed of any
determination described in clause (ii) (relating to a
determination of non-coverage) and the right (referred to in
paragraph (6)(B)) to obtain the item or service and have a
claim submitted for the item or service.
``(5) Effect of determinations.--
``(A) Binding nature of positive determination.--If the
contractor makes the determination described in paragraph
(4)(A)(i), such determination shall be binding on the
contractor in the absence of fraud or evidence of
misrepresentation of facts presented to the contractor.
``(B) Notice and right to redetermination in case of a
denial.--
``(i) In general.--If the contractor makes the
determination described in paragraph (4)(A)(ii)--
``(I) the eligible requester has the right to a
redetermination by the contractor on the determination that
the item or service is not so covered; and
``(II) the contractor shall include in notice under
paragraph (4)(A) a brief explanation of the basis for the
determination, including on what national or local coverage
or noncoverage determination (if any) the determination is
based, and the right to such a redetermination.
``(ii) Deadline for redeterminations.--The contractor shall
complete and provide notice of such redetermination within
the same time period as the time period applicable to the
contractor providing notice of redeterminations relating to a
claim for benefits under subsection (a)(3)(C)(ii).
``(6) Limitation on further review.--
``(A) In general.--Contractor determinations described in
paragraph (4)(A)(ii) or (4)(A)(iii) (and redeterminations
made under paragraph (5)(B)), relating to pre-service claims
are not subject to further administrative appeal or judicial
review under this section or otherwise.
``(B) Decision not to seek prior determination or negative
determination does not impact right to obtain services, seek
reimbursement, or appeal rights.--Nothing in this subsection
shall be construed as affecting the right of an individual
who--
``(i) decides not to seek a prior determination under this
subsection with respect to items or services; or
``(ii) seeks such a determination and has received a
determination described in paragraph (4)(A)(ii),
from receiving (and submitting a claim for) such items
services and from obtaining administrative or judicial review
respecting such claim under the other applicable provisions
of this section. Failure to seek a prior determination under
this subsection with respect to items and services shall not
be taken into account in such administrative or judicial
review.
``(C) No prior determination after receipt of services.--
Once an individual is provided items and services, there
shall be no prior determination under this subsection with
respect to such items or services.''.
(b) Effective Date; Transition.--
(1) Effective date.--The Secretary shall establish the
prior determination process under the amendment made by
subsection (a) in such a manner as to provide for the
acceptance of requests for determinations under such process
filed not later than 18 months after the date of the
enactment of this Act.
(2) Transition.--During the period in which the amendment
made by subsection (a) has become effective but contracts are
not provided under section 1874A of the Social Security Act
with medicare administrative contractors, any reference in
section 1869(g) of such Act (as added by such amendment) to
such a contractor is deemed a reference to a fiscal
intermediary or carrier with an agreement under section 1816,
or contract under section 1842, respectively, of such Act.
(3) Limitation on application to sgr.--For purposes of
applying section 1848(f)(2)(D) of the Social Security Act (42
U.S.C. 1395w-4(f)(2)(D)), the amendment made by subsection
(a) shall not be considered to be a change in law or
regulation.
(c) Provisions Relating to Advance Beneficiary Notices;
Report on Prior Determination Process.--
(1) Data collection.--The Secretary shall establish a
process for the collection of information on the instances in
which an advance beneficiary notice (as defined in paragraph
(4)) has been provided and on instances in which a
beneficiary indicates on such a notice that the beneficiary
does not intend to seek to have the item or service that is
the subject of the notice furnished.
(2) Outreach and education.--The Secretary shall establish
a program of outreach and education for beneficiaries and
providers of services and other persons on the appropriate
use of advance beneficiary notices and coverage policies
under the medicare program.
(3) GAO report report on use of advance beneficiary
notices.--Not later than 18 months after the date on which
section 1869(g) of the Social Security Act (as added by
subsection (a)) takes effect, the Comptroller General of the
United States shall submit to Congress a report on the use of
advance beneficiary notices under title XVIII of such Act.
Such report shall include information concerning the
providers of services and other persons that have provided
such notices and the response of beneficiaries to such
notices.
(4) GAO report on use of prior determination process.--Not
later than 18 months after the date on which section 1869(g)
of the Social Security Act (as added by subsection (a)) takes
effect, the Comptroller General of the United States shall
submit to Congress a report on the use of the prior
determination process under such section. Such report shall
include--
(A) information concerning the types of procedures for
which a prior determination has been sought, determinations
made under the process, and changes in receipt of services
resulting from the application of such process; and
(B) an evaluation of whether the process was useful for
physicians (and other suppliers) and beneficiaries, whether
it was timely, and whether the amount of information required
was burdensome to physicians and beneficiaries.
(5) Advance beneficiary notice defined.--In this
subsection, the term ``advance beneficiary notice'' means a
written notice provided under section 1879(a) of the Social
Security Act (42 U.S.C. 1395pp(a)) to an individual entitled
to benefits under part A or B of title XVIII of such Act
before items or services are furnished under such part in
cases where a provider of services or other person that would
furnish the item or service believes that payment will not be
made for some or all of such items or services under such
title.
Subtitle E--Miscellaneous Provisions
SEC. 841. POLICY DEVELOPMENT REGARDING EVALUATION AND
MANAGEMENT (E & M) DOCUMENTATION GUIDELINES.
(a) In General.--The Secretary may not implement any new
documentation guidelines for evaluation and management
physician services under the title XVIII of the Social
Security Act on or after the date of the enactment of this
Act unless the Secretary--
(1) has developed the guidelines in collaboration with
practicing physicians (including both generalists and
specialists) and provided for an assessment of the proposed
guidelines by the physician community;
(2) has established a plan that contains specific goals,
including a schedule, for improving the use of such
guidelines;
(3) has conducted appropriate and representative pilot
projects under subsection (b) to test modifications to the
evaluation and management documentation guidelines;
(4) finds that the objectives described in subsection (c)
will be met in the implementation of such guidelines; and
(5) has established, and is implementing, a program to
educate physicians on the use of such guidelines and that
includes appropriate outreach.
The Secretary shall make changes to the manner in which
existing evaluation and management documentation guidelines
are implemented to reduce paperwork burdens on physicians.
(b) Pilot Projects to Test Evaluation and Management
Documentation Guidelines.--
(1) In general.--The Secretary shall conduct under this
subsection appropriate and representative pilot projects to
test new evaluation and management documentation guidelines
referred to in subsection (a).
(2) Length and consultation.--Each pilot project under this
subsection shall--
(A) be voluntary;
(B) be of sufficient length as determined by the Secretary
to allow for preparatory physician and medicare contractor
education, analysis, and use and assessment of potential
evaluation and management guidelines; and
(C) be conducted, in development and throughout the
planning and operational stages of the project, in
consultation with practicing physicians (including both
generalists and specialists).
(3) Range of pilot projects.--Of the pilot projects
conducted under this subsection--
(A) at least one shall focus on a peer review method by
physicians (not employed by a medicare contractor) which
evaluates medical record information for claims submitted by
physicians identified as statistical outliers relative to
definitions published in the Current Procedures Terminology
(CPT) code book of the American Medical Association;
(B) at least one shall focus on an alternative method to
detailed guidelines based on physician documentation of face
to face encounter time with a patient;
(C) at least one shall be conducted for services furnished
in a rural area and at least one for services furnished
outside such an area; and
(D) at least one shall be conducted in a setting where
physicians bill under physicians' services in teaching
settings and at least one shall be conducted in a setting
other than a teaching setting.
(4) Banning of targeting of pilot project participants.--
Data collected under this subsection shall not be used as the
basis for overpayment demands or post-payment audits. Such
limitation applies only to claims
[[Page H4266]]
filed as part of the pilot project and lasts only for the
duration of the pilot project and only as long as the
provider is a participant in the pilot project.
(5) Study of impact.--Each pilot project shall examine the
effect of the new evaluation and management documentation
guidelines on--
(A) different types of physician practices, including those
with fewer than 10 full-time-equivalent employees (including
physicians); and
(B) the costs of physician compliance, including education,
implementation, auditing, and monitoring.
(6) Periodic reports.--The Secretary shall submit to
Congress periodic reports on the pilot projects under this
subsection.
(c) Objectives for Evaluation and Management Guidelines.--
The objectives for modified evaluation and management
documentation guidelines developed by the Secretary shall be
to--
(1) identify clinically relevant documentation needed to
code accurately and assess coding levels accurately;
(2) decrease the level of non-clinically pertinent and
burdensome documentation time and content in the physician's
medical record;
(3) increase accuracy by reviewers; and
(4) educate both physicians and reviewers.
(d) Study of Simpler, Alternative Systems of Documentation
for Physician Claims.--
(1) Study.--The Secretary shall carry out a study of the
matters described in paragraph (2).
(2) Matters described.--The matters referred to in
paragraph (1) are--
(A) the development of a simpler, alternative system of
requirements for documentation accompanying claims for
evaluation and management physician services for which
payment is made under title XVIII of the Social Security Act;
and
(B) consideration of systems other than current coding and
documentation requirements for payment for such physician
services.
(3) Consultation with practicing physicians.--In designing
and carrying out the study under paragraph (1), the Secretary
shall consult with practicing physicians, including
physicians who are part of group practices and including both
generalists and specialists.
(4) Application of hipaa uniform coding requirements.--In
developing an alternative system under paragraph (2), the
Secretary shall consider requirements of administrative
simplification under part C of title XI of the Social
Security Act.
(5) Report to congress.--(A) Not later than October 1,
2004, the Secretary shall submit to Congress a report on the
results of the study conducted under paragraph (1).
(B) The Medicare Payment Advisory Commission shall conduct
an analysis of the results of the study included in the
report under subparagraph (A) and shall submit a report on
such analysis to Congress.
(e) Study on Appropriate Coding of Certain Extended Office
Visits.--The Secretary shall conduct a study of the
appropriateness of coding in cases of extended office visits
in which there is no diagnosis made. Not later than October
1, 2004, the Secretary shall submit a report to Congress on
such study and shall include recommendations on how to code
appropriately for such visits in a manner that takes into
account the amount of time the physician spent with the
patient.
(f) Definitions.--In this section--
(1) the term ``rural area'' has the meaning given that term
in section 1886(d)(2)(D) of the Social Security Act, 42
U.S.C. 1395ww(d)(2)(D); and
(2) the term ``teaching settings'' are those settings
described in section 415.150 of title 42, Code of Federal
Regulations.
SEC. 842. IMPROVEMENT IN OVERSIGHT OF TECHNOLOGY AND
COVERAGE.
(a) Improved Coordination Between FDA and CMS on Coverage
of Breakthrough Medical Devices.--
(1) In general.--Upon request by an applicant and to the
extent feasible (as determined by the Secretary), the
Secretary shall, in the case of a class III medical device
that is subject to premarket approval under section 515 of
the Federal Food, Drug, and Cosmetic Act, ensure the sharing
of appropriate information from the review for application
for premarket approval conducted by the Food and Drug
Administration for coverage decisions under title XVIII of
the Social Security Act.
(2) Publication of plan.--Not later than 6 months after the
date of the enactment of this Act, the Secretary shall submit
to appropriate Committees of Congress a report that contains
the plan for improving such coordination and for shortening
the time lag between the premarket approval by the Food and
Drug Administration and coding and coverage decisions by the
Centers for Medicare & Medicaid Services.
(3) Construction.--Nothing in this subsection shall be
construed as changing the criteria for coverage of a medical
device under title XVIII of the Social Security Act nor
premarket approval by the Food and Drug Administration and
nothing in this subsection shall be construed to increase
premarket approval application requirements under the Federal
Food, Drug, and Cosmetic Act.
(b) Council for Technology and Innovation.--Section 1868
(42 U.S.C. 1395ee), as amended by section 823(a), is amended
by adding at the end the following new subsection:
``(c) Council for Technology and Innovation.--
``(1) Establishment.--The Secretary shall establish a
Council for Technology and Innovation within the Centers for
Medicare & Medicaid Services (in this section referred to as
`CMS').
``(2) Composition.--The Council shall be composed of senior
CMS staff and clinicians and shall be chaired by the
Executive Coordinator for Technology and Innovation
(appointed or designated under paragraph (4)).
``(3) Duties.--The Council shall coordinate the activities
of coverage, coding, and payment processes under this title
with respect to new technologies and procedures, including
new drug therapies, and shall coordinate the exchange of
information on new technologies between CMS and other
entities that make similar decisions.
``(4) Executive coordinator for technology and
innovation.--The Secretary shall appoint (or designate) a
noncareer appointee (as defined in section 3132(a)(7) of
title 5, United States Code) who shall serve as the Executive
Coordinator for Technology and Innovation. Such executive
coordinator shall report to the Administrator of CMS, shall
chair the Council, shall oversee the execution of its duties,
and shall serve as a single point of contact for outside
groups and entities regarding the coverage, coding, and
payment processes under this title.''.
(c) GAO Study on Improvements in External Data Collection
for Use in the Medicare Inpatient Payment System.--
(1) Study.--The Comptroller General of the United States
shall conduct a study that analyzes which external data can
be collected in a shorter time frame by the Centers for
Medicare & Medicaid Services for use in computing payments
for inpatient hospital services. The study may include an
evaluation of the feasibility and appropriateness of using of
quarterly samples or special surveys or any other methods.
The study shall include an analysis of whether other
executive agencies, such as the Bureau of Labor Statistics in
the Department of Commerce, are best suited to collect this
information.
(2) Report.--By not later than October 1, 2003, the
Comptroller General shall submit a report to Congress on the
study under paragraph (1).
(d) IOM Study on Local Coverage Determinations.--
(1) Study.--The Secretary shall enter into an arrangement
with the Institute of Medicine of the National Academy of
Sciences under which the Institute shall conduct a study on
local coverage determinations (including the application of
local medical review policies) under the medicare program
under title XVIII of the Social Security Act. Such study
shall examine--
(A) the consistency of the definitions used in such
determinations;
(B) the types of evidence on which such determinations are
based, including medical and scientific evidence;
(C) the advantages and disadvantages of local coverage
decisionmaking, including the flexibility it offers for
ensuring timely patient access to new medical technology for
which data are still be collected;
(D) the manner in which the local coverage determination
process is used to develop data needed for a national
coverage determination, including the need for collection of
such data within a protocol and informed consent by
individuals entitled to benefits under part A of title XVIII
of the Social Security Act, or enrolled under part B of such
title, or both; and
(E) the advantages and disadvantages of maintaining local
medicare contractor advisory committees that can advise on
local coverage decisions based on an open, collaborative
public process.
(2) Report.--Such arrangement shall provide that the
Institute shall submit to the Secretary a report on such
study by not later than 3 years after the date of the
enactment of this Act. The Secretary shall promptly transmit
a copy of such report to Congress.
(e) Methods for Determining Payment Basis For New Lab
Tests.--Section 1833(h) (42 U.S.C. 1395l(h)) is amended by
adding at the end the following:
``(8)(A) The Secretary shall establish by regulation
procedures for determining the basis for, and amount of,
payment under this subsection for any clinical diagnostic
laboratory test with respect to which a new or substantially
revised HCPCS code is assigned on or after January 1, 2004
(in this paragraph referred to as `new tests').
``(B) Determinations under subparagraph (A) shall be made
only after the Secretary--
``(i) makes available to the public (through an Internet
site and other appropriate mechanisms) a list that includes
any such test for which establishment of a payment amount
under this subsection is being considered for a year;
``(ii) on the same day such list is made available, causes
to have published in the Federal Register notice of a meeting
to receive comments and recommendations (and data on which
recommendations are based) from the public on the appropriate
basis under this subsection for establishing payment amounts
for the tests on such list;
``(iii) not less than 30 days after publication of such
notice convenes a meeting, that includes representatives of
officials of the Centers for Medicare & Medicaid Services
involved in determining payment amounts, to
[[Page H4267]]
receive such comments and recommendations (and data on which
the recommendations are based);
``(iv) taking into account the comments and recommendations
(and accompanying data) received at such meeting, develops
and makes available to the public (through an Internet site
and other appropriate mechanisms) a list of proposed
determinations with respect to the appropriate basis for
establishing a payment amount under this subsection for each
such code, together with an explanation of the reasons for
each such determination, the data on which the determinations
are based, and a request for public written comments on the
proposed determination; and
``(v) taking into account the comments received during the
public comment period, develops and makes available to the
public (through an Internet site and other appropriate
mechanisms) a list of final determinations of the payment
amounts for such tests under this subsection, together with
the rationale for each such determination, the data on which
the determinations are based, and responses to comments and
suggestions received from the public.
``(C) Under the procedures established pursuant to
subparagraph (A), the Secretary shall--
``(i) set forth the criteria for making determinations
under subparagraph (A); and
``(ii) make available to the public the data (other than
proprietary data) considered in making such determinations.
``(D) The Secretary may convene such further public
meetings to receive public comments on payment amounts for
new tests under this subsection as the Secretary deems
appropriate.
``(E) For purposes of this paragraph:
``(i) The term `HCPCS' refers to the Health Care Procedure
Coding System.
``(ii) A code shall be considered to be `substantially
revised' if there is a substantive change to the definition
of the test or procedure to which the code applies (such as a
new analyte or a new methodology for measuring an existing
analyte-specific test).''.
SEC. 843. TREATMENT OF HOSPITALS FOR CERTAIN SERVICES UNDER
MEDICARE SECONDARY PAYOR (MSP) PROVISIONS.
(a) In General.--The Secretary shall not require a hospital
(including a critical access hospital) to ask questions (or
obtain information) relating to the application of section
1862(b) of the Social Security Act (relating to medicare
secondary payor provisions) in the case of reference
laboratory services described in subsection (b), if the
Secretary does not impose such requirement in the case of
such services furnished by an independent laboratory.
(b) Reference Laboratory Services Described.--Reference
laboratory services described in this subsection are clinical
laboratory diagnostic tests (or the interpretation of such
tests, or both) furnished without a face-to-face encounter
between the individual entitled to benefits under part A or
enrolled under part B, or both, and the hospital involved and
in which the hospital submits a claim only for such test or
interpretation.
SEC. 844. EMTALA IMPROVEMENTS.
(a) Payment for EMTALA-Mandated Screening and Stabilization
Services.--
(1) In general.--Section 1862 (42 U.S.C. 1395y) is amended
by inserting after subsection (c) the following new
subsection:
``(d) For purposes of subsection (a)(1)(A), in the case of
any item or service that is required to be provided pursuant
to section 1867 to an individual who is entitled to benefits
under this title, determinations as to whether the item or
service is reasonable and necessary shall be made on the
basis of the information available to the treating physician
or practitioner (including the patient's presenting symptoms
or complaint) at the time the item or service was ordered or
furnished by the physician or practitioner (and not on the
patient's principal diagnosis). When making such
determinations with respect to such an item or service, the
Secretary shall not consider the frequency with which the
item or service was provided to the patient before or after
the time of the admission or visit.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to items and services furnished on or after
January 1, 2003.
(b) Notification of Providers When EMTALA Investigation
Closed.--Section 1867(d) (42 U.S.C. 42 U.S.C. 1395dd(d)) is
amended by adding at the end the following new paragraph:
``(4) Notice upon closing an investigation.--The Secretary
shall establish a procedure to notify hospitals and
physicians when an investigation under this section is
closed.''.
(c) Prior Review by Peer Review Organizations in EMTALA
Cases Involving Termination of Participation.--
(1) In general.--Section 1867(d)(3) (42 U.S.C.
1395dd(d)(3)) is amended--
(A) in the first sentence, by inserting ``or in terminating
a hospital's participation under this title'' after ``in
imposing sanctions under paragraph (1)''; and
(B) by adding at the end the following new sentences:
``Except in the case in which a delay would jeopardize the
health or safety of individuals, the Secretary shall also
request such a review before making a compliance
determination as part of the process of terminating a
hospital's participation under this title for violations
related to the appropriateness of a medical screening
examination, stabilizing treatment, or an appropriate
transfer as required by this section, and shall provide a
period of 5 days for such review. The Secretary shall provide
a copy of the organization's report to the hospital or
physician consistent with confidentiality requirements
imposed on the organization under such part B.''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to terminations of participation initiated on or
after the date of the enactment of this Act.
SEC. 845. EMERGENCY MEDICAL TREATMENT AND LABOR ACT (EMTALA)
TECHNICAL ADVISORY GROUP.
(a) Establishment.--The Secretary shall establish a
Technical Advisory Group (in this section referred to as the
``Advisory Group'') to review issues related to the Emergency
Medical Treatment and Labor Act (EMTALA) and its
implementation. In this section, the term ``EMTALA'' refers
to the provisions of section 1867 of the Social Security Act
(42 U.S.C. 1395dd).
(b) Membership.--The Advisory Group shall be composed of 19
members, including the Administrator of the Centers for
Medicare & Medicaid Services and the Inspector General of the
Department of Health and Human Services and of which--
(1) 4 shall be representatives of hospitals, including at
least one public hospital, that have experience with the
application of EMTALA and at least 2 of which have not been
cited for EMTALA violations;
(2) 7 shall be practicing physicians drawn from the fields
of emergency medicine, cardiology or cardiothoracic surgery,
orthopedic surgery, neurosurgery, obstetrics-gynecology, and
psychiatry, with not more than one physician from any
particular field;
(3) 2 shall represent patients;
(4) 2 shall be staff involved in EMTALA investigations from
different regional offices of the Centers for Medicare &
Medicaid Services; and
(5) 1 shall be from a State survey office involved in
EMTALA investigations and 1 shall be from a peer review
organization, both of whom shall be from areas other than the
regions represented under paragraph (4).
In selecting members described in paragraphs (1) through (3),
the Secretary shall consider qualified individuals nominated
by organizations representing providers and patients.
(c) General Responsibilities.--The Advisory Group--
(1) shall review EMTALA regulations;
(2) may provide advice and recommendations to the Secretary
with respect to those regulations and their application to
hospitals and physicians;
(3) shall solicit comments and recommendations from
hospitals, physicians, and the public regarding the
implementation of such regulations; and
(4) may disseminate information on the application of such
regulations to hospitals, physicians, and the public.
(d) Administrative Matters.--
(1) Chairperson.--The members of the Advisory Group shall
elect a member to serve as chairperson of the Advisory Group
for the life of the Advisory Group.
(2) Meetings.--The Advisory Group shall first meet at the
direction of the Secretary. The Advisory Group shall then
meet twice per year and at such other times as the Advisory
Group may provide.
(e) Termination.--The Advisory Group shall terminate 30
months after the date of its first meeting.
(f) Waiver of Administrative Limitation.--The Secretary
shall establish the Advisory Group notwithstanding any
limitation that may apply to the number of advisory
committees that may be established (within the Department of
Health and Human Services or otherwise).
SEC. 846. AUTHORIZING USE OF ARRANGEMENTS WITH OTHER HOSPICE
PROGRAMS TO PROVIDE CORE HOSPICE SERVICES IN
CERTAIN CIRCUMSTANCES.
(a) In General.--Section 1861(dd)(5) (42 U.S.C.
1395x(dd)(5)) is amended by adding at the end the following
new subparagraph:
``(D) In extraordinary, exigent, or other non-routine
circumstances, such as unanticipated periods of high patient
loads, staffing shortages due to illness or other events, or
temporary travel of a patient outside a hospice program's
service area, a hospice program may enter into arrangements
with another hospice program for the provision by that other
program of services described in paragraph (2)(A)(ii)(I). The
provisions of paragraph (2)(A)(ii)(II) shall apply with
respect to the services provided under such arrangements.''.
(b) Conforming Payment Provision.--Section 1814(i) (42
U.S.C. 1395f(i)), as amended by section 421(b), is amended by
adding at the end the following new paragraph:
``(5) In the case of hospice care provided by a hospice
program under arrangements under section 1861(dd)(5)(D) made
by another hospice program, the hospice program that made the
arrangements shall bill and be paid for the hospice care.''.
(c) Effective Date.--The amendments made by this section
shall apply to hospice care provided on or after the date of
the enactment of this Act.
SEC. 847. APPLICATION OF OSHA BLOODBORNE PATHOGENS STANDARD
TO CERTAIN HOSPITALS.
(a) In General.--Section 1866 (42 U.S.C. 1395cc) is
amended--
(1) in subsection (a)(1)--
(A) in subparagraph (R), by striking ``and'' at the end;
[[Page H4268]]
(B) in subparagraph (S), by striking the period at the end
and inserting ``, and''; and
(C) by inserting after subparagraph (S) the following new
subparagraph:
``(T) in the case of hospitals that are not otherwise
subject to the Occupational Safety and Health Act of 1970, to
comply with the Bloodborne Pathogens standard under section
1910.1030 of title 29 of the Code of Federal Regulations (or
as subsequently redesignated).''; and
(2) by adding at the end of subsection (b) the following
new paragraph:
``(4)(A) A hospital that fails to comply with the
requirement of subsection (a)(1)(T) (relating to the
Bloodborne Pathogens standard) is subject to a civil money
penalty in an amount described in subparagraph (B), but is
not subject to termination of an agreement under this
section.
``(B) The amount referred to in subparagraph (A) is an
amount that is similar to the amount of civil penalties that
may be imposed under section 17 of the Occupational Safety
and Health Act of 1970 for a violation of the Bloodborne
Pathogens standard referred to in subsection (a)(1)(T) by a
hospital that is subject to the provisions of such Act.
``(C) A civil money penalty under this paragraph shall be
imposed and collected in the same manner as civil money
penalties under subsection (a) of section 1128A are imposed
and collected under that section.''.
(b) Effective Date.--The amendments made by this subsection
(a) shall apply to hospitals as of July 1, 2003.
SEC. 848. BIPA-RELATED TECHNICAL AMENDMENTS AND CORRECTIONS.
(a) Technical Amendments Relating to Advisory Committee
under BIPA Section 522.--(1) Subsection (i) of section 1114
(42 U.S.C. 1314)--
(A) is transferred to section 1862 and added at the end of
such section; and
(B) is redesignated as subsection (j).
(2) Section 1862 (42 U.S.C. 1395y) is amended--
(A) in the last sentence of subsection (a), by striking
``established under section 1114(f)''; and
(B) in subsection (j), as so transferred and redesignated--
(i) by striking ``under subsection (f)''; and
(ii) by striking ``section 1862(a)(1)'' and inserting
``subsection (a)(1)''.
(b) Terminology Corrections.--(1) Section 1869(c)(3)(I)(ii)
(42 U.S.C. 1395ff(c)(3)(I)(ii)), as amended by section 521 of
BIPA, is amended--
(A) in subclause (III), by striking ``policy'' and
inserting ``determination''; and
(B) in subclause (IV), by striking ``medical review
policies'' and inserting ``coverage determinations''.
(2) Section 1852(a)(2)(C) (42 U.S.C. 1395w-22(a)(2)(C)) is
amended by striking ``policy'' and ``policy'' and inserting
``determination'' each place it appears and
``determination'', respectively.
(c) Reference Corrections.--Section 1869(f)(4) (42 U.S.C.
1395ff(f)(4)), as added by section 522 of BIPA, is amended--
(1) in subparagraph (A)(iv), by striking ``subclause (I),
(II), or (III)'' and inserting ``clause (i), (ii), or
(iii)'';
(2) in subparagraph (B), by striking ``clause (i)(IV)'' and
``clause (i)(III)'' and inserting ``subparagraph (A)(iv)''
and ``subparagraph (A)(iii)'', respectively; and
(3) in subparagraph (C), by striking ``clause (i)'',
``subclause (IV)'' and ``subparagraph (A)'' and inserting
``subparagraph (A)'', ``clause (iv)'' and ``paragraph
(1)(A)'', respectively each place it appears.
(d) Other Corrections.--Effective as if included in the
enactment of section 521(c) of BIPA, section 1154(e) (42
U.S.C. 1320c-3(e)) is amended by striking paragraph (5).
(e) Effective Date.--Except as otherwise provided, the
amendments made by this section shall be effective as if
included in the enactment of BIPA.
SEC. 849. CONFORMING AUTHORITY TO WAIVE A PROGRAM EXCLUSION.
The first sentence of section 1128(c)(3)(B) (42 U.S.C.
1320a-7(c)(3)(B)) is amended to read as follows: ``Subject to
subparagraph (G), in the case of an exclusion under
subsection (a), the minimum period of exclusion shall be not
less than five years, except that, upon the request of the
administrator of a Federal health care program (as defined in
section 1128B(f)) who determines that the exclusion would
impose a hardship on individuals entitled to benefits under
part A of title XVIII or enrolled under part B of such title,
or both, the Secretary may waive the exclusion under
subsection (a)(1), (a)(3), or (a)(4) with respect to that
program in the case of an individual or entity that is the
sole community physician or sole source of essential
specialized services in a community.''.
SEC. 850. TREATMENT OF CERTAIN DENTAL CLAIMS.
(a) In General.--Section 1862 (42 U.S.C. 1395y) is amended
by adding after subsection (g) the following new subsection:
``(h)(1) Subject to paragraph (2), a group health plan (as
defined in subsection (a)(1)(A)(v)) providing supplemental or
secondary coverage to individuals also entitled to services
under this title shall not require a medicare claims
determination under this title for dental benefits
specifically excluded under subsection (a)(12) as a condition
of making a claims determination for such benefits under the
group health plan.
``(2) A group health plan may require a claims
determination under this title in cases involving or
appearing to involve inpatient dental hospital services or
dental services expressly covered under this title pursuant
to actions taken by the Secretary.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on the date that is 60 days after the date
of the enactment of this Act.
SEC. 851. ANNUAL PUBLICATION OF LIST OF NATIONAL COVERAGE
DETERMINATIONS.
The Secretary shall provide, in an appropriate annual
publication available to the public, a list of national
coverage determinations made under title XVIII of the Social
Security Act in the previous year and information on how to
get more information with respect to such determinations.
TITLE IX--MEDICAID PROVISIONS
SEC. 901. NATIONAL BIPARTISAN COMMISSION ON THE FUTURE OF
MEDICAID.
(a) Establishment.--There is established a commission to be
known as the National Bipartisan Commission on the Future of
Medicaid (in this section referred to as the ``Commission'').
(b) Duties of the Commission.--The Commission shall--
(1) review and analyze the long-term financial condition of
the medicaid program under title XIX of the Social Security
Act (42 U.S.C. 1396 et seq.);
(2) identify the factors that are causing, and the
consequences of, increases in costs under the medicaid
program, including--
(A) the impact of these cost increases upon State budgets,
funding for other State programs, and levels of State taxes
necessary to fund growing expenditures under the medicaid
program;
(B) the financial obligations of the Federal government
arising from the Federal matching requirement for
expenditures under the medicaid program; and
(C) the size and scope of the current program and how the
program has evolved over time;
(3) analyze potential policies that will ensure both the
financial integrity of the medicaid program and the provision
of appropriate benefits under such program;
(4) make recommendations for establishing incentives and
structures to promote enhanced efficiencies and ways of
encouraging innovative State policies under the medicaid
program;
(5) make recommendations for establishing the appropriate
balance between benefits covered, payments to providers,
State and Federal contributions and, where appropriate,
recipient cost-sharing obligations;
(6) make recommendations on the impact of promoting
increased utilization of competitive, private enterprise
models to contain program cost growth, through enhanced
utilization of private plans, pharmacy benefit managers, and
other methods currently being used to contain private sector
health-care costs;
(7) make recommendations on the financing of prescription
drug benefits currently covered under medicaid programs,
including analysis of the current Federal manufacturer rebate
program, its impact upon both private market prices as well
as those paid by other government purchasers, recent State
efforts to negotiate additional supplemental manufacturer
rebates and the ability of pharmacy benefit managers to lower
drug costs;
(8) review and analyze such other matters relating to the
medicaid program as the Commission deems appropriate; and
(9) analyze the impact of impending demographic changes
upon medicaid benefits, including long term care services,
and make recommendations for how best to appropriately divide
State and Federal responsibilities for funding these
benefits.
(c) Membership.--
(1) Number and appointment.--The Commission shall be
composed of 17 members, of whom--
(A) four shall be appointed by the President;
(B) six shall be appointed by the Majority Leader of the
Senate, in consultation with the Minority Leader of the
Senate, of whom not more than 4 shall be of the same
political party;
(C) six shall be appointed by the Speaker of the House of
Representatives, in consultation with the Minority Leader of
the House of Representatives, of whom not more than 4 shall
be of the same political party; and
(D) one, who shall serve as Chairman of the Commission,
appointed jointly by the President, Majority Leader of the
Senate, and the Speaker of the House of Representatives.
(2) Deadline for appointment.--Members of the Commission
shall be appointed by not later than December 1, 2002.
(3) Terms of appointment.--The term of any appointment
under paragraph (1) to the Commission shall be for the life
of the Commission.
(4) Meetings.--The Commission shall meet at the call of its
Chairman or a majority of its members.
(5) Quorum.--A quorum shall consist of 8 members of the
Commission, except that 4 members may conduct a hearing under
subsection (e).
(6) Vacancies.--A vacancy on the Commission shall be filled
in the same manner in which the original appointment was made
not later than 30 days after the Commission is given notice
of the vacancy and shall not affect the power of the
remaining members to execute the duties of the Commission.
(7) Compensation.--Members of the Commission shall receive
no additional pay, allowances, or benefits by reason of their
service on the Commission.
(8) Expenses.--Each member of the Commission shall receive
travel expenses and per
[[Page H4269]]
diem in lieu of subsistence in accordance with sections 5702
and 5703 of title 5, United States Code.
(d) Staff and Support Services.--
(1) Executive director.--
(A) Appointment.--The Chairman shall appoint an executive
director of the Commission.
(B) Compensation.--The executive director shall be paid the
rate of basic pay for level V of the Executive Schedule.
(2) Staff.--With the approval of the Commission, the
executive director may appoint such personnel as the
executive director considers appropriate.
(3) Applicability of civil service laws.--The staff of the
Commission shall be appointed without regard to the
provisions of title 5, United States Code, governing
appointments in the competitive service, and shall be paid
without regard to the provisions of chapter 51 and subchapter
III of chapter 53 of such title (relating to classification
and General Schedule pay rates).
(4) Experts and consultants.--With the approval of the
Commission, the executive director may procure temporary and
intermittent services under section 3109(b) of title 5,
United States Code.
(5) Physical facilities.--The Administrator of the General
Services Administration shall locate suitable office space
for the operation of the Commission. The facilities shall
serve as the headquarters of the Commission and shall include
all necessary equipment and incidentals required for the
proper functioning of the Commission.
(e) Powers of Commission.--
(1) Hearings and other activities.--For the purpose of
carrying out its duties, the Commission may hold such
hearings and undertake such other activities as the
Commission determines to be necessary to carry out its
duties.
(2) Studies by gao.--Upon the request of the Commission,
the Comptroller General shall conduct such studies or
investigations as the Commission determines to be necessary
to carry out its duties.
(3) Cost estimates by congressional budget office and
office of the chief actuary of cms.--
(A) The Director of the Congressional Budget Office or the
Chief Actuary of the Centers for Medicare & Medicaid
Services, or both, shall provide to the Commission, upon the
request of the Commission, such cost estimates as the
Commission determines to be necessary to carry out its
duties.
(B) The Commission shall reimburse the Director of the
Congressional Budget Office for expenses relating to the
employment in the office of the Director of such additional
staff as may be necessary for the Director to comply with
requests by the Commission under subparagraph (A).
(4) Detail of federal employees.--Upon the request of the
Commission, the head of any Federal agency is authorized to
detail, without reimbursement, any of the personnel of such
agency to the Commission to assist the Commission in carrying
out its duties. Any such detail shall not interrupt or
otherwise affect the civil service status or privileges of
the Federal employee.
(5) Technical assistance.--Upon the request of the
Commission, the head of a Federal agency shall provide such
technical assistance to the Commission as the Commission
determines to be necessary to carry out its duties.
(6) Use of mails.--The Commission may use the United States
mails in the same manner and under the same conditions as
Federal agencies and shall, for purposes of the frank, be
considered a commission of Congress as described in section
3215 of title 39, United States Code.
(7) Obtaining information.--The Commission may secure
directly from any Federal agency information necessary to
enable it to carry out its duties, if the information may be
disclosed under section 552 of title 5, United States Code.
Upon request of the Chairman of the Commission, the head of
such agency shall furnish such information to the Commission.
(8) Administrative support services.--Upon the request of
the Commission, the Administrator of General Services shall
provide to the Commission on a reimbursable basis such
administrative support services as the Commission may
request.
(9) Printing.--For purposes of costs relating to printing
and binding, including the cost of personnel detailed from
the Government Printing Office, the Commission shall be
deemed to be a committee of the Congress.
(f) Report.--Not later than March 1, 2004, the Commission
shall submit a report to the President and Congress which
shall contain a detailed statement of the recommendations,
findings, and conclusions of the Commission.
(g) Termination.--The Commission shall terminate 30 days
after the date of submission of the report required in
subsection (f).
(h) Authorization of Appropriations.--There are authorized
to be appropriated $1,500,000 to carry out this section.
SEC. 902. DISPROPORTIONATE SHARE HOSPITAL (DSH) PAYMENTS.
Section 1923(f)(3) (42 U.S.C. 1396r-4(f)(3)) is amended--
(1) in subparagraph (A), by amending subparagraph (A) to
read as follows:
``(A) In general.--The DSH allotment for any State--
``(i) for fiscal year 2003 is equal to the DSH allotment
for the State for fiscal year 2001 under the table in
paragraph (2), without regard to paragraph (4), increased,
subject to subparagraph (B) and paragraph (5), by the
percentage change in the consumer price index for all urban
consumers (all items; U.S. city average), for fiscal year
2001; and
``(ii) for each succeeding fiscal year is equal to the DSH
allotment for the State for the previous fiscal year under
this subparagraph increased, subject to subparagraph (B) and
paragraph (5), by 1.7 percent or, in the case of fiscal years
beginning with the fiscal year specified in subparagraph (C)
for that State, the percentage change in the consumer price
index for all urban consumers (all items; U.S. city average),
for the previous fiscal year.''; and
(2) by adding at the end the following new subparagraph:
``(C) Fiscal year specified.--For purposes of subparagraph
(A)(ii), the fiscal year specified in this subparagraph for a
State is the first fiscal year for which the Secretary
estimates that the DSH allotment for that State will equal
(or no longer exceed) the DSH allotment for that State under
the law as in effect before the date of the enactment of this
subparagraph.''.
SEC. 903. MEDICAID PHARMACY ASSISTANCE PROGRAM.
Title XIX is amended--
(1) by redesignating section 1935 as section 1936; and
(2) by inserting after section 1934 the following new
section:
``pharmacy assistance program
``Sec. 1936. (a) In General.--A State plan under this title
may provide assistance, consistent with this section, to
pharmacies in implementing the new prescription drug benefit
under part D of title XVIII.
``(b) Use of Funds.--Such grants may be provided to assist
pharmacies--
``(1) in complying with requirements relating to electronic
prescribing;
``(2) in prospective drug utilization review; and
``(3) in developing innovative medication therapy
management programs using information technology.
``(c) Condition for Receipt.--A pharmacy is not eligible
for a grant under this section unless the pharmacy
demonstrates how it will operate a program that will work
effectively with patients to reduce adverse drug reactions
and medical errors. No grant shall be awarded under this
section before January 1, 2004.
(d) Priorities.--In awarding grants under this section, a
State shall take into account and give priority to the needs
of small or rural pharmacies and to pharmacies which service
underserved areas.
``(e) Funding.--
``(1) Treatment as medical assistance.--Subject to
paragraph (2), amounts provided under grants by a State under
this section (and the reasonable administrative expenses of a
State in carrying out this section, not to exceed 10 percent
of the total amount awarded as grants by a State) shall be
treated as the provision of medical assistance for purposes
of section 1903. In applying section 1903(a)(1) with respect
to such assistance, the Federal medical assistance percentage
is deemed to be 100 percent.
``(2) Limitation and allotment.--
``(A) Limitation.--The total amount for which Federal
financial participation is available under section 1903(a)
for grants and administrative expenses under this section in
calendar quarters in any fiscal year is limited to
$150,000,000 in each of fiscal years 2004 through 2007.
``(B) Allocation.--The Secretary shall provide a method for
the allocation of the amount of funds described in
subparagraph (A) in each fiscal year among the States. Such
method shall take into account the distribution among States
of priority pharmacies specified in subsection (d).
``(3) Requirement for application.--The preceding
provisions of this section shall only apply to a State if the
State has filed with the Secretary an amendment to its State
plan that provides for the awarding of grants under this
section that is consistent with the requirements of this
section.''.
The SPEAKER pro tempore. The gentlewoman from Connecticut (Mrs.
Johnson), the gentleman from California (Mr. Stark), the gentleman from
Louisiana (Mr. Tauzin), and the gentleman from Michigan (Mr. Dingell)
each will control 30 minutes of debate on the bill.
The Chair recognizes the gentlewoman from Connecticut (Mrs. Johnson).
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield myself 3 minutes.
Mr. Speaker, I rise in strong support of H.R. 4954 because it
provides prescription drugs to all seniors as an entitlement under
Medicare.
Mr. Speaker, I am honored to bring this bill to the floor of this
great House. Everywhere I go, seniors look at me with worry in their
eyes, concern that they will not be able to buy the prescription drugs
needed to get well, worry that they will not be able to afford the many
prescriptions needed to enable them to enjoy their lives and keep on
with their daily activities.
Mr. Speaker, nothing is more important than assuring that our seniors
have access to prescription drugs as part of Medicare, within Medicare
as
[[Page H4270]]
part of that entitlement to health services, because indeed, Medicare
without prescription drugs is a mere shadow of the promise of health
care security that Medicare has always represented to the seniors of
our great country.
Mr. Speaker, I am very proud that this bill provides the deepest
discounts on drug prices that any bill has ever brought to this floor.
It is a 30 percent discount, compared to every other plan that provides
a 10 percent discount.
On top of that 30 percent discount are powerful subsidies, 80 percent
subsidies, up to $1,000 in drug costs, and \50/50\ after that. This is
powerful help. For those living under 150 percent of poverty income, it
will provide 100 percent of their drug cost needs up to $2,000. For
over that, States will have freed-up resources to help those that
cannot afford their prescriptions.
This is a powerful benefit for our seniors right up through
catastrophic coverage, which provides the peace of mind that they so
deserve in their senior years.
But that is not all this bill does. It goes on to provide better
preventive care for our seniors and to provide those plans that are
able to provide disease management, which is the only way that seniors
with chronic illness are going to enjoy health in their elder years.
Also, it reduces the cost of medication errors, provides safety for our
seniors, compensates our providers more realistically, and in general,
would strengthen our Medicare program.
I am going to go into the details of the bill later, Mr. Speaker. I
will reserve my time for a discussion of this powerful new expansion of
Medicare to improve the lives of the seniors of our country.
Mr. Speaker, I reserve the balance of my time.
Mr. STARK. Mr. Speaker, I yield myself 1 minute.
Mr. Speaker, I would explain, when one sells out to the insurance
industry, we get the Republican bill. They free up any resources that
go to the Hartford Insurance Companies.
The truth is that the average senior in this country spends $3,059 on
drugs. Under the Republican plan, they will have to spend $1,959 out of
pocket to get that $3,000 worth of drugs. Under the bill that we would
suggest, they would spend only $691.80.
So Members can see that the Democratic plan, had we been allowed to
offer it, is better. It does something for the seniors that the
Republican bill does not do: it gives them the wherewithal to afford
drugs. It gives them an entitlement that they are entitled to.
The Republican bill is an entitlement for the pharmaceutical industry
and the insurance industry. They are the only ones who get any money
under the Republican bill. Under our alternative, the seniors are
entitled.
Mr. Speaker, I reserve the balance of my time.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 3\1/2\ minutes to
the gentleman from California (Mr. Thomas), the chairman of the
Committee on Ways and Means and an expert on health policy and
prescription drugs.
Mr. THOMAS. Mr. Speaker, I thank the gentlewoman for yielding time to
me.
Mr. Speaker, at some point, somebody needs to talk about reality.
What we have heard from the other side of the aisle is that they want
to operate under democracy, that democracy does not operate here.
There is a difference between democracy and chaos. Democracy means
majority rules, but it also means rights of the minority. What are some
of those rights? The rights are the minority gets to participate if
they play by the rules. What are the rules? That under the budget, and
they want democracy, under the budget they have the right to offer a
plan which costs no more than the amount the budget provides: $350
billion. What they presented was a plan that costs $974 billion.
Guess what? They do not play by the rules; they do not get to offer
their substitute. What they want to do is do whatever they want to do
without following the rules. That is not democracy.
Secondly, what I heard from the gentleman from Florida while we were
arguing the rules was, our bill does not do a pay-back to the
providers. What does that mean? They are going to spend $1 trillion,
and they do not take any of it to address the fact that our physicians
serving seniors have a payment system that is broken. Why is it broken?
Because it is not automatic. If it were automatic, it would adjust to
the market. Instead, it is an arbitrary, fixed price. But they do not
even want to fix that in their bill.
Now, we have also heard several times, the latest argument was that
we are in the pocket of somebody; that Republicans can only write a
bill if they are in the pocket of somebody. Oftentimes we have heard
that we are in the pocket of the pharmaceutical manufacturers.
Mr. Speaker, let me explain what is in this bill. The Democrats put
into effect a payment called ``best price.'' Whenever someone says, we
are going to give you the best price, you had better beware. What is
``best price''? It is an arbitrary, bureaucratic, green eye shade
determination of a floor of what we are going to pay.
When the Democrats ran this place and when the Democrats wrote
legislation, they put in best price. Do Members know what we suggest?
In this bill, we get rid of best price. What in the world would we pay
if we got rid of best price? Guess what.
Do Members know that in that pocket of the pharmaceutical
manufacturers that we are in there is going to be a whole lot more room
for us, because the pharmaceutical manufacturers get taken out of their
bottom line $18 billion in this bill. They are denied $18 billion by
going from best price.
They have to help us solve this problem by the tune of $18 billion,
because instead of best price, guess what we ask them to do? We ask
them to compete. We have all kinds of laws to produce pure drugs. Who
will give it to us at the cheapest price? A modest competition produces
a savings of $18 billion applied to the benefits to seniors paid for by
pharmaceutical manufacturers.
They have nothing in their bill. They have rhetoric. They have hot
air. We have $18 billion paid out of the pockets of the pharmaceutical
manufacturers to help seniors.
Mr. STARK. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I would remind the distinguished chair of the Committee
on Ways and Means that I suggested that the Republicans were in the
pocket of the insurance companies, and I was about to say that when
they go to bed with the pharmaceutical industry, they get a bill like
this.
Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Michigan
(Mr. Levin).
(Mr. LEVIN asked and was given permission to revise and extend his
remarks.)
Mr. LEVIN. Mr. Speaker, I say to the gentleman from California (Mr.
Thomas), democracy means give the minority a substitute bill, period.
That is what it means. Under the rules? Look, we go by the American
rules, not the rules of the gentleman from California (Mr. Thomas).
It is a disgrace that they do not give us the chance for a
substitute. They did it on the trade bill, a motion to recommit. Now
they are doing it on this.
Mr. Speaker, we will never yield to the gentleman's demeaning
democracy. The gentlewoman from Connecticut (Mrs. Johnson) talks about
``this great House.'' I want to talk substance, that she is demeaning
this great House. She is changing this from the people's House to
something else.
Mr. Speaker, this bill is a shell. It is worse than empty in the
sense that it is filled with deceptions. Ten words: no set premiums, no
assured benefits, and use private insurance.
The gentlewoman from Connecticut (Mrs. Johnson) said, let us not get
into the details. I can understand why. She likes to say that 44
percent of women will be covered without cost. What she does not say is
that those women are especially vulnerable to paying more than $2,000
bucks; and after that, they fall into a deep hole of noncoverage.
This bill is not part of Medicare like hospital and physician bills,
and we say, why not? They just do not like Medicare.
{time} 2300
Now, the gentleman from California (Mr. Thomas) does not like us to
talk about Medicare+Choice. I can understand. That has not worked.
Under Medicare+Choice if there is not enough money then you have to
come to Congress. Under your bill if there is not
[[Page H4271]]
enough money, I would call this no prescription choice, except you can
run to the Secretary to get some more money.
This bill, as I said, is worse than an empty shell; and what makes it
worse is you are playing the shell game with democracy.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 2 minutes and 15
seconds to the gentleman from Illinois (Mr. Crane).
Mr. CRANE. Mr. Speaker, I rise in strong support of H.R. 4954, the
Medicare Modernization and Prescription Drug Act.
When it comes to Medicare, Congress must consistently balance
accessibility of services from qualified providers, cost and financial
stability of the Medicare program. This legislation does just that.
H.R. 4954 provides a long-overdue prescription drug benefit that is
voluntary and available to all Medicare beneficiaries in a fiscally
responsible way. Our House-passed budget provides for $350 billion for
a Medicare prescription drug benefit and modernizations to the program.
According to CBO estimates our proposed drug benefit is estimated to
cost $310 billion over 10 years and also achieves a 30 percent savings
on drug costs. It is projected that in 2004 the median out-of-pocket
drug costs for Medicare beneficiaries will be $1,453. Under our
proposal, $827 of that, more than 50 percent, of the beneficiary's drug
expenditures will be covered.
The Medicare Modernization and Prescription Drug Act also provides a
number of reasonable and necessary adjustments to provider payments.
Most importantly, this legislation includes $21.3 billion for
physicians to reverse the negative and irrational payment updates they
received this year and are expected to receive next year.
The physician payment provision helps us to ensure that physicians
will continue to participate in the Medicare program and provide
quality health service to beneficiaries. If we do not ensure that
providers are adequately reimbursed, all the new benefits that we have
passed and will pass for Medicare beneficiaries will be for naught
because providers will close their doors to beneficiaries.
My colleagues on the other side of the aisle argue that this
legislation is an empty promise to seniors. I cannot disagree more.
This package provides a prescription drug benefit that covers more than
95 percent of Medicare beneficiaries and helps to improve access to
quality health care services.
Let us give our seniors access to quality health services that they
deserve. Let us pass a meaningful prescription drug benefit that is
voluntary and available to all Medicare beneficiaries. Let us make sure
that our seniors have a choice in Medicare. Let us not play politics
with America's seniors.
I urge my colleagues to support the Medicare Modernization and
Prescription Drug Act.
Mr. STARK. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from Maryland (Mr. Cardin).
Mr. CARDIN. Mr. Speaker, let me thank the gentleman from California
(Mr. Stark) for yielding me time.
Mr. Speaker, this bill is fundamentally flawed. It does not use the
Medicare model for providing benefits; and with Medicare, when we
provide benefits for physicians or hospitals, our seniors are
guaranteed those benefits. In this bill for prescription drugs, they
are guaranteed nothing.
It reminds me of what we told our seniors with HMOs. Join HMOs and
you will get prescription drug coverage. What happened as soon as they
joined? The deductible, the co-pays went up, and the amount of coverage
went down.
There is no protection in this bill on premiums like under Medicare.
In Medicare, our seniors know that their Part B premium is tied to 25
percent of the cost. They know how much it will be. There is no
protection in this bill as to what the premium will be set at or how
much it will increase. No protections to our seniors.
In Medicare, we know that there will be a reimbursement system in our
communities. You can always rely on Medicare. The underlying bill
relies on private insurance. Mr. Speaker, there is no protection in
this bill for those private insurance companies leaving our community.
Look what happened with the HMOs. They enrolled seniors. They brought
them in, and then they left town.
Ask the people in Maryland. In 1996, we had eight HMOs writing
seniors business, private insurance. Today, we have one with a capped
enrollment. The private insurance companies will be there as long as
they can make money; and as soon as they cannot make money, they will
be gone.
There is no protection in this bill to provide prescription drugs to
our seniors. It is fundamentally flawed, and we should correct it. We
will have an opportunity to do it with the motion to recommit.
I urge my colleagues, if we are serious about providing prescription
drug coverage for seniors, let us use the model that has worked. Let us
use the Medicare model. Let us not use private insurance, solely
private insurance. It has not worked in the past, and it will not work
under this bill.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 2 minutes to the
gentleman from Louisiana (Mr. McCrery), an esteemed member of the
Subcommittee on Health of the Committee on Ways and Means.
(Mr. McCRERY asked and was given permission to revise and extend his
remarks.)
Mr. McCRERY. Mr. Speaker, I thank the gentlewoman for yielding me
time.
Mr. Speaker, to those who say the benefit in this bill is not rich
enough, Mr. Speaker, I would ask them to remember that Medicare
spending, despite the bipartisan Balanced Budget Act of 1997, is still
growing at an unsustainable rate. As a share of our gross domestic
product, Medicare has grown from 1.3 percent in 1980 to more than 2.2
percent today and will hit 5 percent by the year 2030. By 2075,
Medicare will be just under 10 percent of our gross domestic product.
10 percent of GDP may not seem like much until you consider that over
the last four decades Federal tax revenues have averaged between 18 and
19 percent of GDP. In other words, Mr. Speaker, under current
projections, unless the Federal tax burden is raised to new and
potentially economically destructive levels, Medicare, together with
Social Security and Medicaid, will quickly crowd out spending on other
important initiatives, including defense, homeland security, education,
transportation and others.
These long-term trends will only be exacerbated by the addition of a
prescription drug benefit which is not coupled with meaningful
structural reform of the Medicare program.
I am pleased, therefore, that the legislation before us this evening
includes the first steps towards the long-term structural reforms
needed to bend the growth curve. Just as it would be irresponsible for
the Congress, Mr. Speaker, not to try to help seniors with the cost of
prescription drugs, it would be irresponsible to add a prescription
drug benefit to Medicare without tackling these long-term trends in the
growth of Medicare spending.
I hope, Mr. Speaker, that next year we will come back here on this
floor and continue the kind of reforms that we started in this bill
tonight so that those who are under 65 in our society will not be
burdened with a tax that just cannot be sustained and continue the kind
of society, the kind of economy that we enjoy in this country.
Mr. Speaker, I urge my colleagues to adopt this bill along with the
minor reforms that we have this evening.
Mr. STARK. Mr. Speaker, pending recognizing the gentleman from
Washington (Mr. McDermott) for 2 minutes, I would just like to remind
the Members that the gentleman from Louisiana (Mr. McCrery) recalls
that it was the gentlewoman from Connecticut (Mrs. Johnson) who voted
in committee not to increase money for nursing homes. She voted against
eliminating co-pays for home health care. She voted against limiting
the premiums to seniors, and she voted against giving seniors a choice
of going to any pharmacy. So much for her concern for the seniors.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I assume my colleague was
speaking on his own time.
