79–006 

115TH CONGRESS REPT. 115–481 " ! HOUSE OF REPRESENTATIVES 1st Session Part 1 

COMPREHENSIVE OPERATIONS, SUSTAINABILITY, AND 

TRANSPORT ACT OF 2017 

DECEMBER 21, 2017.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. BRADY of Texas, from the Committee on Ways and Means, 

submitted the following 

R E P O R T 

[To accompany H.R. 3729] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Ways and Means, to whom was referred the 

bill (H.R. 3729) to amend titles XI and XVIII of the Social Security 

Act to facilitate provider and supplier cost reporting of ambulance 

services under the Medicare program, and for other purposes, having considered the same, report favorably thereon with an amendment and recommend that the bill as amended do pass. 

CONTENTS 

Page 

I. SUMMARY AND BACKGROUND ............................................................... 4 

A. Purpose and Summary ..................................................................... 4 

B. Background and Need for Legislation ............................................. 4 

C. Legislative History ............................................................................ 5 

II. EXPLANATION OF THE BILL ................................................................... 5 

A. Comprehensive Operations, Sustainability and Transport Act 

of 2017 ............................................................................................. 5 

III. VOTES OF THE COMMITTEE .................................................................... 7 

IV. BUDGET EFFECTS OF THE BILL ............................................................ 7 

A. Committee Estimate of Budgetary Effects ...................................... 7 

B. Statement Regarding New Budget Authority and Tax Expenditures Budget Authority .................................................................. 7 

C. Cost Estimate Prepared by the Congressional Budget Office ....... 7 

V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF 

THE HOUSE .............................................................................................. 13 

A. Committee Oversight Findings and Recommendations ................. 13 

B. Statement of General Performance Goals and Objectives ............. 13 

C. Information Relating to Unfunded Mandates ................................ 13 

D. Congressional Earmarks, Limited Tax Benefits, and Limited 

Tariff Benefits ................................................................................. 13 

E. Duplication of Federal Programs ..................................................... 13 

2 

F. Disclosure of Directed Rule Makings .............................................. 14 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED 14 

VII. EXCHANGES OF LETTERS WITH ADDITIONAL COMMITTEES OF 

REFERRAL ................................................................................................. 77 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Comprehensive Operations, Sustainability, and 

Transport Act of 2017’’. 

SEC. 2. GROUND AMBULANCE SERVICES COST REPORTING REQUIREMENT. 

(a) IN GENERAL.—Section 1121 of the Social Security Act (42 U.S.C. 1320a) is 

amended— 

(1) in subsection (a)— 

(A) by striking ‘‘For the purposes of’’ and inserting ‘‘Subject to subsection 

(d), for the purposes of’’; 

(B) by inserting ‘‘suppliers of ground ambulance services,’’ after ‘‘health 

maintenance organizations,’’; and 

(C) in the matter following paragraph (5), by adding the following new 

sentence: ‘‘Not later than December 31, 2019, the Secretary shall modify 

the uniform reporting system for providers of services with respect to ambulance services to ensure that such system contains information similar (as 

determined by the Secretary) to information required under the uniform reporting system for suppliers of ground ambulance services.’’; and 

(2) by adding at the end the following new subsection: 

‘‘(d) In the case of a supplier of ground ambulance services that furnishes such 

services for fewer than 20 individuals entitled to benefits under part A of title XVIII 

and enrolled under part B of such title in a cost reporting period (as defined by the 

Secretary), the Secretary may modify the requirements for inclusion of any information specified in subsection (a) in reports made in accordance with the uniform reporting systems established under this section with respect to such services.’’. 

(b) SUSPENSION OF PAYMENT FOR GROUND AMBULANCE SERVICES; DEEMING CERTAIN PAYMENTS OVERPAYMENTS.—Section 1834(l) of the Social Security Act (42 

U.S.C. 1395m(l)) is amended by adding at the end the following new paragraph: 

‘‘(17) REQUIREMENT TO SUBMIT COST REPORT AND AUTHORITY TO SUSPEND PAYMENTS AND DEEM CERTAIN PAYMENTS OVERPAYMENTS FOR GROUND AMBULANCE

SERVICES.— 

‘‘(A) IN GENERAL.—With respect to ground ambulance services furnished 

by a supplier of such services during cost reporting periods (as defined in 

subparagraph (I)) beginning on or after January 1, 2020, such supplier 

shall make reports to the Secretary of information described in section 

1121(a) in accordance with the uniform reporting system established under 

such section for such suppliers and, as may be required by the Secretary, 

of any of the information described in subparagraph (B). 

‘‘(B) ADDITIONAL INFORMATION.—The Secretary may, with respect to a 

supplier of ground ambulance services, require the following information (to 

be reported to the extent practicable under the uniform reporting system 

established under section 1121(a) for such suppliers): 

‘‘(i) Whether the supplier is part of an emergency services department, a governmental organization, or another type of entity (as described by the Secretary). 

‘‘(ii) The number of hours in a week during which the supplier is 

available for furnishing ground ambulance services. 

‘‘(iii) The average number of volunteer hours a week used by the supplier. 

‘‘(C) SUSPENSION OF PAYMENT.—Subject to subparagraph (E), in the case 

that the Secretary determines that a supplier of ground ambulance services 

has not made to the Secretary a timely report described in subparagraph 

(A) with respect to a cost reporting period beginning on or after January 

1, 2020, and before January 1, 2022, the Secretary may suspend payments 

made under this subsection, in whole or in part, to such supplier until the 

Secretary finds that such supplier has made such a report. 

‘‘(D) DEEMING CERTAIN PAYMENTS OVERPAYMENTS.—Subject to subparagraphs (E) and (F), in the case that the Secretary determines that a supplier of ground ambulance services has not made to the Secretary a complete, accurate, and timely report described in subparagraph (A) with respect to a cost reporting period beginning on or after January 1, 2022, the 

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Secretary may deem payments made under this subsection to such supplier 

for such period to be overpayments and recoup such overpayments. 

‘‘(E) HARDSHIP DELAY.—The Secretary shall establish a process whereby 

a supplier of ground ambulance services may request a delay in making a 

report described in subparagraph (A) with respect to a cost reporting period 

for reason of significant hardship (as determined by the Secretary). 

‘‘(F) AUTHORITY TO MODIFY COST REPORTING ELEMENTS AND ENFORCE- MENT.—Not earlier than January 1, 2023, the Secretary may provide that 

subparagraph (D) no longer applies to ground ambulance services suppliers 

or a category of such suppliers after— 

‘‘(i) taking into account the recommendation of the Medicare Payment 

Advisory Commission in the most recent report available to the Secretary submitted under section 3 of the Comprehensive Operations, 

Sustainability, and Transport Act of 2017 regarding whether cost reports made by suppliers or a category of suppliers (as specified for purposes of the report submitted under such section) should be required 

or modified; and 

‘‘(ii) undertaking notice and comment rulemaking. 

‘‘(G) AUDIT OF COST REPORTS.—The Secretary shall audit reports described in subparagraph (A) made with respect to cost reporting periods beginning on or after January 1, 2021. 

‘‘(H) APPEALS.—The Secretary shall establish a process whereby a supplier of ground ambulance services may appeal a determination described 

in subparagraph (C) or (D) made with respect to a cost report required to 

be made by such supplier under subparagraph (A). 

‘‘(I) DEFINITION.—In this paragraph, the term ‘cost reporting period’ 

means, with respect to a year, the 12-month period beginning on January 

1 of such year.’’. 

(c) STAKEHOLDER FEEDBACK.— 

(1) IN GENERAL.—The Secretary of Health and Human Services shall implement the provisions of this section, including the amendments made by this section, through notice and comment rulemaking and seek input from stakeholders. 

(2) NONAPPLICATION OF PAPERWORK REDUCTION ACT.—Chapter 35 of title 44, 

United States Code, shall not apply with respect to— 

(A) the development and implementation of the uniform reporting system 

required under section 1121(a) of the Social Security Act (42 U.S.C. 

1320a(a)) for suppliers of ground ambulance services and reports required 

to be made under section 1834(l)(17) of such Act (42 U.S.C. 1395m(l)(17)); 

and 

(B) the modification of the uniform reporting systems under such section 

1121(a) of such Act for providers of such services and reports required to 

be made under section 1861(v)(1)(F) of such Act (42 U.S.C. 1395x(v)(1)(F)). 

(d) IMPLEMENTATION RESOURCES.— 

(1) IN GENERAL.—There are hereby appropriated to the Secretary from the 

Federal Hospital Insurance Trust Fund under section 1817 of the Social Security Act (42 U.S.C. 1395i) $8,000,000 and from the Federal Supplementary Medical Insurance Trust Fund under section 1841 of such Act (42 U.S.C. 1395t) 

$92,000,000 (of which not less than $10,000,000 shall be used to fulfill the auditing requirement under section 1834(l)(17)(G) of such Act, as added by subsection (b) of this section) to carry out the provisions of this section, including 

the amendments made by this section, to remain available through December 

31, 2022. 

(2) FUNDING FOR EMPLOYEES.—The Secretary of Health and Human Services 

shall provide for the transfer to the Centers for Medicare & Medicaid Services 

Program Management Account, from the Federal Supplementary Medical Insurance Trust Fund under section 1841 of the Social Security Act (42 U.S.C. 

1395t), of such sums as may be necessary in order to directly hire no more than 

2 full-time employees to carry out the provisions of this section, including the 

amendments made by this section. 

(e) SENSE OF CONGRESS.—It is the sense of Congress that— 

(1) a cost report made by a supplier of ground ambulance services with respect to a cost reporting period beginning before January 1, 2022, may not contain complete and accurate information on ground ambulance services furnished 

during such a period by the supplier; and 

(2) the Secretary should take into account only the timeliness of such a report 

made with respect to such a period when determining whether to suspend payments to a supplier under section 1834(l) of the Social Security Act (42 U.S.C. 

1395m(l)). 

4 

SEC. 3. GROUND AMBULANCE SERVICES COST REPORTING STUDY. 

(a) IN GENERAL.—Not later than March 15, 2022, and as determined necessary 

by the Medicare Payment Advisory Commission thereafter, such Commission shall 

assess and submit to Congress a report on cost reports carried out in accordance 

with sections 1121(a) and 1834(l) of the Social Security Act (42 U.S.C. 1320a(a), 

1395m(l)), the adequacy of payments for such services made under section 1834(l) 

of such Act, and the extent to which state mandates may create geographic variations in the cost of providing such services. 

