,i  #aai? ,,congress  #b;d ,session  ,h4
 ,r4 #ajcfi  ,,9 ,,! ,,h\se ,,(         
,,repres5tatives  ,septemb] #ad1        
#bjbf,mr4 ,mack5zie 7= himself1 ,mr4    
,au*9closs1 ,mr4 ,all51 ,mrs4 ,mc,bath1 
& ,mrs4 ,mill] ( ,we/ ,virg9ia7         
introduc$ ! foll[+ bill2 :i* 0 ref]r$ to
 ! ,committee on ,en]gy & ,comm]ce1 & 9 
addition to ! ,committees on ,ways &    
,means1 & ,education & ,work=ce1 = a    
p]iod to be subsequ5tly det]m9$ by !    
,speak]1 9 ea* case = consid]ation ( su*
 provisions z fall )9 ! jurisdiction ( !
 committee conc]n$  ,a ,,bill  ,to am5d 
title ,,xviii ( ! ,social ,security     
,act1 & ! ,employee ,retirem5t ,income  
,security ,act ( #aigd1 to create c]ta9 
requirem5ts ) respect to ph>macy b5efit 
manag]s4  #a4 ,%ort title ,?is ,act may 
be cit$ z ! ,net ,effective ,co/        
,transp>5cy & ,prescription ,drug       
,af=dability ,act ( #bjbf4  #b4 ,m$ic>e 
"p ,d ph>macy b5efit manag] re=ms  7a7  
,9 g5]al ,section #ahfj;,d-#ab ( !      
,social ,security ,act 7#db ,u4,s4,c4   

#aciew-#aab7 is am5d$--  7#a7 by add+ at
 ! end ! foll[+ new subsections3  7i7   
,requir+ /&>diz$ public bidd+ process = 
ph>macy b5efit manag]s  7#a7 ,requir+   
annual bid solicitation ,= plan ye>s    
beg9n+ on or aft] ,janu>y #a1 #bjbh1 ea*
 contract ent]$ into ) a ,,pdp sponsor  
"u ?is "p ) respect to a prescription   
drug plan (f]$ by su* sponsor %all      
provide t su* sponsor may only ent] into
 a contract ) a ph>macy b5efit manag] to
 provide ph>macy b5efit managem5t       
s]vices on behalf ( su* sponsor dur+ su*
 plan ye> if su* sponsor--  7,a7        
solicits bids = su* ph>macy b5efit      
managem5t s]vices 9 accordance ) !      
process "u p>agraph 7#b72 &  7,b7       
includes 9 ! submission to ! ,secret>y  
"u section #ahfj;,d-#aa7;b7 ) respect to
 su* plan--  7i7 in=mation suffici5t to 
demon/rate t ! sponsor accept$ &        
consid]$ all bids submitt$ by a ph>macy 
b5efit manag] conta9+ ! in=mation       
describ$ 9 p>agraph 7#b77;,b7 9 ! uni=m 
=mat specifi$ by ! ,secret>y2  7ii7 !   

in=mation describ$ 9 p>agraph 7#b77;,b7 
receiv$ f ea* su* ph>macy b5efit manag] 
9 connection ) ea* su* bid2 &  7iii7 9 !
 case t ! bid select$ at ! conclusion ( 
! process describ$ 9 subp>agraph 7,a7 is
 n ! bid ) ! l[e/ project$ net effective
 co/1 in=mation suffici5t to support a  
f9d+ "u p>agraph 7#c7 t ! selection ( ! 
bid s select$ is necess>y to advance a  
significant programmatic int]e/ id5tifi$
 by su* sponsor4  7#b7 ,ph>macy b5efit  
manag] s]vices bidd+ process  7,a7 ,9   
g5]al ,= purposes ( p>agraph 7#a77;,a71 
a ,,pdp sponsor solicits bids = ph>macy 
b5efit manag] s]vices 9 accordance ) !  
process describ$ 9 ?is p>agraph if !    
sponsor--  7i7 requires ea* bid to      
conta9-- 7,i7 ! in=mation describ$ 9    
subp>agraph 7,b7 9 a uni=m =mat specifi$
 by ! ,secret>y2 &  7,,ii7 an atte/ation
 ( complet5ess & accuracy f an (fic] ( !
 ,,pdp sponsor2  7ii7 makes available at
 no co/ to ea* ph>macy b5efit manag]    
submitt+ a bid su* in=mation1 pres5t$ 9 
a uni=m =mat1 z ! ,secret>y det]m9es    

