,,ii #aagth ,,congress #ast ,session ,s4 #bcbg ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,july #ac1 #bjba,mr4 ,cassidy 7for himself and ,mr4 ,menendez7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend title ,,xviii of the ,social ,security ,act to provide for a ,medicare part ,d modernization redesign and to establish a monthly out-of-pocket cost sharing maximum for enrollees who incur a significant portion of costs towards the annual out-of-pocket threshold under ,medicare part ,d4 #a4 ,short title ,this ,act may be cited as the ,seniors ,prescription ,drug ,relief ,act4 #b4 ,medicare part ,d modernization redesign 7a7 ,benefit structure redesign ,section #ahfj;,d-#b7;b7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#ajb7;b77 is amended-- 7#a7 in paragraph 7#b7-- 7,a7 in subparagraph 7,a71 in the matter preceding clause 7i71 by inserting for a year preceding #bjbd and for costs above the annual deductible specified in paragraph 7#a7 and up to the annual out-of-pocket threshold specified in paragraph 7#d77;,b7 for #bjbd and each subsequent year after paragraph 7#c72 7,b7 in subparagraph 7,c7-- 7i7 in clause 7i71 in the matter preceding subclause 7,i71 by inserting for a year preceding #bjbd1 after paragraph 7#d712 and 7ii7 in clause 7ii77,,iii71 by striking and each subsequent year and inserting 1 #bjba1 #bjbb1 and #bjbc2 and 7,c7 in subparagraph 7,d7-- 7i7 in clause 7i7-- 7,i7 in the matter preceding subclause 7,i71 by inserting for a year preceding #bjbd1 after paragraph 7#d712 and 7,,ii7 in subclause 7,i77bb71 by striking a year after #bjah and inserting each of years #bjah through #bjbc2 and 7ii7 in clause 7ii77,v71 by striking #bjai and each subsequent year and inserting each of years #bjai through #bjbc2 7#b7 in paragraph 7#c77;,a7-- 7,a7 in the matter preceding clause 7i71 by inserting for a year preceding #bjbd1 after and 7#d712 and 7,b7 in clause 7ii71 by striking for a subsequent year and inserting for each of years #bjjg through #bjbc2 7#c7 in paragraph 7#d7-- 7,a7 in subparagraph 7,a7-- 7i7 in clause 7i7-- 7,i7 by redesignating subclauses 7,i7 and 7,,ii7 as items 7aa7 and 7bb71 respectively1 and indenting appropriately2 7,,ii7 in the matter preceding item 7aa71 as redesignated by subclause 7,i71 by striking is equal to the greater of-- and inserting 8is equal to-- 7,i7 for a year preceding #bjbd1 the greater of-- 2 7,,iii7 by striking the period at the end of item 7bb71 as redesignated by subclause 7,i71 and inserting 2 and2 and 7,,iv7 by adding at the end the following3 7,,ii7 for #bjbd and each succeeding year1 #j4 2 and 7ii7 in clause 7ii7-- 7,i7 by striking clause 7i77,i7 and inserting clause 7i77,i77aa72 and 7,,ii7 by adding at the end the following new sentence3 ,the ,secretary shall continue to calculate the dollar amounts specified in clause 7i77,i77aa71 including with the adjustment under this clause1 after #bjbc for purposes of section #ahfj;,d-#ad7;a77#a77;,d77iii742 7,b7 in subparagraph 7,b7-- 7i7 in clause 7i7-- 7,i7 in subclause 7,v71 by striking or at the end2 7,,ii7 in subclause 7,,vi7-- 7aa7 by striking for a subsequent year and inserting for #bjba1 #bjbb1 and #bjbc2 and 7bb7 by striking the period at the end and inserting a semicolon2 and 7,,iii7 by adding at the end the following new subclauses3 7,,vii7 for #bjbd1 is equal to #c1ajj2 or 7,,viii7 for a subsequent year1 is equal to the amount specified in this subparagraph for the previous year1 increased by the annual percentage increase described in paragraph 7#f7 for the year involved4 2 and 7ii7 in clause 7ii71 by striking clause 7i77,,ii7 and inserting clause 7i72 7,c7 in subparagraph 7,c77i71 by striking and for amounts and inserting and for a year preceding #bjbd for amounts2 and 7,d7 in subparagraph 7,e71 by striking ,in applying and inserting ,for each of #bjaa through #bjbc1 in applying4 7b7 ,reduction in beneficiary coinsurance 7#a7 ,in general ,section #ahfj;,d-#b7;b77#b77;,a7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#ajb7;b77#b77;,a771 as amended by subsection 7a71 is amended-- 7,a7 by redesignating clauses 7i7 and 7ii7 as subclauses 7,i7 and 7,,ii7 and moving such subclauses #b ems to the right2 7,b7 by striking #be percent coinsurance4--,subject to and inserting 8,coinsurance4-- 7i7 ,in general ,subject to 2 7,c7 in each of subclauses 7,i7 and 7,,ii71 as redesignated by subparagraph 7,a71 by striking #be percent and inserting the applicable percentage 7as defined in clause 7ii772 and 7,d7 by adding at the end the following new clause3 7ii7 ,applicable percentage defined ,for purposes of clause 7i71 the term applicable percentage means-- 7,i7 for a year preceding #bjbd1 #be percent2 and 7,,ii7 