TITLE I--MEDICARE PRESCRIPTION DRUG BENEFIT

SEC. 104. MEDIGAP AMENDMENTS.

(a) RULES RELATING TO MEDIGAP POLICIES THAT PROVIDE PRESCRIPTION DRUG COVERAGE-

(1) IN GENERAL- Section 1882 (42 U.S.C. 1395ss) is amended by adding at the end the following new subsection:

`(v) RULES RELATING TO MEDIGAP POLICIES THAT PROVIDE PRESCRIPTION DRUG COVERAGE-

`(1) PROHIBITION ON SALE, ISSUANCE, AND RENEWAL OF NEW POLICIES THAT PROVIDE PRESCRIPTION DRUG COVERAGE-

`(A) IN GENERAL- Notwithstanding any other provision of law, on or after January 1, 2006, a medigap Rx policy (as defined in paragraph (6)(A)) may not be sold, issued, or renewed under this section--

`(i) to an individual who is a part D enrollee (as defined in paragraph (6)(B)); or

`(ii) except as provided in subparagraph (B), to an individual who is not a part D enrollee.

`(B) CONTINUATION PERMITTED FOR NON-PART D ENROLLEES- Subparagraph (A)(ii) shall not apply to the renewal of a medigap Rx policy that was issued before January 1, 2006.

`(C) CONSTRUCTION- Nothing in this subsection shall be construed as preventing the offering on and after January 1, 2006, of `H', `I', and `J' policies described in paragraph (2)(D)(i) if the benefit packages are modified in accordance with paragraph (2)(C).

`(2) ELIMINATION OF DUPLICATIVE COVERAGE UPON PART D ENROLLMENT-

`(A) IN GENERAL- In the case of an individual who is covered under a medigap Rx policy and enrolls under a part D plan--

`(i) before the end of the initial part D enrollment period, the individual may--

`(I) enroll in a medicare supplemental policy without prescription drug coverage under paragraph (3); or

`(II) continue the policy in effect subject to the modification described in subparagraph (C)(i); or

`(ii) after the end of such period, the individual may continue the policy in effect subject to such modification.

`(B) NOTICE REQUIRED TO BE PROVIDED TO CURRENT POLICYHOLDERS WITH MEDIGAP RX POLICY- No medicare supplemental policy of an issuer shall be deemed to meet the standards in subsection (c) unless the issuer provides written notice (in accordance with standards of the Secretary established in consultation with the National Association of Insurance Commissioners) during the 60-day period immediately preceding the initial part D enrollment period, to each individual who is a policyholder or certificate holder of a medigap Rx policy (at the most recent available address of that individual) of the following:

`(i) If the individual enrolls in a plan under part D during the initial enrollment period under section 1860D-1(b)(2)(A), the individual has the option of--

`(I) continuing enrollment in the individual's current plan, but the plan's coverage of prescription drugs will be modified under subparagraph (C)(i); or

`(II) enrolling in another medicare supplemental policy pursuant to paragraph (3).

`(ii) If the individual does not enroll in a plan under part D during such period, the individual may continue enrollment in the individual's current plan without change, but--

`(I) the individual will not be guaranteed the option of enrollment in another medicare supplemental policy pursuant to paragraph (3); and

`(II) if the current plan does not provide creditable prescription drug coverage (as defined in section 1860D-13(b)(4)), notice of such fact and that there are limitations on the periods in a year in which the individual may enroll under a part D plan and any such enrollment is subject to a late enrollment penalty.

`(iii) Such other information as the Secretary may specify (in consultation with the National Association of Insurance Commissioners), including the potential impact of such election on premiums for medicare supplemental policies.

`(C) MODIFICATION-

`(i) IN GENERAL- The policy modification described in this subparagraph is the elimination of prescription coverage for expenses of prescription drugs incurred after the effective date of the individual's coverage under a part D plan and the appropriate adjustment of premiums to reflect such elimination of coverage.

`(ii) CONTINUATION OF RENEWABILITY AND APPLICATION OF MODIFICATION- No medicare supplemental policy of an issuer shall be deemed to meet the standards in subsection (c) unless the issuer--

`(I) continues renewability of medigap Rx policies that it has issued, subject to subclause (II); and

`(II) applies the policy modification described in clause (i) in the cases described in clauses (i)(II) and (ii) of subparagraph (A).