necess>y to enable ! ph>macy b5efit     
manag] to submit a responsive bid1      
includ+--  7,i7 project$ enrollm5t2     
7,,ii7 hi/orical utilization data2      
7,,iii7 =mul>y design p>amet]s2 &       
7,,iv7 b5efit design p>amet]s2  7iii7   
accepts all bids f ph>macy b5efit       
manag]s conta9+ ! in=mation describ$ 9  
p>agraph 7#b77;,b7 9 ! uni=m =mat       
specifi$ by ! ,secret>y1 )\t impos+ any 
additional conditions = p>ticipation 9 !
 bidd+ process2 &  7iv7 complies )--    
7,i7 requirem5ts = solicitation (       
multiple qualifi$ bidd]s1 evaluation    
crit]ia1 ju/ification proc$ures = limit$
 competition or sole-s\rce contract+1   
contract duration limits1 en=cem5t      
me*anisms1 & m9imum docum5tation /&>ds  
consi/5t ) "p #ae ( sub*apt] ,c ( *apt] 
#a ( title #dh1 ,code ( ,f$]al          
,regulations2 &  7,,ii7 su* o!r         
requirem5ts f ! relevant provisions (   
*apt] #cc ( subtitle ,c ( subtitle ,i ( 
title #da1 ,unit$ ,/ates ,code1 & !     
regulations "u *apt] #a ( title #dh1    

,code ( ,f$]al ,regulations1 z !        
,secret>y det]m9es appropriate4  7,b7   
,/&>diz$ bid cont5ts ,= purposes (      
subp>agraph 7,a77i77,i71 ! in=mation    
describ$ 9 ?is subp>agraph is1 ) respect
 to a prescription drug plan (f]$ by a  
,,pdp sponsor1 a ph>macy b5efit manag]1 
& a plan ye>1 ! foll[+3 7i7 ,! total    
doll> am\nt t ! ph>macy b5efit manag]   
expects to receive 9 connection )       
s]vices p]=m$ on behalf ( ! sponsor--   
7,i7 z bona fide s]vice fees 7z def9$ 9 
section #ahfj;,d-#ab7;h77#g77;,b772     
7,,ii7 z inc5tive paym5ts 7z describ$ "u
 section #ahfj;,d-#ab7;h77#a77;,a77ii772
 &  7,,iii7 z price concessions1 includ+
 rebates1 disc\nts1 & o!r direct or     
indirect remun]ations receiv$ f all     
ph>macy & non-ph>macy s\rces4  7ii7 ,)  
respect to cov]$ "p ,d drugs propos$ by 
! ph>macy b5efit manag] to be includ$ on
 ! =mul>y ( ! plan--  7,i7 ! aggregate  
expect$ utilization ( all su* drugs2    
7,,ii7 ! aggregate :olesale acquisition 
co/ = all su* drugs2  7,,iii7 !         

aggregate am\nt expect$ to be receiv$ by
 ! ph>macy b5efit manag]1 f all ph>macy 
& non-ph>macy s\rces1 z price           
concessions1 includ+ rebates1 disc\nts1 
& o!r direct or indirect remun]ations 9 
connection ) all su* drugs1 display$ z a
 p]c5tage ( su* aggregate :olesale      
acquisition co/2  7,,iv7 ( ! am\nt      
describ$ 9 subclause 7,,iii71 !         
aggregate am\nt expect$ to be           
attributable to su* drugs disp5s$ by a  
ph>macy t is an affiliate 7z def9$ 9    
section #ahfj;,d-#ab7;h77#g77;,a77 ( !  
ph>macy b5efit manag]2  7,v7 ! aggregate
 net +r$i5t co/ = all su* drugs2  7,,vi7
 ! av]age paym5t to a ph>macy = disp5s+ 
all su* drugs2 &  7,,vii7 ! av]age co/  
%>+1 9 doll>s1 = an enrollee 9 su* plan 
) respect to all su* drugs4  7iii7 ,!   
project$ net effective co/ = su* ye>4   
7iv7 ,) respect to ! mo/ rec5t #c-ye>   
p]iod = :i* data is available1 a        
description ( any v>iation betwe5 !     
project$ net effective co/ & ! actual   
net effective co/4  7,c7 ,public        

availability ( data on ph>macy b5efit   
manag] bids ,! ,secret>y %all annually  
publi%1 9 an aggregat$1 deid5tifi$ =mat1
 ! in=mation describ$ 9 subp>agraph 7,b7
 & submitt$ to ! ,secret>y 9 accordance 
) p>agraph 7#a77;,b77ii74  7,d7         
,regulations ,n lat] ?an #ahj days aft] 
! date ( enactm5t ( ?is p>agraph1 !     
,secret>y %all promulgate regulations to
 c>ry out ?is p>agraph4  7#c7 ,f9d+ (   
necessity to advance significant        
programmatic int]e/ ,= purposes (       
p>agraph 7#a77;,b77iii71 9 ! case t !   
bid = ph>macy b5efit managem5t s]vices  
select$ by a ,,pdp sponsor is n ! bid ) 
! l[e/ project$ net effective co/       
receiv$ by su* sponsor1 ! ,secret>y may 
f9d t selection ( su* bid is necess>y to
 advance a significant programmatic     
int]e/ id5tifi$ by su* sponsor 7su* z ! 
protection ( b5efici>y access1 cont9uity
 ( c>e1 network adequacy1 ! prev5tion ( 
s]vice disruption1 program integrity &  
fraud prev5tion1 demon/rat$ op]ational  
capability1 or demon/rat$ cl9ical       