The SPEAKER pro tempore (Mr. Thornberry). The gentlewoman is correct.
The gentleman was speaking on his time.
Mr. STARK. Mr. Speaker, I yield 2 minutes to the gentleman from
Washington (Mr. McDermott).
Mr. McDERMOTT. Mr. Speaker, this is a bad bill because there is no
assured
[[Page H4272]]
benefits and there is no set premiums because the Republicans are
privatizing Medicare. They are giving this whole benefit to the private
insurance companies.
Now you have to remember that the chairman of the committee chaired
the Medicare Commission and spent an entire year trying to get a
voucher system for senior citizens in Medicare. This is his second try.
Buried in this bill is the creation of a new private benefit management
company or management authority that will handle the HMOs and will
handle the private drug plans.
Now you think I am making this up, but if you take the bill, and I
will bet you there is not a person on this floor that has read page
157, line 16, which prevents the Secretary of HHS from ``interfering in
any way with the negotiations between the private drug plans and the
Medicare+Choice organizations and drug manufacturers.''
Now what this is saying is that the Secretary of Health and Human
Services, whoever that may be, has no ability to stand up for the
people of this country, the senior citizens, the 40 million people that
count on this program, and negotiate for them. She has to stand back
and let the private drug programs and the pharmaceutical companies
negotiate.
Now, we all saw what happened with Medicare+Choice. Hundreds of
thousands of people were lured into HMOs and then were dumped out in
the street; 500,000 in my State; and I do not know how many across this
country. And you say, well, we did not learn anything from that. We
know the private industry will take care of them. So let us give them
the drug benefit. You are going to get the same thing, and it is
rotten.
Everyone should vote ``no'' and vote ``yes'' on the Democratic
alternative.
Mr. STARK. Mr. Speaker, I yield myself 15 seconds to remind the
Members that both the gentlewoman from Connecticut (Mrs. Johnson) and
the gentleman from Florida (Mr. Shaw) voted against increasing payments
to hospitals, voting against filling the Republican gap in the drug
coverage, and voted against requiring drug companies to offer real
discounts. So much that they care for the senior citizens of this
country.
Mr. Speaker, I yield 2 minutes to the gentleman from Wisconsin (Mr.
Kleczka).
Mr. KLECZKA. Mr. Speaker, we are told by my Republican colleagues
that this is a powerful benefit, that this is an historic opportunity.
Well, nothing could be further from the truth. For you see, Mr.
Speaker, 2 years ago to the day an identical bill passed this House of
Representatives. And why did it pass 2 years ago at this time and why
is this bill on the floor here today? Because 4 months from now we will
have the November congressional elections.
And you see, the American public wants a drug benefit. And they do
not want to give one, but they keep bringing up this fig leaf 4 months,
every 2 years before the Congressional elections.
But what is their bill all about? This is not a Medicare benefit like
hospitals and physicians. This is a subsidy to insurance companies. We
were told 2 years ago when this same bill was up that no insurance
companies are going to sell these policies. For everyone who buys a
policy will have a claim against the policy, and it is going to be
identical to the failed experiment that the gentleman from California
(Mr. Thomas) called Medicare Choice.
Two million people have been canceled by insurance companies from
that plan, and the same is going to happen here. But for a senior with
drug costs of $3,800 a year, the Republican plan will give them almost
nothing. After they are charged a premium, a deductible, they pay $150
for the first $1,000 of costs. They pay one-half or $500 for the next
thousand. Then they have no coverage at all for any and all drug costs
from $2,000 to $3,800. So for $3,800 in drug costs per year the senior
gets $3,100 of extra payments out of the pocket. The benefit is $680.
Is that what they want to give their mothers and their aging fathers?
They should be ashamed of themselves.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 1 minute to the
gentleman from Iowa (Mr. Nussle).
(Mr. NUSSLE asked and was given permission to revise and extend his
remarks.)
Mr. NUSSLE. Mr. Speaker, I rise in support of H.R. 4954, the Medicare
Modernization Prescription Drug Act. It is a good bill. It fits within
a budget. It fits within a budget plan. We have got a budget. We have
got a plan. It meets the needs of seniors. It meets the needs of health
care providers. It meets the needs for the future.
In 1965, Medicare should have included a prescription drug benefit.
{time} 2315
For many years after 1965, Democrats had the opportunity to propose
legislation for a prescription drug benefit. In fact as early as 1993,
they controlled the House, the other body and the House down the road
here, and did not do a thing for seniors on prescription drugs; and now
tonight they rush in, claim that we will not let them have the
substitute when in fact their substitute costs almost a trillion
dollars; and that is the reason they cannot have it, because it does
not fit within a budget, and it does not fit within a plan.
Mr. Speaker, just 3 hours ago they were screaming that we had to
raise the debt ceiling because we were spending too much. Tonight they
are claiming we are not spending enough. Vote for this bill.
I rise in support of H.R. 4954, the Medicare Modernization and
Prescription Drug act of 2002. I'd like to congratulate the Committees
on Ways and Means and Energy and Commerce for producing a bill that
provides a much-needed Medicare prescription drug benefit within a
fiscally responsible framework.
No senior should be forced to choose between the basic necessities of
life and purchasing prescription drugs. This bill provides prescription
drug coverage that is affordable, accessible, and completely voluntary.
Because the Medicare program has not been significantly modernized
since its inception in 1965 to include a prescription drug benefit, it
is not meeting the needs of Iowa seniors.
While the drug benefit is indeed important, Iowans recognize that the
critical inequities in today's current Medicare program must also be
addressed. While Iowa boasts the 8th highest quality of heathcare in
the Nation, it is 50th in Medicare reimbursement.
Actions that affect Medicare affect Iowa's entire health care system.
If health care providers leave rural areas, who will write
prescriptions under the new drug benefit? Who will provide the care
that cannot be provided by drugs alone? If local hospitals close, where
will we take our children for emergency care?
Many of these problems have compounded since 1965, but rural health
care, particularly in Iowa, is on the verge of a crisis. This bill
offers significant progress toward bridging the gap between urban
providers and those in rural States such as Iowa.
As a member of the House Committee on Ways and Means, I successfully
amended this important legislation with Medicare's antiquated
reimbursement policies in the current system in mind. My amendment is
directed at the hospitals that need help the most, especially those in
Iowa. It has been estimated that my amendment will provide $123 million
over the years in much-needed relief for Iowa hospitals such as
Covenant in Waterloo, Mercy in Dubuque, and Regional Medical Center in
my hometown of Manchester.
I am also pleased that this legislation includes an important
provision recognizing the unique cost of physician work in rural areas.
This provision would give the Secretary of Health and Human Services
discretion to raise the minimum level of physician wages providing an
increase of roughly $7 million to physicians in Iowa.
After years of working to correct these inequities, I'm glad to see
that the House of Representatives is following my lead in addressing
these disparities in the current system. While this legislation is an
important step forward, I will not stop working on this important
issue.
Today we are adding an unquestionably important prescription drug
benefit to Medicare as well as beginning to reverse the years of unjust
reimbursement formulas that have burdened Iowa's hospitals and
physicians. We have listened to both seniors and health care
professionals.
The budgetary parameters for this bill were established in the
Concurrent Resolution on the budget for Fiscal Year 2003 (H. Con. Res
353), the budget resolution that the House passed in March and then
deemed enforceable in the House last month.
That budget made modernizing Medicare with, among other things, a
prescription drug benefit and reforming Medicare among the highest
priorities for the Congress--along with fighting the war on terrorism
and encouraging economic recovery.
[[Page H4273]]
The budget provides $5 billion in fiscal year 2003 and $350 billion
over 10 years to strengthen Medicare and include a prescription drug
benefit. That money was specifically fenced off from the rest of a
budget in a reserve fund.
This bill meets the requirements in the budget resolution and
therefore I am releasing amounts in the reserve fund provided in the
budget resolution to enable the House to consider the bill.
Some have said that $350 billion is inadequate. The bottom line is
that we made the maximum amount available for Medicare, given the state
of the economy and the costs we face in the war against terrorism.
Indeed, the bill provides almost twice the resources for Medicare
reform as the President proposed in his budget for fiscal year 2003.
Unfortunately, critics of the bill failed to offer an alternative when
the budget resolution was considered on the floor. And the other body
has yet to even consider a budget resolution, despite the fact that
they are required by law to do so by April 15.
As modified by the rule, this bill is ``on budget'' and within the
reserve fund level of $350 billion over 10 years. About $310 billion of
the total is for the drug benefit, around $40 billion of additional
assistance is provided to struggling medicare providers, and the rest
is for various miscellaneous but important provisions such as
regulatory reform.
The modernization provisions in the bill include a Medicare+Choice
competition program, regulatory reform, and the President's
prescription drug discount card.
I believe that modernization efforts like the Medicare Plus Choice
competition program are necessary to help address Medicare's long-term
financial liabilities. I would encourage future conferees on this bill
to make further reforms to address Medicare's financial liabilities,
should the other body act on this legislation and allow us to have a
conference.
In conclusion, this bill fulfills our commitment to enact a
prescription drug benefit within Medicare that is affordable, and that
is part of the overall effort to reform Medicare to make the program
sustainable over the long term.
Mr. STARK. Mr. Speaker, I yield 2 minutes to the gentleman from
Tennessee (Mr. Tanner), who realizes that the National Community
Pharmacists Association states that the Republican bill penalizes
beneficiaries desiring to continue their trusted relationship with
their pharmacists and access to valuable pharmacist services.
(Mr. TANNER asked and was given permission to revise and extend his
remarks.)
Mr. TANNER. Mr. Speaker, I thank the gentleman from California (Mr.
Stark) for yielding me this time.
Mr. Speaker, my problem with the bill that is under consideration
tonight is in the theory behind it. My family has been in the insurance
business in Tennessee for over a hundred years, and the reason we have
Medicare in this country is because in the private world of insurance,
there is no way that a senior citizen 80 years old with heart trouble
and diabetes can buy health insurance. That is why Medicare came into
being. They still could not buy it if we did not have Medicare. So what
we are trying to do here is put a square peg in a round hole in that
this bill tries to make an insurable product out of a benefit for which
there is no risk pool for the concept, the theory of insurance to work.
Insurance does not work when every policyholder is also making a
claim against their policy. By the very inception of this kind of
protocol, every policyholder will be making a claim. It is simply not
an insurable product. What we are going to wind up with, I am afraid,
and we will be back here in a year if this passes and passes the
Senate, is we are going to have a patchwork across the country of
differing coverages, differing plans, differing copays, differing
premiums, differing in every respect. Nobody will know for sure what
they have got.
What is one to do? One will figure what one's drug payment is a year;
and if it is less than what they would get if there is a plan offered
and knowing they cannot go to their neighborhood pharmacy even if the
pharmacy is willing to abide by the plan, if their drug benefit is more
than what they are spending, they will take it. If it is less than
that, they will not. So everybody that the insurance company signed up
will be making a claim and will be getting more than their premium
copayments. The whole structure of this thing is flawed, and that is
why I cannot support it.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 2 minutes to the
gentlewoman from Washington (Ms. Dunn), a member of the Committee on
Ways and Means.
Ms. DUNN. Mr. Speaker, one of the most important values to all
seniors is that they be financially independent in their retirement,
and that means they do not want to be a burden on their children and
that means access to affordable health care. The high cost of
prescription drugs and the lack of prescription drug coverage has
caused many seniors, and especially senior women, to be very worried
about their independence.
I was sorry to have witnessed early this evening my women colleagues
in the opposition claiming that older women will not be helped by this
bill because I have seen how older women are being forced to make tough
decisions about whether to spend their limited dollars on necessary
prescription drugs or other of life's necessities. Our mothers and
grandmothers are outliving our fathers and our grandfathers. They are
living on fewer dollars for more years, and they are far more likely to
develop chronic medical conditions.
This bill does benefit women. This bill helps seniors on fixed
incomes and those with high drug costs. A woman living on an income of
less than $15,000 a year will receive total assistance from this
Federal Government Medicare program for prescription drugs. While all
seniors will benefit because any senior can opt to buy this coverage,
nearly 17 million or 44 percent of Medicare beneficiaries will qualify
for additional assistance when this bill is fully implemented.
Perhaps the most important part of this bill, Mr. Speaker, is the
fact that no senior under this coverage will ever have to pay more than
$3,700 a year for their total of drugs. Improving Medicare, though, is
not only about providing drug benefits. It is about giving seniors
access to doctors and hospitals and Medicare HMOs and other services
they need. So we put some additional benefits in this bill to ensure
that doctors will continue to serve seniors. We increase the
reimbursements those doctors receive. We also help rural, urban, and
teaching hospitals care for seniors and low-income individuals.
For Medicare HMOs this bill requires Medicare to account for military
retirees in the future, which means higher Medicare+Choice
reimbursements in every county in this country with military
facilities.
I urge my colleagues to support this fine bill.
Mr. STARK. Mr. Speaker, I yield 15 seconds to the gentlewoman from
Florida (Mrs. Thurman).
Mrs. THURMAN. Mr. Speaker, I thank the gentleman from California (Mr.
Stark) for yielding me this time.
I want to point out something here that continues to be talked about
in the low-income seniors being given total prescription drugs. The
problem is in the bill that we are talking about, it does not waive the
asset test that beneficiaries would have to meet in order to get their
benefits. So in fact the number of people who would qualify for the
low-income benefit would actually be much less.
Mr. STARK. Mr. Speaker, I yield 1 minute to the gentleman from
Pennsylvania (Mr. Holden).
Mr. HOLDEN. Mr. Speaker, I rise in opposition to the bill. Those of
us from rural districts and those of us from central and northeastern
Pennsylvania know that the idea that we are going to turn over the
administration of a prescription drug program for our senior citizens
to the insurance industry, to the HMOs, and have it be fair and
universal is ridiculous. In fact it is a joke.
Number one, the insurance industry wants no part of it. As the
gentleman from Tennessee (Mr. Tanner) mentioned before, why would they
when every policyholder is also going to file a claim? They are going
to lose their shirt in this proposal. Medicare+Choice has failed across
the country, but it has failed miserably in rural America. My
constituents had to look at commercials coming out of the Philadelphia
media market, Cadillac plan for prescription drug coverage and low
premiums, and they were not able to participate. The reason they were
not able to participate is because they had lower participation and
lower reimbursement from Medicare.
As a result of it, we did not have universal coverage as
Medicare+Choice.
[[Page H4274]]
We cannot make the same mistake. We need to have a divine benefit. We
need to have a divine premium, and we need to have universal coverage
for all our senior citizens.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield myself 20 seconds.
I want to make a correction of the record.
Over and over again my colleagues say we do not have a defined
benefit. We have a very clearly defined benefit. Do we have a defined
premium? Of course not. The part B premium is not defined. That is a
percentage of costs and it varies every year. Federal health employee
benefit plans do not define the premium in law. It varies every year.
In our plan we do not want to set the premium in law because if we
can provide a more efficient plan, we want to be able to pass on that
savings through a lower premium to seniors. We are proud of our core
benefit.
Mr. Speaker, I yield 2 minutes to the gentleman from Ohio (Mr.
Portman).
Mr. PORTMAN. Mr. Speaker, I thank the chairwoman for yielding me the
time. I am glad that she was able to correct the record on a few
misstatements that have been made this evening.
I would like to correct the record again. My friend from Pennsylvania
just stood up and talked about Medicare+Choice and how this is the
same. It is not. In fact, in this bill, we are helping to make
Medicare+Choice work. Just because we have choked off the funding to
Medicare+Choice so it does not work for our seniors, including a bunch
of mine, who were not getting the right reimbursement has nothing to do
with this plan. This is an entirely different plan, but it does help on
Medicare+Choice, and I hope people are happy to hear that who are so
concerned about it.
This is a great plan. This is exactly what our seniors need. One
would never design the Medicare program today without adding
prescription drugs. The other side wants to add $1 trillion of
prescription drugs. After just voting not to raise the debt limit they
want to add another $1 trillion.
We are doing this within $350 billion, which is responsible, which
is, unlike what my friend from Wisconsin said earlier, a lot different
than the bill 2 years ago. It is more money, yes, because we believe it
is necessary to be able to provide seniors with the coverage they need.
CBO has scored this. CBO has said that this will lower prescription
drug prices more than any other bill that has been introduced in this
House that has been scored by CBO. Our bill lowers drug prices more.
There is a discount for all seniors. In fact, for the average senior
there will be a 44 percent reduction in the drug costs. Average drug
costs $2,150, they only pay $1,200 out of pocket. That is a savings of
44 percent.
There is another 44 percent number we ought to hear about tonight and
that is for low-income seniors, which is 44 percent of seniors. They
will pay no deductible. They will pay no percentage, 20 percent or 50
percent. They only have a nominal copay. They get this for free. That
is 44 percent of the seniors. The very people the other side has said
tonight repeatedly they are worried about, that they are not going to
get a benefit, they get a total benefit.
This is precisely the kind of plan that the Republican Party has been
talking about for the last couple of years, but it is even better than
the one from 2 years ago. It meets the principles. It lowers the cost
of prescription drugs and does that now. It guarantees all seniors drug
coverage. It gives seniors more choices including Medicare+Choice.
It is a good plan. It is affordable. It is voluntary. It preserves
the right to choose. I strongly urge its adoption.
Mr. STARK. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from North Dakota (Mr. Pomeroy), pending which I would point
out to my distinguished colleagues that the gentlewoman from
Connecticut (Mrs. Johnson) and the gentleman from Florida (Mr. Shaw)
both voted against protecting low-income seniors from higher copayments
and the gaping gap in the Republican plan. So much they care for the
senior citizens.
Mr. POMEROY. Mr. Speaker, I thank the gentleman for yielding me the
time.
At the heart of what this debate is all about is a clear choice,
whether we should provide a prescription drug benefit for seniors
through the Medicare program or whether we should send money to
insurance companies to induce them to provide a coverage that at the
present time they have said they do not want to write, prescription
drug coverage for seniors.
I used to be an insurance commissioner. For 8 years it was my
responsibility to protect the seniors from insurance companies in the
State of North Dakota. There has not been a Member of this body that
spent more time talking to seniors about insurance than me, and
directions that I have received from seniors on this issue are
absolutely consistent and absolutely clear. They want Medicare coverage
for prescription drugs.
Not a single senior has said to me, please, I want to go buy another
insurance policy; please send me more agents, I want to hear what they
have to say; please give me that fine print, it is fascinating and I
want to read some more of it; and by the way, I want to deal with
insurance companies because I so enjoy wondering whether they are going
to pay that claim or whether they will not; I so enjoy wondering
whether they are going to be there when I need them or whether they
will be gone and out of business.
No senior has said that. It is ludicrous on its face. They know
Medicare. Medicare covers their hospital bills. Medicare covers their
doctor bills. Medicare has been the program that has been so vital to
preserving and promoting the health of seniors in this country for the
last nearly 4 decades. We do not have to invent some new hocus pocus
private sector, gosh-I-hope-it-works kind of deal. We have got Medicare
and the seniors know it and they like it; and they would have preferred
that plan tonight, which is why we were not allowed our substitute to
have a Medicare delivery of a prescription drug benefit as opposed to
the alternative the majority has advanced.
Nobody wants prescription drug coverage for seniors more than the
minority in this body, and they will be opposing this version because
it simply will not work. It does not get the job done. Vote it ``no.''
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield myself 10 seconds.
Under Medicare we have part A. We have part B. We have part C, and
this will be part D under Medicare, providing prescription drugs to
seniors to any plan sponsor, and plan sponsors may be a group of any
sort, preferably companies skilled and experienced in managing drug
benefits.
Mr. Speaker, I yield 1 minute to the gentleman from Michigan (Mr.
Camp).
(Mr. CAMP asked and was given permission to revise and extend his
remarks.)
Mr. CAMP. Mr. Speaker, today we have the opportunity to help seniors
improve their quality of life by providing a prescription drug benefit
in Medicare. On a daily basis it is reported that the cost of cutting-
edge, life-saving medicines have skyrocketed, forcing those on fixed
incomes to make difficult choices.
One constituent in my district had drug costs of over $15,000 a year
for him and his wife, and their Social Security check was $21,000 a
year, and there are countless other heartbreaking stories just like
that one.
{time} 2330
These seniors have worked hard all their lives to provide for their
families, but now they can barely make ends meet.
We can all agree if Medicare were created today it would contain a
prescription drug component. In Michigan alone, this bill would benefit
over 1.2 million seniors. This proposal provides affordable coverage
for every senior without gimmicks, without sunsets, without pie-in-the-
sky proposals that cost over $1 trillion.
Regrettably, some have sought to politicize this issue and hold other
seniors and the disabled hostage to a cruel game of brinksmanship. We
must strengthen and modernize Medicare. Vote for this bill.
Mr. STARK. Mr. Speaker, I yield myself 15 seconds to point out that
every Republican, including the gentlewoman from Connecticut (Mrs.
Johnson) and the gentleman from Florida (Mr. Shaw), voted against
assuring seniors that they could get the drugs that
[[Page H4275]]
their doctor prescribes, because there is nothing in the Republican
bill that guaranties the drugs that a doctor might prescribe.
Mr. Speaker, I yield 2 minutes to the gentleman from California (Mr.
Becerra).
Mr. BECERRA. Mr. Speaker, I thank the gentleman for yielding me this
time.
Mr. Speaker, my colleagues on the Republican side have never truly
embraced Medicare. They opposed it in 1965, they have talked about
letting it die on the vine, and they have described it as a Soviet-
style program. In fact, what we have in this bill from my Republican
colleagues and friends is a bill that moves us much closer to
privatizing Medicare all together.
To privatize Medicare is to ignore the lessons of the Enron scandal
and the pension abuse that occurred as a result. To privatize Medicare
is to turn back the clock to those bad old days before 1965 when the
health care for our seniors was not guaranteed and left to the private
sector.
Under this Republican plan, a senior who is paying $250 a month in
prescription drugs, and that is a lot of our seniors, would lose
coverage, total coverage under this plan after August. So that, come
September, come October, come November, come December, that senior
would have to, out of his or her own pocket, pay for the remaining cost
of all those drugs.
Under this plan, a senior who has $5,000 in annual prescription drug
costs, and there are a lot of them who do, would have to pay $4,200
out-of-pocket out of that $5,000 cost. Compare that to the Democratic
plan, where the total cost to that senior for the $5,000 would be
$1,380, a savings of $2,800 between the Republican plan and the
Democratic plan.
Those are the facts, and that is the difference. But we do not have a
chance to put our Democratic plan for a vote here. Mr. Speaker, today,
today as we speak, seniors are having to make a choice, do I buy my
groceries, or do I buy my prescription drugs? Do I pay my rent, or do I
buy the medication I need? We should not have them make that choice.
Give seniors what they want. They want an affordable and guaranteed
benefit. The Democratic plan does that; the Republican plan does not.
Let us defeat this plan.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield myself such time as
I may consume to note that it is curious the gentleman from California
keeps citing the votes that we cast against his unfunded amendments,
the unfunded amendments from the other side, when he is about to cast a
vote against funding 43 percent of the seniors in California with
everything, drug costs, copayments, deductibles, premiums, the whole
business, 43 percent, and saving California $5 billion under Medicaid
with which they can then expand drug benefits for many other folks in
their State. Too bad.
Mr. Speaker, I yield 2 minutes to the gentleman from Pennsylvania
(Mr. English).
Mr. ENGLISH. Mr. Speaker, as a member of the Subcommittee on Health
of the Committee on Ways and Means, I particularly want to pay tribute
to the gentlewoman from Connecticut (Mrs. Johnson), who has been on the
receiving end of many barbs tonight. The fact is that no one has fought
harder to bring a prescription drug benefit to the Medicare program;
and if we are successful in that, she, perhaps more than any other
Member of this body, will deserve substantial credit.
I am here tonight because I represent a district which consists of
working families for whom the abstractions of this debate do not mean
much but who desperately need help on their prescriptions. This program
that is being proposed in this landmark legislation would give them a
flexible and affordable benefit, one that would be voluntary, a program
that would give them real choices, allowing them to customize their
benefits. It would provide a benefit that would be very substantial,
more generous in fact than the one that had been previously proposed by
the Clinton administration that folks on the other side of the aisle
once embraced.
This is a program that represents a $350 billion investment in the
Medicare program and one that would provide substantial benefits to
seniors that would be available for a premium of about $1 a day. At the
same time, for those seniors, including many in my district who cannot
afford that premium, this program would provide full coverage for low-
income seniors.
What is particularly striking about this legislation is that it
establishes a firm ceiling, a limit, catastrophic coverage for people
who participate in this program, an ultimate limit on the amount of
prescription drugs they would be liable for in a given year, a limit of
$3,700. That is extraordinarily generous, and it positions people who
participate in this program to be able to have affordable drugs when
they need it.
The 30 percent discount that is built into this program has been much
mentioned. Let me say it also allows CMS to negotiate with the drug
companies to get the best possible discount and to sharpen their
pencils.
This is a great program, and I hope the House will pass it tonight.
Mr. STARK. Mr. Speaker, I recognize the gentlewoman from Florida
(Mrs. Thurman) for 15 seconds.
Mrs. THURMAN. Mr. Speaker, we keep hearing this 30 percent. Actually,
there has been a letter dated by the CBO on July 26 that says that they
are confused, that there has been some confusion about the meaning of
the 30 percent cost management factor that CBO applied in analyzing
H.R. 4954. It goes on to say, the savings are stated as a proportion of
total spending and do not represent a per-prescription discount.
Mr. STARK. Mr. Speaker, I am privileged to yield 2 minutes to the
gentleman from Arkansas (Mr. Ross), who understands why the National
Association of Chain Drug Stores and the National Retail Federation and
other pharmacy groups have said they consider a vote for the Republican
bill to be a vote against the professional pharmacy and pharmacists.
Mr. ROSS. Mr. Speaker, I do rise in opposition, strong opposition, to
this bill.
Just a few months ago, I was in Glenwood, Arkansas, a small town in
my district, and ran into an elderly woman who is a retired pharmacist
and who just happened to be a relief pharmacist in my hometown when I
was a small child growing up.
She related the story to me about how when I was a child and she was
a pharmacist, if she had a prescription that cost over $5, she would go
on and fill the next one while she built up enough confidence to let
the patient know it was going to cost $5. I think that really
demonstrates, more than life itself, that today's Medicare, if we think
about it, was really designed for yesterday's medical care.
Health insurance companies, which are very greedy, in my opinion,
make huge profits and even they cover the cost of medicine. Why?
Because they know it helps patients to get well and live healthier
lifestyles.
As a small town family pharmacy owner, I am sick and tired of seeing
seniors leave the doors of our pharmacy without their medicine. And
living in a small town, I learn a week or 10 days later where they are
in the hospital running up a $10,000 or $20,000 Medicare bill simply
because they could not afford their medicine or could not afford to
take it properly. So I came to Congress to try to do something about
it.
This should not be a partisan issue. I wrote a bipartisan bill
alongside the gentlewoman from Missouri (Mrs. Emerson), a Republican;
and the Republican national leadership would not give us a hearing on
our bill. They would not give us a vote on our bill.
Now, less than 5 months before, yes, another election, they are
coming to us with this plan, this so-called Medicare plan, which has
nothing to do with Medicare other than attempting to privatize it,
written by the drug manufacturers for the drug manufacturers.
I know my colleagues have heard a lot from both sides tonight and
that very few seniors are still awake listening because it is midnight,
and that is the reason they are bringing it up now, but let me say
this: Do not listen to them and do not listen to us. Go to the family
pharmacist and ask them which plan is right for America.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 30 seconds to the
gentleman from California (Mr. Thomas).
Mr. THUNE. Mr. Speaker, will the gentleman yield?
[[Page H4276]]
Mr. THOMAS. I yield to the gentleman from South Dakota.
Mr. THUNE. Mr. Speaker, I thank the gentleman for yielding to me; and
I want to commend the chairman, because I know he has worked hard,
along with the gentlewoman from Connecticut, to fashion a bill that
addresses these concerns.
Mr. Speaker, we have seniors in South Dakota who need prescription
drug relief. We have rural providers who need relief. I also share some
of the concerns the gentleman just voiced about the pharmacist, and I
would inquire of the chairman whether, as this process moves forward,
he would be willing to work with me to provide assurances to
pharmacists, particularly those in rural areas, that their concerns
will be addressed?
Mr. THOMAS. Reclaiming my time, Mr. Speaker, I appreciate the
gentleman's concerns. We have moved in the direction. There are still
some concerns, and I assure him that, as we move forward in Congress,
we will address the concerns of pharmacists.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield myself 15 seconds.
I would like to point out to the gentleman from South Dakota that,
while on page 18 of the other party's bill they say they require any
willing provider, on page 8 of the other party's bill they say that
there has to be pharmacy networks and the networks can determine cost
sharing for beneficiaries outside the network.
So their bill does not provide any willing providers; and ours, at a
later time, provides a lot of recognition to pharmacists.
Mr. Speaker, I yield 2 minutes to the gentleman from Arizona (Mr.
Hayworth).
Mr. HAYWORTH. Mr. Speaker, I thank the gentlewoman from Connecticut
for yielding me this time and who has worked so hard on this
legislation.
It is important for citizens of my home State, Arizona, the seniors
there who are still awake at what is 20 until 9, prime time in the
State of Arizona, to understand exactly what we are doing in this
legislation.
Despite the wailing and gnashing of teeth about process, we ought to
focus on results. Here are the simple facts, Mr. Speaker: Under our
plan, prescription drug coverage under Medicare is available to every
senior who wants it. Every senior who wants this plan will be eligible
for coverage. We will leave no senior behind.
That is especially important when we look at the people who need the
most help. The 44 percent of seniors nationwide below 175 percent of
poverty, their benefit is paid for. Over $40 billion in savings to
Medicaid. Real money for real people with a real prescription drug
benefit.
And this is the most compelling argument, Mr. Speaker. When we cut
through all the smoke and mirrors and all the rhetoric, what seniors
want, what I heard at the Mesa Senior Center a couple of weeks ago, was
that seniors want prescription drug savings now. When we pass this,
when the other body takes its action, our plan begins covering seniors
and lowering costs as soon as 50 days after the President signs the
bill into law.
Mr. Speaker, the time is now to act. If this can be moved, if this
bill can become law, seniors can start realizing savings before
Christmas. The perfect present to give our mothers and fathers and
grandmothers and grandfathers. Support this legislation.
Mr. STARK. Mr. Speaker, I yield myself 25 seconds to remind the
gentleman from Arizona that he should tell the seniors in Mesa that he
has lined his own pockets with a benefit for Members of Congress which
is 50 percent more generous than what he is willing to give the seniors
in his home State, and that he and the gentlewoman from Connecticut
(Mrs. Johnson) and the gentleman from Florida (Mr. Shaw) voted against
eliminating cost sharing for preventive benefits for seniors.
Now that again shows us how much they care for the seniors in
Hartford or in Florida or in Arizona.
{time} 2345
Mr. Speaker, I yield 1 minute to the gentlewoman from Indiana (Ms.
Carson).
Ms. CARSON of Indiana. Mr. Speaker, there is an old adage that says
those that pay the piper name the tune. We are here tonight on a tune
that was written by a $30 million dinner a few nights ago. As I
understand it, the senior citizens were not allowed to even win door
prizes for prescription drugs at that event. And $30 million would have
undergirded the cost of prescription drugs for millions of seniors who
need them across this country. Those that pay the piper name the tune.
When the nonpartisan Congressional Research Service did a comparison
of the drug benefit under the Blue Cross/Blue Shield standard option
available to Federal employees to the Democrat and Republican
prescription drug plans, they found that the Republican plan would give
about 40 percent of the coverage Members of Congress receive, but the
Democratic would give comparable coverage. But those that pay the piper
name the tune and obviously have now begun to get their thrill on
Capitol Hill.
Mr. Speaker, the senior citizens still suffer with a headache or
heartache from this incredible sham that the Republicans have offered.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 2 minutes to the
gentleman from Illinois (Mr. Weller).
(Mr. WELLER asked and was given permission to revise and extend his
remarks.)
Mr. WELLER. Mr. Speaker, I am proud to say tonight we have an
opportunity to provide prescription drug coverage under Medicare for
our senior citizens. Tonight we are seeing an example of two different
kinds of debate. Some people want to offer partisan rhetoric for
political purposes. Others want to offer policy, policy which gives a
solution to the challenge we have. The bottom line is we want to
provide prescription drug coverage for our seniors.
It was quoted earlier this year, one of the advisers to the
Democratic leadership said, ``One of the biggest worries that our
policy people had was that they would actually write a good bill.''
We have a good bill before us. This is a bill that increases funding
for Medicare by $350 billion, provides prescription drug coverage under
Medicare, lowers the cost of prescription drugs now, guarantees all
senior citizens prescription drug coverage, improves Medicare with more
choices and more savings, and strengthens Medicare for the future.
The question is: What does that mean for the average senior citizen?
The bottom line is under the plan that the gentlewoman from Connecticut
(Mrs. Johnson) is managing before the House of Representatives, we have
an opportunity to save for senior citizens real money. The overall out-
of-pocket drug costs would fall by as much as 70 percent according to
the Department of Human Services with the plan we have before us today.
According to a Health and Human Services study released this week,
the House Republican plan would provide real relief for seniors and
disabled Americans. Those who now pay full retail prices would
typically see the cost of each prescription cut by 60 to 85 percent.
Their overall out-of-pocket drug costs would fall as much as 70
percent, all in exchange for an affordable premium of $34 a month.
It is projected that the average senior would save $940 a year as a
result of this plan. We have a plan that takes $18 billion out of the
pockets of the pharmaceutical companies and saves the average senior
$940. It deserves bipartisan support.
Mr. STARK. Mr. Speaker, I yield 2 minutes to the gentleman from Texas
(Mr. Doggett).
Mr. DOGGETT. Mr. Speaker, this is one of those proposals that is
perhaps best considered very late in the evening when the cover of
darkness can attempt to hide the shame of the proposal. This bill is
about creating the appearance of doing something when it does nothing
to improve the lot of our seniors. When we get right down to it,
despite the charts, the Republicans have no plan. All they offer is a
placebo based on privatization. I suppose we can call it a Swiss cheese
plan, but seniors get all of the holes and no cheese. There is no
guaranteed deductible, no guaranteed premium, no guaranteed benefit,
and there is no insurance company that has ever offered a plan of this
type; and most have said that they will not be able to provide a plan
of this type.
[[Page H4277]]
It all centers on the Republican ideological insistence that we must
privatize Medicare, and that is not a prescription for reform; it is a
prescription for disaster.
This very day, one of their top leaders called the plan that Lyndon
Johnson signed into law and upon which millions of Americans have
relied, had the audacity to call it a Soviet-style plan. They did not
like Medicare then. They have never accepted it, and they are
determined to use this device to privatize it.
Further, we find in the fine print of the plan in the paragraph
called noninterference, a specific command that the administrator of
this program cannot act to reduce costs. This figure of $18 billion has
been pulled out of the air by a Republican Health and Human Services
administrator. It has no basis in fact.
Rather, with this bill, the Republican leadership has once again
pledged its allegiance to the pharmaceutical manufacturers whose price
gouging forces our seniors to pay the highest prices of anyone in the
world. Little wonder that those same manufacturers are continuing to
pay for ads all over the country telling people that the Republican
partners are great people for obstructing the help that our seniors so
desperately need.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 1 minute to the
gentleman from Texas (Mr. Brady).
Mr. BRADY of Texas. Mr. Speaker, this is an important night for the
seniors in my community. I am proud the House is standing up for
seniors who desperately need an affordable, permanent prescription drug
plan under Medicare, and who need it right now.
The House plan gives America's seniors the right to choose the
Medicare prescription plan that is best for them with catastrophic
protection for the very costly illnesses, extra help for the poor who
need it the most, and lower drug prices for all seniors using group
buying power so drug companies will compete for our business and not
the other way around.
That means for nearly half up Texas' seniors on Medicare, they will
receive up to $2,000 of essentially free medicine each year that they
need, and that is real help.
Thankfully, tonight we are rejecting the alternatives, alluringly
irresponsible schemes that are simply too good to be true, schemes that
would bankrupt Medicare within 10 years and leave our vulnerable
seniors to face grim choices. I support the Republican plan, and my
seniors do as well.
Mr. STARK. Mr. Speaker, I yield 1 minute to the gentleman from
California (Mr. Baca), who understands that the AARP opposes the
Republican drug bill in its present form and says that it needs vast
improvement before their members can support it.
Mr. BACA. Mr. Speaker, I stand in opposition to this shameful decoy
that creates the illusion that it covers all seniors, when we know that
it does not cover all seniors. It only covers someone as long as it
only reaches a certain limit.
We have to make sure that all seniors are guaranteed coverage, make
sure that they are able to get the kind of services that they need.
Currently right now, they cannot even buy or put food on the table, and
they have to decide between buying prescription drugs or not.
This is like an insurance plan in California, telling drivers they
have the coverage, when in fact they have the coverage as long as there
is no accident. The minute there is an accident, the premiums go up,
and you lose the coverage. They are afraid. They are afraid to file a
claim. This is the same situation that we are going to have here. We
are going to have seniors that are afraid to buy drug prescriptions
because their coverage will go up. They will continue to go to Tijuana
and buy it cheaper because they do not have the coverage. This is
shameful and a decoy. We should support the Democratic plan that covers
all seniors and all individuals.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 1 minute to the
gentleman from Wisconsin (Mr. Ryan), but in the course of doing that I
want to mention that the Congressional Budget Office in their letter to
us made clear that exempting Medicare prescription drug plans from
Medicaid's best price drives down drug prices $18 billion for our
seniors.
Mr. RYAN of Wisconsin. Mr. Speaker, I would like to put one thing
straight. The AARP does not oppose this bill.
But for the benefit of Members who are truly listening to this debate
and trying to make up their minds, let me point out three distinct
differences. The Democratic bill will have the consequence of pushing
out private-sector-provided prescription drug coverage. The Republican
bill supplements that. What the Democratic bill will do, will have the
consequence of making sure that all those employers who are providing
prescription drug benefits for their employees do not do so any more so
the government will pick it up so we are needlessly forcing taxpayers
to pay for a benefit that the private sector is already providing.
The Republican bill includes deeper discounts on prescription drugs
than the Democrat bill does. The Democrat bill is a $1 trillion-plus
bill that will do nothing more than make Medicare go broke faster. We
have a problem. We have two problems. We need prescription drug
coverage for our seniors. We need to give them access to deep discounts
on their price of drugs, and we need to make Medicare solvent for the
baby boomer generation. The Democrat bill fails in that area. The
Republican bill delivers.
Mr. STARK. Mr. Speaker, I yield 15 seconds to myself to apologize to
the Republicans and quote the actual words that I misspoke. The AARP
does not oppose their bill, they just say that it requires improvements
before our members would support their bill. I want the record to make
it perfectly clear, while they do not oppose it, they do not support
it.
Mr. Speaker, I yield 1 minute to the gentleman from Tennessee (Mr.
Clement).
Mr. CLEMENT. Mr. Speaker, I could not support the Republican bill
because we have to have fairness. It does not offer fairness. As a
matter of fact, I just completed a survey in Tennessee, and the fact is
that prescription drugs are twice what they are in Canada and Europe
and Asia. But that is not true just in Tennessee; it is true all over
the country.
There are a lot of things we could do. The Bush administration could
reimport those drugs from Canada right now, and we would get a break.
We have a lot of people on the border that can go across the border and
get prescription drugs, a 90-day supply. There are a lot of things that
we can do that are not being done.
The United States Senate Democrats have a very good plan, and we
ought to look at the Senate Democrat plan because we are not going to
get any justice here.
I suggest to Members, vote ``no.'' The fact is we are subsidizing
other countries. We have got price gouging going on by the
pharmaceutical companies at present. We need to give relief now, and
prescription drugs should be part of the Medicare package.
{time} 0000
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 1 minute to the
gentleman from Louisiana (Mr. Vitter).
Mr. VITTER. Mr. Speaker, I rise in proud support of this Republican
prescription drug plan. Prescription drug coverage is absolutely
critical for seniors today, and no senior should have to choose between
paying for prescription drugs and paying for food or rent. So we are
acting and we are producing a plan and we are passing a plan to give
seniors choice. They can choose the plan that works best for their
needs. It reduces their out-of-pocket costs for prescription drugs,
gives them a lifetime benefit, and the plan is voluntary.
So if seniors have a plan already that they are happy with, they can
stay with it. They are not going to get kicked out. But for those
without coverage, this bill will help them get that coverage and cover
those escalating costs of prescription drugs.
Seniors deserve a prescription drug benefit, not just talk, not just
debate, and they deserve it today, and that is why we are going to act
today, not talk, not debate but act, act responsibly and act within a
budget that we can sustain over time.
Mr. STARK. Mr. Speaker, I am honored to yield the balance of my time
to the distinguished gentlewoman from California (Ms. Pelosi), pending
which I would just like to remind all the seniors in the country to
review all the
[[Page H4278]]
votes that the Republicans took against their interests in coming to
this useless bill which they have brought to the floor.
The SPEAKER pro tempore (Mr. Thornberry). The gentlewoman from
California is recognized for 3 minutes.
Ms. PELOSI. Mr. Speaker, I thank the gentleman for yielding me this
time and thank him for his leadership and that of so many other members
on the Committee on Commerce and the Committee on Ways and Means for
their leadership in making the distinction between what the Democrats
would have proposed had the Republicans not been afraid of seeing a
real prescription drug benefit plan on the floor tonight and their
sham, their cruel hoax, on America's seniors that they have presented.
Why is it a cruel hoax? It is a cruel hoax because it helps
pharmaceutical companies and HMOs and it does not help seniors pay for
needed medication. It is a cruel hoax because there is no guaranteed
coverage because insurance companies just will not offer plans. Our
plan would have guaranteed coverage for all seniors through Medicare.
Their plan does nothing to lower prices and ours would have lowered
prices by enabling Medicare to negotiate on behalf of seniors. It goes
on and on.
What is very important for me to note is that we spend annually $70
billion on doctors under Medicare, $140 billion on hospitals. It would
be necessary to spend $90 billion on pharmaceuticals. It sounds like a
lot of money, and it is. But it is a tremendous investment in the
health of the American people.
The committee on which I serve that funds the National Institutes of
Health, we have seen the progress in science since the inception of
Medicare. It is miraculous what these drugs can do. Would it not be
great if seniors could have the opportunity to have funding for self-
administered drugs that is prevented so far and that the Republican
bill does nothing to improve?
It would save seniors money. It would save the taxpayers money.
Because these drugs are not only an adjunct to care and to
hospitalization, they are a substitute for it. It would improve the
quality of life, it would save the taxpayers money, and it would go a
long way to restoring the dignity to our seniors which we owe them.
Every family in America, Mr. Speaker, is just one accident or one
diagnosis away from sadness not only in terms of what it means to
physical health but in terms of economic security. We have an agreement
with the American people that their health is part of the strength of
our country. Access and affordability are linked. Access to affordable
prescription drugs is central to the health of our senior population.
We owe them better than a debate on a sham bill that has no guarantee.
It is a suggestion but not a guarantee. It is not a prescription drug
entitlement under Medicare as what is promised and should be promised
to our seniors. Again, it does nothing to address the issue of cost.
Every senior in America deserves the respect and dignity of economic
and health security. The Republican bill is a cruel hoax on them. I
urge a ``no'' vote.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield myself 5 seconds.
Respectfully, how could a sham bill accelerate the pace at which
technology will come into Medicare for the first time ever? And I am
proud of it.
Mr. Speaker, I yield 1 minute to the gentleman from New York (Mr.
Grucci).
Mr. GRUCCI. Mr. Speaker, I thank the gentlewoman for yielding me this
time. When I went back to my district and I started talking about this
program and this plan for senior citizens, I was wondering what kind of
reception I was going to get, what they were going to say to me, the
things that they would tell me.
One of the things I saw that really lit the fire of passion in my
heart on this issue and on this particular bill was when I saw the hope
in the eyes of the senior citizens when they recognized for the first
time ever they were going to get help on their prescription drugs, that
the cost of their prescription drugs was going to come down, that they
were going to be able to put hundreds of dollars back into their
pockets and they were going to be able to use that for the rhetoric
that we keep talking about, to buy their food, to be able to put heat
in their homes, so that instead of having to stretch their medicine,
they could take it as prescribed.
I sat across the table from these senior citizens and they were not
just telling me rhetoric, they were telling me how they have to live
their lives. When they saw the benefits of this program coming in front
of them, when they saw the opportunity to get their money back into
their pockets, they had hope.
For that, Mr. Speaker, I encourage my colleagues here tonight to have
a ``yes'' vote on this particular bill.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield the balance of my
time to the gentleman from Missouri (Mr. Blunt).
The SPEAKER pro tempore. The gentleman from Missouri (Mr. Blunt) is
recognized for 1 minute and 40 seconds.
Mr. BLUNT. Mr. Speaker, I thank the gentleman for yielding time, the
great job she has done on the floor tonight and the great job that she
and the committee have done with this bill.
This is a tremendous step forward. It provides so many things that
seniors need. The amount of money allocated to this bill is possible.
It is within budget. Health care providers and hospitals support this
bill.
The AARP in a letter to the chairman of the Committee on Ways and
Means said, ``We are pleased that your bill makes the voluntary
prescription drug benefit permanent and maintains the entitlement
nature of the Medicare program.''
This is something that can actually be done. It is within a real
budget. It is an amount of money that can be spent for this purpose and
can start immediately. It makes a difference in the lives of seniors.
Certainly health care delivery has changed dramatically since
Medicare was created. This benefit needs to be added to Medicare. It
needs to be an entitlement, not an experiment. It needs to be something
that we do now, not come up with an amount of money that is impossible
to do for years to come.
The amount of money allocated to this bill far exceeds the amount of
money that our friends on the other side of the aisle said was
necessary just 2 years ago. New drugs and devices would not be a result
of a government-run health care program. They will be a result of a
program that maintains incentives but guarantees lower cost, guarantees
access, makes this an entitlement. It is supported by health care
providers for a reason. The AARP says it has great merit for a reason.
We need to do this. We need to do it now. We need to make this a
reality this year.
The SPEAKER pro tempore. Pursuant to House Resolution 465, the
gentleman from Louisiana (Mr. Tauzin) and the gentleman from Michigan
(Mr. Dingell) each will control 30 additional minutes of debate.
The Chair recognizes the gentleman from Louisiana (Mr. Tauzin).
Mr. TAUZIN. Mr. Speaker, I yield myself 3\1/2\ minutes.
Mr. Speaker, I rise in strong support of H.R. 4954.
I first want to thank the gentleman from Michigan (Mr. Dingell) and
all the members of the Committee on Energy and Commerce who spent over
30 hours of markup in producing this bill. I particularly want to thank
my colleagues on the other side for the spirited but I think agreeably
friendly debate we had that stretched over 3 days and ended up on
Thursday when we started at 9:30 and completed at 8:30 the next
morning.
This is a complex piece of legislation. I have heard people describe
it on the other side as a hollow bill that contains no benefits. Let me
make it clear, this is a bill that spends 350 billion of American
taxpayer dollars that will create a valuable new entitlement for
Medicare beneficiaries, that will finally provide them with
prescription drug coverage, and it will do so in a comprehensive way,
ensuring that the benefit will work within a stronger Medicare system
for decades to come.
I do not speak just for myself. Let me quote a letter from the AARP.
The letter from the AARP says our members and virtually all older
Americans need this coverage now. They are tired of excuses. They are
tired of politics. They want us to pass this benefit bill now.
Here is what they said about our bill. ``We are pleased that your
bill makes
[[Page H4279]]
the voluntary prescription drug benefit permanent and maintains the
entitlement nature of the Medicare program.''
They went on further to say, ``The bill contains other favorable
components as well.'' They talk about the coverage of the first $2,000
in the bill and particularly the financial assistance for low-income
beneficiaries with drug costs under $2,000 as being vitally important.
They also mention, and I quote, we appreciate your efforts to contain
drug costs because a Medicare drug benefit bill alone without effective
cost controls will be difficult to sustain. They understand we cannot
bankrupt Medicare. We have got to make this system work within our
budget.
But they went on to say, ``You can improve this. We don't like this
home health copay.'' It is now gone. Our committee voted it out, and it
is not in the bill.
They asked us to do what we could to close the gap, the $4,500 gap
that existed between the first $2,000 of coverage and the catastrophic
coverage. We found $18 billion by forcing the pharmaceutical companies
to negotiate discounts below the so-called best price, $18 billion from
pharmaceutical companies, and we lowered that loss from $4,500 of out-
of-pocket expenses down to $3,700. We paid $800 more of drug cost in
the bill now, exactly what AARP asked us to do.
Finally, they said, it is important, because our research indicates
that Americans are looking for stability and dependability, to ensure
that private sector entities will be willing to offer coverage.
We have a letter, too, from the Health Insurance Association of
America and this is what their letter says:
``The improvements contained in the proposal should make the benefit
more attractive to beneficiaries. Consequently, there is now a much
better chance our members will offer the benefit.''
We have a comprehensive plan, a permanent plan, a voluntary
entitlement within Medicare that is within budget, that insurance
companies say they will be able to work under it and provide plans and
what CBO says as high as 97 percent of the seniors in America will find
drug coverage and participate in.
This is a great bill. Seniors want it now. They are tired of
politics. Let us pass it tonight.
Mr. Speaker, I reserve the balance of my time.
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from New Jersey (Mr. Pallone).
Mr. PALLONE. Mr. Speaker, I listened to the chairman of our committee
from Louisiana, and it bothers me because he is not looking at the
bill. He is not talking about the Republican bill that is on the floor
of this House. This is not a Medicare bill. This is not a Medicare
program. There is nothing in this bill that is going to help the
average American senior.
If you look at it, first of all, we know that it does not provide
Medicare coverage, no guarantees. What it does is to give some money
and throw some money to private insurance companies in the hope that
somehow they are going to provide a Medicare benefit. The insurance
companies have said they are not going to provide the benefit. If they
were providing the benefit, we would not need a Federal program.
Let us imagine that somewhere, somehow, I do not believe it, but
somewhere, somehow some private insurance company is willing to provide
the plan the way the chairman describes. Why in the world would anybody
buy into such a plan? Look at some of the figures that we have.
First of all, if I could use this chart, it shows very dramatically
that the senior citizen is only going to get about 22 percent of their
coverage paid for by the Federal Government, compared to the Democratic
plan which was significantly more. Look at this so-called doughnut hole
in coverage. In the beginning you are going to get, if it is even
available, you will get some money in the very beginning, up to $1,000
and then up to $2,000 out of pocket. But then after that there is no
coverage. For 40 percent of the beneficiaries, the average senior
citizen, they are going to get no coverage during this interim period.
If you are going to be in a situation, either there is no plan at
all, you do not have the advantage of a plan because the private
insurance companies do not provide it, or, secondly, the premium is so
high, the deductible is so high or it costs so much over the course of
the year that it is not even worth buying.
Who in the world would want to buy the coverage even if it was
available? The answer is nobody. That is the reality of this bill.
The other thing that really bothers me here is I have heard some of
my colleagues on the Republican side tonight talk about how there is
going to be a 30 percent discount. I asked the gentlewoman from
Connecticut (Mrs. Johnson), where is this in the bill? There is nothing
in the bill that provides any discount here. She is assuming that there
is going to be some competition to provide it, but they put a
noninterference clause in the bill that prevents any price reduction.
They do not want price reduction.
{time} 0015
Mr. TAUZIN. Mr. Speaker, I note that New Jersey is going to receive
$1.5 billion in Medicaid savings directly from this bill, and 40
percent of their seniors will receive subsidized coverage of their
insurance premium.
Mr. Speaker, I yield 5 minutes to the gentleman from Florida (Mr.
Bilirakis), the chairman of the Subcommittee on Health of the Committee
on Energy and Commerce.
Mr. BILIRAKIS. Mr. Speaker, I thank the gentleman for yielding me
this time.
Before I get into my remarks, I would say that the gentleman from New
Jersey, as usual, does not listen. When the chairman read from the AARP
letter, when they said, ``We are pleased that your bill makes the
voluntary prescription drug benefit permanent and maintains the
entitlement nature of the Medicare program,'' that means it is under
Medicare.
Mr. Speaker, obviously, I rise in support of the bill. I believe that
today's vote is another example of our commitment to getting something
done for seniors this year, not just talk about it this year.
The bill creates a new entitlement under Medicare. Senior citizens
and persons with disabilities will now have access to a voluntary,
comprehensive prescription drug benefit. Our bill creates this benefit
without jeopardizing the financial health of the overall program, which
would certainly happen under the plan offered by our friends on the
other side of the aisle.
During the Committee on Energy and Commerce's consideration of the
bill last week, committee Democrats offered an amendment in the nature
of a substitute that, while not scored, would likely cost over $900
billion over 10 years. I was disappointed that they would offer such an
irresponsible plan during such a serious debate, especially since, just
last year, House Democrats included $330 billion for a new prescription
drug benefit in their proposed budget resolution.
A benefit without explanations is, of course, no benefit at all. The
counter-proposal offered by my colleagues does not explain how they
would fund this enormous program since they did not even offer a budget
resolution this year. I repeat, they did not even offer a budget
resolution this year.
The fact that they have now tripled the amount they say is necessary
for a prescription drug benefit tells me that, instead of being serious
about a solution, they care only about outbidding Republicans in an
attempt to score a political point for the November elections. After
all, as has been said before, they controlled this House for 40
consecutive years and at no time did they attempt to address this
problem.
We are addressing it. We want to help seniors now, not just use
political rhetoric.
Our plan provides Medicare beneficiaries with meaningful,
comprehensive coverage. It does not force beneficiaries into a one-
size-fits-all program where bureaucrats pick their medicines. Instead,
seniors will have a choice of at least two prescription drug plans
which will provide the best price discounts available. The bill also
puts into effect an idea presented to me some time ago by Dr. William
Hale of Dunedin, Florida, to offer at government expense an initial
medical physical for all beneficiaries going into the Medicare program.
