Medicare: Side-by-Side Comparison of Selected Prescription Drug Bills

Medicare: Side-by-Side Comparison of Selected Prescription Drug Bills

Order Code RL30593
CRS Report for Congress
Received through the CRS Web
Medicare: Side-by-Side Comparison of
Selected Prescription Drug Bills
Updated September 20, 2000
Jennifer O’Sullivan
Specialist in Social Legislation
Domestic Social Policy Division
Heidi Yacker
Information Research Specialist
Information Research Division
Congressional Research Service ˜ The Library of Congress

Medicare: Side-by-Side Comparison of
Selected Prescription Drug Bills
Summary
A number of bills have been introduced in the 106th Congress to establish
prescription drug coverage for the Medicare population. On June 28, 2000, the House
passed the Medicare Rx 2000 Act (H.R.4680, Thomas, et al.). The bill relies on
private plans including Medicare+Choice plans to provide drug coverage; federal
subsidies would be provided to encourage participation. There would be a maximum
limit on beneficiary out-of-pocket costs (“stop-loss” coverage); and assistance would
be provided to low-income seniors. The drug benefit and the Medicare+Choice
program would be administered by a new Medicare Benefits Administration. The
Congressional Budget Office (CBO) cost estimate for the new drug program is $37
billion over the FY2001-FY2005 period and $147 billion over the FY2001-FY2010
period.
There are several other proposals which have received considerable attention to
date. These are the President’s plan (S. 2342), the Daschle bill (S. 2541), Breaux-
Frist 2000 (S. 2807), the Graham/Bryan/Robb bill (S.2758) and the Roth bills (S.3016
and S. 3017). On June 24, 2000, the President announced several modifications to
his drug plan including starting the program 1 year earlier and placing a limit on
beneficiary out-of-pocket costs. The Congressional Budget Office (CBO) cost
estimate of the revised proposal is $98.4 billion over the FY2001-FY2005 period and
$337.7 billion over the FY2001-FY2010 period.
There are a number of common themes in many of the major prescription drug
bills pending before the Congress. Most would make coverage available to all
Medicare beneficiaries on a voluntary basis (though one approach would limit
eligibility to those with low-incomes or high drug costs) They would all have a limit
on the amount of federal spending for the new benefit. Further, they would all
provide assistance for the low-income. There are major differences among the bills in
how the benefits would be structured.
It is the degree of reliance placed on the public versus the private sector that
characterizes one of the key areas of difference among the various proposals. All of
the bills would place some measure of responsibility on the private sector for
administration of a drug plan. Some bills would have the government assume all (or
most) of the risk for providing the benefit while others would transfer more of the risk
to the private entity. Another key difference among the plans is the scope of benefits
to be provided. Under some bills a specified level of benefits would be available
nationwide. Under other bills, a minimum benefit level would be established. The bills
also designate different agencies to administer the new benefit at the federal level.
This report provides a side-by-side comparison of the key components of the
major plans currently pending before the Congress. It is a companion report to CRS
Report RL30584, Medicare: Selected Prescription Drug Proposals; that report
provides more information on these major bills. Both reports will be updated to
reflect any legislative action.

Contents
General Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Covered Populations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Enrollment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Nature of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Scope of Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Deductible . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Cost-Sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Access to Negotiated Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Federal Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Federal Payments to Plans, Benefit Administrators, or States . . . . . . . . . . 13
Benefit Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Relationship to Medicare+Choice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Cost Controls/Formularies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Low-Income Subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Relationship to Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Relationship to Private Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Accounting Mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Medicare: Side-by-Side Comparison of
Selected Prescription Drug Bills
The following pages provide a side-by-side comparison of the following bills: 1)
the Medicare Rx 2000 Act (H.R. 4680, Thomas, et al.) as passed by the House on
June 28, 2000; 2) the Administration bill, the Medicare Modernization Act of 2000
(S. 2342, Moynihan), together with the revisions to the plan announced by the
President on June 24, 2000; 3) the Medicare Prescription Drug and Modernization
Act of 2000 (S. 2807, the “Breaux-Frist 2000” bill); 4) the Medicare Expansion for
Needed Drugs (MEND) Act of 2000 (S. 2541, Daschle et al.) announced at the White
House in May 2000; 5) the Medicare Outpatient Drug Act of 2000 (S. 2758, the
“MOD bill” or the “Graham/Bryan/Robb” bill); and 6) the Medicare Temporary Drug
Assistance Act (S. 3016 and S. 3017). For further information on these bills, see CRS
Report RL30584, Medicare: Selected Prescription Drug Proposals; that report
provides more information on these major bills.
On June 27, 2000, Congressman Gephardt, together with 111 cosponsors,
introduced H.R. 4770, the Medicare Guaranteed and Defined Rx Benefit and Health
Provider Relief Act of 2000. On June 28, 2000, during consideration of H.R. 4680,
a point of order was sustained against a motion by Congressman Stark to recommit
the bill to the Committee on Ways and Means with instructions to report it back with
an amendment in the nature of a substitute inserting the provisions of H.R.4770. The
drug provisions of the Gephardt bill are similar to the provisions of S. 2541, the
Daschle bill (which is included in this side-by-side). The following are the major
differences between the Gephardt bill and the Daschle bill. The Gephardt bill would:
1) provide coverage for prescription “medicines” not “drugs”; 2) begin in 2003 rather
than 2002; 3) establish the following benefit limits: $2,000 for 2003 and 2004, $3,000
for 2005 and 2006; $4,000 for 2007 and 2008, and $5,000 for 2009 (with the
beneficiary still liable for 50% of these costs); 4) increase these limits in future years
by the percentage increase in the in per capita expenditures for covered medicines; 5)
establish a catastrophic benefit with an out-of-pocket limit not greater than $4,000 (in
2003) and provide funding for the benefit from projected budget surpluses; 6) permit
late enrollment in the program, subject to late enrollment penalties, with the amount
of such penalties based on the associated costs to the program; 7) specify that the
monthly premium would be $25 in 2003 and that the calculation of the premium for
future years would exclude the costs associated with the catastrophic benefit; 8)
specify that the Secretary would divide the country into an “appropriate number” of
service areas and that the entities administering the program in these areas would be
labeled “private benefit administrators”; 9) establish additional criteria, including past
performance, for competitive selection of private benefit administrators; 10) specify
that contracts with participating pharmacies would allow reasonable dispensing and
consulting fees for pharmacists; 11) require the benefit administrator to use a
pharmacy and therapeutics committee in the development and management of its
formulary; and 12) require the benefit administrator to have in place a medication

