A bill to amend title XVIII of the Social Security Act to improve procedures under part B of the medicare program relating to durable medical equipment, and for other purposes.

SECTION 1. REFERENCES TO SOCIAL SECURITY ACT.

    Except as otherwise specifically provided, whenever in this Act an 
amendment is expressed in terms of an amendment to or repeal of a 
section or other provision, the reference shall be considered to be 
made to that section or other provision of the Social Security Act.

SEC. 2. DURABLE MEDICAL EQUIPMENT.

    (a) Definition of Medical Equipment and Supplies.--
            (1) In general.--Section 1861 (42 U.S.C. 1395x) is amended 
        by adding at the end the following new subsection:

                    ``medical equipment and supplies

    ``(oo) The term `medical equipment and supplies'' means--
            ``(1) durable medical equipment (as defined in section 
        1861(n));
            ``(2) prosthetic devices (as described in section 
        1861(s)(8));
            ``(3) orthotics and prosthetics (as described in section 
        1861(s)(9));
            ``(4) home dialysis supplies and equipment (as described in 
        section 1861(s)(2)(F));
            ``(5) surgical dressings and other devices (as described in 
        section 1861(s)(5));
            ``(6) immunosuppressive drugs (as described in section 
        1861(s)(2)(J)); and
            ``(7) such other items as the Secretary may determine.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to items furnished on or after January 1, 1994.
    (b) Development and Application of National Standards for Suppliers 
of Medical Equipment and Supplies.--Section 1834 (42 U.S.C. 1395m) is 
amended by adding at the end the following new subsection:
    ``(i) Requirements for Issuance and Renewal of Supplier Numbers for 
Suppliers of Medical Equipment and Supplies.--
            ``(1) Payment.--No payment may be made under this part 
        after July 1, 1994, for items furnished by a supplier of 
        medical equipment and supplies (as defined in section 1861(oo)) 
        unless such supplier meets the national standards specified by 
        the Secretary and possesses a valid supplier number.
            ``(2) Revised standards.--
                    ``(A) In general.--The Secretary shall, by no later 
                than January 1, 1996, in consultation with 
                representatives of suppliers of medical equipment and 
                supplies, carriers, and consumers, revise the national 
                standards for suppliers of medical equipment and 
                supplies to include the requirements listed in 
                subparagraph (B).
                    ``(B) Standards described.--The requirements listed 
                in this subparagraph are that suppliers of medical 
                equipment and supplies shall--
                            ``(i) comply with all applicable State and 
                        Federal licensure and regulatory requirements;
                            ``(ii) maintain a physical facility on an 
                        appropriate site;
                            ``(iii) have proof of appropriate liability 
                        insurance; and
                            ``(iv) meet such other requirements as the 
                        Secretary may specify.
                    ``(C) Applicability of revised standards.--
                Beginning after December 31, 1995, each supplier of 
                medical equipment and supplies applying for a supplier 
                number or renewing such supplier's supplier number 
                shall meet the revised standards described in this 
                paragraph.''.
    (c) Certificates of Medical Necessity.--
            (1) In general.--Section 1834 (42 U.S.C. 1395m), as amended 
        by subsection (b), is amended--
                    (A) in subsection (a), by striking paragraph (16), 
                and
                    (B) by adding at the end the following new 
                subsection:
    ``(j) Certificates of Medical Necessity.--
            ``(1) Standardized certificates.--Not later than July 1, 
        1994, the Secretary shall, in consultation with carriers under 
        this part, develop one or more standardized certificates of 
        medical necessity (as defined in paragraph (3)) for medical 
        equipment and supplies (as defined in section 1861(oo) other 
        than paragraphs (4), (6), and (7)). If a certificate of medical 
        necessity is required by the Secretary, such standardized 
        certificates shall--
                    ``(A) be completed by each physician who prescribes 
                such medical equipment and supplies for any beneficiary 
                under this part, and
                    ``(B) be transmitted to the supplier and then to 
                the carrier processing the claim for payment for such 