for #bjbd and each subsequent year1 #bj percent4 4 7#b7 ,conforming amendment ,section #ahfj;,d-#ad7;a77#b77;,d7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#aad7;a77#b77;,d77 is amended by striking #be percent and inserting the applicable percentage4 7c7 ,decreasing reinsurance payment amount ,section #ahfj;,d-#ae7;b7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#aae7;b77 is amended-- 7#a7 in paragraph 7#a7-- 7,a7 by striking equal to #hj percent and inserting 8equal to-- 7,a7 for a year preceding #bjbd1 #hj percent 2 7,b7 in subparagraph 7,a71 as added by paragraph 7#a71 by striking the period at the end and inserting 2 and2 and 7,c7 by adding at the end the following new subparagraph3 7,b7 for #bjbd and each subsequent year1 the sum of-- 7i7 an amount equal to the applicable percentage specified in paragraph 7#e77;,a7 of such allowable reinsurance costs attributable to that portion of gross prescription drug costs as specified in paragraph 7#c7 incurred in the coverage year after such individual has incurred costs that exceed the annual out-of-pocket threshold specified in section #ahfj;,d-#b7;b77#d77;,b7 with respect to applicable drugs 7as defined in section #ahfj;,d-#ad;,b7g77#b772 and 7ii7 an amount equal to the applicable percentage specified in paragraph 7#e77;,b7 of allowable reinsurance costs attributable to that portion of gross prescription drug costs as specified in paragraph 7#c7 incurred in the coverage year after such individual has incurred costs that exceed the annual out-of-pocket threshold specified in section #ahfj;,d-#b7;b77#d77;,b7 with respect to covered part ,d drugs that are not applicable drugs 7as so defined74 2 and 7#b7 by adding at the end the following new paragraph3 7#e7 ,applicable percentage specified ,for purposes of paragraph 7#a77;,b71 the applicable percentage specified in this paragraph is-- 7,a7 with respect to applicable drugs 7as defined in section #ahfj;,d-#ad;,b7g77#b77-- 7i7 for #bjbd1 #fj percent2 7ii7 for #bjbe1 #dj percent2 and 7iii7 for #bjbf and each subsequent year1 #bj percent2 and 7,b7 with respect to covered part ,d drugs that are not applicable drugs 7as so defined7-- 7i7 for #bjbd1 #hj percent2 7ii7 for #bjbe1 #fj percent2 and 7iii7 for #bjbf and each subsequent year1 #dj percent4 4 7d7 ,manufacturer discount program during initial and catastrophic phases of coverage 7#a7 ,in general ,part ,d of title ,,xviii of the ,social ,security ,act is amended by inserting after section #ahfj;,d-#ad;,a 7#db ,u4,s4,c4 #adiew-#aad7 the following new section3 #ahfj;,d-#ad;,b4 ,manufacturer discount program 7a7 ,establishment ,the ,secretary shall establish a manufacturer discount program 7in this section referred to as the program74 ,under the program1 the ,secretary shall enter into agreements described in subsection 7b7 with manufacturers and provide for the performance of the duties described in subsection 7c74 ,the ,secretary shall establish a model agreement for use under the program by not later than ,january #a1 #bjbc1 in consultation with manufacturers1 and allow for comment on such model agreement4 7b7 ,terms of agreement 7#a7 ,in general 7,a7 ,agreement ,an agreement under this section shall require the manufacturer to provide applicable beneficiaries access to discounted prices for applicable drugs of the manufacturer that are dispensed on or after ,january #a1 #bjbd4 7,b7 ,provision of discounted prices at the point-of-sale ,the discounted prices described in subparagraph 7,a7 shall be provided to the applicable beneficiary at the pharmacy or by the mail order service at the point-of-sale of an applicable drug4 7#b7 ,provision of appropriate data ,each manufacturer with an agreement in effect under this section shall collect and have available appropriate data1 as determined by the ,secretary1 to ensure that it can demonstrate to the ,secretary compliance with the requirements under the program4 7#c7 ,compliance with requirements for administration of program ,each manufacturer with an agreement in effect under this section shall comply with requirements imposed by the ,secretary or a third party with a contract under subsection 7d77#c71 as applicable1 for purposes of administering the program1 including any determination under subparagraph 7,a7 of subsection 7c77#a7 or procedures established under such subsection 7c77#a74 7#d7 ,length of agreement 7,a7 ,in general ,an agreement under this section shall be effective for an initial period of not less than #ab months and shall be automatically renewed for a period of not less than #a year unless terminated under subparagraph 7,b74 7,b7 ,termination 7i7 ,by the ,secretary ,the ,secretary may provide for