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such amount as would provide for a benefits ratio of at least .85;
''(B) for 3 consecutive contract years, the Secretary shall not permit the enrollment of new enrollees under the plan for coverage during the second succeeding contract year; and
''(C) the Secretary shall terminate the plan contract if the plan fails to have such a medical loss ratio for 5 consecutive contract years.''.
SEC. 1174. STRENGTHENING AUDIT AUTHORITY.
(a) FOR PART C PAYMENTS RISK ADJUSTMENT.--
Section 1857(d)(1) of the Social Security Act (42 U.S.C.1395w-27(d)(1)) is amended by inserting after ''section 1858(c))'' the following: '', and data submitted with respect to risk adjustment under section 1853(a)(3)''.
(b) ENFORCEMENT OF AUDITS AND DEFICIENCIES.--
(1) IN GENERAL.--Section 1857(e) of such Act, as amended by section 1173, is amended by adding at the end the following new paragraph:
''(5) ENFORCEMENT OF AUDITS AND DEFICIENCIES.--
''(A) INFORMATION IN CONTRACT.--The Secretary shall require that each contract with an MA organization under this section shall in-
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clude terms that inform the organization of the provisions in subsection (d).
''(B) ENFORCEMENT AUTHORITY.--The Secretary is authorized, in connection with conducting audits and other activities under subsection (d), to take such actions, including pursuit of financial recoveries, necessary to address deficiencies identified in such audits or other activities.''.
(2) APPLICATION UNDER PART D.--For provision applying the amendment made by paragraph (1) to prescription drug plans under part D, see section 1860D-12(b)(3)(D) of the Social Security Act.
(c) EFFECTIVE DATE.--The amendments made by this section shall take effect on the date of the enactment of this Act and shall apply to audits and activities conducted for contract years beginning on or after January 1, 2011.
SEC. 1175. AUTHORITY TO DENY PLAN BIDS.
(a) IN GENERAL.--Section 1854(a)(5) of the Social Security Act (42 U.S.C. 1395w-24(a)(5)) is amended by adding at the end the following new subparagraph:
''(C) REJECTION OF BIDS.--Nothing in this section shall be construed as requiring the
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Secretary to accept any or every bid by an MA organization under this subsection.''.
(b) APPLICATIONUNDERPARTD.--Section 1860D-11(d) of such Act (42 U.S.C. 1395w-111(d)) is amended by adding at the end the following new paragraph:
''(3) REJECTIONOF BIDS.--Paragraph (5)(C) of section 1854(a) shall apply with respect to bids under this section in the same manner as it applies to bids by an MA organization under such section.''. (c) EFFECTIVEDATE.--The amendments made by this section shall apply to bids for contract years beginning on or after January 1, 2011.
PART 3--TREATMENT OF SPECIAL NEEDS PLANS
SEC. 1176. LIMITATION ON ENROLLMENT OUTSIDE OPEN ENROLLMENT PERIOD OF INDIVIDUALS INTO CHRONIC CARE SPECIALIZED MA PLANS FOR SPECIAL NEEDS INDIVIDUALS.
Section 1859(f)(4) of the Social Security Act (42 U.S.C. 1395w-28(f)(4)) is amended by adding at the end the following new subparagraph:
''(C) The plan does not enroll an individual on or after January 1, 2011, other than during an annual, coordinated open enrollment period or when at the time of the diagnosis of the disease or condition that qualifies the individual as
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an individual described in subsection (b)(6)(B)(iii).''.
SEC. 1177. EXTENSION OF AUTHORITY OF SPECIAL NEEDS PLANS TO RESTRICT ENROLLMENT.
(a) INGENERAL.--Section 1859(f)(1) of the Social Security Act (42 U.S.C. 1395w-28(f)(1)) is amended by striking ''January 1, 2011'' and inserting ''January 1, 2013 (or January 1, 2016, in the case of a plan described in section 1177(b)(1) of the America's Affordable Health Choices Act of 2009)''.
(b) GRANDFATHERINGOFCERTAINPLANS.--
(1) PLANS DESCRIBED.--For purposes of section 1859(f)(1) of the Social Security Act (42 U.S.C. 1395w-28(f)(1)), a plan described in this paragraph is a plan that had a contract with a State that had a State program to operate an integrated Medicaid-Medicare program that had been approved by the Centers for Medicare & Medicaid Services as of January 1, 2004.
(2) ANALYSIS; REPORT.--The Secretary of Health and Human Services shall provide, through a contract with an independent health services evaluation organization, for an analysis of the plans described in paragraph (1) with regard to the impact of such plans on cost, quality of care, patient satis-
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faction, and other subjects as specified by the Secretary. Not later than December 31, 2011, the Secretary shall submit to Congress a report on such analysis and shall include in such report such recommendations with regard to the treatment of such plans as the Secretary deems appropriate.
Subtitle E--Improvements to Medicare Part D
SEC. 1181. ELIMINATION OF COVERAGE GAP.
(a) INGENERAL.--Section 1860D-2(b) of such Act (42 U.S.C. 1395w-102(b)) is amended--
(1) in paragraph (3)(A), by striking ''paragraph (4)'' and inserting ''paragraphs (4) and (7)'';
(2) in paragraph (4)(B)(i), by inserting ''subject to paragraph (7)'' after ''purposes of this part''; and
(3) by adding at the end the following new paragraph:
''(7) PHASED-IN ELIMINATION OF COVERAGE GAP.--
''(A) INGENERAL.--For each year beginning with 2011, the Secretary shall consistent with this paragraph progressively increase the initial coverage limit (described in subsection (b)(3)) and decrease the annual out-of-pocket
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threshold from the amounts otherwise computed until there is a continuation of coverage from the initial coverage limit for expenditures incurred through the total amount of expenditures at which benefits are available under paragraph (4).
''(B) INCREASE IN INITIAL COVERAGE LIMIT.--For a year beginning with 2011, the initial coverage limit otherwise computed without regard to this paragraph shall be increased by 1⁄2of the cumulative phase-in percentage (as defined in subparagraph (D)(ii) for the year) times the out-of-pocket gap amount (as defined in subparagraph (E)) for the year.