outcomes7 only if--  7,a7 ! ,secret>y   
det]m9es t-- 7i7 ! programmatic int]e/  
id5tifi$ by ! sponsor mat]ially b5efits 
enrollees "u ! plan1 or advances        
/atutory program objectives2  7ii7 !    
programmatic int]e/ is n already        
reflect$ 9 ! calculation ( ! net        
effective co/ ( ! plan2  7iii7 !        
programmatic int]e/ _c reasonably be    
a*iev$ ?r\gh selection ( ! bid ) ! l[e/ 
project$ net effective co/ receiv$ by ! 
sponsor2  7iv7 ! importance ( !         
programmatic int]e/ cle>ly outweighs !  
additional co/ "u ?is "p2 &  7v7        
approval ( ! bid repres5ts a reasonable 
& effici5t use ( ,f$]al res\rces2 &     
7,b7 ea* det]m9ation "u subp>agraph 7,a7
 is support$ by docum5tation suffici5t =
 congressional ov]sight1 audit1 &       
program review purposes4  7#d7 ,treatm5t
 ( sponsor act+ z ,,pbm  7,a7 ,9 g5]al  
,9 ! case ( a ,,pdp sponsor describ$ 9  
subp>agraph 7,b7 t int5ds to provide its
 own ph>macy b5efit managem5t s]vices = 
a ye>1 ! requirem5ts "u ?is subsection  

%all apply ) respect to su* sponsor z if
 su* sponsor 7 ent]+ into a contract ) a
 ph>macy b5efit manag] to provide su*   
s]vices4  7,b7 ,,pdp sponsor describ$ ,=
 purposes ( subp>agraph 7,a71 a ,,pdp   
sponsor describ$ 9 ?is subp>agraph is1 )
 respect to a ye>1 a ,,pdp sponsor t    
provides ph>macy b5efit managem5t       
s]vices on behalf ( ano!r ,,pdp sponsor 
= su* ye>4  7#e7 ,net effective co/     
def9$ ,9 ?is subsection1 ! t]m net      
effective co/ means1 ) respect to a     
prescription drug plan (f]$ by a ,,pdp  
sponsor & a plan ye>1 ! total co/ to su*
 sponsor ( all cov]$ "p ,d drugs includ$
 on ! =mul>y ( ! plan t are furni%$ to  
all enrollees 9 su* plan = su* ye>4  7j7
 ,enhanc$ ov]sight ( ,,pdp sponsors     
7#a7 ,9 g5]al ,= plan ye>s beg9n+ on or 
aft] ,janu>y #a1 #bjbh1 ea* contract    
ent]$ into ) a ,,pdp sponsor "u ?is "p )
 respect to a prescription drug plan    
(f]$ by su* sponsor %all require su*    
sponsor to-- 7,a7 p]iodically submit to 
! ,secret>y1 at su* "t & 9 su* =m z !   

,secret>y may require1 in=mation        
suffici5t to all[ ! ,secret>y to comp>e 
actual co/-%>+ = enrollees 9 ! plan to !
 co/-%>+ describ$ 9 ! bid submitt$ "u   
section #ahfj;,d-#aa7;b77#b72  7,b7     
ma9ta9 a real-"t co/-%>+ tool t         
reflects1 ) respect to ea* cov]$ "p ,d  
drug includ$ on ! =mul>y ( su* plan1 !  
actual co/ ( su* drug 7net ( any price  
concessions1 includ+ rebates1 disc\nts1 
& o!r direct or indirect remun]ations   
negotiat$ 9 connection ) su* drug7 to-- 
7i7 ! sponsor2  7ii7 ! ,secret>y2 &     
7iii7 ! enrollee2 &  7,c7 ma9ta9 9 an   
escr[ acc\nt suffici5t funds to refund  
to enrollees 9 ! plan any am\nts        
incorrectly collect$ = su* ye> 7z       
requir$ "u section #dbc4bid ( title #db1
 ,code ( ,f$]al ,regulations 7or a      
successor regulation774  7#b7 ,ov]sight 
,= plan ye>s beg9n+ on or aft] ,janu>y  
#a1 #bjbh1 ! ,secret>y %all c>ry out !  
foll[+ ov]sight activities ) respect to 
,,pdp sponsors ) a contract to (f] a    
prescription drug plan "u ?is "p3  7,a7 