(b) CONTENTS.—The report described in subsection (a) shall contain the following: 

(1) An analysis of cost report data submitted in accordance with such sections. 

(2) An analysis of any burden on providers and suppliers of such services associated with reporting such data. 

(3) A recommendation on whether or not cost reports of ambulance services 

made by suppliers or a category of suppliers (as specified by the Secretary) of 

such services, or the ground ambulance portion of cost reports made by providers of such services, should be required or modified, taking into account the 

analyses described in paragraphs (1) and (2). 

SEC. 4. EXTENSION OF GROUND AMBULANCE SERVICES EXTENDERS AND PAY-FOR. 

Section 1834(l) of the Social Security Act (42. U.S.C. 1395m(l)) is amended— 

(1) in paragraph (12)(A), by striking ‘‘2018’’ and inserting ‘‘2023’’; 

(2) in paragraph (13)(A), by striking ‘‘2018’’ each place it appears and inserting ‘‘2023’’; and 

(3) in paragraph (15), by striking ‘‘on or after October 1, 2013’’ and inserting 

‘‘during the period beginning on October 1, 2013, and ending on September 30, 

2018, and by 32 percent for such services furnished on or after October 1, 2018’’. 

I. SUMMARY AND BACKGROUND 

A. PURPOSE AND SUMMARY

The bill, H.R. 3729, the ‘‘Comprehensive Operations, Sustainability and Transport (‘‘COST’’) Act of 2017,’’ as ordered reported 

by the Committee on Ways and Means on September 13, 2017, focuses on accurately reimbursing and sustaining access to ground 

ambulance transports in the Medicare program. The bill would 

achieve two primary objectives: (1) required submission of annual 

cost report data by Medicare ambulance suppliers and providers to 

better understand the cost of furnishing ground ambulance services; and (2) extension of the current law add-on reimbursement for 

ground ambulance services that would otherwise expire on December 31, 2017. 

B. BACKGROUND AND NEED FOR LEGISLATION

On September 11, 2017, Representative Nunes (R–CA) and Representative Sewell (D–AL) introduced H.R. 3729, legislation to facilitate provider and supplier cost reporting of ambulance services 

under the Medicare program. Along with the Committee on Energy 

and Commerce, the Committee on Ways and Means received a referral for the bill because it includes Medicare provisions that fall 

within the jurisdiction of the Committee, including changes to relevant provisions of the Social Security Act (‘‘SSA’’). 

In the Balanced Budget Act of 1997 (‘‘BBA ‘7’’), Congress mandated a negotiated rulemaking process to establish an ambulance 

fee schedule with the intent to transition away from cost-based reimbursement. Due to a lack of cost report data, the ambulance fee 

schedule was established without data on the cost of providing ambulance services to Medicare beneficiaries. 

In the Medicare Modernization Act (‘‘MMA of 2003’’), Congress 

established a new temporary program to supplement ambulance reimbursement with add-on payments for services in urban areas, 

5 

rural areas, and super-rural areas. These add-on payments have 

continued to be extended and are currently set to expire on December 31, 2017. 

The Medicare Payment Advisory Committee (‘‘MedPAC’’) has assessed the ambulance fee schedule and raised concerns, including 

involving potential fraud and abuse, regarding non-emergency 

basic life support (‘‘BLS’’) End-Stage Renal Disease (‘‘ESRD’’) transports. MedPAC found that the Medicare program pays more money 

to transport beneficiaries to dialysis than the actual dialysis service. 

C. LEGISLATIVE HISTORY

Background 

H.R. 3729 was introduced on September 11, 2017, and was referred to the Committee on Ways and Means and additionally to 

the Committee on Energy and Commerce. 

Committee hearings 

On June 8, 2017, the Committee held a hearing on The Department of Health and Human Services’ (HHS) Fiscal Year 2018 

Budget Request, at which topics such as Medicare extenders were 

discussed. 

On May 18, 2017, the Subcommittee on Health held a hearing 

on the Current Status of the Medicare Program, Payments Systems 

and Extenders, at which MedPAC’s recommendations on ‘‘extender’’ 

policies were discussed, including those regarding ambulance reimbursements. 

Committee action 

The Committee on Ways and Means marked up H.R. 3729, the 

‘‘Comprehensive Operations, Sustainability and Transport 

(‘‘COST’’) Act of 2017,’’ on September 13, 2017, and ordered the bill, 

as amended, favorably reported (with a quorum being present). 

II. EXPLANATION OF THE BILL 

A. COMPREHENSIVE OPERATIONS, SUSTAINABILITY AND TRANSPORT

ACT OF 2017 

PRESENT LAW

Current law does not require cost reporting from providers and 

suppliers of ground ambulance services. Rather, ambulance suppliers and providers are paid under a fee schedule established 

under BBA ’97. 

MedPAC does not currently submit an annual report to Congress 

regarding payment adequacy for ambulance services. 

Current law extends add-on payments for ground ambulance 

services through December 31, 2017. These add-on payments, last 

extended under the Medicare Access and CHIP Reauthorization Act 

(‘‘MACRA’’) of 2015, are: (1) two percent for services in urban 

areas; (2) three percent for services in rural areas; and (3) 22.6 percent for services in super-rural areas. 

Finally, under current law, there is a 10 percent reduction for 

non-emergency dialysis transports. 

6 

REASONS FOR CHANGE

There is a current lack of cost reporting data among suppliers of 

ground ambulance services. This legislation would assist the Centers for Medicare and Medicaid Services (‘‘CMS’’) to more accurately and empirically understand how much it costs to provide 

ground ambulance services to Medicare beneficiaries. 

An analysis from MedPAC regarding the accuracy and burden of 

reporting cost data will assist Congress in understanding whether 

future payment reforms, such as rebasing and extending add-on 

payments, are warranted. 

In the absence of the extension, the add-on payments would expire on December 31, 2017. 

EXPLANATION OF PROVISIONS

Section 1: This section states the short title as the ‘‘Comprehensive Operations, Sustainability and Transport Act of 2017.’’ 

Section 2: This section would modify section 1121 of the SSA, requiring annual cost reporting. The legislation would allow the Secretary of HHS to modify cost reporting requirements for low-volume ambulance suppliers. It would also require the development of 

a hardship exemption process for those ambulance suppliers that 

demonstrate the need for additional support or that may need an 

extension for filing a cost report. In addition, the bill would require 

input from stakeholders, as well as a public comment process and 

an appeals process. To enforce the new cost reporting requirement, 

the Secretary would be able to issue a payment suspension (beginning January 1, 2020 through December 31, 2021) and determine 

overpayments subject to recoupment (from January 1, 2022 and 

thereafter) for suppliers that fail to report. However, the Congressional Budget Office issued an analysis of the bill stating: 

Based on a longstanding pattern of granting waivers and 

working with providers to bring them into compliance with 

new requirements—rather than imposing financial penalties—CBO expects that the Secretary would not penalize 

any suppliers and estimates that no payments would be 

suspended or reduced. 

Section 3: This section would require MedPAC to submit a report 

to Congress that includes an analysis of: (1) the accuracy of cost 

report data; (2) the burden of reporting; and (3) possible modifications of data collection. 

Section 4: This section would extend the 2 percent urban, 3 percent rural, and 22.6 percent super-rural ground ambulance add-on 

payments for five years. Further, the bill would increase the reduction for non-emergency dialysis transports to 32 percent. 

EFFECTIVE DATE

Section 2: Cost reporting for ambulance suppliers is required no 

later than January 1, 2020. The Secretary would be able to issue 

a payment suspension beginning January 1, 2020 through December 31, 2021 and determine overpayments subject to recoupment 

from January 1, 2020 and thereafter for suppliers that fail report. 

Beginning January 1, 2023, the cost report requirements may be 

modified based on the MedPAC report required in section 3. 

7 

Section 3: The legislation requires that MedPAC submit a report 

to Congress by March 15, 2022 (and annually thereafter, if necessary). 

Section 4: The add-on payments expire December 31, 2017 without extension. The bill extends such payments through December 

31, 2022. 

III. VOTES OF THE COMMITTEE 

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the following statement is made concerning the vote of the Committee on Ways and Means in its consideration of H.R. 3729, the COST Act of 2017, on September 13, 

2017. 

The Chairman’s amendment in the nature of a substitute was 

adopted by a voice vote (with a quorum being present). 

The bill, H.R. 3729, was ordered favorably reported as amended 

by voice vote (with a quorum being present). 

IV. BUDGET EFFECTS OF THE BILL 

A. COMMITTEE ESTIMATE OF BUDGETARY EFFECTS

In compliance with clause 3(d) of rule XIII of the Rules of the 

House of Representatives, the following statement is made concerning the effects on the budget of the bill, H.R. 3729, as reported. 

The Committee agrees with the estimate prepared by the Congressional Budget Office (CBO), which is included below. 

B. STATEMENT REGARDING NEW BUDGET AUTHORITY AND TAX

EXPENDITURES BUDGET AUTHORITY

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee states that the bill involves no new or increased budget authority. The Committee states 

further that the bill involves no new or increased tax expenditures. 

C. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET

OFFICE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, requiring a cost estimate prepared by 

the CBO, the following statement by CBO is provided. 

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, September 27, 2017. 

Hon. KEVIN BRADY, 

Chairman, Committee on Ways and Means, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3729, the Comprehensive 

Operations, Sustainability, and Transport Act of 2017. 

8 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contacts are Rebecca Yip and Lara 

Robillard. 

Sincerely, 

KEITH HALL, Director. 

Enclosure. 

H.R. 3729—Comprehensive Operations, Sustainability, and Transport Act of 2017 

Summary: H.R. 3729 would impose new reporting requirements 

on entities that furnish ambulance services to Medicare beneficiaries. The bill would also extend Medicare payments for ambulance services that would otherwise expire under current law and 

reduce the payment rate for certain ambulance services. CBO estimates that enacting H.R. 3729 would reduce net direct spending by 

about $895 million over the 2018–2027 period. 

Pay-as-you-go procedures apply because enacting the legislation 

would affect direct spending. The legislation would not affect revenues. 

CBO estimates that enacting the legislation would not increase 

net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2028. 

