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.''.
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.
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