,annual audits  7i7 ,9 g5]al ,!         
,secret>y %all audit n less ?an "o-?ird 
( all ,,pdp sponsors ) a contract to (f]
 a prescription drug plan "u ?is "p to  
v]ify t ! prescription drug cov]age     
provid$ "u ! plan reflects !            
prescription drug cov]age propos$ to be 
provid$ "u ! bid submitt$ "u section    
#ahfj;,d-#aa7;b77#b77;,a74  7ii7        
,requir$ compon5ts ,ea* audit conduct$  
"u subp>agraph 7,a7 %all include an     
evaluation (--  7,i7 ! co/-%>+ am\nts   
paid by enrollees "u ! plan1 express$ z 
doll> am\nts1 & :e!r su* am\nts are     
consi/5t ) ! co/-%>+ describ$ 9 ! bid   
submitt$ "u section #ahfj;,d-#aa7;b7 &  
approv$ by ! ,secret>y2 &  7,,ii7 9 !   
case t su* plan implem5ts ti]$ co/-%>+1 
& provides = su* co/-%>+ to be impos$ z 
co9surance1 :e!r ! co/-%>+ am\nts paid  
by enrollees1 express$ z doll> am\nts1  
are consi/5t ) 7& d n exce$7 ! maximum  
all[able co/-%>+ reflect$ 9 su* bid 7&  
m>ket$ to enrollees at ! "t ( plan      
selection71 z det]m9$ on ! basis (      

actual out-(-pocket co/s4  7iii7        
,me?odology ,9 conduct+ ! audits "u     
subp>agraph 7,a71 ! ,secret>y may use   
sampl+ & extrapolation me?odologies to !
 ext5t t su* me?odologies are us$ 9     
connection ) o!r audits "u ?is "p4  7,b7
 ,bid reconciliation analysis ,!        
,secret>y %all p]iodically comp>e actual
 co/s incurr$ 9 connection ) ! plan to !
 project$ co/s includ$ 9 ! bid submitt$ 
"u section #ahfj;,d-#aa7;b77#b74 ,su*   
comp>ison %all include--  7i7 a qu>t]ly 
analysis ( any v>iation betwe5 !        
project$ & actual net effective co/ 7z  
def9$ 9 subsection 7i77#e772 &  7ii7 an 
analysis ( ! impact ( any mid-ye> =mul>y
 *anges on ! co/-%>+ ( enrollees 9 !    
plan4  7,c7 ,risk-bas$ monitor+  7i7 ,9 
g5]al ,if1 pursuant to subp>agraph      
7,b77i71 ! ,secret>y det]m9es t ! actual
 net effective co/ incurr$ by a ,,pdp   
sponsor = a cal5d> qu>t] v>ies f !      
project$ net effective co/ includ$ 9 !  
bid submitt$ "u section                 
#ahfj;,d-#aa7;b77#b77;,c77v7 by m ?an ! 

p]c5tage e/abli%$ "u clause 7ii71 !     
,secret>y %all-- 7,i7 provide notice to 
! ,,pdp sponsor ( su* v>iation2 &       
7,,ii7 require ! ,,pdp sponsor to       
submit1 n lat] ?an #cj cal5d> days aft] 
su* notice-- 7aa7 a writt5 explanation (
 su* v>iation2 &  7bb7 a corrective     
action plan to address su* v>iation4    
7ii7 ,p]c5tage ,= purposes ( clause 7i71
 ! ,secret>y %all e/abli%1 ?r\gh        
rulemak+1 a p]c5tage 7n to exce$ #aj    
p]c5t7 t repres5ts an acceptable level (
 v>iation betwe5 ! project$ & actual net
 effective co/ = a ye>4 ,9 e/abli%+ su* 
p]c5tage1 ! ,secret>y %all take into    
acc\nt pot5tial factors affect+ !       
v>iation betwe5 project$ & actual co/s1 
includ+--  7,i7 hi/orical v>iation 9    
sp5d+ "u ?is "p2  7,,ii7 ! impact (     
high-co/ cov]$ "p ,d drugs on ov]all    
sp5d+ "u ?is "p2  7,,iii7 *anges 9 drug 
utilization1 =mul>y composition1 &      
cl9ical practice patt]ns2  7,,iv7       
v>iability 9 price concessions1 includ+ 
rebates1 disc\nts1 & o!r direct or      