termination of an agreement under this section for a knowing and willful violation of the requirements of the agreement or other good cause shown4 ,such termination shall not be effective earlier than #cj days after the date of notice to the manufacturer of such termination4 ,the ,secretary shall provide1 upon request1 a manufacturer with a hearing concerning such a termination1 and such hearing shall take place prior to the effective date of the termination with sufficient time for such effective date to be repealed if the ,secretary determines appropriate4 7ii7 ,by a manufacturer ,a manufacturer may terminate an agreement under this section for any reason4 ,any such termination shall be effective1 with respect to a plan year-- 7,i7 if the termination occurs before ,january #cj of a plan year1 as of the day after the end of the plan year2 and 7,,ii7 if the termination occurs on or after ,january #cj of a plan year1 as of the day after the end of the succeeding plan year4 7iii7 ,effectiveness of termination ,any termination under this subparagraph shall not affect discounts for applicable drugs of the manufacturer that are due under the agreement before the effective date of its termination4 7iv7 ,notice to third party ,the ,secretary shall provide notice of such termination to a third party with a contract under subsection 7d77#c7 within not less than #cj days before the effective date of such termination4 7#e7 ,effective date of agreement ,an agreement under this section shall take effect on a date determined appropriate by the ,secretary1 which may be at the start of a calendar quarter4 7c7 ,duties described ,the duties described in this subsection are the following3 7#a7 ,administration of program ,administering the program1 including-- 7,a7 the determination of the amount of the discounted price of an applicable drug of a manufacturer2 7,b7 the establishment of procedures under which discounted prices are provided to applicable beneficiaries at pharmacies or by mail order service at the point-of-sale of an applicable drug2 7,c7 the establishment of procedures to ensure that1 not later than the applicable number of calendar days after the dispensing of an applicable drug by a pharmacy or mail order service1 the pharmacy or mail order service is reimbursed for an amount equal to the difference between-- 7i7 the negotiated price of the applicable drug2 and 7ii7 the discounted price of the applicable drug2 7,d7 the establishment of procedures to ensure that the discounted price for an applicable drug under this section is applied before any coverage or financial assistance under other health benefit plans or programs that provide coverage or financial assistance for the purchase or provision of prescription drug coverage on behalf of applicable beneficiaries as the ,secretary may specify2 and 7,e7 providing a reasonable dispute resolution mechanism to resolve disagreements between manufacturers1 applicable beneficiaries1 and the third party with a contract under subsection 7d77#c74 7#b7 ,monitoring compliance 7,a7 ,in general ,the ,secretary shall monitor compliance by a manufacturer with the terms of an agreement under this section4 7,b7 ,notification ,if a third party with a contract under subsection 7d77#c7 determines that the manufacturer is not in compliance with such agreement1 the third party shall notify the ,secretary of such noncompliance for appropriate enforcement under subsection 7e74 7#c7 ,collection of data from prescription drug plans and ma-pd plans ,the ,secretary may collect appropriate data from prescription drug plans and ,,ma-,,pd plans in a timeframe that allows for discounted prices to be provided for applicable drugs under this section4 7d7 ,administration 7#a7 ,in general ,subject to paragraph 7#b71 the ,secretary shall provide for the implementation of this section1 including the performance of the duties described in subsection 7c74 7#b7 ,limitation ,in providing for the implementation of this section1 the ,secretary shall not receive or distribute any funds of a manufacturer under the program4 7#c7 ,contract with third parties ,the ,secretary shall enter into a contract with #a or more third parties to administer the requirements established by the ,secretary in order to carry out this section4 ,at a minimum1 the contract with a third party under the preceding sentence shall require that the third party-- 7,a7 receive and transmit information between the ,secretary1 manufacturers1 and other individuals or entities the ,secretary determines appropriate2 7,b7 receive1 distribute1 or facilitate the distribution of funds of manufacturers to appropriate individuals or entities in order to meet