''(C) DECREASEINANNUALOUT-OF-POCKET THRESHOLD.--For a year beginning with 2011, the annual out-of-pocket threshold otherwise computed without regard to this paragraph shall be decreased by 1⁄2 of the cumulative phase-in percentage of the out-of-pocket gap amount for the year multiplied by 1.75.
''(D) PHASE-IN.--For purposes of this paragraph:
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''(i) ANNUAL PHASE-IN PERCENTAGE.--The term 'annual phase-in percentage' means--
''(I) for 2011, 13 percent;
''(II) for 2012, 2013, 2014, and 2015, 5 percent;
''(III) for 2016 through 2018, 7.5 percent; and
''(IV) for 2019 and each subsequent year, 10 percent.
''(ii) CUMULATIVE PHASE-IN PERCENTAGE.--The term 'cumulative phase-in percentage' means for a year the sum of the annual phase-in percentage for the year and the annual phase-in percentages for each previous year beginning with 2011, but in no case more than 100 percent.
''(E) OUT-OF-POCKET GAP AMOUNT.--For purposes of this paragraph, the term 'out-of-pocket gap amount' means for a year the amount by which--
''(i) the annual out-of-pocket thresh-old specified in paragraph (4)(B) for the
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year (as determined as if this paragraph did not apply), exceeds
''(ii) the sum of--
''(I) the annual deductible under paragraph (1) for the year; and
''(II) 1⁄4 of the amount by which the initial coverage limit under paragraph (3) for the year (as determined as if this paragraph did not apply) exceeds such annual deductible.''.
(b) REQUIRING DRUG MANUFACTURERS TO PROVIDE DRUG REBATES FOR FULL-BENEFIT DUAL ELIGIBLES.--
(1) INGENERAL.--Section 1860D-2 of the Social Security Act (42 U.S.C. 1396r-8) is amended--
(A) in subsection (e)(1), in the matter before subparagraph (A), by inserting ''and subsection (f)'' after ''this subsection''; and
(B) by adding at the end the following new subsection:
''(f) PRESCRIPTION DRUG REBATE AGREEMENT FOR FULL-BENEFIT DUAL ELIGIBLE INDIVIDUALS.--
''(1) INGENERAL.--In this part, the term 'covered part D drug' does not include any drug or biologic that is manufactured by a manufacturer that
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has not entered into and have in effect a rebate agreement described in paragraph 2
''(2) REBATE AGREEMENT.--A rebate agreement under this subsection shall require the manufacturer to provide to the Secretary a rebate for each rebate period (as defined in paragraph (6)(B)) ending after December 31, 2010, in the amount specified in paragraph (3) for any covered part D drug of the manufacturer dispensed after December 31, 2010, to any full-benefit dual eligible individual (as defined in paragraph (6)(A)) for which payment was made by a PDP sponsor under part D or a MA organization under part C for such period. Such rebate shall be paid by the manufacturer to the Secretary not later than 30 days after the date of receipt of the information described in section 1860D- 12(b)(7), including as such section is applied under section 1857(f)(3).
''(3) REBATE FOR FULL-BENEFIT DUAL ELIGIBLE MEDICARE DRUG PLAN ENROLLEES.--
''(A) INGENERAL.--The amount of the rebate specified under this paragraph for a manufacturer for a rebate period, with respect to each dosage form and strength of any covered part D drug provided by such manufacturer
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and dispensed to a full-benefit dual eligible individual, shall be equal to the product of--
''(i) the total number of units of such dosage form and strength of the drug so provided and dispensed for which payment was made by a PDP sponsor under part D or a MA organization under part C for the rebate period (as reported under section 1860D-12(b)(7), including as such section is applied under section 1857(f)(3)); and
''(ii) the amount (if any) by which--
''(I) the Medicaid rebate amount (as defined in subparagraph (B)) for such form, strength, and period, ex-ceeds ''(II) the average Medicare drug program full-benefit dual eligible rebate amount (as defined in subparagraph (C)) for such form, strength, and period.
''(B) MEDICAID REBATE AMOUNT.--For purposes of this paragraph, the term 'Medicaid rebate amount' means, with respect to each dosage form and strength of a covered part D
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drug provided by the manufacturer for a rebate period--
''(i) in the case of a single source drug or an innovator multiple source drug, the amount specified in paragraph (1)(A)(ii) of section 1927(b) plus the amount, if any, specified in paragraph (2)(A)(ii) of such section, for such form, strength, and period; or
''(ii) in the case of any other covered outpatient drug, the amount specified in paragraph (3)(A)(i) of such section for such form, strength, and period.
''(C) AVERAGE MEDICARE DRUG PROGRAM FULL-BENEFIT DUAL ELIGIBLE REBATE AMOUNT.--For purposes of this subsection, the term 'average Medicare drug program full-benefit dual eligible rebate amount' means, with respect to each dosage form and strength of a covered part D drug provided by a manufacturer for a rebate period, the sum, for all PDP sponsors under part D and MA organization administering a MA-PD plan under part C, of--
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''(i) the product, for each such sponsor or organization, of--
''(I) the sum of all rebates, discounts, or other price concessions (not taking into account any rebate provided under paragraph (2) for such dosage form and strength of the drug dispensed, calculated on a per-unit basis, but only to the extent that any such rebate, discount, or other price concession applies equally to drugs dispensed to full-benefit dual eligible Medicare drug plan enrollees and drugs dispensed to PDP and MA-PD enrollees who are not full-benefit dual eligible individuals; and
''(II) the number of the units of such dosage and strength of the drug dispensed during the rebate period to full-benefit dual eligible individuals enrolled in the prescription drug plans administered by the PDP sponsor or the MA-PD plans administered by the MA-PD organization; divided by
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''(ii) the total number of units of such dosage and strength of the drug dispensed during the rebate period to full-benefit dual eligible individuals enrolled in all prescription drug plans administered by PDP sponsors and all MA-PD plans administered by MA-PD organizations.