indirect remun]ations2  7,v7 diff]5ces  
betwe5 project$ & actual enrollm5t1 &   
diff]5ces betwe5 project$ & actual      
enrollee *>act]i/ics2  7,,vi7 plan      
b5efit designs & co/-%>+ /ructures2 &   
7,,vii7 o!r factors beyond ! control ( !
 ,,pdp sponsor1 or ! ph>macy b5efit     
manag] provid+ ph>macy b5efit managem5t 
s]vices on behalf ( su* sponsor1 t may  
mat]ially affect co/s4  7iii7           
,item-level audits ,! ,secret>y may     
conduct an item-level audit ( a         
prescription drug plan "u ?is "p1       
includ+ an audit on ! basis ( a specific
 cov]$ "p ,d drug1 a specific ph>macy1  
or a /ati/ically valid sample (         
individual claims1 = ! purpose (--  7,i7
 id5tify+ ! cause ( any v>iation betwe5 
! project$ & actual net effective co/ = 
a ye>2  7,,ii7 v]ify+ t co/s incurr$ "u 
! plan are consi/5t ) ! assumptions &   
in=mation includ$ 9 ! bid submitt$ "u   
section #ahfj;,d-#aa7;b72 &  7,,iii7    
assess+ :e!r pric+1 reimbursem5t1 or    
utilization patt]ns result 9 a          

diff]5tial f9ancial b5efit to a ph>macy 
b5efit manag] or an affiliate 7z def9$ 9
 subsection 7h77#g77;,a77 t is n        
reasonably reflect$ 9 ! net effective   
co/ or o!r in=mation submitt$ 9 su* bid4
  7,d7 ,=mul>y monitor+  7i7 ,9 g5]al ,!
 ,secret>y %all monitor *anges to !     
=mul>y ( a prescription drug plan "u ?is
 "p ?r\gh\t ! plan ye> to id5tify       
patt]ns t may con/itute b5efici>y       
bait-&-swit* practices4  7ii7 ,b5efici>y
 bait-&-swit* practice def9$ ,9 ?is     
subp>agraph1 ! t]m b5efici>y            
bait-&-swit* practice means a patt]n (  
=mul>y *anges or relat$ utilization     
managem5t practices t1 9 ! aggregate--  
7,i7 mat]ially increase enrollee co/-%>+
 or ov]all co/s relative to ! cov]age   
describ$ 9 ! bid submitt$ "u section    
#ahfj;,d-#aa7;b72  7,,ii7 result 9 a    
sy/ematic %ift 9 utilization t[>d c]ta9 
cov]$ "p ,d drugs1 ph>macies1 or o!r    
arrangem5ts 7includ+ ?r\gh ! pref]5tial 
placem5t ( drugs or ! use ( ph>macies or
 affiliates ( a ph>macy b5efit manag]7 t

 7 n reasonably reflect$ 9 su* bid2 or  
7,,iii7 o!rwise h ! effect ( mat]ially  
alt]+ ! prescription drug cov]age (f]$  
"u ! plan 9 a mann] t w\ld reasonably be
 expect$ to affect an enrollee's plan   
selection at ! "t ( enrollm5t4  7#c7    
,public report+ ,! ,secret>y %all make  
publicly available a report comp>+ !    
actual co/s incurr$ 9 connection ) a    
prescription drug plan "u ?is "p to !   
project$ co/s includ$ 9 bids submitt$ "u
 section #ahfj;,d-#aa7;b77#b74 ,su*     
comp>ison %all be aggregat$ across all  
,,pdp sponsors1 & %all describe any     
aggregate sav+s attributable to ! bidd+ 
process requir$ "u subsection 7i7 79    
relation to ph>macy b5efit manag]s74    
7#d7 ,en=cem5t & p5alties  7,a7 ,civil  
monet>y p5alties  7i7 ,false or mislead+
 in=mation ,a ,,pdp sponsor t provides  
false or mislead+ in=mation 7includ+ a  
mat]ial omission7 9 a bid submission "u 
section #ahfj;,d-#aa7;b7 %all be subject
 to a civil monet>y p5alty ( n m ?an    
#ajj1jjj p] violation4  7ii7 ,failure to

 provide in=mation ,a ,,pdp sponsor t   
fails to provide any in=mation requir$  
to be provid$ "u section                
#ahfj;,d-#aa7;b7 or subsection 7i7 or   
7j7 %all be subject to a civil monet>y  
p5alty ( n m ?an #be1jjj p] cal5d> day  
until su* failure is correct$4  7iii7   
,deviation f bid projection ,9 ! case t 
! actual net effective co/ 7z def9$ 9   
subsection 7i77#e77 = a prescription    
drug plan "u ?is "p & a plan ye> exce$s 
! project$ net effective co/ = su* plan 
includ$ 9 ! bid submitt$ "u section     
#ahfj;,d-#aa7;b7 by m ?an ! p]c5tage    
e/abli%$ "u subsection 7j77#b77;,c77ii71
 ! ,,pdp sponsor (f]+ su* plan %all be  
subject to a civil monet>y p5alty ( n m 
?an #aj1jjj p] violation4 ,9 det]m9+ !  
am\nt ( su* p5alty1 ! ,secret>y %all    
take into acc\nt ! magnitude & duration 
( su* deviation4  7,b7 ,re/itution  7i7 
,9 g5]al ,9 ! case t ! case t actual    
co/s = a prescription drug plan "u ?is  
"p & a plan ye> 7includ+ am\nts         
associat$ ) enrollee co/-%>+ & o!r      

