text: SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
  
      (a) Short Title.--This Act may be cited as the ``Voluntary Medicare 
  Prescription Drug Plan Act of 2000''.
      (b) Table of Contents.--The table of contents of this Act is as 
  follows:
  
  Sec. 1. Short title; table of contents.
  Sec. 2. Medicare payment for outpatient prescription drugs.
          ``Part D--Voluntary Medicare Prescription Drug Coverage
  
          ``Sec. 1860A. Medicare Prescription Drug Plan.
          ``Sec. 1860B. Rx Option.
          ``Sec. 1860C. Combined deductible.
          ``Sec. 1860D. Partnerships with private entities to offer the 
                              Rx Option.''.
  Sec. 3. Conforming changes to Medigap.
  
  SEC. 2. MEDICARE PAYMENT FOR OUTPATIENT PRESCRIPTION DRUGS.
  
      (a) In General.--Title XVIII of the Social Security Act (42 U.S.C. 
  1395 et seq.) is amended by redesignating part D as part E and by 
  inserting after part C the following new part:
  
          ``Part D--Voluntary Medicare Prescription Drug Coverage
  
                     ``medicare prescription drug plan
  
      ``Sec. 1860A. (a) In General.--Each Medicare Prescription Drug Plan 
  eligible individual may elect coverage (beginning on January 1, 2001) 
  under this part by enrolling in the Rx Option in order to receive 
  coverage for outpatient prescription drugs as described in section 
  1860B and to pay a combined deductible under section 1860C.
      ``(b) Medicare Prescription Drug Plan Eligible Individual 
  Defined.--In this part, the term `Medicare Prescription Drug Plan 
  eligible individual' means an individual who is--
              ``(1) eligible for benefits under part A and enrolled under 
          part B;
              ``(2) not enrolled in a Medicare+Choice plan under part C; 
          and
              ``(3) not eligible for medical assistance for outpatient 
          prescription drugs under title XIX.
  
                                ``rx option
  
      ``Sec. 1860B. (a) Enrollment in the Rx Option.--
              ``(1) In general.--Except as provided in paragraph (2), the 
          Secretary shall establish a process for the enrollment of 
          Medicare Prescription Drug Plan eligible individuals under the 
          Rx Option that is based upon the process for enrollment in 
          Medicare+Choice plans under part C of this title.
              ``(2) Exceptions.--
                      ``(A) 2-year obligation.--Except as provided in 
                  subparagraph (B), a Medicare Prescription Drug Plan 
                  eligible individual who elects the Rx Option shall be 
                  subject to the provisions of this part for a minimum 
                  period of 2 years, beginning with the first full month 
                  during which the individual is eligible for benefits 
                  under the Rx Option.
                      ``(B) Free look period.--An individual who elects 
                  the Rx Option may disenroll from such Option no later 
                  than the last day of the first full month following the 
                  month in which such election was made.
              ``(3) Enrollment in medicare supplemental policies.--An 
          individual enrolled in the Rx Option may be enrolled only in a 
          medicare supplemental policy subject to the special rules 
          described in section 1882(v).
      ``(b) Outpatient Prescription Drug Benefits.--
              ``(1) In general.--Beginning in 2001, under the Rx Option, 
          after the enrollee has met the combined deductible under 
          section 1860C, the Secretary shall provide a benefit for 
          outpatient prescription drugs through private entities under 
          section 1860D equal to 50 percent of the lesser of--
                      ``(A) the cost of outpatient prescription drugs for 
                  such year; or
                      ``(B) $5000.
              ``(2) Cost-of-living adjustment.--
                      ``(A) In general.--In the case of any calendar year 
                  beginning after 2001, the dollar amount in paragraph 
                  (1)(B) shall be increased by an amount equal to--
                              ``(i) such dollar amount; multiplied by
                              ``(ii) the cost-of-living adjustment.
                      ``(B) Cost-of-living adjustment.--For purposes of 
                  subparagraph (A), the cost-of-living adjustment for any 
                  calendar year is the percentage (if any) by which--
                              ``(i) the prescription drug component of 
                          the Consumer Price Index for all urban 
                          consumers (all items city average) for the 12-
                          month period ending with August of the 
                          preceding year; exceeds
                              ``(ii) such prescription drug component of 
                          the Consumer Price Index for the 12-month 
                          period ending with August 2000.
                      ``(C) Rounding.--If any increase determined under 
                  subparagraph (B) is not a multiple of $1, such increase 
                  shall be rounded to the nearest multiple of $1.
  