CRS-2
therapy management program. The Gephardt bill also includes other amendments to
the Medicare program including provisions relating to the appeals process,
Medicare+Choice program, and payments to providers.

CRS-3
General Approach
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
A new optional benefit
A new optional drug benefit
The Commissioner of the
A new optional drug benefit
A new optional drug benefit
The bills would establish a
would be established under
would be established under
newly established
would be established under a
would be established under a
new temporary Outpatient
a new Part D. The bill relies
a new Part D. (The bill also
Competitive Medicare
new Part D. The federal
new Part D. The benefit
Prescription Drug Assistance
on private plans to provide
includes other Medicare
Agency (CMA) would be
government would bear the
would be administered by
Program under a new Title
coverage and to bear the
provisions). The federal
required to establish a
financial risk of coverage.
eligible entities under
XXII of the Social Security
financial risk for drug costs;
government would bear the
Prescription Drug and
The benefit would be
contract with HHS. The
Act. Funds would be
federal subsidies would be
financial risk of coverage.
Supplemental Benefit
administered by private
federal government would
provided to states
provided to encourage
The benefit would be
Program under title XXII of
entities under contract with
bear most of the financial
(individually or as part of a
participation. Coverage
administered by entities
the Social Security Act.
HHS.
risk of coverage. Higher
group) who voluntarily set up
would be provided through
under contract with the
Eligible beneficiaries would
income enrollees would
prescription drug programs
prescription drug plans
Department of Health and
voluntarily enroll and receive
receive a lower contribution
for low-income Medicare
(PDPs) or Medicare+Choice
Human Services (HHS). Any
access to covered outpatient
from the federal government
beneficiaries. State
(M+C) plans. Beneficiaries
entity capable of
drugs and, in certain cases,
toward the cot of their Part D
programs could also provide
could purchase either a
administering the benefit
other supplemental benefits
premiums.
assistance to Medicare
standard plan or an
could compete for the
through enrollment in either
beneficiaries with high drug
actuarially equivalent plan.
contract. JUNE 24, 2000
a Medicare Prescription Plus
costs. A state’s Title XXII
A new Medicare Benefits
REVISION: the
plan offered by a private
program would be separate
Administration would be
Administration announced a
entity or a M+C plan. These
from its Medicaid program.
established within HHS to
revision of the bill. Under
private plans would be
The bills would establish a
administer the benefit.
the revision, the benefit
responsible for assuming the
default program,
would begin January 2002
risk of drug costs. All
administered by HCFA, for
and would include a $4,000
persons would receive a
persons residing in states
limit on out-of-pocket
minimum of a 25% discount
which did not establish a
spending.
on that portion of their
program. The Title XXII
premium related to qualified
program would be repealed if
prescription drug coverage.
a comprehensive Medicare
reform plan, that included
coverage for outpatient
prescription drugs, was
enacted prior to the sunset
date. (Both bills are
identical except for the
definition of low-income, the
amounts allocated to the
state, and the sunset dates.)

CRS-4
Effective Date
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
January 1, 2003.
January 1, 2003. JUNE 24,
January 1, 2003.
January 1, 2002.
January 1, 2003
October 1, 2000. Program
2000 REVISION: would
would sunset December 31,
move date to January 2002;
2003 under S. 3016 and
payments would be made to
September 30, 2004, under
M+C plans in 2001 for drug
S. 3017.
benefits.
Covered Populations
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
All Part B enrollees who
All Medicare-eligible
Beneficiaries enrolled in
All Medicare-eligible
All Medicare-eligible
Eligible persons would be
elected to enroll. A one-time
individuals who elected to
both Parts A and B who
individuals who elected to
persons who elected to
low-income Medicare
opportunity would be
enroll.
elected to enroll.
enroll.
enroll.
beneficiaries, and, at state
provided for Part A-only
option, beneficiaries with
beneficiaries.
high drug costs. Low- income
persons would be those with
family income below a state-
established level. This level
could not exceed 150% of
poverty under S. 3016 (175%
under S. 3017). A higher
level could be established if
a state had an existing drug
assistance program providing
coverage for persons with
incomes up to or exceeding
150% of poverty under S.
3016 (175% under S. 3017).
Persons eligible for
assistance with high drug

CRS-5
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
costs would be those whose
family income exceeded the
level that would qualify them
as low-income and whose
out-of-pocket expenditures
for drugs exceeded the state-
established level. States
could establish resources
requirements for both
programs. The low-income
level for the default program
would be 150% of poverty.
Subject to the availability of
funds, the default program
would also cover persons
whose drug costs exceeded a
level specified by HCFA.