It is easy to envision, I think, that many diseases will be picked up
at that time in their early
[[Page H4280]]
stages and, thus, result in more healthful retirement years and
ultimate health cost savings.
Mr. Speaker, H.R. 4954 places an appropriate focus on two populations
that have long been, as many know, a priority of mine: the low-income
senior without prescription drug coverage and the very ill senior who
is in danger of impoverishing him or herself in order to pay for their
medications.
The bill we are considering today includes strong protections for
these vulnerable beneficiaries. It fully subsidizes cost-sharing,
except for nominal copayments for Medicare beneficiaries with incomes
up to 75 percent of poverty. This feature means that 44 percent of our
Nation's seniors, those with incomes less than $15,505 for singles and
$20,895 for married couples, could be eligible for full cost-sharing
assistance. Mr. Speaker, $20,895 for married couples, could be eligible
for full cost-sharing assistance.
Our bill makes needed changes to the program by raising reimbursement
rates. That has been talked about.
Mr. Speaker, I hope that the Senate follows our lead and passes a
bill soon so that we can begin the process of reconciling our two
packages later this year. This is a good bill, a responsible plan, not
a perfect plan by any means, but intended to help our seniors now, and
we need to support it.
Mr. DINGELL. Mr. Speaker, I yield 2\1/2\ minutes to the distinguished
gentleman from Ohio (Mr. Brown), the ranking member of the
subcommittee.
Mr. BROWN of Ohio. Mr. Speaker, I thank the gentleman for yielding me
this time.
The Republican HMO drug plan does several things.
First of all, it begins the process of privatizing Medicare. The
Republican HMO drug plan gives 30 percent less choice, 30 percent less
choice for seniors' prescription drugs. The Republican HMO drug plan is
an entitlement for insurance companies, not for America's seniors. It
does nothing to bring drug prices down. In fact, prices in the United
States will continue to be, under the Republican plan, the highest,
two, three, four times what they are in other countries, the highest
prices in the world. And the Republican HMO drug plan gives benefits
almost twice as good to Members of Congress as it does to America's
seniors. As we can see on this chart, Members of Congress have a plan
worth about $2,100. The Republican plan provides for America's seniors
a plan worth about $1,300.
Now, why would our friends on the other side of the aisle come up
with a plan like this that privatizes Medicare, that gives seniors 30
percent less choices, an entitlement for insurance companies, that most
outrageously gives a much better plan to Members of Congress than it
does to America's seniors? Why would they do that?
I think the answer to that, Mr. Speaker, came last Wednesday
afternoon when our committee, the Committee on Energy and Commerce,
adjourned early at 5 o'clock so that all of the Republican Members
could troop off to a $30 million, that is $30 million fund-raiser
underwritten by the American drug and the prescription drug industry
where the money went to feed the coffers of Republican Party
candidates. This fund-raiser was chaired by the CEO of one of the
world's largest drug companies, the CEO of Glaxo, a drug company
located in England, a foreign drug company. His company gave $250,000
to this Republican event. He was joined by $250,000 contributions from
the trade association representing the drug companies and many others.
The question, Mr. Speaker, is of voting for a plan that is written by
and for the drug companies or a plan for America's seniors.
So, the next day, when Members of Congress from our committee
returned to vote on legislation, to vote on this prescription drug
bill, surprise: every vote cast by my Republican friends, whether it
was to make the seniors' plan the same as Members of Congress, whether
it was to bring prices down, whether it was to reduce out-of-pocket
expenses, every time these Republican Members of Congress voted with
the drug companies.
It is a question of, do we vote for legislation written by and for
America's drug companies, or do we vote for legislation written for
America's seniors?
Mr. TAUZIN. Mr. Speaker, Ohio, under our bill, will earn $1.8 billion
in Medicaid savings, and 38 percent of their seniors will get free
premiums under our bill.
Mr. Speaker, I am pleased to yield 1 minute to the gentleman from
Kentucky (Mr. Whitfield), a distinguished member of our committee.
Mr. WHITFIELD. Mr. Speaker, I have been somewhat shocked, really, at
the animosity expressed against our plan this evening. Medicare as it
exists today uses private companies to administer the Medicare program.
Under the Democratic plan, private companies will be used to administer
their drug program, just as ours is.
I was looking, and in Kentucky we have 615,000 citizens under
Medicare. Under this plan, the plan that we will be voting on and
passing tonight, 315,000, or 50 percent of them, will basically receive
free prescription drugs with a very small copay of like $2 for generics
and $5 for name-brand drugs. So how could we possibly oppose helping
seniors with this kind of a meaningful program?
We have heard a lot of discussion tonight about how horrible the drug
companies are in America. I think they have the best research and
development, and we are fortunate to live in a country where drugs are
being discovered every day to cure serious diseases.
Mr. Speaker, I urge the support and passage of this legislation.
Mr. DINGELL. Mr. Speaker, I yield 1\1/2\ minutes to the distinguished
gentlewoman from California (Ms. Eshoo).
Ms. ESHOO. Mr. Speaker, I thank the distinguished ranking member for
yielding me this time.
Mr. Speaker, I rise tonight to speak about an issue that calls to a
need of the American people. This is really a solemn moment in this
Chamber, and I regret enormously that my friends on the other side of
the aisle did not have enough confidence in themselves to debate here
tonight two plans, not just their plan. So since it is just their plan,
that is what I am going to direct my comments to.
I know you all love your mothers and fathers. So do we. We all love
our families. We are talking about the American family. We are talking
about senior citizens.
Now when the American people go shopping for coverage for something,
what do they want? They want something that is comprehensive, they want
something that is affordable, they want something that is guaranteed,
and they want something that is understandable. They have come to trust
the gold standard that Medicare represents.
Now my friends on the other side keep using the word ``Medicare.'' Do
we know why? It is the best marketing word in the country. But look at
the fine print. What they do is they put the language down for
Medicare, but they take the taxpayers' money and shift to private
insurance companies, with no guarantee that there is any insurance
company that is going to bring them these benefits.
So American people: Beware. Beware of false advertising. This is no
more a Medicare prescription drug plan than I am a redhead.
Mr. TAUZIN. Mr. Speaker, the State of California will get $5.1
billion in Medicaid savings under this bill, and 1.5 million California
seniors, including redheads, will get free premium insurance coverage.
Mr. Speaker, I yield 2 minutes to the gentleman from Iowa (Mr.
Ganske).
Mr. GANSKE. Mr. Speaker, this is a $350 billion bill. Since when has
$350 billion been pencil dust, I ask my colleagues. That is a third of
a trillion dollars.
Mr. Speaker, 37 percent of Iowan senior citizens will have no
copayment, deductible, or premium. They will get this benefit free.
That is not pencil dust.
We have another problem that we have not addressed, and that is that
in rural States like my State, rural hospitals and other providers, the
rural hospitals are going broke and other providers are not taking care
of, cannot take any more Medicare patients into their practices, and
this bill addresses that. This bill addresses that.
Without this bill, we would have a 15 percent cut in physician
payments. Without this bill, rural hospitals in Iowa will go bankrupt.
This bill provides Iowa with $330 million in additional payments for
Medicaid, and this is at a time when my State is struggling to meet its
payments.
[[Page H4281]]
This bill helps seniors. U.S. Seniors endorses it, and Sixty Plus. It
helps the providers like physicians to keep taking Medicare patients
into their practices.
{time} 0030
It helps keep the rural hospitals open. That is why it is endorsed by
the AMA and the American Hospital Association. Ninety-five percent of
seniors would find this a good deal and sign up for this bill.
This bill basically is a bird in the hand. That is worth more than
two or three in the bush. Senior citizens in Iowa are telling me that
$350 billion now will help a lot, and that is a lot better than an
empty promise for two or three times more than that.
Mr. Speaker, a few winters ago, when Iowa was experiencing
skyrocketing home heating bills, I received numerous letters from Iowa
seniors who were forced to choose between paying their monthly heating
bills or paying for their prescription drugs.
I don't believe that's a choice Iowans should have to make.
That is why this week, I have been working with my Energy and
Commerce committee to pass the Medicare Modernization and Prescription
Drug Act of 2002, which would provide a prescription-drug benefit for
needy Iowa seniors through Medicare.
Although many members of the other party continue to treat Medicare
as a political football, we are moving forward to provide immediate
help to those who need it most.
Specifically, the bill includes an affordable and permanent
prescription drug benefit with an average premium of $35 per month. The
bill also includes a standard benefit that would begin with a $250
deductible and pay 80% of spending up to the first $1,000 and 50% up to
the second $1,000. Seniors who meet the low-income criteria (50% of
seniors currently without coverage) would pay less than $5 per
prescription, up to coverage limits. All participants are protected
against catastrophic costs, with out-of-pocket expenditures capped at
$3,800 per year. An estimated 94% of eligible seniors in this country
would participate in this plan in the first year, according to the
nonpartisan Congressional Budget Office.
In addition to the drug benefit, our legislation also provides a
boost to rural Iowa hospitals that, for too long, have ranked last in
the country in Medicare reimbursements. The bill provides increased
equity for all hospitals in rural areas, as well as increasing payments
to sole community hospitals, rural home health agencies, and rural
ambulance services.
Congressman Nussle and I also have worked to amend the legislation to
provide an increase of up to $40 million per year to Iowa's non-
teaching hospitals.
These provisions are significant because the vitality of Iowa's rural
hospitals is central to the economy of our state. Our bill would help
ensure that Iowans living and working in rural areas have access to
reliable and affordable health care.
Our prescription drug legislation contains significant provisions for
lower-income Iowans. Benefit premiums for Medicare beneficiaries below
150% of poverty level would be fully subsidized, as would cost-sharing
expenditures for beneficiaries under 175% of poverty. Premiums for
individuals between 150% and 175% of poverty would be subsidized on a
sliding-scale basis.
The Medicaid provisions would mean savings of $337 million dollars to
Iowa's state budget--needed help to our state legislators who are
struggling to balance the state budget.
Has the other party proposed, a prescription drug bill of their own?
Yes--a bill that irresponsibly busts the budget and risks bankrupting
the entire Medicare system.
Our legislation, on the other hand, provides an immediate $350
billion drug benefit and fits into the budget.
So, do Iowa's seniors want our prescription-drug benefit now, or the
other party's empty promises of a drug benefit at some undetermined
point in the future?
The answer is that Iowa seniors want help now--because they realize
that a bird in the hand is better than two in the bush.
Mr. DINGELL. Mr. Speaker, I yield 1\1/2\ minutes to the distinguished
gentleman from Florida (Mr. Deutsch).
Mr. DEUTSCH. Mr. Speaker, I thank the gentleman for yielding time to
me.
Mr. Speaker, this bill and the two proposals, one is in front of us
and one was not allowed to be in front of us, really are fundamental
policy differences. What the American people want is to have
prescription drugs as part of Medicare.
When Medicare was created in 1965, there are two interesting
statistics. One is that the average age of Americans was 65 in 1965. It
has gone up by more than 10 years. I think we consider that a high-
class problem.
The second interesting statistic is that the out-of-pocket payments
by seniors in America, the percentage of their income has actually gone
up, even with Medicare.
One of the main reasons for both of those statistics is because of
prescription drugs. We cannot conceive of a Medicare program, which is
an insurance program, it is a forced insurance program, and that has
been Medicare's success, we cannot conceive of that being set up today
without prescription drugs.
What my colleagues on the other side of the aisle are proposing, and
I do not doubt the chairman of the full committee will cite a statistic
about Florida saving Medicaid dollars after I finish speaking, but that
is not Medicare, Mr. Speaker. That is not Medicare.
That is not what American seniors want. It is a sham. It is
misadvertising for American seniors, and they get it. They get it, and
they do not want it. They do not want what Members are proposing. What
they want is simple. They want an expansion of Medicare coverage for
prescription drugs, because they understand on a day-to-day basis that
prescription drugs are a necessary component of Medicare, and
eventually the American seniors are going to get what they want,
regardless of the action that we take today.
Mr. TAUZIN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, Floridians, seniors under Medicare, over 1 million will
have free premiums under this bill, and the State of Florida will
receive $3.1 billion in Medicaid savings.
Mr. Speaker, I yield 1 minute to the gentleman from North Carolina
(Mr. Burr), distinguished vice chairman of the Committee on Energy and
Commerce.
Mr. BURR of North Carolina. Mr. Speaker, I have listened to the
debate tonight for over an hour. I have heard the word ``sham'' and I
have heard other words used. Those words are in fact about a benefit
that we are going to extend to Medicare, a benefit that had not been
extended since 1965, when Medicare was created.
Mr. Speaker, tonight we have a great opportunity. We have a great
opportunity to pass a bill that is not perfect, but few things in this
House are. We have the opportunity to extend for seniors for the first
time coverage that the majority of Americans eligible for Medicare want
and need. I do not think that is a sham; I think it is a tremendous
opportunity for the Congress of the United States to pass for those
individuals.
Some will get up and say that ``GOP'' is ``get old people.'' Maybe
they ought to change the words tonight to ``GOPD, Get Old People
Drugs.'' That is what we are here to do. If we can put aside
partisanship, we can pass a bill that for the first time brings drugs
to the American people.
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from California (Mr. Waxman).
Mr. WAXMAN. Mr. Speaker, I cannot tell Members how disappointed I am
that we are not discussing a Medicare bill that will really meet the
needs of the American people.
We are not doing it on a bipartisan basis. Who would have thought
this is a partisan issue? Both parties promised prescription drugs for
seniors under the Medicare program in the last election, but the
Republican plan that is before us today does not provide an adequate
benefit. It does not help bring down the cost of drugs or stop
excessive pharmaceutical company profits. It does not establish what
the premium will be, or if it will be affordable.
Our Republican colleagues claim that the premium is set the same way
the Medicare premium is now established; but that is wrong, and they
know it. Medicare's premium is not set by a private insurance company
that is interested first and foremost in its own profits. These
premiums will be set just that way.
The Republican plan does not guarantee help with the cost of the
drugs the physicians prescribe for us, and it does not ensure that we
get our drugs at the local pharmacy. The fact is, this plan does not
guarantee anything except subsidies for private insurance companies.
Let us put a real benefit in Medicare. Let us defeat this bill and
give people the help they need. If they want to compare, for those
seniors who are
[[Page H4282]]
watching this, if they want to compare what they will get from the
Republican bill and what they would have received from the Democratic
bill if we had even had a chance to debate and pass it, go to the Web
site. Go to www.House.gov/reform/min, and Members will be able to
compare easily on that Web site what the reality is compared to all the
promises we have heard from the Republicans.
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (Mr. Thornberry). The Chair would remind all
Members to address their remarks to the Chair.
Mr. TAUZIN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, not only will 43 percent of the seniors in California
get subsidized premiums under this bill, but the State of California
safety net hospitals receive over $63 million new dollars of help to
provide health care.
Mr. Speaker, I yield 2 minutes to the distinguished gentleman from
Georgia (Mr. Norwood).
Mr. NORWOOD. Mr. Speaker, I thank the gentleman for yielding time to
me.
Mr. Speaker, I heard comments earlier tonight saying that we should
not be debating so late, that nobody would be awake. My contention is
it does not matter whether one is awake or asleep. We cannot get
anything out of this kind of debate at all.
I do not believe I have ever heard more misrepresentations or
mistruths or demagoguery on a subject in a long, long time. I could
spend the night discounting some of the things, but some of the
statements are just absolutely ludicrous, like people lining up over
here saying that $320 billion going into prescription drugs is going to
harm people. Who in the world thinks we are going to spend $320 billion
of the taxpayers' money to harm somebody?
There are statements saying in 1964, Republicans hated Medicare; they
voted against it. That is not true. That is not true at all.
Republicans, in fact, the majority voted for Medicare, and not all the
Democrats voted for Medicare in 1965. It was a discussion worth having
back then.
But do not stand up here and say all Republicans hate Medicare. Those
who continue to say that Republicans say Medicare is going to wither on
the vine, I saw that speech. I have a copy of that speech. Newt
Gingrich made the speech. He said that HCFA was going to wither on the
vine, and that outdated organization needs to have some rework, because
it is interfering with the care of patients, for pity's sakes.
There have been a lot of complaints about the rules, and not a lot of
truths about the bill. This is not a perfect bill. I know that; Members
know that. All of us could do better. Any one of us could write a
perfect bill if we did not have to worry about a budget. We could write
a perfect bill, all of us could, if we did not care about bankrupting
the trust fund, but we do.
But I will tell Members what this bill will do. They can call it, say
it, do any way they want to, but what this bill will do is it will help
the poorest and help the sickest seniors. We need to do it now, because
this is the only game in town.
Mr. DINGELL. Mr. Speaker, I yield 1 minute to my good friend, the
gentleman from Michigan (Mr. Stupak).
Mr. STUPAK. Mr. Speaker, I thank the gentleman for yielding time to
me.
With all due respect to the last speaker, this is not a perfect bill;
this is not even a good bill. Through all this debate, I went back to
my office tonight and listened to all this.
I pulled two letters from my district, one from Vanderbilt, Michigan.
A couple there has $6,288 per year in drug costs. Under the Democratic
plan, if we would ever get a chance to vote on it, they would pay
$1,637 and they would save $4,650, or 74 percent of their drug savings.
Underneath their plan, their bill here tonight, they would have to
pay $4,096. They would only save $2,192, or 35 percent of their drug
costs.
The other couple I pulled was from Travers City, Michigan. They have
$3,240 per year on drug costs. Under the Democratic plan, they would
pay $1,028 and save $2,212 or 68 percent. Under the Republican plan,
they would pay $2,536 and save only $704, or 22 percent.
Do the math. The Republican plan just does not add up.
Mr. TAUZIN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, Michigan will get one and one-tenth billion dollars in
this plan of Medicaid savings, and nearly 40 percent of their seniors
will get subsidized premiums for their Medicare prescription drug
coverage.
Mr. Speaker, I yield 1 minute to the distinguished gentleman from
Oregon (Mr. Walden) from our committee.
Mr. WALDEN of Oregon. Mr. Speaker, if we think about this, nobody has
fought harder for Patients' Bill of Rights in this country than the
gentleman from Georgia (Mr. Norwood), the gentleman from Iowa (Mr.
Ganske), and the gentleman from Kentucky (Mr. Fletcher). They are
unanimously in support of this bill.
These are careful legislators who have evaluated this bill carefully.
They unanimously support it because they know it is within the budget.
It will give care to those who need it the most. From the people that I
represent, that is what is most important, that we put together a plan
that will fit within the budget framework we have been given to operate
under that will get them care, because they need help now. They need
help now. They do not want partisan rhetoric. We are sick and tired of
that in America.
This winter and spring, I went around and met with hospitals,
doctors, patients, and seniors all across my district. The clear
message was: get us help now; do what you can for us now. This bill
does that. That is why organizations representing these doctors and
hospitals and seniors and others support it.
It will help home health care; it will help Medicare patients. This
is a good plan that will make a real difference for patients. It
provides prescription drugs at no cost to those who make $15,000 or
less a year in our senior community.
Mr. DINGELL. Mr. Speaker, I yield 1\1/2\ minutes to my distinguished
friend, the gentleman from Massachusetts (Mr. Markey).
Mr. MARKEY. Mr. Speaker, watch out, Grandma. Watch out, Grandpa. The
GOP doctors are on their way, and boy, do they have a prescription for
you. Every senior citizen gets three bitter pills to swallow:
Pill number one is a half-dose of dollars. The Republicans provide
less than half the money that Democrats provide to seniors in their
plan so that they will not be burdened by the soaring cost of
prescription drugs, but the Republicans will not allow a vote on that
plan.
Pill number two is a poison pill for Medicare. The Republicans are
diverting Medicare funds into risky private drug plans with no maximum
premiums and no guaranteed coverage in a cynical drive to privatize the
Medicare program. But they will not allow a vote to prevent the
privatization of Medicare.
Pill number three is a privacy piracy. The Republicans allow the
pharmaceutical fat cats to exploit Grandma and Grandpa's sensitive
medical secrets in marketing schemes without their knowledge or
consent, and they will not allow a vote to protect that privacy, which
is inside of the Democratic bill.
``GOP,'' it used to stand for ``Grand Old Party.'' ``GOP'' now stands
for ``get old people.'' Vote ``no'' on the Republican plan tonight.
Mr. TAUZIN. Mr. Speaker, I yield myself 30 seconds.
Mr. Speaker, how dare any of the Members suggest they love their
mothers and fathers more than we love our mothers and fathers. How dare
they suggest that we dislike our grandparents and would feed them
bitter pills, and get them. How dare they make that suggestion.
My mother is alive because of Medicare. Medicare saved her life not
once but three times. We are here to fight for Medicare and to improve
it tonight, Republicans and Democrats alike. They have a different plan
than us, but we all love our mothers and fathers. We all love our
grandparents. How dare they suggest otherwise.
Mr. Speaker, I yield 1 minute to my friend, the gentleman from
Michigan (Mr. Upton).
(Mr. UPTON asked and was given permission to revise and extend his
remarks.)
Mr. UPTON. Mr. Speaker, I thank the gentleman for yielding me the
time.
Mr. Speaker, I am pleased that we are moving forward tonight with a
very important bill for our Nation's seniors,
[[Page H4283]]
our moms and dads and health professionals who care for them.
{time} 0045
No senior should be forced to forego needed medications, take less
than the prescribed dose or go without necessities in order to afford
life-saving medication.
The bill before us tonight will provide much-needed comprehensive
Medicare, prescriptive care for all seniors who elect to participate.
For those who can least afford their prescriptions, Medicare will cover
a hundred percent of these premium deductibles.
In addition to modernizing Medicare by adding a prescription drug
benefit, the bill before us tonight will also help to ensure that
Medicare beneficiaries continue to have ready access to high-quality
community-based health care services.
The bill fixes flaws in the Medicare prescription fee schedules that
are resulting in significant unintended cuts in physician payments. It
also improves hospitals and skilled nursing homing reimbursement,
eliminates a scheduled 15 percent cut in home health payments, puts a
moratorium on the cap on physical therapy reimbursement, and takes a
good first step in improving reimbursement for ambulance services.
It is a good bill. I urge my colleagues to votes yes.
Mr. DINGELL. Mr. Speaker, I yield 1\1/2\ minutes to the distinguished
gentleman from Texas (Mr. Green).
Mr. GREEN of Texas. Mr. Speaker, I thank my ranking member from
Michigan for yielding me time.
It is hard to say in one and a half minutes how much is wrong with
this piece of legislation. We should have the opportunity to debate
alternatives to correct the problems, but the tyranny of the majority
makes that mockery of democracy.
There is one major glaring problem that should be mentioned: the
gaping hole in the coverage of the drug costs that exceed $2,000. If a
senior has a $300 monthly drug bill, they can expect to lose their drug
coverage halfway through the year. But they will have to keep paying
month after month for the rest of the year until they reach that
catastrophic limit.
Another problem is, if seniors have other coverage from an employer
or maybe some help from their church or a charitable organization,
these contribution will not count as out-of-pocket expenses for that
senior. So that is wrong with the bill.
There is another major disincentive for employers to provide retiree
health care. It will further erode what little health care coverage we
have left in our country.
Diabetes is a major illness for seniors. This bill, granted, covers
insulin, but it does not pay for the syringes. So those seniors have to
pay to inject the insulin we will give them. What kind of sense does
this make?
Mr. Speaker, there are so many problems with this legislation we
should be allowed our alternative, providing a meaningful prescription
drug benefit, but the Republican majority again is afraid to allow
amendments to pass.
My Republican colleague from Iowa said that their bill is a bird in
the hand, but seniors, when they find out what this bill does, will be
left with only bird droppings in their hands.
Mr. TAUZIN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, the seniors of Texas will receive $1.9 billion in
Medicaid savings under this bill; and 55 percent of them will have
subsidized premium coverage. That is not bird droppings.
Mr. Speaker, I yield 1 minute to my friend, the gentleman from
Pennsylvania (Mr. Gekas).
(Mr. GEKAS asked and was given permission to revise and extend his
remarks.)
Mr. GEKAS. Mr. Speaker, I thank the gentleman for yielding me time.
There is an extra benefit that is being conferred by passage of this
bill and that is to our veterans. Veterans are experiencing two
phenomena that we can help remove here tonight. One is the higher cost
of medications that they are experiencing, of course. All seniors will
benefit from that. But there is another idea that we have to shake away
from the existing scene about our veterans and that is the long waiting
lines that they are experiencing at the VA hospitals.
In our central Pennsylvania area, some 6,000 are waiting to see a
doctor in waiting lines, and their medications that will be prescribed
are not waiting for them because of the long lines and because of the
high costs of medication. Strike a blow here for your veterans as well
as the other seniors by passing this legislation, reducing the cost of
prescriptions to our veterans and reducing the long lines that they are
now facing in and even waiting to see a doctor at VA hospitals for the
purpose of medication.
Waiting lists at veterans hospitals across the country are growing.
In central Pennsylvania alone there are over 6,000 veterans waiting to
be seen. Nearly 70 percent of these veterans are rated as category
seven by the VA, meaning that they have no service connected
disability. In fact, the vast majority of them are seeking a meeting
with a VA doctor solely in order to receive assistance with their
medications. They are seeking help because of the high cost of their
medications or because their health plan discontinued their pharmacy
benefits.
Our new Medicare prescription drug benefit will reduce out-of-pocket
drug expenses for Americans by 25-30 percent. That savings may help
veterans in central Pennsylvania opt out of the long waiting lines at
the veterans health care facilities in Lebanon, Camp Hill, Berks,
Pottsville, and others. Veterans will be able to switch from their
veterans plans to the plan we vote on today without penalty.
I have visited with VA officials in my district to discuss the
problem of lengthening waiting lists. At the Lebanon VA hospital, I was
told that nearly 1,800 veterans still wait to be seen by a doctor. Of
those waiting, 65 percent are category seven and most likely waiting to
get assistance with medication. I commended the caring individuals who
run that acclaimed facility for providing outstanding healthcare. The
Lebanon VA hospital has, in fact, received the highest patient
satisfaction scores of all VA medical centers across the Nation. But I
had to agree with them that we do not want to see these quality
institutions simply turned into pharmacies. Furthermore, we do not want
to see long lines of patients waiting to see a VA doctor when a drug
plan that reduces their drug expenditures would work just as well.
One of the great benefits to come from passage of this prescription
drug coverage bill will be the relief provided to veterans and VA
hospitals. Vets will be able to choose this new drug coverage plan and
opt out of the long lines at VA hospitals. Veterans who need help
purchasing their medication will get real relief. Those who are waiting
inordinate lengths of time on waiting lists to see a doctor at there
local VA hospital may look forward to shorter waits and prompter
services. Our veterans deserve no less.
Mr. DINGELL. Mr. Speaker, I yield 1\1/2\ minutes to the distinguished
gentleman from Ohio (Mr. Strickland).
Mr. STRICKLAND. Mr. Speaker, we need to tell the full truth about
veterans and prescription drugs. This administration has raised the co-
pay for medications that veterans get at our VA facilities from $2 to
$7 per prescription, a $250 increase. That is the fact.
Mr. Speaker, the assets test provided under the Republican plan makes
a mockery of one of the key objectives of the Medicare prescription
drug benefit, to prevent senior citizens from having to pauperize
themselves to get the drugs they need. Think what this means.
It means that a frail elderly woman who qualifies for a handicapped
sticker on her car because she cannot walk a short distance cannot keep
a car that she cannot be confident will not break down on the highway
if she wants to qualify for the assistance she needs to get the drugs
her doctor prescribes.
It means that a spouse who has managed to buy a burial plot, a burial
plot so that they can lie for eternity next to a husband or wife may
have to sell that plot to get the prescription drugs they need to
survive. For shame.
Those of you who want to give a death tax elimination for the multi-
millionaires in this country have no problem with requiring grandma to
give up her burial plot in order to qualify for the assistance under
this plan. You ought to be ashamed of yourselves.
Mr. TAUZIN. Mr. Speaker, I yield myself 15 seconds.
That claim is disingenuous. Section 1902 allows the States to waive
that means test. There is an additional section, 1115 waivers are also
allowed for the States, and they can waive that means test any time
they want to.
Mr. Speaker, I yield 1 minute to the gentleman from Pennsylvania (Mr.
Greenwood), the distinguished chairman of the Subcommittee on Oversight
[[Page H4284]]
and Investigations of the Committee of Energy and Commerce.
Mr. GREENWOOD. Mr. Speaker, I do not have a single new thing to say
about this issue because it has all been said over and over again. But
as I have been sitting listening to the debate for these last 2 hours
and looking at it and listening to the howling and the shrieking and
the bellowing and the clattering of pans, I could think of nothing more
than the ancient times when there was an eclipse; and as the sun was
eclipsed the ancients ran out and made some noise.
For decades, the Democrats claimed to be the party that represented
and cared for the seniors. They did nothing for the prescription drug
benefit. Finally, our plan is eclipsing their stature; and they cannot
stand it; and they are bellowing and howling. When the sun comes up
tomorrow morning, we will have passed the first prescription drug plan
in the history of this program. The howling will silence, and the
seniors will have something to be proud of. And I am proud of you, Mr.
Speaker.
The SPEAKER pro tempore. The gentleman from Louisiana (Mr. Tauzin)
has 10 minutes remaining. The gentleman from Michigan (Mr. Dingell) has
15 minutes remaining.
Mr. DINGELL. Mr. Speaker, I yield 30 seconds to the distinguished
gentleman from Ohio (Mr. Strickland).
Mr. STRICKLAND. Mr. Speaker, I would like to speak to the chairman of
the committee. He says that the States can waive this requirement. In
fact, they can not. The asset test was placed under title 18. The
States are not able to waive this requirement under this bill.
Mr. TAUZIN. Mr. Speaker, I will yield myself 15 seconds to indicate
again that our information is the States have the power to exercise the
waivers under this bill.
Mr. Speaker, how much time is remaining on each side?
The SPEAKER pro tempore. The gentleman from Michigan (Mr. Dingell)
has 14\3/4\ minutes remaining. The gentleman from Louisiana (Mr.
Tauzin) has 9\3/4\ minutes remaining.
Mr. DINGELL. Mr. Speaker, I yield 1\1/2\ minutes to the distinguished
gentlewoman from Colorado (Ms. DeGette).
Ms. DeGETTE. Mr. Speaker, with this bill Congress should be keeping a
solemn promise to our seniors. But what the Republicans are doing is
giving simply a fig leaf instead.
This proposal covers only about 20 percent of the expenses that
seniors will incur for prescription drugs in the next 10 years. Well,
the Republicans say we are operating under budget constraints. We
cannot afford to pay the 80 percent of the costs that the Democratic
alternative would have offered had we been able to offer it. Why? Why
do we have these budget constraints? Because their priority is not to
give relief to the 40 million Americans who need the relief but to give
it to the 500,000 of the very wealthiest Americans who want estate tax
relief.
Take a look at this chart. Here is the number of seniors who need
this prescription drug plan and need a thorough plan, 35 million. Here
is the number of people who will benefit from the Republican estate tax
cut that they passed a few weeks ago and that caused the budget
constraints which are preventing us from passing a real benefit.
The seniors of America need to know this is why we cannot give
grandma and grandpa their drugs. It is not because God came down and
gave us these constraints. It is because the Republican caucus gave
them to us.
Let me answer one more thing. Mr. Strickland says that grandma and
grandpa will not be able to buy their burial plots because of the
assets test. That is under Medicare. That cannot be waived under title
18 by the State. It is nonwaivable.
Mr. DINGELL. Mr. Speaker, I yield 1\1/2\ minutes to the distinguished
gentleman from New York (Mr. Engel.)
Mr. ENGEL. Mr. Speaker, I thank the ranking member for yielding me
time.
The fact of the matter is that the bill that we are debating today is
inadequate because there is inadequate funding for the bill; and the
reason there is inadequate funding for the bill is, as the previous
speaker pointed out, all the money has been used up with tax relief for
the very wealthy in this country, $1.6 trillion worth of tax relief for
the very wealthy people in the country. So, of course, when it comes to
a prescription drug benefit we do not have enough money to provide a
real meaningful plan.
We would like to debate the Democratic bill along with the Republican
bill here, but we were denied the opportunity. So we do not have the
ability to show why our plan is better.
The fact of the matter is, our plan is better. It will cover more
seniors. It will give an entitlement under the Medicare program which
is really what seniors want.
The bill we are debating today does not provide any real guaranteed
benefit and simply, in my opinion, lays the groundwork to eventually
privatize Medicare. The bill does not contain the entitlement to a
defined benefits package as provided in the rest of the Medicare
program. It only promises that seniors can shop for some kind of
coverage undefined either through private insurance plans or Medicare
HMOs. The bill does not contain, again, any defined premium or
assurances that prescription drugs will be affordable; and it will
cover less, and listen to this, it will cover less than one-fifth of
the estimated drug costs of Medicare beneficiaries over the next 10
years. There is a large gap in the coverage.
Seniors who needs more than $2,000 worth of the drugs in the calendar
year must pay for 100 percent of their drugs until they reach $3,700.
So what we are seeing here is a woefully inadequate bill, and it is an
indication where sometimes when you have something it is worse than
having nothing.
Mr. TAUZIN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, this bill that has been described as so terrible will
give to the State of New York $4.5 billion of Medicaid savings. It will
cover 51 percent of New York seniors with subsidized premiums paid for
by the government and will provide safety net hospitals in New York
with nearly 90 million new dollars. What a terrible bill.
Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr.
Barton), the distinguished chairman of the Subcommittee on Energy and
Air Quality of the Committee on Energy and Commerce.
Mr. BARTON of Texas. Mr. Speaker, I want to thank my distinguished
chairman and simply tell him I am glad to be on the floor backing him
up, and I look forward to tomorrow delivering one of his famous
cookbooks to one of my dearest friends down in Texas who has indicated
to me you need to be backed up tonight with great, great enthusiasm.
I would like to tell my good Democratic friends that I agree with
them on one point, and that is the fact that the rule should have
allowed you to offer your substitute. I think it would have been a neat
trick to have almost to a person voted against an increase in the debt
ceiling of $450 billion and then turn right around and voted for a $1
trillion expansion of a brand new entitlement program 2 hours later.
{time} 0100
I think this is a good bill. The provider part of it is almost
universally supported. I think the prescription drug benefit is a good
start. I think it could be improved.
I would like at some point in time to have the ability to offer the
additional option of a prescription drug savings account. Many in my
district, over two-thirds of the seniors that I have talked to, have
said that they would probably opt for some sort of a drug savings
account if they were given that option, and I hope that later this year
we could do that.
This bill that is before us for over half of the seniors in this
country would pay nothing for prescription drugs except a small
copayment for the specific drug that they had to use, and I would point
out that prescription drugs for most of our seniors are not of a
catastrophic nature. They are of a chronic nature. They are to treat
heart disease or to treat high blood pressure or cholesterol. They are
something they have to take to have a lifestyle that we want them to
have.
So I think my idea of a prescription drug savings account would give
them a lot of options to do that, and again, I hope that we have the
opportunity to offer that at some point in time.
To start the ball rolling, I agree that this bill is a good start and
hope we will vote for it later this evening.
[[Page H4285]]
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentlewoman from California (Mrs. Capps).
Mrs. CAPPS. Mr. Speaker, I thank the ranking member for yielding time
to me; and, Mr. Speaker, for seniors in my district, there is no issue
more important than prescription drug coverage, but the bill before us
will not offer my seniors what they need.
First, it entices insurance companies to offer the drug coverage
plans. In fact, it gives them the money without any guarantee of a
benefit for seniors. Medicare+Choice has shown us that just relying on
private insurance companies does not work.
Second, under the majority's proposal, as a senior's drug costs
increase, their benefits decrease. In fact, once a senior's costs
exceed $2,000, a senior has to spend another $2,900 on their
medications before they will get any help.
This chart here, the GOP plan, shows a calendar for seniors. Many
seniors in my district pay $400 a month. This senior paying $400 a
month will get no benefit during the first month while he is paying his
deductible; but then he will get a benefit, February, March, April and
May. Unfortunately, then he reaches that $2,000. No more benefit for
this senior for the entire rest of the month, and we call this is a
drug benefit for our seniors? This is the plan we are voting on tonight
because we have no alternative.
We are not allowed to bring a plan that our side has developed that
would offer affordable, reliable prescription drug coverage for all
under Medicare. For our $25 premium, $100 deductible, seniors would get
80 percent coverage of all their medications. This person during this
time of having no coverage is not allowed to rely on a church who wants
to step to their aid or family members or if they have a pension plan
because of their services, they cannot use that.
This plan is the one that we must vote ``yes'' or ``no'' on tonight.
We do have many alternatives. The one we wanted to put up would be a
good and fair plan. No opportunity to do that because the majority is
so afraid that they will lose the opportunity to do the things that
they know in their hearts they should do for this Greatest Generation.
We owe our seniors a better plan than this one.
Mr. TAUZIN. Mr. Speaker, would the Chair again advise us how much
time remains on each side?
The SPEAKER pro tempore (Mr. Thornberry). The gentleman from
Louisiana (Mr. Tauzin) has 7\1/2\ minutes remaining. The gentleman from
Michigan (Mr. Dingell) has 9\3/4\ minutes remaining.
Mr. TAUZIN. Mr. Speaker, I am pleased to yield 1 minute to the
distinguished gentleman from New Jersey (Mr. Ferguson).
Mr. FERGUSON. Mr. Speaker, I thank the chairman for yielding me the
time.
We have heard a lot tonight about facts and figures and partisan
rhetoric and attacks and misrepresentations. Some of our colleagues on
the other side of the aisle earlier tonight suggested that we talk
about or focus on senior women. I would like to do that for a second,
one in particular, my mother.
My mother, Roberta, was diagnosed almost 5 years ago with cancer,
deadly form of cancer, should have been dead by now. She is alive
today, thank God, because she has had access to good medical care and
prescription drugs that have saved her life. Why is that so important?
Because without it, she never would have met her grandkids. Our kids, 3
and 2 years old, she never would have met them. Thank God she had
access to these life-changing, life-saving products, because of
scientists and researchers and companies who invest hundreds of
millions of dollars, indeed billions of dollars, to find the miracle
cures of tomorrow.
We have to make these miracle products affordable and accessible to
everyone because our seniors are too important to let this opportunity
sneak by. Our grandmothers want to meet their grandkids. Let us make it
happen. Pass this plan tonight.
Mr. DINGELL. Mr. Speaker, I yield 1 minute to the distinguished
gentleman from Maine (Mr. Allen).
Mr. ALLEN. Mr. Speaker, I thank the gentleman for yielding me the
time.
Mr. Speaker, anyone who has been half awake for the last 2 years
knows that for Republicans tax cuts for the wealthy are far more
important than prescription drugs for seniors. In the room upstairs,
Republicans can call Medicare a Soviet-style program; but down here on
television, they say they are providing a Medicare benefit.
The Republican plan relies on private, stand-alone prescription drug
insurance plans. They do not even exist now, and they probably never
will. No guaranteed benefits, no guaranteed premium, no guaranteed
reduction in price. Their plan is an empty promise.
We have been asked where is our plan. The truth is my colleagues will
not let us vote on it. Why? Because they know that a real Medicare
benefit would reduce prescription drug prices. That is not acceptable
to the pharmaceutical companies, so it is not part of the Republican
bill.
Many Americans may be confused by this debate. All these numbers,
estimates, projections. Just remember that Republicans get most of the
money from HMOs and pharmaceutical companies. This bill is great for
them, but it is a fraud on America's seniors.
Mr. TAUZIN. Mr. Speaker, I am pleased to advise the great citizen of
Maine that their citizens, their seniors, 40 percent of them will get
subsidized and mostly fully subsidized premium coverage under this
bill.
Mr. Speaker, I am pleased to yield 1 minute to the distinguished
gentleman from Tennessee (Mr. Bryant), a member of the Committee on
Energy and Commerce.
Mr. BRYANT. Mr. Speaker, I thank the chairman for yielding me the
time, and I thank the chairman for making a priority of our committee
to bring forth this first prescription drug benefit that is going to be
available to people eligible for Medicare.
I think it is a good bill. It offers low-cost drugs. I think it
guarantees insurance coverage, and it is all done in a fiscally
responsible way. It fits within our budget, and I thank again the
chairman for doing this.
I know our folks in Tennessee, we have about 700,000 senior citizens,
and about 45 percent of those senior citizens will be eligible for
virtually cost-free drugs under this plan; and I know those citizens in
Tennessee that are dual eligible, that are covered, are qualified both
in Medicare and Medicaid, that would result in, when this program picks
up those people from the State, in a savings of about $565 million over
the years 2005 to 2012.
So, Mr. Speaker, again I commend the gentleman from Louisiana (Mr.
Tauzin) for bringing forth this very good bill and making it a priority
of this Republican Congress to give us our first-ever prescription drug
benefit in the Medicare system outside the hospital.
Mr. DINGELL. Mr. Speaker, I yield 1\1/2\ minutes to the distinguished
gentleman from Illinois (Mr. Phelps).
Mr. PHELPS. Mr. Speaker, I want to thank the gentleman for what he
has done in the leadership in this particular subject that has brought
us here tonight.
I rise in opposition to this plan and sadly because the rhetoric I
guess tonight comes to an end. After promises from both sides of the
aisle and those who have run an election for the last several years who
promised to do something on this particular subject, we fall short and
it is sad because I wanted to come to this body to have a true, fair
debate on subjects of great priority like this, not to debate at 1:00
a.m. in the morning where we hide things from people, to say just one
plan is the best plan, it is the only plan. That is not what we are
about.
I am not here to promote adversity. I do not want conflicts. I want
us to come together in a bipartisan manner to try to solve the very
best of all plans, not just say one plan is the only plan, and say,
Illinois, that I know that the gentleman is about to quote how many
millions of dollars we are going to receive and help, but what could we
have received? That is the question. Those people out there,
constituents that I represent, will never know until the true light of
day is shed on my colleagues' plan, and that is what we intend to do.
They have limited us to debate here tonight, trying to get one side
of our plan more clear, under handicap conditions. That is not what we
are about.
[[Page H4286]]
That is not why we were elected, to have one party or a majority party
have the only plan to make it deceptively look like it is a positive
plan.
That is why we are here tonight, to debate the best, the most
priority issue in the Nation, not in the wee hours in the morning just
one plan, but a fair plan for all the best of all plans.
Mr. TAUZIN. Mr. Speaker, I am pleased to let my friend know that the
great State of Illinois will get a great fair share of this bill, about
$2 billion in Medicaid savings, and about half a million of his senior
citizens will get totally free premiums for their Medicare premium drug
insurance coverage. That is a pretty good deal, pretty fair.
Mr. Speaker, I am pleased to yield 1 minute to the gentleman from
Indiana (Mr. Buyer), a distinguished member of the Committee on Energy
and Commerce.
Mr. BUYER. Mr. Speaker, it took me 3 years to redesign the pharmacy
benefit of military health delivery system. As the only Member of this
body in this Congress to offer a prescription drug bill that has been
passed and signed into law, I want to share a few observations.
Number one, I want to thank the gentleman from Hawaii (Mr.
Abercrombie) because we worked in a bipartisan fashion, something that
has not occurred here.
Secondly, we were able to modernize a program without dulling the
cutting edge of new prescription drugs.
Missing from this debate is the celebration of capitalization, a free
enterprise system that avails the great minds of the world, the
incentives to form at-risk entities to push the bounds of modern
medicine and pharmacology to the benefit of our people and the
improvements in their quality of life.
Please do not demonize these scientists and those in the medical
community. Americans are living longer with many chronic illnesses.
Why? Because modern medicine and the best health care system in the
world is giving them that chance. Access to these drugs is what is
important. That is what the Republican drug plan is going to do.
Please vote for this bill.
Mr. BROWN of Ohio. Mr. Speaker, I yield 1 minute to the gentlewoman
from Florida (Mrs. Meek).
Mrs. MEEK of Florida. Mr. Speaker, first of all, this bill tonight, I
have listened very carefully. It is a relief act for the insurance
industry. That is what it is.
Also, the Republican plan is not a fair plan. It is not going to help
all seniors. Think about that. That is the fact. It does not cover
them. There is no real guarantee at all, and many of them keep getting
up and saying this is the first plan. That is all they want to go out
and say, this is the first plan. It does not mean anything except it is
the first ever, and it is not worth doodley squat. So they run with
that.
So we have got to think of three things. It will not cover all the
seniors. Imagine this, seniors having to run around, trying to shop
around and find a plan. That is a big hassle for older Americans. They
cannot contend with all these various insurance plans that come and go.
We do not know how the model is going to work. Those of us who have
been around, we know it did not work in 1965; and this is just another
part of it. It is not going to work now.
We should be sure tonight to vote against this relief act for the
insurance agencies.
Mr. TAUZIN. Mr. Speaker, I yield myself such time as I may consume.
I am pleased to let my dear friend, the gentlewoman from Florida
(Mrs. Meek), know that the poor seniors in her State, over 1 million of
them, will get free insurance drug coverage under this bill. That is 42
percent of her seniors and the State will get $3.1 billion of Medicaid
assistance.
Mrs. MEEK of Florida. Mr. Speaker, will the gentleman yield?
Mr. TAUZIN. I yield to the gentlewoman from Florida for 15 seconds
only.
Mrs. MEEK of Florida. Mr. Speaker, I did not say poor seniors. I said
all seniors.
Mr. TAUZIN. Mr. Speaker, I am saying all seniors are going to get
helped, but the poorest will get totally free insurance coverage.
Mr. Speaker, I yield 2 minutes to the distinguished gentleman from
Kentucky (Mr. Fletcher), a new member of the Committee on Energy and
Commerce.
Mr. FLETCHER. Mr. Speaker, again, prescription drugs for our seniors
is probably the most pressing health care issue that we face, and I
want to thank the chairman of the Committee on Energy and Commerce for
his leadership in bringing this to the floor, a plan that is
reasonable, responsible and doable, unlike a plan that was brought up
in our committee and will be brought up in the recommit motion. That is
a plan that scores out at $973 billion with absolutely no way to pay
for it.
{time} 0115
That means you are either going to have to increase taxes on our
children, grandchildren or you are going to have to take it from
education, national security, homeland security, or Social Security.
Those are the only choices you have.
Let me talk just briefly. Two years ago there was a $303 billion
prescription bill plan. Who supported that? Virtually every single
Democrat supported that. What happened this year? I think they have had
an election year epiphany. All of a sudden, it is an election year; and
we need three times as much money for it to be a reasonable plan. Is it
not amazing that when we offer a plan that is reasonable, doable, it
will be a plan that will provide benefits for every senior?
Let me talk about Kentucky. There are 615,000 Medicare beneficiaries
that will receive help with this. Fifty percent of those in Kentucky
are at 175 percent of the poverty level or below, which means they will
be subsidized. It means $459 million for Kentucky. We are a small
State, but $459 million for Kentucky, and those dual eligible for
Medicare and Medicaid will get help. We are having trouble meeting our
budgetary needs, so this bill is the right kind of a bill. It is a
responsible bill, it is a reasonable bill, it is a doable bill, and
they thought it was 2 years ago, but now in an election year, no, it is
not enough.
I think we need to lay aside election-year politics, pass this thing
on a bipartisan basis, and let us do what our seniors need, provide
them a prescription drug bill and help for our States.
Mr. BROWN of Ohio. Mr. Speaker, I notice that my friends on the other
side of the aisle talk about giving free coverage to poor seniors
except for the $2,700 out of pocket they would have to pay under the
Republican private insurance plan.
Mr. Speaker, I yield such time as she may consume to the gentlewoman
from Missouri (Ms. McCarthy).
(Ms. McCARTHY asked and was given permission to revise and extend her
remarks.)
Ms. McCARTHY of Missouri. Mr. Speaker, I am in opposition to the
measure before us and in support of the Democrat alternative that was
denied.
I rise today in opposition to H.R. 4954, the Medicare Modernization
and Prescription Drug Act of 2002. This ``Insurance Company Protection
Act'' will not provide an affordable and dependable benefit for
seniors. The Democratic substitute, which is being denied consideration
by Republican leadership, provides comprehensive prescription drug
coverage and savings to employers.
The ``Insurance Company Protection Act'' is an effort to privatize
Medicare. This bill shifts $68 billion in health care costs onto
employers, by designing the benefit so that private plans are required
to cover prescription drug costs. As a result of this increase in costs
for employers, the Congressional Budget Office (CBO) estimates that one
third of seniors in employer sponsored retiree plans will be dropped,
leaving three million seniors who currently have employee based retiree
coverage owing more for prescription drugs after this law is enacted.
The ``Insurance Company Protection Act'' threatens our local
pharmacies. With myriad medications, seniors rely on their local
pharmacists for advice and help in the management of their
prescriptions. This legislation does not allow any pharmacy to be
applicable for the prescription drug program, breaking many long
standing relationships between pharmacist and patient.
Instead of shifting costs onto employers and seniors losing their
coverage, the Democratic proposal offers a universal benefit with a $25
a month premium, $100 a year deductible, 80 percent of costs paid by
Medicare, and a $2,000 out of pocket limit per beneficiary per year. It
provides low income subsidies to ensure that every senior can afford to
participate
[[Page H4287]]
in the Medicare Prescription Drug Plan. In addition, physicians would
have received a true solution to the Medicare payment problems that
threaten the program today.
The Rules Committee had an opportunity to produce a bill that
provides sufficient drug coverage for our seniors by allowing a vote on
the Democratic substitute. Instead, the House will vote on a plan set
by industry, the ``Insurance Company Protection Act,'' that provides no
entitlement under Medicare, an inadequate and ill defined benefit, and
no equality for seniors in different parts of the country. Seniors
cannot even be assured that the drugs they are prescribed will be
covered, or that they will be able to continue their trusted
relationship with their pharmacist. With these provisions, it is not
difficult to understand why every senior group opposes the bill before
us. I urge my colleagues to vote against the Medicare Modernization and
Prescription Drug Act.
Mr. BROWN of Ohio. Mr. Speaker, I yield 1 minute to my friend, the
gentleman from Washington State (Mr. Inslee).
Mr. INSLEE. Mr. Speaker, why should the senior citizens of America
have to settle with a big gamble about whether they are going to get
prescription drugs? Why should they have to gamble that maybe, maybe an
insurance company will show up when no insurance companies exist on the
face of this planet today to provide this service?
When one thinks about this, the Republican plan does not provide
drugs. It provides a pair of dice to roll, and that is not good enough
for senior citizens. Now, you do provide them a chance maybe some of
them will get prescription drugs, but this generation has taken enough
chances. It took chances on Omaha Beach, it took chances on Iwo Jima,
and it should not have to have a crapshoot to see whether or not they
are going to be able to get prescription drugs, and one would think
after the abject failure of Medicare+Choice that you would not place
your bets on a horse that has gone lame all over this country time and
time again.
Mr. Speaker, we ought to reject this pathetic excuse and pass a real
meaningful Medicare plan.
Mr. BROWN of Ohio. Mr. Speaker, I yield 1 minute to the gentleman
from Texas (Mr. Turner).
Mr. TURNER. Mr. Speaker, we have had a lot said on this floor
tonight, but what really is going to count is what is said when we get
out there talking to those seniors that we are trying to help here
tonight.
I traveled all over my district and collected pill bottles from those
seniors, and I know how they feel, and they are going to ask some tough
questions of us. If this plan passes, they are going to want to know
and they are going to hand me that list of medicines they have been
prescribed by their doctor and they are going to ask, are these
medicines going to be covered under this plan? And if you give them an
honest answer, you are going to have to say, I do not know, because you
do not know.
They are going to say, how much is the premium going to be for this
plan? If you give them an honest answer, you are going to say, I do not
know. That is going to depend on what the insurance company that is
going to carry this plan is going to charge you.
Then they may look at you and say, well, can I get this plan at my
local pharmacy? You know the answer to that one. The answer is no. You
are going to have to get it through mail order.
And if you look at them again and they say, this does not sound like
too good a program, how do I know that this program is going to be
there? The answer is you do not know because those Medicare HMOs have
not been there for our seniors.
So I think what we have got to do tonight is be honest with our
seniors and tell them we are passing a sham tonight, a sham that means
nothing to these seniors, and what we have got to do is pass a real
plan, a real Medicare plan for our seniors.
Mr. BROWN of Ohio. Mr. Speaker, I yield 1\1/2\ minutes to the
gentlewoman from New York (Mrs. Lowey).
Mrs. LOWEY. Mr. Speaker, I rise in strong opposition to this bill.
The skyrocketing cost of prescription drugs is a bitter pill to
swallow, and the Republican leadership's refusal to let us consider the
Democratic proposal is simply bad medicine for America's seniors.
My colleagues, last year, I conducted a study which showed that
seniors in Westchester County are paying from 57 percent to 128 percent
more than their counterparts in six foreign countries for the five
drugs most commonly used by seniors in the United States. It also
revealed that three medications frequently prescribed to seniors
increased in price by at least twice the rate of inflation.
These statistics reveal to us over and over again the depth of the
problem, which is growing worse by the day. Clearly, America's seniors
deserve more than a hope and a prayer when it comes to ensuring their
health and well-being.
The bill under consideration would, unfortunately, not guarantee
benefits for seniors. Instead, it would pay subsidies to insurance
companies in the hopes that they will establish drug-only insurance
plans for Medicare beneficiaries. Under the Democratic plan, which we
were not able to really debate this evening, Medicare would provide
voluntary prescription drug coverage for all Medicare beneficiaries.
It is simply unconscionable that the Republicans are denying us a
vote on the Democratic bill because perhaps they feel their Members
will join us in voting for a real prescription drug benefit.
I also note that congressional action on provider payment increase
and protections for Medicare-Plus Choice is long overdue.
Let us vote for a real plan. Let us have a real debate. Let us vote
down this bill.
Mr. BROWN of Ohio. Mr. Speaker, I yield the balance of my time to the
gentleman from Michigan (Mr. Dingell), who will explain why the
Democratic plan is written for America's seniors and the Republican
plan is written by and for America's drug companies.
The SPEAKER pro tempore (Mr. Thornberry). The gentleman from Michigan
(Mr. Dingell) is recognized for 2\1/2\ minutes.
(Mr. DINGELL asked and was given permission to revise and extend his
remarks.)
Mr. DINGELL. Mr. Speaker, I am Mr. John Dingell. My dad was the
original author of Medicare. He wrote it for and under Harry Truman's
guidance and tutelage. It was a great piece of legislation. It took us
10 years to get it enacted into law. I sat in the Chair when we passed
it. The Republicans, after years of fighting it, finally came along and
supported it because they saw the handwriting on the wall.