H.R. 3729 contains no private-sector or intergovernmental mandates as defined in the Unfunded Mandates Reform Act (UMRA). 

Estimated cost to the Federal Government: The estimated budgetary effect of H.R. 3729 is shown in the following table. The costs 

of this legislation fall within budget function 570 (Medicare). 

9 

By fiscal year, in millions of dollars— 

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017– 2022 2017– 2027 

INCREASES OR DECREASES (¥) IN DIRECT SPENDING 

Estimated Budget Authority ........................................................................................................ 0 150 90 60 55 50 ¥160 ¥235 ¥270 ¥300 ¥335 405 ¥895 

Estimated Outlays ....................................................................................................................... 0 150 90 60 55 50 ¥160 ¥235 ¥270 ¥300 ¥335 405 ¥895 

10 

1The Medicare program makes a distinction between providers of ambulance services, which 

are based at institutions (such as a hospital), and suppliers of ambulance services, which are 

not based at institutions. Suppliers could be affiliated with a fire station or could be a for-profit 

company. Providers already submit cost reports to CMS. 

Basis of estimate: For this estimate, CBO assumes that H.R. 

3729 will be enacted early in fiscal year 2018. 

H.R. 3729 would require the Centers for Medicare and Medicaid 

Services (CMS) to implement a new system through which suppliers of ambulance services would submit data on the costs they 

incur to provide services to Medicare beneficiaries.1 CMS would be 

required to have this new cost-reporting system in place by January 1, 2020. The bill would appropriate $100 million to CMS to 

support creation of that new cost-reporting system and would also 

appropriate whatever sums are necessary to hire two new employees. Based on historical spending patterns for CMS program management activities and on data about the typical cost of a full-time 

employee, currently about $135,000 per year, CBO estimates that 

developing the new cost-reporting system would cost about $103 

million over the 2017–2027 period. 

Once the new system is operational, suppliers who fail to submit 

those reports could be subject to payment suspensions or reductions. H.R. 3729 would allow the Secretary of Health and Human 

Services to exempt certain low-volume providers from the new reporting requirement. The Secretary could also grant hardship 

delays to small suppliers. Based on a longstanding pattern of 

granting waivers and working with providers to bring them into 

compliance with new requirements—rather than imposing financial 

penalties—CBO expects that the Secretary would not penalize any 

suppliers and estimates that no payments would be suspended or 

reduced. 

H.R. 3729 would extend certain Medicare add-on payments to 

ambulance providers and suppliers that would otherwise expire on 

December 31 of this year. Those add-on payments are linked to the 

geographic location (urban, rural, or super-rural, as defined by zip 

code) in which the trip begins. H.R. 3729 would extend these payments for five years, though 2022 as follows: • For trips in urban areas, an increase of 2 percent applied 

to the base payment and to a payment per mile traveled; 

• An upward adjustment of 3 percent to the base payment 

and to mileage for trips in rural areas; and 

• In super-rural areas, an add-on payment of 22.6 percent, 

applied only to the base rate and not to mileage. The superrural adjustment is not specified in the statute, but is instead 

calculated by CMS. 

CBO estimates that extending those add-on payments would increase direct spending by about $1 billion over the 2017–2027 period. 

Ambulance suppliers and providers can furnish non-emergency 

transportation for beneficiaries who are traveling to or from renal 

dialysis services. Under current law, the fee that Medicare pays for 

those trips is reduced by ten percent if the ambulance offers basic 

life-support level services. Under H.R. 3729, that reduction would 

total 32 percent, beginning October 1, 2018; CBO estimates that direct spending would decrease by about $2 billion over the 2017– 

2027 period as a result. 

11 

Pay-As-You-Go considerations: The Statutory Pay-As-You-Go Act 

of 2010 establishes budget-reporting and enforcement procedures 

for legislation affecting direct spending or revenues. The net 

changes in outlays that are subject to those pay-as-you-go procedures are shown in the following table. 

12 

CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 3729, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON SEPTEMBER 13, 2017 

By fiscal year, in millions of dollars— 

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017– 2022 2017– 2027 

NET INCREASE OR DECREASE (¥) IN THE DEFICIT 

Statutory Pay-As-You-Go Impact ................................................................................................. 0 150 90 60 55 50 ¥160 ¥235 ¥270 ¥300 ¥335 405 ¥895 

13 

Increase in long-term direct spending and deficits: CBO estimates that enacting the legislation would not increase net direct 

spending or on-budget deficits in any of the four consecutive 10- 

year periods beginning in 2028. 

Intergovernmental and private-sector impact: H.R. 3729 contains 

no private-sector or intergovernmental mandates as defined in 

UMRA. 

Estimate prepared by: Federal costs: Rebecca Yip and Lara 

Robillard; Impact on state, local, and tribal governments: Zachary 

Byrum; Impact on the private sector: Amy Petz. 

Estimate approved by: Theresa Gullo, Assistant Director for 

Budget Analysis. 

V. OTHER MATTERS TO BE DISCUSSED UNDER THE 

RULES OF THE HOUSE 

A. COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

With respect to clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives, the Committee made findings and recommendations that are reflected in this report. 

B. STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

With respect to clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the bill does 

not authorize funding, so no statement of general performance 

goals and objectives is required. 

C. INFORMATION RELATING TO UNFUNDED MANDATES

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104–4). 

The Committee has determined that the bill does not contain 

Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental 

mandate on State, local, or tribal governments. 

D. CONGRESSIONAL EARMARKS, LIMITED TAX BENEFITS, AND

LIMITED TARIFF BENEFITS

With respect to clause 9 of rule XXI of the Rules of the House 

of Representatives, the Committee has carefully reviewed the provisions of the bill, and states that the provisions of the bill do not 

contain any congressional earmarks, limited tax benefits, or limited 

tariff benefits within the meaning of the rule. 

E. DUPLICATION OF FEDERAL PROGRAMS

In compliance with clause 3(c)(5) of rule XIII of the Rules of the 

House of Representatives, the Committee states that no provision 

of the bill establishes or reauthorizes: (1) a program of the Federal 

Government known to be duplicative of another Federal program; 

(2) a program included in any report from the Government Accountability Office to Congress pursuant to section 21 of Public 

Law 111–139; or (3) a program related to a program identified in 

the most recent Catalog of Federal Domestic Assistance, published 

14 

pursuant to the Federal Program Information Act (Pub. L. No. 95– 

220, as amended by Pub. L. No. 98–169). 

F. DISCLOSURE OF DIRECTED RULE MAKINGS

In compliance with Sec. 3(i) of H. Res. 5 (115th Congress), the 

following statement is made concerning directed rule makings: The 

Committee estimates that the bill requires the following directed 

rule makings within the meaning of such section: Section 2 regarding the modification of the enforcement of cost reporting requirements for low-volume ambulance suppliers, the issuance of a payment suspension, and determining overpayments subject to 

recoupment for suppliers that fail to report. 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS 

REPORTED 

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is show in roman): 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

SOCIAL SECURITY ACT 

* * * * * * * 

TITLE XI—GENERAL PROVISIONS, PEER REVIEW, AND 

ADMINISTRATIVE SIMPLIFICATION 

PART A—GENERAL PROVISIONS

* * * * * * * 

UNIFORM REPORTING SYSTEMS FOR HEALTH SERVICES FACILITIES AND

ORGANIZATIONS

SEC. 1121. (a) øFor the purposes of¿ Subject to subsection (d), for 

the purposes of reporting the cost of services provided by, of planning, and of measuring and comparing the efficiency of and effective use of services in, hospitals, skilled nursing facilities, intermediate care facilities, home health agencies, health maintenance 

organizations, suppliers of ground ambulance services, and other 

types of health services facilities and organizations to which payment may be made under this Act, the Secretary shall establish by 

regulation, for each such type of health services facility or organization, a uniform system for the reporting by a facility or organization of that type of the following information: 

15 

(1) The aggregate cost of operation and the aggregate volume 

of services. 

(2) The costs and volume of services for various functional 

accounts and subaccounts. 

(3) Rates, by category of patient and class of purchaser. 

(4) Capital assets, as defined by the Secretary, including (as 

appropriate) capital funds, debt service, lease agreements used 

in lieu of capital funds, and the value of land, facilities, and 

equipment. 

(5) Discharge and bill data. 

The uniform reporting system for a type of health services facility 

or organization shall provide for appropriate variation in the application of the system to different classes of facilities or organizations 

within that type and shall be established, to the extent practicable, 

consistent with the cooperative system for producing comparable 

and uniform health information and statistics described in section 

306(e)(1) of the Public Health Service Act. In reporting under such 

a system, hospitals shall employ such chart of accounts, definitions, 

principles, and statistics as the Secretary may prescribe in order to 

reach a uniform reconciliation of financial and statistical data for 

specified uniform reports to be provided to the Secretary. Not later 

than December 31, 2019, the Secretary shall modify the uniform reporting system for providers of services with respect to ambulance 

services to ensure that such system contains information similar (as 

determined by the Secretary) to information required under the uniform reporting system for suppliers of ground ambulance services. 

(b) The Secretary shall— 

(1) monitor the operation of the systems established under 

subsection (a); 

(2) assist with and support demonstrations and evaluations 

of the effectiveness and cost of the operation of such systems 

and encourage State adoption of such systems; and 

(3) periodically revise such systems to improve their effectiveness and diminish their cost. 

(c) The Secretary shall provide information obtained through use 

of the uniform reporting systems described in subsection (a) in a 

useful manner and format to appropriate agencies and organizations, including health systems agencies (designated under section 

1515 of the Public Health Service Act) and State health planning 

and development agencies (designated under section 1521 of such 

Act), as may be necessary to carry out such agencies’ and organizations’ functions. 

(d) In the case of a supplier of ground ambulance services that 

furnishes such services for fewer than 20 individuals entitled to benefits under part A of title XVIII and enrolled under part B of such 

title in a cost reporting period (as defined by the Secretary), the Secretary may modify the requirements for inclusion of any information 

specified in subsection (a) in reports made in accordance with the 

uniform reporting systems established under this section with respect to such services. 