CRS-6
Enrollment
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
A 6-month enrollment period
An open enrollment period
There would be a one-time
An open enrollment period
The enrollment process
States would establish
would be established at the
would be established for first
enrollment opportunity. A 6-
would be established for first
would be similar to that for
procedures for state-based
beginning of the program; an
year program was in effect.
month enrollment period
year program was in effect.
Part B. Individuals initial
programs. HCFA would be
initial 7-month period would
A one-time opportunity
would be established at the
A one-time opportunity
enrollment opportunity
required to establish
be provided for future
would be provided for future
beginning of the program; an
would be provided for future
would generally occur when
procedures for determining
beneficiaries. An annual
beneficiaries (generally upon
initial 7-month period would
beneficiaries (generally upon
an individual first became
eligibility for the default
election period, similar to
becoming eligible for
be provided for future
becoming eligible for
eligible for Medicare. The
program.
that for M+C plans, would
Medicare).
beneficiaries. A special
Medicare).
Secretary would establish an
allow for changes in
period would be established
initial open enrollment
enrollment. Late enrollment
for person involuntarily
period for current enrollees.
penalties could apply for
losing other coverage. An
Late enrollment penalties,
persons who did not
annual election period,
similar to those applicable
maintain continuous drug
similar to that for M+C
under Part B, would apply
coverage.
plans, would allow for
for persons who did not
changes in enrollment.
enroll during their initial
enrollment period. An
annual election period,
similar to that for M+C
plans, would allow for
changes in enrollment.

CRS-7
Nature of Benefits
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
“Qualified coverage” would
A specified benefit would be
“Qualified coverage” would
A specified benefit would be
A specified benefit would be
Drug assistance provided
be either standard coverage
available to all enrollees
be either standard coverage
available to all enrollees
available to all enrollees
under an approved state plan
or actuarially equivalent
nationwide.
or actuarially equivalent
nationwide.
nationwide.
would be: 1) coverage that
coverage. Plans could offer
coverage. Plans could offer
was equivalent to that
more generous coverage.
more generous drug
provided in a benchmark
The Administrator would
coverage; they could also
benefit package; 2) coverage
administer the program in a
offer supplemental non-drug
that had an aggregate
manner such that all
benefits. If an entity offered
actuarial value equivalent to
individuals have access to at
more generous coverage, it
that of a benchmark package,
least two plans. If necessary,
would also be required to
3) coverage that was
Administrator could provide
offer a Medicare Prescription
provided under an existing
financial incentives to secure
Plus plan in the area meeting
state-based program, or 4)
such access.
minimum coverage criteria
another coverage package
only. The Commissioner
approved by the Secretary. A
would develop procedures
state could only choose one
for the provision of standard
of these options. If a state
prescription drug coverage to
chose to provide coverage
each beneficiary residing in
equivalent to coverage in a
an area where there were no
benchmark package, only one
Medicare Prescription Plus
benchmark package could be
plans or Medicare+Choice
selected.
plans providing coverage.

CRS-8
Scope of Benefit
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
Standard coverage in 2003:
Program would pay 50% of
Standard coverage in 2003:
Program would pay 50% of
In 2003: After $250
The benchmark packages
After $250 deductible, the
applicable limit: In 2003 and
After $250 deductible, the
applicable limit: In
deductible, the plan would
from which a state could
plan would pay 50% of costs
2004, the program would pay
plan would pay 50% of costs
2002-2004, the program
pay 50% of the next $6,500
select would be Medicaid
up to the next $2100 (i.e.,
up to $1,000 per person per
up to the next $2100 (i.e.,
would pay up to $1,000 per
($6,750 total spending,
coverage offered in the state,
$1,050 paid by plan, $1,050
year (out of the first $2,000
$1,050 paid by plan, $1,050
person per year (out of the
$3,500 total out-of-pocket),
coverage offered to state
paid by beneficiary). The
in total spending). In 2005
paid by beneficiary). The
first $2,000 in total
25% of the next $2,000
employees, coverage offered
plan would pay no costs for
and 2006, it would pay up to
plan would pay no costs for
spending). In 2005-2007, it
($8,750 total spending,
through the largest health
spending between $2,350
$1,500 (out of the first
spending between $2,350
would pay up to $1,500 (out
$4,000 out-of-pocket). The
maintenance organization
and $7,050. The plan would
$3,000 in total spending). In
and $7,050. The plan would
of the first $3,000 in total
plan would pay 100% of
(HMO), or Federal
pay 100% of costs when out-
2007 and 2008, it would pay
pay 100% of costs when out-
spending). In 2008, it would
costs when out-of-pocket
Employees Health Benefit
of-pocket costs reached
up to $2,000 (out of the first
of-pocket costs reached
pay up to $2,000 (out of the
costs reached $4,000 ($8,750
Plan (FEHBP) coverage
$6,000 ($7,050 in total
$4,000 in total spending). In
$6,000 ($7,050 in total
first $4,000 in total
total spending). Beginning in
provided under the standard
spending). Dollar amounts
2009, it would pay up to
spending). Dollar amounts
spending). In 2009, it would
2005, the dollar amounts
Blue Cross and Blue Shield
would be increased annually
$2,500 (out of the first
would be increased annually
pay up to $2,500 (out of the
would be increased by the
service benefit plan. If an
by annual percent increase in
$5,000 in total spending).
by annual percent increase in
first $5,000 in total
percentage increase in
individual was covered under
per capita expenditures for
Beginning in 2010, limit
per capita expenditures for
spending). Beginning in
program spending for drugs.
the default program, the
covered drugs.
would be increased by the
covered drugs. Specific
2010, the limit would be
benefit would be equivalent
increase in the consumer
requirements would apply if
increased by the increase in
to the FEHBP benchmark
price index (CPI). The bill
an entity offered coverage of
the CPI.
package
would include $35 billion for
non-drug benefits and these
catastrophic coverage for
non-drug benefits included
2006-2010 (specifics not
coverage of Medicare cost-
provided). JUNE 24, 2000
sharing charges; in this case
REVISION: would move the
the plan would have to cover
start date to January 2002
at least what would be
and place a $4,000 out-of-
covered under a basic
pocket limit on beneficiary
Medigap plan (Plan A).
liability in 2002 (indexed in
future years to drug
inflation).

