Medicare Modernization Act

Health Hippo: Medicare Prescription Drug, Improvement, and Modernization Act of 2003

MEDICARE PRESCRIPTION DRUG BENEFIT ~ MEDICARE ADVANTAGE ~ COMBATTING WASTE, FRAUD, AND ABUSE ~ RURAL PROVISIONS ~ PART A ~ PART B ~ PARTS A AND B ~ COST CONTAINMENT ~ ADMINISTRATIVE IMPROVEMENTS ~ MEDICAID ~ AFFORDABLE PHARMACEUTICALS ~ TAX INCENTIVES

An Act to amend title XVIII of the Social Security Act to provide for a voluntary program for prescription drug coverage under the Medicare Program, to modernize the Medicare Program, to amend the Internal Revenue Code of 1986 to allow a deduction to individuals for amounts contributed to health savings security accounts and health savings accounts, to provide for the disposition of unused health benefits in cafeteria plans and flexible spending arrangements, and for other purposes.

(a) SHORT TITLE- This Act may be cited as the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
(b) AMENDMENTS TO SOCIAL SECURITY ACT- Except as otherwise specifically provided, whenever in division A 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 for 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 Medicare prescription drug benefit.
Sec. 102 Medicare Advantage conforming amendments.
Sec. 103 Medicaid amendments.
Sec. 104 Medigap amendments.
Sec. 105 Additional provisions relating to medicare prescription drug discount card and transitional assistance program.
Sec. 106 State Pharmaceutical Assistance Transition Commission.
Sec. 107 Studies and reports.
Sec. 108 Grants to physicians to implement electronic prescription drug programs.
Sec. 109 Expanding the work of medicare Quality Improvement Organizations to include parts C and D.
Sec. 110 Conflict of interest study.
Sec. 111 Study on employment-based retiree health coverage.

TITLE II–MEDICARE ADVANTAGE

Sec. 201 Implementation of Medicare Advantage program.
Sec. 211 Immediate improvements.
Sec. 221 Establishment of MA regional plans.
Sec. 222 Competition program beginning in 2006.
Sec. 223 Effective date.
Sec. 231 Specialized MA plans for special needs individuals.
Sec. 232 Avoiding duplicative State regulation.
Sec. 233 Medicare MSAs.
Sec. 234 Extension of reasonable cost contracts.
Sec. 235 Two-year extension of municipal health service demonstration projects.
Sec. 236 Payment by PACE providers for medicare and medicaid services furnished by noncontract providers.
Sec. 237 Reimbursement for federally qualified health centers providing services under MA plans.
Sec. 238 Institute of Medicine evaluation and report on health care performance measures.
Sec. 241 Comparative Cost Adjustment (CCA) program.

TITLE III–COMBATTING WASTE, FRAUD, AND ABUSE

Sec. 301 Medicare secondary payor (MSP) provisions.
Sec. 302 Payment for durable medical equipment; competitive acquisition of certain items and services.
Sec. 303 Payment reform for covered outpatient drugs and biologicals.
Sec. 304 Extension of application of payment reform for covered outpatient drugs and biologicals to other physician specialties.
Sec. 305 Payment for inhalation drugs.
Sec. 306 Demonstration project for use of recovery audit contractors.
Sec. 307 Pilot program for national and State background checks on direct patient access employees of long-term care facilities or providers.

TITLE IV–RURAL PROVISIONS

Sec. 401 Equalizing urban and rural standardized payment amounts under the medicare inpatient hospital prospective payment system.
Sec. 402 Enhanced disproportionate share hospital (DSH) treatment for rural hospitals and urban hospitals with fewer than 100 beds.
Sec. 403 Adjustment to the medicare inpatient hospital prospective payment system wage index to revise the labor-related share of such index.
Sec. 404 More frequent update in weights used in hospital market basket.
Sec. 405 Improvements to critical access hospital program.
Sec. 406 Medicare inpatient hospital payment adjustment for low-volume hospitals.
Sec. 407 Treatment of missing cost reporting periods for sole community hospitals.
Sec. 408 Recognition of attending nurse practitioners as attending physicians to serve hospice patients.
Sec. 409 Rural hospice demonstration project.
Sec. 410 Exclusion of certain rural health clinic and federally qualified health center services from the prospective payment system for skilled nursing facilities.
Sec. 410A Rural community hospital demonstration program.
Sec. 411 Two-year extension of hold harmless provisions for small rural hospitals and sole community hospitals under the prospective payment system for hospital outpatient department services.
Sec. 412 Establishment of floor on work geographic adjustment.
Sec. 413 Medicare incentive payment program improvements for physician scarcity.
Sec. 414 Payment for rural and urban ambulance services.
Sec. 415 Providing appropriate coverage of rural air ambulance services.
Sec. 416 Treatment of certain clinical diagnostic laboratory tests furnished to hospital outpatients in certain rural areas.
Sec. 417 Extension of telemedicine demonstration project.
Sec. 418 Report on demonstration project permitting skilled nursing facilities to be originating telehealth sites; authority to implement.
Sec. 421 One-year increase for home health services furnished in a rural area.
Sec. 422 Redistribution of unused resident positions.
Sec. 431 Providing safe harbor for certain collaborative efforts that benefit medically underserved populations.
Sec. 432 Office of Rural Health Policy improvements.
Sec. 433 MedPAC study on rural hospital payment adjustments.
Sec. 434 Frontier extended stay clinic demonstration project.

TITLE V–PROVISIONS RELATING TO PART A

Sec. 501 Revision of acute care hospital payment updates.
Sec. 502 Revision of the indirect medical education (IME) adjustment percentage.
Sec. 503 Recognition of new medical technologies under inpatient hospital prospective payment system.
Sec. 504 Increase in Federal rate for hospitals in Puerto Rico.
Sec. 505 Wage index adjustment reclassification reform.
Sec. 506 Limitation on charges for inpatient hospital contract health services provided to Indians by medicare participating hospitals.
Sec. 507 Clarifications to certain exceptions to medicare limits on physician referrals.
Sec. 508 One-time appeals process for hospital wage index classification.
Sec. 511 Payment for covered skilled nursing facility services.
Sec. 512 Coverage of hospice consultation services.
Sec. 513 Study on portable diagnostic ultrasound services for beneficiaries in skilled nursing facilities.

TITLE VI–PROVISIONS RELATING TO PART B

Sec. 601 Revision of updates for physicians services.
Sec. 602 Treatment of physicians services furnished in Alaska.
Sec. 603 Inclusion of podiatrists, dentists, and optometrists under private contracting authority.
Sec. 604 GAO study on access to physicians services.
Sec. 605 Collaborative demonstration-based review of physician practice expense geographic adjustment data.
Sec. 606 MedPAC report on payment for physicians services.
Sec. 611 Coverage of an initial preventive physical examination.
Sec. 612 Coverage of cardiovascular screening blood tests.
Sec. 613 Coverage of diabetes screening tests.
Sec. 614 Improved payment for certain mammography services.
Sec. 621 Hospital outpatient department (HOPD) payment reform.
Sec. 622 Limitation of application of functional equivalence standard.
Sec. 623 Payment for renal dialysis services.
Sec. 624 Two-year moratorium on therapy caps; provisions relating to reports.
Sec. 625 Waiver of part B late enrollment penalty for certain military retirees; special enrollment period.
Sec. 626 Payment for services furnished in ambulatory surgical centers.
Sec. 627 Payment for certain shoes and inserts under the fee schedule for orthotics and prosthetics.
Sec. 628 Payment for clinical diagnostic laboratory tests.
Sec. 629 Indexing part B deductible to inflation.
Sec. 630 Five-year authorization of reimbursement for all medicare part B services furnished by certain Indian hospitals and clinics.
Sec. 641 Demonstration project for coverage of certain prescription drugs and biologicals.
Sec. 642 Extension of coverage of Intravenous Immune Globulin (IVIG) for the treatment of primary immune deficiency diseases in the home.
Sec. 643 MedPAC study of coverage of surgical first assisting services of certified registered nurse first assistants.
Sec. 644 MedPAC study of payment for cardio-thoracic surgeons.
Sec. 645 Studies relating to vision impairments.
Sec. 646 Medicare health care quality demonstration programs.
Sec. 647 MedPAC study on direct access to physical therapy services.
Sec. 648 Demonstration project for consumer-directed chronic outpatient services.
Sec. 649 Medicare care management performance demonstration.
Sec. 650 GAO study and report on the propagation of concierge care.
Sec. 651 Demonstration of coverage of chiropractic services under medicare.

TITLE VII–PROVISIONS RELATING TO PARTS A AND B

Sec. 701 Update in home health services.
Sec. 702 Demonstration project to clarify the definition of homebound.
Sec. 703 Demonstration project for medical adult day care services.
Sec. 704 Temporary suspension of OASIS requirement for collection of data on non-medicare and non-medicaid patients.
Sec. 705 MedPAC study on medicare margins of home health agencies.
Sec. 706 Coverage of religious nonmedical health care institution services furnished in the home.
Sec. 711 Extension of update limitation on high cost programs.
Sec. 712 Exception to initial residency period for geriatric residency or fellowship programs.
Sec. 713 Treatment of volunteer supervision.
Sec. 721 Voluntary chronic care improvement under traditional fee-for-service.
Sec. 722 Medicare Advantage quality improvement programs.
Sec. 723 Chronically ill medicare beneficiary research, data, demonstration strategy.
Sec. 731 Improvements in national and local coverage determination process to respond to changes in technology.
Sec. 732 Extension of treatment of certain physician pathology services under medicare.
Sec. 733 Payment for pancreatic islet cell investigational transplants for medicare beneficiaries in clinical trials.
Sec. 734 Restoration of medicare trust funds.
Sec. 735 Modifications to Medicare Payment Advisory Commission (MedPAC).
Sec. 736 Technical amendments.

TITLE VIII–COST CONTAINMENT

Sec. 801 Inclusion in annual report of medicare trustees of information on status of medicare trust funds.
Sec. 802 Presidential submission of legislation.
Sec. 803 Procedures in the House of Representatives.
Sec. 804 Procedures in the Senate.
Sec. 811 Income-related reduction in part B premium subsidy.

TITLE IX–ADMINISTRATIVE IMPROVEMENTS, REGULATORY REDUCTION, AND CONTRACTING REFORM

Sec. 900 Administrative improvements within the Centers for Medicare & Medicaid Services (CMS).
Sec. 901 Construction; definition of supplier.
Sec. 902 Issuance of regulations.
Sec. 903 Compliance with changes in regulations and policies.
Sec. 904 Reports and studies relating to regulatory reform.
Sec. 911 Increased flexibility in medicare administration.
Sec. 912 Requirements for information security for medicare administrative contractors.
Sec. 921 Provider education and technical assistance.
Sec. 922 Small provider technical assistance demonstration program.
Sec. 923 Medicare Beneficiary Ombudsman.
Sec. 924 Beneficiary outreach demonstration program.
Sec. 925 Inclusion of additional information in notices to beneficiaries about skilled nursing facility benefits.
Sec. 926 Information on medicare-certified skilled nursing facilities in hospital discharge plans.
Sec. 931 Transfer of responsibility for medicare appeals.
Sec. 932 Process for expedited access to review.
Sec. 933 Revisions to medicare appeals process.
Sec. 934 repayment review.
Sec. 935 Recovery of overpayments.
Sec. 936 Provider enrollment process; right of appeal.
Sec. 937 Process for correction of minor errors and omissions without pursuing appeals process.
Sec. 938 Prior determination process for certain items and services; advance beneficiary notices.
Sec. 939 Appeals by providers when there is no other party available.
Sec. 940 Revisions to appeals timeframes and amounts.
Sec. 940A Mediation process for local coverage determinations.
Sec. 941 Policy development regarding evaluation and management (E & M) documentation guidelines.
Sec. 942 Improvement in oversight of technology and coverage.
Sec. 943 Treatment of hospitals for certain services under medicare secondary payor (MSP) provisions.
Sec. 944 EMTALA improvements.
Sec. 945 Emergency Medical Treatment and Labor Act (EMTALA) Technical Advisory Group.
Sec. 946 Authorizing use of arrangements to provide core hospice services in certain circumstances.
Sec. 947 Application of OSHA bloodborne pathogens standard to certain hospitals.
Sec. 948 BIPA-related technical amendments and corrections.
Sec. 949 Conforming authority to waive a program exclusion.
Sec. 950 Treatment of certain dental claims.
Sec. 951 Furnishing hospitals with information to compute DSH formula.
Sec. 952 Revisions to reassignment provisions.
Sec. 953 Other provisions.

