II
109th CONGRESS
2d Session
S. 2665
IN THE SENATE OF THE UNITED STATES
April 27, 2006
Mr. Baucus (for himself, Mr. Wyden, Mrs. Lincoln, Mr. Conrad, and Mr. Jeffords) introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To amend title XVIII of the Social Security Act to simplify and improve the Medicare prescription drug program.
Short title; table of contents
Short title
This Act may be cited
as the Medicare Prescription Drug
Simplification Act of 2006
.
Table of Contents
The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—Benefits simplification and improvement
Subtitle A—Simplification
Sec. 101. Establishment of national uniform part D benefit packages.
Subtitle B—Formulary requirements and improvements
Sec. 111. Limitation on removal or change of coverage of covered part D drugs under a formulary under a prescription drug plan or an MA–PD plan.
Sec. 112. Formulary requirement with respect to certain categories and classes of drugs.
Sec. 113. Certainty regarding excluded drugs.
Sec. 114. Pharmacy and therapeutic committee improvements.
Subtitle C—Funding certain costs for administrative improvements
Sec. 121. Additional funding for enrollment assistance.
TITLE II—Beneficiary protection improvements
Sec. 201. Improved plan information.
Sec. 202. Standardized definition for cost and utilization management tools and nomenclature for distinguishing between excluded and nonformulary drugs.
Sec. 203. Standardized enrollee notice regarding coverage determinations.
Sec. 204. Standardized and simplified processes for reconsiderations, exceptions, and appeals.
Sec. 205. Standardized marketing and licensing protections; State certification prior to waiver of licensure requirements.
Sec. 206. Authority to waive late enrollment penalty in certain circumstances.
Sec. 207. Integrated application and enrollment process for certain subsidy-eligible individuals.
Sec. 208. GAO study and report on cost and utilization management tools used under prescription drug plans and MA–PD plans.
TITLE III—Performance and quality
Sec. 301. Requirements for comparative information regarding performance of plans under Medicare part
D.Sec. 302. Required quality for approval of plan.
Sec. 303. MedPAC study and report regarding a value-based purchasing program for plans offering part
D prescription drug coverage.Benefits simplification and improvement
Simplification
Establishment of national uniform part D benefit packages
In general
Section 1860D–2 of the Social Security Act (42 U.S.C. 1395w–102) is amended by adding at the end the following new subsection:
Simplification of coverage
Requirement
Beginning January 1, 2008, qualified prescription drug coverage (other than coverage that is standard prescription drug coverage (as defined in subsection (b)) may only be offered by a prescription drug plan or an MA–PD plan through the benefit packages established by the Secretary under paragraph (2).
Establishment of national uniform benefit packages
The Secretary, in consultation with the entities and individuals described in paragraph (5), shall establish 5 national uniform benefit packages (that are in addition to standard prescription drug coverage) as follows:
Three basic packages
In general
Three of the benefit packages shall only provide basic prescription drug coverage described in subsection (a)(3)(B).
Specification
Of the benefit packages described in clause (i)—
one package shall have no annual deductible and coinsurance, specified by the Secretary, for costs up to the initial coverage limit;
one package, other than the package described in subclause (I), shall include a deductible that is equal to the amount determined under section 1860D–2(b)(1)(A)(ii) and provide for copayment amounts, specified by the Secretary, rather than coinsurance, for costs above the annual deductible and up to the initial coverage limit; and
one package, other than the packages described in subclauses (I) and (II), shall have no deductible and provide for copayment amounts, specified by the Secretary, rather than coinsurance, for costs up to the initial coverage limit.
Two supplemental packages
In general
Two of the benefit packages shall include supplemental prescription drug coverage described in subsection (a)(2)(A).
Specification
Of the benefit packages described in clause (i)—
one package shall include a meaningful level of coverage of costs incurred with respect to covered part D drugs after the initial coverage limit has been reached but before the annual out-of-pocket threshold has been reached; and
one package, other than the package described in subclause (I), shall include an increase in the initial coverage limit with respect to covered part D drugs so that such limit is equal to the annual out-of-pocket threshold.
Requirement for actuarial value of packages
Basic packages
The Secretary shall ensure that the 3 packages described in paragraph (2)(A) meet the following requirements:
Assuring equivalent value of total coverage
The actuarial value of the total coverage is equal to the actuarial value of standard prescription drug coverage, as estimated by the Chief Actuary of the Centers for Medicare & Medicaid Services.
Assuring equivalent unsubsidized value of coverage
The unsubsidized value of the coverage is equal to the unsubsidized value of standard prescription drug coverage, as estimated by the Chief Actuary of the Centers for Medicare & Medicaid Services. 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.
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 the product of—
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
100 percent minus the coinsurance percentage specified in subsection (b)(2)(B).
Supplemental packages
The Secretary shall ensure that the 2 packages described in paragraph (2)(B) have actuarial values that are progressively greater than the actuarial value of standard prescription drug coverage, as estimated by the Chief Actuary of the Centers for Medicare & Medicaid Services.
