SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Diagnostic Innovation Testing and 
Knowledge Advancement Act of 2013''.

SEC. 2. CREATING INCENTIVES FOR INNOVATIVE DIAGNOSTICS.

    (a) Improvements To Process for Determining Fee Schedule Amounts 
for New Tests.--
            (1) Clarifying factors for rate-setting.--In determining 
        the payment amount under gapfilling procedures (as described in 
        section 414.508(b) of title 42, Code of Federal Regulations, or 
        any successor regulation to such section) for new clinical 
        diagnostic laboratory tests under section 1833(h)(8) of the 
        Social Security Act (42 U.S.C. 1395l(h)(8)), the Secretary of 
        Health and Human Services (in this section referred to as the 
        ``Secretary'') shall take into account, as applicable and 
        available, the following factors with respect to such a new 
        test:
                    (A) Impact on patient care.--The impact of the new 
                test on patient care, patient management, or patient 
                treatment.
                    (B) Technical characteristics.--The technical 
                characteristics of the new test, and the resources 
                required to develop, validate, and perform the new 
                test.
                    (C) Claims data.--Data from claims for which 
                payment is made under part B of title XVIII of the 
                Social Security Act.
                    (D) Laboratory charges.--Amounts charged by 
                laboratories to self-pay patients for the new test.
                    (E) Private insurance rates.--Amounts paid to 
                laboratories for such new test under private health 
                insurance coverage offered in the group market and the 
                individual market.
                    (F) Advisory panel recommendations.--The findings 
                and recommendations of the independent advisory panel 
                convened under paragraph (2) with respect to that new 
                test and any comments received during the open meeting 
                of the advisory panel.
                    (G) Additional factors.--Such other factors as the 
                Secretary may specify.
            (2) Input from patients, clinicians, and technical 
        experts.--
                    (A) Requirement for independent advisory panel.--
                The Secretary shall convene an independent advisory 
                panel from which the Secretary shall request 
                information and recommendations regarding any new test 
                (as referred to under subparagraph (A) of section 
                1833(h)(8) of the Social Security Act (42 U.S.C. 
                1395l(h)(8))) for which payment is made under such 
                section, including technical, clinical, and quality 
                information.
                    (B) Composition of independent advisory panel.--
                Subject to subparagraph (D), the independent advisory 
                panel shall be comprised of 19 members, including--
                            (i) 7 individuals with expertise and 
                        experience with clinical diagnostic laboratory 
                        tests including expertise in the technical 
                        characteristics of the new test as well as 
                        expertise in the requirements to develop, 
                        validate, and perform the new test;
                            (ii) 3 representatives of patients, 
                        including a patient representative for rare 
                        disorders;
                            (iii) 3 clinicians who use results of the 
                        new test in patient care;
                            (iv) 2 laboratorians;
                            (v) 2 individuals with expertise in the 
                        area of pharmacoeconomics or health technology 
                        assessment; and
                            (vi) 2 individuals with expertise on the 
                        impact of new tests on quality of patient care, 
                        including genetic counselors.
                    (C) Terms.--Subject to subparagraph (D), a member 
                of the panel shall be appointed to serve a term of 6 
                years, except with respect to the members first 
                appointed, whose terms of appointment shall be 
                staggered evenly over 2-year increments.
                    (D) Temporary appointment of experts.--Insofar as 
                the Secretary determines with respect to a new test 
                that there are an insufficient number of members of the 
                panel with expertise with respect to that specific 
                test, the Secretary may appoint individuals who have 
                expertise pertaining to the new test involved to serve 
                on the panel.
                    (E) Open meetings.--The Secretary shall receive or 
                review the findings and recommendations of the 
                independent advisory panel with respect to the new 
                tests described in subparagraph (A) involved during a 
                meeting open to the public and provide opportunity for 
                public comment.
                    (F) Clarification of authority of secretary to 
                consult carriers.--Nothing in this section shall be 
                construed as affecting the authority of the Secretary 
                to consult with appropriate Medicare administrative 
                contractors.
            (3) Justification for payment determinations.--
                    (A) Initial justification.--With respect to 
                decisions regarding payments made under the clinical 
                laboratory fee schedule for new clinical diagnostic 
                laboratory tests, the Secretary shall publicly provide 
                a justification for the payment basis and payment rate 
                determination, including a detailed summary of the 
                information submitted to, or obtained by, the Secretary 
                regarding the factors specified in paragraph (1), such 
                that interested stakeholders can readily understand the 
                Secretary's rationale for the payment basis and rate 
                determinations.