TITLE X–MEDICAID AND MISCELLANEOUS PROVISIONS

Sec. 1001 Medicaid disproportionate share hospital (DSH) payments.
Sec. 1002 Clarification of inclusion of inpatient drug prices charged to certain public hospitals in the best price exemptions for the medicaid drug rebate program.
Sec. 1003 Extension of moratorium.
Sec. 1011 Federal reimbursement of emergency health services furnished to undocumented aliens.
Sec. 1012 Commission on Systemic Interoperability.
Sec. 1013 Research on outcomes of health care items and services.
Sec. 1014 Health care that works for all Americans: Citizens Health Care Working Group.
Sec. 1015 Funding start-up administrative costs for medicare reform.
Sec. 1016 Health care infrastructure improvement program.

TITLE XI–ACCESS TO AFFORDABLE PHARMACEUTICALS

Sec. 1101 Thirty-month stay-of-effectiveness period.
Sec. 1102 Forfeiture of 180-day exclusivity period.
Sec. 1103 Bioavailability and bioequivalence.
Sec. 1104 Conforming amendments.
Sec. 1111 Federal Trade Commission Review–Definitions.
Sec. 1112 Notification of agreements.
Sec. 1113 Filing deadlines.
Sec. 1114 Disclosure exemption.
Sec. 1115 Enforcement.
Sec. 1116 Rulemaking.
Sec. 1117 Savings clause.
Sec. 1118 Effective date.
Sec. 1121 Importation of prescription drugs.
Sec. 1122 Study and report on importation of drugs.
Sec. 1123 Study and report on trade in pharmaceuticals.

TITLE XII–TAX INCENTIVES FOR HEALTH AND RETIREMENT SECURITY

Sec. 1201 Health savings accounts.
Sec. 1202 Exclusion from gross income of certain Federal subsidies for prescription drug plans.
Sec. 1203 Exception to information reporting requirements related to certain health arrangements.

TITLE I–MEDICARE PRESCRIPTION DRUG BENEFIT

SEC. 101. 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

Subpart 1–Part D Eligible Individuals and Prescription Drug Benefits

ELIGIBILITY, ENROLLMENT, AND INFORMATION

SEC. 1860D-1. (a) PROVISION OF QUALIFIED PRESCRIPTION DRUG COVERAGE THROUGH ENROLLMENT IN PLANS-

(1) IN GENERAL- Subject to the succeeding provisions of this part, each part D eligible individual (as defined in paragraph (3)(A)) is entitled to obtain qualified prescription drug coverage (described in section 1860D-2(a)) as follows:

(A) FEE-FOR-SERVICE ENROLLEES MAY RECEIVE COVERAGE THROUGH A PRESCRIPTION DRUG PLAN- A part D eligible individual who is not enrolled in an MA plan may obtain qualified prescription drug coverage through enrollment in a prescription drug plan (as defined in section 1860D-41(a)(14)).

(B) MEDICARE ADVANTAGE ENROLLEES-

(i) ENROLLEES IN A PLAN PROVIDING QUALIFIED PRESCRIPTION DRUG COVERAGE RECEIVE COVERAGE THROUGH THE PLAN- A part D eligible individual who is enrolled in an MA-PD plan obtains such coverage through such plan.

(ii) LIMITATION ON ENROLLMENT OF MA PLAN ENROLLEES IN PRESCRIPTION DRUG PLANS- Except as provided in clauses (iii) and (iv), a part D eligible individual who is enrolled in an MA plan may not enroll in a prescription drug plan under this part.

(iii) PRIVATE FEE-FOR-SERVICE ENROLLEES IN MA PLANS NOT PROVIDING QUALIFIED PRESCRIPTION DRUG COVERAGE PERMITTED TO ENROLL IN A PRESCRIPTION DRUG PLAN- A part D eligible individual who is enrolled in an MA private fee-for-service plan (as defined in section 1859(b)(2)) that does not provide qualified prescription drug coverage may obtain qualified prescription drug coverage through enrollment in a prescription drug plan.

(iv) ENROLLEES IN MSA PLANS PERMITTED TO ENROLL IN A PRESCRIPTION DRUG PLAN- A part D eligible individual who is enrolled in an MSA plan (as defined in section 1859(b)(3)) may obtain qualified prescription drug coverage through enrollment in a prescription drug plan.

(2) COVERAGE FIRST EFFECTIVE JANUARY 1, 2006- Coverage under prescription drug plans and MA-PD plans shall first be effective on January 1, 2006.

(3) DEFINITIONS- For purposes of this part:

(A) PART D ELIGIBLE INDIVIDUAL- The term part D eligible individual means an individual who is entitled to benefits under part A or enrolled under part B.

(B) MA PLAN- The term MA plan has the meaning given such term in section 1859(b)(1).

(b) ENROLLMENT PROCESS FOR PRESCRIPTION DRUG PLANS-

(1) ESTABLISHMENT OF PROCESS-

(A) IN GENERAL- The Secretary shall establish a process for the enrollment, disenrollment, termination, and change of enrollment of part D eligible individuals in prescription drug plans consistent with this subsection.

(B) APPLICATION OF MA RULES- In establishing such process, the Secretary shall use rules similar to (and coordinated with) the rules for enrollment, disenrollment, termination, and change of enrollment with an MA-PD plan under the following provisions of section 1851:

(i) RESIDENCE REQUIREMENTS- Section 1851(b)(1)(A), relating to residence requirements.

(ii) EXERCISE OF CHOICE- Section 1851(c) (other than paragraph (3)(A) of such section), relating to exercise of choice.

(iii) COVERAGE ELECTION PERIODS- Subject to paragraphs (2) and (3) of this subsection, section 1851(e) (other than subparagraphs (B) and (C) of paragraph (2) and the second sentence of paragraph (4) of such section), relating to coverage election periods, including initial periods, annual coordinated election periods, special election periods, and election periods for exceptional circumstances.

(iv) COVERAGE PERIODS- Section 1851(f), relating to effectiveness of elections and changes of elections.

(v) GUARANTEED ISSUE AND RENEWAL- Section 1851(g) (other than paragraph (2) of such section and clause (i) and the second sentence of clause (ii) of paragraph (3)(C) of such section), relating to guaranteed issue and renewal.

(vi) MARKETING MATERIAL AND APPLICATION FORMS- Section 1851(h), relating to approval of marketing material and application forms.

In applying clauses (ii), (iv), and (v) of this subparagraph, any reference to section 1851(e) shall be treated as a reference to such section as applied pursuant to clause (iii) of this subparagraph.

(C) SPECIAL RULE- The process established under subparagraph (A) shall include, in the case of a part D eligible individual who is a full-benefit dual eligible individual (as defined in section 1935(c)(6)) who has failed to enroll in a prescription drug plan or an MA-PD plan, for the enrollment in a prescription drug plan that has a monthly beneficiary premium that does not exceed the premium assistance available under section 1860D-14(a)(1)(A)). If there is more than one such plan available, the Secretary shall enroll such an individual on a random basis among all such plans in the PDP region. Nothing in the previous sentence shall prevent such an individual from declining or changing such enrollment.

(2) INITIAL ENROLLMENT PERIOD-

(A) PROGRAM INITIATION- In the case of an individual who is a part D eligible individual as of November 15, 2005, there shall be an initial enrollment period that shall be the same as the annual, coordinated open election period described in section 1851(e)(3)(B)(iii), as applied under paragraph (1)(B)(iii).

(B) CONTINUING PERIODS- In the case of an individual who becomes a part D eligible individual after November 15, 2005, there shall be an initial enrollment period which is the period under section 1851(e)(1), as applied under paragraph (1)(B)(iii) of this section, as if entitled to benefits under part A or enrolled under part B were substituted for entitled to benefits under part A and enrolled under part B, but in no case shall such period end before the period described in subparagraph (A).

(3) ADDITIONAL SPECIAL ENROLLMENT PERIODS- The Secretary shall establish special enrollment periods, including the following:

(A) INVOLUNTARY LOSS OF CREDITABLE PRESCRIPTION DRUG COVERAGE-

(i) IN GENERAL- In the case of a part D eligible individual who involuntarily loses creditable prescription drug coverage (as defined in section 1860D-13(b)(4)).

(ii) NOTICE- In establishing special enrollment periods under clause (i), the Secretary shall take into account when the part D eligible individuals are provided notice of the loss of creditable prescription drug coverage.

(iii) FAILURE TO PAY PREMIUM- For purposes of clause (i), a loss of coverage shall be treated as voluntary if the coverage is terminated because of failure to pay a required beneficiary premium.

(iv) REDUCTION IN COVERAGE- For purposes of clause (i), a reduction in coverage so that the coverage no longer meets the requirements under section 1860D-13(b)(5) (relating to actuarial equivalence) shall be treated as an involuntary loss of coverage.

(B) ERRORS IN ENROLLMENT- In the case described in section 1837(h) (relating to errors in enrollment), in the same manner as such section applies to part B.

(C) EXCEPTIONAL CIRCUMSTANCES- In the case of part D eligible individuals who meet such exceptional conditions (in addition to those conditions applied under paragraph (1)(B)(iii)) as the Secretary may provide.

(D) MEDICAID COVERAGE- In the case of an individual (as determined by the Secretary) who is a full-benefit dual eligible individual (as defined in section 1935(c)(6)).

(E) DISCONTINUANCE OF MA-PD ELECTION DURING FIRST YEAR OF ELIGIBILITY- In the case of a part D eligible individual who discontinues enrollment in an MA-PD plan under the second sentence of section 1851(e)(4) at the time of the election of coverage under such sentence under the original medicare fee-for-service program.

(4) INFORMATION TO FACILITATE ENROLLMENT-

(A) IN GENERAL- Notwithstanding any other provision of law but subject to subparagraph (B), the Secretary may provide to each PDP sponsor and MA organization such identifying information about part D eligible individuals as the Secretary determines to be necessary to facilitate efficient marketing of prescription drug plans and MA-PD plans to such individuals and enrollment of such individuals in such plans.

(B) LIMITATION-

(i) PROVISION OF INFORMATION- The Secretary may provide the information under subparagraph (A) only to the extent necessary to carry out such subparagraph.

(ii) USE OF INFORMATION- Such information provided by the Secretary to a PDP sponsor or an MA organization may be used by such sponsor or organization only to facilitate marketing of, and enrollment of part D eligible individuals in, prescription drug plans and MA-PD plans.

(5) REFERENCE TO ENROLLMENT PROCEDURES FOR MA-PD PLANS- For rules applicable to enrollment, disenrollment, termination, and change of enrollment of part D eligible individuals in MA-PD plans, see section 1851.

(6) REFERENCE TO PENALTIES FOR LATE ENROLLMENT- Section 1860D-13(b) imposes a late enrollment penalty for part D eligible individuals who–

(A) enroll in a prescription drug plan or an MA-PD plan after the initial enrollment period described in paragraph (2); and

(B) fail to maintain continuous creditable prescription drug coverage during the period of non-enrollment.

(1) ACTIVITIES- The Secretary shall conduct activities that are designed to broadly disseminate information to part D eligible individuals (and prospective part D eligible individuals) regarding the coverage provided under this part. Such activities shall ensure that such information is first made available at least 30 days prior to the initial enrollment period described in subsection (b)(2)(A).

(2) REQUIREMENTS- The activities described in paragraph (1) shall–

(A) be similar to the activities performed by the Secretary under section 1851(d), including dissemination (including through the toll-free telephone number 1-800-MEDICARE) of comparative information for prescription drug plans and MA-PD plans; and

(B) be coordinated with the activities performed by the Secretary under such section and under section 1804.