''(4) LENGTHOFAGREEMENT.--The provisions of paragraph (4) of section 1927(b) (other than clauses (iv) and (v) of subparagraph (B)) shall apply to rebate agreements under this subsection in the same manner as such paragraph applies to a rebate agreement under such section.
''(5) OTHER TERMS AND CONDITIONS.--The Secretary shall establish other terms and conditions of the rebate agreement under this subsection, including terms and conditions related to compliance, that are consistent with this subsection.
''(6) DEFINITIONS.--In this subsection and section 1860D-12(b)(7):
''(A) FULL-BENEFIT DUAL ELIGIBLE INDIVIDUAL.--The term 'full-benefit dual eligible individual' has the meaning given such term in section 1935(c)(6).
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''(B) REBATEPERIOD.--The term 'rebate period' has the meaning given such term in section 1927(k)(8).''.
(2) REPORTING REQUIREMENT FOR THE DETERMINATION AND PAYMENT OF REBATES BY MANUFACTURES RELATED TO REBATE FOR FULL-BENEFIT DUAL ELIGIBLE MEDICARE DRUG PLAN ENROLLEES.--
(A) REQUIREMENTS FOR PDP SPONSORS.--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:
''(7) REPORTING REQUIREMENT FOR THE DETERMINATION AND PAYMENT OF REBATES BY MANUFACTURERS RELATED TO REBATE FOR FULL-BENEFIT DUAL ELIGIBLE MEDICARE DRUG PLAN ENROLLEES.--
''(A) IN GENERAL.--For purposes of the rebate under section 1860D-2(f) for contract years beginning on or after January 1, 2011, each contract entered into with a PDP sponsor under this part with respect to a prescription drug plan shall require that the sponsor comply with subparagraphs (B) and (C).
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''(B) REPORTFORMANDCONTENTS.--Not later than 60 days after the end of each rebate period (as defined in section 1860D-2(f)(6)(B)) within such a contract year to which such section applies, a PDP sponsor of a prescription drug plan under this part shall report to each manufacturer--
''(i) information (by National Drug Code number) on the total number of units of each dosage, form, and strength of each drug of such manufacturer dispensed to full-benefit dual eligible Medicare drug plan enrollees under any prescription drug plan operated by the PDP sponsor during the rebate period;
''(ii) information on the price discounts, price concessions, and rebates for such drugs for such form, strength, and period;
''(iii) information on the extent to which such price discounts, price conces- sions, and rebates apply equally to full- benefit dual eligible Medicare drug plan enrollees and PDP enrollees who are not
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full-benefit dual eligible Medicare drug plan enrollees; and
''(iv) any additional information that the Secretary determines is necessary to enable the Secretary to calculate the average Medicare drug program full-benefit dual eligible rebate amount (as defined in paragraph (3)(C) of such section), and to determine the amount of the rebate required under this section, for such form, strength, and period. Such report shall be in a form consistent with a standard reporting format established by the Secretary.
''(C) SUBMISSION TO SECRETARY.--Each PDP sponsor shall promptly transmit a copy of the information reported under subparagraph (B) to the Secretary for the purpose of audit oversight and evaluation.
''(D) CONFIDENTIALITY OF INFORMATION.--The provisions of subparagraph (D) of section 1927(b)(3), relating to confidentiality of information, shall apply to information reported by PDP sponsors under this paragraph in the same manner that such provisions apply to in-
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formation disclosed by manufacturers or wholesalers under such section, except--
''(i) that any reference to 'this section' in clause (i) of such subparagraph shall be treated as being a reference to this section;
''(ii) the reference to the Director of the Congressional Budget Office in clause (iii) of such subparagraph shall be treated as including a reference to the Medicare Payment Advisory Commission; and
''(iii) clause (iv) of such subparagraph shall not apply.
''(E) OVERSIGHT.--Information reported under this paragraph may be used by the Inspector General of the Department of Health and Human Services for the statutorily authorized purposes of audit, investigation, and evaluations.
''(F) PENALTIES FOR FAILURE TO PROVIDE TIMELY INFORMATION AND PROVISION OF FALSE INFORMATION.--In the case of a PDP sponsor--
''(i) that fails to provide information required under subparagraph (B) on a
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timely basis, the sponsor is subject to a civil money penalty in the amount of $10,000 for each day in which such information has not been provided; or
''(ii) that knowingly (as defined in section 1128A(i)) provides false information under such subparagraph, the sponsor is subject to a civil money penalty in an amount not to exceed $100,000 for each item of false information. Such civil money penalties are in addition to other penalties as may be prescribed by law. The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under this subparagraph in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).''.
(B) APPLICATION TO MA ORGANIZATIONS.--Section 1857(f)(3) of the Social Security Act (42 U.S.C. 1395w-27(f)(3)) is amended by adding at the end the following:
''(D) REPORTING REQUIREMENT RELATED TO REBATE FOR FULL-BENEFIT DUAL ELIGIBLE MEDICARE DRUG PLAN ENROLLEES.--Section 1860D-12(b)(7).''.
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(3) DEPOSIT OF REBATES INTO MEDICARE PRESCRIPTION DRUG ACCOUNT.--Section 1860D-16(c) of such Act (42 U.S.C. 1395w-116(c)) is amended by adding at the end the following new paragraph:
''(6) REBATE FOR FULL-BENEFIT DUAL ELIGIBLE MEDICARE DRUG PLAN ENROLLEES.--Amounts paid under a rebate agreement under section 1860D-2(f) shall be deposited into the Account and shall be used to pay for all or part of the gradual elimination of the coverage gap under section 1860D-2(b)(7).''.
SEC. 1182. DISCOUNTS FOR CERTAIN PART D DRUGS IN ORIGINAL COVERAGE GAP.