* * * * * * * 

16 

TITLE XVIII—HEALTH INSURANCE FOR THE AGED AND 

DISABLED 

* * * * * * * 

PART B—SUPPLEMENTARY MEDICAL INSURANCE BENEFITS FOR THE

AGED AND DISABLED

* * * * * * * 

SPECIAL PAYMENT RULES FOR PARTICULAR ITEMS AND SERVICES

SEC. 1834. (a) PAYMENT FOR DURABLE MEDICAL EQUIPMENT.— 

(1) GENERAL RULE FOR PAYMENT.— 

(A) IN GENERAL.—With respect to a covered item (as defined in paragraph (13)) for which payment is determined 

under this subsection, payment shall be made in the frequency specified in paragraphs (2) through (7) and in an 

amount equal to 80 percent of the payment basis described 

in subparagraph (B). 

(B) PAYMENT BASIS.—Subject to subparagraph (F)(i), the 

payment basis described in this subparagraph is the lesser 

of— 

(i) the actual charge for the item, or 

(ii) the payment amount recognized under paragraphs (2) through (7) of this subsection for the item; 

except that clause (i) shall not apply if the covered item is 

furnished by a public home health agency (or by another 

home health agency which demonstrates to the satisfaction 

of the Secretary that a significant portion of its patients 

are low income) free of charge or at nominal charges to the 

public. 

(C) EXCLUSIVE PAYMENT RULE.—Subject to subparagraph 

(F)(ii), this subsection shall constitute the exclusive provision of this title for payment for covered items under this 

part or under part A to a home health agency. 

(D) REDUCTION IN FEE SCHEDULES FOR CERTAIN ITEMS.— 

With respect to a seat-lift chair or transcutaneous electrical nerve stimulator furnished on or after April 1, 1990, 

the Secretary shall reduce the payment amount applied 

under subparagraph (B)(ii) for such an item by 15 percent, 

and, in the case of a transcutaneous electrical nerve stimulator furnished on or after January 1, 1991, the Secretary 

shall further reduce such payment amount (as previously 

reduced) by 45 percent. 

(E) CLINICAL CONDITIONS FOR COVERAGE.— 

(i) IN GENERAL.—The Secretary shall establish 

standards for clinical conditions for payment for covered items under this subsection. 

(ii) REQUIREMENTS.—The standards established 

under clause (i) shall include the specification of types 

or classes of covered items that require, as a condition 

of payment under this subsection, a face-to-face examination of the individual by a physician (as defined in 

section 1861(r)), a physician assistant, nurse practitioner, or a clinical nurse specialist (as those terms are 

17 

defined in section 1861(aa)(5)) and a prescription for 

the item. 

(iii) PRIORITY OF ESTABLISHMENT OF STANDARDS.—In 

establishing the standards under this subparagraph, 

the Secretary shall first establish standards for those 

covered items for which the Secretary determines 

there has been a proliferation of use, consistent findings of charges for covered items that are not delivered, or consistent findings of falsification of documentation to provide for payment of such covered 

items under this part. 

(iv) STANDARDS FOR POWER WHEELCHAIRS.—Effective 

on the date of the enactment of this subparagraph, in 

the case of a covered item consisting of a motorized or 

power wheelchair for an individual, payment may not 

be made for such covered item unless a physician (as 

defined in section 1861(r)(1)), a physician assistant, 

nurse practitioner, or a clinical nurse specialist (as 

those terms are defined in section 1861(aa)(5)) has 

conducted a face-to-face examination of the individual 

and written a prescription for the item. 

(v) LIMITATION ON PAYMENT FOR COVERED ITEMS.— Payment may not be made for a covered item under 

this subsection unless the item meets any standards 

established under this subparagraph for clinical condition of coverage. 

(F) APPLICATION OF COMPETITIVE ACQUISITION; LIMITA- TION OF INHERENT REASONABLENESS AUTHORITY.—In the 

case of covered items furnished on or after January 1, 

2011, subject to subparagraphs (G) and (H), that are included in a competitive acquisition program in a competitive acquisition area under section 1847(a)— 

(i) the payment basis under this subsection for such 

items and services furnished in such area shall be the 

payment basis determined under such competitive acquisition program; 

(ii) the Secretary may (and, in the case of covered 

items furnished on or after January 1, 2016, subject to 

clause (iii), shall) use information on the payment determined under such competitive acquisition programs 

to adjust the payment amount otherwise recognized 

under subparagraph (B)(ii) for an area that is not a 

competitive acquisition area under section 1847 and in 

the case of such adjustment, paragraph (10)(B) shall 

not be applied; and 

(iii) in the case of covered items furnished on or 

after January 1, 2016, the Secretary shall continue to 

make such adjustments described in clause (ii) as, 

under such competitive acquisition programs, additional covered items are phased in or information is 

updated as contracts under section 1847 are recompeted in accordance with section 1847(b)(3)(B). 

(G) USE OF INFORMATION ON COMPETITIVE BID RATES.— 

The Secretary shall specify by regulation the methodology 

to be used in applying the provisions of subparagraph 

18 

(F)(ii) and subsection (h)(1)(H)(ii). In promulgating such 

regulation, the Secretary shall consider the costs of items 

and services in areas in which such provisions would be 

applied compared to the payment rates for such items and 

services in competitive acquisition areas.In the case of 

items and services furnished on or after January 1, 2019, 

in making any adjustments under clause (ii) or (iii) of subparagraph (F), under subsection (h)(1)(H)(ii), or under section 1842(s)(3)(B), the Secretary shall— 

(i) solicit and take into account stakeholder input; 

and 

(ii) take into account the highest amount bid by a 

winning supplier in a competitive acquisition area and 

a comparison of each of the following with respect to 

non-competitive acquisition areas and competitive acquisition areas: 

(I) The average travel distance and cost associated with furnishing items and services in the 

area. 

(II) The average volume of items and services 

furnished by suppliers in the area. 

(III) The number of suppliers in the area. 

(H) DIABETIC SUPPLIES.— (i) IN GENERAL.—On or after the date described in 

clause (ii), the payment amount under this part for diabetic supplies, including testing strips, that are nonmail order items (as defined by the Secretary) shall be 

equal to the single payment amounts established 

under the national mail order competition for diabetic 

supplies under section 1847. 

(ii) DATE DESCRIBED.—The date described in this 

clause is the date of the implementation of the single 

payment amounts under the national mail order competition for diabetic supplies under section 1847. 

(I) TREATMENT OF VACUUM ERECTION SYSTEMS.—Effective for items and services furnished on and after July 1, 

2015, vacuum erection systems described as prosthetic devices described in section 1861(s)(8) shall be treated in the 

same manner as erectile dysfunction drugs are treated for 

purposes of section 1860D-2(e)(2)(A). 

(2) PAYMENT FOR INEXPENSIVE AND OTHER ROUTINELY PURCHASED DURABLE MEDICAL EQUIPMENT.— 

(A) IN GENERAL.—Payment for an item of durable medical equipment (as defined in paragraph (13))— 

(i) the purchase price of which does not exceed $150, 

(ii) which the Secretary determines is acquired at 

least 75 percent of the time by purchase, 

(iii) which is an accessory used in conjunction with 

a nebulizer, aspirator, or a ventilator excluded under 

paragraph (3)(A), or 

(iv) in the case of devices furnished on or after October 1, 2015, and before October 1, 2018, which serves 

as a speech generating device or which is an accessory 

that is needed for the individual to effectively utilize 

such a device, 

19 

shall be made on a rental basis or in a lump-sum amount 

for the purchase of the item. The payment amount recognized for purchase or rental of such equipment is the 

amount specified in subparagraph (B) for purchase or rental, except that the total amount of payments with respect 

to an item may not exceed the payment amount specified 

in subparagraph (B) with respect to the purchase of the 

item. 

(B) PAYMENT AMOUNT.—For purposes of subparagraph 

(A), the amount specified in this subparagraph, with respect to the purchase or rental of an item furnished in a 

carrier service area— 

(i) in 1989 and in 1990 is the average reasonable 

charge in the area for the purchase or rental, respectively, of the item for the 12-month period ending on 

June 30, 1987, increased by the percentage increase in 

the consumer price index for all urban consumers 

(U.S. city average) for the 6-month period ending with 

December 1987; 

(ii) in 1991 is the sum of (I) 67 percent of the local 

payment amount for the item or device computed 

under subparagraph (C)(i)(I) for 1991, and (II) 33 percent of the national limited payment amount for the 

item or device computed under subparagraph (C)(ii) 

for 1991; 

(iii) in 1992 is the sum of (I) 33 percent of the local 

payment amount for the item or device computed 

under subparagraph (C)(i)(II) for 1992, and (II) 67 percent of the national limited payment amount for the 

item or device computed under subparagraph (C)(ii) 

for 1992; and 

(iv) in 1993 and each subsequent year is the national limited payment amount for the item or device 

computed under subparagraph (C)(ii) for that year (reduced by 10 percent, in the case of a blood glucose 

testing strip furnished after 1997 for an individual 

with diabetes). 

(C) COMPUTATION OF LOCAL PAYMENT AMOUNT AND NA- TIONAL LIMITED PAYMENT AMOUNT.—For purposes of subparagraph (B)— 

(i) the local payment amount for an item or device 

for a year is equal to— 

(I) for 1991, the amount specified in subparagraph (B)(i) for 1990 increased by the covered 

item update for 1991, and 

(II) for 1992, 1993, and 1994 the amount determined under this clause for the preceding year increased by the covered item update for the year; 

and 

(ii) the national limited payment amount for an item 

or device for a year is equal to— 

(I) for 1991, the local payment amount determined under clause (i) for such item or device for 

that year, except that the national limited payment amount may not exceed 100 percent of the 

20 

weighted average of all local payment amounts determined under such clause for such item for that 

year and may not be less than 85 percent of the 

weighted average of all local payment amounts determined under such clause for such item, 

(II) for 1992 and 1993, the amount determined 

under this clause for the preceding year increased 

by the covered item update for such subsequent 

year, 

(III) for 1994, the local payment amount determined under clause (i) for such item or device for 

that year, except that the national limited payment amount may not exceed 100 percent of the 

median of all local payment amounts determined 

under such clause for such item for that year and 

may not be less than 85 percent of the median of 

all local payment amounts determined under such 

clause for such item or device for that year, and 

(IV) for each subsequent year, the amount determined under this clause for the preceding year 

increased by the covered item update for such subsequent year. 