(3) COMPARATIVE INFORMATION-

(A) IN GENERAL- Subject to subparagraph (B), the comparative information referred to in paragraph (2)(A) shall include a comparison of the following with respect to qualified prescription drug coverage:

(i) BENEFITS- The benefits provided under the plan.

(ii) MONTHLY BENEFICIARY PREMIUM- The monthly beneficiary premium under the plan.

(iii) QUALITY AND PERFORMANCE- The quality and performance under the plan.

(iv) BENEFICIARY COST-SHARING- The cost-sharing required of part D eligible individuals under the plan.

(v) CONSUMER SATISFACTION SURVEYS- The results of consumer satisfaction surveys regarding the plan conducted pursuant to section 1860D-4(d).

(B) EXCEPTION FOR UNAVAILABILITY OF INFORMATION- The Secretary is not required to provide comparative information under clauses (iii) and (v) of subparagraph (A) with respect to a plan–

(i) for the first plan year in which it is offered; and

(ii) for the next plan year if it is impracticable or the information is otherwise unavailable.

(4) INFORMATION ON LATE ENROLLMENT PENALTY- The information disseminated under paragraph (1) shall include information concerning the methodology for determining the late enrollment penalty under section 1860D-13(b).

PRESCRIPTION DRUG BENEFITS

SEC. 1860D-2. (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 PRESCRIPTION DRUG COVERAGE WITH ACCESS TO NEGOTIATED PRICES- Standard prescription drug coverage (as defined in subsection (b)) and access to negotiated prices under subsection (d).

(B) ALTERNATIVE PRESCRIPTION DRUG COVERAGE WITH AT LEAST ACTUARIALLY EQUIVALENT BENEFITS AND ACCESS TO NEGOTIATED PRICES- Coverage of covered part D drugs which meets the alternative prescription drug coverage requirements of subsection (c) and access to negotiated prices under subsection (d), but only if the benefit design of such coverage is approved by the Secretary, as provided under subsection (c).

(2) PERMITTING SUPPLEMENTAL PRESCRIPTION DRUG COVERAGE-

(A) IN GENERAL- Subject to subparagraph (B), qualified prescription drug coverage may include supplemental prescription drug coverage consisting of either or both of the following:

(i) CERTAIN REDUCTIONS IN COST-SHARING-

(I) IN GENERAL- A reduction in the annual deductible, a reduction in the coinsurance percentage, or an increase in the initial coverage limit with respect to covered part D drugs, or any combination thereof, insofar as such a reduction or increase increases the actuarial value of benefits above the actuarial value of basic prescription drug coverage.

(II) CONSTRUCTION- Nothing in this paragraph shall be construed as affecting the application of subsection (c)(3).

(ii) OPTIONAL DRUGS- Coverage of any product that would be a covered part D drug but for the application of subsection (e)(2)(A).

(B) REQUIREMENT- A PDP sponsor may not offer a prescription drug plan that provides supplemental prescription drug coverage pursuant to subparagraph (A) in an area unless the sponsor also offers a prescription drug plan in the area that only provides basic prescription drug coverage.

(3) BASIC PRESCRIPTION DRUG COVERAGE- For purposes of this part and part C, the term basic prescription drug coverage means either of the following:

(A) Coverage that meets the requirements of paragraph (1)(A).

(B) Coverage that meets the requirements of paragraph (1)(B) but does not have any supplemental prescription drug coverage described in paragraph (2)(A).

(4) 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.

(5) CONSTRUCTION- Nothing in this subsection shall be construed as changing the computation of incurred costs under subsection (b)(4).

(b) STANDARD PRESCRIPTION DRUG COVERAGE- For purposes of this part and part C, the term standard prescription drug coverage means coverage of covered part D drugs that meets the following requirements:

(1) DEDUCTIBLE-

(A) IN GENERAL- The coverage has an annual deductible–

(i) for 2006, that is equal to $250; or

(ii) 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 (6) for the year involved.

(B) ROUNDING- Any amount determined under subparagraph (A)(ii) that is not a multiple of $5 shall be rounded to the nearest multiple of $5.

(2) BENEFIT STRUCTURE-

(A) 25 PERCENT COINSURANCE- The coverage has coinsurance (for costs above the annual deductible specified in paragraph (1) and up to the initial coverage limit under paragraph (3)) that is–

(i) equal to 25 percent; or

(ii) actuarially equivalent (using processes and methods established under section 1860D-11(c)) to an average expected payment of 25 percent of such costs.

(B) USE OF TIERS- Nothing in this part shall be construed as preventing a PDP sponsor or an MA organization from applying tiered copayments under a plan, so long as such tiered copayments are consistent with subparagraph (A)(ii).

(3) INITIAL COVERAGE LIMIT-

(A) IN GENERAL- Except as provided in paragraph (4), the coverage has an initial coverage limit on the maximum costs that may be recognized for payment purposes (including the annual deductible)–

(i) for 2006, that is equal to $2,250; or

(ii) 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 (6) for the year involved.

(B) ROUNDING- Any amount determined under subparagraph (A)(ii) that is not a multiple of $10 shall be rounded to the nearest multiple of $10.

(4) PROTECTION AGAINST HIGH OUT-OF-POCKET EXPENDITURES-

(A) IN GENERAL-

(i) IN GENERAL- The coverage provides benefits, after the part D eligible individual has incurred costs (as described in subparagraph (C)) for covered part D drugs in a year equal to the annual out-of-pocket threshold specified in subparagraph (B), with cost-sharing that is equal to the greater of–

(I) a copayment of $2 for a generic drug or a preferred drug that is a multiple source drug (as defined in section 1927(k)(7)(A)(i)) and $5 for any other drug; or

(II) coinsurance that is equal to 5 percent.

(ii) ADJUSTMENT OF AMOUNT- For a year after 2006, the dollar amounts specified in clause (i)(I) shall be equal to the dollar amounts specified in this subparagraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved. Any amount established under this clause that is not a multiple of a 5 cents shall be rounded to the nearest multiple of 5 cents.

(B) ANNUAL OUT-OF-POCKET THRESHOLD-

(i) IN GENERAL- For purposes of this part, the annual out-of-pocket threshold specified in this subparagraph–

(I) for 2006, is equal to $3,600; 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 (6) for the year involved.

(ii) ROUNDING- Any amount determined under clause (i)(II) that is not a multiple of $50 shall be rounded to the nearest multiple of $50.

(i) incurred costs shall only include costs incurred with respect to covered part D drugs for the annual deductible described in paragraph (1), for cost-sharing described in paragraph (2), and for amounts for which benefits are not provided because of the application of the initial coverage limit described in paragraph (3), but does not include any costs incurred for covered part D drugs which are not included (or treated as being included) in the plans formulary; and

(ii) such costs shall be treated as incurred only if they are paid by the part D eligible individual (or by another person, such as a family member, on behalf of the individual), under section 1860D-14, or under a State Pharmaceutical Assistance Program and the part D eligible individual (or other person) is not reimbursed through insurance or otherwise, a group health plan, or other third-party payment arrangement (other than under such section or such a Program) for such costs.

(D) INFORMATION REGARDING THIRD-PARTY REIMBURSEMENT-

(i) PROCEDURES FOR EXCHANGING INFORMATION- In order to accurately apply the requirements of subparagraph (C)(ii), the Secretary is authorized to establish procedures, in coordination with the Secretary of the Treasury and the Secretary of Labor–

(I) for determining whether costs for part D eligible individuals are being reimbursed through insurance or otherwise, a group health plan, or other third-party payment arrangement; and

(II) for alerting the PDP sponsors and MA organizations that offer the prescription drug plans and MA-PD plans in which such individuals are enrolled about such reimbursement arrangements.

(ii) AUTHORITY TO REQUEST INFORMATION FROM ENROLLEES- A PDP sponsor or an MA organization may periodically ask part D eligible individuals enrolled in a prescription drug plan or an MA-PD plan offered by the sponsor or organization whether such individuals have or expect to receive such third-party reimbursement. A material misrepresentation of the information described in the preceding sentence by an individual (as defined in standards set by the Secretary and determined through a process established by the Secretary) shall constitute grounds for termination of enrollment in any plan under section 1851(g)(3)(B) (and as applied under this part under section 1860D-1(b)(1)(B)(v)) for a period specified by the Secretary.

(5) CONSTRUCTION- Nothing in this part shall be construed as preventing a PDP sponsor or an MA organization offering an MA-PD plan from reducing to zero the cost-sharing otherwise applicable to preferred or generic drugs.

(6) ANNUAL PERCENTAGE INCREASE- 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 part D drugs in the United States for part D eligible individuals, as determined by the Secretary for the 12-month period ending in July of the previous year using such methods as the Secretary shall specify.

(c) ALTERNATIVE PRESCRIPTION DRUG COVERAGE REQUIREMENTS- A prescription drug plan or an MA-PD plan may provide a different prescription drug benefit design from standard prescription drug coverage so long as the Secretary determines (consistent with section 1860D-11(c)) that the following requirements are met and the plan applies for, and receives, the approval of the Secretary 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 is at least equal to the actuarial value of standard prescription drug coverage.

(B) ASSURING EQUIVALENT UNSUBSIDIZED VALUE OF COVERAGE- The unsubsidized value of the coverage is at least equal to the unsubsidized value of standard prescription drug coverage. For purposes of this subparagraph, the unsubsidized value of coverage is the amount by which the actuarial value of the coverage exceeds the actuarial value of the subsidy payments under section 1860D-15 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, to provide for the payment, with respect to costs incurred that are equal to the initial coverage limit under subsection (b)(3) for the year, of an amount equal to at least the product of–

(i) the amount by which the initial coverage limit described in subsection (b)(3) for the year exceeds the deductible described in subsection (b)(1) for the year; and

(ii) 100 percent minus the coinsurance percentage specified in subsection (b)(2)(A)(i).

(2) MAXIMUM REQUIRED DEDUCTIBLE- The deductible under the coverage shall not exceed the deductible amount specified under subsection (b)(1) for the year.

(3) SAME PROTECTION AGAINST HIGH OUT-OF-POCKET EXPENDITURES- The coverage provides the coverage required under subsection (b)(4).

(d) ACCESS TO NEGOTIATED PRICES-

(1) ACCESS-

(A) IN GENERAL- Under qualified prescription drug coverage offered by a PDP sponsor offering a prescription drug plan or an MA organization offering an MA-PD plan, the sponsor or organization shall provide enrollees with access to negotiated prices used for payment for covered part D drugs, regardless of the fact that no benefits may be payable under the coverage with respect to such drugs because of the application of a deductible or other cost-sharing or an initial coverage limit (described in subsection (b)(3)).

(B) NEGOTIATED PRICES- For purposes of this part, negotiated prices shall take into account negotiated price concessions, such as discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations, for covered part D drugs, and include any dispensing fees for such drugs.

(C) MEDICAID-RELATED PROVISIONS- The prices negotiated by a prescription drug plan, by an MA-PD plan with respect to covered part D drugs, or by a qualified retiree prescription drug plan (as defined in section 1860D-22(a)(2)) with respect to such drugs on behalf of part D eligible individuals, 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- A PDP sponsor offering a prescription drug plan or an MA organization offering an MA-PD plan shall disclose to the Secretary (in a manner specified by the Secretary) the aggregate negotiated price concessions described in paragraph (1)(B) made available to the sponsor or organization by a manufacturer which are passed through in the form of lower subsidies, lower monthly beneficiary prescription drug premiums, and lower prices through pharmacies and other dispensers. The provisions of section 1927(b)(3)(D) apply to information disclosed to the Secretary under this paragraph.

(3) AUDITS- To protect against fraud and abuse and to ensure proper disclosures and accounting under this part and in accordance with section 1857(d)(2)(B) (as applied under section 1860D-12(b)(3)(C)), the Secretary may conduct periodic audits, directly or through contracts, of the financial statements and records of PDP sponsors with respect to prescription drug plans and MA organizations with respect to MA-PD plans.