CRS-9
Deductible
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
Standard Coverage: $250
No deductible.
Standard Coverage: $250
No deductible.
$250 (2003). Under certain
Not specified.
(2003).
(2003).
circumstances, the entity
administering the benefit
could waive the deductible
for generic drugs. (In this
case any coinsurance paid
would be credited toward the
deductible.)
Cost-Sharing
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
For 2003: After deductible,
Beneficiaries would pay 50%
For 2003: After deductible,
Beneficiaries would pay 50%
For 2003: After deductible,
A plan could not impose any
beneficiaries would pay 50%
of negotiated price up to the
beneficiaries would pay 50%
of negotiated price up to the
beneficiaries would pay 50%
premium or cost-sharing on a
on the next $2,100 of costs.
coverage limit for a given
on the next $2,100 of costs.
coverage limit for a given
on the next $6,500 ($6,750
beneficiary whose family
year. Benefit managers
year. Private entities
total, $3,500 total out-of-
income was below 100% of
could propose a lower
administering the benefit
pocket) and 25% of the next
the poverty line. Any such
percentage for certain classes
could propose a lower
$2,000 ($8,750 total, $4000
charges imposed on other
of drugs, provided that
percentage for certain classes
total out-of-pocket). Under
persons would be set on a
aggregate costs would not be
of drugs, provided that
certain circumstances, the
sliding scale based on
increased.
aggregate costs would not be
entity administering the
income. The annual
increased.
benefit could reduce cost-
aggregate of such premiums
sharing. It could also require
or cost-sharing for all
higher cost-sharing for non-
Medicare beneficiaries in a
formulary drugs, except
family could not exceed 5%
where such drugs were
of the family’s annual
determined to be medically
income.
necessary.

CRS-10
Premium
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
PDPs would establish
Beneficiaries would pay a
All plans would be required
Beneficiaries would pay a
In general, beneficiaries
See cost-sharing, above.
premiums as part of
premium equal to 50% of
to charge a uniform premium
premium equal to 50% of
would pay a premium equal
negotiations with MBA.
program costs. (If a former
for individuals enrolled in
program costs. (Premiums
to 50% of program costs; the
Premiums could not vary
employer buys coverage for
the plan in the same service
paid by former employers
remaining 50% would be
among beneficiaries in a plan
former employees, it would
area. The Commissioner
would equal 2/3 of the
paid by the federal
provided they maintained
pay premiums equal to 2/3 of
would pay to each eligible
program cost.)
government. (Premiums paid
continuous drug coverage.
the program costs.)
entity the full amount of the
by former employers would
Estimated monthly premium
Estimated monthly premium
premium for each beneficiary
equal 2/3 of the program
for 2003 is $35-$40.
would be $26 for 2003.
minus administrative costs
cost.) Higher income
JUNE 24, 2000 REVISION:
levied on the plan.
beneficiaries would receive a
specifies premium would be
Beneficiaries would pay the
lower premium contribution
$25 in 2002 and would not
premium amount (less any
from the federal government.
be increased to reflect cost of
discount) in the same manner
Individuals with adjusted
placing limit on out-of-
as Part B premiums are paid
gross incomes between
pocket expenses.
(generally as a deduction
$75,000 and $100,000 and
from an individual’s social
couples with adjusted gross
security check). All
incomes between $150,000
beneficiaries would receive a
and $200,000 would have the
discount of at least 25%; this
government premium
discount would be included
contribution reduced from
as taxable income to the
50% to 25%, calculated on a
beneficiary.
sliding scale basis. (These
income amounts would be
adjusted for inflation as
measured by the consumer
price index for years after
2003). All beneficiaries
would receive a minimum
25% government subsidy.

CRS-11
Access to Negotiated Prices
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Mecare Expansion
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
for Needed Drugs (MEND)
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Act of 2000 (Senator
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
Plans would have to provide
Prices would be negotiated
Plans would have to provide
Prices would be negotiated
The contracting entities bid
Not specified.
access to negotiated prices
by benefit managers with
access to negotiated prices
by private entities with
would include a proposal for
(including applicable
manufacturers, wholesalers,
(including applicable
manufacturers, wholesalers,
the estimated prices for
discounts) even when no
and pharmacies.
discounts) even when no
and pharmacies.
covered drugs and projected
benefits are payable.
Beneficiaries would have
benefits are payable
annual increases in prices.
access to these prices even
Entities contracts with retail
after they hit the cap.
pharmacies would provide
that charges for drugs could
not exceed negotiated prices.