Section 1860D-2 of the Social Security Act (42 U.S.C. 1395w-102), as amended by section 1181(a), is amended--
(1) in subsection (b)(4)(C)(ii), by inserting ''subject to subsection (g)(2)(C),'' after ''(ii)'';
(2) in subsection (e)(1), in the matter before subparagraph (A), by striking ''subsection (f)'' and inserting ''subsections (f) and (g)'' after ''this subsection''; and
(3) by adding at the end the following new subsection:
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''(g) REQUIREMENT FOR MANUFACTURER DISCOUNT AGREEMENT FOR CERTAIN QUALIFYING DRUGS.--
''(1) INGENERAL.--In this part, the term 'covered part D drug' does not include any drug or biologic that is manufactured by a manufacturer that has not entered into and have in effect for all qualifying drugs (as defined in paragraph (5)(A)) a discount agreement described in paragraph (2).
''(2) DISCOUNTAGREEMENT.--
''(A) PERIODIC DISCOUNTS.--A discount agreement under this paragraph shall require the manufacturer involved to provide, to each PDP sponsor with respect to a prescription drug plan or each MA organization with respect to each MA-PD plan, a discount in an amount specified in paragraph (3) for qualifying drugs (as defined in paragraph (5)(A)) of the manufacturer dispensed to a qualifying enrollee after December 31, 2010, insofar as the individual is in the original gap in coverage (as defined in paragraph (5)(E)).
''(B) DISCOUNTAGREEMENT.--Insofar as not inconsistent with this subsection, the Secretary shall establish terms and conditions of such agreement, including terms and conditions
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relating to compliance, similar to the terms and conditions for rebate agreements under paragraphs (2), (3), and (4) of section 1927(b), except that--
''(i) discounts shall be applied under this subsection to prescription drug plans and MA-PD plans instead of State plans under title XIX;
''(ii) PDP sponsors and MA organizations shall be responsible, instead of States, for provision of necessary utilization information to drug manufacturers; and
''(iii) sponsors and MA organizations shall be responsible for reporting information on drug-component negotiated price, instead of other manufacturer prices.
''(C) COUNTING DISCOUNT TOWARD TRUE OUT-OF-POCKET COSTS.--Under the discount agreement, in applying subsection (b)(4), with regard to subparagraph (C)(i) of such subsection, if a qualified enrollee purchases the qualified drug insofar as the enrollee is in an actual gap of coverage (as defined in paragraph (5)(D)), the amount of the discount under the
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agreement shall be treated and counted as costs incurred by the plan enrollee.
''(3) DISCOUNTAMOUNT.--The amount of the discount specified in this paragraph for a discount period for a plan is equal to 50 percent of the amount of the drug-component negotiated price (as defined in paragraph (5)(C)) for qualifying drugs for the period involved.
''(4) ADDITIONALTERMS.--In the case of a discount provided under this subsection with respect to a prescription drug plan offered by a PDP sponsor or an MA-PD plan offered by an MA organization, if a qualified enrollee purchases the qualified drug--
''(A) insofar as the enrollee is in an actual gap of coverage (as defined in paragraph (5)(D)), the sponsor or plan shall provide the discount to the enrollee at the time the enrollee pays for the drug; and
''(B) insofar as the enrollee is in the portion of the original gap in coverage (as defined in paragraph (5)(E)) that is not in the actual gap in coverage, the discount shall not be applied against the negotiated price (as defined in subsection (d)(1)(B)) for the purpose of calculating the beneficiary payment.
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''(5) DEFINITIONS.--In this subsection:
''(A) QUALIFYING DRUG.--The term 'qualifying drug' means, with respect to a prescription drug plan or MA-PD plan, a drug or biological product that--
''(i)(I) is a drug produced or distributed under an original new drug application approved by the Food and Drug Administration, including a drug product marketed by any cross-licensed producers or distributors operating under the new drug application;
''(II) is a drug that was originally marketed under an original new drug application approved by the Food and Drug Administration; or
''(III) is a biological product as approved under Section 351(a) of the Public Health Services Act;
''(ii) is covered under the formulary of the plan; and
''(iii) is dispensed to an individual who is in the original gap in coverage.
''(B) QUALIFYING ENROLLEE.--The term 'qualifying enrollee' means an individual en-
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rolled in a prescription drug plan or MA-PD plan other than such an individual who is a subsidy-eligible individual (as defined in section 1860D-14(a)(3)).
''(C) DRUG-COMPONENT NEGOTIATED PRICE.--The term 'drug-component negotiated price' means, with respect to a qualifying drug, the negotiated price (as defined in subsection (d)(1)(B)), as determined without regard to any dispensing fee, of the drug under the prescription drug plan or MA-PD plan involved.
''(D) ACTUAL GAP IN COVERAGE.--The term 'actual gap in coverage' means the gap in prescription drug coverage that occurs between the initial coverage limit (as modified under subparagraph (B) of subsection (b)(7)) and the annual out-of-pocket threshold (as modified under subparagraph (C) of such subsection).
''(E) ORIGINAL GAP INCOVERAGE.--The term 'original in gap coverage' means the gap in prescription drug coverage that would occur between the initial coverage limit (described in subsection (b)(3)) and the out-of-pocket thresh- old (as defined in subsection (b)(4))(B) if subsection (b)(7) did not apply.''.
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SEC. 1183. REPEAL OF PROVISION RELATING TO SUBMISSION OF CLAIMS BY PHARMACIES LOCATED IN OR CONTRACTING WITH LONG-TERM CARE FACILITIES.
(a) PART D SUBMISSION.--Section 1860D-12(b) of the Social Security Act (42 U.S.C. 1395w-112(b)), as amended by section 172(a)(1) of Public Law 110-275, is amended by striking paragraph (5) and redesignating paragraph (6) and paragraph (7), as added by section 1181(b)(2), as paragraph (5) and paragraph (6), respectively.
(b) SUBMISSION TO MA-PD PLANS.--Section 1857(f)(3) of the Social Security Act (42 U.S.C. 1395w-27(f)(3)), as added by section 171(b) of Public Law 110-275 and amended by section 172(a)(2) of such Public Law, is amended by striking subparagraph (B) and redesignating subparagraph (C) as subparagraph (B).
(c) EFFECTIVEDATE.--The amendments made by this section shall apply for contract years beginning with 2010.