(e) COVERED PART D DRUG DEFINED-

(1) IN GENERAL- Except as provided in this subsection, for purposes of this part, the term covered part D drug means–

(A) a drug that may be dispensed only upon a prescription and that is described in subparagraph (A)(i), (A)(ii), or (A)(iii) 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 medical supplies associated with the injection of insulin (as defined in regulations of the Secretary),

and such term includes a vaccine licensed under section 351 of the Public Health Service Act and any use of a covered part D 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) of such section (relating to smoking cessation agents), or under section 1927(d)(3).

(B) MEDICARE COVERED DRUGS- A drug prescribed for a part D eligible individual that would otherwise be a covered part D drug under this part shall not be so considered if payment for such drug as so prescribed and dispensed or administered with respect to that individual is available (or would be available but for the application of a deductible) under part A or B for that individual.

(3) APPLICATION OF GENERAL EXCLUSION PROVISIONS- A prescription drug plan or an MA-PD plan may exclude from qualified prescription drug coverage any covered part D drug–

(A) for which payment would not be made if section 1862(a) applied to this part; or

(B) which is not prescribed in accordance with the plan or this part.

Such exclusions are determinations subject to reconsideration and appeal pursuant to subsections (g) and (h), respectively, of section 1860D-4.

ACCESS TO A CHOICE OF QUALIFIED PRESCRIPTION DRUG COVERAGE

SEC. 1860D-3. (a) ASSURING ACCESS TO A CHOICE OF COVERAGE-

(1) CHOICE OF AT LEAST TWO PLANS IN EACH AREA- The Secretary shall ensure that each part D eligible individual has available, consistent with paragraph (2), a choice of enrollment in at least 2 qualifying plans (as defined in paragraph (3)) in the area in which the individual resides, at least one of which is a prescription drug plan. In any such case in which such plans are not available, the part D eligible individual shall be given the opportunity to enroll in a fallback prescription drug plan.

(2) REQUIREMENT FOR DIFFERENT PLAN SPONSORS- The requirement in paragraph (1) is not satisfied with respect to an area if only one entity offers all the qualifying plans in the area.

(3) QUALIFYING PLAN DEFINED- For purposes of this section, the term qualifying plan means–

(A) a prescription drug plan; or

(B) an MA-PD plan described in section 1851(a)(2)(A)(i) that provides–

(i) basic prescription drug coverage; or

(ii) qualified prescription drug coverage that provides supplemental prescription drug coverage so long as there is no MA monthly supplemental beneficiary premium applied under the plan, due to the application of a credit against such premium of a rebate under section 1854(b)(1)(C).

(b) FLEXIBILITY IN RISK ASSUMED AND APPLICATION OF FALLBACK PLAN- In order to ensure access pursuant to subsection (a) in an area–

(1) the Secretary may approve limited risk plans under section 1860D-11(f) for the area; and

(2) only if such access is still not provided in the area after applying paragraph (1), the Secretary shall provide for the offering of a fallback prescription drug plan for that area under section 1860D-11(g).

BENEFICIARY PROTECTIONS FOR QUALIFIED PRESCRIPTION DRUG COVERAGE

SEC. 1860D-4. (a) DISSEMINATION OF INFORMATION-

(1) GENERAL INFORMATION-

(A) APPLICATION OF MA 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, insofar as the Secretary determines appropriate with respect to benefits provided under this part, and including the information described in subparagraph (B).

(B) DRUG SPECIFIC INFORMATION- The information described in this subparagraph is information concerning the following:

(i) Access to specific covered part D drugs, including access through pharmacy networks.

(ii) How any formulary (including any tiered formulary structure) used by the sponsor functions, including a description of how a part D eligible individual may obtain information on the formulary consistent with paragraph (3).

(iii) Beneficiary cost-sharing requirements and how a part D eligible individual may obtain information on such requirements, including tiered or other copayment level applicable to each drug (or class of drugs), consistent with paragraph (3).

(iv) The medication therapy management program required under subsection (c).

(2) DISCLOSURE UPON REQUEST OF GENERAL COVERAGE, UTILIZATION, AND GRIEVANCE INFORMATION- Upon request of a part D eligible individual who is eligible to enroll in a prescription drug plan, the PDP sponsor offering such plan shall provide information similar (as determined by the Secretary) to the information described in subparagraphs (A), (B), and (C) of section 1852(c)(2) to such individual.

(3) PROVISION OF SPECIFIC INFORMATION-

(A) RESPONSE TO BENEFICIARY QUESTIONS- Each PDP sponsor offering a prescription drug plan shall have a mechanism for providing specific information on a timely basis to enrollees upon request. Such mechanism shall include access to information through the use of a toll-free telephone number and, upon request, the provision of such information in writing.

(B) AVAILABILITY OF INFORMATION ON CHANGES IN FORMULARY THROUGH THE INTERNET- A PDP sponsor offering a prescription drug plan shall make available on a timely basis through an Internet website information on specific changes in the formulary under the plan (including changes to tiered or preferred status of covered part D drugs).

(4) CLAIMS INFORMATION- A PDP sponsor offering a prescription drug plan must furnish to each enrollee in a form easily understandable to such enrollees–

(A) an explanation of benefits (in accordance with section 1806(a) or in a comparable manner); and

(B) when prescription drug benefits are provided under this part, a notice of the benefits in relation to–

(i) the initial coverage limit for the current year; and

(ii) the annual out-of-pocket threshold for the current year.

Notices under subparagraph (B) need not be provided more often than as specified by the Secretary and notices under subparagraph (B)(ii) shall take into account the application of section 1860D-2(b)(4)(C) to the extent practicable, as specified by the Secretary.

(b) ACCESS TO COVERED PART D DRUGS-

(1) ASSURING PHARMACY ACCESS-

(A) PARTICIPATION OF ANY WILLING PHARMACY- A prescription drug plan shall permit the participation of any pharmacy that meets the terms and conditions under the plan.

(B) DISCOUNTS ALLOWED FOR NETWORK PHARMACIES- For covered part D drugs dispensed through in-network pharmacies, a prescription drug plan may, notwithstanding subparagraph (A), reduce coinsurance or copayments for part D eligible individuals enrolled in the plan below the level otherwise required. In no case shall such a reduction result in an increase in payments made by the Secretary under section 1860D-15 to a plan.

(i) 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 (consistent with rules established by the Secretary).

(ii) APPLICATION OF TRICARE STANDARDS- The Secretary shall establish rules for convenient access to in-network pharmacies under this subparagraph that are no less favorable to enrollees than the rules for convenient access to pharmacies included in the statement of work of solicitation (#MDA906-03-R-0002) of the Department of Defense under the TRICARE Retail Pharmacy (TRRx) as of March 13, 2003.

(iii) ADEQUATE EMERGENCY ACCESS- Such rules shall include adequate emergency access for enrollees.

(iv) CONVENIENT ACCESS IN LONG-TERM CARE FACILITIES- Such rules may include standards with respect to access for enrollees who are residing in long-term care facilities and for pharmacies operated by the Indian Health Service, Indian tribes and tribal organizations, and urban Indian organizations (as defined in section 4 of the Indian Health Care Improvement Act).

(D) LEVEL PLAYING FIELD- Such a sponsor shall permit enrollees to receive benefits (which may include a 90-day supply of drugs or biologicals) through a pharmacy (other than a mail order pharmacy), with any differential in charge paid by such enrollees.

(E) NOT REQUIRED TO ACCEPT INSURANCE RISK- The terms and conditions under subparagraph (A) may not require participating pharmacies to accept insurance risk as a condition of participation.

(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 enrollee to assure access to negotiated prices under section 1860D-2(d).

(B) STANDARDS-

(i) IN GENERAL- The Secretary shall provide for the development, adoption, or recognition of standards relating to a standardized format for the card or other technology required under subparagraph (A).

SEC. 102. MEDICARE ADVANTAGE CONFORMING AMENDMENTS.

(a) CONFORMING AMENDMENTS TO ENROLLMENT PROCESS-

(1) EXTENDING OPEN ENROLLMENT PERIODS- Section 1851(e) (42 U.S.C. 1395w-21(e)) is amended–

(A) in paragraph (2), by striking 2004 and 2005 and inserting 2005 and 2006 each place it appears; and

(B) in paragraph (4), by striking 2005 and inserting 2006 each place it appears.

(2) ESTABLISHMENT OF SPECIAL ANNUAL, COORDINATED ELECTION PERIOD FOR 6 MONTHS BEGINNING NOVEMBER 15, 2005- Section 1851(e)(3)(B) (42 U.S.C. 1395w-21(e)(3)(B)) is amended to read as follows:

(B) ANNUAL, COORDINATED ELECTION PERIOD- For purposes of this section, the term annual, coordinated election period means–

(i) with respect to a year before 2002, the month of November before such year;

(ii) with respect to 2002, 2003, 2004, and 2005, the period beginning on November 15 and ending on December 31 of the year before such year;

(iii) with respect to 2006, the period beginning on November 15, 2005, and ending on May 15, 2006; and

(iv) with respect to 2007 and succeeding years, the period beginning on November 15 and ending on December 31 of the year before such year..

(3) SPECIAL INFORMATION CAMPAIGN- Section 1851(e)(3) (42 U.S.C. 1395w-21(e)(3)) is amended–

(A) in subparagraph (C), by inserting and during the period described in subparagraph (B)(iii) after (beginning with 1999); and

(B) in subparagraph (D)–

(i) in the heading by striking CAMPAIGN IN 1998 and inserting CAMPAIGNS; and

(ii) by adding at the end the following: During the period described in subparagraph (B)(iii), the Secretary shall provide for an educational and publicity campaign to inform MA eligible individuals about the availability of MA plans (including MA-PD plans) offered in different areas and the election process provided under this section..

(4) COORDINATING INITIAL ENROLLMENT PERIODS- Section 1851(e)(1) (42 U.S.C. 1395w-21(e)(1)) is amended by adding at the end the following new sentence: If any portion of an individuals initial enrollment period under part B occurs after the end of the annual, coordinated election period described in paragraph (3)(B)(iii), the initial enrollment period under this part shall further extend through the end of the individuals initial enrollment period under part B..

(5) COORDINATION OF EFFECTIVENESS OF ELECTIONS DURING ANNUAL COORDINATED ELECTION PERIOD FOR 2006- Section 1851(f)(3) (42 U.S.C. 1395w-21(f)(3)) is amended by inserting , other than the period described in clause (iii) of such subsection after subsection (e)(3)(B).

(6) LIMITATION ON ONE-CHANGE RULE TO SAME TYPE OF PLAN- Section 1851(e)(2) (42 U.S.C. 1395w-21(e)(2)) is amended–

(A) in subparagraph (B)(i), by inserting , subparagraph (C)(iii), after clause (ii);

(B) in subparagraph (C)(i), by striking clause (ii) and inserting clauses (ii) and (iii); and

(iii) LIMITATION ON EXERCISE OF RIGHT WITH RESPECT TO PRESCRIPTION DRUG COVERAGE- Effective for plan years beginning on or after January 1, 2006, in applying clause (i) (and clause (i) of subparagraph (B)) in the case of an individual who–

(I) is enrolled in an MA plan that does provide qualified prescription drug coverage, the individual may exercise the right under such clause only with respect to coverage under the original fee-for-service plan or coverage under another MA plan that does not provide such coverage and may not exercise such right to obtain coverage under an MA-PD plan or under a prescription drug plan under part D; or

(II) is enrolled in an MA-PD plan, the individual may exercise the right under such clause only with respect to coverage under another MA-PD plan (and not an MA plan that does not provide qualified prescription drug coverage) or under the original fee-for-service plan and coverage under a prescription drug plan under part D..

(b) PROMOTION OF E-PRESCRIBING BY MA PLANS- Section 1852(j) (42 U.S.C. 1395w-22(j)) is amended by adding at the end the following new paragraph:

(7) PROMOTION OF E-PRESCRIBING BY MA PLANS-

(A) IN GENERAL- An MA-PD plan may provide for a separate payment or otherwise provide for a differential payment for a participating physician that prescribes covered part D drugs in accordance with an electronic prescription drug program that meets standards established under section 1860D-4(e).