Restriction on number of tiers or levels of cost-sharing
In general
Subject to clause (ii), a package described in paragraph (2) may not include more than 3 distinct tiers or levels of cost-sharing.
Exception
A package described in paragraph (2) may include a fourth distinct tier or level of cost-sharing that may only be used for specialty or high cost covered part D drugs (as determined by the Secretary) if the PDP sponsor of the prescription drug plan or the Medicare Advantage organization offering the MA–PD plan has an exceptions process under subsection (g) with respect to the 4th tier or level.
Balancing of objectives
In establishing the benefit packages under paragraph (2), the Secretary shall balance the objectives of—
simplifying the benefit structures to facilitate comparisons among plans;
avoiding adverse selection;
ensuring meaningful differences between benefit packages;
providing program stability; and
promoting competition among plans.
Standardized language, nomenclature, definitions, and format
In general
In establishing the benefit packages under paragraph (2), the Secretary shall develop—
standardized language, nomenclature, and definitions to be used by the Secretary and PDP sponsors and MA–PD organizations with respect to such benefit packages; and
a standardized format to be used by PDP sponsors and MA–PD organizations with respect to such benefit packages.
Requirement
In developing standardized language, nomenclature, and definitions and a standardized format under subparagraph (A), the Secretary shall ensure that such language, nomenclature, definitions, and format clearly distinguishes between—
a plan that offers only basic prescription drug coverage (as described in subsection (a)(3)) and a plan that offers supplemental prescription drug coverage (as described in subsection (a)(2)(A));
a plan that offers coinsurance and a plan that offers flat copayments;
a plan that covers all covered part D drugs and a plan that covers less than all such drugs; and
prescription drug plans and MA–PDs, especially on terms of how enrollment in those plans would affect access to items and services under the original medicare fee-for-service program under parts A and B.
Advisory committee
Establishment
The Secretary shall establish a Benefit Advisory Committee (in this paragraph referred to as the Committee).
Membership
The Committee shall be composed of 15 members to be appointed by the Secretary. The Secretary shall ensure that the following individuals are appointed to the Committee:
Two representatives appointed upon recommendation of the National Association of Insurance Commissioners.
The Chief Actuary of the Centers for Medicare & Medicaid Services.
Two individuals with expertise in consumer choice.
Two individuals with expertise in health economics.
Two individuals with expertise in actuarial sciences.
Two individuals with expertise in pharmacy benefit management.
Two representatives of health insurers, health care providers, and consumers.
Two other individuals or entities determined appropriate by the Secretary.
Consultation
In establishing the benefit packages under paragraph (2) (including determinations under paragraph (3)), the Secretary shall consult with the Committee.
Updating of benefit packages
Not less than once every 3 years, the Secretary shall review the benefit packages established under this subsection, and, subject to the requirements under paragraph (2), shall update the content of such packages as appropriate.
No effect on requirement to offer a plan that only provides basic prescription drug coverage
Nothing in this subsection shall be construed to effect the requirement under subsection (a)(2)(B).
.
Conforming amendments
Section 1860D–2 of the Social Security Act (42 U.S.C. 1395w–102) is amended—
in subsection (a)—
in paragraph (1)—
in the matter preceding subparagraph (A),
by striking For purposes
and inserting Subject to
subsection (f), for purposes
;
in subparagraph (B), by striking
which meets the alternative
and all that follows through the
period at the end and inserting the following: “which—
with respect to plan years beginning prior to January 1, 2008, meets the alternative prescription drug 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); or
with respect to plan years beginning on or after January 1, 2008, meets the requirements of subsection (f) and access to negotiated prices under subsection (d), but only if the benefit design of such coverage is approved by the Secretary, in accordance with subsection (f).
.
in paragraph (2)(A), in the matter
preceding clause (i), by inserting and subsection (f)
after
subparagraph (B)
;
in subsection (b), by striking paragraph (2) and inserting the following:
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—
prior to January 1, 2008—
equal to 25 percent; or
actuarially equivalent (using processes and methods established under section 1860D–11(c)) to an average expected payment of 25 percent of such costs; or
beginning on January 1, 2008, is equal to 25 percent.
.
Formulary requirements and improvements
Limitation on removal or change of coverage of covered part D drugs under a formulary under a prescription drug plan or an MA–PD plan
Limitation on removal or change
Section 1860D–4(b)(3)(E) of the Social Security Act (42 U.S.C. 1395w–104(b)(3)(E)) is amended to read as follows:
Removing or changing a drug on a formulary
Limitation
Subject to clause (ii), with respect to plan years beginning on or after January 1, 2007, the PDP sponsor of a prescription drug plan may not remove a covered part D drug from the plan formulary, apply a cost or utilization management tool that imposes a restriction or limitation on the coverage of such a drug (such as through the application of a preferred status, usage restriction, step therapy, prior authorization, or quantity limitation), or increase the cost-sharing of such a drug (such as through placement of a drug on a tier that would result in higher cost-sharing for a beneficiary) other than the date on which PDP sponsors may begin marketing their plans with respect to the immediately succeeding plan year, as determined by the Secretary.