I know Medicare, and this fraudulent proposal that is before the
House is not Medicare. What it is is a subsidy for the insurance
companies. We give a pile of money to the insurance companies that they
can spend any way they want.
The counsel of the committee was inquired of by me for about 20
minutes. He could not tell us of any constraints on the insurance
companies or any rights of the insured that would be protected under
this Republican legislation.
That is why this is bad legislation. The insurance companies can take
this money and spend it any doggone way they want, dividends, or they
can give it in corporate executive salaries and bonuses. That is why it
is a bad bill.
The Democratic bill is a very simple bill. What it does is it says,
you pay $25 a month, you get 80 percent of your prescription
pharmaceuticals paid for by the government, and you pay 20 percent of
the cost yourself. Very simple, very understandable, very plain. No
great big donut hole, no disqualifications for having your expenditures
counted, and you get your benefits all year round. Not like this sorry
mess that my Republican colleagues would foist upon our senior
citizens.
This is a bad proposal. This is a bad process. This is a situation
where we do not get an honest chance to either offer an amendment or
see to it it is properly explained.
But I would note one thing. Every honest senior citizen organization
in the United States says this Republican bill is a bad bill, and AARP
says it needs significant improvement before they can support it.
We want to give the American senior citizens Social Security in good
form, Medicare in proper form, and a Medicare benefit which will take
care of their needs for prescription pharmaceuticals when they come. No
longer should we have a situation where American senior citizens have
to decide whether they are going to pay
[[Page H4288]]
their rent or whether they are going to eat or whether they are going
to get their prescription pharmaceuticals. That is wrong.
Our bill corrects that. The Republican bill does not. Vote against
their bill. Vote for the motion to recommit and my colleagues will
serve their constituents well, especially their seniors.
Mr. Speaker, I include for the Record a letter written to the
gentleman from Louisiana (Mr. Tauzin) from AARP, which was referred to
earlier.
AARP,
June 18, 2002.
Hon. W.J. Tauzin,
Chairman, Committee on Energy and Commerce, U.S. House of
Representatives, Washington, DC.
Dear Chairman Tauzin: Thank you for your initiative to move
legislation through the House this year that will address the
important need for prescription drug coverage in Medicare. As
you know, AARP's top priority is available and affordable
prescription drug coverage for all Medicare beneficiaries.
Our members, and virtually all older Americans, need this
coverage now. They cannot wait any longer for protection
against the increasing costs of prescription drugs.
We are pleased that your bill makes the voluntary
prescription drug benefit permanent and maintains the
entitlement nature of the Medicare program.
The bill contains other favorable components as well. For
the approximately 50 percent of beneficiaries who are
estimated to have annual prescription drug costs of $2,000 or
less in 2005, the initial level of coinsurance in the bill
should be attractive. Likewise, the financial assistance for
low-income beneficiaries with drug costs under $2,000 is
vitally important.
We also appreciate your efforts to contain drug costs
because a Medicare drug benefit alone, without effective cost
controls will be difficult to sustain as our growing
population of older Americans increases its drug utilization.
While we want to ensure that cost containment mechanisms
result in meaningful savings, it is critical that these
mechanisms do not impede access to needed medications.
More needs to be done to ensure that a final bill provides
a benefit of value to our members and a program in which
Medicare beneficiaries will enroll. As the process moves
forward, the issues of funding adequacy, structure, benefit
viability, and other Medicare changes like the home health
copay, need to be addressed.
A voluntary drug benefit must attract broad enough
participation to avoid the dangers of risk selection. Our
research show that beneficiaries assess the value of the
benefit by adding up the premium, coinsurance, and deductible
to determine if it is a good buy. The existence of a large
coverage gap is a strong disincentive to enrollment. More
funds are needed to close this gap and protect the viability
of the program.
Unfortunately, a substantial amount of the already limited
funds allocated for a prescription drug benefit have been
diverted to pay for provider reimbursement increases. We
believe that providers should be paid fairly for treating
Medicare patients, but Medicare beneficiaries have waited
long enough for relief from high prescription drug costs.
Every dollar allocated to ``givebacks'' package means one
dollar less for a Medicare drug benefit. We firmly believe
that agreement on an affordable Medicare prescription drug
benefit should be reached before Congress considers
additional provider reimbursement increases.
Our research also indicates that older Americans are
looking for stability and dependability in coverage.
Therefore, it is important to ensure that private sector
entities will be willing to offer coverage.
AARP's goal is enactment this year of an affordable
Medicare drug benefit that is available to all beneficiaries.
This bill requires improvements before our members will
provide their support. We want to work with you to assure
adequate funding and resolve other issues as the process
moves forward and before any legislation is enacted into law.
Sincerely,
William D. Novelli,
Executive Director and CEO.
Mr. TAUZIN. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, this debate tonight should not be about politics.
American seniors have heard all the politics they can stomach. And the
AARP said it best in their letter. They said, ``Our members, virtually
all older Americans, need this coverage now.'' What coverage were they
talking about? They were talking about the coverage in this bill.
Here is a quote from the AARP, and I am sorry my colleagues are in
such disagreement with the AARP, but here is their quote. ``We are
pleased that your bill makes the voluntary prescription drug benefit
permanent and maintains the entitlement nature of the Medicare
program.''
Now this is not also about who loves their mother or father the most
or their grandparents the most or who is willing to step up to the
plate and do what they can to make sure that American citizens in their
senior years have prescription drug benefits. This is about whether or
not we have a plan that works. We think it does, and the AARP agrees
with us.
Now let me make another point. We have heard a lot about the drug
companies. I want to give my colleagues a Clinton administration
statistic. The Clinton administration estimated that seniors without
drug coverage pay 20 percent more for their drugs than anybody else in
America with drug coverage. This bill will give seniors drug coverage.
It will reduce the cost of their drugs at the expense of the
pharmaceuticals.
We had the courage in the Committee on Energy and Commerce to do
something our friends on the other side would not do. We got rid of the
floor that pharmaceuticals will not negotiate below, and we forced the
pharmaceuticals to spend $18 billion more, lowering the cost of drugs
by eliminating that floor.
This is a great bill for Americans. This makes for a great savings on
the drug bills of moms and dads and grandparents. We ought to vote for
it tonight.
Mr. HOYER. Mr. Speaker, This GOP drug bill is nothing but a candy-
coated placebo that fails to cure the problems faces by million and
millions of senior citizens who are struggling every single month to
pay for life-saving prescription drugs.
The American people are just not going to swallow it.
If the FDA approved a drug that was this untested and unreliable,
there would be an outcry across this great Nation for immediate
congressional investigations.
Three words say it all: It won't work.
This ideological plan--which depends on private insurance drug only
policies--even has insurers scratching their heads.
As Bill Gradison, our former Republican colleague in this House and
the former head of the Health Insurance Association of America,
recently said: ``I'm very skeptical that `drug only' private plans
would work.''
There's no guarantee insurers will offer drug only policies.
There's no guaranteed monthly premium. There's no defined benefit for
seniors. There's no guaranteed access to the drugs you need.
The only guarantee in this bill is that it would provide inadequate
coverage.
Everyone of us knows that the Republican party really wants to
privatize Medicare.
This bill is the first step. A few years ago, the majority leader
even told the Chicago Tribune that he ``deeply resents the fact that
when I'm 65, I must enroll in Medicare.''
In sharp contrast, Democrats want to create a plan under Medicare
that's affordable, guaranteed, universal, and voluntary.
The only argument that our Republican friends can muster against the
Democratic plan is cost.
But these are the same folks who voted to give Enron $250 Million,
who voted to give a handful of other corporations billions more, who
voted to eliminate the estate tax on the wealthiest estates in the
country.
Vote against this shameless drug bill.
Let's adopt a plan that gives seniors the drugs they need and
deserve.
Mr. UDALL of New Mexico. Mr. Speaker, I rise today in opposition to
H.R. 4954, the Medicare Modernization and Prescription Drug Act. It's a
sad day for seniors all across this country and especially in my
congressional district in New Mexico. It is sad because the Republican
leadership has decided that the House will only consider their
pharmaceutical company-backed Medicare prescription drug benefit
program.
The majority does not seem to care about making affordable
prescription drugs available to all of our seniors. Instead, they only
care about making political capital at the expense, literally, of our
low income-seniors. For Congress after Congress, Democrats have called
for making affordable prescription drugs available to seniors. And now
that the Republicans fear losing their majority, they have brought a
bill forward that has been industry-bought and industry-paid for.
The Democrat alternative that we have proposed, and that the majority
refuses to allow us to debate, has been bought and paid for by the
American people, many who are seniors that have sent us here to
represent their interests and not the interests of America's
pharmaceutical companies. Our bill which has been endorsed by most
senior advocacy groups would charge a $25 monthly premium and a $100
deductible and require co-payments of 20 percent up to $2,000. After
that amount, the government would pay all costs. The Democratic plan
has no gaps in coverage and low-income seniors are protected under our
plan. The majority says it is too expensive.
[[Page H4289]]
Why? Because all the money was spent last year on the $1.3 trillion
Bush tax cut for the wealthy few.
The Republican proposal is a ridiculous sham that has been introduced
to fool our senior citizens into believing that they will finally have
a prescription drug plan under Medicare that works. Republican
strategists believe that their passage of any drug bill will inoculate
their candidates against criticism. Even the spokesman for House
Republicans' campaign committee has been quoted in the Washington Post
as saying, ``The fact that the House will have passed a prescription-
drug bill will take away the Democrats' ammunition, and will make
Senate Democrats look worse for failing to pass it.''
Ar you kidding me? This shouldn't be about politics. It should be
about policy. Prescription drugs are nothing more than a political game
to the majority. Frankly, this is slap in the face to every American
senior and not to mention insulting.
My poor constituency in New Mexico cannot afford the outrageous
prices of prescription drugs. Many of them drive hundreds of miles
across the U.S./Mexico border to buy affordable prescription drugs.
Many of them have to go without paying their bills in order to afford
prescription drugs. Many of them have to forgo buying groceries,
clothes, and other basic necessities to afford prescription drugs.
We owe it to America's seniors to do the right thing and propose a
plan that offers a real prescription drug benefit. We owe it to
America's seniors to be able to debate a plan that offers real
prescription drug benefits. We owe it to American's seniors to debate
our bill.
Our seniors deserve a prescription drug plan that works with a
defined benefit plan, guaranteed premium and access, and protection for
low-income seniors. The democratic alternative is the real prescription
drug plan and not hoax on low-income seniors.
I urge my colleagues to vote ``no'' on H.R. 4954. Send this back and
give us a fair vote on a real prescription drug plan.
Mr. OWENS. Mr. Speaker, H.R. 4954, the Republican Pharmaceutical
Industry Protection Act, is a cruel and unusual joke perpetrated
against the senior citizens of America. The Republicans are preoccupied
with the goal of the prescription drug manufacturers which is to
maintain the highest possible prices and profits in America. Without
operating at a loss in foreign markets, these drug companies sell their
products at much lower prices. They sell at lower prices because
foreign government negotiators refuse to pay exorbitant prices. Insults
are added to injuries when Americans are forced to pay the highest
prices for drugs which our Government often play a major role in
research and development. A workable and simple plan offering the
necessary benefits to seniors in need can be set in motion immediately.
First, lower the cost of prescription drugs by following the principles
and procedures set forth in my bill, H.R. 4772, the Pharmaceutical
Products Price Equity Act which I first introduced on September 25,
2000. This bill ensures that pharmaceutical companies cannot charge
more the 6 percent above the average retail price of prescription drugs
sold in the 5 most industrialized, free-market countries. This will
ensure that pharmaceutical companies charge consumers within the U.S.
prescription drug prices that are comparable to other nations.
The second simple step is to follow the program of implementation as
stated in the Democratic Plan. No new HMO and insurance bureaucracy is
necessary. Let the Prescription Drug Benefit Plan be an extension of
the of the Medicare program. Instead of offering a cruel and unusual
joke, this Congress should unite behind a plan which relieves the very
desperate needs of many of our senior citizens.
Mr. FILNER. Mr. Speaker and colleagues, I rise today to protest the
half-baked drug scheme that the GOP has jammed down Congress' throat. I
find it a particular affront to our system of democracy that the
Republicans blocked consideration of a plan that would easily cover all
seniors.
I join hundreds of my colleagues in opposing a GOP scheme that would
force America's seniors and future seniors to rely on private insurance
companies or HMOs for prescription drug coverage. GOP supporters of the
scheme received hundreds of thousands of dollars in campaign
contributions from pharmaceutical companies and HMOs.
America's seniors deserve affordable prescription drug coverage. They
should not have to make the preposterous choice between prescription
drugs and paying their rent.
The Democratic bill--on which GOP leaders refused to allow a vote--
would have guaranteed voluntary prescription coverage for all Medicare
beneficiaries. Medicare is available to the vast majority of people
over 65. It would have a $25 monthly premium and a deductible of $100
per year. After that, beneficiaries would be responsible for just 20
percent of drug costs, with Medicare covering the remaining 80 percent.
All costs would be covered after a beneficiary spent $2,000 out-of-
pocket.
The Republican bill guarantees no specific benefit and subsidizes
insurance companies in the hope they will create private insurance
plans. Many HMOs and private insurance would not want to offer coverage
under the plan. Those that did would be able devise the coverage and
set the premium.
We should not be playing a shell game with something as important as
our seniors' health and well-being. The Republican bill leaves our
seniors out in the cold.
Mr. DAVIS of Illinois. Mr. Speaker, I rise today to urge my
colleagues to support a fair and equal prescription drug plan.
Mr. Speaker, as you know, Adam Smith's economic theory of competition
over monopoly has worked for our country's economy for nearly 200
years. While competition works for material items, it does not work for
social services and human needs such as health care and prescription
drugs. If we allow private companies to set their own premiums and
encourage competition among the prescription drug plan providers we
will not cut costs, nor will we provide seniors with low premiums and
co-pays.
As we have seen from health insurance providers, the most affordable
insurance plans offer the least amount of coverage, while the most
comprehensive plans are the most expensive. This leaves a senior, on a
tight monthly budget, with the option of enrolling in a low-cost plan,
or no plan at all. Therefore, by voting for this legislation, and
allowing these companies to set their own premiums and deductibles, we
are not guaranteeing anything to our seniors, and will be leaving the
sickest ones, on the tightest budgets behind.
The Democratic plan is simply stated. There will be a $25 premium,
$100 deductible, and 20 percent co-pay, and an out-of-pocket limit at
$2,000. However, the Republican plan is extremely complicated.
Different people will pay different co-pays depending on their total
prescription drug costs. And let us not forget the gap in coverage for
those who exceed $2,000 in total costs, but do not exceed their out-of-
pocket cost of $3,800, all the while continuing to pay their high
premiums of $35 per month.
In order to maintain all these different co-pays and to assure that
competition is available, this bill would create a new agency called
the Medicare Benefits Administration. This would only create more
bureaucracy and red tape that is currently driving up the cost of
health care in America. Almost 25 percent of the cost of health care is
to cover the administrative overhead. We cannot add to this current
horrible problem.
Not only is the Republican plan more confusing, but it will cost our
seniors more. Let us look at two examples. The first is of individuals
with $100 per month in prescription drug costs. Under the Republican
plan they would pay $892 a year, but under the Democratic plan they
would pay only $620 a year. How about those that have $300 per month in
prescription drug costs? Under the Republican plan they would pay
$2,892 a year, but under the Democratic plan they would only have to
pay $1,100; that is a difference of $1,796 a year.
Mr. Speaker, let me close by saying that the issue of adding
prescription drug coverage for Medicare recipients is long over due.
But H.R. 4954 is not the answer.
Mr. RAMSTAD. Mr. Speaker, I rise today in strong support of H.R.
4954, the Medicare Modernization and Prescription Drug Act of 2002.
This is truly a monumental day for millions of seniors in America.
Congress is finally addressing our greatest generation's need for a
prescription drug benefit under Medicare.
Prescription drug coverage is one of the most critical issues facing
our Nation. This issue has moral, medical, and economic implications
for every single American.
Under this bill, seniors will no longer have to become insolvent just
to pay for the prescription drugs they need. We are rescuing seniors
from the terrible dilemma of paying for food or life-saving medicines.
The problem is that when the majority of people need prescription
drugs most, in the later years of life, the largest insurer of the
elderly does not provide prescription drug coverage. As a result, many
seniors go without the drugs they need, dilute their prescriptions or
forego other basic necessities to purchase vital prescription drugs.
This is wrong, Mr. Speaker.
H.R. 4954 not only provides affordable prescription drug coverage,
but also strengthens the Medicare system to ensure that doctors are
available to treat Medicare patients and hospitals can keep their doors
open to Medicare beneficiaries.
Mr. Speaker, our seniors need and deserve a Medicare system that
reflects the advances in medicine that have occurred in the past 37
years since Medicare began in 1965. They also deserve prescription drug
coverage under Medicare.
The Medicare Modernization and Prescription Drug Act provides a
prescription drug
[[Page H4290]]
benefit to all seniors and reforms irrational payments to doctors,
hospitals, and nursing homes. The bill also strengthens the long-term
financial condition of the Medicare program.
All Medicare beneficiaries are eligible for this prescription drug
coverage, and seniors will save nearly 30 percent, according to the
Congressional Budget Office.
Mr. Speaker, I urge my colleagues to pass this critical legislation
because the seniors of America deserve a prescription drug benefit and
a modernized Medicare system.
Ms. HARMAN. Mr. Speaker, tonight we are engaged in a partisan debate
on what should be a bipartisan issue.
Reforming Medicare to ensure access to prescription drugs is one of
the most important things we could do this year. Seniors have been
promised this benefit by both parties during the past two Congresses.
Rather than engage in constructive debate, the Republican leadership
has introduced a bill that does not get the job done under a rule for
debate designed to prevent the consideration of any alternatives.
I intend to vote against the Republican bill because it fails to
provide genuine, reliable drug coverage for seniors.
The Republican bill is confusing and unworkable. It requires seniors
pay different amount in co-payments depending on how much they spend on
prescription drugs overall. In fact, its benefits are likely so meager
that only the sickest seniors would want to enroll--a recipe for
bankruptcy of the system.
The Republican bill does not ensure discounts on all the drugs
seniors need. Not only does it offer no guarantee that private plans
will cover all the prescriptions seniors need, but because of high
cost-sharing and premiums, it will cover only 20 percent of the average
senior's drug costs in a year.
The Republican bill has a large gap in coverage. It offers seniors no
assistance on drug costs between $2,000 and $3,700. That means that
nearly half of all seniors will receive no coverage of their
prescriptions for part of the year, even though they continue to pay
premiums.
A Medicare prescription drug benefit must be affordable for both
senior citizens and the federal government. A plan with high premiums
and deductibles--or large gaps in coverage--won't help the seniors who
need it most.
I believe that a Medicare drug benefit should achieve the following
goals, and I am eager to work with my colleagues to achieve them:
(1) Help those who need it most first. We need to provide genuine and
immediate assistance to low-income seniors and seniors who do not
currently have drug coverage.
(2) Provide relief from the high and escalating cost of prescription
drugs. Prescription drugs cost more in the United States than in any
other nation in the world. Medicare should have the ability to
negotiate lower prices for senior citizens as part of a drug benefit.
(3) Encourage new disease management techniques and innovation in the
delivery of care. Medicare needs to catch up with the private sector in
focusing on preventive care and the treatment of chronic conditions.
Improving Medicare's coverage on these fronts will improve seniors'
lives--and reduce their health care costs as well.
I hope we will be able to work in a bipartisan manner in the coming
months to keep our promises to seniors and enact a fiscally
responsible, meaningful law to include prescription drugs under
Medicare.
Mr. WATTS of Oklahoma. Mr. Speaker, this House stepped up to the
plate in March and set aside three hundred and fifty billion dollars in
our budget for prescription drug coverage. What was in the Democrat
budget proposal for senior citizens? Well, nothing. They didn't bother
to offer a budget.
But the absence of action did not prevent the other party from
criticism and condemnation. It's always easy to yell and scream when
you have nothing to offer.
The plan before the House today is one that will lower the cost of
prescription drugs and help seniors get the life-saving medicine they
need. It is practical, realistic, and supported by the President.
The Medicare Modernization and Prescription Drug Act of 2002 is the
right remedy for a national problem. In fact, the Department of Health
and Human Services recently released a report that stated: ``The House
Republican plan would provide real relief for seniors and disabled
Americans: those who now pay full retail prices would typically see the
costs of each prescription cut by 60 to 85 percent, and their overall
out-of-pocket drug costs would fall by as much as 70 percent--in
exchange for a stable and affordable premium starting at thirty-four
dollars per month.''
The Democrat plan is a prescription for higher drug costs, enriching
drug companies and fiscal disaster. It is an election year gimmick that
will cost over eight hundred billion dollars over ten years and lead to
higher drug prices and government price controls.
The Republican plan lowers drug costs, guarantees coverage and gives
seniors choices. Seniors would be able to pick the plan of their
choice--because one size does not fit all. Competition will drive down
costs.
Mr. Speaker, no senior should have to decide between buying food and
buying medicine. I urge my colleagues to support this legislation to
give seniors the life-saving drugs they need and the peace of mind they
deserve.
Mr. BLUMENAUER. Mr. Speaker, the pattern denying opportunity for full
debate and reasonable alternatives continues as we deal with
prescription drug benefits for our Nation's seniors. The House will not
be permitted to vote on the Democratic prescription alternative.
Instead, we will only be allowed to consider the Republican bill, which
does not provide a guaranteed drug benefit, instead offering only an
HMO-style managed-drugs plan for some. Medicare was created in 1965
because most elderly people could not afford to buy expensive health
insurance on the private market. Most still cannot, and we as a
Congress should not in fairness impose this flawed plan on seniors.
Especially important to Oregon seniors are the regional inequities
that already exist in Medicare, and that the Republican bill would
allow to grow. Medicare already punishes Oregon for its size and
efficiency with a Medicare reimbursement rate that is 66 percent of the
national average rate per enrollee. As a result, Oregon seniors lose
more than \3/4\ of a billion dollars every year. That represents
approximately $1,660 per enrollee that ought to be going to medical
care and services. We cannot tell how much we will lose under the bill
before us today.
Their bill allows many different insurance companies to deal with
seniors differently from city to city, and state to state. A senior in
Oregon might pay significantly more than someone in Louisiana for the
same, or even a reduced benefit. All seniors paid their taxes, and they
all deserve an equal benefit. Rural areas and western states have had
enough of this regional healthcare discrimination!
Choice is illusory in the Republican bill because the plans they
propose do not exist and there is no assurance that insurance companies
will ever offer these plans.
The Democratic bill, by comparison, is simple and fair. All
beneficiaries will receive the same benefits, the same low $25 a month
premiums, a lower $2,000 out-of-pocket limit, with any pharmacy they
choose--wherever they live.
Furthermore, the Democratic alternative allows the Secretary to use
collective purchasing powers on behalf of 40 million beneficiaries to
negotiate lower prices, as he did getting Cipro, the antibiotic used
for Anthrax, in the Fall of 2001. The Republican bill has no such
provision. I support the plan that helps seniors, Medicare contractors,
and is fair to the taxpayers.
Mr. STRICKLAND. Mr. Speaker, the Republican prescription drug bill is
a sham, and the unfair rule that brings it to the floor exposed this
partisan and shameful process for what it is--a political masquerade
designed to convince Americans that we have answered the plea to add a
prescription drug benefit to Medicare. Make no mistake, we fall far
short of that goal today. I am appalled that the Republican leadership
is not willing to allow the American people the decency of comparing
the bill before us to a substitute that would provide a real drug
benefit for Medicare beneficiaries. This limited debate available to us
speaks volumes about the quality of the proposal before us today and
its lack of a meaningful prescription drug benefit for the seniors.
The Republican sham prescription drug plan would not provide a
guaranteed adequate prescription drug benefit for seniors. The coverage
outlined in the bill isn't the kind of coverage most Americans think of
when the need for prescription drug coverage for seniors. Coverage if
80/20 only through the first $1,000, when coverage drops to 50/50. And
then there is a huge gap in coverage between $2,000, when the initial
benefits run out, and $3,700, when catastrophic coverage finally
begins. A beneficiary will receive zero benefits between $2,000 and
$3,800 in spending, even though she will continue to pay the $35
monthly premium.
Perhaps even worse, the bill take the first step toward privitizing
Medicare by contracting this new drug benefit out to private insurance
plans. In so doing, premiums, deductibles, and copayments will vary
across the country--so a senior who lives in Florida will likely pay a
different premium than one of my constituents in Ohio. In addition,
coverage under the bill we are considering today will be unstable
because plans will be able to pull out from an area when they decide it
doesn't fit their business plan. Where, then do our seniors turn for
prescription drug coverage? The experience of Medicare+Choice
illustrates this concern: there were Medicare+Choice HMOs in my
district, but every single one left. Thankfully, those seniors who did
switch to an M+C plan had traditional Medicare to fall back on. This
[[Page H4291]]
won't be the case for prescription drugs if we pass the Republican drug
plan. Instead, seniors will be left without any drug plan at all if and
when the private insurers leave the area.
The Democrats' prescription drug plan would provide quality,
guaranteed help for seniors. Unlike the Republican plan, the Democrats'
proposal would create a prescription drug benefit that is part of
Medicare, thus avoiding instability or variation in premiums that occur
depending on where the beneficiary happens to live. In addition, the
Democrats' plan provides much more help for seniors: there is no gap in
coverage, catastrophic coverage would begin at $2,000 rather than
3,800, and the monthly premium would be $25. The unfair rule under
which we debate this incredibly important issue means that Americans
won't get to hear this comparison in detail or see how it fares in a
vote. This is exactly what the Republicans want because they know their
proposal can't compete with the Democrats' concrete plan, which has
been endorsed by a litany of groups, including the Alliance of Retired
Persons, the AARP, the AFL-CIO, AFSCME, The American Federation of
Teachers, the Center for Medicare Advocacy, Families USA, the National
Committee to Preserve Social Security, and Medicare, the National
Council on the Aging, the National Partnership for Women and Families,
and the National Senior Citizens Law Center.
Some of my colleagues will contend that the difference between our
plan and theirs is the cost. They will say that the Democrats' are
fiscally irresponsible and that our plan breaks the bank. On this
point, I stand firm. It is a fact that this Congress has chosen to give
huge tax breaks to the wealthy. The President told us we could do both:
he said we could enact nearly $2 trillion in tax cuts as well as a
prescription drug benefit for America's seniors. But Congress chose to
pass tax cuts for the wealthy, and we have chosen not to enact a real
prescription drug benefit for seniors. If the choice is between
enacting a real prescription drug benefit and giving tax breaks to the
wealthy and corporations, then I am proud to choose to stand on the
side of America's seniors.
The rule also means that I won't be able to vote for a bill including
many commendable provisions that have clear bipartisan support. This
year, doctors were hit with a 5.4 percent cut in their Medicare
reimbursement, hospitals are struggling with decreases in Medicaid
disproportionate share hospital (DSH) funding and shortages in other
payments, home health agencies are facing a 15 percent cut in
reimbursement, and most Medicare providers are struggling with an
increasingly difficult regulatory burden.
Doctors and hospitals in my district provide invaluable care to
Medicare and Medicaid recipients, and I hope they know that I support
fixing all of these problems. I hope they do not interpret my no vote
on this bill as a vote against the compromises that have been reached
to address these problems. I recognize that our failure to fix these
could seriously threaten the quality of care seniors and the disabled
receive, and I cannot overstate my determination to continue working
with my colleagues on both sides of the aisle to enact these important
solutions. We have, in some cases, already done this. For example, last
year, the House passed a Medicare regulatory reform package that is now
also included in this bill. And even though I support a permanent fix
to the formula used to calculate the physician update in Medicare, I
have worked with my colleagues to reach a temporary compromise that is
included in this bill. I support these and other provisions that will
go a long way to ensuring providers have the resources they need to
continue to offer quality care for seniors. Therefore, it is with
regret that I cannot support the bill that includes many of these
solutions, and I will continue to work for their enactment this year.
I would like for all Americans to understand that the rule bringing
this bill to the floor today undermines their ability to hear a full
and open debate about developing a prescription drug plan for our
seniors. It is shameful that politics is getting in the way of a
healthy debate on the addition of a prescription drug benefit to
Medicare. And it is also shameful that politics is interfering in the
needed changes in Medicare reimbursements that will ensure
beneficiaries continue to receive quality care. This is no way to
develop thoughtful, reasonable, balanced legislation that will best
serve the nation. Our seniors deserve much better.
Mr. WICKER. Mr. Speaker, I rise in support of this comprehensive
package which will provide needed improvements to the Medicare system.
Much of the debate on this legislation has centered on the need to add
a prescription drug component to Medicare. I agree with this goal, and
I support the responsible proposal put forth by the Ways and Means and
Commerce Committees. The practice of medicine has significantly changed
since the Medicare program was created in the 1960s, and the role of
prescription drugs has dramatically increased. It is time we reform the
Medicare program to reflect changing times.
However, I want to focus on other, very important parts of this
legislation related to reimbursements for providers, especially those
in rural America. This legislation provides a lifeline for rural
America.
In my conversations with doctors, hospital administrators, and
community leaders throughout Mississippi, a common concern is the
decreasing ability to provide access to quality care in rural areas.
The jobs of rural health care professionals are made harder by
inequities in Medicare reimbursement rates between rural and urban
areas. This bill goes a long way in correcting this problem by
increasing the standardized amount for hospital reimbursement in small
cities and rural areas to the level of urban areas in a two step
process over the next 2 fiscal years. This is in addition to an
increase in the market basket adjustment that all hospitals--urban,
suburban, and rural--will receive.
The level of the standardized amount is especially important because
this is the base with which Medicare starts when establishing
reimbursement rates for specific services. Equalizing the standardized
amount reduces the difference in payments caused by other parts of the
Medicare reimbursement formula. But by putting urban and rural
hospitals on the same footing at the beginning of the reimbursement
formula, rural hospitals will benefit for years to come as changes are
made to any part of the reimbursement system. This major improvement
for rural hospitals will be fully implemented in just 2 years.
Other aspects of this bill provide additional benefits for home
health agencies and critical access hospitals in rural America. The
threat of a 15 percent reduction for home health services has been
eased in recent years as Congress has continually delayed the planned
reduction. This bill will eliminate the threat by permanently repealing
the 15 percent cut, allowing home health agencies to adequately prepare
their financial future. Critical access hospitals are increasingly an
attractive option for rural communities that would otherwise be without
health care service. By improving the rules and regulations for
critical access hospitals, this legislation provides more flexibility
in operations and in attracting physicians to medically underserved
areas.
I am also pleased this legislation includes a three site hospice
pilot project which is based upon H.R. 3270, a bill which I introduced
in an effort to improve options for hospice care in rural areas. I
believe the current 80 percent out-patient requirement makes it
economically difficult to provide inpatient hospice care in rural areas
because of smaller patient populations. It is my hope that this pilot
project will validate the worth of our proposal and lead to an
expansion of this specialized care to rural areas across the Nation.
Mr. Speaker, this is a good bill which will improve access to
quality health care, be it for prescription drugs, or care in a
hospital, home health agency, or hospice. I urge support for this
legislation.
Mr. SIMMONS. Mr. Speaker, in my 18 months in Congress, through the
many town hall meetings, letters, e-mails and phone calls, I
consistently hear the same concern from people of eastern Connecticut--
the rising cost of prescription drugs.
We all heard about seniors who have cut their medication in half
because they can't afford to take their entire prescription or a senior
who has to choose between buying food and buying their medication. We
see seniors who are confronted with this choice at supermarkets
everyday. We need to lower the cost of prescription drugs for our
seniors now.
This concern is not perceived, but very real. The non-partisan
Congressional Budget Office estimated that in 1999, nearly 90 percent
of Medicare beneficiaries filled at least one prescription. In 2001,
the average Medicare beneficiary pay $1,756 on prescription drugs
annually, filling approximately 22 prescriptions in that year.
Next month, Medicare will turn 37 years old. The delivery of health
care today is very different from the system of our parents and
grandparents and very different from the way we cared for our seniors
back in 1965.
I believe Medicare needs to be improved to better reflect these
changes and strengthened for the future. If Medicare were being
designed today, it would include a prescription drug benefit. Because
of the remarkable advances made in prescription drugs, seniors are
living longer, with a better quality of life. Unfortunately, the
promise of prescription drugs is very hollow for those who cannot
afford them.
Twenty-six states--including Connecticut--have already enacted some
form of prescription drug assistance program and they are to be
prescription drug assistance program and they are to be commended. I
have long felt that the Federal Government should partner with states
to help provide prescription drug relief to seniors, particularly to
low-income seniors who have the greatest need.
Earlier this year, in an effort to provide immediate relief for
Connecticut's seniors who
[[Page H4292]]
were feeling the financial pinch over paying for their medicine, I
introduced ``Immediate Helping Hand'' legislation, which provides more
than $48 billion to states to give those who can't afford prescription
drugs a ``helping hand.''
My bill would provide Connecticut's ConnPACE program with more than
$91 million per year and expand prescription drug coverage to thousands
of seniors. My plan was a solid first step--a bridge to provide seniors
with immediate assistance until Congress passed a more comprehensive
prescription drug benefit through Medicare.
But as of tonight, only 51 or so legislative days remain until
Congress adjourns. I've come to realize with the short window of time
left, its time to roll up our sleeves and work together on this issue.
If Congress really wants to give seniors a prescription drug benefit,
then we would need to do it now.
The Ways and Means and the Energy and Commerce Committees have
introduced a plan to provide a prescription drug benefit under Medicare
that is voluntary and affordable and guarantees prescription drug
coverage for all seniors. Our plan gives seniors immediate relief from
the rising costs of prescription medications by providing a 30 percent
discount off the top of their overall drug bill. While seniors would
pay a $35 monthly premium and A $250 annual deductible, our bill
provides 80 percent coverage for drug bills between $251 and $1,000 of
out of pocket drug expenses and 50 percent coverage for the next
$1,000. Finally, our plan provides 100 percent catastrophic coverage
for out of pocket drug expenses over $4,500 a year, ensuring that no
senior will be forced into bankruptcy because of their prescription
medication bill during a long-term, serious illness.
Our plan will lower the cost of prescription drugs now by providing a
discount so that seniors can better afford their medications. Our plan
will guarantee all senior citizens prescription drug coverage and
provide additional assistance to low-income seniors. Our plan will
improve Medicare with more choices and more savings and will strengthen
Medicare for the future. Our plan is a reasonable solution that
provides seniors with upfront savings on the high costs of drugs now as
well as guarantee them a drug benefit under Medicare that doesn't
sunset and can't be taken away.
Our seniors have worked hard to save for their ``Golden Years.'' Yet
the cost of prescription drugs is depleting their savings and
jeopardizing their retirement security. Under our plan, seniors will be
protected from run-away drug costs.
Our plan is also of particular importance to women. Women have a
higher life expectancy than men; yet often have lower incomes in their
retirement and face additional costs after their husbands pass on.
Speaker Hastert asked me to participate in a special Prescription
Drug Action Team and I thank him for this opportunity. In this role, I
have tried to advance the cause of providing a prescription drug
benefit under Medicare by meeting with the President and members of his
cabinet; hold outreach meetings with groups such as senior citizen
advocates and representatives of pharmacies and drug companies; attend
listening sessions at local senior centers, such as Rose City Senior
Center in Norwich and the Colchester Seniors Center, and pharmacies;
and participate in bipartisan discussions with other Members of
Congress to find lawmakers with the same goals who will work with me to
produce a plan that will help provide real relief to seniors in
Connecticut as well as the rest of the country.
Our seniors should not be forced to scrimp on food and shelter just
to be able to afford their medicine. Older Americans deserve more
savings and more choice when they fill their prescriptions, and I hope
Democrats and Republicans will join together now to see that they
receive meaningful prescription drug coverage.
To delay is to deny. Lets get a prescription drug benefit signed into
law now.
Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise today to speak out
against H.R. 4954, what should have been called the Republican
Insurance Protection Act.
When medical students become doctors, they take an oath written by
Hippocrates, a great Greek philosopher and naturalist, in the year 400
BC. The underlying spirit of the Hippocratic Oath, is that when someone
needs your help, when they trust you to do the right thing to improve
their health, the number one priority is to do not harm.
As we design a system to get the much-needed medications to our
Nation's seniors and disabled citizens on Medicare, we must keep the
spirit of the Hippocratic oath in mind. These folks need our help, we
have promised them that we would help them get the health care they
need, and they trust us to keep that promise.
The Republican plan to privatize and compromise Medicare would be a
step in the wrong direction. It is a gift to insurance companies and
the pharmaceuticals industry, but does nothing for most of our seniors.
If it passes, Hippocrates will probably be turning over in his grave.
Let's look at some numbers:
Let's consider one senior, she could be your mother or grandmother.
She could be on a fixed income, and her doctor has decided she needs
$500 per month in prescription medications to live comfortably. Not
only is she carrying a huge financial burden, but she is sick, and from
talking to our constituents at home, we all know the frustration and
even depression that can accompany long-term illness.
She is a member of the greatest generation, as they have been called,
that generation that worked hard to give us the unprecedented
prosperity and security we all have enjoyed over the past decades, and
now she needs our help.
And what does the Insurance Protection Act offer her?
As the year starts, so do her bills. Her out of pocket costs rise
rapidly throughout the year--$1,000, $2,000, $3,000, about $4,000,
because even if she hits the catastrophic limit, she is still paying
premiums that add to her burden.
And what about her benefits? They are almost non-existent for most of
the year. She gets a little help at first, but it falls off rapidly.
Then, for a big chunk of the year--she gets nothing, as she falls into
the Republican gap.
Finally, when she hits catastrophe, her bills get covered. But, most
seniors don't ever get there--they just end up stuck in the Republican
gap.
These numbers are the best we could calculate last week with the
vague plan that we had been presented with. These numbers look bad, but
they may be even worse. H.R. 4954 does not guarantee even this low
level of benefit. It only offers subsidies to private insurance
companies in hopes that they might take care of our seniors even though
we don't. Associations of insurance companies have already gone on
record stating they probably will not offer the drug-only plans
necessary for the Republican plan to function.
The Republican plan puts this sick senior on a roller coaster. Her
premiums are not guaranteed. Her deductible is high. She is not assured
that she will be able to buy the drugs her doctor prescribes at the
pharmacy she trusts. She gets nothing for a big part of the year, even
though she keeps paying her premiums.
She gets all of the paperwork and premiums of a big government
program--with none of the benefits. This is a gimmick. It is a step in
the wrong direction, and it violates the principle of do no harm.
We do not have to take this step backward because, there is a choice.
The Democratic alternative provides a continuous stream of aid to all
of those who need it. It offers low premiums and guaranteed benefits.
Yes it costs more, but it could actually be a bargain. Unlike the
Republican plan which does nothing for the vast majority of seniors,
the Democratic plan helps all seniors. By harnessing the bargaining
power of those 40 million seniors, the Democratic plan will drive down
the cost of prescription drugs. Also, new medications, especially
preventive medications can save us money in the long run. By keeping
people out of hospitals and emergency rooms and off of the surgeon's
table, a good prescription drug bill could actually start saving us
money.
But most importantly, it is what our seniors deserve. I urge my
colleagues to wait for a better alternative, and vote ``no'' today on
H.R. 4539, the Insurance Protection Plan.
Mr. SERRANO. Mr. Speaker, I rise in opposition to the bill before us
and in strong support of the Democratic alternative, of which I am an
original cosponsor.
The Republicans know that the American people demand prescription
drug coverage for seniors. But instead of passing a bill to help our
seniors, they've chosen to give $350 billion to insurance companies,
trusting them to do what's right for seniors.
This bill is a cruel joke. Republicans broke their word--they
promised to help seniors and the disabled with a real Medicare
prescription drug benefit, and instead passed a pathetic gimmick that
will leave seniors holding the bag. This bill isn't a Medicare benefit
plan for seniors, it's a Republican benefit plan for corporations.
I am an original cosponsor of a alternative bill that would provide
real coverage for our seniors through Medicare. The Democratic plan
fulfills our responsibility to provide for those who made this country
what it is today. No senior should be forced into poverty to pay for
life-saving drugs--and no senior living in poverty should be denied
necessary medications.
Our plan would not only provide a meaningful prescription drug
benefit, it would allow seniors and individuals with disabilities to go
on making the choices that matter. The Republican bill would take
choices away, offering coverage through private plans that may not
allow seniors to choose their pharmacy, or
[[Page H4293]]
their doctor. The only choice left for many seniors would be between
purchasing food and purchasing drugs.
The Democratic plan is so good, in fact, that Republicans would not
even let it come to a vote. They did not want to admit that their
trillion dollar tax cuts for the super-rich don't leave enough money
for a real benefit for seniors. But the American people are not so
easily fooled. They know that Republicans put the interests of the rich
ahead of the interests of seniors.
Our plan would help all Americans. It would bring down the
skyrocketing price of prescription drugs, so that giant pharmaceutical
companies can't inflate their profits at public expense. Medicare
contractors would obtain guaranteed reductions in price, and the
Secretary of Health and Human Services would be able to fight back
against price gouging, using the collective bargaining power of
Medicare's 40-million beneficiaries. It would stop patent abuses,
bringing down drug prices for all Americans. The Secretary would also
be able to encourage the use of generic drugs, set lower coinsurance
for preferred drugs, enhance disease management, and strengthen
beneficiary and provider education. The Republican plan would do
nothing to reduce the price of prescription drugs. Tax dollars would be
used to pay the same inflated prices that seniors pay today.
I urge my colleagues to make good on their promises, to defeat H.R.
4954, and to pass meaningful prescription drug coverage in Medicare for
seniors and the disabled.
Mr. HINOJOSA. Mr. Speaker, I rise today in opposition to the
Republican prescription drug bill. For years, our seniors have been
begging for help to obtain affordable prescription drugs. The bill
before us today gives relief to the large drug companies, not our
vulnerable seniors.
It forces Medicare patients into multiple private drug plans,
undercuts seniors' collective purchasing power, and enables the drug
industry to maintain its unjustifiably high prices.
By contrast, the Democratic plan would provide voluntary prescription
drug coverage for all Medicare beneficiaries. The plan curbs drug costs
by allowing the Secretary to use the collective bargaining power of
Medicare's 40 million beneficiaries to negotiate lower drug prices.
But we will not have the opportunity to vote on this sensible plan
that is supported by the majority of Americans because the Republican
leadership is afraid it would pass.
I urge my colleagues to oppose the sham Republican proposal and say
no to the big drug companies. I yield back the balance of my time.
Mr. WEXLER. Mr. Speaker, prescription drug coverage has long been a
top priority for a majority of Americans, and as a result, both George
Bush and Al Gore pledged during the 2000 Presidential campaign to
provide seniors with a comprehensive prescription drug plan and finally
put an end to the prescription drug crisis in America. The House
Republican leadership avoided this issue for as long as they could, but
the day of reckoning arrived, and when it was time for both sides to
ante up, the Republicans offered nothing but a sham. Now here we are,
preparing to vote on what the Republicans say is a plan that will help
seniors pay for prescription drugs. But before we do, I want all my
colleagues to know what is really on the table.
Quite simply, the Republican prescription drug plan is a disgrace; it
is nothing more than a half-hearted attempt to deliver on an empty
promise and provide themselves with election year cover. This will not
bring the rising costs of prescription drugs down, it has significant
gaps in coverage, and where it does provide coverage, it relies
completely on unreliable HMOs and insurance companies to provide it.
The Republican plan will get us nowhere and will leave too many seniors
with nothing at all. As we look at the Republican proposal, it is clear
that while the needs of so many are being neglected, the wants of an
influential few are being met.
The Democratic prescription drug bill we have offered will provide
real, meaningful, affordable, prescription drug coverage under
Medicare. It will allocate $800 billion to ensure that all seniors can
afford coverage. There will be no gaps in coverage, and nobody will be
force to join an HMO. But regrettably, we can't even debate this bill
today. While that is a shame in and of itself, the real tragedy is that
we must choose between a horrible bill or no bill at all. But maybe
that is what Republicans--who have been raking in campaign
contributions from the insurance industry and the pharmaceutical
companies who are the only true beneficiaries of the Republican bill--
wanted all along.
The bill that I am sponsoring will be affordable for all seniors,
will cover any prescription regardless of the brand, and not just cover
those on the insurance companies' formularies. Our prescription drug
plan will provide seniors substantial savings by using the government's
bargaining power to obtain the best prices for Medicare, as currently
done for Medicaid and the Veterans Administration. The Republican plan,
in contrast, relies on the insurance industry and HMOs to provide the
already scant coverage that it offers. The Republicans have disguised
their shallow attempt to pay back the pharmaceutical companies and
insurance industry for millions in campaign contributions under the
title of Medicare Modernization. The real name for this bill should be
the Insurance and Pharmaceutical Industry Payback Act.
The criticism that has been offered by Republicans regarding the
Democratic bill is that it is unrealistic. That is their argument,
simply because they know that the Democratic bill interferes with their
$1.3 trillion tax cut. And to add insult to injury, Republicans
continue to push for additional billions in tax cuts for the wealthiest
Americans, which is more than enough to pay for the more generous
Democratic plan. It is shameful that while Republicans pander to the
narrow interests they serve, seniors continue to wait for a real
solution to the prescription drug crisis.
Mr. KNOLLENBERG. Mr. Speaker, it is simply unacceptable that 13
million seniors do not have prescription drug coverage. Seniors need
prescription drug coverage and they need it now.
The legislation before us today provides a real, timely drug benefit
while helping ensure the future solvency of the Medicare program.
Although much more reform is necessary, the Medicare modernization
provisions contained in the bill are a significant step forward in
providing long overdue Medicare improvements. If the Medicare system is
to remain viable in the future, it is essential that we bring the
Medicare program in line with 21st century healthcare advances and
expectations.
I support the Medicare Modernization and Prescription Drug Act of
2002 because it creates a prescription drug benefit in Medicare that is
affordable, available, and voluntary. It gives people the power to
choose the plan that best fits their needs, including protection
against high out-of-pocket drug costs that threaten their health and
financial security.
This bill guarantees a choice of at least two drug plans in every
area of the country, without endangering existing drug coverage that
seniors might already have through a former employer. We avoid giving
the Federal Government too heavy a hand in controlling drug benefits,
ensuring that seniors will not be denied the right to select the
coverage that best fits their needs.
Furthermore, the bill will bring the increased competition among
health plans that is necessary to reduce drug prices. According to the
Department of Health and Human Services, this plan is the only proposal
before Congress that would lower drug prices and provide an immediate
drug discount of up to 15 percent.
Mr. Speaker, seniors must not have to choose between their medicine
and other basics like food and housing. We have a chance to strengthen
the Medicare program to guarantee that our children and their children
have access to quality health services and prescription drugs when they
become eligible for Medicare. Let us take this monumental step and
improve Medicare for the future.
Mr. COSTELLO. Mr. Speaker, I rise today in opposition to H.R. 4954
and in support of the Democratic substitute. It is imperative that we
provide senior citizens with quality, affordable, and reliable health
care. H.R. 4954 does not accomplish these important goals.
I am committed to strengthening and improving Medicare. As the
nationwide health insurance program for the elderly, Medicare has
provided important protections for millions of Americans over its 37-
year history. However, the program continues to face increasing
problems. Like so many Americans, I am concerned that the program's
structure has failed to keep pace with the changes in the health care
system as a whole. When Medicare was created, prescription drug use was
limited, with most beneficiaries being treated in hospitals. Today,
advances in pharmaceutical research allow doctors to treat seniors on
an outpatient basis. Unfortunately, Medicare has not keep up with this
change.
As a result, Congress has been actively working to craft a
prescription drug benefit for Medicare that is affordable and reliable.
Yet, under the Republican bill, the government would pay subsidies to
insurance companies to induce them to offer drug coverage. These ``drug
only'' insurance plans do not currently exist, and may never exist, and
therefore do not offer a guaranteed benefit to our seniors.
Beneficiaries would be forced to choose between HMOs and risky private
drug-only insurance plans. Further, this legislation merely provides
suggestions for standard coverage; private insurers have the freedom to
alter premiums which can be much higher, varying from county to county,
and year to year. Seniors would not know what to expect from their drug
benefit from year to year or how much it would cost.
In addition, H.R. 4954 provides inadequate coverage to Medicare
beneficiaries. It would cover less than a quarter of beneficiaries'
estimated drug costs over the next 10 years.
[[Page H4294]]
Nearly half of all seniors spend over $2,000 annually. This bill would
not pay for drug costs between $2,000 and $3,700. Further, this
legislation would do nothing to assist low-income beneficiaries. Low-
income beneficiaries may have to pay $2 to $5 co-pays and 100 percent
of the costs in the coverage gap.
In contrast, the Democratic substitute, had we been able to offer it,
offers seniors a real Medicare prescription drug benefit for with
relief from the high cost of prescription drug prices. This legislation
would lower the costs of drugs for all seniors, would offer an
affordable, guaranteed Medicare drug benefit, would ensure seniors
coverage of the drugs their doctors prescribe, and would not force
seniors into HMOs or private insurance. Beneficiaries would pay a $25
premium per month, a $100 deductible per year, and would receive full
coverage after paying $2,000 in out of pocket expenses. In addition,
this substitute would help low-income beneficiaries with premium and
co-insurance payments. Finally, it would guarantee Medicare
beneficiaries the choices that matter: choice of prescription drug,
choice of pharmacy, and choice of doctor and hospital.
I support the provider payment adjustments made to hospitals,
physicians, and rural communities represented in both H.R. 4954 and the
Democratic substitute; however, I cannot in good faith support H.R.
4954 with its unacceptable prescription drug plan.
Mr. Speaker, I am committed to providing a comprehensive benefit that
is affordable and dependable for all beneficiaries with no gaps or
gimmicks in its coverage. What Congress offers to senior citizens and
individuals with disabilities should be no less generous than what
Members of Congress and other Federal employees receive. For these
reasons, I oppose H.R. 4954. I urge my colleagues to do the same.
Mr. BONILLA. Mr. Speaker, while I support this bill because it
provides meaningful prescription drug coverage for America's seniors
and implements measures needed to modernize the Medicare system, I rise
out of concern for the effects of this bill on pharmacy services.
Pharmacists are on the front lines of health care for millions of
Americans. Seniors count on their pharmacist for quality medications
and medication therapy services. Coverage of prescription drugs should
go hand-in-hand with access to quality pharmacy services.
This bill would inhibit the ability of America's seniors to select
the pharmacy that best meets their needs. In many of the smaller towns
in my district, seniors have established long-standing relationships of
trust with their community pharmacists. This bill would force many of
these seniors to turn elsewhere for prescription drug services.
Furthermore, this bill allows Pharmacy Benefit Managers to establish
restrictive pharmacy networks, preferred formularies, mail order
services and inadequate reimbursement rates, severely undermining the
future viability of community pharmacies. Prescription drug plan
sponsors, not pharmacists or doctors, would determine the selection of
medications to be included on formularies. Cost would supercede the
medication that is in the best interest of the patient, and community
pharmacies would be left struggling to stay in business.
This bill also compromises seniors' access to medication-therapy
services. Pharmacists play an important role in reducing medication-
related problems. They routinely resolve complex drug interaction
problems for seniors who take multiple medications. These problems cost
billions of dollars annually and kill hundreds-of-thousands of persons.
Medication-therapy services decrease long-term health care costs while
increasing safety.
As a conservative, I recognize the need to be fiscally responsible,
however we should not allow our efforts to rein in the high cost of
prescription drugs to jeopardize the health of our seniors. Taken
together, the provisions of this legislation would impose economic
hardships that would severely damage pharmacy infrastructure and
compromise the health of America's precious seniors.
Thousands of pharmacists have diligently served America's seniors
with dedication and excellence. We should not inhibit their ability to
continue providing the drugs and services our seniors desperately need.
Mr. PAUL. Mr. Speaker, while there is little debate about the need to
update and modernize the Medicare system to allow seniors to use
Medicare funds for prescription drugs, there is much debate about the
proper means to achieve this end. However, much of that debate is
phony, since neither H.R. 4954 or the alternative allow seniors the
ability to control their own health care. Instead both plans give a
large bureaucracy the power to determine what prescription drugs senior
citizens can receive. The only difference is that alternative puts
seniors under the control of the federal bureaucy, while H.R. 4954
gives this power to ``private'' health maintenance organizations and
insurance companies.
I am pleased that the drafters of H.R. 4954 incorporate regulatory
relief legislation, which I have supported in the past, into the bill.
This will help relieve some of the tremendous regulatory burden imposed
on health care providers by the Federal Government. I am also pleased
that H.R. 4954 contains several good provisions addressing the
Congressionally-created crisis in rural health and attempting to ensure
that physicians are fairly reimbursed by the Medicare system.
However, Mr. Speaker, at the heart of this legislation is a fatally
flawed plan that will fail to provide seniors access to the
pharmaceuticals of their choice. H.R. 4954 requires seniors to enroll
in a prescription benefit management company (PBM), which is the
equivalent of an HMO. Under this plan, the PBM will have the authority
to determine which pharmaceuticals are available to seniors. Thus, in
order to get any help with their prescription drug costs, seniors have
to relinquish their ability to choose the type of prescriptions that
meet their own individual needs! The inevitable result of this process
will be rationing, as PBM bureaucrats attempt to control costs by
reducing the reimbursements paid to pharmacists to below-market levels
(thus causing pharmacists to refuse to participate in PBM plans), and
restricting the type of pharmacies seniors may use in the name of
``cost effectiveness.'' PBM bureaucrats may even go so far as to forbid
seniors from using their own money to purchase Medicare-covered
pharmaceuticals. I remind my colleagues that today the federal
government prohibits seniors from using their own money to obtain
health care services which differ from those ``approved'' of by the
Medicare bureaucracy!
Since H.R. 4954 extends federal subsidies (and federal regulations)
to private insurers, the effects of this program will be felt even by
those seniors with private insurance. Thus, H.R. 4954 will in actuality
reduce the access of many seniors to the prescription drugs of their
choice!