(B) CONSIDERATIONS- Such payment may take into consideration the costs of the physician in implementing such a program and may also be increased for those participating physicians who significantly increase–

(i) formulary compliance;

(ii) lower cost, therapeutically equivalent alternatives;

(iii) reductions in adverse drug interactions; and

(iv) efficiencies in filing prescriptions through reduced administrative costs.

(C) STRUCTURE- Additional or increased payments under this subsection may be structured in the same manner as medication therapy management fees are structured under section 1860D-4(c)(2)(E)..

(1) Section 1851(a)(1) (42 U.S.C. 1395w-21(a)(1)) is amended–

(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

and may elect qualified prescription drug coverage in accordance with section 1860D-1..

(2) EFFECTIVE DATE- The amendments made by this subsection shall apply on and after January 1, 2006.

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

(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) REQUIREMENTS RELATING TO MEDICARE PRESCRIPTION DRUG LOW-INCOME SUBSIDIES AND MEDICARE TRANSITIONAL PRESCRIPTION DRUG ASSISTANCE- 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 do the following:

(1) INFORMATION FOR TRANSITIONAL PRESCRIPTION DRUG ASSISTANCE VERIFICATION- The State shall provide the Secretary with information to carry out section 1860D-31(f)(3)(B)(i).

(2) ELIGIBILITY DETERMINATIONS FOR LOW-INCOME SUBSIDIES- The State shall–

(A) make determinations of eligibility for premium and cost-sharing subsidies under and in accordance with section 1860D-14;

(B) inform the Secretary of such determinations in cases in which such eligibility is established; and

(C) otherwise provide the Secretary with such information as may be required to carry out part D, other than subpart 4, of title XVIII (including section 1860D-14).

(3) SCREENING FOR ELIGIBILITY, AND ENROLLMENT OF, BENEFICIARIES FOR MEDICARE COST-SHARING- As part of making an eligibility determination required under paragraph (2) for an individual, the State shall make a determination of the individuals eligibility for medical assistance for any medicare cost-sharing described in section 1905(p)(3) and, if the individual is eligible for any such medicare cost-sharing, offer enrollment to the individual under the State plan (or under a waiver of such plan).

(b) REGULAR FEDERAL SUBSIDY OF ADMINISTRATIVE COSTS- The amounts expended by a State in carrying out subsection (a) are expenditures reimbursable under the appropriate paragraph of section 1903(a)..

(b) PHASED-IN FEDERAL ASSUMPTION OF MEDICAID RESPONSIBILITY FOR PREMIUM AND COST-SHARING SUBSIDIES FOR DUALLY ELIGIBLE INDIVIDUALS- Section 1935, as inserted by subsection (a)(2), is amended by adding at the end the following new subsection:

(1) PHASED-DOWN STATE CONTRIBUTION-

(A) IN GENERAL- Each of the 50 States and the District of Columbia for each month beginning with January 2006 shall provide for payment under this subsection to the Secretary of the product of–

(i) the amount computed under paragraph (2)(A) for the State and month;

(ii) the total number of full-benefit dual eligible individuals (as defined in paragraph (6)) for such State and month; and

(iii) the factor for the month specified in paragraph (5).

(B) FORM AND MANNER OF PAYMENT- Payment under subparagraph (A) shall be made in a manner specified by the Secretary that is similar to the manner in which State payments are made under an agreement entered into under section 1843, except that all such payments shall be deposited into the Medicare Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund.

(C) COMPLIANCE- If a State fails to pay to the Secretary an amount required under subparagraph (A), interest shall accrue on such amount at the rate provided under section 1903(d)(5). The amount so owed and applicable interest shall be immediately offset against amounts otherwise payable to the State under section 1903(a), in accordance with the Federal Claims Collection Act of 1996 and applicable regulations.

(D) DATA MATCH- The Secretary shall perform such periodic data matches as may be necessary to identify and compute the number of full-benefit dual eligible individuals for purposes of computing the amount under subparagraph (A).

(2) AMOUNT-

(A) IN GENERAL- The amount computed under this paragraph for a State described in paragraph (1) and for a month in a year is equal to–

(i) 1/12 of the product of–

(I) the base year State medicaid per capita expenditures for covered part D drugs for full-benefit dual eligible individuals (as computed under paragraph (3)); and

(II) a proportion equal to 100 percent minus the Federal medical assistance percentage (as defined in section 1905(b)) applicable to the State for the fiscal year in which the month occurs; and

(ii) increased for each year (beginning with 2004 up to and including the year involved) by the applicable growth factor specified in paragraph (4) for that year.

(B) NOTICE- The Secretary shall notify each State described in paragraph (1) not later than October 15 before the beginning of each year (beginning with 2006) of the amount computed under subparagraph (A) for the State for that year.

(3) BASE YEAR STATE MEDICAID PER CAPITA EXPENDITURES FOR COVERED PART D DRUGS FOR FULL-BENEFIT DUAL ELIGIBLE INDIVIDUALS-

(A) IN GENERAL- For purposes of paragraph (2)(A), the base year State medicaid per capita expenditures for covered part D drugs for full-benefit dual eligible individuals for a State is equal to the weighted average (as weighted under subparagraph (C)) of–

(i) the gross per capita medicaid expenditures for prescription drugs for 2003, determined under subparagraph (B); and

(ii) the estimated actuarial value of prescription drug benefits provided under a capitated managed care plan per full-benefit dual eligible individual for 2003, as determined using such data as the Secretary determines appropriate.

(B) GROSS PER CAPITA MEDICAID EXPENDITURES FOR PRESCRIPTION DRUGS-

(i) IN GENERAL- The gross per capita medicaid expenditures for prescription drugs for 2003 under this subparagraph is equal to the expenditures, including dispensing fees, for the State under this title during 2003 for covered outpatient drugs, determined per full-benefit-dual-eligible-individual for such individuals not receiving medical assistance for such drugs through a medicaid managed care plan.

(ii) DETERMINATION- In determining the amount under clause (i), the Secretary shall–

(I) use data from the Medicaid Statistical Information System (MSIS) and other available data;

(II) exclude expenditures attributable to covered outpatient prescription drugs that are not covered part D drugs (as defined in section 1860D-2(e)); and

(III) reduce such expenditures by the product of such portion and the adjustment factor (described in clause (iii)).

(iii) ADJUSTMENT FACTOR- The adjustment factor described in this clause for a State is equal to the ratio for the State for 2003 of–

(I) aggregate payments under agreements under section 1927; to

(II) the gross expenditures under this title for covered outpatient drugs referred to in clause (i).

Such factor shall be determined based on information reported by the State in the medicaid financial management reports (form CMS-64) for the 4 quarters of calendar year 2003 and such other data as the Secretary may require.

(i) with respect to subparagraph (A)(i), the average number of full-benefit dual eligible individuals in 2003 who are not described in clause (ii); and

(ii) with respect to subparagraph (A)(ii), the average number of full-benefit dual eligible individuals in such year who received in 2003 medical assistance for covered outpatient drugs through a medicaid managed care plan.

(4) APPLICABLE GROWTH FACTOR- The applicable growth factor under this paragraph for–

(A) each of 2004, 2005, and 2006, is the average annual percent change (to that year from the previous year) of the per capita amount of prescription drug expenditures (as determined based on the most recent National Health Expenditure projections for the years involved); and

(B) a succeeding year, is the annual percentage increase specified in section 1860D-2(b)(6) for the year.

(5) FACTOR- The factor under this paragraph for a month–

(A) in 2006 is 90 percent;

(B) in 2007 is 88 1/3 percent;

(D) in 2009 is 85 percent;

(E) in 2010 is 83 1/3 percent;

(F) in 2011 is 81 2/3 percent;

(G) in 2012 is 80 percent;

(H) in 2013 is 78 1/3 percent;

(I) in 2014 is 76 2/3 percent; or

(J) after December 2014, is 75 percent.

(6) FULL-BENEFIT DUAL ELIGIBLE INDIVIDUAL DEFINED-

(A) IN GENERAL- For purposes of this section, the term full-benefit dual eligible individual means for a State for a month an individual who–

(i) has coverage for the month for covered part D drugs under a prescription drug plan under part D of title XVIII, or under an MA-PD plan under part C of such title; and

(ii) is determined eligible by the State for medical assistance for full benefits under this title for such month under section 1902(a)(10)(A) or 1902(a)(10)(C), by reason of section 1902(f), or under any other category of eligibility for medical assistance for full benefits under this title, as determined by the Secretary.

(B) TREATMENT OF MEDICALLY NEEDY AND OTHER INDIVIDUALS REQUIRED TO SPEND DOWN- In applying subparagraph (A) in the case of an individual determined to be eligible by the State for medical assistance under section 1902(a)(10)(C) or by reason of section 1902(f), the individual shall be treated as meeting the requirement of subparagraph (A)(ii) for any month if such medical assistance is provided for in any part of the month..

(c) MEDICAID COORDINATION WITH MEDICARE PRESCRIPTION DRUG BENEFITS- Section 1935, as so inserted and amended, is further amended by adding at the end the following new subsection:

(d) COORDINATION OF PRESCRIPTION DRUG BENEFITS-

(1) MEDICARE AS PRIMARY PAYOR- In the case of a part D eligible individual (as defined in section 1860D-1(a)(3)(A)) who is described in subsection (c)(6)(A)(ii), notwithstanding any other provision of this title, medical assistance is not available under this title for such drugs (or for any cost-sharing respecting such drugs), and the rules under this title relating to the provision of medical assistance for such drugs shall not apply. The provision of benefits with respect to such drugs shall not be considered as the provision of care or services under the plan under this title. No payment may be made under section 1903(a) for prescribed drugs for which medical assistance is not available pursuant to this paragraph.

(2) COVERAGE OF CERTAIN EXCLUDABLE DRUGS- In the case of medical assistance under this title with respect to a covered outpatient drug (other than a covered part D drug) furnished to an individual who is enrolled in a prescription drug plan under part D of title XVIII or an MA-PD plan under part C of such title, the State may elect to provide such medical assistance in the manner otherwise provided in the case of individuals who are not full-benefit dual eligible individuals or through an arrangement with such plan..

(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

(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 and submits to the Secretary a plan described in paragraph (2) (for providing medical assistance with respect to the provision of prescription drugs to part D eligible individuals), the amount otherwise determined under section 1108(f) (as increased under section 1108(g)) for the State shall be increased by the amount for the fiscal period specified in paragraph (3).

(2) PLAN- The Secretary shall determine that a plan is described in this paragraph if the plan–

(A) provides medical assistance with respect to the provision of covered part D drugs (as defined in section 1860D-2(e)) to low-income part D eligible individuals;

(B) provides assurances that additional amounts received by the State that are attributable to the operation of this subsection shall be used only for such assistance and related administrative expenses and that no more than 10 percent of the amount specified in paragraph (3)(A) for the State for any fiscal period shall be used for such administrative expenses; and

(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 ratio (as estimated by the Secretary) of–

(I) the number of individuals who are entitled to benefits under part A or enrolled under part B and who reside in the State (as determined by the Secretary based on the most recent available data before the beginning of the year); to

(II) the sum of such numbers for all States that submit a plan described in paragraph (2).

(B) AGGREGATE AMOUNT- The aggregate amount specified in this subparagraph for–

(i) the last 3 quarters of fiscal year 2006, is equal to $28,125,000;

(ii) fiscal year 2007, is equal to $37,500,000; or

(iii) 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 1860D-2(b)(6) for the year involved.

(4) REPORT- The Secretary shall submit to Congress a report on the application of this subsection 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 1935(e)(1)(B) after Subject to subsection (g).

(e) AMENDMENT TO BEST PRICE-

(1) IN GENERAL- Section 1927(c)(1)(C)(i) (42 U.S.C. 1396r-8(c)(1)(C)(i)) is amended–

(A) by striking and at the end of subclause (III);

(B) by striking the period at the end of subclause (IV) and inserting a semicolon; and

(V) the prices negotiated from drug manufacturers for covered discount card drugs under an endorsed discount card program under section 1860D-31; and

(VI) any prices charged which are negotiated by a prescription drug plan under part D of title XVIII, by an MA-PD plan under part C of such title with respect to covered part D drugs or by a qualified retiree prescription drug plan (as defined in section 1860D-22(a)(2)) with respect to such drugs on behalf of individuals entitled to benefits under part A or enrolled under part B of such title..