Exceptions to limitation on removal
Subject to clause (iii), clause (i) shall not apply with respect to a covered part D drug that—
is a brand name drug for which there is a generic drug approved under section 505(j) of the Food and Drug Cosmetic Act that is placed on the market during the period in which there are limitations on removal or change in the formulary under clause (i);
is a drug for which the Commissioner of Food and Drugs issues a safety warning that would impose a restriction on the drug or require a drug label warning during the plan year;
is a drug that the Pharmacy and Therapeutic Committee of the plan determines, based directly on evidence from peer-reviewed research, has a lower safety profile than is appropriate or is ineffective; or
for which the Secretary establishes a specific exception through the promulgation of regulations relating to plan formularies.
Limited application of exceptions to drugs in certain categories and classes
For 2007 and 2008, subclauses (I), (II), (IV), and (V) of clause (ii) shall not apply to a drug in a category or class described in section 1860D–4(b)(3)(H)(i).
Notice of removal under application of exception to limitation
The PDP sponsor of a prescription drug plan shall provide appropriate notice (such as under subsection (a)(3) and includes the annual notice under subsection (a)(5)) of any removal or change under clause (ii) to the Secretary, affected enrollees, physicians, pharmacies, and pharmacists.
.
Notice for change in formulary and other restrictions or limitations on coverage
In general
Section 1860D–4(a) of such Act (42 U.S.C. 1395w–104(a)) is amended by adding at the end the following new paragraph:
Annual notice of changes in formulary and other restrictions or limitations on coverage
Each PDP sponsor offering a prescription drug plan shall furnish to each enrollee at the time of each annual coordinated election period (referred to in section 1860D–1(b)(1)(B)(iii)) for a plan year a notice of any changes in the formulary or other restrictions or limitations on coverage of any covered part D drug under the plan that will take effect for the plan year.
.
Effective date
The amendment made by paragraph (1) shall apply to annual coordinated election periods beginning on or after November 15, 2006.
Formulary requirement with respect to certain categories and classes of drugs
Required Inclusion
Section 1860D–4(b)(3) of the Social Security Act (42 U.S.C. 1395w–104(b)(3)) is amended—
in subparagraph (C)(i), by striking
The formulary
and inserting Subject to subparagraph (G),
the formulary
; and
by inserting after subparagraph (F) the following new subparagraph:
Required inclusion of drugs in certain categories and classes
For 2007 and 2008
For 2007 and 2008, the formulary must include all or substantially all drugs in the following 6 categories that are available as of June 1 of the prior year:
Immunosuppressant.
Antidepressant.
Antipsychotic.
Anticonvulsant.
Antiretroviral.
Antineoplastic.
Substantially all defined
For purposes of
clause (i), the term substantially all
means all drugs and
unique dosage forms in the categories described in such clause except
for—
multi-source brands of the identical molecular structure;
extended release products when the immediate-release product is included on the formulary;
products that have the same active ingredient; and
multiple dosage forms that do not provide a unique route of administration, such as tablets and capsules.
For 2009 and subsequent years
Authority
Beginning with the plan year beginning on January 1, 2009, the Secretary, taking into account the results of the study conducted under section 113(b) of the Medicare Prescription Drug Simplification Act of 2006, may require that the formulary include coverage of covered part D drugs within certain categories or classes of drugs.
Requirement for use of authority
The Secretary shall promulgate regulations to exercise the authority under subclause (I) and may not exercise such authority through program guidance.
.
Institute of Medicine study and report on protected categories and classes of drugs
Study
In general
Not later than the
date that is 2 months after the date of the enactment of this Act, the
Secretary of Health and Human Services (in this subsection referred to as the
Secretary
) shall enter into an arrangement under which the
Institute of Medicine of the National Academy of Sciences (in this subsection
referred to as the Institute
) shall conduct a study on issues
related to requiring any formulary used under prescription drug plans under
part D of title XVIII of the Social Security Act or under MA–PD plans under
part C of such title to cover drugs within certain categories or
classes.
Required items to be evaluated
The study conducted under subparagraph (A) shall include an evaluation of—
whether all or substantially all drugs within certain drug categories or classes of drugs should be required by the Secretary on any formulary used under a prescription drug plan or an MA–PD plan in order to protect enrollees from undue medical risk and complication, including life threatening interruptions in, or lack of access to, medication therapy, and if so, what the protected categories or classes should be; and
options for processes by which the Secretary could reevaluate requirements with respect to the matters described in clause (i) on an ongoing basis.
Report
Not later than the date that is 12 months after the Secretary enters into the arrangement with the Institute under paragraph (1), the Institute shall submit to the Secretary and to Congress a report on the study conducted under such paragraph.