(3) PAYMENT FOR ITEMS REQUIRING FREQUENT AND SUBSTAN- TIAL SERVICING.— (A) IN GENERAL.—Payment for a covered item (such as 

IPPB machines and ventilators, excluding ventilators that 

are either continuous airway pressure devices or intermittent assist devices with continuous airway pressure devices) for which there must be frequent and substantial 

servicing in order to avoid risk to the patient’s health shall 

be made on a monthly basis for the rental of the item and 

the amount recognized is the amount specified in subparagraph (B). 

(B) PAYMENT AMOUNT.—For purposes of subparagraph 

(A), the amount specified in this subparagraph, with respect to an item or device furnished in a carrier service 

area— 

(i) in 1989 and in 1990 is the average reasonable 

charge in the area for the rental of the item or device 

for the 12-month period ending with June 1987, increased by the percentage increase in the consumer 

price index for all urban consumers (U.S. city average) 

for the 6-month period ending with December 1987; 

(ii) in 1991 is the sum of (I) 67 percent of the local 

payment amount for the item or device computed 

under subparagraph (C)(i)(I) for 1991, and (II) 33 percent of the national limited payment amount for the 

item or device computed under subparagraph (C)(ii) 

for 1991; 

(iii) in 1992 is the sum of (I) 33 percent of the local 

payment amount for the item or device computed 

under subparagraph (C)(i)(II) for 1992, and (II) 67 percent of the national limited payment amount for the 

item or device computed under subparagraph (C)(ii) 

for 1992; and 

21 

(iv) in 1993 and each subsequent year is the national limited payment amount for the item or device 

computed under subparagraph (C)(ii) for that year. 

(C) COMPUTATION OF LOCAL PAYMENT AMOUNT AND NA- TIONAL LIMITED PAYMENT AMOUNT.—For purposes of subparagraph (B)— 

(i) the local payment amount for an item or device 

for a year is equal to— 

(I) for 1991, the amount specified in subparagraph (B)(i) for 1990 increased by the covered 

item update for 1991, and 

(II) for 1992, 1993, and 1994 the amount determined under this clause for the preceding year increased by the covered item update for the year; 

and 

(ii) the national limited payment amount for an item 

or device for a year is equal to— 

(I) for 1991, the local payment amount determined under clause (i) for such item or device for 

that year, except that the national limited payment amount may not exceed 100 percent of the 

weighted average of all local payment amounts determined under such clause for such item for that 

year and may not be less than 85 percent of the 

weighted average of all local payment amounts determined under such clause for such item, 

(II) for 1992 and 1993, the amount determined 

under this clause for the preceding year increased 

by the covered item update for such subsequent 

year, 

(III) for 1994, the local payment amount determined under clause (i) for such item or device for 

that year, except that the national limited payment amount may not exceed 100 percent of the 

median of all local payment amounts determined 

under such clause for such item for that year and 

may not be less than 85 percent of the median of 

all local payment amounts determined under such 

clause for such item or device for that year, and 

(IV) for each subsequent year, the amount determined under this clause for the preceding year 

increased by the covered item update for such subsequent year. 

(4) PAYMENT FOR CERTAIN CUSTOMIZED ITEMS.—Payment 

with respect to a covered item that is uniquely constructed or 

substantially modified to meet the specific needs of an individual patient, and for that reason cannot be grouped with 

similar items for purposes of payment under this title, shall be 

made in a lump-sum amount (A) for the purchase of the item 

in a payment amount based upon the carrier’s individual consideration for that item, and (B) for the reasonable and necessary maintenance and servicing for parts and labor not covered by the supplier’s or manufacturer’s warranty, when necessary during the period of medical need, and the amount recognized for such maintenance and servicing shall be paid on a 

22 

lump-sum, as needed basis based upon the carrier’s individual 

consideration for that item. In the case of a wheelchair furnished on or after January 1, 1992, the wheelchair shall be 

treated as a customized item for purposes of this paragraph if 

the wheelchair has been measured, fitted, or adapted in consideration of the patient’s body size, disability, period of need, or 

intended use, and has been assembled by a supplier or ordered 

from a manufacturer who makes available customized features, 

modifications, or components for wheelchairs that are intended 

for an individual patient’s use in accordance with instructions 

from the patient’s physician. 

(5) PAYMENT FOR OXYGEN AND OXYGEN EQUIPMENT.— 

(A) IN GENERAL.—Payment for oxygen and oxygen equipment shall be made on a monthly basis in the monthly 

payment amount recognized under paragraph (9) for oxygen and oxygen equipment (other than portable oxygen 

equipment), subject to subparagraphs (B), (C), (E), and (F). 

(B) ADD-ON FOR PORTABLE OXYGEN EQUIPMENT.—When 

portable oxygen equipment is used, but subject to subparagraph (D), the payment amount recognized under subparagraph (A) shall be increased by the monthly payment 

amount recognized under paragraph (9) for portable oxygen equipment. 

(C) VOLUME ADJUSTMENT.—When the attending physician prescribes an oxygen flow rate— 

(i) exceeding 4 liters per minute, the payment 

amount recognized under subparagraph (A), subject to 

subparagraph (D), shall be increased by 50 percent, or 

(ii) of less than 1 liter per minute, the payment 

amount recognized under subparagraph (A) shall be 

decreased by 50 percent. 

(D) LIMIT ON ADJUSTMENT.—When portable oxygen 

equipment is used and the attending physician prescribes 

an oxygen flow rate exceeding 4 liters per minute, there 

shall only be an increase under either subparagraph (B) or 

(C), whichever increase is larger, and not under both such 

subparagraphs. 

(E) RECERTIFICATION FOR PATIENTS RECEIVING HOME OX- YGEN THERAPY.—In the case of a patient receiving home 

oxygen therapy services who, at the time such services are 

initiated, has an initial arterial blood gas value at or above 

a partial pressure of 56 or an arterial oxygen saturation at 

or above 89 percent (or such other values, pressures, or criteria as the Secretary may specify) no payment may be 

made under this part for such services after the expiration 

of the 90-day period that begins on the date the patient 

first receives such services unless the patient’s attending 

physician certifies that, on the basis of a follow-up test of 

the patient’s arterial blood gas value or arterial oxygen 

saturation conducted during the final 30 days of such 90- 

day period, there is a medical need for the patient to continue to receive such services. 

(F) RENTAL CAP.— 

(i) IN GENERAL.—Payment for oxygen equipment (including portable oxygen equipment) under this paraVerDate Sep 11 2014 02:46 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00022 Fmt 6659 Sfmt 6601 E:\HR\OC\HR481P1.XXX HR481P1
23 

graph may not extend over a period of continuous use 

(as determined by the Secretary) of longer than 36 

months. 

(ii) PAYMENTS AND RULES AFTER RENTAL CAP.—After 

the 36th continuous month during which payment is 

made for the equipment under this paragraph— 

(I) the supplier furnishing such equipment 

under this subsection shall continue to furnish the 

equipment during any period of medical need for 

the remainder of the reasonable useful lifetime of 

the equipment, as determined by the Secretary; 

(II) payments for oxygen shall continue to be 

made in the amount recognized for oxygen under 

paragraph (9) for the period of medical need; and 

(III) maintenance and servicing payments shall, 

if the Secretary determines such payments are 

reasonable and necessary, be made (for parts and 

labor not covered by the supplier’s or manufacturer’s warranty, as determined by the Secretary to 

be appropriate for the equipment), and such payments shall be in an amount determined to be appropriate by the Secretary. 

(6) PAYMENT FOR OTHER COVERED ITEMS (OTHER THAN DURA- BLE MEDICAL EQUIPMENT).—Payment for other covered items 

(other than durable medical equipment and other covered 

items described in paragraph (3), (4), or (5)) shall be made in 

a lump-sum amount for the purchase of the item in the 

amount of the purchase price recognized under paragraph (8). 

(7) PAYMENT FOR OTHER ITEMS OF DURABLE MEDICAL EQUIPMENT.— 

(A) PAYMENT.—In the case of an item of durable medical 

equipment not described in paragraphs (2) through (6), the 

following rules shall apply: 

(i) RENTAL.— 

(I) IN GENERAL.—Except as provided in clause 

(iii), payment for the item shall be made on a 

monthly basis for the rental of the item during the 

period of medical need (but payments under this 

clause may not extend over a period of continuous 

use (as determined by the Secretary) of longer 

than 13 months). 

(II) PAYMENT AMOUNT.—Subject to subclause 

(III) and subparagraph (B), the amount recognized 

for the item, for each of the first 3 months of such 

period, is 10 percent of the purchase price recognized under paragraph (8) with respect to the 

item, and, for each of the remaining months of 

such period, is 7.5 percent of such purchase price. 

(III) SPECIAL RULE FOR POWER-DRIVEN WHEEL- CHAIRS.—For purposes of payment for power-driven wheelchairs, subclause (II) shall be applied by 

substituting ‘‘15 percent’’ and ‘‘6 percent’’ for ‘‘10 

percent’’ and ‘‘7.5 percent’’, respectively. 

(ii) OWNERSHIP AFTER RENTAL.—On the first day 

that begins after the 13th continuous month during 

24 

which payment is made for the rental of an item 

under clause (i), the supplier of the item shall transfer 

title to the item to the individual. 

(iii) PURCHASE AGREEMENT OPTION FOR COMPLEX, RE- HABILITATIVE POWER-DRIVEN WHEELCHAIRS.—In the 

case of a complex, rehabilitative power-driven wheelchair, at the time the supplier furnishes the item, the 

supplier shall offer the individual the option to purchase the item, and payment for such item shall be 

made on a lump-sum basis if the individual exercises 

such option. 

(iv) MAINTENANCE AND SERVICING.—After the supplier transfers title to the item under clause (ii) or in 

the case of a power-driven wheelchair for which a purchase agreement has been entered into under clause 

(iii), maintenance and servicing payments shall, if the 

Secretary determines such payments are reasonable 

and necessary, be made (for parts and labor not covered by the supplier’s or manufacturer’s warranty, as 

determined by the Secretary to be appropriate for the 

particular type of durable medical equipment), and 

such payments shall be in an amount determined to 

be appropriate by the Secretary. 

(B) RANGE FOR RENTAL AMOUNTS.— (i) FOR 1989.—For items furnished during 1989, the 

payment amount recognized under subparagraph (A)(i) 

shall not be more than 115 percent, and shall not be 

less than 85 percent, of the prevailing charge established for rental of the item in January 1987, increased by the percentage increase in the consumer 

price index for all urban consumers (U.S. city average) 

for the 6-month period ending with December 1987. 