(2) IN GENERAL- Section 1927(c)(1)(C)(i)(VI) of the Social Security Act, as added by paragraph (1), shall apply to prices charged for drugs dispensed on or after January 1, 2006.

(f) EXTENSION OF MEDICARE COST-SHARING FOR PART B PREMIUM FOR QUALIFYING INDIVIDUALS THROUGH SEPTEMBER 2004-

(1) IN GENERAL- Section 1902(a)(10)(E)(iv) (42 U.S.C. 1396a(a)(10)(E)(iv)), as amended by section 401(a) of Public Law 108-89, is amended by striking ending with March 2004 and inserting ending with September 2004.

(2) TOTAL AMOUNT AVAILABLE FOR ALLOCATION- Section 1933(g) (42 U.S.C. 1396u-3(g)), as added by section 401(c) of Public Law 108-89, is amended–

(A) in the matter preceding paragraph (1), by striking March 31, 2004 and inserting September 30, 2004; and

(B) in paragraph (2), by striking $100,000,000 and inserting $300,000,000.

(3) EFFECTIVE DATE- The amendments made by this subsection shall apply to calendar quarters beginning on or after April 1, 2004.

(g) OUTREACH BY THE COMMISSIONER OF SOCIAL SECURITY- Section 1144 (42 U.S.C. 1320b-14) is amended–

(1) in the section heading, by inserting AND SUBSIDIES FOR LOW-INCOME INDIVIDUALS UNDER TITLE XVIII after COST-SHARING;

(2) in subsection (a)–

(A) in paragraph (1)–

(i) in subparagraph (A), by inserting for the transitional assistance under section 1860D-31(f), or for premium and cost-sharing subsidies under section 1860D-14 before the semicolon; and

(ii) in subparagraph (B), by inserting , program, and subsidies after medical assistance; and

(B) in paragraph (2)–

(i) in the matter preceding subparagraph (A), by inserting , the transitional assistance under section 1860D-31(f), or premium and cost-sharing subsidies under section 1860D-14 after assistance; and

(ii) in subparagraph (A), by striking such eligibility and inserting eligibility for medicare cost-sharing under the medicaid program; and

(3) in subsection (b)–

(A) in paragraph (1)(A), by inserting , for transitional assistance under section 1860D-31(f), or for premium and cost-sharing subsidies for low-income individuals under section 1860D-14 after 1933; and

(B) in paragraph (2), by inserting , program, and subsidies after medical assistance.

SEC. 104. MEDIGAP AMENDMENTS.

(a) RULES RELATING TO MEDIGAP POLICIES THAT PROVIDE PRESCRIPTION DRUG COVERAGE-

(1) IN GENERAL- Section 1882 (42 U.S.C. 1395ss) is amended by adding at the end the following new subsection:

(v) RULES RELATING TO MEDIGAP POLICIES THAT PROVIDE PRESCRIPTION DRUG COVERAGE-

(1) PROHIBITION ON SALE, ISSUANCE, AND RENEWAL OF NEW POLICIES THAT PROVIDE PRESCRIPTION DRUG COVERAGE-

(A) IN GENERAL- Notwithstanding any other provision of law, on or after January 1, 2006, a medigap Rx policy (as defined in paragraph (6)(A)) may not be sold, issued, or renewed under this section–

(i) to an individual who is a part D enrollee (as defined in paragraph (6)(B)); or

(ii) except as provided in subparagraph (B), to an individual who is not a part D enrollee.

(B) CONTINUATION PERMITTED FOR NON-PART D ENROLLEES- Subparagraph (A)(ii) shall not apply to the renewal of a medigap Rx policy that was issued before January 1, 2006.

(C) CONSTRUCTION- Nothing in this subsection shall be construed as preventing the offering on and after January 1, 2006, of H, I, and J policies described in paragraph (2)(D)(i) if the benefit packages are modified in accordance with paragraph (2)(C).

(2) ELIMINATION OF DUPLICATIVE COVERAGE UPON PART D ENROLLMENT-

(A) IN GENERAL- In the case of an individual who is covered under a medigap Rx policy and enrolls under a part D plan–

(i) before the end of the initial part D enrollment period, the individual may–

(I) enroll in a medicare supplemental policy without prescription drug coverage under paragraph (3); or

(II) continue the policy in effect subject to the modification described in subparagraph (C)(i); or

(ii) after the end of such period, the individual may continue the policy in effect subject to such modification.

(B) NOTICE REQUIRED TO BE PROVIDED TO CURRENT POLICYHOLDERS WITH MEDIGAP RX POLICY- No medicare supplemental policy of an issuer shall be deemed to meet the standards in subsection (c) unless the issuer provides written notice (in accordance with standards of the Secretary established in consultation with the National Association of Insurance Commissioners) during the 60-day period immediately preceding the initial part D enrollment period, to each individual who is a policyholder or certificate holder of a medigap Rx policy (at the most recent available address of that individual) of the following:

(i) If the individual enrolls in a plan under part D during the initial enrollment period under section 1860D-1(b)(2)(A), the individual has the option of–

(I) continuing enrollment in the individuals current plan, but the plans coverage of prescription drugs will be modified under subparagraph (C)(i); or

(II) enrolling in another medicare supplemental policy pursuant to paragraph (3).

(ii) If the individual does not enroll in a plan under part D during such period, the individual may continue enrollment in the individuals current plan without change, but–

(I) the individual will not be guaranteed the option of enrollment in another medicare supplemental policy pursuant to paragraph (3); and

(II) if the current plan does not provide creditable prescription drug coverage (as defined in section 1860D-13(b)(4)), notice of such fact and that there are limitations on the periods in a year in which the individual may enroll under a part D plan and any such enrollment is subject to a late enrollment penalty.

(iii) Such other information as the Secretary may specify (in consultation with the National Association of Insurance Commissioners), including the potential impact of such election on premiums for medicare supplemental policies.

(i) IN GENERAL- The policy modification described in this subparagraph is the elimination of prescription coverage for expenses of prescription drugs incurred after the effective date of the individuals coverage under a part D plan and the appropriate adjustment of premiums to reflect such elimination of coverage.

(ii) CONTINUATION OF RENEWABILITY AND APPLICATION OF MODIFICATION- No medicare supplemental policy of an issuer shall be deemed to meet the standards in subsection (c) unless the issuer–

(I) continues renewability of medigap Rx policies that it has issued, subject to subclause (II); and

(II) applies the policy modification described in clause (i) in the cases described in clauses (i)(II) and (ii) of subparagraph (A).

(D) REFERENCES TO RX POLICIES-

(i) H, I, AND J POLICIES- Any reference to a benefit package classified as H, I, or J (including the benefit package classified as J with a high deductible feature, as described in subsection (p)(11)) under the standards established under subsection (p)(2) shall be construed as including a reference to such a package as modified under subparagraph (C) and such packages as modified shall not be counted as a separate benefit package under such subsection.

(ii) APPLICATION IN WAIVERED STATES- Except for the modification provided under subparagraph (C), the waivers previously in effect under subsection (p)(2) shall continue in effect.

(3) AVAILABILITY OF SUBSTITUTE POLICIES WITH GUARANTEED ISSUE-

(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, or F (including the benefit package classified as F with a high deductible feature, as described in subsection (p)(11)), under the standards established under subsection (p)(2), or a benefit package described in subparagraph (A) or (B) of subsection (w)(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 effective date of the individuals coverage under a part D plan.

(B) INDIVIDUAL COVERED- An individual described in this subparagraph with respect to the issuer of a medicare supplemental policy is an individual who–

(i) enrolls in a part D plan during the initial part D enrollment period;

(ii) at the time of such enrollment was enrolled in a medigap Rx policy issued by such issuer; and

(iii) terminates enrollment in such policy and submits evidence of such termination along with the application for the policy under subparagraph (A).

(C) SPECIAL RULE FOR WAIVERED STATES- For purposes of applying this paragraph in the case of a State that provides for offering of benefit packages other than under the classification referred to in subparagraph (A)(i), the references to benefit packages in such subparagraph are deemed references to comparable benefit packages offered in such State.

(4) ENFORCEMENT-

(A) PENALTIES FOR DUPLICATION- The penalties described in subsection (d)(3)(A)(ii) shall apply with respect to a violation of paragraph (1)(A).

(B) GUARANTEED ISSUE- The provisions of paragraph (4) of subsection (s) shall apply with respect to the requirements of paragraph (3) in the same manner as they apply to the requirements of such subsection.

(5) 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 with respect to a part D enrollee through the continuation of the policy subject to modification under paragraph (2)(C) or the offering of a substitute policy under paragraph (3). The previous sentence shall not be construed to affect the guaranteed renewability of such a modified or substitute policy.

(6) DEFINITIONS- For purposes of this subsection:

(A) MEDIGAP RX POLICY- The term medigap Rx policy means a medicare supplemental policy–

(i) which has a benefit package classified as H, I, or J (including the benefit package classified as J with a high deductible feature, as described in subsection (p)(11)) under the standards established under subsection (p)(2), without regard to this subsection; and

(ii) to which such standards do not apply (or to which such standards have been waived under subsection (p)(6)) but which provides benefits for prescription drugs.

Such term does not include a policy with a benefit package as classified under clause (i) which has been modified under paragraph (2)(C)(i).

(B) PART D ENROLLEE- The term part D enrollee means an individual who is enrolled in a part D plan.

(C) PART D PLAN- The term part D plan means a prescription drug plan or an MA-PD plan (as defined for purposes of part D).

(D) INITIAL PART D ENROLLMENT PERIOD- The term initial part D enrollment period means the initial enrollment period described in section 1860D-1(b)(2)(A)..

(2) CONFORMING CURRENT GUARANTEED ISSUE PROVISIONS-

(A) EXTENDING GUARANTEED ISSUE POLICY FOR INDIVIDUALS ENROLLED IN MEDIGAP RX POLICIES WHO TRY MEDICARE ADVANTAGE- Subsection (s)(3)(C)(ii) of such section is amended–

(i) by striking (ii) Only and inserting (ii)(I) Subject to subclause (II), only; and

(ii) by adding at the end the following new subclause:

(II) If the medicare supplemental policy referred to in subparagraph (B)(v) was a medigap Rx policy (as defined in subsection (v)(6)(A)), a medicare supplemental policy described in this subparagraph is such policy in which the individual was most recently enrolled as modified under subsection (v)(2)(C)(i) or, at the election of the individual, a policy referred to in subsection (v)(3)(A)(i)..

(B) CONFORMING AMENDMENT- Section 1882(s)(3)(C)(iii) is amended by inserting and subject to subsection (v)(1) after subparagraph (B)(vi).

(b) DEVELOPMENT OF NEW STANDARDS FOR MEDIGAP POLICIES-

(1) IN GENERAL- Section 1882 (42 U.S.C. 1395ss) is further amended by adding at the end the following new subsection:

(w) DEVELOPMENT OF NEW STANDARDS FOR MEDICARE SUPPLEMENTAL POLICIES-

(1) IN GENERAL- The Secretary shall request the National Association of Insurance Commissioners to review and revise the standards for benefit packages under subsection (p)(1), taking into account the changes in benefits resulting from enactment of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and to otherwise update standards to reflect other changes in law included in such Act. Such revision shall incorporate the inclusion of the 2 benefit packages described in paragraph (2). Such revisions shall be made consistent with the rules applicable under subsection (p)(1)(E) with the reference to the 1991 NAIC Model Regulation deemed a reference to the NAIC Model Regulation as published in the Federal Register on December 4, 1998, and as subsequently updated by the National Association of Insurance Commissioners to reflect previous changes in law (and subsection (v)) and the reference to date of enactment of this subsection deemed a reference to the date of enactment of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. To the extent practicable, such revision shall provide for the implementation of revised standards for benefit packages as of January 1, 2006.