Factors for IOM to consider
In conducting the study required by this subsection, the Institute shall consider—
the existing regulatory and statutory framework for beneficiary protections under part D of title XVIII of the Social Security Act, including the coverage determination and appeals processes under such part;
the role of Pharmacy and Therapeutic Committees in selecting drugs to be included on the formulary of a prescription drug plan or an MA–PD plan; and
the implications of the presence or absence of such drug/drug category or class protections on spending under the Medicare program, including spending on non-drug services, such as hospital and physician care.
Committee
The committee appointed by the Institute to conduct the study and prepare the report required by this subsection shall include individuals with expertise in economics, clinical pharmacology, actuarial sciences, pharmacy benefit design, and medicine.
Authorization of Appropriations
There are authorized to be appropriated such sums as may be necessary for purposes of conducting the study and preparing the report required by this subsection.
Certainty regarding excluded drugs
Section 1860D–2(e) of the Social Security Act (42 U.S.C. 1395w–102(e)) is amended by adding at the end the following new paragraphs:
Annual publication
By not later than April 1 of each year (beginning with 2007), the Secretary shall identify and cause to have published in the Federal Register the list of drugs that are excluded under paragraph (2)(A) for the subsequent year. Such list shall describe the drugs by National Drug Code Directory level.
Beneficiary notice
With respect to activities conducted under section 1860D–1(c)(1) for each plan year (beginning with plan year 2007), the Secretary shall inform eligible part D individuals (and prospective part D eligible individuals) of the types of drugs excluded under paragraph (2)(A) in conducting such activities.
.
Pharmacy and therapeutic committee improvements
Disclosure of conflicts of interest for members of pharmacy and therapeutic committee
Section 1860D–4(b)(3)(A) of the Social Security Act (42 U.S.C. 1395w–104(b)(3)(A)) is amended by adding at the end the following new clause:
Disclosure
Beginning November 1, 2006, such committee shall annually disclose to the Secretary, and, upon request, to the public, any conflict of interest members have with a pharmaceutical company, an insurer, a PDP sponsor or an MA organization, or any other relevant entity.
.
Disclosure of decisions and bases for decisions
Section 1860D–4(b)(3)(B) of the Social Security Act (42 U.S.C. 1395w–104(b)(3)(B)) is amended by adding at the end the following flush sentence:
With respect to decisions made by such Committee regarding the formulary for plan years beginning on or after January 1, 2007, the committee shall disclose such decisions (and the bases for such decisions) to the Secretary, and, upon request, to the public.
.
Funding certain costs for administrative improvements
Additional funding for enrollment assistance
In general
There are appropriated, to be transferred from the Federal Supplementary Medical Insurance Trust Fund, not to exceed $120,000,000 for the Centers for Medicare & Medicaid Services, for the purpose of ensuring that individuals have adequate access to impartial advice and assistance in enrolling in the prescription drug program under part D of title XVIII of the Social Security Act.
Use of funds
Amounts provided under subsection (a) shall be used for the following purposes:
Grants to State health insurance assistance programs
To provide additional grants to State health insurance counseling programs (receiving assistance under section 4360 of the Omnibus Reconciliation Act of 1990) to broaden their capacity to—
provide personal and impartial assistance to individuals seeking to enroll in a prescription drug plan or an MA–PD plan under such program;
educate and assist individuals in applying for a low-income subsidy under section 1860D–14 of such Act (42 U.S.C. 1395w–114); and
assist individuals in accessing benefits under such a prescription drug plan or such an MA–PD plan once they are enrolled in a plan.
Grants for innovative programs
To provide grants to eligible States to conduct innovative programs that provide any of the services described in subparagraphs (A), (B), and (C) of paragraph (1). A State is eligible for a grant under this paragraph if the level of enrollment in the State in the prescription drug program under such part is below the national average.
Promotion
To widely promote and disseminate information about the existence of, and services provided by, State health insurance counseling programs.
Priority
In awarding grants under paragraphs (1) and (2) of subsection (b), priority shall be given to States, and State health insurance counseling programs located in States, with the lowest percentage of part D eligible individuals enrolled in such prescription drug program.
Availability
Amounts provided under subsection (a) shall remain available until December 31, 2010.
Beneficiary protection improvements
Improved plan information
Comparative information provided by the Secretary
In general
Section 1860D–1(c)(3) of the Social Security Act (42 U.S.C. 1395w–101(c)(3)) is amended—
in subparagraph (A), by adding at the end the following new clause:
Cost and utilization management tools
A clear and prominent display of the cost and utilization management tools used under the plan to impose a restriction or limitation on the coverage of a drug on the formulary of the plan.