CRS-12
Federal Administration
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
NEW AGENCY –
NEW AGENCY – Not
NEW AGENCY –
NEW AGENCY – Not
NEW AGENCY - Not
NEW AGENCY – Not
Establishes Medicare
applicable.
Establishes a new executive
applicable.
applicable. However, a 19-
applicable.
Benefits Administration
branch agency, Competitive
member Medicare Pharmacy
(MBA) within HHS.
Medicare Agency (CMA),
and Therapeutics (P&T)
outside of HHS headed by a
Advisory Committee would
Commissioner. An
be established to advise the
independent 7-member
Secretary on policies related
Medicare Competition and
to administering the new
Prescription Drug Advisory
benefit.
Board would be set up to
advise the Commissioner.
FUNCTIONS – The MBA
FUNCTIONS – HHS would
FUNCTIONS – The MCA
FUNCTIONS – HHS would
FUNCTIONS: HHS would
FUNCTIONS - HHS would
would: administer both the
designate at least 15 service
would administer the
designate at least 15 service
establish at least 10 different
review state plans and
new Part D (drugs) and Part
areas nationwide and enter
prescription drug and
areas nationwide and enter
coverage areas nationwide. It
amendments; these would be
C (the M+C program); enter
into a contract with one
supplemental benefit
into a contract with one
would award at least two
considered approved unless
into contracts with PDPs;
entity to serve as the benefit
program under the new title
private entity to administer
contracts per area to entities
the Secretary notified the
negotiate terms and
manager for the area. The
XXII and the
the benefit for the area. The
to administer the benefit
state or group of states
conditions of contracts with
initial contract would be
Medicare+Choice program.
initial contract would be
unless only one entity met
within 45 days of either
PDPs, establish process to
awarded for 3-5 years and
(HHS would retain
awarded for 2-5 years and
the bidding requirements.
disapproval or the need for
administer subsidy program;
could be renewed
responsibility for the
would be subject to review
Each contract would be
additional information. A
make reinsurance payments
noncompetitively. In
traditional fee-for-service
after 2 years. In addition, the
awarded for 2-5 years. The
default program would be
to PDPs or M+C plans; and
addition, the Secretary would
program.) The
Secretary would determine
Secretary would have
established in a fiscal year
determine actuarial value of
determine monthly premiums
Commissioner would have
monthly premiums and
responsibility for conducting
for beneficiaries residing in a
coverage and annual percent
and conduct Part D
responsibility for: 1)
conduct Part D enrollment.
Part D enrollment,
state which failed to submit a
increases in standard
enrollment.
coordinating determinations
disseminating information
plan to the Secretary by the
coverage levels. The Office
of beneficiary eligibility and
regarding drug coverage
required date. For purposes
of Beneficiary Assistance
enrollment with the
including comparative
of the default program,
(OBA) within the MBA
Commissioner of Social
information on each entity
HCFA would: 1) establish
would carry out functions
Security; 2) negotiating the
contracting to administer the
procedures for making
related to beneficiaries
terms and conditions of
benefit in the area. The
eligibility determinations; 2)
including enrollment,
contracts with entities and
Secretary would determine
establish a process for
education, and dissemination
entering into and enforcing
the part D premium. The
accepting bids, awarding
of information on appeal
such contracts;
Secretary would make
contracts, and making
rights.
3)disseminating comparative
determinations (on the basis
payments to PBMs or other
information regarding
of tax return information
entities under such contracts;

CRS-13
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
benefits and quality; 4)
supplied by the Secretary of
and 3) establish policies and
disseminating of appeals
the Treasury and any
procedures for overseeing the
rights information; and 5)
information supplied by the
provision of assistance under
establishing a Medicare
beneficiary) of modified
the contracts. For FY 2001
beneficiary education
adjusted gross income (AGI)
only, HCFA would be
program. The Commissioner
for purposes of determining
permitted to contract with
would also make reinsurance
those high-income persons
PBMs or other entities
payments to plans. The
subject to higher premiums.
without using competitive
Commissioner could
bidding. Each contract
establish Medicare
would be for a uniform term
Consumer Coalitions to help
of at least 1 year and could
provide information to
be made automatically
beneficiaries.
renewable.

CRS-14
Federal Payments to Plans, Benefit Administrators, or States
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
The Administrator would
Payments would be made to
The Commissioner would
Payments would be made to
The Secretary would
The Secretary would make
provide reinsurance
benefit managers under
pay to each entity the full
private entities administering
establish procedures for
quarterly payments to each
payments for excess costs
terms of the contract. The
amount of the premium for
the benefit under terms of
making payments to
state with an approved plan
incurred in providing
Secretary could provide
each beneficiary minus
the contract. The Secretary
contracting entities under
from the state’s allotment.
coverage. Percentage of costs
incentives for cost and
administrative costs levied
could provide incentives for
which entities would be only
States would determine
subject to reinsurance
utilization management
on the plan. The
cost and utilization
subject to limited risk. The
payments to any benefit
payments would be increased
including: bonus and penalty
Commissioner would provide
management including:
procedures could include the
administrator. Under the
from 30% for costs over
incentives to encourage
for reinsurance payments
bonus and penalty incentives
use of risk corridors tied to
default program, the contract
$1,250 to 90% of costs
efficiency, incentives for
equal to 80% of costs
to encourage efficiency,
performance measures that
with the PBM or other entity
exceeding $1,550 but below
sharing of any benefit
exceeding $7,050 (the point
incentives for sharing of any
were agreed to under the
would specify the amount
$2,300; reinsurance
savings achieved, and risk
at which beneficiary out-of-
benefit savings achieved, and
contract as well as any other
and manner in which
payments also provided for
sharing arrangements related
pocket costs cease).
risk sharing arrangements
incentives the Secretary
payments would be made to
90% of costs exceeding
to benefit payments.
related to benefit payments.
determined appropriate.
such entity.
$6,000 out-of-pocket limit.
The Administrator would
also be authorized to provide
financial incentives to secure
access to plans.