                    (B) Reconsideration period.--After providing such 
                justification for a payment basis and payment rate 
                determination, the Secretary shall provide for a 
                reasonable period of reconsideration to receive any 
                appeal of the determination and to evaluate any 
                additional information received regarding the 
                justification and the factors specified in paragraph 
                (1).
                    (C) Final determination.--After the period of 
                reconsideration the Secretary shall make a final 
                payment basis and payment rate determination and 
                provide a justification for such final determination 
                explaining what additional information was evaluated 
                during the reconsideration and how such information was 
                taken into account with respect to the final 
                determination. Nothing in this paragraph shall be 
                construed as authorizing the Secretary to reveal 
                proprietary information which is otherwise prohibited 
                from disclosure under law.
    (b) Process for Assignment of Temporary Codes for Diagnostic 
Tests.--The Secretary shall establish a process for application for the 
assignment of a temporary national HCPCS code to uniquely identify a 
diagnostic test until a permanent national HCPCS code is available for 
assignment to that test. Assignments of a temporary national HCPCS code 
shall occur on a quarterly basis. The Secretary shall provide public 
notice through the Centers for Medicare & Medicaid Services Web site of 
applications made for such temporary national HCPCS codes. Upon 
assignment of a temporary code under this process, the Secretary shall 
treat such test as a new test for purposes of section 1833(h)(8) of the 
Social Security Act.
    (c) Development of Further Improvements in Rate-Setting 
Processes.--The Secretary shall analyze the process used for the 
gapfilling procedure used in determining payment amounts for new 
clinical diagnostic laboratory tests under section 1833(h)(8) of the 
Social Security Act. Taking into account the changes made by this 
section, the Secretary shall identify further changes to improve the 
accuracy and appropriateness of resulting rates and the openness, 
transparency, and predictability of the process. The Secretary shall 
examine what and how many entities should perform gapfilling, under 
contract or otherwise, and how to ensure that the process is informed 
by appropriate expertise and proceeds in a transparent and accountable 
manner. The Secretary shall implement improvements in the process, 
insofar as these are possible under the law through regulations, after 
public notice and opportunity for comment. For changes the Secretary 
determines would require a change in law, the Secretary shall transmit 
recommendations to the Speaker of the House and the President of the 
Senate not later than July 1, 2014.
    (d) Definitions.--For purposes of this section:
            (1) New clinical diagnostic laboratory tests.--The term 
        ``new clinical diagnostic laboratory test'' means a clinical 
        diagnostic laboratory test--
                    (A) that is assigned a new or substantially revised 
                code on or after January 1, 2013; or
                    (B) for which a temporary national HCPCS code is 
                granted under subsection (b) on or after January 1, 
                2014.
            (2) Self-pay patient.--The term ``self-pay patient'' means, 
        with respect to a health care item or service, an individual 
        who pays out of pocket for such item or service and who does 
        not have health insurance coverage for such item or service.
    (e) Effective Date.--
            (1) In general.--Subject to paragraph (2), this section 
        shall take effect on the date of enactment of this Act and 
        shall apply with respect to new clinical diagnostic laboratory 
        tests.
            (2) Application of justifications to current rate 
        determinations.--Subsection (a)(3) shall apply to payment basis 
        and payment rate determinations made on or after January 1, 
        2013.
Diagnostic Innovation Testing and Knowledge Advancement Act of 2013 - Sets forth additional factors for the Secretary of Health and Human Services (HHS) to consider in determining the payment amount for new clinical diagnostic laboratory tests under gapfilling procedures which are used when no comparable existing test is available. Directs the Secretary to convene an independent advisory panel to inform and make recommendations to the Secretary regarding any new test. Requires the Secretary to justify publicly the basis and rate determination for any payments made under the clinical laboratory fee schedule for new clinical diagnostic laboratory tests, including a detailed summary of information received regarding the additional factors considered. Requires the Secretary then, after publishing such justification, to provide for a reasonable period of reconsideration to: (1) receive any appeal of the payment determination, and (2) evaluate any additional information received regarding the justification and the factors considered. Requires the Secretary, following the period of reconsideration, to make a final payment basis and payment rate determination, providing a justification for it with an explanation of what additional information was evaluated during reconsideration and how it was taken into account. Directs the Secretary to: (1) establish a process for application for the assignment of a temporary national HCPCS (Healthcare Common Procedure Coding System) code to uniquely identify a diagnostic test until a permanent national HCPCS code is available for assignment to that test, (2) analyze the process used for the gapfilling procedures used in determining payment amounts for new clinical diagnostic laboratory tests, and (3) implement improvements in the process after public notice and opportunity for comment. Applies this Act to payment basis and payment rate determinations made on or after January 1, 2013.
Diagnostic Innovation Testing and Knowledge Advancement Act of 2013