`(D) REFERENCES TO RX POLICIES-

`(i) H, I, AND J POLICIES- Any reference to a benefit package classified as `H', `I', or `J' (including the benefit package classified as `J' with a high deductible feature, as described in subsection (p)(11)) under the standards established under subsection (p)(2) shall be construed as including a reference to such a package as modified under subparagraph (C) and such packages as modified shall not be counted as a separate benefit package under such subsection.

`(ii) APPLICATION IN WAIVERED STATES- Except for the modification provided under subparagraph (C), the waivers previously in effect under subsection (p)(2) shall continue in effect.

`(3) AVAILABILITY OF SUBSTITUTE POLICIES WITH GUARANTEED ISSUE-

`(A) IN GENERAL- The issuer of a medicare supplemental policy--

`(i) may not deny or condition the issuance or effectiveness of a medicare supplemental policy that has a benefit package classified as `A', `B', `C', or `F' (including the benefit package classified as `F' with a high deductible feature, as described in subsection (p)(11)), under the standards established under subsection (p)(2), or a benefit package described in subparagraph (A) or (B) of subsection (w)(2) and that is offered and is available for issuance to new enrollees by such issuer;

`(ii) may not discriminate in the pricing of such policy, because of health status, claims experience, receipt of health care, or medical condition; and

`(iii) may not impose an exclusion of benefits based on a pre-existing condition under such policy,

in the case of an individual described in subparagraph (B) who seeks to enroll under the policy not later than 63 days after the effective date of the individual's coverage under a part D plan.

`(B) INDIVIDUAL COVERED- An individual described in this subparagraph with respect to the issuer of a medicare supplemental policy is an individual who--

`(i) enrolls in a part D plan during the initial part D enrollment period;

`(ii) at the time of such enrollment was enrolled in a medigap Rx policy issued by such issuer; and

`(iii) terminates enrollment in such policy and submits evidence of such termination along with the application for the policy under subparagraph (A).

`(C) SPECIAL RULE FOR WAIVERED STATES- For purposes of applying this paragraph in the case of a State that provides for offering of benefit packages other than under the classification referred to in subparagraph (A)(i), the references to benefit packages in such subparagraph are deemed references to comparable benefit packages offered in such State.

`(4) ENFORCEMENT-

`(A) PENALTIES FOR DUPLICATION- The penalties described in subsection (d)(3)(A)(ii) shall apply with respect to a violation of paragraph (1)(A).

`(B) GUARANTEED ISSUE- The provisions of paragraph (4) of subsection (s) shall apply with respect to the requirements of paragraph (3) in the same manner as they apply to the requirements of such subsection.

`(5) CONSTRUCTION- Any provision in this section or in a medicare supplemental policy relating to guaranteed renewability of coverage shall be deemed to have been met with respect to a part D enrollee through the continuation of the policy subject to modification under paragraph (2)(C) or the offering of a substitute policy under paragraph (3). The previous sentence shall not be construed to affect the guaranteed renewability of such a modified or substitute policy.

`(6) DEFINITIONS- For purposes of this subsection:

`(A) MEDIGAP RX POLICY- The term `medigap Rx policy' means a medicare supplemental policy--

`(i) which has a benefit package classified as `H', `I', or `J' (including the benefit package classified as `J' with a high deductible feature, as described in subsection (p)(11)) under the standards established under subsection (p)(2), without regard to this subsection; and

`(ii) to which such standards do not apply (or to which such standards have been waived under subsection (p)(6)) but which provides benefits for prescription drugs.

Such term does not include a policy with a benefit package as classified under clause (i) which has been modified under paragraph (2)(C)(i).

`(B) PART D ENROLLEE- The term `part D enrollee' means an individual who is enrolled in a part D plan.

`(C) PART D PLAN- The term `part D plan' means a prescription drug plan or an MA-PD plan (as defined for purposes of part D).

`(D) INITIAL PART D ENROLLMENT PERIOD- The term `initial part D enrollment period' means the initial enrollment period described in section 1860D-1(b)(2)(A).'.