am\nts n directly *>g$ to enrollees7    
mat]ially exce$s ! project$ co/s = su*  
plan includ$ 9 ! bid submitt$ "u section
 #ahfj;,d-#aa7;b71 ! ,secret>y may      
require ! ,,pdp sponsor (f]+ su* plan to
 refund plan enrollees = su* am\nts     
reta9$ by ! sponsor1 a ph>macy b5efit   
manag] provid+ ph>macy b5efit managem5t 
s]vices on behalf ( su* sponsor1 or an  
affiliate ( su* ph>macy b5efit manag] z 
are attributable to su* disp>ity4  7ii7 
,coord9ation ) refunds ( am\nts         
incorrectly collect$ ,to ! ext5t        
feasible1 ! ,secret>y %all coord9ate !  
application ( ?is subp>agraph ) !       
requirem5ts "u section #dbc4bid7;b7 (   
title #db1 ,code ( ,f$]al ,regulations  
7or a successor regulation74  7,c7      
,judicial review ,any p5alty impos$ "u  
?is p>agraph %all be subject to judicial
 review 9 ! ,unit$ ,/ates di/rict c\rt =
 ! di/rict 9 :i* ! violation occurr$1   
consi/5t ) section #aabh;,a7e74  2 &    
7#b7 9 subsection 7h7--  7,a7 9 !       
subsection head+1 by ins]t+ agreem5ts ) 

be=e ph>macy b5efit manag]s2  7,b7 9    
p>agraph 7#a71 by add+ at ! end ! foll[+
 new subp>agraph3  7,e7 ,gu>antees )    
respect to net effective co/ &          
transp>5cy  7i7 ,9 g5]al ,! ph>macy     
b5efit manag]-- 7,i7 gu>antees t !      
actual net effective co/ 7z def9$ 9     
subsection 7i77#e77 = ! ye> w n exce$ ! 
project$ net effective co/ by m ?an !   
p]c5tage e/abli%$ "u subsection         
7j77#b77;,c77ii71 ) p]iodic             
reconciliation requirem5ts on a frequ5cy
 e/abli%$ by ! ,secret>y2 &  7,,ii7     
agrees t1 9 ! case t su* actual net     
effective co/ does exce$ su* project$   
net effective co/ by m ?an su*          
p]c5tage-- 7aa7 ! ph>macy b5efit manag] 
w pay to ! ,,pdp sponsor a p5alty 7n to 
exce$ #aj1jjj p] violation72 &  7bb7 !  
,,pdp sponsor may t]m9ate ! contract )\t
 p5alty4  7ii7 ,transp>5cy ,! ph>macy   
b5efit manag] agrees--  7,i7 to provide 
to ! ,,pdp sponsor ) su* in=mation z !  
sponsor requires to comply ) !          
requirem5ts "u subsection 7j72 &  7,,ii7

 t1 if ! ph>macy b5efit manag] fails to 
provide su* in=mation to ! ,,pdp        
sponsor1 ! ,,pdp sponsor may t]m9ate !  
contract )\t p5alty4  2 &  7,c7 9       
p>agraph 7#b77;,a7-- 7i7 9 clause 7ii71 
by /rik+ & at ! end2  7ii7 9 clause     
7iii71 by /rik+ ! p]iod at ! end &      
ins]t+ a semicolon2 &  7iii7 by add+ at 
! end ! foll[+ new clauses3  7iv7 submit
 to ! ,secret>y a copy ( ea* su* writt5 
agreem5t n lat] ?an ! date t is #cj days
 aft] ! effective date ( su* agreem5t2  
7v7 c]tify to ! ,secret>y on a qu>t]ly  
basis t ea* ph>macy b5efit manag] t has 
ent]$ into su* an agreem5t is meet+ all 
! obligations "u su* agreem5t2 &  7vi7 9
 ! case t any ph>macy b5efit manag] t   
has ent]$ into su* an agreem5t fails to 
meet all ! obligations "u su* agreem5t1 
imm$iately report su* failure to !      
,secret>y2  4  7b7 ,con=m+ am5dm5t      
,section #ahfj;,d-#aa7;b77#b77;,c7 ( !  
,social ,security ,act 7#db ,u4,s4,c4   
#aciew-#aaa7;b77#b77;,c77 is am5d$--    
7#a7 9 clause 7iii71 by /rik+ & at !    