the obligations of manufacturers under agreements under this section2 7,c7 provide adequate and timely information to manufacturers1 consistent with the agreement with the manufacturer under this section1 as necessary for the manufacturer to fulfill its obligations under this section2 and 7,d7 permit manufacturers to conduct periodic audits1 directly or through contracts1 of the data and information used by the third party to determine discounts for applicable drugs of the manufacturer under the program4 7#d7 ,performance requirements ,the ,secretary shall establish performance requirements for a third party with a contract under paragraph 7#c7 and safeguards to protect the independence and integrity of the activities carried out by the third party under the program under this section4 7#e7 ,administration ,chapter #ce of title #dd1 ,united ,states ,code1 shall not apply to the program under this section4 7#f7 ,funding ,for purposes of carrying out this section1 the ,secretary shall provide for the transfer1 from the ,federal ,supplementary ,medical ,insurance ,trust ,fund under section #ahda to the ,centers for ,medicare ,medicaid ,services ,program ,management ,account1 of #d1jjj1jjj for each of fiscal years #bjba through #bjbd1 to remain available until expended404 7e7 ,enforcement 7#a7 ,audits ,each manufacturer with an agreement in effect under this section shall be subject to periodic audit by the ,secretary4 7#b7 ,civil money penalty 7,a7 ,in general ,the ,secretary shall impose a civil money penalty on a manufacturer that fails to provide applicable beneficiaries discounts for applicable drugs of the manufacturer in accordance with such agreement for each such failure in an amount the ,secretary determines is commensurate with the sum of-- 7i7 the amount that the manufacturer would have paid with respect to such discounts under the agreement1 which will then be used to pay the discounts which the manufacturer had failed to provide2 and 7ii7 #be percent of such amount4 7,b7 ,application ,the provisions of section #aabh;,a 7other than subsections 7a7 and 7b77 shall apply to a civil money penalty under this paragraph in the same manner as such provisions apply to a penalty or proceeding under section #aabh;,a7a74 7f7 ,clarification regarding availability of other covered part d drugs ,nothing in this section shall prevent an applicable beneficiary from purchasing a covered part ,d drug that is not an applicable drug 7including a generic drug or a drug that is not on the formulary of the prescription drug plan or ,,ma-,,pd plan that the applicable beneficiary is enrolled in74 7g7 ,definitions ,in this section3 7#a7 ,applicable beneficiary ,the term applicable beneficiary means an individual who1 on the date of dispensing a covered part ,d drug-- 7,a7 is enrolled in a prescription drug plan or an ,,ma-,,pd plan2 7,b7 is not enrolled in a qualified retiree prescription drug plan2 and 7,c7 has incurred costs for covered part ,d drugs in the year that are above the annual deductible specified in section #ahfj;,d-#b7;b77#a7 for such year4 7#b7 ,applicable drug ,the term applicable drug means1 with respect to an applicable beneficiary1 a covered part ,d drug-- 7,a7 approved under a new drug application under section #eje7;c7 of the ,federal ,food1 ,drug1 and ,cosmetic ,act or1 in the case of a biologic product1 licensed under section #cea of the ,public ,health ,service ,act 7including a product licensed under subsection 7k7 of such section #cea72 and 7,b7 7i7 if the ,,pdp sponsor of the prescription drug plan or the ,,ma organization offering the ,,ma-,,pd plan uses a formulary1 which is on the formulary of the prescription drug plan or ,,ma-,,pd plan that the applicable beneficiary is enrolled in2 7ii7 if the ,,pdp sponsor of the prescription drug plan or the ,,ma organization offering the ,,ma-,,pd plan does not use a formulary1 for which benefits are available under the prescription drug plan or ,,ma-,,pd plan that the applicable beneficiary is enrolled in2 or 7iii7 is provided through an exception or appeal4 7#c7 ,applicable number of calendar days ,the term applicable number of calendar days means-- 7,a7 with respect to claims for reimbursement submitted electronically1 #ad days2 and 7,b7 with respect to claims for reimbursement submitted otherwise1 #cj days4 7#d7 ,discounted price 7,a7 ,in general ,except as provided in subparagraph 7,b71 the term discounted price means #ij percent of the negotiated price of the applicable drug of a manufacturer4 7,b7 ,phase-in for certain drugs dispensed for subsidy eligible individuals 7i7 ,in general ,in the case of an applicable drug of a specified manufacturer 7as defined in