; and
by adding at the end the following new subparagraph:
Requirements
In disseminating comparative information under paragraph (2)(A), the Secretary shall—
ensure that such information clearly distinguishes between—
plans that offer only basic prescription drug coverage and plans that offer supplemental prescription drug coverage;
plans that offer coinsurance and plans that offer flat copayments; and
plans that cover all covered part D drugs and plans that cover less than all such drugs;
to the extent that comparative information is linked on the Internet to an Internet website of a prescription drug plan or an MA–PD plan, ensure that the information, including information relating to the formulary of the plan, is directly linked to the relevant page of the plan Internet website and not the homepage of such website; and
use the standardized definitions, nomenclature, language, and format developed under sections 1860D–2(f)(4) and 1860D–4(l).
.
Effective date
The amendments made by this subsection shall apply with respect to comparative information disseminated with respect to plan years beginning on or after January 1, 2007.
Information provided by plans
Drug specific information
Section 1860D–4(a)(1) of the Social Security Act (42 U.S.C. 1395w–104(a)(1)) is amended—
in subparagraph (A), by striking
subparagraph (B)
and inserting subparagraphs (B), (C),
(D), and (E)
;
in subparagraph (B), by striking clauses (ii) and (iii) and inserting the following new clauses:
How any formulary used by the sponsor functions, including, using the standard definitions developed under subsection (l), how any cost and utilization management tools used to impose a restriction or limitation on the coverage of a drug on the formulary (such as through the application of the tools described in such subsection) functions.
Beneficiary cost-sharing requirements, including the tiered or other copayment level applicable for each drug (or class of drugs).
; and
by adding at the end the following new subparagraphs:
Benefit process information
The information described in this subparagraph is information concerning the benefit process under the plan, including an explanation of what a coverage determination is and how to file a grievance, reconsideration, exception, and appeal.
Contact information
The information described in this subparagraph is the plan’s toll-free customer call line and Internet website and the name, address, and phone number of the plan administrator.
Specific information
The information described in this subparagraph is a description of—
the specific information, including the information described in paragraph (2)(A), an enrollee can request of the PDP sponsor under the mechanism described in paragraph (3)(A); and
how the enrollee can make such a request.
.
Disclosure upon request of certain information
Section 1860D–4(a)(2) of the Social Security Act (42 U.S.C. 1395w–104(a)(2)) is amended to read as follows:
Disclosure upon request of certain 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 such individual with—
information similar (as determined by the Secretary) to the information described in subparagraphs (A) and (C) of section 1852(c)(2); and
information disclosed to enrollees under paragraphs (1) and (5).
.
Standardized format for information
Section 1860D–4(a) of the Social Security Act (42 U.S.C. 1395w–104(a)), as amended by section 111(b), is amended by adding at the end the following new paragraph:
Standardized information
In general
The Secretary shall standardize the format of the presentation of information by PDP sponsors of a prescription drug plan to enrollees pursuant to this subsection, including the covered part D drugs covered under the plan's formulary and the cost and utilization management tools used under the plan.
Written and electronic information
Such standardized format shall apply to information presented in writing and electronically.
.
Effective date
The amendments made by this subsection shall apply with respect to information provided with respect to plan years beginning on or after January 1, 2007.
Standardized definition for cost and utilization management tools and nomenclature for distinguishing between excluded and nonformulary drugs
In general
Section 1860D–4 of the Social Security Act (42 U.S.C. 1395w–104) is amended by adding at the end the following new subsection:
Standardized definitions and nomenclature
The Secretary shall develop, and require PDP sponsors offering a prescription drug plan to use, the following:
Definition of cost and utilization management tools
A standard definition for any cost and utilization management tools used under the plan to impose a restriction or limitation on the coverage of a drug on the formulary (such as through the application of a preferred status or tiered formulary structure, usage restriction, step therapy, prior authorization, or quantity limitation).
Nomenclature for excluded and nonformulary drugs
A standard nomenclature for referring to, and distinguishing between—
drugs excluded from the definition of a covered part D drug pursuant to section 1860D–2(e)(2); and
drugs not included on the formulary under the plan.
.
Effective date
The Secretary of Health and Human Services shall provide for the standard definitions and nomenclature, and the required use of such definitions and nomenclature, under the amendment made by subsection (a) by not later than January 1, 2007.
Standardized enrollee notice regarding coverage determinations
In general
Section 1860D–4 of the Social Security Act (42 U.S.C. 1395w–104), as amended by section 202(a), is amended by adding at the end the following new subsection:
Standardized enrollee notice
In general
The Secretary shall develop a standard notice that PDP sponsors and Medicare Advantage organizations shall ensure is distributed by each pharmacy that dispenses a covered part D drug to an enrollee in a prescription drug plan or an MA–PD plan when—
a covered part D drug prescribed for the enrollee is not covered, or the coverage of such drug is otherwise restricted, by the plan; or
if the plan uses a tiered formulary structure, a covered part D drug prescribed for the enrollee is on a nonpreferred or specialty tier.
Requirement for notice
The standard notice required under paragraph (1) shall include—
an explanation of the coverage decision;
information on how to request a reconsideration and an exception under subsection (g) and how to file an appeal under subsection (h); and
the contact name, address, and phone number for the PDP sponsor of the plan or the Medicare Advantage organization offering the plan.