                medical equipment and supplies under this part.
            ``(2) Prohibition against distribution by suppliers of 
        certificates of medical necessity.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), a supplier of medical equipment and 
                supplies described in paragraph (1) may not distribute 
                to physicians or to individuals entitled to benefits 
                under this part for commercial purposes any completed 
                or partially completed certificates of medical 
                necessity.
                    ``(B) Exception for certain billing information.--
                Subparagraph (A) shall not apply with respect to a 
                certificate of medical necessity to the extent that 
                such certificate contains only information completed by 
                the supplier of medical equipment and supplies 
                identifying such supplier and the beneficiary to whom 
                such medical equipment and supplies are furnished, a 
                description of such medical equipment and supplies, any 
                product code identifying such medical equipment and 
                supplies, and any other administrative information 
                identified by the Secretary. In the event a supplier 
                provides a certificate of medical necessity containing 
                information permitted under this subparagraph, such 
                certificate shall also contain the supplier's charge 
                and the fee schedule amount for the medical equipment 
                or supplies being furnished prior to distribution of 
                such certificate to the physician.
                    ``(C) Penalty.--Any supplier of medical equipment 
                and supplies who knowingly and willfully distributes a 
                certificate of medical necessity in violation of 
                subparagraph (A) is subject to a civil money penalty in 
                an amount not to exceed $1,000 for each such 
                certificate of medical necessity so distributed. The 
                provisions of section 1128A (other than subsections (a) 
                and (b)) shall apply to civil money penalties under 
                this subparagraph in the same manner as they apply to a 
                penalty or proceeding under section 1128A(a).
            ``(3) Definition.--For purposes of this subsection, the 
        term `certificate of medical necessity' means a form or other 
        document containing information required by the Secretary to be 
        submitted to show that a covered item is reasonable and 
        necessary for the diagnosis or treatment of illness or injury 
        or to improve the functioning of a malformed body member.''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply with respect to certificates of medical necessity 
        on or after January 1, 1994.
    (d) Coverage and Review Criteria for Certain Medical Equipment and 
Supplies.--Section 1834 (42 U.S.C. 1395m), as amended by subsection 
(c), is amended by adding at the end the following new subsection:
    ``(k) Coverage and Review Criteria.--
            ``(1) Development and establishment.--Not later than July 
        1, 1994, the Secretary, in consultation with representatives of 
        suppliers of medical equipment and supplies (as defined in 
        section 1861(oo) other than paragraphs (4), (6), and (7)), 
        individuals enrolled under this part, and appropriate medical 
        specialty societies, shall develop and establish uniform 
        national coverage and utilization review criteria for 200 items 
        of medical equipment and supplies (as so defined) selected in 
        accordance with the standards described in paragraph (2). The 
        Secretary shall publish the criteria as part of the 
        instructions provided to fiscal intermediaries and carriers 
        under this part and no further publication, including 
        publication in the Federal Register, shall be required.
            ``(2) Standards for selecting items subject to criteria.--
        The Secretary may select an item for coverage under the 
        criteria developed and established under paragraph (1) if the 
        Secretary finds that--
                    ``(A) the item is frequently purchased or rented by 
                beneficiaries;
                    ``(B) the item is frequently subject to a 
                determination that such item is not medically 
                necessary; or
                    ``(C) the coverage or utilization criteria applied 
                to the item (as of the date of the enactment of this 
                subsection) is not consistent among carriers.
            ``(3) Annual review and expansion of items subject to 
        criteria.--The Secretary shall annually review the coverage and 