clause 7ii77 that is dispensed for an applicable beneficiary who is a subsidy eligible individual 7as defined in section #ahfj;,d-#ad7;a77#c771 the term discounted price means the specified ,,lis percent 7as defined in clause 7iii77 of the negotiated price of the applicable drug of the manufacturer4 7ii7 ,specified manufacturer ,in this subparagraph1 the term specified manufacturer means a manufacturer of an applicable drug for which1 in the calendar year #b years prior to the current plan year 7referred to in this clause as the applicable period71 the total reimbursement under this title during the applicable period represented less than #a percent of the total reimbursement under this title for all prescription drugs during such period4 7iii7 ,specified ,,lis percent ,in this subparagraph1 the term specified ,,lis percent means-- 7,i7 for #bjbd1 #ih percent2 7,,ii7 for #bjbe1 #ig percent2 7,,iii7 for #bjbf1 #if percent2 7,,iv7 for #bjbg1 #ie percent2 7,v7 for #bjbh1 #id percent2 7,,vi7 for #bjbi1 #ic percent2 7,,vii7 for #bjcj1 #ib percent2 7,,viii7 for #bjca1 #ia percent2 and 7,,ix7 for #bjcb and each subsequent year1 #ij percent4 7,c7 ,clarification ,nothing in this section shall be construed as affecting the responsibility of an applicable beneficiary for payment of a dispensing fee for an applicable drug4 7#e7 ,manufacturer ,the term manufacturer means any entity which is engaged in the production1 preparation1 propagation1 compounding1 conversion1 or processing of prescription drug products1 either directly or indirectly by extraction from substances of natural origin1 or independently by means of chemical synthesis1 or by a combination of extraction and chemical synthesis4 ,such term does not include a wholesale distributor of drugs or a retail pharmacy licensed under ,state law4 7#f7 ,negotiated price ,the term negotiated price has the meaning given such term in section #ahfj;,d-#b7;d77#a77;,b71 except that such negotiated price shall not include any dispensing fee for the applicable drug4 7#g7 ,qualified retiree prescription drug plan ,the term qualified retiree prescription drug plan has the meaning given such term in section #ahfj;,d-#bb7;a77#b74 4 7#b7 ,sunset of ,medicare coverage gap discount program ,section #ahfj;,d-#ad;,a of the ,social ,security ,act 7#db ,u4,s4,c4 #acie-aad;a7 is amended-- 7,a7 in subsection 7a71 in the first sentence1 by striking ,the ,secretary and inserting ,subject to subsection 7h71 the ,secretary2 and 7,b7 by adding at the end the following new subsection3 7h7 ,sunset of program 7#a7 ,in general ,the program shall not apply to applicable drugs dispensed on or after ,january #a1 #bjbd1 and1 subject to paragraph 7#b71 agreements under this section shall be terminated as of such date4 7#b7 ,continued application for applicable drugs dispensed prior to sunset ,the provisions of this section 7including all responsibilities and duties7 shall continue to apply after ,january #a1 #bjbd1 with respect to applicable drugs dispensed prior to such date4 4 7#c7 ,inclusion of actuarial value of manufacturer discounts in bids ,section #ahfj;,d-#aa of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#aaa7 is amended-- 7,a7 in subsection 7b77#b77;,c77iii7-- 7i7 by striking assumptions regarding the reinsurance and inserting 8assumptions regarding-- 7,i7 the reinsurance 2 and 7ii7 by adding at the end the following3 7,,ii7 for #bjbd and each subsequent year1 the manufacturer discounts provided under section #ahfj;,d-#ad;,b subtracted from the actuarial value to produce such bid2 and 2 and 7,b7 in subsection 7c77#a77;,c7-- 7i7 by striking an actuarial valuation of the reinsurance and inserting 8an actuarial valuation of-- 7i7 the reinsurance 2 7ii7 in clause 7i71 as added by clause 7i7 of this subparagraph1 by adding and at the end2 and 7iii7 by adding at the end the following3 7ii7 for #bjbd and each subsequent year1 the manufacturer discounts provided under section #ahfj;,d-#ad;,b2 4 7#d7 ,clarification regarding exclusion of manufacturer discounts from ,tr,o,o,p ,section #ahfj;,d-#b7;b77#d7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#ajb7;b77#d77 is amended-- 7,a7 in subparagraph 7,c71 by inserting and subject to subparagraph 7,f7 after subparagraph 7,e72 and 7,b7 by adding at the end the following new subparagraph3 7,f7 ,clarification regarding exclusion of manufacturer discounts ,in applying subparagraph 7,a71 incurred costs shall not include any manufacturer discounts provided under section #ahfj;,d-#ad;,b4 4 7e7 ,determination of allowable reinsurance costs ,section #ahfj;,d-#ae7;b7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#aae7;b77 is amended-- 7#a7 in paragraph 7#b7-- 