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SEC. 1184. INCLUDING COSTS INCURRED BY AIDS DRUG ASSISTANCE PROGRAMS AND INDIAN HEALTH SERVICE IN PROVIDING PRESCRIPTION DRUGS TOWARD THE ANNUAL OUT-OF-POCKET THRESHOLD UNDER PART D.
(a) IN GENERAL.--Section 1860D-2(b)(4)(C) of the Social Security Act (42 U.S.C. 1395w-102(b)(4)(C)) is amended--
(1) in clause (i), by striking ''and'' at the end;
(2) in clause (ii)--
(A) by striking ''such costs shall be treated as incurred only if'' and inserting ''subject to clause (iii), such costs shall be treated as incurred only if'';
(B) by striking '', under section 1860D-14, or under a State Pharmaceutical Assistance Program''; and
(C) by striking the period at the end and inserting ''; and''; and
(3) by inserting after clause (ii) the following new clause:
''(iii) such costs shall be treated as incurred and shall not be considered to be reimbursed under clause (ii) if such costs are borne or paid--
''(I) under section 1860D-14;
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''(II) under a State Pharmaceutical Assistance Program;
''(III) by the Indian Health Service, an Indian tribe or tribal organization, or an urban Indian organization (as defined in section 4 of the Indian Health Care Improvement Act); or
''(IV) under an AIDS Drug Assistance Program under part B of title XXVI of the Public Health Service Act.''.
(b) EFFECTIVE DATE.--The amendments made by subsection (a) shall apply to costs incurred on or after January 1, 2011.
SEC. 1185. PERMITTING MID-YEAR CHANGES IN ENROLLMENT FOR FORMULARY CHANGES THAT ADVERSELY IMPACT AN ENROLLEE.
(a) INGENERAL.--Section 1860D-1(b)(3) of the Social Security Act (42 U.S.C. 1395w-101(b)(3)) is amended by adding at the end the following new subparagraph:
''(F) CHANGE IN FORMULARY RESULTING IN INCREASE IN COST-SHARING.--
''(i) IN GENERAL.--Except as provided in clause (ii), in the case of an individual enrolled in a prescription drug plan
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(or MA-PD plan) who has been prescribed and is using a covered part D drug while so enrolled, if the formulary of the plan is materially changed (other than at the end of a contract year) so to reduce the coverage (or increase the cost-sharing) of the drug under the plan.
''(ii) EXCEPTION.--Clause (i) shall not apply in the case that a drug is removed from the formulary of a plan because of a recall or withdrawal of the drug issued by the Food and Drug Administration, because the drug is replaced with a generic drug that is a therapeutic equivalent, or because of utilization management applied to--
''(I) a drug whose labeling includes a boxed warning required by the Food and Drug Administration under section 210.57(c)(1) of title 21, Code of Federal Regulations (or a successor regulation); or
''(II) a drug required under subsection (c)(2) of section 505-1 of the Federal Food, Drug, and Cosmetic
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Act to have a Risk Evaluation and Management Strategy that includes elements under subsection (f) of such section.''.
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall apply to contract years beginning on or after January 1, 2011.
Subtitle F--Medicare Rural Access Protections
SEC. 1191. TELEHEALTH EXPANSION AND ENHANCEMENTS.
(a) ADDITIONALTELEHEALTHSITE.----
(1) IN GENERAL.--Paragraph (4)(C)(ii) of section 1834(m) of the Social Security Act (42 U.S.C. 1395m(m)) is amended by adding at the end the following new subclause:
''(IX) A renal dialysis facility.''
(2) EFFECTIVE DATE.--The amendment made by paragraph (1) shall apply to services furnished on or after January 1, 2011.
(b) TELE HEALTH ADVISORY COMMITTEE.--
(1) ESTABLISHMENT.--Section 1868 of the Social Security Act (42 U.S.C. 1395ee) is amended--
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(A) in the heading, by adding at the end the following: ''TELEHEALTH ADVISORY COMMITTEE''; and
(B) by adding at the end the following new subsection:
''(c) TELEHEALTHADVISORYCOMMITTEE.--
''(1) INGENERAL.--The Secretary shall appoint a Telehealth Advisory Committee (in this subsection referred to as the 'Advisory Committee') to make recommendations to the Secretary on policies of the Centers for Medicare & Medicaid Services regarding telehealth services as established under section 1834(m), including the appropriate addition or deletion of services (and HCPCS codes) to those specified in paragraphs (4)(F)(i) and (4)(F)(ii) of such section and for authorized payment under paragraph (1) of such section.
''(2) MEMBERSHIP; TERMS.--
''(A) MEMBERSHIP.--
''(i) IN GENERAL.--The Advisory
Committee shall be composed of 9 members, to be appointed by the Secretary, of whom--
''(I) 5 shall be practicing physicians;
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''(II) 2 shall be practicing non-physician health care practitioners; and
''(III) 2 shall be administrators of telehealth programs.
''(ii) REQUIREMENTS FOR APPOINTING MEMBERS.--In appointing members of the Advisory Committee, the Secretary shall--
''(I) ensure that each member has prior experience with the practice of telemedicine or telehealth;
''(II) give preference to individuals who are currently providing telemedicine or telehealth services or who are involved in telemedicine or tele- health programs;
''(III) ensure that the membership of the Advisory Committee represents a balance of specialties and geographic regions; and
''(IV) take into account the recommendations of stakeholders.
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''(B) TERMS.--The members of the Advisory Committee shall serve for such term as the Secretary may specify.
''(C) CONFLICTSOFINTEREST.--An advisory committee member may not participate with respect to a particular matter considered in an advisory committee meeting if such member (or an immediate family member of such member) has a financial interest that could be affected by the advice given to the Secretary with respect to such matter.
''(3) MEETINGS.--The Advisory Committee shall meet twice each calendar year and at such other times as the Secretary may provide.
''(4) PERMANENTCOMMITTEE.--Section 14 of the Federal Advisory Committee Act (5 U.S.C. App.) shall not apply to the Advisory Committee.''