(2) NEW BENEFIT PACKAGES- The benefit packages described in this paragraph are the following (notwithstanding any other provision of this section relating to a core benefit package):

(A) FIRST NEW BENEFIT PACKAGE- A benefit package consisting of the following:

(i) Subject to clause (ii), coverage of 50 percent of the cost-sharing otherwise applicable under parts A and B, except there shall be no coverage of the part B deductible and coverage of 100 percent of any cost-sharing otherwise applicable for preventive benefits.

(ii) Coverage for all hospital inpatient coinsurance and 365 extra lifetime days of coverage of inpatient hospital services (as in the current core benefit package).

(iii) A limitation on annual out-of-pocket expenditures under parts A and B to $4,000 in 2006 (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 BENEFIT PACKAGE- A benefit package consisting of the benefit package 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 (iii) of such subparagraph..

(2) CONFORMING AMENDMENTS- Section 1882 (42 U.S.C. 1395ss) is amended–

(A) in subsection (g)(1), by inserting a prescription drug plan under part D or after but does not include; and

(B) in subsection (o)(1), by striking subsection (p) and inserting subsections (p), (v), and (w).

(1) IN GENERAL- Nothing in this Act shall be construed to require an issuer of a medicare supplemental policy under section 1882 of the Social Security Act (42 U.S.C. 1395rr) to participate as a PDP sponsor under part D of title XVIII of such Act, as added by section 101, as a condition for issuing such policy.

(2) PROHIBITION ON STATE REQUIREMENT- A State may not require an issuer of a medicare supplemental policy under section 1882 of the Social Security Act (42 U.S.C. 1395rr) to participate as a PDP sponsor under such part D as a condition for issuing such policy.

SEC. 105. ADDITIONAL PROVISIONS RELATING TO MEDICARE PRESCRIPTION DRUG DISCOUNT CARD AND TRANSITIONAL ASSISTANCE PROGRAM.

(a) EXCLUSION OF COSTS FROM DETERMINATION OF PART B MONTHLY PREMIUM- Section 1839(g) (42 U.S.C. 1395r(g)) is amended–

(1) by striking attributable to the application of section and inserting attributable to–

(1) the application of section;

(2) by striking the period and inserting ; and; and

(3) by adding at the end the following new paragraph:

(2) the medicare prescription drug discount card and transitional assistance program under section 1860D-31..

(b) APPLICATION OF CONFIDENTIALITY FOR DRUG PRICING DATA- The last sentence of section 1927(b)(3)(D) (42 U.S.C. 1396r-8(b)(3)(D)), as added by section 101(e)(4), is amended by inserting and drug pricing data reported under the first sentence of section 1860D-31(i)(1) after section 1860D-4(c)(2)(E).

(c) RULES FOR IMPLEMENTATION- The following rules shall apply to the medicare prescription drug discount card and transitional assistance program under section 1860D-31 of the Social Security Act, as added by section 101(a):

(1) In promulgating regulations pursuant to subsection (a)(2)(B) of such section 1860D-31–

(A) section 1871(a)(3) of the Social Security Act (42 U.S.C. 1395hh(a)(3)), as added by section 902(a)(1), shall not apply;

(B) chapter 35 of title 44, United States Code, shall not apply; and

(2) Section 1857(c)(5) of the Social Security Act (42 U.S.C. 1395w-27(c)(5)) shall apply with respect to section 1860D-31 of such Act, as added by section 101(a), in the same manner as it applies to part C of title XVIII of such Act.

(3) The administration of such program shall be made without regard to chapter 35 of title 44, United States Code.

(4)(A) There shall be no judicial review of a determination not to endorse, or enter into a contract, with a prescription drug card sponsor under section 1860D-31 of the Social Security Act.

(B) In the case of any order issued to enjoin any provision of section 1860D-31 of the Social Security Act (or of any provision of this section), such order shall not affect any other provision of such section (or of this section) and all such provisions shall be treated as severable.

(d) CONFORMING AMENDMENTS TO FEDERAL SMI TRUST FUND FOR TRANSITIONAL ASSISTANCE ACCOUNT- Section 1841 (42 U.S.C. 1395t), as amended by section 101(e)(3)(C), is amended–

(1) in the last sentence of subsection (a), by inserting after section 1860D-16 the following: or the Transitional Assistance Account established by section 1860D-31(k)(1); and

(2) in subsection (g), by adding at the end the following: The payments provided for under section 1860D-31(k)(2) shall be made from the Transitional Assistance Account in the Trust Fund..

(e) DISCLOSURE OF RETURN INFORMATION FOR PURPOSES OF PROVIDING TRANSITIONAL ASSISTANCE UNDER MEDICARE DISCOUNT CARD PROGRAM-

(1) IN GENERAL- Subsection (l) of section 6103 of the Internal Revenue Code of 1986 (relating to disclosure of returns and return information for purposes other than tax administration) is amended by adding at the end the following new paragraph:

(19) DISCLOSURE OF RETURN INFORMATION FOR PURPOSES OF PROVIDING TRANSITIONAL ASSISTANCE UNDER MEDICARE DISCOUNT CARD PROGRAM-

(A) IN GENERAL- The Secretary, upon written request from the Secretary of Health and Human Services pursuant to carrying out section 1860D-31 of the Social Security Act, shall disclose to officers, employees, and contractors of the Department of Health and Human Services with respect to a taxpayer for the applicable year–

(i)(I) whether the adjusted gross income, as modified in accordance with specifications of the Secretary of Health and Human Services for purposes of carrying out such section, of such taxpayer and, if applicable, such taxpayers spouse, for the applicable year, exceeds the amounts specified by the Secretary of Health and Human Services in order to apply the 100 and 135 percent of the poverty lines under such section, (II) whether the return was a joint return, and (III) the applicable year, or

(ii) if applicable, the fact that there is no return filed for such taxpayer for the applicable year.

(B) DEFINITION OF APPLICABLE YEAR- For the purposes of this subsection, the term applicable year means the most recent taxable year for which information is available in the Internal Revenue Services taxpayer data information systems, or, if there is no return filed for such taxpayer for such year, the prior taxable year.

(C) RESTRICTION ON USE OF DISCLOSED INFORMATION- Return information disclosed under this paragraph may be used only for the purposes of determining eligibility for and administering transitional assistance under section 1860D-31 of the Social Security Act..

(2) CONFIDENTIALITY- Paragraph (3) of section 6103(a) of such Code is amended by striking or (16) and inserting (16), or (19).

(3) PROCEDURES AND RECORDKEEPING RELATED TO DISCLOSURES- Subsection (p)(4) of section 6103 of such Code is amended by striking (l)(16) or (17) each place it appears and inserting (l)(16), (17), or (19).

(4) UNAUTHORIZED DISCLOSURE OR INSPECTION- Paragraph (2) of section 7213(a) of such Code is amended by striking or (16) and inserting (16), or (19).

SEC. 106. STATE PHARMACEUTICAL ASSISTANCE TRANSITION COMMISSION.

(a) ESTABLISHMENT-

(1) IN GENERAL- There is established, as of the first day of the third month beginning after the date of the enactment of this Act, a State Pharmaceutical Assistance Transition Commission (in this section referred to as the Commission) to develop a proposal for addressing the unique transitional issues facing State pharmaceutical assistance programs, and program participants, due to the implementation of the voluntary prescription drug benefit program under part D of title XVIII of the Social Security Act, as added by section 101.

(2) DEFINITIONS- For purposes of this section:

(A) STATE PHARMACEUTICAL ASSISTANCE PROGRAM DEFINED- The term State pharmaceutical assistance program means a program (other than the medicaid program) operated by a State (or under contract with a State) that provides as of the date of the enactment of this Act financial assistance to medicare beneficiaries for the purchase of prescription drugs.

(B) PROGRAM PARTICIPANT- The term program participant means a low-income medicare beneficiary who is a participant in a State pharmaceutical assistance program.

(b) COMPOSITION- The Commission shall include the following:

(1) A representative of each Governor of each State that the Secretary identifies as operating on a statewide basis a State pharmaceutical assistance program that provides for eligibility and benefits that are comparable or more generous than the low-income assistance eligibility and benefits offered under section 1860D-14 of the Social Security Act.

(2) Representatives from other States that the Secretary identifies have in operation other State pharmaceutical assistance programs, as appointed by the Secretary.

(3) Representatives of organizations that have an inherent interest in program participants or the program itself, as appointed by the Secretary but not to exceed the number of representatives under paragraphs (1) and (2).

(4) Representatives of Medicare Advantage organizations, pharmaceutical benefit managers, and other private health insurance plans, as appointed by the Secretary.

(5) The Secretary (or the Secretarys designee) and such other members as the Secretary may specify.

The Secretary shall designate a member to serve as Chair of the Commission and the Commission shall meet at the call of the Chair.

(c) DEVELOPMENT OF PROPOSAL- The Commission shall develop the proposal described in subsection (a) in a manner consistent with the following principles:

(1) Protection of the interests of program participants in a manner that is the least disruptive to such participants and that includes a single point of contact for enrollment and processing of benefits.

(2) Protection of the financial and flexibility interests of States so that States are not financially worse off as a result of the enactment of this title.

(3) Principles of medicare modernization under this Act.

(d) REPORT- By not later than January 1, 2005, the Commission shall submit to the President and Congress a report that contains a detailed proposal (including specific legislative or administrative recommendations, if any) and such other recommendations as the Commission deems appropriate.

(e) SUPPORT- The Secretary shall provide the Commission with the administrative support services necessary for the Commission to carry out its responsibilities under this section.

(f) TERMINATION- The Commission shall terminate 30 days after the date of submission of the report under subsection (d).

SEC. 107. STUDIES AND REPORTS.

(a) STUDY REGARDING REGIONAL VARIATIONS IN PRESCRIPTION DRUG SPENDING-

(1) IN GENERAL- The Secretary shall conduct a study that examines variations in per capita spending for covered part D drugs under part D of title XVIII of the Social Security Act among PDP regions and, with respect to such spending, the amount of such variation that is attributable to–

(A) price variations (described in section 1860D-15(c)(2) of such Act); and

(B) differences in per capita utilization that is not taken into account in the health status risk adjustment provided under section 1860D-15(c)(1) of such Act.

(2) REPORT AND RECOMMENDATIONS- Not later than January 1, 2009, the Secretary shall submit to Congress a report on the study conducted under paragraph (1). Such report shall include–

(A) information regarding the extent of geographic variation described in paragraph (1)(B);

(B) an analysis of the impact on direct subsidies under section 1860D-15(a)(1) of the Social Security Act in different PDP regions if such subsidies were adjusted to take into account the variation described in subparagraph (A); and

(C) recommendations regarding the appropriateness of applying an additional geographic adjustment factor under section 1860D-15(c)(2) that reflects some or all of the variation described in subparagraph (A).

(b) Review and Report on Current Standards of Practice for Pharmacy Services Provided to Patients in Nursing Facilities-

(1) REVIEW-

(A) IN GENERAL- Not later than 12 months after the date of the enactment of this Act, the Secretary shall conduct a thorough review of the current standards of practice for pharmacy services provided to patients in nursing facilities.

(B) SPECIFIC MATTERS REVIEWED- In conducting the review under subparagraph (A), the Secretary shall–

(i) assess the current standards of practice, clinical services, and other service requirements generally used for pharmacy services in long-term care settings; and

(ii) evaluate the impact of those standards with respect to patient safety, reduction of medication errors and quality of care.

(2) REPORT-

(A) IN GENERAL- Not later than the date that is 18 months after the date of the enactment of this Act, the Secretary shall submit a report to Congress on the study conducted under paragraph (1)(A).

(B) CONTENTS- The report submitted under subparagraph (A) shall contain–

(i) a description of the plans of the Secretary to implement the provisions of this Act in a manner consistent with applicable State and Federal laws designed to protect the safety and quality of care of nursing facility patients; and

(ii) recommendations regarding necessary actions and appropriate reimbursement to ensure the provision of prescription drugs to medicare beneficiaries residing in nursing facilities in a manner consistent with existing patient safety and quality of care standards under applicable State and Federal laws.