7,a7 by striking costs4--,for purposes and inserting 8costs4-- 7,a7 ,in general ,subject to subparagraph 7,b71 for purposes 2 and 7,b7 by adding at the end the following new subparagraph3 7,b7 ,inclusion of manufacturer discounts on applicable drugs ,for purposes of applying subparagraph 7,a71 the term allowable reinsurance costs shall include the portion of the negotiated price 7as defined in section #ahfj;,d-#ad;,b7g77#f77 of an applicable drug 7as defined in section #ahfj;,d-#ad;,b7g77#b77 that was paid by a manufacturer under the manufacturer discount program under section #ahfj;,d-#ad;,b4 2 and 7#b7 in paragraph 7#c7-- 7,a7 in the first sentence1 by striking ,for purposes and inserting ,subject to paragraph 7#b77;,b71 for purposes2 and 7,b7 in the second sentence1 by inserting or1 in the case of an applicable drug1 by a manufacturer after by the individual or under the plan4 7f7 ,updating risk adjustment methodologies ,to account for part ,d modernization redesign ,section #ahfj;,d-#ae7;c7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#aae7;c77 is amended by adding at the end the following new paragraph3 7#c7 ,updating risk adjustment methodologies to account for part ,d modernization redesign ,the ,secretary shall update the risk adjustment methodologies used to adjust bid amounts pursuant to this subsection as appropriate to take into account changes in benefits under this part pursuant to the amendments made by section #b of the ,seniors ,prescription ,drug ,relief ,act4 4 7g7 ,conditions for coverage of drugs under this part ,section #ahfj;,d-#dc of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#aec7 is amended-- 7#a7 in subsection 7a7-- 7,a7 in paragraph 7#b71 by striking and at the end2 7,b7 in paragraph 7#c71 by striking the period at the end and inserting a semicolon2 and 7,c7 by adding at the end the following new paragraphs3 7#d7 participate in the manufacturer discount program under section #ahfj;,d-#ad;,b2 7#e7 have entered into and have in effect an agreement described in subsection 7b7 of such section #ahfj;,d-#ad;,b with the ,secretary2 and 7#f7 have entered into and have in effect1 under terms and conditions specified by the ,secretary1 a contract with a third party that the ,secretary has entered into a contract with under subsection 7d77#c7 of such section #ahfj;,d-#ad;,b4 2 7#b7 by striking subsection 7b7 and inserting the following3 7b7 ,effective date ,paragraphs 7#a7 through 7#c7 of subsection 7a7 shall apply to covered part ,d drugs dispensed under this part on or after ,january #a1 #bjaa1 and before ,january #a1 #bjbd1 and paragraphs 7#d7 through 7#f7 of such subsection shall apply to covered part ,d drugs dispensed on or after ,january #a1 #bjbd4 2 and 7#c7 in subsection 7c71 by striking paragraph 7#b7 and inserting the following3 7#b7 the ,secretary determines that in the period beginning on ,january #a1 #bjaa1 and ending on ,december #ca1 #bjaa 7with respect to paragraphs 7#a7 through 7#c7 of subsection 7a771 or the period beginning on ,january #a1 #bjbd1 and ending ,december #ca1 #bjbd 7with respect to paragraphs 7#d7 through 7#f7 of such subsection71 there were extenuating circumstances4 4 7h7 ,conforming amendments 7#a7 ,section #ahfj;,d-#b of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#ajb7 is amended-- 7,a7 in subsection 7a77#b77;,a77i77,i71 by striking 1 or an increase in the initial and inserting or for a year preceding #bjbd an increase in the initial2 7,b7 in subsection 7c77#a77;,c7-- 7i7 in the subparagraph heading1 by striking at initial coverage limit2 and 7ii7 by inserting for a year preceding #bjbd or the annual out-of-pocket threshold specified in subsection 7b77#d77;,b7 for the year for #bjbd and each subsequent year after subsection 7b77#c7 for the year each place it appears2 and 7,c7 in subsection 7d77#a77;,a71 by striking or an initial and inserting or for a year preceding #bjbd an initial4 7#b7 ,section #ahfj;,d-#d7;a77#d77;,b77i7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#ajd7;a77#d77;,b77i77 is amended by striking the initial and inserting for a year preceding #bjbd1 the initial4 7#c7 ,section #ahfj;,d-#ad7;a7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#aad7;a77 is amended-- 7,a7 in paragraph 7#a7-- 7i7 in subparagraph 7,c71 by striking ,the continuation and inserting ,for a year preceding #bjbd1 the continuation2 7ii7 in subparagraph 7,d77iii71 by striking #ahfj;,d-#b7;b77#d77;,a77i77,i7 and inserting #ahfj;,d-#b7;b77#d77;,a77i77,i77aa72 and 7iii7 in subparagraph 7,e71 by striking ,the elimination and inserting ,for a year preceding #bjbd1 the elimination2 and 7,b7 in paragraph 7#b7-- 7i7 in subparagraph 7,c71 by striking ,the continuation and inserting ,for a year preceding #bjbd1 the continuation2 and 7ii7 in subparagraph 7,e7-- 7,i7 by inserting for a year preceding #bjbd1 after subsection 7c72 and 7,,ii7 by striking #ahfj;,d-#b7;b77#d77;,a77i77,i7 and inserting #ahfj;,d-#b7;b77#d77;,a77i77,i77aa74 7#d7 ,section #ahfj;,d-#ba7;d77#g7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#aca7;d77#g77 is amended by striking section #ahfj;,d-#b7;b77,b77#d77;,b77i7 and inserting section #ahfj;,d-#b7;b77,b77#d77;,c77i74 7#e7 ,section #ahfj;,d-#bb7;a77#b77;,a7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#acb7;a77#b77;,a77 is amended-- 7,a7 by striking the value of any discount and inserting the following3 8the value of-- 7i7 for years prior to #bjbd1 any discount 2 7,b7 in clause 7i71 as inserted by subparagraph 7,a7 of this paragraph1 by striking the period at the end and inserting 2 and2 and 7,c7 by adding at the end the following new clause3 7ii7 for #bjbd and each subsequent year1 any discount provided pursuant to section #ahfj;,d-#ad;,b4 4 7#f7 ,section #ahfj;,d-#da7;a77#f7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#aea7;a77#f77 is amended-- 7,a7 by inserting for a year before #bjbd after #ahfj;,d-#b7;b77#c72 and 7,b7 by inserting for such year before the period4 7i7 ,effective date ,the amendments made by this section shall apply to plan year #bjbd and subsequent plan years4 #c4 ,monthly out-of-pocket cost sharing maximum for enrollees who incur a significant portion of costs towards annual out-of-pocket threshold 7a7 ,in general ,section #ahfj;,d-#b7;b7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#ajb7;b771 as amended by section #b1 is amended-- 7#a7 in paragraph 7#b7-- 7,a7 in subparagraph 7,a71 by striking and 7,d7 and inserting 1 7,d71 and 7,e72 and 7,b7 by adding at the end the following new subparagraph3 7,e7 ,monthly out-of-pocket cost sharing maximum for enrollees who incur a significant portion of costs towards annual out-of-pocket threshold 7i7 ,establishment of process 7,i7 ,in general ,for plan years beginning on or after ,january #a1 #bjbd1 the ,secretary shall1 through notice and comment rulemaking1 establish a process under which each ,,pdp sponsor offering a prescription drug plan and each ,,ma organization offering an ,,ma-,,pd plan shall each plan year automatically enroll applicable enrollees in the option to have their monthly out-of-pocket cost-sharing under the plan capped and paid in monthly installments in accordance with this subparagraph 7referred to in this subparagraph as the monthly out-of-pocket cost sharing maximum option74 7,,ii7 ,opt out ,the process established under this clause shall permit an applicable enrollee1 prior to the beginning of the plan year or at any point during the plan year1 to opt out of enrollment in the monthly out-of-pocket cost sharing maximum option and pay any out-of-pocket cost-sharing otherwise applicable for any covered part ,d drug in full at the time of the dispensing of such drug 7or at the time of such opt out in the case of costs incurred during such enrollment that have not yet been billed to the enrollee74 7ii7 ,definitions 7,i7 ,applicable enrollee ,in this subparagraph1 the term applicable enrollee means any enrollee in a prescription drug plan or an ,,ma-,,pd plan1 including an enrollee who is a subsidy eligible individual 7as defined in paragraph 7#c7 of section #ahfj;,d-#ad7;a771 who incurs or is likely to incur a significant percentage of costs for covered part ,d drugs4 7,,ii7 ,significant percentage ,for purposes of subclause 7,i71 the ,secretary shall1 in the rulemaking under clause 7i71 define the term significant percentage with respect to a percentage of the annual out-of-pocket threshold specified in paragraph 7#d77;,b7 but in no case shall the significant percentage be less than #ej percent or more than #ajj percent of the annual out-of-pocket threshold4 7iii7 ,determination of monthly out-of-pocket cost sharing maximum ,for each month in a plan year in which an applicable enrollee is enrolled in the monthly out-of-pocket cost sharing maximum option1 the ,,pdp sponsor or ,,ma organization shall determine a monthly out-of-pocket cost sharing maximum 7as defined in clause 7v77 for such enrollee4 7iv7 ,beneficiary monthly payments ,with respect to an applicable enrollee who is enrolled in the monthly out-of-pocket cost sharing maximum option1 for each month described in clause 7iii71 the ,,pdp sponsor or ,,ma organization shall bill such enrollee an amount 7not to exceed the monthly out-of-pocket cost sharing maximum7 for the out-of-pocket costs of such enrollee in such month4 7v7 ,monthly out-of-pocket cost sharing maximum defined ,in this subparagraph1 the term monthly out-of-pocket cost sharing maximum means1 with respect to an enrollee-- 7,i7 for the first month in which this subparagraph applies1 an amount determined by calculating-- 7aa7 the annual out-of-pocket threshold specified in paragraph 7#d77;,b7 minus the incurred costs of the enrollee as described in paragraph 7#d77;,c72 divided by 7bb7 the number of months remaining in the plan year2 and 7,,ii7 for a subsequent month1 an amount determined by calculating-- 7aa7 the sum of any remaining out-of-pocket costs owed by the enrollee from a previous month that have not yet been billed to the enrollee and any additional costs incurred by the enrollee2 divided by 7bb7 the number of months remaining in the plan year4 7vi7 ,additional requirements ,the following requirements shall apply with respect to the monthly out-of-pocket cost sharing maximum option under this subparagraph3 7,i7 ,secretarial responsibilities ,the ,secretary shall provide information to part ,d eligible individuals on the monthly out-of-pocket cost sharing maximum option through educational materials1 including through the notices provided under section #ahjd7;a74 7,,ii7 ,,pdp sponsor and ,,ma organization responsibilities ,each ,,pdp sponsor offering a prescription drug plan or ,,ma organization offering an ,,ma-,,pd plan-- 7aa7 shall not limit the application of the monthly out-of-pocket cost sharing maximum option to certain covered part ,d drugs2 7bb7 shall1 prior to the plan year1 notify prospective enrollees of such option1 including the availability of the opt out under clause 7i77,,ii72 7cc7 shall include information on such option in enrollee educational materials1 including the availability of the opt out under clause 7i77,,ii72 7dd7 shall have in place a mechanism to notify a pharmacy during the plan year when an enrollee incurs out-of-pocket costs with respect to covered part ,d drugs that make it likely the enrollee is an applicable enrollee2 7ee7 shall provide that a pharmacy1 after receiving a notification described in item 7dd7 with respect to an enrollee1 informs the enrollee of such notification2 7ff7 shall ensure that the application of this subparagraph has no effect on the amount paid to pharmacies 7or the timing of such payments7 with respect to covered part ,d drugs dispensed to the enrollee2 and 7gg7 shall have in place a financial reconciliation process to correct inaccuracies in payments made by an enrollee under this subparagraph with respect to covered part ,d drugs during the plan year4 7,,iii7 ,failure to pay amount billed under monthly out-of-pocket cost sharing maximum option ,if an applicable enrollee fails to pay the amount billed for a month as required under this subparagraph1 the applicable enrollee's enrollment in the monthly out-of-pocket cost sharing maximum option shall be terminated and the enrollee shall pay the cost-sharing otherwise applicable for any covered part ,d drugs subsequently dispensed to the enrollee up to the annual out-of-pocket threshold specified in paragraph 7#d77;,b74 7,,iv7 ,clarification regarding past due amounts ,nothing in this subparagraph shall be construed as prohibiting a ,,pdp sponsor or an ,,ma organization from billing an enrollee for an amount owed under this subparagraph4 7,v7 ,treatment of unsettled balances ,any unsettled balances with respect to amounts owed under this subparagraph shall be treated as plan losses and the ,secretary shall not be liable for any such balances outside of those assumed as losses estimated in plan bids4 2 and 7#b7 in paragraph 7#d7-- 7,a7 in subparagraph 7,c71 by striking and subject to subparagraph 7,f7 and inserting and subject to subparagraphs 7,f7 and 7,g72 and 7,b7 by adding at the end the following new subparagraph3 7,g7 ,inclusion of costs paid under monthly out-of-pocket cost sharing maximum option ,in applying subparagraph 7,a71 with respect to an applicable enrollee who is enrolled in the monthly out-of-pocket cost sharing maximum option described in clause 7i77,i7 of paragraph 7#b77;,e71 costs shall be treated as incurred if such costs are paid by a ,,pdp sponsor or an ,,ma organization under the process provided under such paragraph4 4 7b7 ,application to alternative prescription drug coverage ,section #ahfj;,d-#b7;c7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#ajb7;c77 is amended by adding at the end the following new paragraph3 7#d7 ,same monthly out-of-pocket cost sharing maximum ,for plan years beginning on or after ,january #a1 #bjbd1 the monthly out-of-pocket cost sharing maximum for applicable enrollees under the process provided under subsection 7b77#b77;,e7 shall apply to such coverage4 4