        utilization of items of medical equipment and supplies to 
        determine whether items not included among the items selected 
        under paragraph (1) should be made subject to uniform national 
        coverage and utilization review criteria, and, if appropriate, 
        shall develop and apply such criteria to such additional items.
            ``(4) Report on effect of uniform criteria on utilization 
        of items.--Not later than January 1, 1995, the Secretary shall 
        submit a report to the Committee on Ways and Means and the 
        Committee on Energy and Commerce of the House of 
        Representatives and the Committee on Finance of the Senate 
        analyzing the impact of the uniform criteria established under 
        paragraph (1) on the utilization of items of medical equipment 
        and supplies by individuals enrolled under this part.''.
    (e) Prohibition Against Multiple Supplier Numbers.--
            (1) In general.--Section 1834 (42 U.S.C. 1395m), as amended 
        by subsection (d), is amended by adding at the end the 
        following new subsection:
    ``(l) Prohibition Against Multiple Supplier Numbers for Suppliers 
of Medical Equipment and Supplies.--The Secretary may not issue more 
than one supplier number to any supplier of medical equipment and 
supplies (as defined in section 1861(oo)) unless the issuance of more 
than one number is appropriate to identify subsidiary or regional 
entities under the supplier's ownership or control.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to items furnished on or after July 1, 1994.
    (f) Definition of Inducements as Kickbacks Clarified.--
            (1) In general.--Section 1128B(b)(3)(B) (42 U.S.C. 1320a-
        7b(b)(3)(B)) is amended by inserting before the semicolon 
        ``(except that in the case of a contract supply arrangement 
        between a skilled nursing facility and a supplier of medical 
        supplies and equipment (as defined in section 1861(oo) other 
        than paragraphs (4), (6), and (7)), such employment shall not 
        be considered bona fide to the extent that it includes tasks of 
        a clerical and cataloging nature in transmitting to suppliers 
        assignment rights of individuals eligible for benefits under 
        part B of title XVIII, or performance of warehousing or stock 
        inventory functions)''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply with respect to services furnished on or after 
        January 1, 1994.
    (g) Limitation on Beneficiary Liability.--
            (1) In general.--Section 1879 (42 U.S.C. 1395pp) is amended 
        by adding at the end the following new subsection:
    ``(h) If a supplier of medical equipment and supplies (as defined 
in section 1861(oo))--
            ``(1) furnishes an item or service to a beneficiary for 
        which no payment may be made by reason of section 1834(i);
            ``(2) furnishes an item or service to a beneficiary for 
        which payment is denied in advance under section 1834(a)(15);
            ``(3) is excluded from participation under this title; or
            ``(4) furnishes an item or service to a beneficiary for 
        which payment is denied under section 1862(a)(1);
any expenses incurred for items and services furnished to an individual 
by such a supplier on an unassigned basis shall be the responsibility 
of such supplier. The individual shall have no financial responsibility 
for such expenses and the supplier shall refund on a timely basis to 
the individual (and shall be liable to the individual for) any amounts 
collected from the individual for such items or services, unless the 
supplier informs the individual in advance that payment under this part 
will not be made for the item or services and the individual agrees to 
pay for the item or service.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to items or services furnished on or after July 1, 
        1994.
    (h) Treatment of Nebulizers and Aspirators as Miscellaneous Items 
of Durable Medical Equipment.--
            (1) In general.--Section 1834(a)(3)(A) (42 U.S.C. 
        1395m(a)(3)(A)) is amended by striking ``ventilators, 
        aspirators, IPPB machines, and nebulizers'' and inserting 
        ``ventilators and IPPB machines''.
            (2) Payment for supplies relating to nebulizers and 
        aspirators.--Section 1834(a)(7)(A) (42 U.S.C. 1395m(a)(7)(A)) 
        is amended by striking ``and'' at the end of clause (v), by 
        striking the period at the end of clause (vi) and inserting ``; 
        and'', and by inserting after clause (vi) the following new 
        clause:
                            ``(vii) In the case of supplies to be used 
                        in conjunction with a nebulizer or aspirator 
                        for which payment is made under this paragraph, 
                        payment shall be in accordance with paragraph 
