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Medicare Prescription Drug, Improvement, and Modernization Act

The Medicare Prescription Drug, Improvement, and Modernization Act,[1] also called the Medicare Modernization Act or MMA, is a federal law of the United States, enacted in 2003.[2] It produced the largest overhaul of Medicare in the public health program's 38-year history.

Long title

An act to amend title XVIII of the Social Security Act to provide for a voluntary prescription drug benefit under the medicare program and to strengthen and improve the medicare program, and for other purposes.

Medicare Modernization Act or MMA

108 - 173

The MMA was signed by President George W. Bush on December 8, 2003, after passing in Congress by a close margin.[3]

It provides a subsidy for large employers to discourage them from eliminating private prescription coverage to retired workers (a key goal);

AARP

It prohibits the federal government from negotiating discounts with drug companies;

It prevents the government from establishing a , but does not prevent private providers such as HMOs from doing so.

formulary

enrollees sign on for a whole year

care could be restricted to specific provider networks

formularies were to be used to restrict prescription drug choices

prescription coverage would be deferred to the patient or a Medicare Part D prescription plan

care other than emergency care can be restricted to a particular region

federal reimbursement can be adjusted according to the health risk of the enrollees

Health savings accounts[edit]

The MMA created a new Health Savings Account statute that replaced and expanded the previous Medical Savings Account law by expanding allowable contributions and employer participation.[4] After the first 10 years over 12 million Americans were enrolled in HSAs (AHIP;EBRI).[5][6]

it mandated a six-city trial of a partly privatized Medicare system (by 2010)

it gave an extra $25 billion to rural hospitals (at the request of congressional representatives in the rural West)

it required higher fees from wealthier seniors

it added a pretax for working people

health savings account

it required Medicare Part D plans to support , with a planned implementation date of April 2009.[7]

electronic prescribing

Costs[edit]

Initially, the net cost of the program was projected at $400 billion for the ten-year period between 2004 and 2013. Administration official Thomas Scully instructed analyst Richard Foster not to tell Congress of Foster's finding that the cost would actually be over $500 billion. One month after passage, the administration estimated that the net cost of the program over the period between 2006 (the first year the program started paying benefits) and 2015 would be $534 billion.[19] As of February 2009, the projected net cost of the program over the 2006 to 2015 period was $549.2 billion.[20]

Bar to negotiation of prescription drug prices[edit]

After the enactment of Medicare Prescription Drug, Improvement, and Modernization Act in 2003, only insurance companies administering Medicare prescription drug program, not Medicare, had the legal right to negotiate drug prices directly with drug manufacturers. The Medicare Prescription Drug Act expressly prohibited Medicare from negotiating bulk prescription drug prices.[21] The "donut hole" provision of the Patient Protection and Affordable Care Act of 2010 was an attempt to correct the issue.[22] In 2022, the Inflation Reduction Act removed this ban and allowed Medicare to begin negotiating drug prices starting in 2026.[23]

(PDF/details) as amended in the GPO Statute Compilations collection

Social Security Act - Title XVIII Health Insurance for The Aged and Disabled

Centers for Medicare & Medicaid Services (CMS)

Medicare Modernization Act

Medicare.gov

Medicare Modernization Act