(2) FOLLOWING RECOMMENDATIONS.--Section 1834(m)(4)(F) of such Act (42 U.S.C. 1395m(m)(4)(F)) is amended by adding at the end the following new clause:
''(iii) RECOMMENDATIONS OF THE TELEHEALTH ADVISORY COMMITTEE.--In making determinations under clauses (i) and (ii), the Secretary shall take into ac-
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count the recommendations of the Telehealth Advisory Committee (established under section 1868(c)) when adding or deleting services (and HCPCS codes) and in establishing policies of the Centers for Medicare & Medicaid Services regarding the delivery of telehealth services. If the Secretary does not implement such a recommendation, the Secretary shall publish in the Federal Register a statement regarding the reason such recommendation was not implemented.''
(3) WAIVER OF ADMINISTRATIVE LIMITATION.--The Secretary of Health and Human Services shall establish the Telehealth Advisory Committee under the amendment made by paragraph (1) notwithstanding any limitation that may apply to the number of advisory committees that may be established (within the Department of Health and Human Services or otherwise).
SEC. 1192. EXTENSION OF OUTPATIENT HOLD HARMLESS PROVISION.
Section 1833(t)(7)(D)(i) of the Social Security Act (42 U.S.C. 1395l(t)(7)(D)(i)) is amended--
(1) in subclause (II)--
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(A) in the first sentence, by striking '''2010''and inserting ''2012''; and
(B) in the second sentence, by striking ''or 2009'' and inserting '', 2009, 2010, or 2011''; and (2) in subclause (III), by striking ''January 1, 2010'' and inserting ''January 1, 2012''.
SEC. 1193. EXTENSION OF SECTION 508 HOSPITAL RECLASSIFICATIONS.
Subsection (a) of section 106 of division B of the Tax Relief and Health Care Act of 2006 (42 U.S.C. 1395 note), as amended by section 117 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Public Law 110-173) and section 124 of the Medicare Improvements for Patients and Providers Act of 2008 (Public Law 110-275), is amended by striking ''September 30, 2009'' and inserting ''September 30, 2011''.
SEC. 1194. EXTENSION OF GEOGRAPHIC FLOOR FOR WORK.
Section 1848(e)(1)(E) of the Social Security Act (42 U.S.C. 1395w-4(e)(1)(E)) is amended by striking ''before January 1, 2010'' and inserting ''before January 1, 2012''.
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SEC. 1195. EXTENSION OF PAYMENT FOR TECHNICAL COMPONENT OF CERTAIN PHYSICIAN PATHOLOGY SERVICES.
Section 542(c) of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (as enacted into law by section 1(a)(6) of Public Law 106-554), as amended by section 732 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (42 U.S.C. 1395w-4 note), section 104 of division B of the Tax Relief and Health Care Act of 2006 (42 U.S.C. 1395w-4 note), section 104 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Public Law 110-173), and section 136 of the Medicare Improvements for Patients and Providers Act of 1008 (Public Law 110- 275), is amended by striking ''and 2009'' and inserting
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''2009, 2010, and 2011''.
SEC. 1196. EXTENSION OF AMBULANCE ADD-ONS.
(a) IN GENERAL.--Section 1834(l)(13) of the Social Security Act (42 U.S.C. 1395m(l)(13)) is amended--
(1) in subparagraph (A)--
(A) in the matter preceding clause (i), by striking ''before January 1, 2010'' and inserting ''before January 1, 2012''; and
(B) in each of clauses (i) and (ii), by striking ''before January 1, 2010'' and inserting ''before January 1, 2012''.
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(b) AIR AMBULANCE IMPROVEMENTS.--Section 146(b)(1) of the Medicare Improvements for Patients and Providers Act of 2008 (Public Law 110-275) is amended by striking ''ending on December 31, 2009'' and inserting ''ending on December 31, 2011''.
TITLE II--MEDICARE
BENEFICIARY IMPROVEMENTS
Subtitle A--Improving and Simplifying Financial Assistance for Low Income Medicare Beneficiaries
SEC. 1201. IMPROVING ASSETS TESTS FOR MEDICARE SAVINGS PROGRAM AND LOW-INCOME SUBSIDY PROGRAM.
(a) APPLICATION OF HIGHEST LEVEL PERMITTED UNDER LIS TO ALL SUBSIDY ELIGIBLE INDIVIDUALS.--
(1) IN GENERAL.--Section 1860D-14(a)(1) of the Social Security Act (42 U.S.C. 1395w-114(a)(1)) is amended in the matter before subparagraph (A), by inserting ''(or, beginning with 2012, paragraph (3)(E))'' after ''paragraph (3)(D)''.
(2) ANNUAL INCREASE IN LIS RESOURCE TEST.--Section 1860D-14(a)(3)(E)(i) of such Act (42 U.S.C. 1395w-114(a)(3)(E)(i)) is amended--
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(A) by striking ''and'' at the end of subclause (I);
(B) in subclause (II), by inserting ''(before 2012)'' after ''subsequent year'';
(C) by striking the period at the end of subclause (II) and inserting a semicolon;
(D) by inserting after subclause (II) the following new subclauses:
''(III) for 2012, $17,000 (or $34,000 in the case of the combined value of the individual's assets or resources and the assets or resources of the individual's spouse); and
''(IV) for a subsequent year, the dollar amounts specified in this sub- clause (or subclause (III)) for the previous year increased by the annual percentage increase in the consumer price index (all items; U.S. city average) as of September of such previous year.''; and
(E) in the last sentence, by inserting ''or
(IV)'' after ''subclause (II)''.
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(3) APPLICATION OF LIS TEST UNDER MEDICARE SAVINGS PROGRAM.--Section 1905(p)(1)(C) of such Act (42 U.S.C. 1396d(p)(1)(C)) is amended--
(A) by striking ''effective beginning with January 1, 2010'' and inserting ''effective for the period beginning with January 1, 2010, and ending with December 31, 2011''; and
(B) by inserting before the period at the end the following: ''or, effective beginning with January 1, 2012, whose resources (as so determined) do not exceed the maximum resource level applied for the year under subparagraph (E) of section 1860D-14(a)(3) (determined without regard to the life insurance policy exclusion provided under subparagraph (G) of such section) applicable to an individual or to the individual and the individual's spouse (as the case may be)''.