                        (2) of this subsection.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to items furnished on or after January 1, 1994.
    (i) Payment for Ostomy Supplies, Tracheostomy Supplies, 
Urologicals, Surgical Dressings, and Other Medical Supplies.--
            (1) In general.--Section 1834(h)(1) (42 U.S.C. 1395m(h)(1)) 
        is amended by adding at the end the following new subparagraph:
                    ``(E) Exception for certain items.--Payment for 
                ostomy supplies, tracheostomy supplies, urologicals, 
                surgical dressings, and other medical supplies shall be 
                made in accordance with subparagraphs (B) and (C) of 
                section 1834(a)(2) (except that in the case of surgical 
                dressings, the national limited payment amount shall be 
                computed based on local payment amounts using average 
                reasonable charges for the six-month period ending June 
                30, 1993, increased by the covered item update for 
                1994).''.
            (2) Effective dates.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the amendment made by paragraph (1) shall apply 
                with respect to items furnished on or after January 1, 
                1994.
                    (B) Surgical dressings and other medical 
                supplies.--The amendment made by paragraph (1) with 
                respect to surgical dressings and other medical 
                supplies shall apply to items supplied on or after July 
                1, 1994.
    (j) Freeze in Reasonable Charges for Parenteral and Enteral 
Nutrients, Supplies, and Equipment During 1994.--In determining the 
amount of payment under part B of title XVIII of the Social Security 
Act during 1994, the charges determined to be reasonable with respect 
to parenteral and enteral nutrients, supplies, and equipment may not 
exceed the charges determined to be reasonable with respect to such 
nutrients, supplies, and equipment during 1993.
    (k) Studies.--
            (1) Supplies and services in nursing facilities.--The 
        Comptroller General of the United States shall conduct a study 
        and report to the Congress no later than January 1, 1995, on 
        the types, volume, and utilization of services and supplies 
        furnished under contract or under arrangement with suppliers to 
        individuals eligible for benefits under title XVIII of the 
        Social Security Act residing in skilled nursing facilities and 
        nursing facilities.
            (2) Descriptions relating to certain codes.--The 
        Comptroller General of the United States shall conduct a study 
        beginning no earlier than July 1, 1994, and report to the 
        Congress no later than January 1, 1995, on--
                    (A) whether changes made by the Department of 
                Health and Human Services to the descriptions relating 
                to the codes for medical equipment and supplies (as 
                defined in section 1861(oo) of the Social Security Act 
                other than paragraphs (4), (6), and (7))--
                            (i) accurately reflect the items being 
                        furnished under such codes, and
                            (ii) are sufficiently explicit to 
                        distinguish between items of varying quality 
                        and price, and
                    (B) recommendations for additional changes that 
                would improve the descriptions relating to the codes 
                for such items.

                                 

S 516 IS----2

Summary: Amends title XVIII (Medicare) of the Social Security Act (SSA) to revise procedures under Medicare part B with regard to durable medical equipment, including requirements for: (1) national standards and supplier numbers for suppliers of medical equipment and supplies. (2) standardized certificates of medical necessity and uniform national coverage and utilization review criteria for certain medical equipment and supplies. (3) limited Medicare beneficiary liability for items and services for which payment is prohibited by reason of a supplier's failure to meet such national standards or lack of a valid supplier number. (4) the treatment of nebulizers and aspirators as miscellaneous items of durable medical equipment. And (5) payment of ostomy supplies, tracheostomy supplies, urologicals, surgical dressings, and other medical supplies. Amends SSA title XI to modify anti-kickback provisions. Provides for a freeze under Medicare part B in reasonable charges for parenteral and enteral nutrients, supplies, and equipment during 1994. Requires the Comptroller General to study and report to the Congress on: (1) services and supplies furnished to Medicare-eligible nursing facility residents. And (2) changes made to descriptions relating to codes for medical equipment and supplies.