CRS-15
Benefit Administration
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
The PDP sponsors and M+C
The benefit manager for an
Private entities and M+C
The private entity for an
Contracting entities and
State programs would be
organizations would offer
area would: establish,
plans would offer plans to
area would: establish,
M+C plans would offer plans
administered by the states.
plans to beneficiaries. They
through negotiations, a
beneficiaries. They would
through negotiations, a
to beneficiaries. They would
A state or group of states
would provide plan
schedule of prices for drugs;
provide plan information to
schedule of prices for drugs;
administer the benefit,
would submit a written plan
information to beneficiaries;
enter into participation
beneficiaries; have an
enter into participation
provide information to
to the Secretary of HHS
assure access to pharmacies;
agreements with pharmacies;
appeals process; maintain
agreements with pharmacies;
beneficiaries, enter contracts
which 1) described how the
assure quality; have an
process claims; maintain
records and patient
process claims; maintain
with retail pharmacies,
state, or group of states,
appeals process; and
records comply with program
confidentiality, and have in
records and comply with
comply with access
intended to use the funds;
maintain records and patient
quality requirements; and
place cost and utilization
program quality
requirements, have in place
and 2) included a description
confidentiality. PDP
have in place education
management programs.
requirements; and have in
appeals procedures, and
of the budget for the plan
sponsors would have to be
activities.
Entities would have to be
place education activities.
maintain records and patient
(updated periodically as
licensed by the state or meet
licensed by the state or meet
confidentiality.
necessary) and details on the
alternative requirements.
alternative requirements.
planned use of funds, sources
of the non-federal share of
plan expenditures, and any
cost-sharing requirements. A
state would be required to
submit a plan, which the
Secretary found met the
applicable requirements, by
September 1 prior to the start
of the fiscal year, except that
the submission for FY2001
would have to occur by
December 30, 2000.

CRS-16
Relationship to Medicare+Choice
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
If a M+C plan offered
Enrollees in managed care
If a M+C plan offered
Enrollees in managed care
Enrollees in managed care
No provision.
prescription drug coverage, it
plans would receive their
prescription drug coverage, it
plans would receive their
plans would receive their
would have to be “qualified
benefit through the M+C
would have to be “qualified
benefit through the M+C
benefit through the M+C
coverage.” Beneficiaries
organization.
coverage.” Beneficiaries
organization.
organization.
enrolled in plans offering
enrolled in plans offering
coverage would have to
coverage would have to
obtain coverage through the
obtain coverage through the
M+C.
M+C.
Cost Controls/Formularies
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
Plans could use formularies
Benefit managers could use
Entities could use cost
Private entities administering
Contracting entities could
Not specified.
and other cost and utilization
formularies and other cost
control mechanisms
the benefit could use
use mechanisms to provide
controls, including incentives
control measures established
customarily used in
formularies and other cost
benefits economically
to use generics. An enrollee
in their contracts.
employer-sponsored plans,
control measures established
including formularies,
would have the right to
Beneficiaries would be
including formularies, tiered
in their contracts.
alternative distribution
appeal to obtain coverage for
guaranteed access to
copayments (which places
Beneficiaries would be
methods and generic drug
a drug not on formulary if
off-formulary drugs when
higher cost-sharing for use of
guaranteed access to
substitution. Formularies
prescribing physician
medically necessary and
brand name instead of
off-formulary drugs when
would have to comply with
determined that
would have appeal rights
generic drugs or use of off-
medically necessary and
standards established by the
therapeutically similar drug
when coverage was denied.
formulary drugs), selective
would have appeal rights
Secretary in consultation
on the formulary was not as
contracting with providers of
when coverage was denied.
with the Medicare Pharmacy
effective or had significant
drugs, and mail order
and Therapeutics Advisory
adverse effects.
pharmacies. Entities would
Committee. Entities would
be required to have a process
be required to cover
for beneficiaries to appeal
nonformulary drugs when
denials of coverage based on
determined to be medically
application of the formulary.
necessary.

