Common use of Covered Drugs Clause in Contracts

Covered Drugs. Covered outpatient drugs are defined to include: 1) a drug which could only be dispensed subject to a prescription and which was described in subparagraph A of Section 1927(k)(2) of the Social Security Act (relating to drugs covered under Medicaid); 2) a biological product described in paragraph B of such subsection; 3) insulin described in subparagraph C of such section and medical supplies associated with the injection of insulin (as defined in regulations of the Secretary); and 4) vaccines licensed under section 351 of the Public Health Service Act. It is the intent of conferees that the definition of insulin, and medical supplies associated with the administration of insulin, as a covered prescription drug shall include medical supplies that the Secretary determines to be reasonable and necessary, such as insulin, insulin syringes, and insulin delivery devices that are not otherwise covered under the durable medical equipment benefit. Drugs excluded from Medicaid coverage are excluded from the definition except for smoking cessation drugs. The definition would include any use of a covered outpatient drug for a medically accepted indication. Drugs, which can be paid for under Medicare Part B, are not covered under Part D. A PDP plan or MA-PD plan could exclude from coverage, subject to reconsideration and appeals provisions, any drug which would not meet Medicare’s definition of medically necessary or was not prescribed in accordance with the plan or Part D. Access to a Choice of Qualified Prescription Drug Coverage (New Section 1860D-3 of Conference agreement; New Section 1860D-5 of House bill; New Section 1860d-13 of Senate bill). Present Law No provision. House Bill New section 1860D-5 would require the Administrator to assure that all eligible individuals residing in the U.S. would have a choice of enrollment in at least two qualifying plan options, at least one of which was a PDP, in their area of residence. The requirement would not be satisfied if only one PDP sponsor or one MA or EFFS organization offered all the qualifying plans in the area. If necessary to ensure such access, the Administrator would be authorized to provide partial underwriting of risk for a PDP sponsor to expand its service area under an existing prescription drug plan to adjoining or additional areas, or to establish such a plan, including offering such plan on a regional or nationwide basis. The assistance would be available only so long as, and to the extent, necessary to assure the guaranteed access. However, the Administrator could never provide for the full underwriting of financial risk for any PDP sponsor. Additionally, the Administrator would be directed to seek to maximize the assumption of financial risk by PDP sponsors and entities offering MA Rx or EFFS Rx plans. The Administrator would be required to report to Congress annually on the exercise of this authority and recommendations to minimize the exercise of such authority. Senate Bill New Section 1860D-13 of the Senate bill would require the Administrator to approve at least 2 contracts to offer a Medicare Prescription drug Plan in an area. If the Administrator determined that at least 2 plans were not going to be available in the subsequent year, the Administrator would reduce the amount of risk required by plans in a region. This would be achieved by adjusting the percentages applicable to risk corridors established under the bill. Alternatively, the reinsurance percentage could be increased. The Administrator could not provide for the full underwriting of financial risk for any entity and could not provide for the underwriting of any financial risk for a public entity. The Administrator would seek to maximize the assumption of financial risk to ensure fair competition among plans. The authority would be used only so long as, and to the extent necessary, to assure access. The authority could not be used if 2 or more qualified bids were submitted in an area by qualified entities. Not later than September 1 of each year, beginning in 2005, the Administrator would make a determination as to whether there were 2 approved bids. If not, the Administrator would enter into an annual fallback contract with an entity to provide Part D enrollees in the area with standard coverage (including access to negotiated prices) for the following year. In the case of an area with only one competitively bid contract, the plan (at the plan’s option) could be offered under the rules established for risk-bearing plans. Beneficiaries could enroll with such plan or with the fallback plan. Conference Agreement New Section 1860D-3 of the conference agreement requires the Secretary to assure that each beneficiary has available a choice of enrollment in at least 2 qualifying plans in the area in which the beneficiary resides. At least one plan has to be a prescription drug plan. The requirement is not satisfied for an area if only one PDP sponsor or one MA organization offering a MA-PD plan offers all the qualifying plans for the area. A qualifying plan is defined as a prescription drug plan or an MA-PD plan that provides either: 1) basic prescription drug coverage; or 2) qualified prescription drug coverage, so long as there is no MA monthly supplemental beneficiary premium applied (due to the application of a credit against the premium of a rebate). In any case where plans are not available, the beneficiary is given the opportunity to enroll in a fallback plan. The conference agreement permits the Secretary, in order to assure access, to approve limited risk contracts as specified under the new Section 1860D-11. Only if access is still not provided, will the Secretary provide for the offering of a fallback plan. Beneficiary Protections for Qualified Prescription Drug Coverage (New Section 1860D-4 of conference agreement; New Section 1860D-3 of House bill; New Section 1860D-5 and Section 121 of Senate bill).