                           ``combined deductible
  
      ``Sec. 1860C. (a) In General.--Notwithstanding any provision of 
  this title and beginning in 2001, a beneficiary electing the Rx Option 
  shall be subject to a combined deductible that shall apply in lieu of 
  the deductibles applied under sections 1813(a)(1) and 1833(b).
      ``(b) Amount.--
              ``(1) In general.--For purposes of subsection (a), the 
          combined deductible is equal to $675.
              ``(2) Cost-of-living adjustment.--In the case of any 
          calendar year after 2001, the dollar amount in paragraph (1) 
          shall be increased by an amount equal to--
                      ``(A) such dollar amount; multiplied by
                      ``(B) the increase in the medical component of the 
                  CPI as determined by the Bureau of Labor Statistics.
              ``(3) Rounding.--If any increase determined under paragraph 
          (2) is not a multiple of $1, such increase shall be rounded to 
          the nearest multiple of $1.
      ``(c) Application.--In applying the combined deductible described 
  in subsection (a) such deductible shall apply to each expense incurred 
  on a calendar year basis for each item or service covered under this 
  title, and each expense paid on a calendar year basis for such an item 
  or service shall be credited against such deductible.
  
        ``partnerships with private entities to offer the rx option
  
      ``Sec. 1860D. (a) Partnerships.--
              ``(1) In general.--The Secretary shall contract with 
          private entities for the provision of outpatient prescription 
          drug benefits under the Rx Option.
              ``(2) Private entities.--The private entities described in 
          paragraph (1) shall include insurers (including issuers of 
          medicare supplemental policies under section 1882), 
          pharmaceutical benefit managers, chain pharmacies, groups of 
          independent pharmacies, and other private entities that the 
          Secretary determines are appropriate.
              ``(3) Areas.--The Secretary may award a contract to a 
          private entity under this section on a local, regional, or 
          national basis.
              ``(4) Drug benefits only through private entities.--
          Outpatient prescription drug benefits under the Rx Option shall 
          be offered only through a contract with a private entity under 
          this section.
      ``(b) Secretary Required To Contract With Any Willing Qualified 
  Private Entity.--The Secretary may not exclude a private entity from 
  receiving a contract to provide outpatient prescription drug benefits 
  under the Rx Option if the private entity meets all of the requirements 
  established by the Secretary for providing such benefits.''.
  
  SEC. 3. CONFORMING CHANGES TO MEDIGAP.
  
      Section 1882 of the Social Security Act (42 U.S.C. 1395ss) is 
  amended by adding at the end the following new subsection:
      ``(v) Special Rules for Medicare Prescription Drug Plan 
  Enrollees.--
              ``(1) Revision of benefit packages.--
                      ``(A) In general.--Notwithstanding subsection (p), 
                  the benefit packages established under such subsection 
                  (including the 2 plans described in paragraph (11)(A) 
                  of such subsection) shall be revised (in the manner 
                  described in subsection (p)(1)(E)) so that each of the 
                  benefit packages classified as `A' through `J' remain 
                  exactly the same, except that each benefit package 
                  shall include special rules that apply only to 
                  individuals enrolled in the Rx Option under section 
                  1860B as follows:
                              ``(i) Combined deductible.--Each benefit 
                          package shall require the beneficiary of the 
                          policy to pay annual out-of-pocket expenses 
                          (other than premiums) in an amount equal to the 
                          amount of the combined deductible under section 
                          1860C(b) before the policy begins payment of 
                          any benefits.
                              ``(ii) Prescription drug coverage.--In the 
                          case of a benefit package classified as `H', 
                          `I', and `J', such policy may not provide 
                          coverage for outpatient prescription drugs that 
                          duplicates the coverage for outpatient 
                          prescription drugs provided under the Rx Option 
                          under section 1860B(b).
                      ``(B) Adjusted premium.--In the case of an 
                  individual enrolled in the Rx Option, the premium for 
                  the policy in which the individual is enrolled may be 
                  appropriately adjusted to reflect the special rules 
                  applicable to such individual under subparagraph (A).
              ``(2) Renewability and continuity of coverage.--The 
          revisions of benefit packages under paragraph (1) shall not 
          affect--
                      ``(A) the renewal of medicare supplemental policies 
                  under this section that are in existence on the 
                  effective date of such revisions; or
                      ``(B) the continuity of coverage under such 
                  policies.''.
target: Sets the outpatient prescription drug benefit at 50 percent of the lesser of: (1) the cost of such drugs for a year; or (2) $5000.
  Establishes special rules with respect to Medicare supplemental health insurance (Medigap) for individuals enrolled in the Rx Option.
feat_title: Voluntary Medicare Prescription Drug Plan Act of 2000