(b) EFFECTIVE DATE.--The amendments made by subsection (a) shall apply to eligibility determinations for income-related subsidies and medicare cost-sharing furnished for periods beginning on or after January 1, 2012.
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SEC. 1202. ELIMINATION OF PART D COST-SHARING FOR CERTAIN NON-INSTITUTIONALIZED FULL-BENEFIT DUAL ELIGIBLE INDIVIDUALS.
(a) IN GENERAL.--Section 1860D-14(a)(1)(D)(i) of the Social Security Act (42 U.S.C. 1395w-114(a)(1)(D)(i)) is amended--
(1) by striking ''INSTITUTIONALIZED INDIVIDUALS.--In'' and inserting ''ELIMINATION OF COSTSHARING FOR CERTAIN FULL-BENEFIT DUAL ELIGIBLE INDIVIDUALS.--
''(I) INSTITUTIONALIZED INDIVIDUALS.--In''; and
(2) by adding at the end the following new subclause:
''(II) CERTAIN OTHER INDIVIDUALS.--In the case of an individual who is a full-benefit dual eligible individual and with respect to whom there has been a determination that but for the provision of home and community based care (whether under section 1915, 1932, or under a waiver under section 1115) the individual would require the level of care provided in a hospital or a nursing facility or intermediate care facility for the mentally
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retarded the cost of which could be reimbursed under the State plan under title XIX, the elimination of any beneficiary coinsurance described in section 1860D-2(b)(2) (for all amounts through the total amount of expenditures at which benefits are available under section 1860D-2(b)(4)).''.
(b) EFFECTIVE DATE.--The amendments made by subsection (a) shall apply to drugs dispensed on or after January 1, 2011.
SEC. 1203. ELIMINATING BARRIERS TO ENROLLMENT.
(a) ADMINISTRATIVE VERIFICATION OF INCOME AND RESOURCES UNDER THE LOW-INCOME SUBSIDY PROGRAM.--
(1) IN GENERAL.--Clause (iii) of section 1860D-14(a)(3)(E) of the Social Security Act (42 U.S.C. 1395w-114(a)(3)(E)) is amended to read as follows:
''(iii) CERTIFICATION OF INCOME AND RESOURCES.--For purposes of applying this section--
''(I) an individual shall be permitted to apply on the basis of self-
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certification of income and resources; and
''(II) matters attested to in the application shall be subject to appropriate methods of verification without the need of the individual to provide additional documentation, except in extraordinary situations as determined by the Commissioner.''.
(2) EFFECTIVE DATE.--The amendment made by paragraph (1) shall apply beginning January 1, 2010.
(b) DISCLOSURES TO FACILITATE IDENTIFICATION OF INDIVIDUALS LIKELY TO BE INELIGIBLE FOR THE LOW-INCOME ASSISTANCE UNDER THE MEDICARE PRESCRIPTION DRUG PROGRAM TO ASSIST SOCIAL SECURITY ADMINISTRATION'S OUTREACH TO ELIGIBLE INDIVIDUALS.--For provision authorizing disclosure of return information to facilitate identification of individuals likely to be ineligible for low-income subsidies under Medicare prescription drug program, see section 1801.
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SEC. 1204. ENHANCED OVERSIGHT RELATING TO REIMBURSEMENTS FOR RETROACTIVE LOW INCOME SUBSIDY ENROLLMENT.
(a) IN GENERAL.--In the case of a retroactive LIS enrollment beneficiary who is enrolled under a prescription drug plan under part D of title XVIII of the Social Security Act (or an MA-PD plan under part C of such title), the beneficiary (or any eligible third party) is entitled to reimbursement by the plan for covered drug costs incurred by the beneficiary during the retroactive coverage period of the beneficiary in accordance with subsection (b) and in the case of such a beneficiary described in subsection (c)(4)(A)(i), such reimbursement shall be made automatically by the plan upon receipt of appropriate notice the beneficiary is eligible for assistance described in such subsection (c)(4)(A)(i) without further information required to be filed with the plan by the beneficiary.
(b) ADMINISTRATIVE REQUIREMENTS RELATING TO REIMBURSEMENTS.--
(1) LINE-ITEM DESCRIPTION.--Each reimbursement made by a prescription drug plan or MA-PD plan under subsection (a) shall include a line-item description of the items for which the reimbursement is made.
(2) TIMING OF REIMBURSEMENTS.--A prescription drug plan or MA-PD plan must make a reim-
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bursement under subsection (a) to a retroactive LIS enrollment beneficiary, with respect to a claim, not later than 45 days after--
(A) in the case of a beneficiary described in subsection (c)(4)(A)(i), the date on which the plan receives notice from the Secretary that the beneficiary is eligible for assistance described in such subsection; or (B) in the case of a beneficiary described in subsection (c)(4)(A)(ii), the date on which the beneficiary files the claim with the plan.
(3) REPORTING REQUIREMENT.--For each month beginning with January 2011, each prescription drug plan and each MA-PD plan shall report to the Secretary the following:
(A) The number of claims the plan has readjudicated during the month due to a beneficiary becoming retroactively eligible for subsidies available under section 1860D-14 of the Social Security Act.
(B) The total value of the readjudicated claim amount for the month.
(C) The Medicare Health Insurance Claims Number of beneficiaries for whom claims were readjudicated.
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(D) For the claims described in subparagraphs (A) and (B), an attestation to the Administrator of the Centers for Medicare & Medicaid Services of the total amount of reimbursement the plan has provided to beneficiaries for premiums and cost-sharing that the beneficiary overpaid for which the plan received payment from the Centers for Medicare & Medicaid Services.
(c) DEFINITIONS.--For purposes of this section:
(1) COVERED DRUG COSTS.--The term ''covered drug costs'' means, with respect to a retroactive LIS enrollment beneficiary enrolled under a prescription drug plan under part D of title XVIII of the Social Security Act (or an MA-PD plan under part C of such title), the amount by which--
(A) the costs incurred by such beneficiary during the retroactive coverage period of the beneficiary for covered part D drugs, premiums, and cost-sharing under such title; exceeds
(B) such costs that would have been incurred by such beneficiary during such period if the beneficiary had been both enrolled in the plan and recognized by such plan as qualified during such period for the low income subsidy
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under section 1860D-14 of the Social Security Act to which the individual is entitled.