I must express my disappointment that this legislation does nothing
to reform the government policies responsible for the skyrocketing
costs of prescription drugs. Congress should help all Americans by
reforming federal patent laws and FDA policies which provide certain
large pharmaceutical companies a government-granted monopoly over
pharmaceutical products. Perhaps the most important thing Congress
could do to reduce pharmaceutical policies is liberalize the
regulations surrounding the reimportation of FDA-approved
pharmaceuticals.
As a representative of an area near the Texas-Mexican border, I often
hear from angry constituents who cannot purchase inexpensive quality
imported pharmaceuticals in their local drug store. Some of these
constituents regularly travel to Mexico on their own to purchase
pharmaceuticals. It is an outrage that my constituents are being denied
the opportunity to benefit from a true free market in pharmaceuticals
by their own government.
The alternative suffers from the same flaws, and will have the same
(if not worse) negative consequences for seniors as will H.R. 4954. The
only difference between the two is that under the alternative, seniors
will be denied the choice for pharmaceuticals by bureaucrats at the
Center for Medicare and Medicaid Services (CMS) rather than by a
federally subsidized PMB bureaucrat.
Mr. Speaker, our seniors deserve better than a ``choice'' between
whether a private-or-public sector bureaucrat will control their health
care. Meaningful prescription drug legislation should be based on the
principles of maximum choice and flexibility for senior citizens. For
example, my H.R. 2268 provides seniors the ability to use Medicare
dollars to cover the costs of prescription drugs in a manner that
increases seniors' control over their own health care.
H.R. 2268 removes the numerical limitations and sunset provisions in
the Medicare Medical Savings Accounts (MSA) program. Medicare MSAs
consist of a special saving account containing Medicare funds for
seniors to use for their routine medical expenses, including
prescription drug costs. Unlike the plans contained in H.R. 4504, and
the Democratic alternative, Medicare MSAs allow seniors to use Medicare
funds to obtain the prescription drugs that fit their unique needs.
Medicare MSAs also allow seniors to use Medicare funds for other
services not available under traditional Medicare, such as mammograms.
Medicare MSAs will also ensure senior access to a wide variety of
health care services by minimizing the role of the federal bureaucracy.
As many of my colleagues know, an increasing number of health care
providers have withdrawn from the Medicare program because of the
paperwork burden and constant interference with their practice by
bureaucrats from the Center for Medicare and Medicaid Services. The MSA
program frees seniors and providers from this burden, thus making it
more likely that quality providers will remain in the Medicare program!
Mr. Speaker, seniors should not be treated like children by the
federal government and told what health care services they can and
[[Page H4295]]
cannot have. We in Congress have a duty to preserve and protect the
Medicare trust fund. We must keep the promise to American's seniors and
working Americans, whose taxes finance Medicare, that they will have
quality health care in their golden years. However, we also have a duty
to make sure that seniors can get the health care that suits their
needs, instead of being forced into a cookie cutter program designed by
Washington, DC--based bureaucrats! Medicare MSAs are a good first step
toward allowing seniors the freedom to control their own health care.
In conclusion, Mr. Speaker, both H.R. 4954 and the alternative force
seniors to cede control over what prescription medicines they may
receive. The only difference between them is that H.R. 4954 gives
federally funded HMO bureaucrats control over seniors prescription
drugs, while the alternative gives government functionaries the power
to tell seniors what prescription drug they can (and can't) have.
Congress can, and must, do better for our Nation's seniors, by
rejecting this command-and-control approach. Instead, Congress should
give seniors the ability to use Medicare funds to pay for the
prescription drugs of their choice by passing my legislation giving all
seniors access to Medicare Medicaid Savings Accounts.
Ms. ROYBAL-ALLARD. Mr. Speaker, I rise in opposition to the
Republican Party's sham prescription drug benefit proposal.
Prescription drugs, especially for our elderly population, are not a
luxury but a matter of life or death. Prescripton drug costs in our
country are rising nearly 20 percent each year, forcing more and more
of our country's parents and grandparents to choose between their
medication and other necessities of life such as food. Our Nation's
seniors worked hard to make this country strong, many fighting in far-
off places to keep us free. They deserve to have health care security.
Unfortunately, the Republican prescription drug plan falls short in
providing this security to our seniors. First, the Republican plan
covers less than a quarter of the costs seniors will pay for their
medication over the next 10 years. Second, under the Republican plan,
the premiums and the deductible are so high that most seniors won't be
able to afford the plan and as a result will receive no benefits at
all. Finally, the Republicans have no universal prescription drug plan.
Instead, they leave it to individual insurance companies to develop
their own plans. This means seniors will be left on their own to do the
research on each plan that will vary in price, benefits, and
availability across the country.
This complicated, time-consuming, and expensive process is unfair and
unnecessary, and it represents just another step in the Republican
Party's effort to privatize Medicare. That is why Democrats have
offered a simple, affordable prescription drug plan with a standard
benefit and a low deductible. Through the use of collective buying
power, the Democratic prescription drug plan actually lowers drug
prices for all of Medicare's 40 million beneficiaries. Unfortunately,
Republicans did not allow this alternative plan to be presented to the
House for a vote. The Republican bill before us is a sham that does
little to help our Nation's seniors.
The House must defeat the Republican bill and take the necessary
steps to pass the Democratic prescription drug bill that will give all
America's seniors the benefits they need and the health care security
they deserve.
Ms. BROWN of Florida. Mr. Speakers, it matters who is in charge. This
Republican leadership must think the American people are stupid. Last
week they raised $30 million dollars in a fund raiser with the drug
companies, and this week we have a prescription drug bill on the floor.
Now who do you think they wrote this bill for: The seniors they've been
promising relief to for 2 years, or the big drug companies that will be
funding their elections this fall?
While on a trip back home to Jacksonville in March, I went to the
drug store for my grandmother to pick up just one of her prescriptions.
I was expecting maybe a $15 co-payment because I knew her insurance
plan had drug coverage. The bill was $91 dollars. She had a limit on
her coverage, and it had run out. We were 3 months into the year, and
she no longer has a drug plan.
My grandmother, and all grandmothers deserve better than this. If the
Republicans can take a break from their million dollar drug company
fund raisers and constant tax cut bills for their country club friends,
maybe we can work on a compromise that will provide our seniors with
the relief we have been promising them. My Republican colleagues talk
the talk, but they don't walk the walk. The Republican leadership has
come up with a privatized drug plan that has been rejected by both the
insurance industry and the drug stores as unworkable, and fails to
truly help seniors.
This is one more perfect example of why it matters who is in charge.
Mrs. BONO. Mr. Speaker, I rise today to support comprehensive health
care improvements for our country. The Medicare Modernization and
Prescription Drug Act of 2002 offers a real and immediate benefit to
our seniors, while also offering substantive improvements to a Medicare
system that will collapse in on itself without out reforms.
Currently the seniors in my district, which represent over one in
five of all individuals in California's 44th District, are without
prescription drug coverage that is essential to their quality of
health. With this legislation, these individuals will receive an
affordable option that will become a permanent facet of Medicare for
generations to come.
I have had the honor of serving on the Speaker's Prescription Drug
Action team, and we have worked hard to address both prescription drug
coverage and improvements to the Medicare system. These include helping
our doctors continue to better serve Medicare beneficiaries and helping
our hospitals to keep their doors open to those who can't afford to
meet even basic health care needs. In particular, the Medicaid
Disproportionate Share Hospital monies included in this bill are a
serious start to helping our public hospitals, including two in my
district.
There is still work to be done in properly funding these hospitals
that offer such essential services, but this comprehensive legislation
is taking a step in the right direction.
One of my constituents recently wrote to me and spoke of the urgency
with which we need to provide our seniors with affordable prescription
drug coverage. Her message is echoed by thousands of others, and she is
correct that we can no longer ignore the urgent need to improve our
health care system.
It is urgent because our seniors cannot continue to keep up with
rising prescription drug costs. It is urgent because our doctors and
hospitals must have the tools to continue to offer quality care. And it
is urgent because we can no longer afford to make patchwork fixes to a
program that has not received needed improvements since its inception
in 1965. It is for these reasons that I rise today in support of The
Medicare Modernization and Prescription Drug Act of 2002.
Mr. KIND. Mr. Speaker, providing affordable Medicare prescription
drug coverage for our Nation's seniors is one of the most pressing
issues facing our country today. Even though the elderly use the most
prescriptions, more than 75 percent of seniors on Medicare lack
reliable drug coverage. It is time to modernize Medicare to reflect our
current health care delivery system. The use of prescription
medications is as important today as the use of hospital beds was in
1965 when Medicare was created.
I have heard from a number of seniors in western Wisconsin regarding
the problems they have paying for prescription drugs. One woman from
Deer Park, Wisconsin, a small town in my district, wrote to me and
said:
My medication is $135.00 per month. Fortunately my husband
is not on any medication. If we both were not working part-
time, I guess that we would have to make a choice between
food and Medication--does one eat to survive or take the
medication for a ``long and happy life''?
What is to happen to this couple if the husband falls ill and has
high drug costs too?
Seniors without prescription drug coverage often pay the highest
prices for their medication. Pharmaceutical companies negotiate prices
with their most favored customers, such as HMOs, but seniors without
drug coverage do not benefit from these negotiations. Not only do my
seniors face price discrimination in their hometowns, but also they can
go to Canada and get the same medicine for a substantially cheaper
price. On average my constituents would pay about 80 percent less for
their drugs in Canada than they do at home in western Wisconsin. That
is wrong.
The cost of prescription medicines should not place financial on
seniors that would force them to choose between buying drugs and buying
food. We need to make prescription medicines affordable and accessible
to all of our seniors.
Unfortunately, today's debate is a sham. We will not have the
opportunity to discuss this issue in a fair and open process. The
majority decided to railroad the debate and silence the minority by not
allowing an alternative to be debated and voted upon. Our nation's
seniors deserve better. They deserve an open process, but the
Republican leadership has failed to deliver this.
The leadership has also failed seniors with their prescription drug
proposal. The Republican plan is doomed to fail because the plan relies
on health insurance companies to offer drug only polices which they
have said they won't offer. If insurance companies won't offer these
policies, how will seniors actually obtain prescription drug coverage
under the leadership plan?
Every insurance company with whom I have spoken has said that they
will not offer a drug-only insurance policy. In fact, during our last
debate on this issue, the Health Insurance Association of America,
which consists of nearly 300 insurance companies, released a statement
claiming, ``These `drug only' policies represent an empty promise to
America's seniors. They are not workable or realistic.''
[[Page H4296]]
Why should the insurance companies provide these drug only policies?
They are in the business of insuring risk and there is no risk
associated with a drug only policy. This single benefit policy will
result in adverse risk seleciton--only people with predictably high
prescription medicine costs will purchase the plan. This will increase
the cost to the insurance companies who in turn will pass the costs on
to the beneficiaries through higher premiums.
In addition, providing a drug benefit through private plans could be
problematic, specifically for folks living in rural and small
communities. There are no requirements as to what has to be covered and
the coverage may vary from area to area depending on the plan.
Wisconsin may end up on the short end of the stick like we have in the
past under Medicare. Another problem is the huge hole in coverage. Once
a senior hits $2,000 in drug costs there is no coverage until they
spend $3,700 in out-of-pocket expenses. Nearly half of all seniors have
drug expenditures over $2,000 and will receive no drug coverage for
part of the year. Further, there is no help for low-income seniors to
cover their drug costs over $2,000 and before they hit the stop-loss.
We must provide a real solution to the problem of prescription drug
coverage for our seniors. The Republican plan falls woefully short. The
Democratic proposal, however, heads in the right direction and builds
on the current Medicare program. The benefit would include: a $25/month
premium; a $100 annual deductible; 20 percent cost-sharing for drug
costs; and $2,000 out-of-pocket annual stop-loss. Low-income
individuals up to 150 percent of poverty will pay no premium or cost-
sharing. The Democratic plan would guarantee a minimum benefit and
ensure that those who live in Wisconsin would receive the same benefit
as those who live in California or Florida.
This plan is expensive but it would work because of its simplicity.
The question about its affordability depends on whether the American
people want a meaningful prescription drug program or if they would
rather see large tax cuts in the future for the wealthiest Americans.
It is unfortunate that the Republican leadership has squandered an
excellent opportunity to try and solve the problem of prescription drug
coverage in a bipartisan fashion. Instead they have steam-rolled ahead
and presented our Nation's seniors with an unworkable solution to a
grave problem. I urge my colleagues to reject this flawed proposal.
Mr. BEREUTER. Mr. Speaker, this Member will vote for H.R. 4954, the
Medicare Modernization and Prescription Drug Act of 2002. There are
elements in this Medicare reform legislation which improve the access
of health care services in rural areas.
For example, not only does this legislation continue an effort to
address some of this Member's concerns regarding the significant
difference in reimbursement levels for urban and rural health care
providers, it would also provide a 3-year fix for the Medicare
physician payment formula, resulting in a 6 percent increase in
Medicare payments over the next 3 years rather than the 14.2 percent
projected cut under current law.
For some time now, this Member has been aggressively pursuing an
issue related to the formula used in the Medicare program to reimburse
physicians and other health care providers for beneficiaries' medical
care. The problem is that it does not accurately measure the cost of
providing such services. The program reimburses physicians and other
health care providers in a manner that favors urban providers in a
manner that favors urban providers over rural providers. Instead,
Medicare payment formulas should more accurately compensate physicians
and providers who deliver high-quality, cost-effective services to
Medicare beneficiaries in all areas of the country.
Accordingly, this Member is pleased that the Medicare Modernization
and Prescription Drug Act of 2002 contains a compromise agreement that
would establish a floor of 9.985 for the physician work adjuster in
2004 (only), thereby raising all localities with a work adjuster below
9.985 to that level. This change would be dependent upon the outcome of
a General Accounting Office (GAO) study and secretarial discretion. The
Secretary of the Department of Health and Human Services would
determine, after taking into account the GAO report, if there is ``a
sound economic rationale for the implementation'' of such a change. If
so, the new floor would go into effect. The change would thereby allow
34 Medicare localities across the county, including this Member's home
state of Nebraska, to receive a higher reimbursement rate without
harming other localities. This language is a modified version of this
Member's legislation, the Rural Equity Payment Index Reform Act (H.R.
3569), which is currently co-sponsored on a bipartisan basis by 60
Members of the House. The language included in the House Medicare
Modernization and Prescription Drug Act is also a result of efforts by
the distinguished gentlelady from New Mexico [Mrs. Wilson], and pushed
hard to ensure such language was and the distinguished gentleman from
Wisconsin [Mr. Barrett], who pursued this issue in the House Energy and
Commerce Committee. This Member joined his colleagues, especially the
gentlelady from New Mexico (Mrs. Wilson), and pushed hard to ensure
such language was included in the final Medicare bill brought to the
House Floor for consideration today.
Establishing a floor of 0.985 to the Medicare physician work adjuster
would translate into approximately a $4 million annual increase in
Medicare payments to Nebraska physician and skilled health care
professionals in 2004. This is an important first step toward achieving
much needed Medicare reform.
This Member is also pleased that the bill would avert a series of
projected cuts of nearly 15 percent in Medicare payments. On November
1, 2001, the Centers for Medicare and Medicaid Services (CMS) announces
that it would lower payment rates for 2002 under the Medicare Physician
Fee Schedule. Estimates indicate that this change would result in a
$2.0 billion reduction in payments for 2002.
Reductions of this magnitude were completely unexpected and stemmed
from two major factors: the downturn of the economy and the related
reduction in the Gross Domestic Product that is used to establish the
sustainable growth rate for physician spending, and an error on the
part of the CMS in collecting physician payment information. This
legislation addresses this serious health care issue.
The Medicare Modernization and Prescription Drug Act of 2002 also
takes an important step forward in addressing the unintended
consequences of the Balanced Budget Act, as well as improving payments
for hospitals, particularly rural hospitals. For example, the bill
provides increased payment rates for hospitals in rural areas or in
metropolitan areas with a population of less than one million.
Under current law, Medicare pays for inpatient services in acute care
hospitals in large urban areas using a standardized payment amount that
is 1.6 percent larger than the standardized amount used to reimburse
hospitals in rural areas and smaller urban areas. This legislation,
over a 2-year period, would increase the standardized amount for
hospitals in rural and small urban areas to the standardized amount
paid to hospitals in large urban areas. According to the Nebraska
Hospital Association, for example, this could mean an additional $6
million annually for hospitals in Nebraska.
Additionally, the bill increases payments to non-teaching rural and
urban hospitals in states whose aggregate inpatient operating medical
margins are negative for rural hospitals or less than three percent for
urban hospitals. The Nebraska Hospital Association estimates that this
could result in an additional $8 million annually for Nebraska's
hospitals.
This Member will record two concerns about the initiation of any
Medicare prescription drug plan and that is, first, the rather
extraordinary cost of this new entitlement program which would have to
be paid for employers, employees, and the self-employed, recognizing
the high probability that these costs will be under-estimated in this
or any alternative proposals put before the Congress. That is the track
record for all past Medicare and Medicaid initiatives.
However, the major concern this Member has is the near certainty that
the cost of prescription drugs for Americans not eligible for the
proposed Medicare prescription drug benefits will increase because of
the Medicare prescription drug coverage offered to eligible senior
citizens under this or other proposals. When, for example, Medicaid
costs for nursing home care soared, cost restraints were imposed and
the operators cost-shifted to the private-pay and insurance-pay
residents. The same cost-shifting occurred when cost-restraints had to
be established on Medicare costs for hospitalization and health
professional fees. It is certain that some cost-shifting will occur in
short order when restraints inevitably will be placed on Medicare
prescription drug costs. The result will surely be that pharmaceutical
costs will be cost-shifted by the drug industry to everyone else in
America.
This legislation, in this crucial deficiency, does nothing to
restrain pharmaceutical costs and domestic cost-shifting. However,
after extensive consultation, House leadership has promised a vote to
those of us demanding some method to directly keep Medicare
prescription drug benefits of eligible senior citizens from causing
prescription drug costs to resultantly increase for other Americans.
One such vote could be on an implementable drug re-importation
program of FDA approved drugs for individual, wholesale, or retail
uses. Turn loose the American entrepreneurial proclivities on this
approach, and it will moderate the outrageously unacceptable level of
international cost-shifting that now falls onto the backs of American
consumers. Most other developed countries have imposed cost constraints
on the prescription drug costs borne by their consumers; therefore,
American and foreign-owned pharmaceutical firms are
[[Page H4297]]
charging what the market and tolerance of the American people will
bear. This legislation thus far does not address this huge problem--
ultimately providing Medicare drug benefits to eligible senior citizens
will make the cost of prescription drugs more expensive for most
Americans directly and indirectly through Medicare deductions from
their paychecks and through its effects on their employer's bottom
line.
Mr. Speaker, in conclusion, on balance, this Member supports H.R.
4954 because of the progress made in providing better access to quality
health care in non-metropolitan areas through the Medicare finance
reforms and because of the promised opportunity for a clear opportunity
for the House to soon cast votes on legislation which can restrain or
lower prescription drug costs for those Americans not eligible for
prospective Medicare prescription drug benefits. This Member will
support the advancement of H.R. 4954 to a stage where conferees can
craft what this Member would hope to be better legislation if the other
body passes its version of a Medicare reform and prescription drug
bill.
Mr. CHAMBLISS. Mr. Speaker, we need to strengthen, simplify, and
improve Medicare and provide prescription drug coverage for all seniors
and disabled Americans. It has been entirely too long that seniors have
done without substantial help in affording their prescription drugs. I
am committed to working hard to pass prescription drug relief for
America's seniors.
Tonight we will pass a fiscally responsible bill that allows seniors
and disabled Americans to purchase quality and affordable prescription
drugs, offers seniors third party buying power, and provides the
security of knowing they are protected from catastrophic pharmaceutical
bills.
We desperately need this prescription drug plan. Seniors need this
plan to finally receive prescription drug coverage they deserve along
with greater choice and flexibility. Further, this plan will
substantially help nursing facilities, home health agencies, rural
hospitals and local doctors provide better health services and ensure
quality health care for folks throughout Georgia.
This bill will not force folks into a Federal Government-run, one-
size-fits-all prescription drug plan that has too many rules,
regulations, and restrictions and that allows Washington bureaucrats to
decide what medicines can and can't be prescribed. This plan is
voluntary, and protects those seniors who are already satisfied with
their current prescription drug benefit by allowing them to stay in the
existing program.
With all these benefits, we need to make sure this legislation is
friendly to small businesses and our local pharmacies. I have heard
from a number of constituents and share their serious concerns that
pharmacists may lose access to networks and our seniors will not gain
access to benefits at their local pharmacy. Our hometown pharmacies
play a critical role in providing health care in our local communities.
We need to ensure that they are not put out of business by this
legislation and that pharmacists will have the same opportunity to
negotiate price reductions and provide discounted drugs to their
customers. It is important that pharmacists be involved in the decision
making process for these plans and have the same opportunities to
deliver lower costs to the consumer. I want our pharmacists to be able
to continue giving customers top-notch care, and I hope that as the
process moves forward on this important bill, these critical issues
will be adequately addressed.
It is no secret that prescription drug costs are an overwhelming
burden on the health and financial security of seniors and disabled
Americans. Too many senior citizens and disabled Americans face
decisions between putting food on their table and being able to afford
the prescription drugs they need. In the wealthiest country in the
world, our seniors should not be forced to make these decisions or do
without medication that would allow them to live longer healthier more
enjoyable lives, and I look forward to passing a responsible
prescription drug plan that helps America's seniors.
Mr. EVANS. Mr. Speaker, today's seniors increasingly depend on
prescription drugs to live healthy lives. But with prescription drug
prices skyrocketing, medication is out-of-reach for too many of our
Nation's seniors. All too often, we hear of seniors on tight budgets
who are forced to choose between medication and their next meal.
Congress must ensure that all seniors have access to afforable
prescription drug coverage, but the plan that the Republicans have
offered falls short. A voluntarily benefit added to Medicare would
guarantee all seniors access to affordable coverage.
I support a plan that provides a voluntary, guaranteed, defined
benefit under the Medicare program. A Medicare prescription drug plan
would leave nothing to surprise. Seniors would know how much to expect
to pay in premiums and co-payments. All seniors would be eligible to
participate. Moreover, this plan would allow Medicare to negotiate the
same price breaks for Medicare beneficiaries that are currently enjoyed
by other large scale buyers like HMOs and insurance companies.
The Republican plan is riddled with flaws. First, it is not a
Medicare benefit, rather it relies on private insurers who have already
made clear that they have no intention of providing drug only plans to
Medicare beneficaries. Second, the Republican proposal falls to rein in
the high costs of prescription drugs for seniors. Private insurers will
not be limited to what they may charge Medicare beneficiaries and will
do little to reduce the high out-of-pocket costs that seniors already
pay. Third, the GOP plan will only create more hardships for seniors
who will be forced to jump through the hoops of their private insurer
and be subjected to limited power provider and drug choices.
Mr. SMITH of Texas. Mr. Speaker, I support this legislation because
it provides a prescription drug benefit to all seniors using Medicare.
In these items of escalating prescription drug prices, it is
essential that seniors have access to affordable drugs to meet their
medical needs.
The best way to accomplish this goal is to lower the costs of
prescription drugs, ensure that all seniors have prescription drug
coverage and increase choices of coverage plans.
Patients who live in rural areas and communities deserve the same
access to physicians as their urban counterparts. As a member of the
Rural Health Care Caucus, I am pleased that this bill addresses
inequities between payments made to rural and urban hospitals, wage
adjustments for physicians in rural areas and funding for health care
organizations.
Not only does this legislation help consumers of prescription drugs,
but it also recognizes the importance of pharmacists in providing
prescription drugs, helps states cover their Medicare costs and
enhances employer-sponsored health care benefits for retirees.
My Democratic colleagues have proposed a bill that costs over $800
billion and sunsets after ten years. But what happens after ten years?
This bill is a common sense, realistic approach that provides
permanent coverage for seniors at a sensible cost. It gives special
attention to the needs of low-income seniors and those facing
exorbitant costs due to catastrophic illness.
The SPEAKER pro tempore. All time for debate has expired.
Pursuant to House Resolution 467, the previous question is ordered on
the bill, as amended.
The question is on engrossment and third reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
Motion to Recommit Offered by Mr. Gephardt
Mr. GEPHARDT. Mr. Speaker, I offer a motion to recommit.
The SPEAKER pro tempore. Is the gentleman opposed to the bill?
Mr. GEPHARDT. I am in its current form, Mr. Speaker.
The SPEAKER pro tempore. The Clerk will report the motion to
recommit.
The Clerk read as follows:
Mr. Gephardt moves to recommit the bill H.R. 4954 jointly
to the Committee on Ways and Means and the Committee on
Energy and Commerce with instructions to report the same back
to the House promptly with the following amendment:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; REFERENCES IN ACT; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Medicare
Rx Drug Benefit and Discount Act of 2002''.
(b) Amendments to Social Security Act.--Except as otherwise
specifically provided, whenever in title I of this Act an
amendment 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 that section or other provision of
the Social Security Act.
(c) BIPA; Secretary.--In this Act:
(1) BIPA.--The term ``BIPA'' means the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2000, as
enacted into law by section 1(a)(6) of Public Law 106-554.
(2) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(d) Table of Contents.--The table of contents of this Act
is as follows:
TITLE I--PRESCRIPTION DRUG PROVISIONS
Sec. 101. Voluntary medicare outpatient prescription medicine program.
``Part D--Voluntary Prescription Medicine Benefit for the Aged and
Disabled
``Sec. 1859. Medicare outpatient prescription medicine benefit.
``Sec. 1859A. Negotiating fair prices with pharmaceutical
manufacturers.
``Sec. 1859B. Contract authority.
[[Page H4298]]
``Sec. 1859C. Eligibility; voluntary enrollment; coverage.
``Sec. 1859D. Provision of, and entitlement to, benefits.
``Sec. 1859E. Administration; quality assurance.
``Sec. 1859F. Federal Medicare Prescription Medicine Trust Fund.
``Sec. 1859G. Compensation for employers covering retiree medicine
costs.
``Sec. 1859H. Medicare Prescription Medicine Advisory Committee.
Sec. 102. Provision of medicare outpatient prescription medicine
coverage under the Medicare+Choice program.
Sec. 103. Medigap revisions.
Sec. 104. Transitional assistance for low income beneficiaries.
Sec. 105. Expansion of membership and duties of Medicare Payment
Advisory Commission (MedPAC).
TITLE II--MEDICARE+CHOICE REVITALIZATION AND MEDICARE+CHOICE
COMPETITION PROGRAM
Sec. 201. Medicare+Choice improvements.
Sec. 202. Making permanent change in Medicare+Choice reporting
deadlines and annual, coordinated election period.
Sec. 203. Specialized Medicare+Choice plans for special needs
beneficiaries.
Sec. 204. Extension of reasonable cost and SHMO contracts.
Sec. 205. Continuous open enrollment and disenrollment.
Sec. 206. Limitation on Medicare+Choice cost-sharing.
Sec. 207. Extension of municipal health service demonstration projects.
TITLE III--RURAL HEALTH CARE IMPROVEMENTS
Sec. 301. Reference to full market basket increase for sole community
hospitals.
Sec. 302. Enhanced disproportionate share hospital (DSH) treatment for
rural hospitals and urban hospitals with fewer than 100
beds.
Sec. 303. 2-year phased-in increase in the standardized amount in rural
and small urban areas to achieve a single, uniform
standardized amount.
Sec. 304. More frequent update in weights used in hospital market
basket.
Sec. 305. Improvements to critical access hospital program.
Sec. 306. Extension of temporary increase for home health services
furnished in a rural area.
Sec. 307. Reference to 10 percent increase in payment for hospice care
furnished in a frontier area and rural hospice
demonstration project.
Sec. 308. Reference to priority for hospitals located in rural or small
urban areas in redistribution of unused graduate medical
education residencies.
Sec. 309. GAO study of geographic differences in payments for
physicians' services.
Sec. 310. Providing safe harbor for certain collaborative efforts that
benefit medically underserved populations.
Sec. 311. Relief for certain non-teaching hospitals.
TITLE IV--PROVISIONS RELATING TO PART A
Subtitle A--Inpatient Hospital Services
Sec. 401. Revision of acute care hospital payment updates.
Sec. 402. Freeze in level of adjustment for indirect costs of medical
education (IME) through fiscal year 2007.
Sec. 403. Recognition of new medical technologies under inpatient
hospital PPS.
Sec. 404. Phase-in of Federal rate for hospitals in Puerto Rico.
Sec. 405. Reference to provision relating to enhanced disproportionate
share hospital (DSH) payments for rural hospitals and
urban hospitals with fewer than 100 beds.
Sec. 406. Reference to provision relating to 2-year phased-in increase
in the standardized amount in rural and small urban areas
to achieve a single, uniform standardized amount.
Sec. 407. Reference to provision for more frequent updates in the
weights used in hospital market basket.
Sec. 408. Reference to provision making improvements to critical access
hospital program.
Subtitle B--Skilled Nursing Facility Services
Sec. 411. Payment for covered skilled nursing facility services.
Subtitle C--Hospice
Sec. 421. Coverage of hospice consultation services.
Sec. 422. 10 percent increase in payment for hospice care furnished in
a frontier area.
Sec. 423. Rural hospice demonstration project.
Subtitle D--Other Provisions
Sec. 431. Demonstration project for use of recovery audit contractors
for part A services.
TITLE V--PROVISIONS RELATING TO PART B
Subtitle A--Physicians' Services
Sec. 501. Revision of updates for physicians' services.
Sec. 502. Studies on access to physicians' services.
Sec. 503. MedPAC report on payment for physicians' services.
Sec. 504. 1-year extension of treatment of certain physician pathology
services under medicare.
Sec. 505. Physician fee schedule wage index revision.
Subtitle B--Other Services
Sec. 511. Competitive acquisition of certain items and services.
Sec. 512. Payment for ambulance services.
Sec. 513. 5-year extension of moratorium on therapy caps; provisions
relating to reports.
Sec. 514. Accelerated implementation of 20 percent coinsurance for
hospital outpatient department (OPD) services; other OPD
provisions.
Sec. 515. Coverage of an initial preventive physical examination.
Sec. 516. Renal dialysis services.
Sec. 517. Improved payment for certain mammography services.
Sec. 518. Waiver of part B late enrollment penalty for certain military
retirees; special enrollment period.
Sec. 519. Coverage of cholesterol and blood lipid screening.
TITLE VI--PROVISIONS RELATING TO PARTS A AND B
Subtitle A--Home Health Services
Sec. 601. Elimination of 15 percent reduction in payment rates under
the prospective payment system.
Sec. 602. Update in home health services.
Sec. 603. OASIS Task Force; suspension of certain OASIS data collection
requirements pending Task Force submittal of report.
Sec. 604. MedPAC study on medicare margins of home health agencies.
Subtitle B--Direct Graduate Medical Education
Sec. 611. Redistribution of unused resident positions.
Sec. 612. Increasing for 5 years to 100 percent of the locality
adjusted national average per resident amount the payment
floor for direct graduate medical education payments
under the medicare program.
Subtitle C--Other Provisions
Sec. 621. Modifications to Medicare Payment Advisory Commission
(MedPAC).
Sec. 622. Demonstration project for disease management for certain
medicare beneficiaries with diabetes.
Sec. 623. Demonstration project for medical adult day care services.
Sec. 624. Publication on final written guidance concerning prohibitions
against discrimination by national origin with respect to
health care services.
TITLE VII--MEDICAID PROVISIONS
Sec. 701. DSH provisions.
Sec. 702. 1-year extension of Q-I1 program.
TITLE I--PRESCRIPTION MEDICINE PROVISIONS
Subtitle A--MEDICARE PRESCRIPTION MEDICINE BENEFIT
SEC. 101. VOLUNTARY MEDICARE OUTPATIENT PRESCRIPTION MEDICINE
PROGRAM.
(a) In General.--Title XVIII (42 U.S.C. 1395 et seq.) is
amended--
(1) by redesignating section 1859 and part D as section
1858 and part E, respectively; and
(2) by inserting after part C the following new part:
``Part D--Voluntary Prescription Medicine Benefit for the Aged and
Disabled
``medicare outpatient prescription medicine benefit
``Sec. 1859. Subject to the succeeding provisions of this
part, the voluntary prescription medicine benefit program
under this part provides the following:
``(1) Premium.--The monthly premium is $25.
``(2) Deductible.--The annual deductible is $100.
``(3) Coinsurance.--The coinsurance is 20 percent.
``(4) Out-of-pocket limit.--The annual limit on out-of-
pocket spending on covered medicines is $2,000.
``negotiating fair prices with pharmaceutical manufacturers
``Sec. 1859A. (a) Authority to Negotiate Prices with
Manufacturers.--The Secretary shall, consistent with the
requirements of this part and the goals of providing quality
care and containing costs under this part, negotiate
contracts with manufacturers of covered outpatient
prescription medicines that provide for the maximum prices
that may be charged to individuals enrolled under this part
by participating pharmacies for dispensing such medicines to
such individuals.
``(b) Promotion of Breakthrough Medicines.--In conducting
negotiations with manufacturers under this part, the
Secretary shall take into account the goal of promoting the
development of breakthrough medicines (as defined in section
1859H(b)).
[[Page H4299]]
``contract authority
``Sec. 1859B. (a) Contract Authority.--
``(1) In general.--The Secretary is responsible for the
administration of this part and shall enter into contracts
with appropriate pharmacy contractors on a national or
regional basis to administer the benefits under this part.
``(2) Procedures.--The Secretary shall establish procedures
under which the Secretary--
``(A) accepts bids submitted by entities to serve as
pharmacy contractors under this part in a region or on a
national basis;
``(B) awards contracts to such contractors to administer
benefits under this part to eligible beneficiaries in the
region or on a national basis; and
``(C) provides for the termination (and nonrenewal) of a
contract in the case of a contractor's failure to meet the
requirements of the contract and this part.
``(3) Competitive procedures.--Competitive procedures (as
defined in section 4(5) of the Office of Federal Procurement
Policy Act (41 U.S.C. 403(5))) shall be used to enter into
contracts under this part.
``(4) Terms and conditions.--Such contracts shall have such
terms and conditions as the Secretary shall specify and shall
be for such terms (of at least 2 years, but not to exceed 5
years) as the Secretary shall specify consistent with this
part.
``(5) Use of pharmacy contractors in price negotiations.--
Such contracts shall require the contractor involved to
negotiate contracts with manufacturers that provide for
maximum prices for covered outpatient prescription medicines
that are lower than the maximum prices negotiated under
section 1859A(a), if applicable. The price reductions shall
be passed on to eligible beneficiaries and the Secretary
shall hold the contractor accountable for meeting performance
requirements with respect to price reductions and limiting
price increases.
``(6) Area for contracts.--
``(A) Regional basis.--
``(i) In general.--Except as provided in clause (ii) and
subject to subparagraph (B), the contract entered into
between the Secretary and a pharmacy contractor shall require
the contractor to administer the benefits under this part in
a region determined by the Secretary under subparagraph (B)
or on a national basis.
``(ii) Partial regional basis.--
``(I) In general.--If determined appropriate by the
Secretary, the Secretary may permit the benefits to be
administered in a partial region determined appropriate by
the Secretary.
``(II) Requirements.--If the Secretary permits
administration pursuant to subclause (I), the Secretary shall
ensure that the partial region in which administration is
effected is no smaller than a State and is at least the size
of the commercial service area of the contractor for that
area.
``(B) Determination.--
``(i) In general.--In determining regions for contracts
under this part, the Secretary shall--
``(I) take into account the number of individuals enrolled
under this part in an area in order to encourage
participation by pharmacy contractors; and
``(II) ensure that there are at least 10 different regions
in the United States.
``(ii) No administrative or judicial review.--The
determination of administrative areas under this paragraph
shall not be subject to administrative or judicial review.
``(7) Submission of bids.--
``(A) Submission.--
``(i) In general.--Subject to subparagraph (B), each entity
desiring to serve as a pharmacy contractor under this part in
an area shall submit a bid with respect to such area to the
Secretary at such time, in such manner, and accompanied by
such information as the Secretary may reasonably require.
``(ii) Bid that covers multiple areas.--The Secretary shall
permit an entity to submit a single bid for multiple areas if
the bid is applicable to all such areas.
``(B) Required information.--The bids described in
subparagraph (A) shall include--
``(i) a proposal for the estimated prices of covered
outpatient prescription medicines and the projected annual
increases in such prices, including the additional reduction
in price negotiated below the Secretary's maximum price and
differentials between preferred and nonpreferred prices, if
applicable;
``(ii) a statement regarding the amount that the entity
will charge the Secretary for administering the benefits
under the contract;
``(iii) a statement regarding whether the entity will
reduce the applicable coinsurance percentage pursuant to
section 1859E(a)(1)(A)(ii) and if so, the amount of such
reduction and how such reduction is tied to the performance
requirements described in subsection (c)(4)(A)(ii);
``(iv) a detailed description of the performance
requirements for which the administrative fee of the entity
will be subject to risk pursuant to subsection (c)(4)(A)(ii);
``(v) a detailed description of access to pharmacy services
provided by the entity, including information regarding
whether the pharmacy contractor will use a preferred pharmacy
network, and, if so, how the pharmacy contractor will ensure
access to pharmacies that choose to be outside of that
network, and whether there will be increased cost-sharing for
beneficiaries if they obtain medicines at such pharmacies;
``(vi) a detailed description of the procedures and
standards the entity will use for--
``(I) selecting preferred prescription medicines; and
``(II) determining when and how often the list of preferred
prescription medicines should be modified;
``(vii) a detailed description of any ownership or shared
financial interests with pharmaceutical manufacturers,
pharmacies, and other entities involved in the administration
or delivery of benefits under this part as proposed in the
bid;
``(viii) a detailed description of the entity's estimated
marketing and advertising expenditures related to enrolling
and retaining eligible beneficiaries; and
``(ix) such other information that the Secretary determines
is necessary in order to carry out this part, including
information relating to the bidding process under this part.
The procedures under clause (vi) shall include the use of a
pharmaceutical and therapeutics committee the members of
which include practicing pharmacists.
``(8) Awarding of contracts.--
``(A) Number of contracts.--The Secretary shall, consistent
with the requirements of this part and the goals of providing
quality care and of containing costs under this part, award
in a competitive manner at least 2 contracts to administer
benefits under this part in each area specified under
paragraph (6), unless only 1 pharmacy contractor submitting a
bid meets the minimum standards specified under this part and
by the Secretary.
``(B) Determination.--In determining which of the pharmacy
contractors that submitted bids that meet the minimum
standards specified under this part and by the Secretary to
award a contract, the Secretary shall consider the
comparative merits of each bid, as determined on the basis of
relevant factors, with respect to--
``(i) how well the contractor meets such minimum standards;
``(ii) the amount that the contractor will charge the
Secretary for administering the benefits under the contract;
``(iii) the performance standards established under
subsection (c)(2) and performance requirements for which the
administrative fee of the entity will be subject to risk
pursuant to subsection (c)(4)(A)(ii);
``(iv) the proposed negotiated prices of covered outpatient
medicines and annual increases in such prices;
``(v) factors relating to benefits, quality and
performance, beneficiary cost-sharing, and consumer
satisfaction;
``(vi) past performance and prior experience of the
contractor in administering a prescription medicine benefit
program;
``(vii) effectiveness of the contractor in containing costs
through pricing incentives and utilization management; and
``(viii) such other factors as the Secretary deems
necessary to evaluate the merits of each bid.
``(C) Exception to conflict of interest rules.--In awarding
contracts with pharmacy contractors under this part, the
Secretary may waive conflict of interest laws generally
applicable to Federal acquisitions (subject to such
safeguards as the Secretary may find necessary to impose) in
circumstances where the Secretary finds that such waiver--
``(i) is not inconsistent with the--
``(I) purposes of the programs under this part; or
``(II) best interests of beneficiaries enrolled under this
part; and
``(ii) permits a sufficient level of competition for such
contracts, promotes efficiency of benefits administration, or
otherwise serves the objectives of the program under this
part.
``(D) No administrative or judicial review.--The
determination of the Secretary to award or not award a
contract to a pharmacy contractor under this part shall not
be subject to administrative or judicial review.
``(9) Access to benefits in certain areas.--
``(A) Areas not covered by contracts.--The Secretary shall
develop procedures for the provision of covered outpatient
prescription medicines under this part to each eligible
beneficiary enrolled under this part that resides in an area
that is not covered by any contract under this part.
``(B) Beneficiaries residing in different locations.--The
Secretary shall develop procedures to ensure that each
eligible beneficiary enrolled under this part that resides in
different areas in a year is provided the benefits under this
part throughout the entire year.
``(b) Quality, Financial, and Other Standards and
Programs.--In consultation with appropriate pharmacy
contractors, pharmacists, and health care professionals with
expertise in prescribing, dispensing, and the appropriate use
of prescription medicines, the Secretary shall establish
standards and programs for the administration of this part to
ensure appropriate prescribing, dispensing, and utilization
of outpatient medicines under this part, to avoid adverse
medicine reactions, and to continually reduce errors in the
delivery of medically appropriate covered benefits. The
Secretary shall not award a contract to a pharmacy contractor
under this part unless the Secretary finds that the
contractor agrees to comply with such standards and programs
and other terms and conditions as the Secretary shall
specify. The standards and programs under this subsection
shall be applied
[[Page H4300]]
to any administrative agreements described in subsection (a)
the Secretary enters into. Such standards and programs shall
include the following:
``(1) Access.--
``(A) In general.--The pharmacy contractor shall ensure
that covered outpatient prescription medicines are accessible
and convenient to eligible beneficiaries enrolled under this
part for whom benefits are administered by the pharmacy
contractor, including by offering the services 24 hours a day
and 7 days a week for emergencies.
``(B) On-line review.--The pharmacy contractor shall
provide for on-line prospective review available 24 hours a
day and 7 days a week in order to evaluate each prescription
for medicine therapy problems due to duplication,
interaction, or incorrect dosage or duration of therapy.
``(C) Guaranteed access to medicines in rural and hard-to-
serve areas.--The Secretary shall ensure that all
beneficiaries have guaranteed access to the full range of
pharmaceuticals under this part, and shall give special
attention to access, pharmacist counseling, and delivery in
rural and hard-to-serve areas, including through the use of
incentives such as bonus payments to retail pharmacists in
rural areas and extra payments to the pharmacy contractor for
the cost of rapid delivery of pharmaceuticals and any other
actions necessary.
``(D) Preferred pharmacy networks.--
``(i) In general.--If a pharmacy contractor uses a
preferred pharmacy network to deliver benefits under this
part, such network shall meet minimum access standards
established by the Secretary.
``(ii) Standards.--In establishing standards under clause
(i), the Secretary shall take into account reasonable
distances to pharmacy services in both urban and rural areas.
``(E) Adherence to negotiated prices.--The pharmacy
contractor shall have in place procedures to assure
compliance of pharmacies with the requirements of subsection
(d)(3)(C) (relating to adherence to negotiated prices).
``(F) Continuity of care.--
``(i) In general.--The pharmacy contractor shall ensure
that, in the case of an eligible beneficiary who loses
coverage under this part with such entity under circumstances
that would permit a special election period (as established
by the Secretary under section 1859C(b)(3)), the contractor
will continue to provide coverage under this part to such
beneficiary until the beneficiary enrolls and receives such
coverage with another pharmacy contractor under this part or,
if eligible, with a Medicare+Choice organization.
``(ii) Limited period.--In no event shall a pharmacy
contractor be required to provide the extended coverage
required under clause (i) beyond the date which is 30 days
after the coverage with such contractor would have terminated
but for this subparagraph.
``(2) Enrollee guidelines.--The pharmacy contractor shall,
consistent with State law, apply guidelines for counseling
enrollees regarding--
``(A) the proper use of covered outpatient prescription
medicine: and
``(B) interactions and contra-indications.
``(3) Education.--The pharmacy contractor shall apply
methods to identify and educate providers, pharmacists, and
enrollees regarding--
``(A) instances or patterns concerning the unnecessary or
inappropriate prescribing or dispensing of covered outpatient
prescription medicines;
``(B) instances or patterns of substandard care;
``(C) potential adverse reactions to covered outpatient
prescription medicines;
``(D) inappropriate use of antibiotics;
``(E) appropriate use of generic products; and
``(F) the importance of using covered outpatient
prescription medicines in accordance with the instruction of
prescribing providers.
``(4) Coordination.--The pharmacy contractor shall
coordinate with State prescription medicine programs, other
pharmacy contractors, pharmacies, and other relevant entities
as necessary to ensure appropriate coordination of benefits
with respect to enrolled individuals when such individual is
traveling outside the home service area, and under such other
circumstances as the Secretary may specify.
``(5) Cost data.--
``(A) The pharmacy contractor shall make data on
prescription medicine negotiated prices (including data on
discounts) available to the Secretary.
``(B) The Secretary shall require, either directly or
through a pharmacy contractor, that participating
pharmacists, physicians, and manufacturers--
``(i) maintain their prescription medicine cost data
(including data on discounts) in a form and manner specified
by the Secretary;
``(ii) make such prescription medicine cost data available
for review and audit by the Secretary; and
``(iii) certify that the prescription medicine cost data
are current, accurate, and complete, and reflect all
discounts obtained by the pharmacist or physician in the
purchasing of covered outpatient prescription medicines.
Discounts referred to in subparagraphs (A) and (B) shall
include all volume discounts, manufacturer rebates, prompt
payment discounts, free goods, in-kind services, or any other
thing of financial value provided explicitly or implicitly in
exchange for the purchase of a covered outpatient
prescription medicine.
``(6) Reporting.--The pharmacy contractor shall provide the
Secretary with periodic reports on--
``(A) the contractor's costs of administering this part;
``(B) utilization of benefits under this part;
``(C) marketing and advertising expenditures related to
enrolling and retaining individuals under this part; and
``(D) grievances and appeals.
``(7) Records and audits.--The pharmacy contractor shall
maintain adequate records related to the administration of
benefits under this part and afford the Secretary access to
such records for auditing purposes.
``(8) Approval of marketing material and application
forms.--The pharmacy contractor shall comply with
requirements of section 1851(h) (relating to marketing
material and application forms) with respect to this part in
the same manner as such requirements apply under part C,
except that the provisions of paragraph (4)(A) of such
section shall not apply with respect to discounts or rebates
provided in accordance with this part.
``(c) Incentives for Cost and Utilization Management and
Quality Improvement.--
``(1) In general.--The Secretary shall include in a
contract awarded under subsection (b) with a pharmacy
contractor such incentives for cost and utilization
management and quality improvement as the Secretary may deem
appropriate. The contract may provide financial or other
incentives to encourage greater savings to the program under
this part.
``(2) Performance standards.--The Secretary shall provide
for performance standards (which may include monetary bonuses
if the standards are met and penalties if the standards are
not met), including standards relating to the time taken to
answer member and pharmacy inquiries (written or by
telephone), the accuracy of responses, claims processing
accuracy, online system availability, appeal procedure
turnaround time, system availability, the accuracy and
timeliness of reports, and level of beneficiary satisfaction.
``(3) Other incentives.--Such incentives under this
subsection may also include--
``(A) financial incentives under which savings derived from
the substitution of generic and other preferred multi-source
medicines in lieu of nongeneric and nonpreferred medicines
are made available to pharmacy contractors, pharmacies,
beneficiaries, and the Federal Medicare Prescription Medicine
Trust Fund; and
``(B) any other incentive that the Secretary deems
appropriate and likely to be effective in managing costs or
utilization or improving quality that does not reduce the
access of beneficiaries to medically necessary covered
outpatient medicines.
``(4) Requirements for procedures.--
``(A) In general.--The Secretary shall establish procedures
for making payments to each pharmacy contractor with a
contract under this part for the administration of the
benefits under this part. The procedures shall provide for
the following:
``(i) Administrative payment.--Payment of administrative
fees for such administration.
``(ii) Risk requirement.--An adjustment of a percentage
(determined under subparagraph (B)) of the administrative fee
payments made to a pharmacy contractor to ensure that the
contractor, in administering the benefits under this part,
pursues performance requirements established by the
Secretary, including the following:
``(I) Quality service.--The contractor provides eligible
beneficiaries for whom it administers benefits with quality
services, as measured by such factors as sustained pharmacy
network access, timeliness and accuracy of service delivery
in claims processing and card production, pharmacy and member
service support access, and timely action with regard to
appeals and current beneficiary service surveys.
``(II) Quality clinical care.--The contractor provides such
beneficiaries with quality clinical care, as measured by such
factors as providing notification to such beneficiaries and
to providers in order to prevent adverse drug reactions and
reduce medication errors and specific clinical suggestions to
improve health and patient and prescriber education as
appropriate.
``(III) Control of medicare costs.--The contractor contains
costs under this part to the Federal Medicare Prescription
Medicine Trust Fund and enrollees, as measured by generic
substitution rates, price discounts, and other factors
determined appropriate by the Secretary that do not reduce
the access of beneficiaries to medically necessary covered
outpatient prescription medicines.
``(B) Percentage of payment tied to risk.--
``(i) In general.--Subject to clause (ii), the Secretary
shall determine the percentage of the administrative payments
to a pharmacy contractor that will be tied to the performance
requirements described in subparagraph (A)(ii).
``(ii) Limitation on risk to ensure program stability.--In
order to provide for program stability, the Secretary may not
establish a percentage to be adjusted under this paragraph at
a level that jeopardizes the ability of a pharmacy contractor
to administer the benefits under this part or administer such
benefits in a quality manner.
[[Page H4301]]
``(C) Risk adjustment of payments based on enrollees in
plan.--To the extent that a pharmacy contractor is at risk
under this paragraph, the procedures established under this
paragraph may include a methodology for risk adjusting the
payments made to such contractor based on the differences in
actuarial risk of different enrollees being served if the
Secretary determines such adjustments to be necessary and
appropriate.
``(d) Authority Relating to Pharmacy Participation.--
``(1) In general.--Subject to the succeeding provisions of
this subsection, a pharmacy contractor may establish
consistent with this part conditions for the participation of
pharmacies, including conditions relating to quality
(including reduction of medical errors) and technology.
``(2) Agreements with pharmacies.--Each pharmacy contractor
shall enter into a participation agreement with any pharmacy
that meets the requirements of this subsection and section
1859E to furnish covered outpatient prescription medicines to
individuals enrolled under this part.
``(3) Terms of agreement.--An agreement under this
subsection shall include the following terms and conditions:
``(A) Applicable requirements.--The pharmacy shall meet
(and throughout the contract period continue to meet) all
applicable Federal requirements and State and local licensing
requirements.
``(B) Access and quality standards.--The pharmacy shall
comply with such standards as the Secretary (and such a
pharmacy contractor) shall establish concerning the quality
of, and enrolled individuals' access to, pharmacy services
under this part. Such standards shall require the pharmacy--
``(i) not to refuse to dispense covered outpatient
prescription medicines to any individual enrolled under this
part;
``(ii) to keep patient records (including records on
expenses) for all covered outpatient prescription medicines
dispensed to such enrolled individuals;
``(iii) to submit information (in a manner specified by the
Secretary to be necessary to administer this part) on all
purchases of such medicines dispensed to such enrolled
individuals; and
``(iv) to comply with periodic audits to assure compliance
with the requirements of this part and the accuracy of
information submitted.
``(C) Adherence to negotiated prices.--(i) The total charge
for each medicine dispensed by the pharmacy to an enrolled
individual under this part, without regard to whether the
individual is financially responsible for any or all of such
charge, shall not exceed the price negotiated under section
1859A(a) or, if lower, negotiated under subsection (a)(5)
(or, if less, the retail price for the medicine involved)
with respect to such medicine plus a reasonable dispensing
fee determined contractually with the pharmacy contractor.
``(ii) The pharmacy does not charge (or collect from) an
enrolled individual an amount that exceeds the individual's
obligation (as determined in accordance with the provisions
of this part) of the applicable price described in clause
(i).
``(D) Additional requirements.--The pharmacy shall meet
such additional contract requirements as the applicable
pharmacy contractor specifies under this section.
``(4) Applicability of fraud and abuse provisions.--The
provisions of section 1128 through 1128C (relating to fraud
and abuse) apply to pharmacies participating in the program
under this part.
``eligibility; voluntary enrollment; coverage
``Sec. 1859C. (a) Eligibility.--Each individual who is
entitled to hospital insurance benefits under part A or is
eligible to be enrolled in the medical insurance program
under part B is eligible to enroll in accordance with this
section for outpatient prescription medicine benefits under
this part.
``(b) Voluntary Enrollment.--
``(1) In general.--An individual may enroll under this part
only in such manner and form as may be prescribed by
regulations, and only during an enrollment period prescribed
in or under this subsection.
``(2) Initial enrollment period.--
``(A) Individuals currently covered.--In the case of an
individual who satisfies subsection (a) as of November 1,
2004, the initial general enrollment period shall begin on
August 1, 2004, and shall end on March 1, 2005.
``(B) Individual covered in future.--In the case of an
individual who first satisfies subsection (a) on or after
November 1, 2004, the individual's initial enrollment period
shall begin on the first day of the third month before the
month in which such individual first satisfies such paragraph
and shall end seven months later. The Secretary shall apply
rules similar to the rule described in the second sentence of
section 1837(d).
``(3) Special enrollment periods (without premium
penalty).--
``(A) Employer coverage at time of initial general
enrollment period.--In the case of an individual who--
``(i) at the time the individual first satisfies subsection
(a) is enrolled in a group health plan (including
continuation coverage) that provides outpatient prescription
medicine coverage by reason of the individual's (or the
individual's spouse's) current (or, in the case of
continuation coverage, former) employment status, and
``(ii) has elected not to enroll (or to be deemed enrolled)
under this subsection during the individual's initial
enrollment period,
there shall be a special enrollment period of 6 months
beginning with the first month that includes the date of the
individual's (or individual's spouse's) retirement from or
termination of current employment status with the employer
that sponsors the plan, or, in the case of continuation
coverage, that includes the date of termination of such
coverage, or that includes the date the plan substantially
terminates outpatient prescription medicine coverage.
``(B) Dropping of retiree prescription medicine coverage.--
In the case of an individual who--
``(i) at the time the individual first satisfies subsection
(a) is enrolled in a group health plan that provides
outpatient prescription medicine coverage other than by
reason of the individual's (or the individual's spouse's)
current employment; and
``(ii) has elected not to enroll (or to be deemed enrolled)
under this subsection during the individual's initial
enrollment period,
there shall be a special enrollment period of 6 months
beginning with the first month that includes the date that
the plan substantially terminates outpatient prescription
medicine coverage and ending 6 months later.