Required information to pharmacies
A PDP sponsor of a prescription drug plan shall have in place procedures to provide pharmacies with the information necessary for the pharmacy to distribute the appropriate notice required under paragraph (1).
Reimbursement of pharmacy costs
A PDP sponsor of a prescription drug plan shall provide appropriate reimbursement to pharmacies for the costs of the pharmacy in distributing the appropriate notice required under paragraph (1)
.
Effective date
The Secretary of Health and Human Services shall provide for the standard notice, and the use of such notice, under the amendment made by subsection (a) by not later than January 1, 2007.
Standardized and simplified processes for reconsiderations, exceptions, and appeals
Standardized forms and processes for reconsiderations and exceptions
Section 1860D–4 of the Social Security Act (42 U.S.C. 1395w–104), as amended by section 203, is amended by adding at the end the following new subsection:
Standardized forms and processes for reconsiderations and exceptions
Standardized forms
In general
The Secretary shall develop standardized forms to be used under a prescription drug plan to request a reconsideration or an exception under subsection (g), with the goal of making such reconsideration and exceptions process more simple, transparent, and efficient for enrollees and providers.
Required use by plans
If a PDP sponsor of a prescription drug plan requires a request for a reconsideration or an exception to be in writing, the sponsor shall use the standardized forms developed under subparagraph (A).
Standardized processes for reconsiderations and exceptions
In general
The Secretary shall develop, and require PDP sponsors of prescription drug plans to use, a standardized process for reconsiderations and exceptions under subsection (g).
Requirement
The process developed in subparagraph (A)—
shall require that determinations regarding medical necessity are based on professional medical judgement, the medical condition of the enrollee, the treating provider's recommendation, and other medical evidence; and
may not require an enrollee or a provider to submit extraneous information beyond the standardized form described in paragraph (1) as a condition for the plan to make a reconsideration or exception but shall permit the enrollee or provider to provide additional information to the request if they so choose.
.
Improved appeals process for nonformulary drugs
Section 1860D–4(h)(2) of the Social
Security Act (42 U.S.C. 1395w–104(h)(2)) is amended by striking only
if
and all that follows through the period and inserting the following:
“only if the prescribing physician determines at least one of the following
applies:
That all covered part D drugs on any tier of the formulary for treatment of the same condition would not be as effective for the individual.
That all covered part D drugs on any tier of the formulary for treatment of the same condition would have adverse effects for the individual.
That the covered part D drug that is not on the formulary under the plan is the most effective drug for the individual and that the individual would destabilize if coverage of the drug is not provided.
.
Effective date
The Secretary of Health and Human Services shall provide for the standard notice and the standardized process, and the use of such notice and process, under the amendment made by paragraph (1) by not later than January 1, 2007.
The amendment made by subsection (b) shall apply to drugs dispensed on or after January 1, 2007.
Standardized marketing and licensing protections; State certification prior to waiver of licensure requirements
Standardized marketing requirements
In general
Section 1860D–1 of the Social Security Act (42 U.S.C. 1395w–101) is amended—
in subsection (b)(1)(B)(vi), by striking
Section
and inserting Subject to subsection (d),
section
; and
by adding at the end the following new subsection:
Standardized marketing requirements
Development by the NAIC
Requirements
The Secretary shall request the National
Association of Insurance Commissioners (in this subsection referred to as the
NAIC
) to—
develop standardized marketing requirements for prescription drug plans and MA–PD plans; and
submit a report on such requirements to the Secretary by not later than April 1, 2007.
Prohibited activities
Such requirements shall prohibit the following:
Cross-selling of non-Medicare products or services with products or services offered by a prescription drug plan under this part or an MA–PD plan under part C.
Up-selling from prescription drug plans to MA–PD plans.
Telemarketing (including cold calling) conducted by a prescription drug plan or MA–PD plan (or agent of such plan).
Other activities to address
Such requirements shall address the conduct of agents engaged in on-site promotion at a facility of an organization with which the PDP sponsor or Medicare Advantage organization has a cobranding relationship and any other marketing practices that are determined to be inappropriate for the eligible part D individual population.
Implementation of requirements
Requirements based on NAIC recommendations
If the NAIC develops standardized marketing requirements and submits the report pursuant to paragraph (1), the Secretary shall promulgate regulations for standardized marketing requirements for prescription drug plans and MA–PD plans that are based on the NAIC recommendations contained in such report. The Secretary shall ensure that such regulations take effect not later than July 31, 2007.
Requirements if NAIC does not submit report
If the NAIC does not develop standardized marketing requirements and submit the report pursuant to paragraph (1), the Secretary shall promulgate regulations for standardized marketing requirements for prescription drug plans and MA–PD plans. Such regulations shall prohibit the conduct described in paragraph (1)(B) and address the conduct described in paragraph (1)(C). The Secretary shall ensure that such regulations take effect not later than July 31, 2007.