CRS-17
Low-Income Subsidies
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
BENEFICIARIES AT OR
BENEFICIARIES AT OR
BENEFICIARIES AT OR
BENEFICIARIES AT OR
BENEFICIARIES AT OR
The Secretary would make
BELOW 135% OF
BELOW 135% OF
BELOW 135% OF
BELOW 135% OF
BELOW 135% OF
quarterly payments to each
POVERTY – Premium
POVERTY – Medicaid
POVERTY-Individuals
POVERTY–Medicaid would
POVERTY– Medicaid would
state with an approved plan
subsidy equal to 100% of
would pay Part D drug
would have a discount on
pay Part D drug premiums
pay Part D premiums,
from the state’s allotment.
premium for standard
premiums and coinsurance
their premium equal to 100%
and coinsurance charges (up
coinsurance, and deductible
BENEFICIARIES AT OR
coverage (or actuarially
charges (up to the benefit
of the value of standard drug
to the benefit limit).
amounts. Regular
BELOW 135% OF
equivalent) coverage. Cost
limit). ABOVE 135% AND
coverage provided under the
ABOVE 135% AND
federal/state matching would
POVERTY - The federal
sharing would be nominal;
BELOW 150% OF
plan. Beneficiary cost-
BELOW 150% OF
apply for those below 120%
payment from the allotment
subsidy could not exceed
POVERTY – Medicaid
sharing for such individuals
POVERTY – Medicaid
of poverty; 100% federal
would be 100% of the costs
95% of maximum amount
would pay, on a sliding
would be nominal. ABOVE
would pay, on a sliding scale
matching would apply for
incurred. ALL OTHER
that could be incurred for
scale, based on income, a
135% AND BELOW 150%
based on income, a portion of
those between 120/% and
LOW-INCOME
standard coverage. ABOVE
portion of the premium. No
OF POVERTY – There
the premium. No cost-
135% of poverty. ABOVE
BENEFICIARIES AND, IF
135% AND BELOW 150%
cost-sharing subsidy. For
would be a sliding scale
sharing subsidy. For
135% AND BELOW 150%
APPLICABLE,
OF POVERTY – Sliding
“Qualified Medicare drug
discount on their premiums
“qualified Medicare drug
OF POVERTY –
BENEFICIARIES WITH
scale premium subsidy from
beneficiaries” (persons with
ranging from 100% of the
beneficiaries” (persons with
Beneficiaries would pay a
HIGH DRUG COSTS - The
100% (at 135% of poverty)
incomes between 100% and
value of standard drug
incomes between 100% and
reduced premium, calculated
federal payment would equal
to 0% (at 150%). No cost-
150% of poverty and assets
coverage at 135% of poverty
150% of poverty and assets
on a sliding scale basis. The
an enhanced federal
sharing subsidy.
below $4,000 for an
to 25% of such value at
below $4,000 for an
federal matching rate would
matching rate, defined as
individual and $6,000 for a
150% of poverty. No cost-
individual and $6,000 for a
be 100%.
the federal matching rate for
couple) benefits would be
sharing subsidy.
couple) benefits would be
the state’s Medicaid program
paid 100% by the federal
paid 100% by the federal
plus 30% of the percentage
government for persons not
government for persons not
point difference between this
otherwise eligible for full
otherwise eligible for full
rate and 100%. In no case
Medicaid benefits.
Medicaid benefits.
could the federal rate exceed
85%.

CRS-18
Relationship to Medicaid
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
Part D would be the primary
States could choose to pay
The new Title XXII would
States could choose to pay
Part D would be the primary
The new program would be
payor with Medicaid paying
Part D premiums and cost-
be the primary payer with
Part D premiums and cost-
payor with Medicaid paying
separate from Medicaid.
remaining costs for dual
sharing for those persons
Medicaid paying remaining
sharing for those persons
remaining costs for dual
Persons eligible for drug
eligibles. There would be a
dually eligible for Medicare
costs for dual eligibles.
dually eligible for Medicare
eligibles. States would make
benefits under Medicaid
phase-in of federal
and full Medicaid benefits
There would be a phase-in of
and full Medicaid benefits
eligibility determinations for
would not be eligible for
assumption of Medicaid
instead of providing drug
federal assumption of
instead of providing drug
persons below 150% of
benefits under Title XXII.
responsibility for premiums
benefits through Medicaid. If
Medicaid responsibility for
benefits through Medicaid. If
poverty. Regular
The one exception is the case
and cost-sharing for dual
they elected this option,
premiums and cost-sharing
they elected this option,
federal/state matching would
of a state which had
eligibles. States would make
States would have to cover
for dual eligibles. States
states would have to cover to
apply for those below 120%
established a drug program
eligibility determinations
all dually eligible persons
would make eligibility
all dually eligible persons
of poverty; 100% federal
for Medicare beneficiaries
with phase-in of increasing
under Part D, buy all
determinations with phase-in
under Part D, buy all
matching would apply for
under a Medicaid waiver.
matching rates for these
prescriptions for such
of increasing matching rates
prescriptions for such
those between 120/% and
activities. Medicaid drug
individuals according to Part
for these activities.
individuals according to Part
150% of poverty.
price rebates would not apply
D requirements, and cover
D requirements, and cover
for dual eligibles where a
drugs in excess of the Part D
drugs in excess of the Part D
PDP or M+C plan had
limits. For persons below
limits. For persons below
already negotiated discounts
100% of poverty, Medicaid
100% of poverty, Medicaid
under Part D.
would have to pay Part D
would have to pay Part D
premium and cost-sharing
premium and cost-sharing
charges. For all persons
charges. For all persons
below 100% of poverty, the
below 100% of poverty, the
current federal/state
current federal/state
matching rate would apply.
matching rate would apply.
(See also LOW-INCOME
(See also LOW-INCOME
SUBSIDIES, above).
SUBSIDIES, above).
Medicaid drug price rebates
Medicaid drug price rebates
would not apply to
would not apply to
prescription drugs purchased
prescription drugs purchased
under Part D.
under Part D.