(1) IN GENERAL- The Secretary shall enter into a contract with the Institutes of Medicine of the National Academies of Science (such Institutes referred to in this subsection as the IOM) to carry out a comprehensive study (in this subsection referred to as the study) of drug safety and quality issues in order to provide a blueprint for system-wide change.

(2) OBJECTIVES-

(A) The study shall develop a full understanding of drug safety and quality issues through an evidence-based review of literature, case studies, and analysis. This review will consider the nature and causes of medication errors, their impact on patients, the differences in causation, impact, and prevention across multiple dimensions of health care delivery-including patient populations, care settings, clinicians, and institutional cultures.

(B) The study shall attempt to develop credible estimates of the incidence, severity, costs of medication errors that can be useful in prioritizing resources for national quality improvement efforts and influencing national health care policy.

(C) The study shall evaluate alternative approaches to reducing medication errors in terms of their efficacy, cost-effectiveness, appropriateness in different settings and circumstances, feasibility, institutional barriers to implementation, associated risks, and the quality of evidence supporting the approach.

(D) The study shall provide guidance to consumers, providers, payers, and other key stakeholders on high-priority strategies to achieve both short-term and long-term drug safety goals, to elucidate the goals and expected results of such initiatives and support the business case for them, and to identify critical success factors and key levers for achieving success.

(E) The study shall assess the opportunities and key impediments to broad nationwide implementation of medication error reductions, and to provide guidance to policy-makers and government agencies (including the Food and Drug Administration, the Centers for Medicare & Medicaid Services, and the National Institutes of Health) in promoting a national agenda for medication error reduction.

(F) The study shall develop an applied research agenda to evaluate the health and cost impacts of alternative interventions, and to assess collaborative public and private strategies for implementing the research agenda through AHRQ and other government agencies.

(3) CONDUCT OF STUDY-

(A) EXPERT COMMITTEE- In conducting the study, the IOM shall convene a committee of leading experts and key stakeholders in pharmaceutical management and drug safety, including clinicians, health services researchers, pharmacists, system administrators, payer representatives, and others.

(B) COMPLETION- The study shall be completed within an 18-month period.

(4) REPORT- A report on the study shall be submitted to Congress upon the completion of the study.

(5) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated to carry out this section such sums as may be necessary.

(d) STUDY OF MULTI-YEAR CONTRACTS-

(1) IN GENERAL- The Secretary shall provide for a study on the feasibility and advisability of providing for contracting with PDP sponsors and MA organizations under parts C and D of title XVIII on a multi-year basis.

(2) REPORT- Not later than January 1, 2007, the Secretary shall submit to Congress a report on the study under paragraph (1). The report shall include such recommendations as the Secretary deems appropriate.

(e) GAO STUDY REGARDING IMPACT OF ASSETS TEST FOR SUBSIDY ELIGIBLE INDIVIDUALS-

(1) STUDY- The Comptroller General of the United States shall conduct a study to determine the extent to which drug utilization and access to covered part D drugs under part D of title XVIII of the Social Security Act by subsidy eligible individuals differs from such utilization and access for individuals who would qualify as such subsidy eligible individuals but for the application of section 1860D-14(a)(3)(A)(iii) of such Act.

(2) REPORT- Not later than September 30, 2007, the Comptroller General shall submit a report to Congress on the study conducted under paragraph (1) that includes such recommendations for legislation as the Comptroller General determines are appropriate.

(f) STUDY ON MAKING PRESCRIPTION PHARMACEUTICAL INFORMATION ACCESSIBLE FOR BLIND AND VISUALLY-IMPAIRED INDIVIDUALS-

(1) STUDY-

(A) IN GENERAL- The Secretary shall undertake a study of how to make prescription pharmaceutical information, including drug labels and usage instructions, accessible to blind and visually-impaired individuals.

(B) STUDY TO INCLUDE EXISTING AND EMERGING TECHNOLOGIES- The study under subparagraph (A) shall include a review of existing and emerging technologies, including assistive technology, that makes essential information on the content and prescribed use of pharmaceutical medicines available in a usable format for blind and visually-impaired individuals.

(2) REPORT-

(A) IN GENERAL- Not later than 18 months after the date of the enactment of this Act, the Secretary shall submit a report to Congress on the study required under paragraph (1).

(B) CONTENTS OF REPORT- The report required under paragraph (1) shall include recommendations for the implementation of usable formats for making prescription pharmaceutical information available to blind and visually-impaired individuals and an estimate of the costs associated with the implementation of each format.

SEC. 108. GRANTS TO PHYSICIANS TO IMPLEMENT ELECTRONIC PRESCRIPTION DRUG PROGRAMS.

(a) IN GENERAL- The Secretary is authorized to make grants to physicians for the purpose of assisting such physicians to implement electronic prescription drug programs that comply with the standards promulgated or modified under section 1860D-4(e) of the Social Security Act, as inserted by section 101(a).

(b) AWARDING OF GRANTS-

(1) APPLICATION- No grant may be made under this section except pursuant to a grant application that is submitted and approved in a time, manner, and form specified by the Secretary.

(2) CONSIDERATIONS AND PREFERENCES- In awarding grants under this section, the Secretary shall–

(A) give special consideration to physicians who serve a disproportionate number of medicare patients; and

(B) give preference to physicians who serve a rural or underserved area.

(3) LIMITATION ON GRANTS- Only 1 grant may be awarded under this section with respect to any physician or group practice of physicians.

(1) IN GENERAL- Grants under this section shall be made under such terms and conditions as the Secretary specifies consistent with this section.

(2) USE OF GRANT FUNDS- Funds provided under grants under this section may be used for any of the following:

(A) For purchasing, leasing, and installing computer software and hardware, including handheld computer technologies.

(B) Making upgrades and other improvements to existing computer software and hardware to enable e-prescribing.

(C) Providing education and training to eligible physician staff on the use of technology to implement the electronic transmission of prescription and patient information.

(3) PROVISION OF INFORMATION- As a condition for the awarding of a grant under this section, an applicant shall provide to the Secretary such information as the Secretary may require in order to–

(A) evaluate the project for which the grant is made; and

(B) ensure that funding provided under the grant is expended only for the purposes for which it is made.

(4) AUDIT- The Secretary shall conduct appropriate audits of grants under this section.

(5) MATCHING REQUIREMENT- The applicant for a grant under this section shall agree, with respect to the costs to be incurred by the applicant in implementing an electronic prescription drug program, to make available (directly or through donations from public or private entities) non-Federal contributions toward such costs in an amount that is not less than 50 percent of such costs. Non-Federal contributions under the previous sentence may be in cash or in kind, fairly evaluated, including plant, equipment, or services. Amounts provided by the Federal Government, or services assisted or subsidized to any significant extent by the Federal Government, may not be included in determining the amount of such contributions.

(d) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated to carry out this section $50,000,000 for fiscal year 2007 and such sums as may be necessary for each of fiscal years 2008 and 2009.

SEC. 109. EXPANDING THE WORK OF MEDICARE QUALITY IMPROVEMENT ORGANIZATIONS TO INCLUDE PARTS C AND D.

(a) APPLICATION TO MEDICARE MANAGED CARE AND PRESCRIPTION DRUG COVERAGE- Section 1154(a)(1) (42 U.S.C. 1320c-3(a)(1)) is amended by inserting , to Medicare Advantage organizations pursuant to contracts under part C, and to prescription drug sponsors pursuant to contracts under part D after under section 1876.

(b) PRESCRIPTION DRUG THERAPY QUALITY IMPROVEMENT- Section 1154(a) (42 U.S.C. 1320c-3(a)) is amended by adding at the end the following new paragraph:

(17) The organization shall execute its responsibilities under subparagraphs (A) and (B) of paragraph (1) by offering to providers, practitioners, Medicare Advantage organizations offering Medicare Advantage plans under part C, and prescription drug sponsors offering prescription drug plans under part D quality improvement assistance pertaining to prescription drug therapy.

SEC. 110. CONFLICT OF INTEREST STUDY.

(a) STUDY- The Federal Trade Commission shall conduct a study of differences in payment amounts for pharmacy services provided to enrollees in group health plans that utilize pharmacy benefit managers. Such study shall include the following:

(1) An assessment of the differences in costs incurred by such enrollees and plans for prescription drugs dispensed by mail-order pharmacies owned by pharmaceutical benefit managers compared to mail-order pharmacies not owned by pharmaceutical benefit managers, and community pharmacies.

(2) Whether such plans are acting in a manner that maximizes competition and results in lower prescription drug prices for enrollees.

(b) REPORT- Not later than 18 months after the date of the enactment of this Act, the Commission shall submit to Congress a report on the study conducted under subsection (a). Such report shall include recommendations regarding any need for legislation to ensure the fiscal integrity of the voluntary prescription drug benefit program under part D of title XVIII, as added by section 101, that may be appropriated as the result of such study.

(c) EXEMPTION FROM PAPERWORK REDUCTION ACT- Chapter 35 of title 44, United States Code, shall not apply to the collection of information under subsection (a).

SEC. 111. STUDY ON EMPLOYMENT-BASED RETIREE HEALTH COVERAGE.

(a) STUDY- The Comptroller General of the United States shall conduct an initial and final study under this subsection to examine trends in employment-based retiree health coverage (as defined in 1860D-22(c)(1) of the Social Security Act, as added by section 101), including coverage under the Federal Employees Health Benefits Program (FEHBP), and the options and incentives available under this Act which may have an effect on the voluntary provision of such coverage.

(b) CONTENT OF INITIAL STUDY- The initial study under this section shall consider the following:

(1) Trends in employment-based retiree health coverage prior to the date of the enactment of this Act.

(2) The opinions of sponsors of employment-based retiree health coverage concerning which of the options available under this Act they are most likely to utilize for the provision of health coverage to their medicare-eligible retirees, including an assessment of the administrative burdens associated with the available options.

(3) The likelihood of sponsors of employment-based retiree health coverage to maintain or adjust their levels of retiree health benefits beyond coordination with medicare, including for prescription drug coverage, provided to medicare-eligible retirees after the date of the enactment of this Act.

(4) The factors that sponsors of employment-based retiree health coverage expect to consider in making decisions about any changes they may make in the health coverage provided to medicare-eligible retirees.

(5) Whether the prescription drug plan options available, or the health plan options available under the Medicare Advantage program, are likely to cause employers and other entities that did not provide health coverage to retirees prior to the date of the enactment of this Act to provide supplemental coverage or contributions toward premium expenses for medicare-eligible retirees who may enroll in such options in the future.

(1) Changes in the trends in employment-based retiree health coverage since the completion of the initial study by the Comptroller General.

(2) Factors contributing to any changes in coverage levels.

(3) The number and characteristics of sponsors of employment-based retiree health coverage who receive the special subsidy payments under section 1860D-22 of the Social Security Act, as added by section 101, for the provision of prescription drug coverage to their medicare-eligible retirees that is the same or greater actuarial value as the prescription drug coverage available to other medicare beneficiaries without employment-based retiree health coverage.

(4) The extent to which sponsors of employment-based retiree health coverage provide supplemental health coverage or contribute to the premiums for medicare-eligible retirees who enroll in a prescription drug plan or an MA-PD plan.

(5) Other coverage options, including tax-preferred retirement or health savings accounts, consumer-directed health plans, or other vehicles that sponsors of employment-based retiree health coverage believe would assist retirees with their future health care needs and their willingness to sponsor such alternative plan designs.

(6) The extent to which employers or other entities that did not provide employment-based retiree health coverage prior to the date of the enactment of this Act provided some form of coverage or financial assistance for retiree health care needs after the date of the enactment of this Act.

(7) Recommendations by employers, benefits experts, academics, and others on ways that the voluntary provision of employment-based retiree health coverage may be improved and expanded.

(d) REPORTS- The Comptroller General shall submit a report to Congress on–

(1) the initial study under subsection (b) not later than 1 year after the date of the enactment of this Act; and

(2) the final study under subsection (c) not later than January 1, 2007.

(e) CONSULTATION- The Comptroller General shall consult with sponsors of employment-based retiree health coverage, benefits experts, human resources professionals, employee benefits consultants, and academics with experience in health benefits and survey research in the development and design of the initial and final studies under this section.