State authority to enforce standardized marketing requirements
State enforcement against agents of prescription drug plans
Notwithstanding any other provision of law, if a State provides for the adoption of the standardized marketing requirements under the regulations under subparagraph (A) or (B) of paragraph (2), the State may provide for the enforcement of such requirements with respect to agents of prescription drug plans or MA–PD plans that are licensed within the State.
Memorandum of understanding providing enforcement against prescription drug plans
Notwithstanding any other provision of law, the Secretary may enter into a memorandum of understanding with a State that provides for State enforcement of such standardized marketing requirements with respect to prescription drug plans and MA–PD plans that are licensed within the State.
State reporting of violations of standardized marketing requirements
The Secretary shall request that States report any violations of such standardized marketing requirements to national and regional offices of the Centers for Medicare & Medicaid Services.
Report
The Secretary shall submit an annual report to Congress on the enforcement of such standardized marketing requirements, together with such recommendations as the Secretary determines appropriate. Such report shall include—
a list of any alleged violations of such requirements reported to the Secretary by a State, a PDP sponsor, or a Medicare Advantage organization; and
the disposition of such reported violations.
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Required compliance with standardized marketing requirements for prescription drug plans and MA–PD plans
Prescription drug plans
Section 1860D–12(b) of the Social Security Act (42 U.S.C. 1395w–112(b)) is amended by adding at the end the following new paragraph:
Standardized marketing requirements
With respect to plan years beginning on or after January 1, 2008, each contract entered into with a PDP sponsor under this section with respect to a prescription drug plan offered by such sponsor shall provide that the plan (or agents of such plan) shall comply with the standardized marketing requirements under section 1860D–1(d)(2).
.
MA–PD plans
Section 1857(f) of the Social Security Act (42 U.S.C. 1395w–27) is amended by adding at the end the following new paragraph:
Incorporation of prescription drug plan contract requirement regarding marketing
The provisions of section 1860D–12(b)(4) shall apply to a contract with a Medicare Advantage organization offering an MA–PD plan in the same manner as they apply to a contract with a PDP sponsor offering a prescription drug plan under part D.
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State certification prior to waiver of licensure requirements
In general
Section 1860D–12(c) of the Social Security Act (42 U.S.C. 1395w–112(c)) is amended—
in paragraph (1)(A), by striking In
the case
and inserting Subject to paragraph (5), in the
case
; and
by adding at the end the following new paragraph:
State certification required
In general
The Secretary may only grant a waiver under paragraph (1)(A) if the Secretary has received a certification from the State insurance commissioner that the prescription drug plan has a substantially complete application pending in the State.
Revocation of waiver upon finding of fraud and abuse
The Secretary shall revoke a waiver granted under paragraph (1)(A) if the State insurance commissioner submits a certification to the Secretary that the recipient of such a waiver has—
committed fraud or abuse with respect to such waiver;
failed to make a good faith effort to satisfy State licensing requirements; or
was determined ineligible for licensure by the State
.
Effective date
The amendments made by paragraph (1) shall apply with respect to plan years beginning on or after January 1, 2007.
Authority to waive late enrollment penalty in certain circumstances
In general
Section 1860D–13(b) of the Social Security Act (42 U.S.C. 1395w–113(b)) is amended by adding at the end the following new paragraph:
Authority to waive penalty
If the Secretary finds that a part D eligible individual's nonenrollment in a prescription drug plan, an MA–PD plan, or another plan with creditable prescription drug coverage is based on exceptional circumstances, such as an individual receiving erroneous information regarding the program under this part, the Secretary may waive the application of this subsection with respect to the individual (or a category of individuals) as may be necessary to eliminate the effects of such nonenrollment.
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Conforming amendment to special enrollment periods
Section 1860D–1(b)(3)(C) of the Social
Security Act (42 U.S.C. 1395w–101(b)(3)(C)) is amended by inserting ,
including the circumstances described in section 1860D–13(b)(8)
before
the period at the end.
Effective Date
The amendments made by this section shall take effect on the date of enactment of this Act.
Integrated application and enrollment process for certain subsidy-eligible individuals
In general
Section 1860D–14(a)(3) of the Social Security Act (42 U.S.C. 1395w–114(a)(3)) is amended by adding at the end the following new subparagraph:
Integrated application and enrollment process
The Secretary, jointly with the Commissioner of Social Security, shall work to integrate processes and beneficiary information for applying for a subsidy under this section and enrolling in a prescription drug plan or an MA–PD plan under section 1860D–1(b) in order to simplify steps for part D eligible individuals who wish to participate in both.
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Effective Date
The amendments made by this section shall take effect on the date of enactment of this Act.