``(C) Loss of medicare+choice prescription medicine
coverage.--In the case of an individual who is enrolled under
part C in a Medicare+Choice plan that provides prescription
medicine benefits, if such enrollment is terminated because
of the termination or reduction in service area of the plan,
there shall be a special enrollment period of 6 months
beginning with the first month that includes the date that
such plan is terminated or such reduction occurs and ending 6
months later.
``(D) Loss of medicaid prescription medicine coverage.--In
the case of an individual who--
``(i) satisfies subsection (a);
``(ii) loses eligibility for benefits (that include
benefits for prescription medicine) under a State plan after
having been enrolled (or determined to be eligible) for such
benefits under such plan; and
``(iii) is not otherwise enrolled under this subsection at
the time of such loss of eligibility,
there shall be a special enrollment period specified by the
Secretary of not less than 6 months beginning with the first
month that includes the date that the individual loses such
eligibility.
``(4) Late enrollment with premium penalty.--The Secretary
shall permit an individual who satisfies subsection (a) to
enroll other than during the initial enrollment period under
paragraph (2) or a special enrollment period under paragraph
(3). But, in the case of such an enrollment, the amount of
the monthly premium of the individual is subject to an
increase under section 1859C(e)(1).
``(5) Information.--
``(A) In general.--The Secretary shall broadly distribute
information to individuals who satisfy subsection (a) on the
benefits provided under this part. The Secretary shall
periodically make available information on the cost
differentials to enrollees for the use of generic medicines
and other medicines.
``(B) Toll-free hotline.--The Secretary shall maintain a
toll-free telephone hotline (which may be a hotline already
used by the Secretary under this title) for purposes of
providing assistance to beneficiaries in the program under
this part, including responding to questions concerning
coverage, enrollment, benefits, grievances and appeals
procedures, and other aspects of such program.
``(6) Enrollee defined.--For purposes of this part, the
term `enrollee' means an individual enrolled for benefits
under this part.
``(c) Coverage Period.--
``(1) In general.--The period during which an individual is
entitled to benefits under this part (in this subsection
referred to as the individual's `coverage period') shall
begin on such a date as the Secretary shall establish
consistent with the type of coverage rules described in
subsections (a) and (e) of section 1838, except that in no
case shall a coverage period begin before January 1, 2005. No
payments may be made under this part with respect to the
expenses of an individual unless such expenses were incurred
by such individual during a period which, with respect to the
individual, is a coverage period.
``(2) Termination.--The Secretary shall provide for the
application of provisions under this subsection similar to
the provisions in section 1838(b).
``(d) Provision of Benefits to Medicare+Choice Enrollees.--
In the case of an individual who is enrolled under this part
and is enrolled in a Medicare+Choice plan under part C, the
individual shall be provided the benefits under this part
through such plan and not through payment under this part.
``(e) Late Enrollment Penalties; Payment of Premiums.--
``(1) Late enrollment penalty.--
``(A) In general.--In the case of a late enrollment
described in subsection (b)(4), subject to the succeeding
provisions of this paragraph, the Secretary shall establish
procedures for increasing the amount of the monthly premium
under this part applicable to such enrollee by an amount that
the Secretary determines is actuarially sound for each such
period.
[[Page H4302]]
``(B) Periods taken into account.--For purposes of
calculating any 12-month period under subparagraph (A), there
shall be taken into account months of lapsed coverage in a
manner comparable to that applicable under the second
sentence of section 1839(b).
``(C) Periods not taken into account.--
``(i) In general.--For purposes of calculating any 12-month
period under subparagraph (A), subject to clause (ii), there
shall not be taken into account months for which the enrollee
can demonstrate that the enrollee was covered under a group
health plan that provides coverage of the cost of
prescription medicines whose actuarial value (as defined by
the Secretary) to the enrollee equals or exceeds the
actuarial value of the benefits provided to an individual
enrolled in the outpatient prescription medicine benefit
program under this part.
``(ii) Application.--This subparagraph shall only apply
with respect to a coverage period the enrollment for which
occurs before the end of the 60-day period that begins on the
first day of the month which includes the date on which the
plan terminates or reduces its service area (in a manner that
results in termination of enrollment), ceases to provide, or
reduces the value of the prescription medicine coverage under
such plan to below the value of the coverage provided under
the program under this part.
``(2) Incorporation of premium payment and government
contributions provisions.--The provisions of sections 1840
and 1844(a)(1) shall apply to enrollees under this part in
the same manner as they apply to individuals 65 years of age
or older enrolled under part B. For purposes of this
subsection, any reference in a section referred to in a
previous subsection to the Federal Supplementary Medical
Insurance Trust Fund is deemed a reference to the Federal
Medicare Prescription Medicine Trust Fund.
``(f) Election of Pharmacy Contractor To Administer
Benefits.--The Secretary shall establish a process whereby
each individual enrolled under this part and residing in a
region may elect the pharmacy contractor that will administer
the benefits under this part with respect to the individual.
Such process shall permit the individual to make an initial
election and to change such an election on at least an annual
basis and under such other circumstances as the Secretary
shall specify.
``provision of, and entitlement to, benefits
``Sec. 1859D. (a) Benefits.--Subject to the succeeding
provisions of this section, the benefits provided to an
enrollee by the program under this part shall consist of the
following:
``(1) Covered outpatient prescription medicine benefits.--
Entitlement to have payment made on the individual's behalf
for covered outpatient prescription medicines.
``(2) Limitation on cost-sharing for part b outpatient
prescription medicines.--
``(A) In general.--Once an enrollee has incurred aggregate
countable cost-sharing (as defined in subparagraph (B)) equal
to the stop-loss limit specified in subsection (c)(4) for
expenses in a year, entitlement to the elimination of cost-
sharing otherwise applicable under part B for additional
expenses incurred in the year for outpatient prescription
medicines or biologicals for which payment is made under part
B.
``(B) Countable cost-sharing defined.--For purposes of this
part, the term `countable cost-sharing' means--
``(i) out-of-pocket expenses for outpatient prescription
medicines with respect to which benefits are payable under
part B, and
``(ii) cost-sharing under subsections (c)(3)(B) and
(c)(3)(C)(i).
``(b) Covered Outpatient Prescription Medicine Defined.--
``(1) In general.--Except as provided in paragraph (2), for
purposes of this part the term `covered outpatient
prescription medicine' means any of the following products:
``(A) A medicine which may be dispensed only upon
prescription, and--
``(i) which is approved for safety and effectiveness as a
prescription medicine under section 505 of the Federal Food,
Drug, and Cosmetic Act;
``(ii)(I) which was commercially used or sold in the United
States before the date of enactment of the Drug Amendments of
1962 or which is identical, similar, or related (within the
meaning of section 310.6(b)(1) of title 21 of the Code of
Federal Regulations) to such a medicine, and (II) which has
not been the subject of a final determination by the
Secretary that it is a `new drug' (within the meaning of
section 201(p) of the Federal Food, Drug, and Cosmetic Act)
or an action brought by the Secretary under section 301,
302(a), or 304(a) of such Act to enforce section 502(f) or
505(a) of such Act; or
``(iii)(I) which is described in section 107(c)(3) of the
Drug Amendments of 1962 and for which the Secretary has
determined there is a compelling justification for its
medical need, or is identical, similar, or related (within
the meaning of section 310.6(b)(1) of title 21 of the Code of
Federal Regulations) to such a medicine, and (II) for which
the Secretary has not issued a notice of an opportunity for a
hearing under section 505(e) of the Federal Food, Drug, and
Cosmetic Act on a proposed order of the Secretary to withdraw
approval of an application for such medicine under such
section because the Secretary has determined that the
medicine is less than effective for all conditions of use
prescribed, recommended, or suggested in its labeling.
``(B) A biological product which--
``(i) may only be dispensed upon prescription;
``(ii) is licensed under section 351 of the Public Health
Service Act; and
``(iii) is produced at an establishment licensed under such
section to produce such product.
``(C) Insulin approved under appropriate Federal law, and
needles, syringes, and disposable pumps for the
administration of such insulin.
``(D) A prescribed medicine or biological product that
would meet the requirements of subparagraph (A) or (B) but
that is available over-the-counter in addition to being
available upon prescription, but only if the particular
dosage form or strength prescribed and required for the
individual is not available over-the-counter.
``(E) Smoking cessation agents (as specified by the
Secretary).
``(2) Exclusion.--The term `covered outpatient prescription
medicine' does not include--
``(A) medicines or classes of medicines, 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), as the
Secretary may specify and does not include such other
medicines, classes, and uses as the Secretary may specify
consistent with the goals of providing quality care and
containing costs under this part;
``(B) except as provided in paragraphs (1)(D) and (1)(E),
any product which may be distributed to individuals without a
prescription;
``(C) any product when furnished as part of, or as incident
to, a diagnostic service or any other item or service for
which payment may be made under this title; or
``(D) any product that is covered under part B of this
title.
``(c) Payment of Benefits.--
``(1) Covered outpatient prescription medicines.--There
shall be paid from the Federal Medicare Prescription Medicine
Trust Fund, in the case of each enrollee who incurs expenses
for medicines with respect to which benefits are payable
under this part under subsection (a)(1), amounts equal to the
sum of--
``(A) the price for which the medicine is made available
under this part (consistent with sections 1859A and 1859B),
reduced by any applicable cost-sharing under paragraphs (2)
and (3); and
``(B) a reasonable dispensing fee.
The price under subparagraph (A) shall in no case exceed the
retail price for the medicine involved.
``(2) Deductible.--The amount of payment under paragraph
(1) for expenses incurred in a year, beginning with 2005,
shall be reduced by an annual deductible equal to the amount
specified in section 1859(2) (subject to adjustment under
paragraph (8)). Only expenses for countable cost-sharing (as
defined in subsection (a)(2)(B)) shall be taken into account
in applying this paragraph.
``(3) Coinsurance.--
``(A) In general.--The amount of payment under paragraph
(1) for expenses incurred in a year shall be further reduced
(subject to the stop-loss limit under paragraph (4)) by
coinsurance as provided under this paragraph.
``(B) Preferred medicines.--The coinsurance under this
paragraph in the case of a preferred medicine (including a
medicine treated as a preferred medicine under paragraph
(5)), is equal to 20 percent of the price applicable under
paragraph (1)(A) (or such lower percentage as may be provided
for under section 1859E(a)(1)(A)(ii)). In this part, the term
`preferred medicine' means, with respect to medicines
classified within a therapeutic class, those medicines which
have been designated as a preferred medicine by the Secretary
or the pharmacy contractor involved with respect to that
class and (in the case of a nongeneric medicine) with respect
to which a contract has been negotiated under this part.
``(C) Nonpreferred medicines.--The coinsurance under this
paragraph in the case of a nonpreferred medicine that is not
treated as a preferred medicine under paragraph (5) is equal
to the sum of--
``(i) 20 percent of the price for lowest price preferred
medicine that is within the same therapeutic class; and
``(ii) the amount by which--
``(I) the price at which the nonpreferred medicine is made
available to the enrollee; exceeds
``(II) the price of such lowest price preferred medicine.
``(4) No coinsurance once out-of-pocket expenditures equal
stop-loss limit.--Once an enrollee has incurred aggregate
countable cost-sharing under paragraph (3) (including cost-
sharing under part B attributable to outpatient prescription
drugs or biologicals) equal to the amount specified in
section 1859(4) (subject to adjustment under paragraph (8))
for expenses in a year--
``(A) there shall be no coinsurance under paragraph (3) for
additional expenses incurred in the year involved; and
``(B) there shall be no coinsurance under part B for
additional expenses incurred in the year involved for
outpatient prescription drugs and biologicals.
``(5) Appeals rights relating to coverage of nonpreferred
medicines.--
``(A) Procedures regarding the determination of medicines
that are medically
[[Page H4303]]
necessary.--Each pharmacy contractor shall have in place
procedures on a case-by-case basis to treat a nonpreferred
medicine as a preferred medicine under this part if the
preferred medicine is determined to be not as effective for
the enrollee or to have significant adverse effect on the
enrollee. Such procedures shall require that such
determinations are based on professional medical judgment,
the medical condition of the enrollee, and other medical
evidence.
``(B) Procedures regarding denials of care.--Such
contractor shall have in place procedures to ensure--
``(i) a timely internal review for resolution of denials of
coverage (in whole or in part and including those regarding
the coverage of nonpreferred medicines) in accordance with
the medical exigencies of the case and a timely resolution of
complaints, by enrollees in the plan, or by providers,
pharmacists, and other individuals acting on behalf of each
such enrollee (with the enrollee's consent) in accordance
with requirements (as established by the Secretary) that are
comparable to such requirements for Medicare+Choice
organizations under part C;
``(ii) that the entity complies in a timely manner with
requirements established by the Secretary that (I) provide
for an external review by an independent entity selected by
the Secretary of denials of coverage described in clause (i)
not resolved in the favor of the beneficiary (or other
complainant) under the process described in such clause and
(II) are comparable to the external review requirements
established for Medicare+Choice organizations under part C;
and
``(iii) that enrollees are provided with information
regarding the appeals procedures under this part at the time
of enrollment with a pharmacy contractor under this part and
upon request thereafter.
``(6) Transfer of funds to cover costs of part b
prescription medicine catastrophic benefit.--With respect to
benefits described in subsection (a)(2), there shall
transferred from the Federal Medicare Prescription Medicine
Trust Fund to the Federal Supplementary Medical Insurance
Trust Fund amounts equivalent to the elimination of cost-
sharing described in such subsection.
``(7) Permitting application under part b of negotiated
prices.--For purposes of making payment under part B for
medicines that would be covered outpatient prescription
medicines but for the exclusion under subparagraph (B) or (C)
of subsection (b)(2), the Secretary may elect to apply the
payment basis used for payment of covered outpatient
prescription medicines under this part instead of the payment
basis otherwise used under such part, if it results in a
lower cost to the program.
``(8) Inflation adjustment.--
``(A) In general.--With respect to expenses incurred in a
year after 2005--
``(i) the deductible under paragraph (2) is equal to the
deductible determined under such paragraph (or this
subparagraph) for the previous year increased by the
percentage increase in per capita program expenditures (as
estimated in advance for the year involved under subparagraph
(B)); and
``(ii) the stop-loss limit under paragraph (3) is equal to
the stop-loss limit determined under such paragraph (or this
subparagraph) for the previous year increased by such
percentage increase.
The Secretary shall adjust such percentage increase in
subsequent years to take into account misestimations made of
the per capita program expenditures under clauses (i) and
(ii) in previous years. Any increase under this subparagraph
that is not a multiple of $10 shall be rounded to the nearest
multiple of $10.
``(B) Estimation of increase in per capita program
expenditures.--The Secretary shall before the beginning of
each year (beginning with 2006) estimate the percentage
increase in average per capita aggregate expenditures from
the Federal Medicare Prescription Medicine Trust Fund for the
year involved compared to the previous year.
``(C) Reconciliation.--The Secretary shall also compute
(beginning with 2007) the actual percentage increase in such
aggregate expenditures in order to provide for reconciliation
of deductibles, stop-loss limits, and premiums under the
second sentence of subparagraph (A) and under section
1859D(d)(2).
``(d) Amount of Premiums.--
``(1) Monthly premium rate in 2005.--The monthly premium
rate in 2005 for prescription medicine benefits under this
part is the amount specified in section 1859(1).
``(2) Inflation adjustment for subsequent years.--The
monthly premium rate for a year after 2005 for prescription
medicine benefits under this part is equal to the monthly
premium rate for the previous year under this subsection
increased by the percentage increase in per capita program
expenditures (as estimated in advance for the year involved
under subsection (c)(8)(B)). The Secretary shall adjust such
percentage in subsequent years to take into account
misestimations made of the per capita program expenditures
under the previous sentence in previous years. Any increase
under this paragraph that is not a multiple of $1 shall be
rounded to the nearest multiple of $1.
``administration; quality assurance
``Sec. 1859E. (a) Rules Relating to Provision of
Benefits.--
``(1) Provision of benefits.--
``(A) In general.--In providing benefits under this part,
the Secretary (directly or through the contracts with
pharmacy contractors) shall employ mechanisms to provide
benefits appropriately and efficiently, and those mechanisms
may include--
``(i) the use of--
``(I) price negotiations (consistent with subsection (b));
``(II) reduced coinsurance (below 20 percent) to encourage
the utilization of appropriate preferred medicines; and
``(III) methods to reduce medication errors and encourage
appropriate use of medications; and
``(ii) permitting pharmacy contractors, as approved by the
Secretary, to make exceptions to section 1859D(c)(3)(C)
(relating to cost-sharing for non-preferred medicines) to
secure best prices for enrollees so long as the payment
amount under section 1859D(c)(1) does not equal zero.
``(B) Construction.--Nothing in this subsection shall be
construed to prevent the Secretary (directly or through the
contracts with pharmacy contractors) from using incentives to
encourage enrollees to select generic or other cost-effective
medicines, so long as--
``(i) such incentives are designed not to result in any
increase in the aggregate expenditures under the Federal
Medicare Prescription Medicine Trust Fund; and
``(ii) a beneficiary's coinsurance shall be no greater than
20 percent in the case of a preferred medicine (including a
nonpreferred medicine treated as a preferred medicine under
section 1859D(c)(5)).
``(2) Construction.--Nothing in this part shall preclude
the Secretary or a pharmacy contractor from--
``(A) educating prescribing providers, pharmacists, and
enrollees about medical and cost benefits of preferred
medicines;
``(B) requesting prescribing providers to consider a
preferred medicine prior to dispensing of a nonpreferred
medicine, as long as such request does not unduly delay the
provision of the medicine;
``(C) using mechanisms to encourage enrollees under this
part to select cost-effective medicines or less costly means
of receiving or administering medicines, including the use of
therapeutic interchange programs, disease management
programs, and notification to the beneficiary that a more
affordable generic medicine equivalent was not selected by
the prescribing provider and a statement of the lost cost
savings to the beneficiary;
``(D) using price negotiations to achieve reduced prices on
covered outpatient prescription medicines, including new
medicines, medicines for which there are few therapeutic
alternatives, and medicines of particular clinical importance
to individuals enrolled under this part; and
``(E) utilizing information on medicine prices of OECD
countries and of other payors in the United States in the
negotiation of prices under this part.
``(b) Price Negotiations Process.--
``(1) Requirements with respect to preferred medicines.--
Negotiations of contracts with manufacturers with respect to
covered outpatient prescription medicines under this part
shall be conducted in a manner so that--
``(A) there is at least a contract for a medicine within
each therapeutic class (as defined by the Secretary in
consultation with such Medicare Prescription Medicine
Advisory Committee);
``(B) if there is more than 1 medicine available in a
therapeutic class, there are contracts for at least 2
medicines within such class unless determined clinically
inappropriate in accordance with standards established by the
Secretary; and
``(C) if there are more than 2 medicines available in a
therapeutic class, there is a contract for at least 2
medicines within such class and a contract for generic
medicine substitute if available unless determined clinically
inappropriate in accordance with standards established by the
Secretary.
``(2) Establishment of therapeutic classes.--The Secretary,
in consultation with the Medicare Prescription Medicine
Advisory Committee (established under section 1859H), shall
establish for purposes of this part therapeutic classes and
assign to such classes covered outpatient prescription
medicines.
``(3) Disclosure concerning preferred medicines.--The
Secretary shall provide, through pharmacy contractors or
otherwise, for--
``(A) disclosure to current and prospective enrollees and
to participating providers and pharmacies in each service
area a list of the preferred medicines and differences in
applicable cost-sharing between such medicines and
nonpreferred medicines; and
``(B) advance disclosure to current enrollees and to
participating providers and pharmacies in each service area
of changes to any such list of preferred medicines and
differences in applicable cost-sharing.
``(4) No review.--The Secretary's establishment of
therapeutic classes and the assignment of medicines to such
classes and the Secretary's determination of what is a
breakthrough medicine are not subject to administrative or
judicial review.
``(c) Confidentiality.--The Secretary shall ensure that the
confidentiality of individually identifiable health
information relating to the provision of benefits under this
part is protected, consistent with the standards for the
privacy of such information promulgated by the Secretary
under the Health Insurance Portability and Accountability Act
of 1996, or any subsequent comprehensive
[[Page H4304]]
and more protective set of confidentiality standards enacted
into law or promulgated by the Secretary. Nothing in this
subsection shall be construed as preventing the coordination
of data with a State prescription medicine program so long as
such program has in place confidentiality standards that are
equal to or exceed the standards used by the Secretary.
``(d) Fraud and Abuse Safeguards.--The Secretary, through
the Office of the Inspector General, is authorized and
directed to issue regulations establishing appropriate
safeguards to prevent fraud and abuse under this part. Such
safeguards, at a minimum, should include compliance programs,
certification data, audits, and recordkeeping practices. In
developing such regulations, the Secretary shall consult with
the Attorney General and other law enforcement and regulatory
agencies.
``federal medicare prescription medicine trust fund
``Sec. 1859F. (a) Establishment.--There is hereby created
on the books of the Treasury of the United States a trust
fund to be known as the `Federal Medicare Prescription
Medicine Trust Fund' (in this section referred to as the
`Trust Fund'). The Trust Fund shall consist of such gifts and
bequests as may be made as provided in section 201(i)(1), and
such amounts as may be deposited in, or appropriated to, such
fund as provided in this part.
``(b) Application of SMI Trust Fund Provisions.--The
provisions of subsections (b) through (i) of section 1841
shall apply to this part and the Trust Fund in the same
manner as they apply to part B and the Federal Supplementary
Medical Insurance Trust Fund, respectively.
``compensation for employers covering retiree medicine costs
``Sec. 1859G. (a) In General.--In the case of an individual
who is eligible to be enrolled under this part and is a
participant or beneficiary under a group health plan that
provides outpatient prescription medicine coverage to
retirees the actuarial value of which is not less than the
actuarial value of the coverage provided under this part, the
Secretary shall make payments to such plan subject to the
provisions of this section. Such payments shall be treated as
payments under this part for purposes of sections 1859F and
1859C(e)(2). In applying the previous sentence with respect
to section 1859C(e)(2), the amount of the Government
contribution referred to in section 1844(a)(1)(A) is deemed
to be equal to the aggregate amount of the payments made
under this section.
``(b) Requirements.--To receive payment under this section,
a group health plan shall comply with the following
requirements:
``(1) Compliance with requirements.--The group health plan
shall comply with the requirements of this Act and other
reasonable, necessary, and related requirements that are
needed to administer this section, as determined by the
Secretary.
``(2) Annual assurances and notice before termination.--The
sponsor of the plan shall--
``(A) annually attest, and provide such assurances as the
Secretary may require, that the coverage offered under the
group health plan meets the requirements of this section and
will continue to meet such requirements for the duration of
the sponsor's participation in the program under this
section; and
``(B) guarantee that it will give notice to the Secretary
and covered enrollees--
``(i) at least 120 days before terminating its plan, and
``(ii) immediately upon determining that the actuarial
value of the prescription medicine benefit under the plan
falls below the actuarial value required under subsection
(a).
``(3) Beneficiary information.--The sponsor of the plan
shall report to the Secretary, for each calendar quarter for
which it seeks a payment under this section, the names and
social security numbers of all enrollees described in
subsection (a) covered under such plan during such quarter
and the dates (if less than the full quarter) during which
each such individual was covered.
``(4) Audits.--The sponsor or plan seeking payment under
this section shall agree to maintain, and to afford the
Secretary access to, such records as the Secretary may
require for purposes of audits and other oversight activities
necessary to ensure the adequacy of prescription medicine
coverage, the accuracy of payments made, and such other
matters as may be appropriate.
``(c) Payment.--
``(1) In general.--The sponsor of a group health plan that
meets the requirements of subsection (b) with respect to a
quarter in a calendar year shall be entitled to have payment
made on a quarterly basis of the amount specified in
paragraph (2) for each individual described in subsection (a)
who during the quarter is covered under the plan and was not
enrolled in the insurance program under this part.
``(2) Amount of payment.--
``(A) In general.--The amount of the payment for a quarter
shall approximate, for each such covered individual, \2/3\ of
the sum of the monthly Government contribution amounts
(computed under subparagraph (B)) for each of the 3 months in
the quarter.
``(B) Computation of monthly government contribution
amount.--For purposes of subparagraph (A), the monthly
Government contribution amount for a month in a year is equal
to the amount by which--
``(i) \1/12\ of the average per capita aggregate
expenditures, as estimated under section 1859D(c)(8) for the
year involved; exceeds
``(ii) the monthly premium rate under section 1859D(d) for
the month involved.
``medicare prescription medicine advisory committee
``Sec. 1859H. (a) Establishment of Committee.--There is
established a Medicare Prescription Medicine Advisory
Committee (in this section referred to as the `Committee').
``(b) Functions of Committee.--The Committee shall advise
the Secretary on policies related to--
``(1) the development of guidelines for the implementation
and administration of the outpatient prescription medicine
benefit program under this part; and
``(2) the development of--
``(A) standards required of pharmacy contractors under
section 1859D(c)(5) for determining if a medicine is as
effective for an enrollee or has a significant adverse effect
on an enrollee under this part;
``(B) standards for--
``(i) defining therapeutic classes;
``(ii) adding new therapeutic classes;
``(iii) assigning to such classes covered outpatient
prescription medicines; and
``(iv) identifying breakthrough medicines;
``(C) procedures to evaluate the bids submitted by pharmacy
contractors under this part;
``(D) procedures for negotiations, and standards for
entering into contracts, with manufacturers, including
identifying medicines or classes of medicines where
Secretarial negotiation is most likely to yield savings under
this part significantly above those that which could be
achieved by a pharmacy contractor; and
``(E) procedures to ensure that pharmacy contractors with a
contract under this part are in compliance with the
requirements under this part.
For purposes of this part, a medicine is a `breakthrough
medicine' if the Secretary, in consultation with the
Committee, determines it is a new product that will make a
significant and major improvement by reducing physical or
mental illness, reducing mortality, or reducing disability,
and that no other product is available to beneficiaries that
achieves similar results for the same condition. The
Committee may consider cost-effectiveness in establishing
standards for defining therapeutic classes and assigning
drugs to such classes under subparagraph (B).
``(c) Structure and Membership of the Committee.--
``(1) Structure.--The Committee shall be composed of 19
members who shall be appointed by the Secretary.
``(2) Membership.--
``(A) In general.--The members of the Committee shall be
chosen on the basis of their integrity, impartiality, and
good judgment, and shall be individuals who are, by reason of
their education, experience, and attainments, exceptionally
qualified to perform the duties of members of the Committee.
``(B) Specific members.--Of the members appointed under
paragraph (1)--
``(i) 5 shall be chosen to represent practicing physicians,
2 of whom shall be gerontologists;
``(ii) 2 shall be chosen to represent practicing nurse
practitioners;
``(iii) 4 shall be chosen to represent practicing
pharmacists;
``(iv) 1 shall be chosen to represent the Centers for
Medicare & Medicaid Services;
``(v) 4 shall be chosen to represent actuaries,
pharmacoeconomists, researchers, and other appropriate
experts;
``(vi) 1 shall be chosen to represent emerging medicine
technologies;
``(vii) 1 shall be chosen to represent the Food and Drug
Administration; and
``(viii) 1 shall be chosen to represent individuals
enrolled under this part.
``(d) Terms of Appointment.--Each member of the Committee
shall serve for a term determined appropriate by the
Secretary. The terms of service of the members initially
appointed shall begin on January 1, 2004.
``(e) Chairperson.--The Secretary shall designate a member
of the Committee as Chairperson. The term as Chairperson
shall be for a 1-year period.
``(f) Committee Personnel Matters.--
``(1) Members.--
``(A) Compensation.--Each member of the Committee who is
not an officer or employee of the Federal Government shall be
compensated at a rate equal to the daily equivalent of the
annual rate of basic pay prescribed for level IV of the
Executive Schedule under section 5315 of title 5, United
States Code, for each day (including travel time) during
which such member is engaged in the performance of the duties
of the Committee. All members of the Committee who are
officers or employees of the United States shall serve
without compensation in addition to that received for their
services as officers or employees of the United States.
``(B) Travel expenses.--The members of the Committee shall
be allowed travel expenses, including per diem in lieu of
subsistence, at rates authorized for employees of agencies
under subchapter I of chapter 57 of title 5, United States
Code, while away from their homes or regular places of
business in the performance of services for the Committee.
[[Page H4305]]
``(2) Staff.--The Committee may appoint such personnel as
the Committee considers appropriate.
``(g) Operation of the Committee.--
``(1) Meetings.--The Committee shall meet at the call of
the Chairperson (after consultation with the other members of
the Committee) not less often than quarterly to consider a
specific agenda of issues, as determined by the Chairperson
after such consultation.
``(2) Quorum.--Ten members of the Committee shall
constitute a quorum for purposes of conducting business.
``(h) Federal Advisory Committee Act.--Section 14 of the
Federal Advisory Committee Act (5 U.S.C. App.) shall not
apply to the Committee.
``(i) Transfer of Personnel, Resources, and Assets.--For
purposes of carrying out its duties, the Secretary and the
Committee may provide for the transfer to the Committee of
such civil service personnel in the employ of the Department
of Health and Human Services (including the Centers for
Medicare & Medicaid Services), and such resources and assets
of the Department used in carrying out this title, as the
Committee requires.
``(j) Authorization of Appropriations.--There are
authorized to be appropriated such sums as may be necessary
to carry out the purposes of this section.''.
(b) Application of General Exclusions from Coverage.--
(1) Application to part d.--Section 1862(a) (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''.
(2) Prescription medicines not excluded from coverage if
appropriately prescribed.--Section 1862(a)(1) (42 U.S.C.
1395y(a)(1)) is amended--
(A) in subparagraph (H), by striking ``and'' at the end;
(B) in subparagraph (I), by striking the semicolon at the
end and inserting ``, and''; and
(C) by adding at the end the following new subparagraph:
``(J) in the case of prescription medicines covered under
part D, which are not prescribed in accordance with such
part;''.
(c) Conforming Amendments.--(1) Part C of title XVIII is
amended--
(A) in section 1851(a)(2)(B) (42 U.S.C. 1395w-21(a)(2)(B)),
by striking ``1859(b)(3)'' and inserting ``1858(b)(3)'';
(B) in section 1851(a)(2)(C) (42 U.S.C. 1395w-21(a)(2)(C)),
by striking ``1859(b)(2)'' and inserting ``1858(b)(2)'';
(C) in section 1852(a)(1) (42 U.S.C. 1395w-22(a)(1)), by
striking ``1859(b)(3)'' and inserting ``1858(b)(3)'';
(D) in section 1852(a)(3)(B)(ii) (42 U.S.C. 1395w-
22(a)(3)(B)(ii)), by striking ``1859(b)(2)(B)'' and inserting
``1858(b)(2)(B)'';
(E) in section 1853(a)(1)(A) (42 U.S.C. 1395w-23(a)(1)(A)),
by striking ``1859(e)(4)'' and inserting ``1858(e)(4)''; and
(F) in section 1853(a)(3)(D) (42 U.S.C. 1395w-23(a)(3)(D)),
by striking ``1859(e)(4)'' and inserting ``1858(e)(4)''.
(2) Section 1171(a)(5)(D) (42 U.S.C. 1320d(a)(5)(D)) is
amended by striking ``or (C)'' and inserting ``(C), or (D)''.
SEC. 102. PROVISION OF MEDICARE OUTPATIENT PRESCRIPTION
MEDICINE COVERAGE UNDER THE MEDICARE+CHOICE
PROGRAM.
(a) Requiring Availability of an Actuarially Equivalent
Prescription Medicine Benefit.--Section 1851 (42 U.S.C.
1395w-21) is amended by adding at the end the following new
subsection:
``(j) Availability of Prescription Medicine Benefits.--
``(1) In general.--Notwithstanding any other provision of
this part, each Medicare+Choice organization that makes
available a Medicare+Choice plan described in section
1851(a)(2)(A) shall make available such a plan that offers
coverage of covered outpatient prescription medicines that is
at least actuarially equivalent to the benefits provided
under part D. Information respecting such benefits shall be
made available in the same manner as information on other
benefits provided under this part is made available. Nothing
in this paragraph shall be construed as requiring the
offering of such coverage separate from coverage that
includes benefits under parts A and B.
``(2) Treatment of prescription medicine enrollees.--In the
case of a Medicare+Choice eligible individual who is enrolled
under part D, the benefits described in paragraph (1) shall
be treated in the same manner as benefits described in part B
for purposes of coverage and payment and any reference in
this part to the Federal Supplementary Medical Insurance
Trust Fund shall be deemed, with respect to such benefits, to
be a reference to the Federal Medicare Prescription Medicine
Trust Fund.''.
(b) Application of Quality Standards.--Section
1852(e)(2)(A) (42 U.S.C. 1395w-22(e)(2)(A)) is amended--
(1) by striking ``and'' at the end of clause (xi);
(2) by striking the period at the end of clause (xii) and
inserting ``, and''; and
(3) by adding at the end the following new clause:
``(xiii) comply with the standards, and apply the programs,
under section 1859B(b) for covered outpatient prescription
medicines under the plan.''.
(c) Payment Separate From Payment for Part A and B
Benefits.--Section 1853 (42 U.S.C. 1395w-23) is amended--
(1) in subsection (a)(1)(A), by striking ``and (i)'' and
inserting ``(i), and (j)''; and
(2) by adding at the end the following new subsection:
``(j) Payment for Prescription Medicine Coverage Option.--
``(1) In general.--In the case of a Medicare+Choice plan
that provides prescription medicine benefits described in
section 1851(j)(1), the amount of payment otherwise made to
the Medicare+Choice organization offering the plan shall be
increased by the amount described in paragraph (2). Such
payments shall be made in the same manner and time as the
amount otherwise paid, but such amount shall be payable from
the Federal Medicare Prescription Medicine Trust Fund.
``(2) Amount.--The amount described in this paragraph is
the monthly Government contribution amount computed under
section 1859G(c)(2)(B), but subject to adjustment under
paragraph (3). Such amount shall be uniform geographically
and shall not vary based on the Medicare+Choice payment area
involved.
``(3) Risk adjustment.--The Secretary shall establish a
methodology for the adjustment of the payment amount under
this subsection in a manner that takes into account the
relative risks for use of outpatient prescription medicines
by Medicare+Choice enrollees. Such methodology shall be
designed in a manner so that the total payments under this
title (including part D) are not changed as a result of the
application of such methodology.''.
(d) Separate Application of Adjusted Community Rate
(ACR).--Section 1854 (42 U.S.C. 1395w-24) is amended by
adding at the end the following:
``(i) Application to Prescription Medicine Coverage.--The
Secretary shall apply the previous provisions of this section
(including the computation of the adjusted community rate)
separately with respect to prescription medicine benefits
described in section 1851(j)(1).''.
(f) Conforming Amendments.--
(1) Section 1851 (42 U.S.C. 1395w-21) is amended--
(A) in subsection (a)(1)(A), by striking ``parts A and B''
and inserting ``parts A, B, and D''; and
(B) in subsection (i) by inserting ``(and, if applicable,
part D)'' after ``parts A and B''.
(2) Section 1852(a)(1)(A) (42 U.S.C. 1395w-22(a)(1)(A)) is
amended by inserting ``(and under part D to individuals also
enrolled under such part)'' after ``parts A and B''.
(3) Section 1852(d)(1) (42 U.S.C. 1395w-22(d)(1)) is
amended--
(A) by striking ``and'' at the end of subparagraph (D);
(B) by striking the period at the end of subparagraph (E)
and inserting ``; and''; and
(C) by adding at the end the following:
``(F) the plan for part D benefits guarantees coverage of
any specifically named prescription medicine for an enrollee
to the extent that it would be required to be covered under
part D.
In carrying out subparagraph (F), a Medicare+Choice
organization has the same authority to enter into contracts
with respect to coverage of preferred medicines as the
Secretary has under part D, but subject to an independent
contractor appeal or other appeal process that would be
applicable to determinations by such a pharmacy contractor
consistent with section 1859D(c)(5).''.
(e) Limitation on Cost-Sharing.--Section 1854(e) (42 U.S.C.
1395w-24(e)) is amended by adding at the end the following
new paragraph:
``(5) Limitation on cost-sharing.--In no event may a
Medicare+Choice organization include a requirement that an
enrollee pay cost-sharing in excess of the cost-sharing
otherwise permitted under part D.''.
SEC. 103. MEDIGAP REVISIONS.
(a) Required Coverage of Covered Outpatient Prescription
Medicines.--Section 1882(p)(2)(B) (42 U.S.C. 1395ss(p)(2)(B))
is amended by inserting before ``and'' at the end the
following: ``including a requirement that an appropriate
number of policies provide coverage of medicines which
complements but does not duplicate the medicine benefits that
beneficiaries are otherwise eligible for benefits under part
D of this title (with the Secretary and the National
Association of Insurance Commissioners determining the
appropriate level of medicine benefits that each benefit
package must provide and ensuring that policies providing
such coverage are affordable for beneficiaries;''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on January 1, 2005.
(c) Transition Provisions.--
(1) In general.--If the Secretary of Health and Human
Services identifies a State as requiring a change to its
statutes or regulations to conform its regulatory program to
the amendments made by this section, the State regulatory
program shall not be considered to be out of compliance with
the requirements of section 1882 of the Social Security Act
due solely to failure to make such change until the date
specified in paragraph (4).
(2) NAIC standards.--If, within 9 months after the date of
enactment of this Act, the National Association of Insurance
Commissioners (in this subsection referred to as the
``NAIC'') modifies its NAIC Model Regulation relating to
section 1882 of the Social Security Act (referred to in such
section as the 1991 NAIC Model Regulation, as subsequently
modified) to conform to the amendments made by this section,
such revised regulation
[[Page H4306]]
incorporating the modifications shall be considered to be the
applicable NAIC model regulation (including the revised NAIC
model regulation and the 1991 NAIC Model Regulation) for the
purposes of such section.
(3) Secretary standards.--If the NAIC does not make the
modifications described in paragraph (2) within the period
specified in such paragraph, the Secretary of Health and
Human Services shall make the modifications described in such
paragraph and such revised regulation incorporating the
modifications shall be considered to be the appropriate
regulation for the purposes of such section.
(4) Date specified.--
(A) In general.--Subject to subparagraph (B), the date
specified in this paragraph for a State is the earlier of--
(i) the date the State changes its statutes or regulations
to conform its regulatory program to the changes made by this
section; or
(ii) 1 year after the date the NAIC or the Secretary first
makes the modifications under paragraph (2) or (3),
respectively.
(B) Additional legislative action required.--In the case of
a State which the Secretary identifies as--
(i) requiring State legislation (other than legislation
appropriating funds) to conform its regulatory program to the
changes made in this section; but
(ii) having a legislature which is not scheduled to meet in
2003 in a legislative session in which such legislation may
be considered;
the date specified in this paragraph is the first day of the
first calendar quarter beginning after the close of the first
legislative session of the State legislature that begins on
or after January 1, 2003. For purposes of the previous
sentence, in the case of a State that has a 2-year
legislative session, each year of such session shall be
deemed to be a separate regular session of the State
legislature.
SEC. 104. TRANSITIONAL ASSISTANCE FOR LOW INCOME
BENEFICIARIES.
(a) QMB Coverage of Premiums and Cost-Sharing.--Section
1905(p)(3) (42 U.S.C. 1396d(p)(3)) is amended--
(1) in subparagraph (A)--
(A) by striking ``and'' at the end of clause (i),
(B) by adding ``and'' at the end of clause (ii), and
(C) by adding at the end the following new clause:
``(iii) premiums under section 1859D(d).'';
(2) in subparagraph (B), by inserting ``and section
1859D(c)(3)(B) and 1859D(c)(3)(C)(i)'' after ``1813''; and
(3) in subparagraph (C), by striking ``and section
1833(b)'' and inserting ``, section 1833(b), and section
1859D(c)(2)''.
(b) Expanded SLMB Eligibility.--Section 1902(a)(10)(E) (42
U.S.C. 1396a(a)(10)(E)) is amended--
(1) by striking ``and'' at the end of clause (iii);
(2) by adding ``and'' at the end of clause (iv); and
(3) by adding at the end the following new clause:
``(v)(I) for making medical assistance available for
medicare cost-sharing described in section 1905(p)(3)(A)(iii)
and medicare cost-sharing described in section 1905(p)(3)(B)
and section 1905(p)(3)(C) but only insofar as it relates to
benefits provided under part D of title XVIII, subject to
section 1905(p)(4), for individuals (other than qualified
medicare beneficiaries) who are enrolled under part D of
title XVIII and are described in section 1905(p)(1)(B) or
would be so described but for the fact that their income
exceeds 100 percent, but is less than 150 percent, of the
official poverty line (referred to in such section) for a
family of the size involved;
``(II) subject to section 1905(p)(4), for individuals
(other than qualified medicare beneficiaries and individuals
described in subclause (I)) who are enrolled under part D of
title XVIII and would be described in section 1905(p)(1)(B)
but for the fact that their income exceeds 150 percent, but
is less than 175 percent, of the official poverty line
(referred to in such section) for a family of the size
involved, for making medical assistance available for
medicare cost-sharing described in section 1905(p)(3)(A)(iii)
and medicare cost-sharing described in section 1905(p)(3)(B)
and section 1905(p)(3)(C) but only insofar as it relates to
benefits provided under part D of title XVIII, and the
assistance for medicare cost-sharing described in section
1905(p)(3)(A)(iii) is reduced (on a sliding scale based on
income) from 100 percent to 0 percent as the income increases
from 150 percent to 175 percent of such poverty line;''.
(c) Federal Financing.--The third sentence of section
1905(b) (42 U.S.C. 1396d(b)) is amended by inserting before
the period at the end the following: ``and with respect to
amounts expended that are attributable to section
1902(a)(10)(E)(v) (other than for individuals described in
section 1905(p)(1)(B))''.
(d) Treatment of Territories.--
(1) In general.--Section 1905(p) (42 U.S.C. 1396d(p)) is
amended--
(A) by redesignating paragraphs (5) and (6) as paragraphs
(6) and (7), respectively; and
(B) by inserting after paragraph (4) the following new
paragraph:
``(5)(A) In the case of a State, other than the 50 States
and the District of Columbia--
``(i) the provisions of paragraph (3) insofar as they
relate to section 1859D and the provisions of section
1902(a)(10)(E)(v) shall not apply to residents of such State;
and
``(ii) if the State establishes a plan described in
subparagraph (B) (for providing medical assistance with
respect to the provision of prescription medicines to
medicare beneficiaries), the amount otherwise determined
under section 1108(f) (as increased under section 1108(g))
for the State shall be increased by the amount specified in
subparagraph (C).
``(B) The plan described in this subparagraph is a plan
that--
``(i) provides medical assistance with respect to the
provision of covered outpatient medicines (as defined in
section 1859D(b)) to low-income medicare beneficiaries; and
``(ii) assures that additional amounts received by the
State that are attributable to the operation of this
paragraph are used only for such assistance.
``(C)(i) The amount specified in this subparagraph for a
State for a year is equal to the product of--
``(I) the aggregate amount specified in clause (ii); and
``(II) the amount specified in section 1108(g)(1) for that
State, divided by the sum of the amounts specified in such
section for all such States.
``(ii) The aggregate amount specified in this clause for--
``(I) 2005, is equal to $25,000,000; or
``(II) a subsequent year, is equal to the aggregate amount
specified in this clause for the previous year increased by
annual percentage increase specified in section
1859D(c)(8)(B) for the year involved.
``(D) The Secretary shall submit to Congress a report on
the application of this paragraph and may include in the
report such recommendations as the Secretary deems
appropriate.''.
(2) Conforming amendment.--Section 1108(f) (42 U.S.C.
1308(f)) is amended by inserting ``and section
1905(p)(5)(A)(ii)'' after ``Subject to subsection (g)''.
(e) Application of Cost-Sharing.--Section 1902(n)(2) (42
U.S.C. 1396a(n)(2)) is amended by adding at the end the
following: ``The previous sentence shall not apply to
medicare cost-sharing relating to benefits under part D of
title XVIII.''.
(f) Effective Date.--The amendments made by this section
apply to medical assistance for premiums and cost-sharing
incurred on or after January 1, 2005, with regard to whether
regulations to implement such amendments are promulgated by
such date.
SEC. 105. EXPANSION OF MEMBERSHIP AND DUTIES OF MEDICARE
PAYMENT ADVISORY COMMISSION (MEDPAC).
(a) Expansion of Membership.--
(1) In general.--Section 1805(c) (42 U.S.C. 1395b-6(c)) is
amended--
(A) in paragraph (1), by striking ``17'' and inserting
``19''; and
(B) in paragraph (2)(B), by inserting ``experts in the area
of pharmacology and prescription medicine benefit programs,''
after ``other health professionals,''.
(2) Initial terms of additional members.--
(A) In general.--For purposes of staggering the initial
terms of members of the Medicare Payment Advisory Commission
under section 1805(c)(3) of the Social Security Act (42
U.S.C. 1395b-6(c)(3)), the initial terms of the 2 additional
members of the Commission provided for by the amendment under
paragraph (1)(A) are as follows:
(i) One member shall be appointed for 1 year.
(ii) One member shall be appointed for 2 years.
(B) Commencement of terms.--Such terms shall begin on
January 1, 2003.
(b) Expansion of Duties.--Section 1805(b)(2) (42 U.S.C.
1395b-6(b)(2)) is amended by adding at the end the following
new subparagraph:
``(D) Prescription medicine benefit program.--Specifically,
the Commission shall review, with respect to the prescription
medicine benefit program under part D, the following:
``(i) The methodologies used for the management of costs
and utilization of prescription medicines.
``(ii) The prices negotiated and paid, including trends in
such prices and applicable discounts and comparisons with
prices under section 1859E(a)(2)(E).
``(iii) The relationship of pharmacy acquisition costs to
the prices so negotiated and paid.
``(iv) The methodologies used to ensure access to covered
outpatient prescription medicines and to ensure quality in
the appropriate dispensing and utilization of such medicines.
``(v) The impact of the program on promoting the
development of breakthrough medicines.''.
TITLE II--MEDICARE+CHOICE REVITALIZATION AND MEDICARE+CHOICE
COMPETITION PROGRAM
SEC. 201. MEDICARE+CHOICE IMPROVEMENTS.
(a) Equalizing Payments Between Fee-For-Service and
Medicare+Choice.--
(1) In general.--Section 1853(c)(1) (42 U.S.C. 1395w-
23(c)(1)) is amended by adding at the end the following:
``(D) Based on 100 percent of fee-for-service costs.--
``(i) In general.--For 2003 and 2004, the adjusted average
per capita cost for the year involved, determined under
section 1876(a)(4) for the Medicare+Choice payment area for
services covered under parts A and B for individuals entitled
to benefits under part A and enrolled under part B who are
not enrolled in a Medicare+Choice plan under this part for
the year, but adjusted to exclude costs attributable to
payments under section 1886(h).
[[Page H4307]]
``(ii) Inclusion of costs of va and dod military facility
services to medicare-eligible beneficiaries.--In determining
the adjusted average per capita cost under clause (i) for a
year, such cost shall be adjusted to include the Secretary's
estimate, on a per capita basis, of the amount of additional
payments that would have been made in the area involved under
this title if individuals entitled to benefits under this
title had not received services from facilities of the
Department of Veterans Affairs or the Department of
Defense.''.
(2) Conforming amendment.--Such section is further amended,
in the matter before subparagraph (A), by striking ``or (C)''
and inserting ``(C), or (D)''.
(b) Revision of Blend.--
(1) Revision of national average used in calculation of
blend.--Section 1853(c)(4)(B)(i)(II) (42 U.S.C. 1395w-
23(c)(4)(B)(i)(II)) is amended by inserting ``who (with
respect to determinations for 2003 and for 2004) are enrolled
in a Medicare+Choice plan'' after ``the average number of
medicare beneficiaries''.
(2) Change in budget neutrality.--Section 1853(c) (42
U.S.C. 1395w-23(c)) is amended--
(A) in paragraph (1)(A), by inserting ``(for a year before
2003)'' after ``multiplied''; and
(B) in paragraph (5), by inserting ``(before 2003)'' after
``for each year''.
(c) Revision in Minimum Percentage Increase for 2003 and
2004.--Section 1853(c)(1)(C) (42 U.S.C. 1395w-23(c)(1)(C)) is
amended by striking clause (iv) and inserting the following:
``(iv) For 2002, 102 percent of the annual Medicare+Choice
capitation rate under this paragraph for the area for 2001.
``(v) For 2003 and 2004, 103 percent of the annual
Medicare+Choice capitation rate under this paragraph for the
area for the previous year.
``(iv) For 2005 and each succeeding year, 102 percent of
the annual Medicare+Choice capitation rate under this
paragraph for the area for the previous year.''.
(d) Inclusion of Costs of DOD and VA Military Facility
Services to Medicare-eligible Beneficiaries in Calculation of
Medicare+Choice Payment Rates.--Section 1853(c)(3) (42 U.S.C.
1395w-23(c)(3)) is amended--
(1) in subparagraph (A), by striking ``subparagraph (B)''
and inserting ``subparagraphs (B) and (E)'', and
(2) by adding at the end the following new subparagraph:
``(E) Inclusion of costs of dod and va military facility
services to medicare-eligible beneficiaries.--In determining
the area-specific Medicare+Choice capitation rate under
subparagraph (A) for a year (beginning with 2003), the annual
per capita rate of payment for 1997 determined under section
1876(a)(1)(C) shall be adjusted to include in the rate the
Secretary's estimate, on a per capita basis, of the amount of
additional payments that would have been made in the area
involved under this title if individuals entitled to benefits
under this title had not received services from facilities of
the Department of Defense or the Department of Veterans
Affairs.''.
(e) Announcement of Revised Medicare+Choice Payment
Rates.--Within 2 weeks after the date of the enactment of
this Act, the Secretary shall determine, and shall announce
(in a manner intended to provide notice to interested
parties) Medicare+Choice capitation rates under section 1853
of the Social Security Act (42 U.S.C. 1395w-23) for 2003,
revised in accordance with the provisions of this section.
(f) MedPAC Study of AAPCC.--
(1) Study.--The Medicare Payment Advisory Commission shall
conduct a study that assesses the method used for determining
the adjusted average per capita cost (AAPCC) under section
1876(a)(4) of the Social Security Act (42 U.S.C.
1395mm(a)(4)). Such study shall examine--
(A) the bases for variation in such costs between different
areas, including differences in input prices, utilization,
and practice patterns;
(B) the appropriate geographic area for payment under the
Medicare+Choice program under part C of title XVIII of such
Act; and
(C) the accuracy of risk adjustment methods in reflecting
differences in costs of providing care to different groups of
beneficiaries served under such program.
(2) Report.--Not later than 9 months after the date of the
enactment of this Act, the Commission shall submit to
Congress a report on the study conducted under paragraph (1).
Such report shall include recommendations regarding changes
in the methods for computing the adjusted average per capita
cost among different areas.
(g) Applying Limitations on Balance Billing to Medicare
MSAs.--Section 1852(k)(1) (42 U.S.C. 1395w-22(k)(1)) is
amended by inserting ``or with an organization offering a MSA
plan'' after ``section 1851(a)(2)(A)''.
(h) Report on Impact of Increased Financial Assistance to
Medicare+Choice Plans.--Not later than July 1, 2003, the
Secretary shall submit to Congress a report that describes
the impact of additional financing provided under this Act
and other Acts (including the Medicare, Medicaid, and SCHIP
Balanced Budget Refinement Act of 1999 and BIPA) on the
availability of Medicare+Choice plans in different areas and
its impact on lowering premiums and increasing benefits under
such plans.
SEC. 202. MAKING PERMANENT CHANGE IN MEDICARE+CHOICE
REPORTING DEADLINES AND ANNUAL, COORDINATED
ELECTION PERIOD.
(a) Change in Reporting Deadline.--Section 1854(a)(1) (42
U.S.C. 1395w-24(a)(1)), as amended by section 532(b)(1) of
the Public Health Security and Bioterrorism Preparedness and
Response Act of 2002, is amended by striking ``2002, 2003,
and 2004 (or July 1 of each other year)'' and inserting
``2002 and each subsequent year (or July 1 of each year
before 2002)''.
(b) Delay in Annual, Coordinated Election Period.--Section
1851(e)(3)(B) (42 U.S.C. 1395w-21(e)(3)(B)), as amended by
section 532(c)(1)(A) of the Public Health Security and
Bioterrorism Preparedness and Response Act of 2002, is
amended by striking ``and after 2005, the month of November
before such year and with respect to 2003, 2004, and 2005''
and inserting ``, the month of November before such year and
with respect to 2003 and any subsequent year''.
(c) Annual Announcement of Payment Rates.--Section
1853(b)(1) (42 U.S.C. 1395w-23(b)(1)), as amended by section
532(d)(1) of the Public Health Security and Bioterrorism
Preparedness and Response Act of 2002, is amended by striking
``and after 2005 not later than March 1 before the calendar
year concerned and for 2004 and 2005'' and inserting ``not
later than March 1 before the calendar year concerned and for
2004 and each subsequent year''.
(d) Requiring Provision of Available Information Comparing
Plan Options.--The first sentence of section
1851(d)(2)(A)(ii) (42 U.S.C. 1395w-21(d)(2)(A)(ii)) is
amended by inserting before the period the following: ``to
the extent such information is available at the time of
preparation of materials for the mailing''.
SEC. 203. SPECIALIZED MEDICARE+CHOICE PLANS FOR SPECIAL NEEDS
BENEFICIARIES.
(a) Treatment as Coordinated Care Plan.--Section
1851(a)(2)(A) (42 U.S.C. 1395w-21(a)(2)(A)) is amended by
adding at the end the following new sentence: ``Specialized
Medicare+Choice plans for special needs beneficiaries (as
defined in section 1859(b)(4)) may be any type of coordinated
care plan.''.
(b) Specialized Medicare+Choice Plan for Special Needs
Beneficiaries Defined.--Section 1859(b) (42 U.S.C. 1395w-
29(b)) is amended by adding at the end the following new
paragraph:
``(4) Specialized medicare+choice plans for special needs
beneficiaries.--
``(A) In general.--The term `specialized Medicare+Choice
plan for special needs beneficiaries' means a Medicare+Choice
plan that exclusively serves special needs beneficiaries (as
defined in subparagraph (B)).