(2) CONFORMING CURRENT GUARANTEED ISSUE PROVISIONS-

(A) EXTENDING GUARANTEED ISSUE POLICY FOR INDIVIDUALS ENROLLED IN MEDIGAP RX POLICIES WHO TRY MEDICARE ADVANTAGE- Subsection (s)(3)(C)(ii) of such section is amended--

(i) by striking `(ii) Only' and inserting `(ii)(I) Subject to subclause (II), only'; and

(ii) by adding at the end the following new subclause:

`(II) If the medicare supplemental policy referred to in subparagraph (B)(v) was a medigap Rx policy (as defined in subsection (v)(6)(A)), a medicare supplemental policy described in this subparagraph is such policy in which the individual was most recently enrolled as modified under subsection (v)(2)(C)(i) or, at the election of the individual, a policy referred to in subsection (v)(3)(A)(i).'.

(B) CONFORMING AMENDMENT- Section 1882(s)(3)(C)(iii) is amended by inserting `and subject to subsection (v)(1)' after `subparagraph (B)(vi)'.

(b) DEVELOPMENT OF NEW STANDARDS FOR MEDIGAP POLICIES-

(1) IN GENERAL- Section 1882 (42 U.S.C. 1395ss) is further amended by adding at the end the following new subsection:

`(w) DEVELOPMENT OF NEW STANDARDS FOR MEDICARE SUPPLEMENTAL POLICIES-

`(1) IN GENERAL- The Secretary shall request the National Association of Insurance Commissioners to review and revise the standards for benefit packages under subsection (p)(1), taking into account the changes in benefits resulting from enactment of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and to otherwise update standards to reflect other changes in law included in such Act. Such revision shall incorporate the inclusion of the 2 benefit packages described in paragraph (2). Such revisions shall be made consistent with the rules applicable under subsection (p)(1)(E) with the reference to the `1991 NAIC Model Regulation' deemed a reference to the NAIC Model Regulation as published in the Federal Register on December 4, 1998, and as subsequently updated by the National Association of Insurance Commissioners to reflect previous changes in law (and subsection (v)) and the reference to `date of enactment of this subsection' deemed a reference to the date of enactment of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. To the extent practicable, such revision shall provide for the implementation of revised standards for benefit packages as of January 1, 2006.

`(2) NEW BENEFIT PACKAGES- The benefit packages described in this paragraph are the following (notwithstanding any other provision of this section relating to a core benefit package):

`(A) FIRST NEW BENEFIT PACKAGE- A benefit package consisting of the following:

`(i) Subject to clause (ii), coverage of 50 percent of the cost-sharing otherwise applicable under parts A and B, except there shall be no coverage of the part B deductible and coverage of 100 percent of any cost-sharing otherwise applicable for preventive benefits.

`(ii) Coverage for all hospital inpatient coinsurance and 365 extra lifetime days of coverage of inpatient hospital services (as in the current core benefit package).

`(iii) A limitation on annual out-of-pocket expenditures under parts A and B to $4,000 in 2006 (or, in a subsequent year, to such limitation for the previous year increased by an appropriate inflation adjustment specified by the Secretary).

`(B) SECOND NEW BENEFIT PACKAGE- A benefit package consisting of the benefit package described in subparagraph (A), except as follows:

`(i) Substitute `75 percent' for `50 percent' in clause (i) of such subparagraph.

`(ii) Substitute `$2,000' for `$4,000' in clause (iii) of such subparagraph.'.

(2) CONFORMING AMENDMENTS- Section 1882 (42 U.S.C. 1395ss) is amended--

(A) in subsection (g)(1), by inserting `a prescription drug plan under part D or' after `but does not include'; and

(B) in subsection (o)(1), by striking `subsection (p)' and inserting `subsections (p), (v), and (w)'.

(c) RULE OF CONSTRUCTION-

(1) IN GENERAL- Nothing in this Act shall be construed to require an issuer of a medicare supplemental policy under section 1882 of the Social Security Act (42 U.S.C. 1395rr) to participate as a PDP sponsor under part D of title XVIII of such Act, as added by section 101, as a condition for issuing such policy.

(2) PROHIBITION ON STATE REQUIREMENT- A State may not require an issuer of a medicare supplemental policy under section 1882 of the Social Security Act (42 U.S.C. 1395rr) to participate as a PDP sponsor under such part D as a condition for issuing such policy.

[ Previous | Table of Contents | Next ]

Medicare Prescription Drug, Improvement, and Modernization Act
Implementation Tracking System (MITS)