(ii) FOR 1990.—For items furnished during 1990, 

clause (i) shall apply in the same manner as it applies 

to items furnished during 1989. 

(C) REPLACEMENT OF ITEMS.— (i) ESTABLISHMENT OF REASONABLE USEFUL LIFE- TIME.—In accordance with clause (iii), the Secretary 

shall determine and establish a reasonable useful lifetime for items of durable medical equipment for which 

payment may be made under this paragraph. 

(ii) PAYMENT FOR REPLACEMENT ITEMS.—If the reasonable lifetime of such an item, as so established, has 

been reached during a continuous period of medical 

need, or the carrier determines that the item is lost or 

irreparably damaged, the patient may elect to have 

payment for an item serving as a replacement for such 

item made— 

(I) on a monthly basis for the rental of the replacement item in accordance with subparagraph 

(A); or 

(II) in the case of an item for which a purchase 

agreement has been entered into under subparagraph (A)(iii), in a lump-sum amount for the purchase of the item. 

25 

(iii) LENGTH OF REASONABLE USEFUL LIFETIME.—The 

reasonable useful lifetime of an item of durable medical equipment under this subparagraph shall be equal 

to 5 years, except that, if the Secretary determines 

that, on the basis of prior experience in making payments for such an item under this title, a reasonable 

useful lifetime of 5 years is not appropriate with respect to a particular item, the Secretary shall establish an alternative reasonable lifetime for such item. 

(8) PURCHASE PRICE RECOGNIZED FOR MISCELLANEOUS DE- VICES AND ITEMS.—For purposes of paragraphs (6) and (7), the 

amount that is recognized under this paragraph as the purchase price for a covered item is the amount described in subparagraph (C) of this paragraph, determined as follows: 

(A) COMPUTATION OF LOCAL PURCHASE PRICE.—Each carrier under section 1842 shall compute a base local purchase price for the item as follows: 

(i) The carrier shall compute a base local purchase 

price, for each item described— 

(I) in paragraph (6) equal to the average reasonable charge in the locality for the purchase of the 

item for the 12-month period ending with June 

1987, or 

(II) in paragraph (7) equal to the average of the 

purchase prices on the claims submitted on an assignment-related basis for the unused item supplied during the 6-month period ending with December 1986. 

(ii) The carrier shall compute a local purchase price, 

with respect to the furnishing of each particular 

item— 

(I) in 1989 and 1990, equal to the base local 

purchase price computed under clause (i) increased by the percentage increase in the consumer price index for all urban consumers (U.S. 

city average) for the 6-month period ending with 

December 1987, 

(II) in 1991, equal to the local purchase price 

computed under this clause for the previous year, 

increased by the covered item update for 1991, 

and decreased by the percentage by which the average of the reasonable charges for claims paid for 

all items described in paragraph (7) is lower than 

the average of the purchase prices submitted for 

such items during the final 9 months of 1988; or 

(III) in 1992, 1993, and 1994 equal to the local 

purchase price computed under this clause for the 

previous year increased by the covered item update for the year. 

(B) COMPUTATION OF NATIONAL LIMITED PURCHASE

PRICE.—With respect to the furnishing of a particular item 

in a year, the Secretary shall compute a national limited 

purchase price— 

(i) for 1991, equal to the local purchase price computed under subparagraph (A)(ii) for the item for the 

26 

year, except that such national limited purchase price 

may not exceed 100 percent of the weighted average of 

all local purchase prices for the item computed under 

such subparagraph for the year, and may not be less 

than 85 percent of the weighted average of all local 

purchase prices for the item computed under such subparagraph for the year; 

(ii) for 1992 and 1993, the amount determined under 

this subparagraph for the preceding year increased by 

the covered item update for such subsequent year; 

(iii) for 1994, the local purchase price computed 

under subparagraph (A)(ii) for the item for the year, 

except that such national limited purchase price may 

not exceed 100 percent of the median of all local purchase prices computed for the item under such subparagraph for the year and may not be less than 85 

percent of the median of all local purchase prices computed under such subparagraph for the item for the 

year; and 

(iv) for each subsequent year, equal to the amount 

determined under this subparagraph for the preceding 

year increased by the covered item update for such 

subsequent year. 

(C) PURCHASE PRICE RECOGNIZED.—For purposes of paragraphs (6) and (7), the amount that is recognized under 

this paragraph as the purchase price for each item furnished— 

(i) in 1989 or 1990, is 100 percent of the local purchase price computed under subparagraph (A)(ii)(I); 

(ii) in 1991, is the sum of (I) 67 percent of the local 

purchase price computed under subparagraph 

(A)(ii)(II) for 1991, and (II) 33 percent of the national 

limited purchase price computed under subparagraph 

(B) for 1991; 

(iii) in 1992, is the sum of (I) 33 percent of the local 

purchase price computed under subparagraph 

(A)(ii)(III) for 1992, and (II) 67 percent of the national 

limited purchase price computed under subparagraph 

(B) for 1992; and 

(iv) in 1993 or a subsequent year, is the national 

limited purchase price computed under subparagraph 

(B) for that year. 

(9) MONTHLY PAYMENT AMOUNT RECOGNIZED WITH RESPECT

TO OXYGEN AND OXYGEN EQUIPMENT.—For purposes of paragraph (5), the amount that is recognized under this paragraph 

for payment for oxygen and oxygen equipment is the monthly 

payment amount described in subparagraph (C) of this paragraph. Such amount shall be computed separately (i) for all 

items of oxygen and oxygen equipment (other than portable oxygen equipment) and (ii) for portable oxygen equipment (each 

such group referred to in this paragraph as an ‘‘item’’). 

(A) COMPUTATION OF LOCAL MONTHLY PAYMENT RATE.— 

Each carrier under this section shall compute a base local 

payment rate for each item as follows: 

27 

(i) The carrier shall compute a base local average 

monthly payment rate per beneficiary as an amount 

equal to (I) the total reasonable charges for the item 

during the 12-month period ending with December 

1986, divided by (II) the total number of months for all 

beneficiaries receiving the item in the area during the 

12-month period for which the carrier made payment 

for the item under this title. 

(ii) The carrier shall compute a local average monthly payment rate for the item applicable— 

(I) to 1989 and 1990, equal to 95 percent of the 

base local average monthly payment rate computed under clause (i) for the item increased by 

the percentage increase in the consumer price 

index for all urban consumers (U.S. city average) 

for the 6-month period ending with December 

1987, or 

(II) to 1991, 1992, 1993, and 1994 equal to the 

local average monthly payment rate computed 

under this clause for the item for the previous 

year increased by the covered item increase for 

the year. 

(B) COMPUTATION OF NATIONAL LIMITED MONTHLY PAYMENT RATE.—With respect to the furnishing of an item in 

a year, the Secretary shall compute a national limited 

monthly payment rate equal to— 

(i) for 1991, the local monthly payment rate computed under subparagraph (A)(ii)(II) for the item for 

the year, except that such national limited monthly 

payment rate may not exceed 100 percent of the 

weighted average of all local monthly payment rates 

computed for the item under such subparagraph for 

the year, and may not be less than 85 percent of the 

weighted average of all local monthly payment rates 

computed for the item under such subparagraph for 

the year; 

(ii) for 1992 and 1993, the amount determined under 

this subparagraph for the preceding year increased by 

the covered item update for such subsequent year; 

(iii) for 1994, the local monthly payment rate computed under subparagraph (A)(ii) for the item for the 

year, except that such national limited monthly payment rate may not exceed 100 percent of the median 

of all local monthly payment rates computed for the 

item under such subparagraph for the year and may 

not be less than 85 percent of the median of all local 

monthly payment rates computed for the item under 

such subparagraph for the year; 

(iv) for 1995, 1996, and 1997, equal to the amount 

determined under this subparagraph for the preceding 

year increased by the covered item update for such 

subsequent year; 

(v) for 1998, 75 percent of the amount determined 

under this subparagraph for 1997; and 

28 

(vi) for 1999 and each subsequent year, 70 percent 

of the amount determined under this subparagraph for 

1997. 

(C) MONTHLY PAYMENT AMOUNT RECOGNIZED.—For purposes of paragraph (5), the amount that is recognized 

under this paragraph as the base monthly payment 

amount for each item furnished— 

(i) in 1989 and in 1990, is 100 percent of the local 

average monthly payment rate computed under subparagraph (A)(ii) for the item; 

(ii) in 1991, is the sum of (I) 67 percent of the local 

average monthly payment rate computed under subparagraph (A)(ii)(II) for the item for 1991, and (II) 33 

percent of the national limited monthly payment rate 

computed under subparagraph (B)(i) for the item for 

1991; 

(iii) in 1992, is the sum of (I) 33 percent of the local 

average monthly payment rate computed under subparagraph (A)(ii)(II) for the item for 1992, and (II) 67 

percent of the national limited monthly payment rate 

computed under subparagraph (B)(ii) for the item for 

1992; and 

(iv) in a subsequent year, is the national limited 

monthly payment rate computed under subparagraph 

(B) for the item for that year. 

(10) EXCEPTIONS AND ADJUSTMENTS.— (A) AREAS OUTSIDE CONTINENTAL UNITED STATES.—Exceptions to the amounts recognized under the previous provisions of this subsection shall be made to take into account the unique circumstances of covered items furnished 

in Alaska, Hawaii, or Puerto Rico. 

(B) ADJUSTMENT FOR INHERENT REASONABLENESS.—The 

Secretary is authorized to apply the provisions of paragraphs (8) and (9) of section 1842(b) to covered items and 

suppliers of such items and payments under this subsection in an area and with respect to covered items and 

services for which the Secretary does not make a payment 

amount adjustment under paragraph (1)(F). 

(C) TRANSCUTANEOUS ELECTRICAL NERVE STIMULATOR

(TENS).—In order to permit an attending physician time to 

determine whether the purchase of a transcutaneous electrical nerve stimulator is medically appropriate for a particular patient, the Secretary may determine an appropriate payment amount for the initial rental of such item 

for a period of not more than 2 months. If such item is 

subsequently purchased, the payment amount with respect 

to such purchase is the payment amount determined under 

paragraph (2). 