``(B) Special needs beneficiary.--The term `special needs
beneficiary' means a Medicare+Choice eligible individual
who--
``(i) is institutionalized (as defined by the Secretary);
``(ii) is entitled to medical assistance under a State plan
under title XIX; or
``(iii) meets such requirements as the Secretary may
determine would benefit from enrollment in such a specialized
Medicare+Choice plan described in subparagraph (A) for
individuals with severe or disabling chronic conditions.''.
(c) Restriction on Enrollment Permitted.--Section 1859 (42
U.S.C. 1395w-29) is amended by adding at the end the
following new subsection:
``(f) Restriction on Enrollment for Specialized
Medicare+Choice Plans for Special Needs Beneficiaries.--In
the case of a specialized Medicare+Choice plan (as defined in
subsection (b)(4)), notwithstanding any other provision of
this part and in accordance with regulations of the Secretary
and for periods before January 1, 2007, the plan may restrict
the enrollment of individuals under the plan to individuals
who are within one or more classes of special needs
beneficiaries.''.
(d) Report to Congress.--Not later than December 31, 2005,
the Secretary shall submit to Congress a report that assesses
the impact of specialized Medicare+Choice plans for special
needs beneficiaries on the cost and quality of services
provided to enrollees. Such report shall include an
assessment of the costs and savings to the medicare program
as a result of amendments made by subsections (a), (b), and
(c).
(e) Effective Dates.--
(1) In general.--The amendments made by subsections (a),
(b), and (c) shall take effect upon the date of the enactment
of this Act.
(2) Deadline for issuance of requirements for special needs
beneficiaries; transition.--No later than 6 months after the
date of the enactment of this Act, the Secretary of Health
and Human Services shall issue final regulations to establish
requirements for special needs beneficiaries under section
1859(b)(4)(B)(iii) of the Social Security Act, as added by
subsection (b).
SEC. 204. EXTENSION OF REASONABLE COST AND SHMO CONTRACTS.
(a) Reasonable Cost Contracts.--
(1) In general.--Section 1876(h)(5)(C) (42 U.S.C.
1395mm(h)(5)(C)) is amended--
(A) by inserting ``(i)'' after ``(C)'';
(B) by inserting before the period the following: ``,
except (subject to clause (ii)) in the case of a contract for
an area which is not covered in the service area of 1 or more
coordinated care Medicare+Choice plans under part C''; and
(C) by adding at the end the following new clause:
[[Page H4308]]
``(ii) In the case in which--
``(I) a reasonable cost reimbursement contract includes an
area in its service area as of a date that is after December
31, 2003;
``(II) such area is no longer included in such service area
after such date by reason of the operation of clause (i)
because of the inclusion of such area within the service area
of a Medicare+Choice plan; and
``(III) all Medicare+Choice plans subsequently terminate
coverage in such area;
such reasonable cost reimbursement contract may be extended
and renewed to cover such area (so long as it is not included
in the service area of any Medicare+Choice plan).''.
(2) Study.--The Secretary shall conduct a study of an
appropriate transition for plans offered under reasonable
cost contracts under section 1876 of the Social Security Act
on and after January 1, 2005. Such a transition may take into
account whether there are one or more coordinated care
Medicare+Choice plans being offered in the areas involved.
Not later than February 1, 2004, the Secretary shall submit
to Congress a report on such study and shall include
recommendations regarding any changes in the amendment made
by paragraph (1) as the Secretary determines to be
appropriate.
(b) Extension of Social Health Maintenance Organization
(SHMO) Demonstration Project.--
(1) In general.--Section 4018(b)(1) of the Omnibus Budget
Reconciliation Act of 1987 is amended by striking ``the date
that is 30 months after the date that the Secretary submits
to Congress the report described in section 4014(c) of the
Balanced Budget Act of 1997'' and inserting ``December 31,
2004''.
(2) SHMOs offering medicare+choice plans.--Nothing in such
section 4018 shall be construed as preventing a social health
maintenance organization from offering a Medicare+Choice plan
under part C of title XVIII of the Social Security Act.
SEC. 205. CONTINUOUS OPEN ENROLLMENT AND DISENROLLMENT.
(a) In General.--Section 1851(e)(2) (42 U.S.C. 1395w-
21(e)(2)) is amended to read as follows:
``(2) Continuous open enrollment and disenrollment.--
Subject to paragraph (5), a Medicare+Choice eligible
individual may change the election under subsection (a)(1) at
any time.''.
(b) Conforming Amendments.--
(1) Medicare+choice.--Section 1851(e) (42 U.S.C. 1395w-
21(e)) is amended--
(A) in paragraph (4)--
(i) by striking ``Effective as of January 1, 2002, an'' and
inserting ``An'';
(ii) by striking ``other than during an annual, coordinated
election period'';
(iii) by inserting ``in a special election period for such
purpose'' after ``make a new election under this section'';
and
(iv) by striking the second sentence; and
(B) in paragraphs (5)(B) and (6)(A), by striking ``the
first sentence of''.
(2) Permitting enrollment in medigap when m+c plans reduce
benefits or when provider leaves a m+c plan.--
(A) In general.--Clause (ii) of section 1882(s)(3)(B) (42
U.S.C. 1395ss(s)(3)(B)) is amended--
(i) by inserting ``(I)'' after ``(ii)'';
(ii) by striking ``under the first sentence of'' each place
it appears and inserting ``during a special election period
provided for under'';
(iii) by inserting ``the circumstances described in
subclause (II) are present or'' before ``there are
circumstances''; and
(iv) by adding at the end the following new subclause:
``(II) The circumstances described in this subclause are,
with respect to an individual enrolled in a Medicare+Choice
plan, a reduction in benefits (including an increase in cost-
sharing) offered under the Medicare+Choice plan from the
previous year or a provider of services or physician who
serves the individual no longer participating in the plan
(other than because of good cause relating to quality of care
under the plan).''.
(B) Conforming amendment.--Clause (iii) of such section is
amended--
(i) by inserting ``the circumstances described in clause
(ii)(II) are met or'' after ``policy described in subsection
(t), and''; and
(ii) by striking ``under the first sentence of'' and
inserting ``during a special election period provided for
under''.
(c) Effective Date.--The amendments made by this section
shall take effect on January 1, 2003, and shall apply to
reductions in benefits and changes in provider participation
occurring on or after such date.
SEC. 206. LIMITATION ON MEDICARE+CHOICE COST-SHARING.
(a) In General.--Section 1852(a) (42 U.S.C. 1395w-22(a)) is
amended by adding at the end the following new paragraph:
``(6) Limitation on cost-sharing.--
``(A) In general.--Subject to subparagraph (B), in no case
shall the cost-sharing with respect to an item or service
under a Medicare+Choice plan exceed the cost-sharing
otherwise applicable under parts A and B to an individual who
is not enrolled in a Medicare+Choice plan under this part.
``(B) Permitting flat copayments.--Subparagraph (A) shall
not be construed as preventing the application of flat dollar
copayment amounts (in place of a percentage coinsurance),
such as a fixed copayment for a doctor's visit, so long as
such amounts are reasonable and appropriate and do not
adversely affect access to items and services (as determined
by the Secretary).''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply as of January 1, 2003.
SEC. 207. EXTENSION OF MUNICIPAL HEALTH SERVICE DEMONSTRATION
PROJECTS.
The last sentence of section 9215(a) of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (42 U.S.C. 1395b-1
note), as previously amended, is amended by striking
``December 31, 2004, but only with respect to'' and all that
follows and inserting ``December 31, 2009, but only with
respect to individuals who reside in the city in which the
project is operated and so long as the total number of
individuals participating in the project does not exceed the
number of such individuals participating as of January 1,
1996.''.
TITLE III--RURAL HEALTH CARE IMPROVEMENTS
SEC. 301. REFERENCE TO FULL MARKET BASKET INCREASE FOR SOLE
COMMUNITY HOSPITALS.
For provision eliminating any reduction from full market
basket in the update for inpatient hospital services for sole
community hospitals, see section 401.
SEC. 302. ENHANCED DISPROPORTIONATE SHARE HOSPITAL (DSH)
TREATMENT FOR RURAL HOSPITALS AND URBAN
HOSPITALS WITH FEWER THAN 100 BEDS.
(a) Blending of Payment Amounts.--
(1) In general.--Section 1886(d)(5)(F) (42 U.S.C.
1395ww(d)(5)(F)) is amended by adding at the end the
following new clause:
``(xiv)(I) In the case of discharges in a fiscal year
beginning on or after October 1, 2002, subject to subclause
(II), there shall be substituted for the disproportionate
share adjustment percentage otherwise determined under clause
(iv) (other than subclause (I)) or under clause (viii), (x),
(xi), (xii), or (xiii), the old blend proportion (specified
under subclause (III)) of the disproportionate share
adjustment percentage otherwise determined under the
respective clause and 100 percent minus such old blend
proportion of the disproportionate share adjustment
percentage determined under clause (vii) (relating to large,
urban hospitals).
``(II) Under subclause (I), the disproportionate share
adjustment percentage shall not exceed 10 percent for a
hospital that is not classified as a rural referral center
under subparagraph (C).
``(III) For purposes of subclause (I), the old blend
proportion for fiscal year 2003 is 66\2/3\ percent, for
fiscal year 2004 is 33\1/3\ percent subsequent year, and for
each fiscal year beginning with 2005 is 0 percent.''.
(2) Conforming amendments.--Section 1886(d)(5)(F) (42
U.S.C. 1395ww(d)(5)(F)) is amended--
(A) in each of subclauses (II), (III), (IV), (V), and (VI)
of clause (iv), by inserting ``subject to clause (xiv) and''
before ``for discharges occurring'';
(B) in clause (viii), by striking ``The formula'' and
inserting ``Subject to clause (xiv), the formula''; and
(C) in each of clauses (x), (xi), (xii), and (xiii), by
striking ``For purposes'' and inserting ``Subject to clause
(xiv), for purposes''.
(b) Effective Date.--The amendments made by this section
shall apply with respect to discharges occurring on or after
October 1, 2002.
SEC. 303. 2-YEAR PHASED-IN INCREASE IN THE STANDARDIZED
AMOUNT IN RURAL AND SMALL URBAN AREAS TO
ACHIEVE A SINGLE, UNIFORM STANDARDIZED AMOUNT.
Section 1886(d)(3)(A)(iv) (42 U.S.C. 1395ww(d)(3)(A)(iv))
is amended--
(1) by striking ``(iv) For discharges'' and inserting
``(iv)(I) Subject to the succeeding provisions of this
clause, for discharges''; and
(2) by adding at the end the following new subclauses:
``(II) For discharges occurring during fiscal year 2003,
the average standardized amount for hospitals located other
than in a large urban area shall be increased by \1/2\ of the
difference between the average standardized amount determined
under subclause (I) for hospitals located in large urban
areas for such fiscal year and such amount determined
(without regard to this subclause) for other hospitals for
such fiscal year.
``(III) For discharges occurring in a fiscal year beginning
with fiscal year 2004, the Secretary shall compute an average
standardized amount for hospitals located in any area within
the United States and within each region equal to the average
standardized amount computed for the previous fiscal year
under this subparagraph for hospitals located in a large
urban area (or, beginning with fiscal year 2005, for
hospitals located in any area) increased by the applicable
percentage increase under subsection (b)(3)(B)(i).''.
SEC. 304. MORE FREQUENT UPDATE IN WEIGHTS USED IN HOSPITAL
MARKET BASKET.
(a) More Frequent Updates in Weights.--After revising the
weights used in the hospital market basket under section
1886(b)(3)(B)(iii) of the Social Security Act (42 U.S.C.
1395ww(b)(3)(B)(iii)) to reflect the most current data
available, the Secretary shall establish a frequency for
revising such weights in such market basket to reflect the
most current data available more frequently than once every 5
years.
(b) Report.--Not later than October 1, 2003, the Secretary
shall submit a report to Congress on the frequency
established under subsection (a), including an explanation of
the reasons for, and options considered, in determining such
frequency.
[[Page H4309]]
SEC. 305. IMPROVEMENTS TO CRITICAL ACCESS HOSPITAL PROGRAM.
(a) Reinstatement of Periodic Interim Payment (PIP).--
Section 1815(e)(2) (42 U.S.C. 1395g(e)(2)) is amended--
(1) by striking ``and'' at the end of subparagraph (C);
(2) by adding ``and'' at the end of subparagraph (D); and
(3) by inserting after subparagraph (D) the following new
subparagraph:
``(E) inpatient critical access hospital services;''.
(b) Condition for Application of Special Physician Payment
Adjustment.--Section 1834(g)(2) (42 U.S.C. 1395m(g)(2)) is
amended by adding after and below subparagraph (B) the
following:
``The Secretary may not require, as a condition for applying
subparagraph (B) with respect to a critical access hospital,
that each physician providing professional services in the
hospital must assign billing rights with respect to such
services, except that such subparagraph shall not apply to
those physicians who have not assigned such billing
rights.''.
(c) Flexibility in Bed Limitation for Hospitals With Strong
Seasonal Census Fluctuations.--Section 1820 (42 U.S.C. 1395i-
4) is amended--
(1) in subsection (c)(2)(B)(iii), by inserting ``subject to
paragraph (3)'' after ``(iii) provides'';
(2) by adding at the end of subsection (c) the following
new paragraph:
``(3) Increase in maximum number of beds for hospitals with
strong seasonal census fluctuations.--
``(A) In general.--In the case of a hospital that
demonstrates that it meets the standards established under
subparagraph (B), the bed limitations otherwise applicable
under paragraph (2)(B)(iii) and subsection (f) shall be
increased by 5 beds.
``(B) Standards.--The Secretary shall specify standards for
determining whether a critical access hospital has
sufficiently strong seasonal variations in patient admissions
to justify the increase in bed limitation provided under
subparagraph (A).''; and
(3) in subsection (f), by adding at the end the following
new sentence: ``The limitations in numbers of beds under the
first sentence are subject to adjustment under subsection
(c)(3).''.
(d) 5-Year Extension of the Authorization for
Appropriations for Grant Program.--Section 1820(j) (42 U.S.C.
1395i-4(j)) is amended by striking ``through 2002'' and
inserting ``through 2007''.
(e) Prohibition of Retroactive Recoupment.--The Secretary
shall not recoup (or otherwise seek to recover) overpayments
made for outpatient critical access hospital services under
part B of title XVIII of the Social Security Act, for
services furnished in cost reporting periods that began
before October 1, 2002, insofar as such overpayments are
attributable to payment being based on 80 percent of
reasonable costs (instead of 100 percent of reasonable costs
minus 20 percent of charges).
(f) Effective Dates.--
(1) Reinstatement of pip.--The amendments made by
subsection (a) shall apply to payments made on or after
January 1, 2003.
(2) Physician payment adjustment condition.--The amendment
made by subsection (b) shall be effective as if included in
the enactment of section 403(d) of the Medicare, Medicaid,
and SCHIP Balanced Budget Refinement Act of 1999 (113 Stat.
1501A-371).
(3) Flexibility in bed limitation.--The amendments made by
subsection (c) shall apply to designations made on or after
January 1, 2003, but shall not apply to critical access
hospitals that were designated as of such date.
SEC. 306. EXTENSION OF TEMPORARY INCREASE FOR HOME HEALTH
SERVICES FURNISHED IN A RURAL AREA.
(a) In General.--Section 508(a) of BIPA (114 Stat. 2763A-
533) is amended--
(1) by striking ``24-Month Increase Beginning April 1,
2001'' and inserting ``In General''; and
(2) by striking ``April 1, 2003'' and inserting ``January
1, 2005''.
(b) Conforming Amendment.--Section 547(c)(2) of BIPA (114
Stat. 2763A-553) is amended by striking ``the period
beginning on April 1, 2001, and ending on September 30,
2002,'' and inserting ``a period under such section''.
SEC. 307. REFERENCE TO 10 PERCENT INCREASE IN PAYMENT FOR
HOSPICE CARE FURNISHED IN A FRONTIER AREA AND
RURAL HOSPICE DEMONSTRATION PROJECT.
For--
(1) provision of 10 percent increase in payment for hospice
care furnished in a frontier area, see section 422; and
(2) provision of a rural hospice demonstration project, see
section 423.
SEC. 308. REFERENCE TO PRIORITY FOR HOSPITALS LOCATED IN
RURAL OR SMALL URBAN AREAS IN REDISTRIBUTION OF
UNUSED GRADUATE MEDICAL EDUCATION RESIDENCIES.
For provision providing priority for hospitals located in
rural or small urban areas in redistribution of unused
graduate medical education residencies, see section 611.
SEC. 309. GAO STUDY OF GEOGRAPHIC DIFFERENCES IN PAYMENTS FOR
PHYSICIANS' SERVICES.
(a) Study.--The Comptroller General of the United States
shall conduct a study of differences in payment amounts under
the physician fee schedule under section 1848 of the Social
Security Act (42 U.S.C. 1395w-4) for physicians' services in
different geographic areas. Such study shall include--
(1) an assessment of the validity of the geographic
adjustment factors used for each component of the fee
schedule;
(2) an evaluation of the measures used for such adjustment,
including the frequency of revisions; and
(3) an evaluation of the methods used to determine
professional liability insurance costs used in computing the
malpractice component, including a review of increases in
professional liability insurance premiums and variation in
such increases by State and physician specialty and methods
used to update the geographic cost of practice index and
relative weights for the malpractice component.
(b) Report.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under subsection
(a). The report shall include recommendations regarding the
use of more current data in computing geographic cost of
practice indices as well as the use of data directly
representative of physicians' costs (rather than proxy
measures of such costs).
SEC. 310. PROVIDING SAFE HARBOR FOR CERTAIN COLLABORATIVE
EFFORTS THAT BENEFIT MEDICALLY UNDERSERVED
POPULATIONS.
(a) In General.--Section 1128B(b)(3) (42 U.S.C. 1320a-
7(b)(3)), as amended by section 101(b)(2), is amended--
(1) in subparagraph (F), by striking ``and'' after the
semicolon at the end;
(2) in subparagraph (G), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(H) any remuneration between a public or nonprofit
private health center entity described under clause (i) or
(ii) of section 1905(l)(2)(B) and any individual or entity
providing goods, items, services, donations or loans, or a
combination thereof, to such health center entity pursuant to
a contract, lease, grant, loan, or other agreement, if such
agreement contributes to the ability of the health center
entity to maintain or increase the availability, or enhance
the quality, of services provided to a medically underserved
population served by the health center entity.''.
(b) Rulemaking for Exception for Health Center Entity
Arrangements.--
(1) Establishment.--
(A) In general.--The Secretary of Health and Human Services
(in this subsection referred to as the ``Secretary'') shall
establish, on an expedited basis, standards relating to the
exception described in section 1128B(b)(3)(H) of the Social
Security Act, as added by subsection (a), for health center
entity arrangements to the antikickback penalties.
(B) Factors to consider.--The Secretary shall consider the
following factors, among others, in establishing standards
relating to the exception for health center entity
arrangements under subparagraph (A):
(i) Whether the arrangement between the health center
entity and the other party results in savings of Federal
grant funds or increased revenues to the health center
entity.
(ii) Whether the arrangement between the health center
entity and the other party restricts or limits a patient's
freedom of choice.
(iii) Whether the arrangement between the health center
entity and the other party protects a health care
professional's independent medical judgment regarding
medically appropriate treatment.
The Secretary may also include other standards and criteria
that are consistent with the intent of Congress in enacting
the exception established under this section.
(2) Interim final effect.--No later than 180 days after the
date of enactment of this Act, the Secretary shall publish a
rule in the Federal Register consistent with the factors
under paragraph (1)(B). Such rule shall be effective and
final immediately on an interim basis, subject to such change
and revision, after public notice and opportunity (for a
period of not more than 60 days) for public comment, as is
consistent with this subsection.
SEC. 311. RELIEF FOR CERTAIN NON-TEACHING HOSPITALS.
(a) In General.--In the case of a non-teaching hospital
that meets the condition of subsection (b), for its cost
reporting period beginning in each of fiscal years 2003,
2004, and 2005 the amount of payment made to the hospital
under section 1886(d) of the Social Security Act for
discharges occurring during such fiscal year only shall be
increased as though the applicable percentage increase
(otherwise applicable to discharges occurring during such
fiscal year under section 1886(b)(3)(B)(i) of the Social
Security Act (42 U.S.C. 1395ww(b)(3)(B)(i)) had been
increased by 5 percentage points. The previous sentence shall
be applied for each such fiscal year separately without
regard to its application in a previous fiscal year and shall
not affect payment for discharges for any hospital occurring
during a fiscal year after fiscal year 2005.
(b) Condition.--A non-teaching hospital meets the condition
of this paragraph if--
(1) it is located in a rural area and the amount of the
aggregate payments under subsection (d) of such section for
non-teaching hospitals located in rural areas in the State
for their cost reporting periods beginning during fiscal year
1999 is less than the aggregate allowable operating costs of
inpatient hospital services (as defined in section
[[Page H4310]]
1886(a)(4) of such Act) for all such hospitals in such areas
in such State with respect to such cost reporting periods; or
(2) it is located in an urban area and the amount of the
aggregate payments under subsection (d) of such section for
non-teaching hospitals located in urban areas in the State
for their cost reporting periods beginning during fiscal year
1999 is less than 103 percent of the aggregate allowable
operating costs of inpatient hospital services (as defined in
section 1886(a)(4) of such Act) for all such hospitals in
such areas in such State with respect to such cost reporting
periods.
The amounts under paragraphs (1) and (2) shall be determined
by the Secretary of Health and Human Services based on data
of the Medicare Payment Advisory Commission.
(c) Definitions.--For purposes of this section:
(1) Non-teaching hospital.--The term ``non-teaching
hospital'' means, for a cost reporting period, a subsection
(d) hospital (as defined in section 1886(d)(1)(B) of the
Social Security Act, 42 U.S.C. 1395ww(d)(1)(B))) that is not
receiving any additional payment under section 1886(d)(5)(B)
of such Act (42 U.S.C. 1395ww(d)(5)(B)) or a payment under
section 1886(h) of such Act (42 U.S.C. 1395ww(h)) for
discharges occurring during the period.
(2) Rural; urban.--The terms ``rural'' and ``urban'' have
the meanings given such terms for purposes of section 1886(d)
of the Social Security Act (42 U.S.C. 1395ww(d)).
TITLE IV--PROVISIONS RELATING TO PART A
Subtitle A--Inpatient Hospital Services
SEC. 401. REVISION OF ACUTE CARE HOSPITAL PAYMENT UPDATES.
Subclause (XVIII) of section 1886(b)(3)(B)(i) (42 U.S.C.
1395ww(b)(3)(B)(i)) is amended to read as follows:
``(XVIII) for fiscal year 2003, the market basket
percentage increase for sole community hospitals and such
increase minus 0.25 percentage points for other hospitals,
and''.
SEC. 402. FREEZE IN LEVEL OF ADJUSTMENT FOR INDIRECT COSTS OF
MEDICAL EDUCATION (IME) THROUGH FISCAL YEAR
2007.
Section 1886(d)(5)(B)(ii) (42 U.S.C. 1395ww(d)(5)(B)(ii))
is amended--
(1) in subclause (VI), by inserting ``and each succeeding
fiscal year through fiscal year 2007'' after ``2002''; and
(2) in subclause (VII), by striking ``2002'' and inserting
``2007''.
SEC. 403. RECOGNITION OF NEW MEDICAL TECHNOLOGIES UNDER
INPATIENT HOSPITAL PPS.
(a) Improving Timeliness of Data Collection.--Section
1886(d)(5)(K) (42 U.S.C. 1395ww(d)(5)(K)) is amended by
adding at the end the following new clause:
``(vii) Under the mechanism under this subparagraph, the
Secretary shall provide for the addition of new diagnosis and
procedure codes in April 1 of each year, but the addition of
such codes shall not require the Secretary to adjust the
payment (or diagnosis-related group classification) under
this subsection until the fiscal year that begins after such
date.''.
(b) Eligibility Standard.--
(1) Minimum period for recognition of new technologies.--
Section 1886(d)(5)(K)(vi) (42 U.S.C. 1395ww(d)(5)(K)(vi)) is
amended--
(A) by inserting ``(I)'' after ``(vi)''; and
(B) by adding at the end the following new subclause:
``(II) Under such criteria, a service or technology shall
not be denied treatment as a new service or technology on the
basis of the period of time in which the service or
technology has been in use if such period ends before the end
of the 2-to-3-year period that begins on the effective date
of implementation of a code under ICD-9-CM (or a successor
coding methodology) that enables the identification of a
significant sample of specific discharges in which the
service or technology has been used.''.
(2) Adjustment of threshold.--Section 1886(d)(5)(K)(ii)(I)
(42 U.S.C. 1395ww(d)(5)(K)(ii)(I)) is amended by inserting
``(applying a threshold specified by the Secretary that is
the lesser of 50 percent of the national average standardized
amount for operating costs of inpatient hospital services for
all hospitals and all diagnosis-related groups or one
standard deviation for the diagnosis-related group
involved)'' after ``is inadequate''.
(3) Criterion for substantial improvement.--Section
1886(d)(5)(K)(vi) (42 U.S.C. 1395ww(d)(5)(K)(vi)), as amended
by paragraph (1), is further amended by adding at the end the
following subclause:
``(III) The Secretary shall by regulation provide for
further clarification of the criteria applied to determine
whether a new service or technology represents an advance in
medical technology that substantially improves the diagnosis
or treatment of beneficiaries. Under such criteria, in
determining whether a new service or technology represents an
advance in medical technology that substantially improves the
diagnosis or treatment of beneficiaries, the Secretary shall
deem a service or technology as meeting such requirement if
the service or technology is a drug or biological that is
designated under section 506 or 526 of the Federal Food,
Drug, and Cosmetic Act, approved under section 314.510 or
601.41 of title 21, Code of Federal Regulations, or
designated for priority review when the marketing application
for such drug or biological was filed or is a medical device
for which an exemption has been granted under section 520(m)
of such Act, or for which priority review has been provided
under section 515(d)(5) of such Act.''.
(4) Process for public input.--Section 1886(d)(5)(K) (42
U.S.C. 1395ww(d)(5)(K)), as amended by paragraph (1), is
amended--
(A) in clause (i), by adding at the end the following:
``Such mechanism shall be modified to meet the requirements
of clause (viii).''; and
(B) by adding at the end the following new clause:
``(viii) The mechanism established pursuant to clause (i)
shall be adjusted to provide, before publication of a
proposed rule, for public input regarding whether a new
service or technology not described in the second sentence of
clause (vi)(III) represents an advance in medical technology
that substantially improves the diagnosis or treatment of
beneficiaries as follows:
``(I) The Secretary shall make public and periodically
update a list of all the services and technologies for which
an application for additional payment under this subparagraph
is pending.
``(II) The Secretary shall accept comments,
recommendations, and data from the public regarding whether
the service or technology represents a substantial
improvement.
``(III) The Secretary shall provide for a meeting at which
organizations representing hospitals, physicians, medicare
beneficiaries, manufacturers, and any other interested party
may present comments, recommendations, and data to the
clinical staff of the Centers for Medicare & Medicaid
Services before publication of a notice of proposed
rulemaking regarding whether service or technology represents
a substantial improvement.''.
(c) Preference for Use of DRG Adjustment.--Section
1886(d)(5)(K) (42 U.S.C. 1395ww(d)(5)(K)) is further amended
by adding at the end the following new clause:
``(ix) Before establishing any add-on payment under this
subparagraph with respect to a new technology, the Secretary
shall seek to identify one or more diagnosis-related groups
associated with such technology, based on similar clinical or
anatomical characteristics and the cost of the technology.
Within such groups the Secretary shall assign an eligible new
technology into a diagnosis-related group where the average
costs of care most closely approximate the costs of care of
using the new technology. In such case, no add-on payment
under this subparagraph shall be made with respect to such
new technology and this clause shall not affect the
application of paragraph (4)(C)(iii).''.
(d) Improvement in Payment for New Technology.--Section
1886(d)(5)(K)(ii)(III) (42 U.S.C. 1395ww(d)(5)(K)(ii)(III))
is amended by inserting after ``the estimated average cost of
such service or technology'' the following: ``(based on the
marginal rate applied to costs under subparagraph (A))''.
(e) Effective Date.--
(1) In general.--The Secretary shall implement the
amendments made by this section so that they apply to
classification for fiscal years beginning with fiscal year
2004.
(2) Reconsiderations of applications for fiscal year 2003
that are denied.--In the case of an application for a
classification of a medical service or technology as a new
medical service or technology under section 1886(d)(5)(K) of
the Social Security Act (42 U.S.C. 1395ww(d)(5)(K)) that was
filed for fiscal year 2003 and that is denied--
(A) the Secretary shall automatically reconsider the
application as an application for fiscal year 2004 under the
amendments made by this section; and
(B) the maximum time period otherwise permitted for such
classification of the service or technology shall be extended
by 12 months.
SEC. 404. PHASE-IN OF FEDERAL RATE FOR HOSPITALS IN PUERTO
RICO.
Section 1886(d)(9) (42 U.S.C. 1395ww(d)(9)) is amended--
(1) in subparagraph (A)--
(A) in clause (i), by striking ``for discharges beginning
on or after October 1, 1997, 50 percent (and for discharges
between October 1, 1987, and September 30, 1997, 75
percent)'' and inserting ``the applicable Puerto Rico
percentage (specified in subparagraph (E))''; and
(B) in clause (ii), by striking ``for discharges beginning
in a fiscal year beginning on or after October 1, 1997, 50
percent (and for discharges between October 1, 1987, and
September 30, 1997, 25 percent)'' and inserting ``the
applicable Federal percentage (specified in subparagraph
(E))''; and
(2) by adding at the end the following new subparagraph:
``(E) For purposes of subparagraph (A), for discharges
occurring--
``(i) between October 1, 1987, and September 30, 1997, the
applicable Puerto Rico percentage is 75 percent and the
applicable Federal percentage is 25 percent;
``(ii) on or after October 1, 1997, and before October 1,
2003, the applicable Puerto Rico percentage is 50 percent and
the applicable Federal percentage is 50 percent;
``(iii) during fiscal year 2004, the applicable Puerto Rico
percentage is 45 percent and the applicable Federal
percentage is 55 percent;
``(iv) during fiscal year 2005, the applicable Puerto Rico
percentage is 40 percent and the applicable Federal
percentage is 60 percent;
``(v) during fiscal year 2006, the applicable Puerto Rico
percentage is 35 percent and the applicable Federal
percentage is 65 percent;
``(vi) during fiscal year 2007, the applicable Puerto Rico
percentage is 30 percent and the
[[Page H4311]]
applicable Federal percentage is 70 percent; and
``(vii) on or after October 1, 2007, the applicable Puerto
Rico percentage is 25 percent and the applicable Federal
percentage is 75 percent.''.
SEC. 405. REFERENCE TO PROVISION RELATING TO ENHANCED
DISPROPORTIONATE SHARE HOSPITAL (DSH) PAYMENTS
FOR RURAL HOSPITALS AND URBAN HOSPITALS WITH
FEWER THAN 100 BEDS.
For provision enhancing disproportionate share hospital
(DSH) treatment for rural hospitals and urban hospitals with
fewer than 100 beds, see section 302.
SEC. 406. REFERENCE TO PROVISION RELATING TO 2-YEAR PHASED-IN
INCREASE IN THE STANDARDIZED AMOUNT IN RURAL
AND SMALL URBAN AREAS TO ACHIEVE A SINGLE,
UNIFORM STANDARDIZED AMOUNT.
For provision phasing in over a 2-year period an increase
in the standardized amount for rural and small urban areas to
achieve a single, uniform, standardized amount, see section
303.
SEC. 407. REFERENCE TO PROVISION FOR MORE FREQUENT UPDATES IN
THE WEIGHTS USED IN HOSPITAL MARKET BASKET.
For provision providing for more frequent updates in the
weights used in hospital market basket, see section 304.
SEC. 408. REFERENCE TO PROVISION MAKING IMPROVEMENTS TO
CRITICAL ACCESS HOSPITAL PROGRAM.
For provision providing making improvements to critical
access hospital program, see section 305.
Subtitle B--Skilled Nursing Facility Services
SEC. 411. PAYMENT FOR COVERED SKILLED NURSING FACILITY
SERVICES.
(a) 5-Year Extension of Temporary Increase in Nursing
Component of PPS Federal Rate.--Section 312(a) of BIPA is
amended by striking ``, and before October 1, 2002'' and
inserting ``and before October 1, 2007''.
(b) Adjustment to RUGs for AIDS Residents.--
(1) In general.--Paragraph (12) of section 1888(e) (42
U.S.C. 1395yy(e)) is amended to read as follows:
``(12) Adjustment for residents with aids.--
``(A) In general.--Subject to subparagraph (B), in the case
of a resident of a skilled nursing facility who is afflicted
with acquired immune deficiency syndrome (AIDS), the per diem
amount of payment otherwise applicable shall be increased by
128 percent to reflect increased costs associated with such
residents.
``(B) Sunset.--Subparagraph (A) shall not apply on and
after such date as the Secretary certifies that there is an
appropriate adjustment in the case mix under paragraph
(4)(G)(i) to compensate for the increased costs associated
with residents described in such subparagraph.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to services furnished on or after October 1,
2003.
Subtitle C--Hospice
SEC. 421. COVERAGE OF HOSPICE CONSULTATION SERVICES.
(a) Coverage of Hospice Consultation Services.--Section
1812(a) (42 U.S.C. 1395d(a)) is amended--
(1) by striking ``and'' at the end of paragraph (3);
(2) by striking the period at the end of paragraph (4) and
inserting ``; and''; and
(3) by inserting after paragraph (4) the following new
paragraph:
``(5) for individuals who are terminally ill, have not made
an election under subsection (d)(1), and have not previously
received services under this paragraph, services that are
furnished by a physician who is the medical director or an
employee of a hospice program and that consist of--
``(A) an evaluation of the individual's need for pain and
symptom management;
``(B) counseling the individual with respect to end-of-life
issues and care options; and
``(C) advising the individual regarding advanced care
planning.''.
(b) Payment.--Section 1814(i) (42 U.S.C. l395f(i)) is
amended by adding at the end the following new paragraph:
``(4) The amount paid to a hospice program with respect to
the services under section 1812(a)(5) for which payment may
be made under this part shall be equal to an amount
equivalent to the amount established for an office or other
outpatient visit for evaluation and management associated
with presenting problems of moderate severity under the fee
schedule established under section 1848(b), other than the
portion of such amount attributable to the practice expense
component.''.
(c) Conforming Amendment.--Section 1861(dd)(2)(A)(i) (42
U.S.C. 1395x(dd)(2)(A)(i)) is amended by inserting before the
comma at the end the following: ``and services described in
section 1812(a)(5)''.
(d) Effective Date.--The amendments made by this section
shall apply to services provided by a hospice program on or
after January 1, 2004.
SEC. 422. 10 PERCENT INCREASE IN PAYMENT FOR HOSPICE CARE
FURNISHED IN A FRONTIER AREA.
(a) In General.--Section 1814(i)(1) (42 U.S.C. 1395f(i)(1))
is amended by adding at the end the following new
subparagraph:
``(D) With respect to hospice care furnished in a frontier
area on or after January 1, 2003, and before January 1, 2008,
the payment rates otherwise established for such care shall
be increased by 10 percent. For purposes of this
subparagraph, the term `frontier area' means a county in
which the population density is less than 7 persons per
square mile.''.
(b) Report on Costs.--Not later than January 1, 2007, the
Comptroller General of the United States shall submit to
Congress a report on the costs of furnishing hospice care in
frontier areas. Such report shall include recommendations
regarding the appropriateness of extending, and modifying,
the payment increase provided under the amendment made by
subsection (a).
SEC. 423. RURAL HOSPICE DEMONSTRATION PROJECT.
(a) In General.--The Secretary shall conduct a
demonstration project for the delivery of hospice care to
medicare beneficiaries in rural areas. Under the project
medicare beneficiaries who are unable to receive hospice care
in the home for lack of an appropriate caregiver are provided
such care in a facility of 20 or fewer beds which offers,
within its walls, the full range of services provided by
hospice programs under section 1861(dd) of the Social
Security Act (42 U.S.C. 1395x(dd)).
(b) Scope of Project.--The Secretary shall conduct the
project under this section with respect to no more than 3
hospice programs over a period of not longer than 5 years
each.
(c) Compliance With Conditions.--Under the demonstration
project--
(1) the hospice program shall comply with otherwise
applicable requirements, except that it shall not be required
to offer services outside of the home or to meet the
requirements of section 1861(dd)(2)(A)(iii) of the Social
Security Act; and
(2) payments for hospice care shall be made at the rates
otherwise applicable to such care under title XVIII of such
Act.
The Secretary may require the program to comply with such
additional quality assurance standards for its provision of
services in its facility as the Secretary deems appropriate.
(d) Report.--Upon completion of the project, the Secretary
shall submit a report to Congress on the project and shall
include in the report recommendations regarding extension of
such project to hospice programs serving rural areas.
Subtitle D--Other Provisions
SEC. 431. DEMONSTRATION PROJECT FOR USE OF RECOVERY AUDIT
CONTRACTORS.
(a) In General.--The Secretary of Health and Human Services
shall conduct a demonstration project under this section (in
this section referred to as the ``project'') to demonstrate
the use of recovery audit contractors under the Medicare
Integrity Program in identifying and recouping overpayments
under the medicare program for services for which payment is
made under part A of title XVIII of the Social Security Act.
Under the project--
(1) payment may be made to such a contractor on a
contingent basis;
(2) a percentage of the amount recovered may be retained by
the Secretary and shall be available to the program
management account of the Centers for Medicare & Medicaid
Services; and
(3) the Secretary shall examine the efficacy of such use
with respect to duplicative payments, accuracy of coding, and
other payment policies in which inaccurate payments arise.
(b) Scope and Duration.--The project shall cover at least 2
States and at least 3 contractors and shall last for not
longer than 3 years.
(c) Waiver.--The Secretary of Health and Human Services
shall waive such provisions of title XVIII of the Social
Security Act as may be necessary to provide for payment for
services under the project in accordance with subsection (a).
(d) Qualifications of Contractors.--
(1) In general.--The Secretary shall enter into a recovery
audit contract under this section with an entity only if the
entity has staff that has knowledge of and experience with
the payment rules and regulations under the medicare program
or the entity has or will contract with another entity that
has such knowledgeable and experienced staff.
(2) Ineligibility of certain contractors.--The Secretary
may not enter into a recovery audit contract under this
section with an entity to the extent that the entity is a
fiscal intermediary under section 1816 of the Social Security
Act (42 U.S.C. 1395h), a carrier under section 1842 of such
Act (42 U.S.C. 1395u), or a Medicare Administrative
Contractor under section 1874A of such Act, or any other
entity that carries out the type of activities with respect
to providers of services under part A that would constitute a
conflict of interest, as determined by the Secretary.
(3) Preference for entities with demonstrated proficiency
with private insurers.--In awarding contracts to recovery
audit contractors under this section, the Secretary shall
give preference to those entities that the Secretary
determines have demonstrated proficiency in recovery audits
with private insurers or under the medicaid program under
title XIX of such Act.
(e) Report.--The Secretary of Health and Human Services
shall submit to Congress a report on the project not later
than 6 months after the date of its completion. Such reports
shall include information on the impact of
[[Page H4312]]
the project on savings to the medicare program and
recommendations on the cost-effectiveness of extending or
expanding the project.
TITLE V--PROVISIONS RELATING TO PART B
Subtitle A--Physicians' Services
SEC. 501. REVISION OF UPDATES FOR PHYSICIANS' SERVICES.
(a) Update for 2003 through 2006.--
(1) In general.--Section 1848(d) (42 U.S.C. 1395w-4(d)) is
amended by adding at the end the following new paragraphs:
``(5) Update for 2003.--The update to the single conversion
factor established in paragraph (1)(C) for 2003 is 2 percent.
``(6) Special rules for update for 2004, 2005, and 2006.--
The following rules apply in determining the update
adjustment factors under paragraph (4)(B) for 2004, 2005, and
2006:
``(A) Use of 2002 data in determining allowable costs.--
``(i) The reference in clause (ii)(I) of such paragraph to
April 1, 1996, is deemed to be a reference to January 1,
2002.
``(ii) The allowed expenditures for 2002 is deemed to be
equal to the actual expenditures for physicians' services
furnished during 2002, as estimated by the Secretary.
``(B) 1 percentage point increase in gdp under sgr.--The
annual average percentage growth in real gross domestic
product per capita under subsection (f)(2)(C) for each of
2003, 2004, 2005, and 2006 is deemed to be increased by 1
percentage point.''.
(2) Conforming amendment.--Paragraph (4)(B) of such section
is amended, in the matter before clause (i), by inserting
``and paragraph (6)'' after ``subparagraph (D)''.
(3) Not treated as change in law and regulation in
sustainable growth rate determination.--The amendments made
by this subsection shall not be treated as a change in law
for purposes of applying section 1848(f)(2)(D) of the Social
Security Act (42 U.S.C. 1395w-4(f)(2)(D)).
(b) Use of 10-Year Rolling Average in Computing Gross
Domestic Product.--
(1) In general.--Section 1848(f)(2)(C) (42 U.S.C. 1395w-
4(f)(2)(C)) is amended--
(A) by striking ``projected'' and inserting ``annual
average''; and
(B) by striking ``from the previous applicable period to
the applicable period involved'' and inserting ``during the
10-year period ending with the applicable period involved''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to computations of the sustainable growth rate
for years beginning with 2002.
(c) Elimination of Transitional Adjustment.--Section
1848(d)(4)(F) (42 U.S.C. 1395w-4(d)(4)(F)) is amended by
striking ``subparagraph (A)'' and all that follows and
inserting ``subparagraph (A), for each of 2001 and 2002, of
-0.2 percent.''
SEC. 502. STUDIES ON ACCESS TO PHYSICIANS' SERVICES.
(a) GAO Study on Beneficiary Access to Physicians'
Services.--
(1) Study.--The Comptroller General of the United States
shall conduct a study on access of medicare beneficiaries to
physicians' services under the medicare program. The study
shall include--
(A) an assessment of the use by beneficiaries of such
services through an analysis of claims submitted by
physicians for such services under part B of the medicare
program;
(B) an examination of changes in the use by beneficiaries
of physicians' services over time;
(C) an examination of the extent to which physicians are
not accepting new medicare beneficiaries as patients.
(2) Report.--Not later than 18 months after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under paragraph
(1). The report shall include a determination whether--
(A) data from claims submitted by physicians under part B
of the medicare program indicate potential access problems
for medicare beneficiaries in certain geographic areas; and
(B) access by medicare beneficiaries to physicians'
services may have improved, remained constant, or
deteriorated over time.
(b) Study and Report on Supply of Physicians.--
(1) Study.--The Secretary shall request the Institute of
Medicine of the National Academy of Sciences to conduct a
study on the adequacy of the supply of physicians (including
specialists) in the United States and the factors that affect
such supply.
(2) Report to congress.--Not later than 2 years after the
date of enactment of this section, the Secretary shall submit
to Congress a report on the results of the study described in
paragraph (1), including any recommendations for legislation.
SEC. 503. MEDPAC REPORT ON PAYMENT FOR PHYSICIANS' SERVICES.
Not later than 1 year after the date of the enactment of
this Act, the Medicare Payment Advisory Commission shall
submit to Congress a report on the effect of refinements to
the practice expense component of payments for physicians'
services in the case of services for which there are no
physician work relative value units, after the transition to
a full resource-based payment system in 2002, under section
1848 of the Social Security Act (42 U.S.C. 1395w-4). Such
report shall examine the following matters by physician
specialty:
(1) The effect of such refinements on payment for
physicians' services.
(2) The interaction of the practice expense component with
other components of and adjustments to payment for
physicians' services under such section.
(3) The appropriateness of the amount of compensation by
reason of such refinements.
(4) The effect of such refinements on access to care by
medicare beneficiaries to physicians' services.
(5) The effect of such refinements on physician
participation under the medicare program.
SEC. 504. 1-YEAR EXTENSION OF TREATMENT OF CERTAIN PHYSICIAN
PATHOLOGY SERVICES UNDER MEDICARE.
Section 542(c) of BIPA is amended by striking ``2-year
period'' and inserting ``3-year period''.
SEC. 505. PHYSICIAN FEE SCHEDULE WAGE INDEX REVISION.
(a) In General.--Notwithstanding any other provision of
law, for purposes of payment under the physician fee schedule
under section 1848 of the Social Security Act (42 U.S.C.
1395w-4) for physicians' services furnished during 2004, in
no case may the work geographic index otherwise calculated
under section 1848(e)(1)(A)(iii) of such Act (42 U.S.C.
1395w-4(e)(1)(A)(iii)) be less than 0.985.
(b) Exemption From Limitation on Annual Adjustments.--The
increase in expenditures attributable to subsection (a)
during 2004 shall not be taken into account in applying
section 1848(c)(2)(B)(ii)(II) of such Act (42 U.S.C. 1395w-
4(c)(2)(B)(ii)(II)) for that year.
(c) GAO Report.--
(1) Study.--The Comptroller General of the United States
shall conduct a study to evaluate the following:
(A) The economic basis of the current methodology for
geographic adjustment of the work component of the physician
payment rate under the physician fee schedule under section
1848 of the Social Security Act (42 U.S.C. 1395w-4).
(B) Whether the adjustment under subsection (a) should be
continued, and whether there is an economic basis for the
continuation of such adjustment, in those areas in which the
adjustment applies.
(C) The effect of the methodology on physician location and
retention in areas affected by such adjustment.
(D) The differences in recruitment costs and retention
rates for physicians, including specialists, between large
urban areas and other areas.
(E) The mobility of physicians, including specialists, over
the last decade.
(F) The effect of raising the floor of the geographic index
to a value of 1.0 for adjustment of the work component.
(2) Report.--The Comptroller General shall submit to
Congress a report on the study conducted under paragraph (1)
by not later than 1 year after the date of the enactment of
this Act.
Subtitle B--Other Services
SEC. 511. COMPETITIVE ACQUISITION OF CERTAIN ITEMS AND
SERVICES.
(a) In General.--Section 1847 (42 U.S.C. 1395w-3) is
amended to read as follows:
``competitive acquisition of certain items and services
``Sec. 1847. (a) Establishment of Competitive Acquisition
Programs.--
``(1) Implementation of programs.--
``(A) In general.--The Secretary shall establish and
implement programs under which, beginning in 2008,
competitive acquisition areas are established throughout the
United States for contract award purposes for the furnishing
under this part of competitively priced items and services
(described in paragraph (2)) for which payment is made under
this part. Such areas may differ for different items and
services.
``(B) Phased-in implementation.--The programs shall be
phased-in among competitive acquisition areas over a period
of not longer than 3 years in a manner so that the
competition under the programs occurs in--
``(i) at least \1/3\ of such areas in 2008; and
``(ii) at least \2/3\ of such areas in 2009.
``(C) Waiver of certain provisions.--In carrying out the
programs, the Secretary may waive such provisions of the
Federal Acquisition Regulation as are necessary for the
efficient implementation of this section, other than
provisions relating to confidentiality of information and
such other provisions as the Secretary determines
appropriate.
``(2) Items and services described.--The items and services
referred to in paragraph (1) are the following:
``(A) Durable medical equipment and inhalation drugs used
in connection with durable medical equipment.--Covered items
(as defined in section 1834(a)(13)) for which payment is
otherwise made under section 1834(a), other than items used
in infusion, and inhalation drugs used in conjunction with
durable medical equipment.
``(B) Off-the-shelf orthotics.--Orthotics (described in
section 1861(s)(9)) for which payment is otherwise made under
section 1834(h) which require minimal self-adjustment for
appropriate use and does not require expertise in trimming,
bending, molding, assembling, or customizing to fit to the
patient.
``(3) Exemption authority.--In carrying out the programs
under this section, the Secretary may exempt--
``(A) areas that are not competitive due to low population
density; and
``(B) items and services for which the application of
competitive acquisition is not likely to result in
significant savings.
``(b) Program Requirements.--
[[Page H4313]]
``(1) In general.--The Secretary shall conduct a
competition among entities supplying items and services
described in subsection (a)(2) for each competitive
acquisition area in which the program is implemented under
subsection (a) with respect to such items and services.
``(2) Conditions for awarding contract.--
``(A) In general.--The Secretary may not award a contract
to any entity under the competition conducted in an
competitive acquisition area pursuant to paragraph (1) to
furnish such items or services unless the Secretary finds all
of the following:
``(i) The entity meets quality and financial standards
specified by the Secretary or developed by accreditation
entities or organizations recognized by the Secretary.
``(ii) The total amounts to be paid under the contract
(including costs associated with the administration of the
contract) are expected to be less than the total amounts that
would otherwise be paid.
``(iii) Beneficiary access to a choice of multiple
suppliers in the area is maintained.
``(iv) Beneficiary liability is limited to the applicable
percentage of contract award price.
``(B) Quality standards.--The quality standards specified
under subparagraph (A)(i) shall not be less than the quality
standards that would otherwise apply if this section did not
apply and shall include consumer services standards. The
Secretary shall consult with an expert outside advisory panel
composed of an appropriate selection of representatives of
physicians, practitioners, and suppliers to review (and
advise the Secretary concerning) such quality standards.
``(3) Contents of contract.--
``(A) In general.--A contract entered into with an entity
under the competition conducted pursuant to paragraph (1) is
subject to terms and conditions that the Secretary may
specify.
``(B) Term of contracts.--The Secretary shall rebid
contracts under this section not less often than once every 3
years.
``(4) Limit on number of contractors.--
``(A) In general.--The Secretary may limit the number of
contractors in a competitive acquisition area to the number
needed to meet projected demand for items and services
covered under the contracts. In awarding contracts, the
Secretary shall take into account the ability of bidding
entities to furnish items or services in sufficient
quantities to meet the anticipated needs of beneficiaries for
such items or services in the geographic area covered under
the contract on a timely basis.
``(B) Multiple winners.--The Secretary shall award
contracts to more than one entity submitting a bid in each
area for an item or service.
``(5) Participating contractors.--Payment shall not be made
for items and services described in subsection (a)(2)
furnished by a contractor and for which competition is
conducted under this section unless--
``(A) the contractor has submitted a bid for such items and
services under this section; and
``(B) the Secretary has awarded a contract to the
contractor for such items and services under this section.
``(6) Authority to contract for education, outreach and
complaint services.--The Secretary may enter into a contract
with an appropriate entity to address complaints from
beneficiaries who receive items and services from an entity
with a contract under this section and to conduct appropriate
education of and outreach to such beneficiaries with respect
to the program.
``(c) Annual Reports.--The Secretary shall submit to
Congress an annual management report on the programs under
this section. Each such report shall include information on
savings, reductions in cost-sharing, access to items and
services, and beneficiary satisfaction.
``(d) Demonstration Project for Clinical Laboratory
Services.--
``(1) In general.--The Secretary shall, beginning in 2008,
conduct a demonstration project on the application of
competitive acquisition under this section to clinical
diagnostic laboratory tests--
``(A) for which payment is otherwise made under section
1833(h) or 1834(d)(1) (relating to colorectal cancer
screening tests); and
``(B) which are furnished without a face-to-face encounter
between the individual and the hospital or physician ordering
the tests.
``(2) Terms and conditions.--Such project shall be under
the same conditions as are applicable to items and services
described in subsection (a)(2).
``(3) Report.--The Secretary shall submit to Congress--
``(A) an initial report on the project not later than
December 31, 2009; and
``(B) such progress and final reports on the project after
such date as the Secretary determines appropriate.''.
(b) Continuation of Certain Demonstration Projects.--
Notwithstanding the amendment made by subsection (a), with
respect to demonstration projects implemented by the
Secretary under section 1847 of the Social Security Act (42
U.S.C. 1395w-3) (relating to the establishment of competitive
acquisition areas) that was in effect on the day before the
date of the enactment of this Act, each such demonstration
project may continue under the same terms and conditions
applicable under that section as in effect on that date.
(c) Report on Differences in Payment for Laboratory
Services.--Not later than 18 months after the date of the
enactment of this Act, the Comptroller General of the United
States shall submit to Congress a report that analyzes
differences in reimbursement between public and private
payors for clinical diagnostic laboratory services.
(d) MedPAC Report on Impact of Demonstration Projects on
Beneficiary Access to Services.--Not later than 1 year after
the date of the enactment of this Act, the Medicare Pyament
Advisory Commission shall submit to Congress a report that
analyzes the impact of demonstration projects carried out
under section 1847 of the Social Security Act, as in effect
on June 1, 2002, on access by medicare beneficiaries to
durable medical equipment for which payment was made under
the demonstration project.
SEC. 512. PAYMENT FOR AMBULANCE SERVICES.
(a) Phase-In Providing Floor Using Blend of Fee Schedule
and Regional Fee Schedules.--Section 1834(l) (42 U.S.C.
1395m(l)) is amended--
(1) in paragraph (2)(E), by inserting ``consistent with
paragraph (10)'' after ``in an efficient and fair manner'';
(2) by redesignating the paragraph (8) added by section
221(a) of BIPA as paragraph (9); and
(3) by adding at the end the following new paragraph:
``(10) Phase-in providing floor using blend of fee schedule
and regional fee schedules.--In carrying out the phase-in
under paragraph (2)(E) for each level of service furnished in
a year before January 1, 2007, the portion of the payment
amount that is based on the fee schedule shall not be less
than the following blended rate of the fee schedule under
paragraph (1) and of a regional fee schedule for the region
involved:
``(A) For 2003, the blended rate shall be based 20 percent
on the fee schedule under paragraph (1) and 80 percent on the
regional fee schedule.
``(B) For 2004, the blended rate shall be based 40 percent
on the fee schedule under paragraph (1) and 60 percent on the
regional fee schedule.
``(C) For 2005, the blended rate shall be based 60 percent
on the fee schedule under paragraph (1) and 40 percent on the
regional fee schedule.
``(D) For 2006, the blended rate shall be based 80 percent
on the fee schedule under paragraph (1) and 20 percent on the
regional fee schedule.