end2  7#b7 9 clause 7iv71 by /rik+ !    
p]iod at ! end & ins]t+ 2 &2 &  7#c7 by 
add+ at ! end ! foll[+ new clause3  7v7 
= plan ye>s beg9n+ on or aft] ,janu>y   
#a1 #bjbh1 ! in=mation describ$ 9       
section #ahfj;,d-#ab7;i77#a77;,b7 7)    
respect to bids = ph>macy b5efit manag] 
s]vices74  4  #c4 ,m$ic>e ,advantage    
ph>macy b5efit manag] requirem5ts  7a7  
,,ma-,,pd compliance ,section           
#aheg7;f77#c77;,g7 ( ! ,social ,security
 ,act 7#db ,u4,s4,c4                    
#aciew-#bg7;f77#c77;,g77 is am5d$ by    
ins]t+ & section #ahfj;,d-#ab7;i7 be=e !
 p]iod at ! end4  7b7 ,quality rat+     
sy/em = ,,ma-,,pd plans ,section        
#ahec7o7 ( ! ,social ,security ,act 7#db
 ,u4,s4,c4 #aciew-#bc7o77 is am5d$--    
7#a7 9 p>agraph 7#d77;,a71 by ins]t+ &1 
beg9n+ ,janu>y #a1 #bjbh1 ) respect to  
an ,,ma-,,pd plan1 incorporat+ ! ph>macy
 b5efit managem5t s]vices p]=mance      
measure describ$ 9 p>agraph 7#h7 be=e ! 
p]iod at ! end2 &  7#b7 by add+ at ! end
 ! foll[+ new p>agraph3  7#h7           

,prescription drug co/ p]=mance measure 
7,a7 ,9 g5]al ,= purposes ( p>agraph    
7#d71 ! ,secret>y %all e/abli% a        
p]=mance measure = ,,ma-,,pd plans =    
purposes ( evaluat+ prescription drug   
co/ v>iations4  7,b7 ,measurem5t crit]ia
 ,! p]=mance measure e/abli%$ "u        
subp>agraph 7,a7 %all evaluate--  7i7 ! 
p]c5tage v>iation betwe5 ! project$ &   
actual net effective co/ 7z def9$ 9     
section #ahfj;,d-#ab7;i77#e77 = a ye>2  
7ii7 ! timel9ess & adequacy ( any       
corrective action plans submitt$ 9      
connection ) su* a v>iation 7z requir$  
"u section                              
#ahfj;,d-#ab7;j77#b77;,c77i77,,ii77bb772
  7iii7 ! ext5t to :i* implem5t+ su*    
corrective actions successfully r$uc$   
su* v>iations 9 subsequ5t qu>t]s2  7iv7 
! frequ5cy & magnitude ( b5efici>y      
co/-%>+ increases attributable to su* a 
v>iation or a =mul>y *ange2 &  7v7 !    
plan's compliance ) ! reconciliation &  
transp>5cy report+ requirem5ts "u       
section #ahfj;,d-#ab7;j74  7,c7 ,rat+   

scale ,! ,secret>y %all e/abli% a #e-/> 
rat+ scale = ! p]=mance measure "u ?is  
p>agraph1 :]e--  7i7 #e />s indicates   
actual co/s )9 #b p]c5t ( bid           
projections ) no requir$ corrective     
actions2  7ii7 #d />s indicates actual  
co/s )9 #e p]c5t ( bid projections )    
timely & effective corrective actions2  
7iii7 #c />s indicates actual co/s )9   
#aj p]c5t ( bid projections ) adequate  
corrective actions2  7iv7 #b />s        
indicates actual co/s exce$+ #aj p]c5t (
 bid projections or inadequate          
corrective actions2 &  7v7 #a />        
indicates actual co/s exce$+ #ae p]c5t (
 bid projections1 failure to submit     
corrective action plans1 or repeat$     
noncompliance4  7,d7 ,integration )     
ov]all /> rat+s  7i7 ,weight+ ,!        
p]=mance measure e/abli%$ "u ?is        
p>agraph %all be weight$ at n less ?an !
 m$ian weight ( all o!r measures us$ 9  
calculat+ ! ov]all /> rat+ "u ?is       
subsection4  7ii7 ,bonus paym5t impact  
,p]=mance on ?is measure %all be fully  