(11) IMPROPER BILLING AND REQUIREMENT OF PHYSICIAN

ORDER.— 

(A) IMPROPER BILLING FOR CERTAIN RENTAL ITEMS.—Notwithstanding any other provision of this title, a supplier of 

a covered item for which payment is made under this subsection and which is furnished on a rental basis shall continue to supply the item without charge (other than a 

29 

charge provided under this subsection for the maintenance 

and servicing of the item) after rental payments may no 

longer be made under this subsection. If a supplier knowingly and willfully violates the previous sentence, the Secretary may apply sanctions against the supplier under section 1842(j)(2) in the same manner such sanctions may 

apply with respect to a physician. 

(B) REQUIREMENT OF PHYSICIAN ORDER.— 

(i) IN GENERAL.—The Secretary is authorized to require, for specified covered items, that payment may 

be made under this subsection with respect to the item 

only if a physician enrolled under section 1866(j) or an 

eligible professional under section 1848(k)(3)(B) that is 

enrolled under section 1866(j) has communicated to 

the supplier, before delivery of the item, a written 

order for the item. 

(ii) REQUIREMENT FOR FACE TO FACE ENCOUNTER.— 

The Secretary shall require that such an order be 

written pursuant to a physician, a physician assistant, 

a nurse practitioner, or a clinical nurse specialist (as 

those terms are defined in section 1861(aa)(5)) documenting such physician, physician assistant, practitioner, or specialist has had a face-to-face encounter 

(including through use of telehealth under subsection 

(m) and other than with respect to encounters that are 

incident to services involved) with the individual involved during the 6-month period preceding such written order, or other reasonable timeframe as determined by the Secretary. 

(12) REGIONAL CARRIERS.—The Secretary may designate, by 

regulation under section 1842, one carrier for one or more entire regions to process all claims within the region for covered 

items under this section. 

(13) COVERED ITEM.—In this subsection, the term ‘‘covered 

item’’ means durable medical equipment (as defined in section 

1861(n)), including such equipment described in section 

1861(m)(5), but not including implantable items for which payment may be made under section 1833(t). 

(14) COVERED ITEM UPDATE.—In this subsection, the term 

‘‘covered item update’’ means, with respect to a year— 

(A) for 1991 and 1992, the percentage increase in the 

consumer price index for all urban consumers (U.S. city 

average) for the 12-month period ending with June of the 

previous year reduced by 1 percentage point; 

(B) for 1993, 1994, 1995, 1996, and 1997, the percentage 

increase in the consumer price index for all urban consumers (U.S. city average) for the 12-month period ending 

with June of the previous year; 

(C) for each of the years 1998 through 2000, 0 percentage points; 

(D) for 2001, the percentage increase in the consumer 

price index for all urban consumers (U.S. city average) for 

the 12-month period ending with June 2000; 

(E) for 2002, 0 percentage points; 

30 

(F) for 2003, the percentage increase in the consumer 

price index for all urban consumers (U.S. urban average) 

for the 12-month period ending with June of 2002; 

(G) for 2004 through 2006— 

(i) subject to clause (ii), in the case of class III medical devices described in section 513(a)(1)(C) of the 

Federal Food, Drug, and Cosmetic Act (21 U.S.C. 

360(c)(1)(C)), the percentage increase described in subparagraph (B) for the year involved; and 

(ii) in the case of covered items not described in 

clause (i), 0 percentage points; 

(H) for 2007— 

(i) subject to clause (ii), in the case of class III medical devices described in section 513(a)(1)(C) of the 

Federal Food, Drug, and Cosmetic Act (21 U.S.C. 

360(c)(1)(C)), the percentage change determined by the 

Secretary to be appropriate taking into account recommendations contained in the report of the Comptroller General of the United States under section 

302(c)(1)(B) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003; and 

(ii) in the case of covered items not described in 

clause (i), 0 percentage points; 

(I) for 2008— 

(i) subject to clause (ii), in the case of class III medical devices described in section 513(a)(1)(C) of the 

Federal Food, Drug, and Cosmetic Act (21 U.S.C. 

360(c)(1)(C)), the percentage increase described in subparagraph (B) (as applied to the payment amount for 

2007 determined after the application of the percentage change under subparagraph (H)(i)); and 

(ii) in the case of covered items not described in 

clause (i), 0 percentage points; 

(J) for 2009— 

(i) in the case of items and services furnished in any 

geographic area, if such items or services were selected for competitive acquisition in any area under 

the competitive acquisition program under section 

1847(a)(1)(B)(i)(I) before July 1, 2008, including related accessories but only if furnished with such items 

and services selected for such competition and diabetic 

supplies but only if furnished through mail order, - 9.5 

percent; or 

(ii) in the case of other items and services, the percentage increase in the consumer price index for all 

urban consumers (U.S. urban average) for the 12- 

month period ending with June 2008; 

(K) for 2010, the percentage increase in the consumer 

price index for all urban consumers (U.S. urban average) 

for the 12-month period ending with June of the previous 

year; and 

(L) for 2011 and each subsequent year— 

(i) the percentage increase in the consumer price 

index for all urban consumers (United States city avVerDate Sep 11 2014 02:46 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00030 Fmt 6659 Sfmt 6601 E:\HR\OC\HR481P1.XXX HR481P1
31 

erage) for the 12-month period ending with June of 

the previous year, reduced by— 

(ii) the productivity adjustment described in section 

1886(b)(3)(B)(xi)(II). 

The application of subparagraph (L)(ii) may result in the covered item update under this paragraph being less than 0.0 for 

a year, and may result in payment rates under this subsection 

for a year being less than such payment rates for the preceding 

year. 

(15) ADVANCE DETERMINATIONS OF COVERAGE FOR CERTAIN

ITEMS.— 

(A) DEVELOPMENT OF LISTS OF ITEMS BY SECRETARY.— 

The Secretary may develop and periodically update a list 

of items for which payment may be made under this subsection that the Secretary determines, on the basis of prior 

payment experience, are frequently subject to unnecessary 

utilization throughout a carrier’s entire service area or a 

portion of such area. 

(B) DEVELOPMENT OF LISTS OF SUPPLIERS BY SECRETARY.—The Secretary may develop and periodically update a list of suppliers of items for which payment may be 

made under this subsection with respect to whom— 

(i) the Secretary has found that a substantial number of claims for payment under this part for items 

furnished by the supplier have been denied on the 

basis of the application of section 1862(a)(1); or 

(ii) the Secretary has identified a pattern of overutilization resulting from the business practice of the 

supplier. 

(C) DETERMINATIONS OF COVERAGE IN ADVANCE.—A carrier shall determine in advance of delivery of an item 

whether payment for the item may not be made because 

the item is not covered or because of the application of section 1862(a)(1) if— 

(i) the item is included on the list developed by the 

Secretary under subparagraph (A); 

(ii) the item is furnished by a supplier included on 

the list developed by the Secretary under subparagraph (B); or 

(iii) the item is a customized item (other than inexpensive items specified by the Secretary) and the patient to whom the item is to be furnished or the supplier requests that such advance determination be 

made. 

(16) DISCLOSURE OF INFORMATION AND SURETY BOND.—The 

Secretary shall not provide for the issuance (or renewal) of a 

provider number for a supplier of durable medical equipment, 

for purposes of payment under this part for durable medical 

equipment furnished by the supplier, unless the supplier provides the Secretary on a continuing basis— 

(A) with— 

(i) full and complete information as to the identity 

of each person with an ownership or control interest 

(as defined in section 1124(a)(3)) in the supplier or in 

any subcontractor (as defined by the Secretary in regVerDate Sep 11 2014 02:46 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00031 Fmt 6659 Sfmt 6601 E:\HR\OC\HR481P1.XXX HR481P1
32 

ulations) in which the supplier directly or indirectly 

has a 5 percent or more ownership interest; and 

(ii) to the extent determined to be feasible under 

regulations of the Secretary, the name of any disclosing entity (as defined in section 1124(a)(2)) with 

respect to which a person with such an ownership or 

control interest in the supplier is a person with such 

an ownership or control interest in the disclosing entity; and 

(B) with a surety bond in a form specified by the Secretary and in an amount that is not less than $50,000 that 

the Secretary determines is commensurate with the volume of the billing of the supplier. 

The Secretary may waive the requirement of a bond under subparagraph (B) in the case of a supplier that provides a comparable surety bond under State law. The Secretary, at the 

Secretary’s discretion, may impose the requirements of the 

first sentence with respect to some or all providers of items or 

services under part A or some or all suppliers or other persons 

(other than physicians or other practitioners, as defined in section 1842(b)(18)(C)) who furnish items or services under this 

part. 

(17) PROHIBITION AGAINST UNSOLICITED TELEPHONE CONTACTS BY SUPPLIERS.— 

(A) IN GENERAL.—A supplier of a covered item under 

this subsection may not contact an individual enrolled 

under this part by telephone regarding the furnishing of a 

covered item to the individual unless 1 of the following applies: 

(i) The individual has given written permission to 

the supplier to make contact by telephone regarding 

the furnishing of a covered item. 

(ii) The supplier has furnished a covered item to the 

individual and the supplier is contacting the individual only regarding the furnishing of such covered 

item. 

(iii) If the contact is regarding the furnishing of a 

covered item other than a covered item already furnished to the individual, the supplier has furnished at 

least 1 covered item to the individual during the 15- 

month period preceding the date on which the supplier 

makes such contact. 

(B) PROHIBITING PAYMENT FOR ITEMS FURNISHED SUBSEQUENT TO UNSOLICITED CONTACTS.—If a supplier knowingly contacts an individual in violation of subparagraph 

(A), no payment may be made under this part for any item 

subsequently furnished to the individual by the supplier. 

(C) EXCLUSION FROM PROGRAM FOR SUPPLIERS ENGAGING

IN PATTERN OF UNSOLICITED CONTACTS.—If a supplier 

knowingly contacts individuals in violation of subparagraph (A) to such an extent that the supplier’s conduct establishes a pattern of contacts in violation of such subparagraph, the Secretary shall exclude the supplier from participation in the programs under this Act, in accordance 

33 

with the procedures set forth in subsections (c), (f), and (g) 

of section 1128. 