For purposes of this paragraph, the Secretary shall establish
a regional fee schedule for each of the 9 Census divisions
using the methodology (used in establishing the fee schedule
under paragraph (1)) to calculate a regional conversion
factor and a regional mileage payment rate and using the same
payment adjustments and the same relative value units as used
in the fee schedule under such paragraph.''.
(b) Adjustment in Payment for Certain Long Trips.--Section
1834(l), as amended by subsection (a), is further amended by
adding at the end the following new paragraph:
``(11) Adjustment in payment for certain long trips.--In
the case of ground ambulance services furnished on or after
January 1, 2003, and before January 1, 2008, regardless of
where the transportation originates, the fee schedule
established under this subsection shall provide that, with
respect to the payment rate for mileage for a trip above 50
miles the per mile rate otherwise established shall be
increased by \1/4\ of the payment per mile otherwise
applicable to such miles.''.
(c) Effective Date.--The amendments made by this section
shall apply to ambulance services furnished on or after
January 1, 2003.
SEC. 513. 5-YEAR EXTENSION OF MORATORIUM ON THERAPY CAPS;
PROVISIONS RELATING TO REPORTS.
(a) 5-Year Extension of Moratorium on Therapy Caps.--
Section 1833(g)(4) (42 U.S.C. 1395l(g)(4)) is amended by
striking ``and 2002'' and inserting ``2002, 2003, 2004, 2005,
2006, and 2007''.
(b) Prompt Submission of Overdue Reports on Payment and
Utilization of Outpatient Therapy Services.--Not later than
December 31, 2002, the Secretary shall submit to Congress the
reports required under section 4541(d)(2) of the Balanced
Budget Act of 1997 (relating to alternatives to a single
annual dollar cap on outpatient therapy) and under section
221(d) of the Medicare, Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999 (relating to utilization patterns for
outpatient therapy).
(c) Identification of Conditions and Diseases Justifying
Waiver of Therapy Cap.--
(1) Study.--The Secretary shall request the Institute of
Medicine of the National Academy of Sciences to identify
conditions or diseases that should justify conducting an
assessment of the need to waive the therapy caps under
section 1833(g)(4) of the Social Security Act (42 U.S.C.
1395l(g)(4)).
(2) Reports to congress.--Not later than July 1, 2003, the
Secretary shall submit to Congress a preliminary report on
the conditions and diseases identified under paragraph (1)
and not later than September 1, 2003, a final report on the
conditions and diseases so identified.
(d) GAO Study of Patient Access to Physical Therapist
Services.--
(1) Study.--The Comptroller General of the United States
shall conduct a study on access to physical therapist
services in States authorizing such services without a
physician referral and in States that require such a
physician referral. The study shall--
[[Page H4314]]
(A) examine the use of and referral patterns for physical
therapist services for patients age 50 and older in States
that authorize such services without a physician referral and
in States that require such a physician referral;
(B) examine the use of and referral patterns for physical
therapist services for patients who are medicare
beneficiaries;
(C) examine the potential effect of prohibiting a physician
from referring patients to physical therapy services owned by
the physician and provided in the physician's office;
(D) examine the delivery of physical therapists' services
within the facilities of Department of Defense; and
(E) analyze the potential impact on medicare beneficiaries
and on expenditures under the medicare program of eliminating
the need for a physician referral and physician certification
for physical therapist services under the medicare program.
(2) Report.--The Comptroller General shall submit to
Congress a report on the study conducted under paragraph (1)
by not later than 1 year after the date of the enactment of
this Act.
SEC. 514. ACCELERATED IMPLEMENTATION OF 20 PERCENT
COINSURANCE FOR HOSPITAL OUTPATIENT DEPARTMENT
(OPD) SERVICES; OTHER OPD PROVISIONS.
(a) Accelerated Implementation of Coinsurance Reductions.--
Section 1833(t)(8)(C)(ii) (42 U.S.C. 1395l(t)(8)(C)(ii)) is
amended by striking subclauses (III) through (V) and
inserting the following:
``(III) For procedures performed in 2004, 45 percent.
``(IV) For procedures performed in 2005, 40 percent.
``(V) For procedures performed in 2006, 2007, 2008 and
2009, 35 percent.
``(VI) For procedures performed in 2010, 30 percent.
``(VII) For procedures performed in 2011, 25 percent.
``(VIII) For procedures performed in 2012 and thereafter,
20 percent.''.
(b) Treatment of Temperature Monitored Cryoablation.--
(1) In general.--Section 1833(t)(6)(A)(ii) (42 U.S.C.
1395l(t)(6)(A)(ii)) is amended by striking ``or temperature
monitored cryoablation''.
(2) Effective date.--The amendment made by paragraph (1)
applies to payment for services furnished on or after January
1, 2003.
SEC. 515. COVERAGE OF AN INITIAL PREVENTIVE PHYSICAL
EXAMINATION.
(a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)),
is amended--
(1) in subparagraph (U), by striking ``and'' at the end;
(2) in subparagraph (V), by inserting ``and'' at the end;
and
(3) by adding at the end the following new subparagraph:
``(W) an initial preventive physical examination (as
defined in subsection (ww));''.
(b) Services Described.--Section 1861 (42 U.S.C. 1395x) is
amended by adding at the end the following new subsection:
``Initial Preventive Physical Examination
``(ww) The term `initial preventive physical examination'
means physicians' services consisting of a physical
examination with the goal of health promotion and disease
detection and includes items and services specified by the
Secretary in regulations.''.
(c) Waiver of Deductible and Coinsurance.--
(1) Deductible.--The first sentence of section 1833(b) (42
U.S.C. 1395l(b)) is amended--
(A) by striking ``and'' before ``(6)'', and
(B) by inserting before the period at the end the
following: ``, and (7) such deductible shall not apply with
respect to an initial preventive physical examination (as
defined in section 1861(ww))''.
(2) Coinsurance.--Section 1833(a)(1) (42 U.S.C.
1395l(a)(1)) is amended--
(A) in clause (N), by inserting ``(or 100 percent in the
case of an initial preventive physical examination, as
defined in section 1861(ww))'' after ``80 percent''; and
(B) in clause (O), by inserting ``(or 100 percent in the
case of an initial preventive physical examination, as
defined in section 1861(ww))'' after ``80 percent''.
(d) Payment as Physicians' Services.--Section 1848(j)(3)
(42 U.S.C. 1395w-4(j)(3)) is amended by inserting ``(2)(W),''
after ``(2)(S),''.
(e) Other Conforming Amendments.--Section 1862(a) (42
U.S.C. 1395y(a)) is amended--
(1) in paragraph (1)--
(A) by striking ``and'' at the end of subparagraph (H);
(B) by striking the semicolon at the end of subparagraph
(I) and inserting ``, and''; and
(C) by adding at the end the following new subparagraph:
``(J) in the case of an initial preventive physical
examination, which is performed not later than 6 months after
the date the individual's first coverage period begins under
part B;''; and
(2) in paragraph (7), by striking ``or (H)'' and inserting
``(H), or (J)''.
(f) Effective Date.--The amendments made by this section
shall apply to services furnished on or after January 1,
2004, but only for individuals whose coverage period begins
on or after such date.
SEC. 516. RENAL DIALYSIS SERVICES.
(a) Report on Differences in Costs in Different Settings.--
Not later than 1 year after the date of the enactment of this
Act, the Comptroller General of the United States shall
submit to Congress a report containing--
(1) an analysis of the differences in costs of providing
renal dialysis services under the medicare program in home
settings and in facility settings;
(2) an assessment of the percentage of overhead costs in
home settings and in facility settings; and
(3) an evaluation of whether the charges for home dialysis
supplies and equipment are reasonable and necessary.
(b) Restoring Composite Rate Exceptions for Pediatric
Facilities.--
(1) In general.--Section 422(a)(2) of BIPA is amended--
(A) in subparagraph (A), by striking ``and (C)'' and
inserting ``, (C), and (D)'';
(B) in subparagraph (B), by striking ``In the case'' and
inserting ``Subject to subparagraph (D), in the case''; and
(C) by adding at the end the following new subparagraph:
``(D) Inapplicability to pediatric facilities.--
Subparagraphs (A) and (B) shall not apply, as of October 1,
2002, to pediatric facilities that do not have an exception
rate described in subparagraph (C) in effect on such date.
For purposes of this subparagraph, the term `pediatric
facility' means a renal facility at least 50 percent of whose
patients are individuals under 18 years of age.''.
(2) Conforming amendment.--The fourth sentence of section
1881(b)(7) (42 U.S.C. 1395rr(b)(7)) is amended by striking
``The Secretary'' and inserting ``Subject to section
422(a)(2) of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000, the Secretary''.
(c) Increase in Renal Dialysis Composite Rate for Services
Furnished in 2004.--Notwithstanding any other provision of
law, with respect to payment under part B of title XVIII of
the Social Security Act for renal dialysis services furnished
in 2004, the composite payment rate otherwise established
under section 1881(b)(7) of such Act (42 U.S.C. 1395rr(b)(7))
shall be increased by 1.2 percent.
SEC. 517. IMPROVED PAYMENT FOR CERTAIN MAMMOGRAPHY SERVICES.
(a) Exclusion from OPD Fee Schedule.--Section
1833(t)(1)(B)(iv) (42 U.S.C. 1395l(t)(1)(B)(iv)) is amended
by inserting before the period at the end the following:
``and does not include screening mammography (as defined in
section 1861(jj)) and unilateral and bilateral diagnostic
mammography''.
(b) Adjustment to Technical Component.--For diagnostic
mammography performed on or after January 1, 2004, for which
payment is made under the physician fee schedule under
section 1848 of the Social Security Act (42 U.S.C. 1395w-4),
the Secretary, based on the most recent cost data available,
shall provide for an appropriate adjustment in the payment
amount for the technical component of the diagnostic
mammography.
(c) Effective Date.--The amendment made by subsection (a)
shall apply to mammography performed on or after January 1,
2004.
SEC. 518. WAIVER OF PART B LATE ENROLLMENT PENALTY FOR
CERTAIN MILITARY RETIREES; SPECIAL ENROLLMENT
PERIOD.
(a) Waiver of Penalty.--
(1) In general.--Section 1839(b) (42 U.S.C. 1395r(b)) is
amended by adding at the end the following new sentence: ``No
increase in the premium shall be effected for a month in the
case of an individual who is 65 years of age or older, who
enrolls under this part during 2001, 2002, or 2003, and who
demonstrates to the Secretary before December 31, 2003, that
the individual is a covered beneficiary (as defined in
section 1072(5) of title 10, United States Code). The
Secretary of Health and Human Services shall consult with the
Secretary of Defense in identifying individuals described in
the previous sentence.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to premiums for months beginning with January
2003. The Secretary of Health and Human Services shall
establish a method for providing rebates of premium penalties
paid for months on or after January 2003 for which a penalty
does not apply under such amendment but for which a penalty
was previously collected.
(b) Medicare Part B Special Enrollment Period.--
(1) In general.--In the case of any individual who, as of
the date of the enactment of this Act, is 65 years of age or
older, is eligible to enroll but is not enrolled under part B
of title XVIII of the Social Security Act, and is a covered
beneficiary (as defined in section 1072(5) of title 10,
United States Code), the Secretary of Health and Human
Services shall provide for a special enrollment period during
which the individual may enroll under such part. Such period
shall begin as soon as possible after the date of the
enactment of this Act and shall end on December 31, 2003.
(2) Coverage period.--In the case of an individual who
enrolls during the special enrollment period provided under
paragraph (1), the coverage period under part B of title
XVIII of the Social Security Act shall begin on the first day
of the month following the month in which the individual
enrolls.
SEC. 519. COVERAGE OF CHOLESTEROL AND BLOOD LIPID SCREENING.
(a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)),
as amended by section 515(a), is amended--
(1) in subparagraph (V), by striking ``and'' at the end;
(2) in subparagraph (W), by inserting ``and'' at the end;
and
[[Page H4315]]
(3) by adding at the end the following new subparagraph:
``(X) cholesterol and other blood lipid screening tests (as
defined in subsection (xx));''.
(b) Services Described.--Section 1861 (42 U.S.C. 1395x), as
amended by section 515(b), is amended by adding at the end
the following new subsection:
``Cholesterol and Other Blood Lipid Screening Test
``(xx)(1) The term `cholesterol and other blood lipid
screening test' means diagnostic testing of cholesterol and
other lipid levels of the blood for the purpose of early
detection of abnormal cholesterol and other lipid levels.
``(2) The Secretary shall establish standards, in
consultation with appropriate organizations, regarding the
frequency and type of cholesterol and other blood lipid
screening tests, except that such frequency may not be more
often than once every 2 years.''.
(c) Frequency.--Section 1862(a)(1) (42 U.S.C. 1395y(a)(1)),
as amended by section 515(e), is amended
(1) by striking ``and'' at the end of subparagraph (I);
(2) by striking the semicolon at the end of subparagraph
(J) and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(K) in the case of a cholesterol and other blood lipid
screening test (as defined in section 1861(xx)(1)), which is
performed more frequently than is covered under section
1861(xx)(2).''.
(d) Effective Date.--The amendments made by this section
shall apply to tests furnished on or after January 1, 2004.
TITLE VI--PROVISIONS RELATING TO PARTS A AND B
Subtitle A--Home Health Services
SEC. 601. ELIMINATION OF 15 PERCENT REDUCTION IN PAYMENT
RATES UNDER THE PROSPECTIVE PAYMENT SYSTEM.
(a) In General.--Section 1895(b)(3)(A) (42 U.S.C.
1395fff(b)(3)(A)) is amended to read as follows:
``(A) Initial basis.--Under such system the Secretary shall
provide for computation of a standard prospective payment
amount (or amounts) as follows:
``(i) Such amount (or amounts) shall initially be based on
the most current audited cost report data available to the
Secretary and shall be computed in a manner so that the total
amounts payable under the system for fiscal year 2001 shall
be equal to the total amount that would have been made if the
system had not been in effect and if section
1861(v)(1)(L)(ix) had not been enacted.
``(ii) For fiscal year 2002 and for the first quarter of
fiscal year 2003, such amount (or amounts) shall be equal to
the amount (or amounts) determined under this paragraph for
the previous fiscal year, updated under subparagraph (B).
``(iii) For 2003, such amount (or amounts) shall be equal
to the amount (or amounts) determined under this paragraph
for fiscal year 2002, updated under subparagraph (B) for
2003.
``(iv) For 2004 and each subsequent year, such amount (or
amounts) shall be equal to the amount (or amounts) determined
under this paragraph for the previous year, updated under
subparagraph (B).
Each such amount shall be standardized in a manner that
eliminates the effect of variations in relative case mix and
area wage adjustments among different home health agencies in
a budget neutral manner consistent with the case mix and wage
level adjustments provided under paragraph (4)(A). Under the
system, the Secretary may recognize regional differences or
differences based upon whether or not the services or agency
are in an urbanized area.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect as if included in the amendments made by
section 501 of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (as enacted into law
by section 1(a)(6) of Public Law 106-554).
SEC. 602. UPDATE IN HOME HEALTH SERVICES.
(a) Change to Calendar Year Update.--
(1) In general.--Section 1895(b) (42 U.S.C. 1395fff(b)(3))
is amended--
(A) in paragraph (3)(B)(i)--
(i) by striking ``each fiscal year (beginning with fiscal
year 2002)'' and inserting ``fiscal year 2002 and for each
subsequent year (beginning with 2003)''; and
(ii) by inserting ``or year'' after ``the fiscal year'';
(B) in paragraph (3)(B)(ii)--
(i) in subclause (II), by striking ``fiscal year'' and
inserting ``year'' and by redesignating such subclause as
subclause (III); and
(ii) in subclause (I), by striking ``each of fiscal years
2002 and 2003'' and inserting the following: ``fiscal year
2002, the home health market basket percentage increase (as
defined in clause (iii)) minus 1.1 percentage points;
``(II) 2003'';
(C) in paragraph (3)(B)(iii), by inserting ``or year''
after ``fiscal year'' each place it appears;
(D) in paragraph (3)(B)(iv)--
(i) by inserting ``or year'' after ``fiscal year'' each
place it appears; and
(ii) by inserting ``or years'' after ``fiscal years''; and
(E) in paragraph (5), by inserting ``or year'' after
``fiscal year''.
(2) Transition rule.--The standard prospective payment
amount (or amounts) under section 1895(b)(3) of the Social
Security Act for the calendar quarter beginning on October 1,
2002, shall be such amount (or amounts) for the previous
calendar quarter.
(b) Changes in Updates for 2003, 2004, and 2005.--Section
1895(b)(3)(B)(ii) (42 U.S.C. 1395fff(b)(3)(B)(ii)), as
amended by subsection (a)(1)(B), is amended--
(1) in subclause (II), by striking ``the home health market
basket percentage increase (as defined in clause (iii)) minus
1.1 percentage points'' and inserting ``2.0 percentage
points'';
(2) by striking ``or'' at the end of subclause (II);
(3) by redesignating subclause (III) as subclause (V); and
(4) by inserting after subclause (II) the following new
subclause:
``(III) 2004, 1.1 percentage points;
``(IV) 2005, 2.7 percentage points; or''.
(c) Payment Adjustment.--
(1) In general.--Section 1895(b)(5) (42 U.S.C.
1395fff(b)(5)) is amended by striking ``5 percent'' and
inserting ``3 percent''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to years beginning with 2003.
SEC. 603. OASIS TASK FORCE; SUSPENSION OF CERTAIN OASIS DATA
COLLECTION REQUIREMENTS PENDING TASK FORCE
SUBMITTAL OF REPORT.
(a) Establishment.--The Secretary of Health and Human
Services shall establish and appoint a task force (to be
known as the ``OASIS Task Force'') to examine the data
collection and reporting requirements under OASIS. For
purposes of this section, the term ``OASIS'' means the
Outcome and Assessment Information Set required by reason of
section 4602(e) of Balanced Budget Act of 1997 (42 U.S.C.
1395fff note).
(b) Composition.--The OASIS Task Force shall be composed of
the following:
(1) Staff of the Centers for Medicare & Medicaid Services
with expertise in post-acute care.
(2) Representatives of home health agencies.
(3) Health care professionals and research and health care
quality experts outside the Federal Government with expertise
in post-acute care.
(4) Advocates for individuals requiring home health
services.
(c) Duties.--
(1) Review and recommendations.--The OASIS Task Force shall
review and make recommendations to the Secretary regarding
changes in OASIS to improve and simplify data collection for
purposes of--
(A) assessing the quality of home health services; and
(B) providing consistency in classification of patients
into home health resource groups (HHRGs) for payment under
section 1895 of the Social Security Act (42 U.S.C. 1395fff).
(2) Specific items.--In conducting the review under
paragraph (1), the OASIS Task Force shall specifically
examine--
(A) the 41 outcome measures currently in use;
(B) the timing and frequency of data collection; and
(C) the collection of information on comorbidities and
clinical indicators.
(3) Report.--The OASIS Task Force shall submit a report to
the Secretary containing its findings and recommendations for
changes in OASIS by not later than 18 months after the date
of the enactment of this Act.
(d) Sunset.--The OASIS Task Force shall terminate 60 days
after the date on which the report is submitted under
subsection (c)(2).
(e) Nonapplication of FACA.--The provisions of the Federal
Advisory Committee Act shall not apply to the OASIS Task
Force.
(f) Suspension of OASIS Requirement for Collection of Data
on Non-Medicare and Non-Medicaid Patients Pending Task Force
Report.--
(1) In general.--During the period described in paragraph
(2), the Secretary of Health and Human Services may not
require, under section 4602(e) of the Balanced Budget Act of
1997 or otherwise under OASIS, a home health agency to gather
or submit information that relates to an individual who is
not eligible for benefits under either title XVIII or title
XIX of the Social Security Act.
(2) Period of suspension.--The period described in this
paragraph--
(A) begins on January 1, 2003, and
(B) ends on the last day of the 2nd month beginning after
the date the report is submitted under subsection (c)(2).
SEC. 604. MEDPAC STUDY ON MEDICARE MARGINS OF HOME HEALTH
AGENCIES.
(a) Study.--The Medicare Payment Advisory Commission shall
conduct a study of payment margins of home health agencies
under the home health prospective payment system under
section 1895 of the Social Security Act (42 U.S.C. 1395fff).
Such study shall examine whether systematic differences in
payment margins are related to differences in case mix (as
measured by home health resource groups (HHRGs)) among such
agencies. The study shall use the partial or full-year cost
reports filed by home health agencies.
(b) Report.--Not later than 2 years after the date of the
enactment of this Act, the Commission shall submit to
Congress a report on the study under subsection (a).
[[Page H4316]]
Subtitle B--Direct Graduate Medical Education
SEC. 611. REDISTRIBUTION OF UNUSED RESIDENT POSITIONS.
(a) In General.--Section 1886(h)(4) (42 U.S.C.
1395ww(h)(4)) is amended--
(1) in subparagraph (F)(i), by inserting ``subject to
subparagraph (I),'' after ``October 1, 1997,'';
(2) in subparagraph (H)(i), by inserting ``subject to
subparagraph (I),'' after ``subparagraphs (F) and (G),''; and
(3) by adding at the end the following new subparagraph:
``(I) Redistribution of unused resident positions.--
``(i) Reduction in limit based on unused positions.--
``(I) In general.--If a hospital's resident level (as
defined in clause (iii)(I)) is less than the otherwise
applicable resident limit (as defined in clause (iii)(II))
for each of the reference periods (as defined in subclause
(II)), effective for cost reporting periods beginning on or
after January 1, 2003, the otherwise applicable resident
limit shall be reduced by 75 percent of the difference
between such limit and the reference resident level specified
in subclause (III) (or subclause (IV) if applicable).
``(II) Reference periods defined.--In this clause, the term
`reference periods' means, for a hospital, the 3 most recent
consecutive cost reporting periods of the hospital for which
cost reports have been settled (or, if not, submitted) on or
before September 30, 2001.
``(III) Reference resident level.--Subject to subclause
(IV), the reference resident level specified in this
subclause for a hospital is the highest resident level for
the hospital during any of the reference periods.
``(IV) Adjustment process.--Upon the timely request of a
hospital, the Secretary may adjust the reference resident
level for a hospital to be the resident level for the
hospital for the cost reporting period that includes July 1,
2002.
``(ii) Redistribution.--
``(I) In general.--The Secretary is authorized to increase
the otherwise applicable resident limits for hospitals by an
aggregate number estimated by the Secretary that does not
exceed the aggregate reduction in such limits attributable to
clause (i) (without taking into account any adjustment under
subclause (IV) of such clause).
``(II) Effective date.--No increase under subclause (I)
shall be permitted or taken into account for a hospital for
any portion of a cost reporting period that occurs before
July 1, 2003, or before the date of the hospital's
application for an increase under this clause. No such
increase shall be permitted for a hospital unless the
hospital has applied to the Secretary for such increase by
December 31, 2004.
``(III) Considerations in redistribution.--In determining
for which hospitals the increase in the otherwise applicable
resident limit is provided under subclause (I), the Secretary
shall take into account the need for such an increase by
specialty and location involved, consistent with subclause
(IV).
``(IV) Priority for rural and small urban areas.--In
determining for which hospitals and residency training
programs an increase in the otherwise applicable resident
limit is provided under subclause (I), the Secretary shall
first distribute the increase to programs of hospitals
located in rural areas or in urban areas that are not large
urban areas (as defined for purposes of subsection (d)) on a
first-come-first-served basis (as determined by the
Secretary) based on a demonstration that the hospital will
fill the positions made available under this clause and not
to exceed an increase of 25 full-time equivalent positions
with respect to any hospital.
``(V) Application of locality adjusted national average per
resident amount.--With respect to additional residency
positions in a hospital attributable to the increase provided
under this clause, notwithstanding any other provision of
this subsection, the approved FTE resident amount is deemed
to be equal to the locality adjusted national average per
resident amount computed under subparagraph (E) for that
hospital.
``(VI) Construction.--Nothing in this clause shall be
construed as permitting the redistribution of reductions in
residency positions attributable to voluntary reduction
programs under paragraph (6) or as affecting the ability of a
hospital to establish new medical residency training programs
under subparagraph (H).
``(iii) Resident level and limit defined.--In this
subparagraph:
``(I) Resident level.--The term `resident level' means,
with respect to a hospital, the total number of full-time
equivalent residents, before the application of weighting
factors (as determined under this paragraph), in the fields
of allopathic and osteopathic medicine for the hospital.
``(II) Otherwise applicable resident limit.--The term
`otherwise applicable resident limit' means, with respect to
a hospital, the limit otherwise applicable under
subparagraphs (F)(i) and (H) on the resident level for the
hospital determined without regard to this subparagraph.''.
(b) No Application of Increase to IME.--Section
1886(d)(5)(B)(v) (42 U.S.C. 1395ww(d)(5)(B)(v)) is amended by
adding at the end the following: ``The provisions of clause
(i) of subparagraph (I) of subsection (h)(4) shall apply with
respect to the first sentence of this clause in the same
manner as it applies with respect to subparagraph (F) of such
subsection, but the provisions of clause (ii) of such
subparagraph shall not apply.''.
(c) Report on Extension of Applications Under
Redistribution Program.--Not later than July 1, 2004, the
Secretary shall submit to Congress a report containing
recommendations regarding whether to extend the deadline for
applications for an increase in resident limits under section
1886(h)(4)(I)(ii)(II) of the Social Security Act (as added by
subsection (a)).
SEC. 612. INCREASING FOR 5 YEARS TO 100 PERCENT OF THE
LOCALITY ADJUSTED NATIONAL AVERAGE PER RESIDENT
AMOUNT THE PAYMENT FLOOR FOR DIRECT GRADUATE
MEDICAL EDUCATION PAYMENTS UNDER THE MEDICARE
PROGRAM.
Section 1886(h)(2)(D)(iii) (42 U.S.C.
1395ww(h)(2)(D)(iii)), as amended by section 511 of BIPA, is
amended--
(1) by striking ``and'' after ``70 percent,''; and
(2) by inserting after ``85 percent,'' the following: ``and
for cost reporting periods beginning during the period
beginning on October 1, 2002, and ending on September 31,
2007, shall not be less than 100 percent,''.
Subtitle C--Other Provisions
SEC. 621. MODIFICATIONS TO MEDICARE PAYMENT ADVISORY
COMMISSION (MEDPAC).
(a) Examination of Budget Consequences.--Section 1805(b)
(42 U.S.C. 1395b-6(b)) is amended by adding at the end the
following new paragraph:
``(8) Examination of budget consequences.--Before making
any recommendations, the Commission shall examine the budget
consequences of such recommendations, directly or through
consultation with appropriate expert entities.''.
(b) Consideration of Efficient Provision of Services.--
Section 1805(b)(2)(B)(i) (42 U.S.C. 1395b-6(b)(2)(B)(i)) is
amended by inserting ``the efficient provision of'' after
``expenditures for''.
(c) Additional Reports.--
(1) Data needs and sources.--The Medicare Payment Advisory
Commission shall conduct a study, and submit a report to
Congress by not later than June 1, 2003, on the need for
current data, and sources of current data available, to
determine the solvency and financial circumstances of
hospitals and other medicare providers of services. The
Commission shall examine data on uncompensated care, as well
as the sahre of uncompensated care accounted for by the
expenses for treating illegal aliens.
(2) Use of tax-related returns.--Using return information
provided under Form 990 of the Internal Revenue Service, the
Commission shall submit to Congress, by not later than June
1, 2003, a report on the following:
(A) Investments and capital financing of hospitals
participating under the medicare program and related
foundations.
(B) Access to capital financing for private and for not-
for-profit hospitals.
SEC. 622. DEMONSTRATION PROJECT FOR DISEASE MANAGEMENT FOR
CERTAIN MEDICARE BENEFICIARIES WITH DIABETES.
(a) In General.--The Secretary of Health and Human Services
shall conduct a demonstration project under this section (in
this section referred to as the ``project'') to demonstrate
the impact on costs and health outcomes of applying disease
management to certain medicare beneficiaries with diagnosed
diabetes. In no case may the number of participants in the
project exceed 30,000 at any time.
(b) Voluntary Participation.--
(1) Eligibility.--Medicare beneficiaries are eligible to
participate in the project only if--
(a) they are Hispanic, as determined by the Secretary;
(A) they meet specific medical criteria demonstrating the
appropriate diagnosis and the advanced nature of their
disease;
(B) their physicians approve of participation in the
project; and
(C) they are not enrolled in a Medicare+Choice plan.
(2) Benefits.--A medicare beneficiary who is enrolled in
the project shall be eligible--
(A) for disease management services related to their
diabetes; and
(B) for payment for all costs for prescription drugs
without regard to whether or not they relate to the diabetes,
except that the project may provide for modest cost-sharing
with respect to prescription drug coverage.
(c) Contracts With Disease Management Organizations.--
(1) In general.--The Secretary of Health and Human Services
shall carry out the project through contracts with up to
three disease management organizations. The Secretary shall
not enter into such a contract with an organization unless
the organization demonstrates that it can produce improved
health outcomes and reduce aggregate medicare expenditures
consistent with paragraph (2).
(2) Contract provisions.--Under such contracts--
(A) such an organization shall be required to provide for
prescription drug coverage described in subsection (b)(2)(B);
(B) such an organization shall be paid a fee negotiated and
established by the Secretary in a manner so that (taking into
account savings in expenditures under parts A and B of the
medicare program under title XVIII of the Social Security
Act) there will be no net increase, and to the extent
practicable, there
[[Page H4317]]
will be a net reduction in expenditures under the medicare
program as a result of the project; and
(C) such an organization shall guarantee, through an
appropriate arrangement with a reinsurance company or
otherwise, the prohibition on net increases in expenditures
described in subparagraph (B).
(3) Payments.--Payments to such organizations shall be made
in appropriate proportion from the Trust Funds established
under title XVIII of the Social Security Act.
(4) Working group.--The Secretary shall establish within
the Department of Health and Human Services a working group
consisting of employees of the Department to carry out the
following:
(A) To oversee the project.
(B) To establish policy and criteria for medicare disease
management programs within the Department, including the
establishment of policy and criteria for such programs.
(C) To identify targeted medical conditions and targeted
individuals.
(D) To select areas in which such programs are carried out.
(E) To monitor health outcomes under such programs.
(F) To measure the effectiveness of such programs in
meeting any budget neutrality requirements.
(G) Otherwise to serve as a central focal point within the
Department for dissemination of information on medicare
disease management programs.
(d) Application of Medigap Protections to Demonstration
Project Enrollees.--(1) Subject to paragraph (2), the
provisions of section 1882(s)(3) (other than clauses (i)
through (iv) of subparagraph (B)) and 1882(s)(4) of the
Social Security Act shall apply to enrollment (and
termination of enrollment) in the demonstration project under
this section, in the same manner as they apply to enrollment
(and termination of enrollment) with a Medicare+Choice
organization in a Medicare+Choice plan.
(2) In applying paragraph (1)--
(A) any reference in clause (v) or (vi) of section
1882(s)(3)(B) of such Act to 12 months is deemed a reference
to the period of the demonstration project; and
(B) the notification required under section 1882(s)(3)(D)
of such Act shall be provided in a manner specified by the
Secretary of Health and Human Services.
(e) Duration.--The project shall last for not longer than 3
years.
(f) Waiver.--The Secretary of Health and Human Services
shall waive such provisions of title XVIII of the Social
Security Act as may be necessary to provide for payment for
services under the project in accordance with subsection
(c)(3).
(g) Report.--The Secretary of Health and Human Services
shall submit to Congress an interim report on the project not
later than 2 years after the date it is first implemented and
a final report on the project not later than 6 months after
the date of its completion. Such reports shall include
information on the impact of the project on costs and health
outcomes and recommendations on the cost-effectiveness of
extending or expanding the project.
(h) GAO Study on Disease Management Programs.--The
Comptroller General of the United States shall conduct a
study that compares disease management programs under title
XVIII of the Social Security Act with such programs conducted
in the private sector, including the prevalence of such
programs and programs for case management. The study shall
identify the cost-effectiveness of such programs and any
savings achieved by such programs. The Comptroller General
shall submit a report on such study to Congress by not later
than 18 months after the date of the enactment of this Act.
SEC. 623. DEMONSTRATION PROJECT FOR MEDICAL ADULT DAY CARE
SERVICES.
(a) Establishment.--Subject to the succeeding provisions of
this section, the Secretary of Health and Human Services
shall establish a demonstration project (in this section
referred to as the ``demonstration project'') under which the
Secretary shall, as part of a plan of an episode of care for
home health services established for a medicare beneficiary,
permit a medical adult day care facility or a home health
agency, directly or under arrangements with a medical adult
day care facility, to provide medical adult day care services
as a substitute for a portion of home health services that
would otherwise be provided in the beneficiary's home.
(b) Payment.--
(1) In general.--The amount of payment for an episode of
care for home health services, a portion of which consists of
substitute medical adult day care services, under the
demonstration project shall be made at a rate equal to 95
percent of the amount that would otherwise apply for such
home health services under section 1895 of the Social
Security Act (42 U.S.C. 1395fff). In no case may a a medical
adult day care facility or home health agency, or a medical
adult day care facility under arrangements with a home health
agency, separately charge a beneficiary for medical adult day
care services furnished under the plan of care.
(2) Budget neutrality for demonstration project.--
Notwithstanding any other provision of law, the Secretary
shall provide for an appropriate reduction in the aggregate
amount of additional payments made under section 1895 of the
Social Security Act (42 U.S.C. 1395fff) to reflect any
increase in amounts expended from the Trust Funds as a result
of the demonstration project conducted under this section.
(c) Demonstration Project Sites.--The project established
under this section shall be conducted in not more than 5
sites in States selected by the Secretary that license or
certify providers of services that furnish medical adult day
care services.
(d) Duration.--The Secretary shall conduct the
demonstration project for a period of 3 years.
(e) Voluntary Participation.--Participation of medicare
beneficiaries in the demonstration project shall be
voluntary. The total number of such beneficiaries that may
participate in the project at any given time may not exceed
15,000.
(f) Preference in Selecting Agencies.--In selecting medical
adult day care facilities and home health agencies to
participate under the demonstration project, the Secretary
shall give preference to those facilities and agencies that--
(1) are currently licensed or certified to furnish medical
adult day care services; and
(2) have furnished medical adult day care services to
medicare beneficiaries for a continuous 2-year period before
the beginning of the demonstration project.
(g) Waiver Authority.--The Secretary may waive such
requirements of title XVIII of the Social Security Act as may
be necessary for the purposes of carrying out the
demonstration project, other than waiving the requirement
that an individual be homebound in order to be eligible for
benefits for home health services.
(h) Evaluation and Report.--The Secretary shall conduct an
evaluation of the clinical and cost effectiveness of the
demonstration project. Not later 30 months after the
commencement of the project, the Secretary shall submit to
Congress a report on the evaluation, and shall include in the
report the following:
(1) An analysis of the patient outcomes and costs of
furnishing care to the medicare beneficiaries participating
in the project as compared to such outcomes and costs to
beneficiaries receiving only home health services for the
same health conditions.
(2) Such recommendations regarding the extension,
expansion, or termination of the project as the Secretary
determines appropriate.
(i) Definitions.--In this section:
(1) Home health agency.--The term ``home health agency''
has the meaning given such term in section 1861(o) of the
Social Security Act (42 U.S.C. 1395x(o)).
(2) Medical adult day care facility.--The term ``medical
adult day care facility'' means a facility that--
(A) has been licensed or certified by a State to furnish
medical adult day care services in the State for a continuous
2-year period;
(B) is engaged in providing skilled nursing services and
other therapeutic services directly or under arrangement with
a home health agency;
(C) meets such standards established by the Secretary to
assure quality of care and such other requirements as the
Secretary finds necessary in the interest of the health and
safety of individuals who are furnished services in the
facility; and
(D) provides medical adult day care services.
(3) Medical adult day care services.--The term ``medical
adult day care services'' means--
(A) home health service items and services described in
paragraphs (1) through (7) of section 1861(m) furnished in a
medical adult day care facility;
(B) a program of supervised activities furnished in a group
setting in the facility that--
(i) meet such criteria as the Secretary determines
appropriate; and
(ii) is designed to promote physical and mental health of
the individuals; and
(C) such other services as the Secretary may specify.
(4) Medicare beneficiary.--The term ``medicare
beneficiary'' means an individual entitled to benefits under
part A of this title, enrolled under part B of this title, or
both.
SEC. 624. PUBLICATION ON FINAL WRITTEN GUIDANCE CONCERNING
PROHIBITIONS AGAINST DISCRIMINATION BY NATIONAL
ORIGIN WITH RESPECT TO HEALTH CARE SERVICES.
Not later than January 1, 2003, the Secretary shall issue
final written guidance concerning the application of the
prohibition in title VI of the Civil Rights Act of 1964
against national origin discrimination as it affects persons
with limited English proficiency with respect to access to
health care services under the medicare program.
TITLE VII--MEDICAID AND OTHER HEALTH PROVISIONS
SEC. 701. DSH PROVISIONS.
(a) Continuation of Medicaid DSH Allotment Adjustments
Under BIPA 2000.--
(1) In general.--Section 1923(f) (42 U.S.C. 1396r-4(f))--
(A) in paragraph (2)--
(i) in the heading, by striking ``through 2002'' and
inserting ``through 2000'';
(ii) by striking ``ending with fiscal year 2002'' and
inserting ``ending with fiscal year 2000''; and
(iii) in the table in such paragraph, by striking the
columns labeled ``FY 01'' and ``FY02'';
(B) in paragraph (3)(A), by striking ``paragraph (2)'' and
inserting ``paragraph (4)''; and
(C) in paragraph (4), as added by section 701(a)(1) of
BIPA--
[[Page H4318]]
(i) by striking ``for fiscal years 2001 and 2002'' in the
heading;
(ii) in subparagraph (A), by striking ``Notwithstanding
paragraph (2), the'' and inserting ``The'';
(iii) in subparagraph (C)--
(I) by striking ``No application'' and inserting
``Application''; and
(II) by striking ``without regard to'' and inserting
``taking into account''.
(2) Increase in medicaid dsh allotment for the district of
columbia.--
(A) In general.--Effective for DSH allotments beginning
with fiscal year 2002, the item in the table contained in
section 1923(f)(2) of the Social Security Act (42 U.S.C.
1396r-4(f)(2)) for the District of Columbia for the DSH
allotment for FY 00 (fiscal year 2000) is amended by striking
``32'' and inserting ``49''.
(B) Construction.--Nothing in subparagraph (A) shall be
construed as preventing the application of section 1923(f)(4)
of the Social Security Act (as amended by subsection (a)) to
the District of Columbia for fiscal year 2002 and subsequent
fiscal years.
(b) Increase in Floor for Treatment As an Extremely Low DSH
State to 3 Percent in Fiscal Year 2002.--
(1) Increase in dsh floor.--Section 1923(f)(5) (42 U.S.C.
1396r-4(f)(5)) is amended--
(A) by striking ``fiscal year 1999'' and inserting ``fiscal
year 2001'';
(B) by striking ``August 31, 2000'' and inserting ``August
31, 2002'';
(C) by striking ``1 percent'' each place it appears and
inserting ``3 percent''; and
(D) by striking ``fiscal year 2001'' and inserting ``fiscal
year 2003''.
(2) Effective date.--The amendments made by paragraph (1)
take effect on October 1, 2002, and apply to DSH allotments
under title XIX of the Social Security Act for fiscal year
2003 and each fiscal year thereafter.
SEC. 702. 1-YEAR EXTENSION OF Q-I1 PROGRAM.
Section 1902(a)(10)(E)(E)(iv) (42 U.S.C.
1396a(a)(10)(E)(E)(iv)) is amended by striking ``2002'' and
inserting ``2003''.
Mr. GEPHARDT (during the reading). Mr. Speaker, I ask unanimous
consent that the motion to recommit be considered as read and printed
in the Record.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Missouri?
Mr. NUSSLE. Mr. Speaker, I reserve all points of order against this
motion, and I object to the unanimous consent request to dispense with
the reading.
The SPEAKER pro tempore. The Clerk will continue to read.
The Clerk continued the reading of the motion to recommit.
{time} 0130
Mr. GEPHARDT (during the reading). Mr. Speaker, I ask unanimous
consent that the motion to recommit be considered as read and printed
in the Record.
The SPEAKER pro tempore (Mr. Thornberry). Is there objection to the
request of the gentleman from Missouri?
There was no objection.
Mr. TAUZIN. Mr. Speaker, I claim the time in opposition to the motion
to recommit.
The SPEAKER pro tempore. The gentleman from Missouri (Mr. Gephardt)
is recognized for 5 minutes in support of his motion.
(Mr. GEPHARDT asked and was given permission to revise and extend his
remarks.)
Mr. GEPHARDT. Mr. Speaker, I ask Members to vote ``yes'' on this
motion to recommit and to vote ``no'' on the Republican plan.
I guess I would like to start tonight's debate with a question: Why
did you not allow us to have an alternative to this drug plan? A
Democratic House gave Republicans an alternative in 1965 when we
debated Medicare. We represent 49 percent of the American people. This
is one of the most important issues that we will vote on in this
Congress, yet we are not afforded the opportunity to have a clean vote
on a clear alternative. Are you afraid? Do you think that too many of
Republican Members would vote for our plan?
This process tonight is not worthy of this House of Representatives.
This is the people's House. Here the people must be heard. I am deeply
disappointed that we were not afforded the opportunity for a clear
alternative on this very, very important issue. This is an important
issue to all the senior citizens of our country. The Greatest
Generation that fought our wars, paid their taxes, raised their
children, and made this country great, that Greatest Generation now is
too often getting on buses and going to Canada or going to Mexico to
get their prescription drugs at prices they can afford. They are making
choices between food and taking their drugs. There are senior citizens
tonight that are cutting their pills in half because they cannot afford
to pay for a whole month's worth.
And tonight, those people are only afforded a vote on a flawed,
deficient, wrong plan. If we stack that plan up against what these
people are asking for, it fails. It fails. In fact, I would say it is a
fraud. I give you what Webster called a fraud: a deception,
deliberately practiced to secure unfair or unlawful gain. A piece of
trickery. A trick.
The Republican plan has no set premium. They say it might be $35. We
are told in States where they have done what the Republicans are doing
it is $85. There is no defined benefit. Republicans are turning seniors
over to the private insurance market.
This is the same debate that we had in 1965. This is a replay of that
debate. If this were 1965, we would not have dreamed of having a
Medicare program without a prescription drug benefit. Prescription
drugs are now the treatment for most maladies that people face. Why
would we not just add this benefit to the Medicare program? Our plan
that is in the motion to recommit is simple. It is Medicare: $100
deductible, $25 premium. The government pays 80 percent of the drug
cost. The recipient pays 20 percent, and when they hit $2,000 out of
pocket, the government picks it all up.
This is what seniors are asking for. They are not asking to go into
private insurance. They want a Medicare drug benefit, and they want all
the seniors to be amassed to get leverage to get the price of
prescription drugs down, down, down.
{time} 0145
In the end, I suspect many of you do not support Medicare. I suspect
you still want to privatize it. Your plans for Social Security call for
privatizing it. In 1965, Republicans predicted Medicare would lead to
socialized medicine. One said, ``If we pass Medicare, one day we will
be telling our children what it was like in America when people were
free.'' Your majority leader has said Medicare is a program that I
would have no part of in a free world. He said he deeply resented the
fact that when he was 65 he would have to enroll in Medicare.
So you have reverted to form. In the end, this Republican bill
listens not to the people of this country. It listens to the
pharmaceutical companies and to the insurance companies and is not good
for the people's House of Representatives. It should not be passed.
In closing, I would ask all of you to simply tonight think of the
people you represent, people like my mother. She is 94 years old. She
lives in St. Louis. Every time I go home, she asks me about what is
going to happen with the cost of her drugs. She had a stroke about 5
years ago, and the doctor said she will probably never talk again; she
will probably never be able to cook or to do household duties. She was
able to get the drugs and she is back and she is talking. She is asking
me every time I see her about what she is going to do about the cost of
her drugs. She has glaucoma and she gets a little bitty bottle of drops
that cost $100 a bottle and lasts for 2 weeks. She is lucky. She has
got my brother and me, and we send her the money every month so that
she can get her drugs.
Think about the thousands of people in your district who are not as
lucky as my mother. Think about them. Think about whether they can
afford a premium more than $25. Think about whether they can put up
with benefits ending in the middle of the year when they cannot get
their needed drugs. Think about them when you are not getting the price
of drugs down so that they can afford to buy the drugs.
In 1965, this Congress took a historic step, and it passed the
greatest program that this country has ever put together. It is the
reason that people are living to 80 and 90 and 100 in this country with
quality in their lives. We should honor that program tonight and expand
it as it should have been many years ago. I am sure there were Members
on that day or night in 1965 that voted against the Medicare program
and regretted it through the rest of their career and their life. Do
not regret your vote tonight. Stand for Medicare and stand for the
American people that you represent.
The SPEAKER pro tempore (Mr. Thornberry). Any point of order to be
reserved on the motion has now been withdrawn.
The Chair recognizes the gentleman from Louisiana (Mr. Tauzin) for 5
minutes.
[[Page H4319]]
Mr. TAUZIN. Mr. Speaker, there is trickery about this place. There is
fraud about this House. We could have a motion to recommit forthwith,
but that is not what happened tonight. What happened tonight was a
motion to recommit promptly. My friend, the chairman of Ways and Means,
will explain in just a minute the trickery in that motion.
You see, that motion has a very special effect regarding this debate
tonight and the possibility of us passing a prescription drug benefit
for the seniors of America tonight. The gentleman from California will
explain it to you in just a minute. But if we were to even consider the
proposal offered in this motion to recommit seriously, it is almost
identical, I believe, to the proposal that was made before the
Committee on Energy and Commerce.
It has been scored by CBO now at $971 billion, although our budget,
as you know, allocated $350 billion to this effort. It is more
expensive than the plan prepared on the Senate side by Senator Bob
Graham. The Bob Graham plan is estimated to drive Medicare into
insolvency by the year 2016. Just imagine how much sooner Medicare goes
bankrupt under the plan our friends on the other side are offering in
the motion to recommit.
That is saving the Medicare program, driving it into bankruptcy? We
are not alone in that assessment. The AARP looked at our plans, too;
and this is what they said about ours: ``We appreciate your efforts to
contain drug costs, because a Medicare drug benefit alone without
effective cost controls will be difficult to sustain as our growing
population of older Americans increases its drug utilization.''
Our assessment in the committee of this plan, believe it or not,
actually raises drug prices to seniors. We asked CBO a simple question.
We asked CBO if the Medicare Modernization and Prescription Drug Act
before us that we presented to this House tonight would lower drug
expenditures more than any other House bill introduced in the Congress
and scored by CBO, and this is what they responded: ``The answer to
your question is yes.'' Yes, lower drug costs. Yes, prescription drug
benefits for our seniors. Tonight, not promptly. Yes, it is time to
pass this bill tonight for all our moms and dads.
Mr. Speaker, I yield to the gentleman from California (Mr. Thomas).
Mr. THOMAS. I thank the gentleman for yielding.
The gentleman from Missouri mentioned several times 1965; 1965 was 10
years before a Member of this Congress was born, Adam Putnam. For more
than 30 of those 37 years, you were in the majority. You never put
prescription drugs in Medicare. You had your chance. You never did. And
your argument is that you have now in front of us a plan.
The gentleman from Missouri read a definition from Webster's. What my
mother would have said, you should have washed your mouth out, because
for you to cite the definition of fraud and call it trickery is for
everyone to understand what this motion to recommit really is. It is a
little word called ``forthwith.'' If this motion had said Mr. Gephardt
moves to recommit the bill forthwith, it would not have been fraud, and
it would not have been trickery. But because that little word is
missing and it requires it to be reported promptly, the effect of this
motion to recommit is to kill this bill. All of the statements that the
gentleman from Missouri made in the well were simply trickery, it was a
fraud, because this bill cannot come back and be made law. You are
wasting the House's time. Obviously, some of you do not understand the
rules under which this House operates.
Mr. Speaker, had they had the guts to put ``forthwith'' in this
motion to recommit, this bill would have come back to the floor, and we
could have debated it. You did not put ``forthwith'' in it. Your motion
to recommit is a motion to kill the bill.
Mr. WALDEN of Oregon. Mr. Speaker, the House is not in order. The
gentleman deserves to be heard as was the minority leader.
The SPEAKER pro tempore. The House will be in order.
Mr. THOMAS. Actually, nobody deserves to be heard on this motion to
recommit. It is 119 pages of nothing. The way you constructed it,
knowingly and on purpose, was to pull a charade on seniors. Nothing in
this bill will be available to seniors because you did not put a little
word in there, a word that would have proved honesty, a word that would
have proved courage, a word that would have let seniors know----
Mr. TAUZIN. Mr. Speaker, the House is not in order.
Mr. Speaker, we listened very patiently to the minority leader. I
believe the gentleman deserves to be heard.
The SPEAKER pro tempore. The time in opposition to the motion to
recommit has expired.
Mr. THOMAS. Mr. Speaker, I urge my colleagues to vote ``no'' on the
motion to recommit.
The SPEAKER pro tempore. Without objection, the previous question is
ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Recorded Vote
Mr. DINGELL. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 204,
noes 223, not voting 8, as follows:
[Roll No. 281]
AYES--204
Abercrombie
Ackerman
Allen
Andrews
Baca
Baird
Baldacci
Baldwin
Barcia
Barrett
Becerra
Bentsen
Berkley
Berman
Berry
Bishop
Blagojevich
Blumenauer
Bonior
Borski
Boswell
Boucher
Boyd
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (IN)
Carson (OK)
Clayton
Clement
Clyburn
Condit
Conyers
Costello
Coyne
Cramer
Crowley
Cummings
Davis (CA)
Davis (FL)
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Dooley
Doyle
Edwards
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank
Frost
Gephardt
Gonzalez
Gordon
Green (TX)
Hall (OH)
Hall (TX)
Harman
Hastings (FL)
Hill
Hilliard
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
John
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kind (WI)
Kleczka
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Lucas (KY)
Luther
Lynch
Maloney (CT)
Maloney (NY)
Markey
Mascara
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Mink
Mollohan
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Peterson (MN)
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Ross
Rothman
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Shows
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Stark
Stenholm
Strickland
Stupak
Tanner
Tauscher
Thompson (CA)
Thurman
Tierney
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Waters
Watson (CA)
Watt (NC)
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn
NOES--223
Aderholt
Akin
Armey
Bachus
Baker
Ballenger
Barr
Bartlett
Barton
Bass
Bereuter
Biggert
Bilirakis
Blunt
Boehlert
Boehner
Bonilla
Bono
Boozman
Brady (TX)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Cantor
Capito
Castle
Chabot
Chambliss
Coble
Collins
Combest
Cooksey
Cox
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Diaz-Balart
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
[[Page H4320]]
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Gutknecht
Hansen
Hart
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hilleary
Hobson
Hoekstra
Horn
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Jenkins
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kerns
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (OK)
Manzullo
McCrery
McHugh
McInnis
McKeon
Mica
Miller, Dan
Miller, Gary
Miller, Jeff
Moran (KS)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Pence
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Riley
Roemer
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schaffer
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Stump
Sullivan
Sununu
Sweeney
Tancredo
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiahrt
Tiberi
Toomey
Upton
Vitter
Walden
Walsh
Wamp
Watkins (OK)
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)
NOT VOTING--8
Clay
Gutierrez
Jefferson
Paul
Roukema
Thompson (MS)
Towns
Traficant
{time} 0215
So the motion to recommit was rejected.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore (Mr. Thornberry.) The question is on the
passage of the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Recorded Vote
Mr. PALLONE. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 221,
noes 208, not voting 6, as follows:
[Roll No. 282]
AYES--221
Aderholt
Akin
Armey
Bachus
Baker
Ballenger
Barr
Bartlett
Barton
Bass
Bereuter
Biggert
Bilirakis
Blunt
Boehlert
Boehner
Bonilla
Bono
Boozman
Boswell
Brady (TX)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Cantor
Capito
Castle
Chabot
Chambliss
Coble
Combest
Condit
Cooksey
Cox
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Diaz-Balart
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
English
Everett
Ferguson
Fletcher
Foley
Forbes
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Hall (TX)
Hansen
Hart
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hilleary
Hobson
Hoekstra
Horn
Houghton
Hulshof
Hunter
Hyde
Isakson
Israel
Issa
Jenkins
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kerns
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Maloney (CT)
Matheson
McCrery
McHugh
McInnis
McKeon
Mica
Miller, Dan
Miller, Gary
Miller, Jeff
Moran (KS)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Pence
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Riley
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schaffer
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skeen
Smith (NJ)
Smith (TX)
Souder
Stearns
Stump
Sullivan
Sununu
Sweeney
Tancredo
Tauzin
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiahrt
Tiberi
Toomey
Upton
Vitter
Walden
Walsh
Wamp
Watkins (OK)
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)
NOES--208
Abercrombie
Ackerman
Allen
Andrews
Baca
Baird
Baldacci
Baldwin
Barcia
Barrett
Becerra
Bentsen
Berkley
Berman
Berry
Bishop
Blagojevich
Blumenauer
Bonior
Borski
Boucher
Boyd
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (IN)
Carson (OK)
Clayton
Clement
Clyburn
Collins
Conyers
Costello
Coyne
Cramer
Crowley
Cummings
Davis (CA)
Davis (FL)
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Dooley
Doyle
Edwards
Emerson
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Flake
Ford
Frank
Frost
Gephardt
Gonzalez
Gordon
Green (TX)
Gutierrez
Gutknecht
Hall (OH)
Harman
Hastings (FL)
Hill
Hilliard
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley
Hostettler
Hoyer
Inslee
Istook
Jackson (IL)
Jackson-Lee (TX)
John
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kind (WI)
Kleczka
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Luther
Lynch
Maloney (NY)
Manzullo
Markey
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Mink
Mollohan
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roemer
Ross
Rothman
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Shows
Skelton
Slaughter
Smith (MI)
Smith (WA)
Snyder
Solis
Spratt
Stark
Stenholm
Strickland
Stupak
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Waters
Watson (CA)
Watt (NC)
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn
NOT VOTING--6
Clay
Jefferson
Paul
Roukema
Towns
Traficant
{time} 0232
So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
____________________