integrat$ into ! ov]all /> rat+s        
calculation = purposes ( quality bonus  
paym5ts "u p>agraph 7#d74  7,e7 ,public 
report+ ,! ,secret>y %all publicly      
report ea* ,,ma-,,pd plan's p]=mance on 
?is measure z "p ( ! annual /> rat+s    
release "u p>agraph 7#c71 includ+--  7i7
 specific p]c5tage v>iation betwe5      
project$ & actual net effective co/s2   
7ii7 corrective action outcomes2 &      
7iii7 comp>ison to national & regional  
b5*m>ks4  7,f7 ,b5efici>y notification  
7i7 ,l[ p]=mance notification ,,ma-,,pd 
plans receiv+ rat+s ( #b />s or bel[ on 
! measure e/abli%$ "u ?is p>agraph %all 
notify enrollees ( _! p]=mance & provide
 in=mation on alt]native plan options   
dur+ ! annual enrollm5t p]iod4  7ii7    
,notification =mat ,! ,secret>y %all    
e/abli% /&>diz$ =mats = b5efici>y       
notifications t cle>ly expla9 !         
implications ( l[ rat+s on su* measure1 
includ+ enrollee co/s = premiums1       
d$uctibles1 co/ %>+1 & ov]all taxpay]   
burd54  7,g7 ,implem5tation timel9e  7i7

 ,initial measurem5t ,! ,secret>y %all  
beg9 collect+ data = ! p]=mance measure 
e/abli%$ "u ?is p>agraph beg9n+ ) ! fir/
 plan ye> beg9n+ aft] ! date t is #a ye>
 aft] ! date ( enactm5t ( ! ,net        
,effective ,co/ ,transp>5cy &           
,prescription ,drug ,af=dability ,act ( 
#bjbf4  7ii7 ,fir/ rat+s ,! ,secret>y   
%all publi% ! fir/ /> rat+s "u ?is      
p>agraph n lat] ?an ! second plan ye>   
foll[+ ! initial data collection4  7iii7
 ,bonus paym5t integration ,p]=mance on 
?is measure %all affect quality bonus   
paym5ts beg9n+ ) ! ?ird plan ye> foll[+ 
initial data collection4  7,h7          
,application to /&alone "p ,d plans ,!  
,secret>y %all e/abli% a comp>able      
p]=mance measurem5t & public report+    
sy/em = prescription drug plans "u "p   
,d1 us+ ! same measurem5t crit]ia & rat+
 scale e/abli%$ "u ?is p>agraph4  4  #d4
 ,comm]cial heal? plan transp>5cy       
requirem5ts  7a7 ,net effective co/s    
7#a7 ,requirem5t ,section               
#djh7;b77#b77;,b77iii7 ( ! ,employee    

,retirem5t ,income ,security ,act (     
#aigd 7#bi ,u4,s4,c4                    
#aajh7;b77#b77;,b77iii77 is am5d$ by    
add+ at ! end ! foll[+3  7,,vii7 ,a     
description1 9 a uni=m =mat1 ( !        
project$ net effective co/ = !          
applicable plan ye> = ea* bid receiv$ by
 ! cov]$ s]vice provid] on behalf ( !   
cov]$ plan f an entity provid+ ph>macy  
b5efit managem5t s]vices4  4  7#b7      
,def9ition ,section #c ( ! ,employee    
,retirem5t ,income ,security ,act (     
#aigd 7#bi ,u4,s4,c4 #ajjb7 is am5d$ by 
ins]t+ aft] p>agraph 7#de7 ! foll[+3    
7#df7 ,net effective co/ ,! t]m net     
effective co/ means1 9 relation to a bid
 provid$ to a cov]$ plan 7z def9$ 9     
section #djh7;b77#b77;,b77ii77 by an    
entity provid+ ph>macy b5efit managem5t 
s]vices1 ! total annual co/ to ! cov]$  
plan ( all cov]$ drugs 9 ! =mul>y t w\ld
 be furni%$ to all enrollees 9 su* plan 
= su* ye> if su* bid 7 accept$4  4  7b7 
,bona fide s]vice fees def9$ ,section #c
 ( ! ,employee ,retirem5t ,income       

,security ,act ( #aigd 7#bi ,u4,s4,c4   
#ajjb71 z am5d$ by subsection 7a77#b71  
is fur!r am5d$ by add+ at ! end !       
foll[+3  7#dg7 ,bona fide s]vice fees ,!
 t]m bona fide s]vice fees means fees   
*>g$ t repres5t fair-m>ket value = bona 
fide1 itemiz$ s]vices p]=m$ on behalf ( 
a drug manufactur] or a cov]$ plan 7z   
def9$ 9 section #djh7;b77#b77;,b77ii77 &
 t ! manufactur] w\ld o!rwise p]=m1 or !
 cov]$ plan w\ld o!rwise contract = 9 ! 
abs5ce ( a s]vice arrangem5t1 & t are n 
pass$ on 9 :ole or 9 "p to ! cov]$ plan1
 :e!r or n an entity (f]+ ph>macy b5efit
 managem5t s]vices takes possession ( ! 
drug4  4  7c7 ,effective date ,!        
am5dm5ts made by ?is section %all apply 
) respect to plan ye>s beg9n+ aft]      
cal5d> ye> #bjbg4