CRS-19
Relationship to Private Plans
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
Medigap
No new Medigap
Medigap policies would be
No new Medigap
Not specified.
Medigap plans offering drug
A policyholder could request
prescription drug policies
revised to conform to the
prescription drug policies
coverage would have to be
suspension of benefits and
could be issued after January
revised program structure.
could be issued after January
revised to complement, not
premiums payable under a
1, 2003. Beneficiaries
1, 2003. Beneficiaries
duplicate Part D. The revised
Medigap policy during the
currently enrolled in
currently enrolled in
drug packages could not offer
period the policyholder was
Medigap plans with drug
Medigap plans with drug
coverage for either the Part
covered under a state
coverage could keep that
coverage could keep that
D deductible or for more
program or the default
coverage. Beneficiaries
coverage. Beneficiaries
than 90% of the Part D
program. The policyholder
terminating enrollment in a
terminating enrollment in a
coinsurance.
would automatically be
Medigap policy with a drug
Medigap policy with a drug
reinstated in the Medigap
benefit would be guaranteed
benefit would be guaranteed
plan if they notified the plan
enrollment in a non-drug
enrollment in a non-drug
within 90 days of the loss of
policy if enrollment occurred
policy if enrollment occurred
coverage under the state
within 63 days of prior
within 63 days of prior
program or the default
coverage.
coverage.
program.
Relationship to Group Health Plans
Qualified retiree plans would
Employers would receive a
Qualified retiree plans would
Employers would receive a
Employers and other
No federal matching funds
be eligible for reinsurance
partial subsidy if their retiree
be eligible for reinsurance
partial subsidy if their retiree
sponsors of employer-based
would be available to the
subsidies. The sponsor of the
health coverage for drugs
subsidies. The sponsor of the
health coverage for drugs
retiree coverage would
extent a private insurer
plan would be required to
was at least as good as the
plan would be required to
was at least as good as the
receive a partial subsidy if
would have been obligated to
attest that coverage met
Part D benefit; the subsidy
attest that coverage met
Part D benefit; the subsidy
their retiree health coverage
provide assistance but for an
requirements for qualified
would equal b of the
requirements for qualified
would equal to b of the
for drugs was at least as good
exclusion provision in its
coverage.
amount the government
coverage.
amount the government
as the Part D benefit; the
insurance contract; private
would pay toward the
would pay toward the
subsidy would equal to b of
insurers covered under this
premium if the individual
premium if the individual
the amount the government
provision would include
were enrolled in Part D The
were enrolled in Part D The
would pay toward the
group health plans, service
Secretary would make these
Secretary would make these
premium if the individual
benefit plans, and health
premium subsidy payments
premium subsidy payments
were enrolled in Part D.
maintenance organizations.
to the health plan sponsor
to the health plan sponsor
used by the employer.
used by the employer.

CRS-20
Accounting Mechanism
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
A separate account — the
A separate account — the
A separate account — the
A separate account — the
Part D premiums would be
S. 3016 would appropriate
Medicare Prescription Drug
Prescription Drug Insurance
Medicare Prescription Drug
Prescription Drug Insurance
credited to the Part B trust
the following amounts for
Account — would be
Account — would be set up
Account — would be
Account — would be set up
fund, and Part D costs would
purposes of making
established within the Part B
within the Part B trust fund.
established within the Part B
within the Part B trust fund.
be paid from the Part B trust
allotments to the states: $1.2
trust fund. Payments under
Premiums would be credited
trust fund. Payments under
Premiums would be credited
fund. Part D costs would be
billion in FY2001, $4.2
Part D would be kept
to the account and benefit
the new Title XXII would be
to the account and benefit
excluded from the
billion in FY2002, $9.0
separate from all other Part
payments made from the
kept separate from all other
payments made from the
determination of the Part B
billion in FY2003, and $3.0
B funds.
account.
Part B funds. The annual
account.
premium. The bill would
billion in FY2004. The
reporting requirements for
authorize the appropriation
amounts under S. 3017
the Board of Trustees of the
of such sums as are
would be: $1.3 billion in FY
Part A and Part B trust funds
necessary, beginning in
2001; $4.6 billion in FY
would be expanded to
FY2001, for the
2002; $9.7 billion in FY
include a report on the two
administration of the Part D
2003; and $13.0 billion in
trust funds as well as the
program.
FY 2004. The Secretary
Medicare Prescription Drug
would allocate the amount
Account. The report would
appropriated in a fiscal year
include information on total
to the states with approved
amounts obligated from the
plans. The amount available
general revenues of the
for allocation would be
Treasury for benefits; a
reduced by any amounts
historical overview of
made available to the
spending; 10-year and 50-
territories (0.25% from the
year projections; and overall
total amount available). The
spending from general
amount allocated to each
revenues in relation to gross
state would bear the same
domestic product (GDP)
ratio to the total allotment
growth.
amount as the ratio of the
number of the state Medicare
beneficiaries below 150% of
poverty (175% under S.
3017) bore to the number of
such beneficiaries in all
states with plans. A
minimum allotment available
to any state would be 0.5
percent of total allotments

CRS-21
H.R. 4680 Medicare Rx
S. 2342 Medicare
S. 2807, Medicare
S. 2541 Medicare
S. 2758 Medicare
S. 3016 and S. 3017
2000 Act (Representative
Modernization Act
Prescription Drug and
Expansion for Needed
Outpatient Drug (MOD)
Medicare Temporary Drug
Thomas, et al.)
(Senator Moynihan by
Modernization Act of 2000
Drugs (MEND) Act of 2000
Act of 2000 (Senator
Assistance Act (Senator
request) Administration
(Senators Breaux and
(Senator Daschle et al.)
Graham et al.)
Roth et al.)
Bill
Frist)
(after subtracting amounts
for territories); if needed to
meet this requirement,
allotments otherwise
determined would be
proportionately adjusted. If a
state did not submit a plan to
the Secretary by the required
date, 90% of the allotment
for the state would be made
available to the Secretary for
purposes of administering
the default program; the
other 10% would be
redistributed among states
with plans.