(2) ELIGIBLE THIRD PARTY.--The term ''eligible third party'' means, with respect to a retroactive LIS enrollment beneficiary, an organization or other third party that is owed payment on behalf of such beneficiary for covered drug costs incurred by such beneficiary during the retroactive coverage period of such beneficiary.
(3) RETROACTIVE COVERAGE PERIOD.--The term ''retroactive coverage period'' means--
(A) with respect to a retroactive LIS enrollment beneficiary described in paragraph (4)(A)(i), the period--
(i) beginning on the effective date of the assistance described in such paragraph for which the individual is eligible; and
(ii) ending on the date the plan effectuates the status of such individual as so eligible; and
(B) with respect to a retroactive LIS enrollment beneficiary described in paragraph (4)(A)(ii), the period-- (i) beginning on the date the individual is both entitled to benefits under
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part A, or enrolled under part B, of title XVIII of the Social Security Act and eligible for medical assistance under a State plan under title XIX of such Act; and
(ii) ending on the date the plan effectuates the status of such individual as a full-benefit dual eligible individual (as defined in section 1935(c)(6) of such Act).
(4) RETROACTIVE LIS ENROLLMENT BENEFICIARY.--
(A) IN GENERAL.--The term ''retroactive LIS enrollment beneficiary'' means an individual who--
(i) is enrolled in a prescription drug plan under part D of title XVIII of the Social Security Act (or an MA-PD plan under part C of such title) and subsequently becomes eligible as a full-benefit dual eligible individual (as defined in section 1935(c)(6) of such Act), an individual receiving a low-income subsidy under section 1860D-14 of such Act, an individual receiving assistance under the Medicare Savings Program implemented under clauses (i), (iii), and (iv) of section
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1902(a)(10)(E) of such Act, or an individual receiving assistance under the supplemental security income program under section 1611 of such Act; or
(ii) subject to subparagraph (B)(i), is a full-benefit dual eligible individual (as defined in section 1935(c)(6) of such Act) who is automatically enrolled in such a plan under section 1860D-1(b)(1)(C) of such Act.
(B) EXCEPTION FOR BENEFICIARIES ENROLLED IN RFP PLAN.--
(i) IN GENERAL.--In no case shall an individual described in subparagraph (A)(ii) include an individual who is enrolled, pursuant to a RFP contract described in clause (ii), in a prescription drug plan offered by the sponsor of such plan awarded such contract.
(ii) RFP CONTRACT DESCRIBED.-- The RFP contract described in this section is a contract entered into between the Secretary and a sponsor of a prescription drug plan pursuant to the Centers for Medicare & Medicaid Services' request for proposals
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issued on February 17, 2009, relating to Medicare part D retroactive coverage for certain low income beneficiaries, or a similar subsequent request for proposals.
SEC. 1205. INTELLIGENT ASSIGNMENT IN ENROLLMENT.
(a) IN GENERAL.--Section 1860D-1(b)(1)(C) of the Social Security Act (42 U.S.C. 1395w-101(b)(1)(C)) is amended by adding after ''PDP region'' the following: ''or through use of an intelligent assignment process that is designed to maximize the access of such individual to necessary prescription drugs while minimizing costs to such individual and to the program under this part to the greatest extent possible. In the case the Secretary enrolls such individuals through use of an intelligent assignment process, such process shall take into account the extent to which prescription drugs necessary for the individual are covered in the case of a PDP sponsor of a prescription drug plan that uses a formulary, the use of prior authorization or other restrictions on access to coverage of such prescription drugs by such a sponsor, and the overall quality of a prescription drug plan as measured by quality ratings established by the Secretary.''
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall take effect for contract years beginning with 2012.
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SEC. 1206. SPECIAL ENROLLMENT PERIOD AND AUTOMATIC ENROLLMENT PROCESS FOR CERTAIN SUBSIDY ELIGIBLE INDIVIDUALS.
(a) SPECIAL ENROLLMENT PERIOD.--Section 1860D-1(b)(3)(D) of the Social Security Act (42 U.S.C. 1395w-101(b)(3)(D)) is amended to read as follows:
''(D) SUBSIDY ELIGIBLE INDIVIDUALS.-- In the case of an individual (as determined by the Secretary) who is determined under subparagraph (B) of section 1860D-14(a)(3) to be a subsidy eligible individual.''.
(b) AUTOMATIC ENROLLMENT.--Section 1860D-1(b)(1) of the Social Security Act (42 U.S.C. 1395w- 101(b)(1)) is amended by adding at the end the following new subparagraph:
''(D) SPECIAL RULE FOR SUBSIDY ELIGIBLE INDIVIDUALS.--The process established under subparagraph (A) shall include, in the case of an individual described in section 1860D-1(b)(3)(D) who fails to enroll in a prescription drug plan or an MA-PD plan during the special enrollment established under such section applicable to such individual, the application of the assignment process described in subparagraph (C) to such individual in the same manner as such assignment process ap-
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plies to a part D eligible individual described in such subparagraph (C). Nothing in the previous sentence shall prevent an individual described in such sentence from declining enrollment in a plan determined appropriate by the Secretary (or in the program under this part) or from changing such enrollment.''.
(c) EFFECTIVE DATE.--The amendments made by this section shall apply to subsidy determinations made for months beginning with January 2011.
SEC. 1207. APPLICATION OF MA PREMIUMS PRIOR TO REBATE IN CALCULATION OF LOW INCOME SUBSIDY BENCHMARK.
(a) IN GENERAL.--Section 1860D-14(b)(2)(B)(iii) of the Social Security Act (42 U.S.C. 1395w-114(b)(2)(B)(iii)) is amended by inserting before the period the following: ''before the application of the monthly rebate computed under section 1854(b)(1)(C)(i) for that plan and year involved''.
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall apply to subsidy determinations made for months beginning with January 2011.