GAO study and report on cost and utilization management tools used under prescription drug plans and MA–PD plans
Study
In general
The Comptroller General of the United States shall conduct a study on the cost and utilization management tools used under prescription drug plans under part D of title XVIII of the Social Security Act and MA–PD plans under part C of such title to impose a restriction or limitation on the coverage of a drug on the formulary (such as through the application of a preferred status or tiered formulary structure, usage restriction, step therapy, prior authorization, or quantity limitation).
Requirements
The study conducted under paragraph (1) shall include—
a comparison of such prescription drug plans and MA–PD plans regarding the range and extent of cost and utilization management tools used under such plans;
a comparison of cost and utilization management tools used under such plans with the cost and utilization tools used by private insurance plans in the commercial market and by plans under the Federal Employees Health Benefits Program under chapter 89 of title 5, United States Code;
an assessment of the impact of the cost and utilization management tools used under such prescription drug plans and MA–PD plans on—
enrollee access to recommended medications;
enrollee health;
providers; and
pharmacists;
an assessment of the cost-effectiveness of the cost and utilization management tools used under such plans in general, as well as the relative cost-savings and burden of specific tools; and
an assessment of the feasibility, advantages, and disadvantages of implementing standardized cost and utilization management tools under such plans and standardized criteria for the use of such tools.
Report
Not later than September 1, 2007, the Comptroller General shall submit a report to Congress on the study conducted under subsection (a) together with such recommendations for legislation as the Comptroller General considers appropriate.
Performance and quality
Requirements for comparative information regarding performance of plans under Medicare part D
In General
Section 1860D–1(c)(3) of the Social Security Act (42 U.S.C. 1395w–101(c)(3)), as amended by section 201(a), is amended—
in subparagraph (A), in the matter
preceding clause (i), by striking subparagraph (B)
and inserting
subparagraphs (B) and (D)
; and
by adding at the end the following new subparagraph:
Requirements for comparative information regarding performance under the plan
The comparative information regarding performance under the plan under subparagraph (A)(iii) shall include a comparison of the following:
The number of enrollees in the plan as of September 1 of the year prior to the plan year for which the information under this paragraph applies.
The percentage of all drugs dispensed under the plan that were generic drugs.
The total number of grievances received under the plan.
The total number of appeals received under the plan and the percentage of such appeals in which the appeal was successful.
The total number of calls received at customer service call centers.
The average time on hold at customer service call centers under the plan.
The percentage of drugs dispensed under the plan that required prior authorization.
The percentage of drugs dispensed under the plan that required step therapy.
Any additional information regarding performance under the plan determined appropriate by the Secretary.
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Requirement that enrollment and appeals information be included in comparative information beginning with the second plan year
Section 1860D–1(c)(3)(B)(ii) of the
Social Security Act (42 U.S.C.
1395w–101(c)(3)(B)(ii)) is amended by striking for
and inserting
except with respect to the comparative information under clauses (i),
(v), (vi), (vii), and (viii) of subparagraph (D), for
.
Effective Date
The amendments made by this section shall apply to comparative information disseminated with respect to plan years beginning on or after January 1, 2007.
Required quality for approval of plan
Section 1860D–11(e)(2) of the Social Security Act (42 U.S.C. 1395W–111(e)(2)) is amended by adding at the end the following new subparagraph:
Quality Performance
In general
With respect to plan years beginning on or after January 1, 2007, the plan and the PDP sponsor demonstrate satisfactory quality of performance, as determined by the Secretary.
Determination
In making the determination under clause (i), the Secretary shall consider—
indicators of consumer service (including grievances and appeals, calls to customer service call centers, errors in transition plans, and errors in charges to enrollees) in the prior year;
indicators of compliance with pharmacy service (including delays in payment) in the prior year;
incorporation by the plan of reports on treatment effectiveness developed by the Agency for Healthcare Research and Quality;
adverse consequences to the health of enrollees as a consequence of formulary, utilization management, or transition policies in the prior year;
indicators resulting from the study conducted under section 303 of the Medicare Prescription Drug Simplification Act of 2006;
the negligent provision to the Secretary of inaccurate formulary information for inclusion in the comparative information disseminated under section 1860D–1(c); and
clinical quality indicators determined appropriate by the Secretary.
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MedPAC study and report regarding a value-based purchasing program for plans offering part D prescription drug coverage
Study
The Medicare Payment Advisory Commission shall conduct a study on the establishment and implementation of a value-based purchasing program under the Medicare program under title XVIII of the Social Security Act with respect to the provision of prescription drug coverage under part D of such title under prescription drug plans and fallback prescription drug plans under such part D, under Medicare Advantage plans under part C of such title, and under reasonable cost contracts under section 1876(h) of such Act (42 U.S.C. 1395mm). Such study shall include an analysis of potential clinical quality indicators and options for aligning payments to such plans with performance with respect to the provision of prescription drug coverage under such part D.
Report
Not later than June 1, 2007, the Commission shall submit a report to Congress and the Secretary on the study conducted under subsection (a) together with recommendations for such legislation and administrative actions as the Commission considers appropriate.