(18) REFUND OF AMOUNTS COLLECTED FOR CERTAIN DIS- ALLOWED ITEMS.— (A) IN GENERAL.—If a nonparticipating supplier furnishes to an individual enrolled under this part a covered 

item for which no payment may be made under this part 

by reason of paragraph (17)(B), the supplier shall refund 

on a timely basis to the patient (and shall be liable to the 

patient for) any amounts collected from the patient for the 

item, unless— 

(i) the supplier establishes that the supplier did not 

know and could not reasonably have been expected to 

know that payment may not be made for the item by 

reason of paragraph (17)(B), or 

(ii) before the item was furnished, the patient was 

informed that payment under this part may not be 

made for that item and the patient has agreed to pay 

for that item. 

(B) SANCTIONS.—If a supplier knowingly and willfully 

fails to make refunds in violation of subparagraph (A), the 

Secretary may apply sanctions against the supplier in accordance with section 1842(j)(2). 

(C) NOTICE.—Each carrier with a contract in effect 

under this part with respect to suppliers of covered items 

shall send any notice of denial of payment for covered 

items by reason of paragraph (17)(B) and for which payment is not requested on an assignment-related basis to 

the supplier and the patient involved. 

(D) TIMELY BASIS DEFINED.—A refund under subparagraph (A) is considered to be on a timely basis only if— 

(i) in the case of a supplier who does not request reconsideration or seek appeal on a timely basis, the refund is made within 30 days after the date the supplier receives a denial notice under subparagraph (C), 

or 

(ii) in the case in which such a reconsideration or 

appeal is taken, the refund is made within 15 days 

after the date the supplier receives notice of an adverse determination on reconsideration or appeal. 

(19) CERTAIN UPGRADED ITEMS.— 

(A) INDIVIDUAL’S RIGHT TO CHOOSE UPGRADED ITEM.— 

Notwithstanding any other provision of this title, the Secretary may issue regulations under which an individual 

may purchase or rent from a supplier an item of upgraded 

durable medical equipment for which payment would be 

made under this subsection if the item were a standard 

item. 

(B) PAYMENTS TO SUPPLIER.—In the case of the purchase 

or rental of an upgraded item under subparagraph (A)— 

(i) the supplier shall receive payment under this 

subsection with respect to such item as if such item 

were a standard item; and 

(ii) the individual purchasing or renting the item 

shall pay the supplier an amount equal to the difVerDate Sep 11 2014 02:46 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00033 Fmt 6659 Sfmt 6601 E:\HR\OC\HR481P1.XXX HR481P1
34 

ference between the supplier’s charge and the amount 

under clause (i). 

In no event may the supplier’s charge for an upgraded 

item exceed the applicable fee schedule amount (if any) for 

such item. 

(C) CONSUMER PROTECTION SAFEGUARDS.—Any regulations under subparagraph (A) shall provide for consumer 

protection standards with respect to the furnishing of upgraded equipment under subparagraph (A). Such regulations shall provide for— 

(i) determination of fair market prices with respect 

to an upgraded item; 

(ii) full disclosure of the availability and price of 

standard items and proof of receipt of such disclosure 

information by the beneficiary before the furnishing of 

the upgraded item; 

(iii) conditions of participation for suppliers in the 

billing arrangement; 

(iv) sanctions of suppliers who are determined to engage in coercive or abusive practices, including exclusion; and 

(v) such other safeguards as the Secretary determines are necessary. 

(20) IDENTIFICATION OF QUALITY STANDARDS.— 

(A) IN GENERAL.—Subject to subparagraph (C), the Secretary shall establish and implement quality standards for 

suppliers of items and services described in subparagraph 

(D) to be applied by recognized independent accreditation 

organizations (as designated under subparagraph (B)) and 

with which such suppliers shall be required to comply in 

order to— 

(i) furnish any such item or service for which payment is made under this part; and 

(ii) receive or retain a provider or supplier number 

used to submit claims for reimbursement for any such 

item or service for which payment may be made under 

this title. 

(B) DESIGNATION OF INDEPENDENT ACCREDITATION ORGANIZATIONS.—Not later than the date that is 1 year after 

the date on which the Secretary implements the quality 

standards under subparagraph (A), notwithstanding section 1865(a), the Secretary shall designate and approve 

one or more independent accreditation organizations for 

purposes of such subparagraph. 

(C) QUALITY STANDARDS.—The quality standards described in subparagraph (A) may not be less stringent than 

the quality standards that would otherwise apply if this 

paragraph did not apply and shall include consumer services standards. 

(D) ITEMS AND SERVICES DESCRIBED.—The items and 

services described in this subparagraph are the following 

items and services, as the Secretary determines appropriate: 

35 

(i) Covered items (as defined in paragraph (13)) for 

which payment may otherwise be made under this 

subsection. 

(ii) Prosthetic devices and orthotics and prosthetics 

described in section 1834(h)(4). 

(iii) Items and services described in section 

1842(s)(2). 

(E) IMPLEMENTATION.—The Secretary may establish by 

program instruction or otherwise the quality standards 

under this paragraph, including subparagraph (F), after 

consultation with representatives of relevant parties. Such 

standards shall be applied prospectively and shall be published on the Internet website of the Centers for Medicare 

& Medicaid Services. 

(F) APPLICATION OF ACCREDITATION REQUIREMENT.—In 

implementing quality standards under this paragraph— 

(i) subject to clause (ii) and subparagraph (G), the 

Secretary shall require suppliers furnishing items and 

services described in subparagraph (D) on or after October 1, 2009, directly or as a subcontractor for another entity, to have submitted to the Secretary evidence of accreditation by an accreditation organization 

designated under subparagraph (B) as meeting applicable quality standards, except that the Secretary 

shall not require under this clause pharmacies to obtain such accreditation before January 1, 2010, except 

that the Secretary shall not require a pharmacy to 

have submitted to the Secretary such evidence of accreditation prior to January 1, 2011; and 

(ii) in applying such standards and the accreditation 

requirement of clause (i) with respect to eligible professionals (as defined in section 1848(k)(3)(B)), and including such other persons, such as orthotists and 

prosthetists, as specified by the Secretary, furnishing 

such items and services— 

(I) such standards and accreditation requirement shall not apply to such professionals and 

persons unless the Secretary determines that the 

standards being applied are designed specifically 

to be applied to such professionals and persons; 

and 

(II) the Secretary may exempt such professionals and persons from such standards and requirement if the Secretary determines that licensing, accreditation, or other mandatory quality requirements apply to such professionals and persons with respect to the furnishing of such items 

and services. 

(G) APPLICATION OF ACCREDITATION REQUIREMENT TO

CERTAIN PHARMACIES.— (i) IN GENERAL.—With respect to items and services 

furnished on or after January 1, 2011, in implementing quality standards under this paragraph— 

(I) subject to subclause (II), in applying such 

standards and the accreditation requirement of 

36 

subparagraph (F)(i) with respect to pharmacies 

described in clause (ii) furnishing such items and 

services, such standards and accreditation requirement shall not apply to such pharmacies; 

and 

(II) the Secretary may apply to such pharmacies 

an alternative accreditation requirement established by the Secretary if the Secretary determines such alternative accreditation requirement 

is more appropriate for such pharmacies. 

(ii) PHARMACIES DESCRIBED.—A pharmacy described 

in this clause is a pharmacy that meets each of the following criteria: 

(I) The total billings by the pharmacy for such 

items and services under this title are less than 5 

percent of total pharmacy sales, as determined 

based on the average total pharmacy sales for the 

previous 3 calendar years, 3 fiscal years, or other 

yearly period specified by the Secretary. 

(II) The pharmacy has been enrolled under section 1866(j) as a supplier of durable medical 

equipment, prosthetics, orthotics, and supplies, 

has been issued (which may include the renewal 

of) a provider number for at least 5 years, and for 

which a final adverse action (as defined in section 

424.57(a) of title 42, Code of Federal Regulations) 

has not been imposed in the past 5 years. 

(III) The pharmacy submits to the Secretary an 

attestation, in a form and manner, and at a time, 

specified by the Secretary, that the pharmacy 

meets the criteria described in subclauses (I) and 

(II). Such attestation shall be subject to section 

1001 of title 18, United States Code. 

(IV) The pharmacy agrees to submit materials 

as requested by the Secretary, or during the 

course of an audit conducted on a random sample 

of pharmacies selected annually, to verify that the 

pharmacy meets the criteria described in subclauses (I) and (II). Materials submitted under the 

preceding sentence shall include a certification by 

an accountant on behalf of the pharmacy or the 

submission of tax returns filed by the pharmacy 

during the relevant periods, as requested by the 

Secretary. 

(21) SPECIAL PAYMENT RULE FOR SPECIFIED ITEMS AND SUPPLIES.— 

(A) IN GENERAL.—Notwithstanding the preceding provisions of this subsection, for specified items and supplies 

(described in subparagraph (B)) furnished during 2005, the 

payment amount otherwise determined under this subsection for such specified items and supplies shall be reduced by the percentage difference between— 

(i) the amount of payment otherwise determined for 

the specified item or supply under this subsection for 

2002, and 

37 

(ii) the amount of payment for the specified item or 

supply under chapter 89 of title 5, United States Code, 

as identified in the column entitled ‘‘Median FEHP 

Price’’ in the table entitled ‘‘SUMMARY OF MEDICARE PRICES COMPARED TO VA, MEDICAID, RETAIL, AND FEHP PRICES FOR 16 ITEMS’’ included 

in the Testimony of the Inspector General before the 

Senate Committee on Appropriations, June 12, 2002, 

or any subsequent report by the Inspector General. 

(B) SPECIFIED ITEM OR SUPPLY DESCRIBED.—For purposes 

of subparagraph (A), a specified item or supply means oxygen and oxygen equipment, standard wheelchairs (including standard power wheelchairs), nebulizers, diabetic supplies consisting of lancets and testing strips, hospital beds, 

and air mattresses, but only if the HCPCS code for the 

item or supply is identified in a table referred to in subparagraph (A)(ii). 

(C) APPLICATION OF UPDATE TO SPECIAL PAYMENT

AMOUNT.—The covered item update under paragraph (14) 

for specified items and supplies for 2006 and each subsequent year shall be applied to the payment amount under 

subparagraph (A) unless payment is made for such items 

and supplies under section 1847. 

(22) SPECIAL PAYMENT RULE FOR DIABETIC SUPPLIES.—Notwithstanding the preceding provisions of this subsection, for 

purposes of determining the payment amount under this subsection for diabetic supplies furnished on or after the first day 

of the calendar quarter during 2013 that is at least 30 days 

after the date of the enactment of this paragraph and before 

the date described in paragraph (1)(H)(ii), the Secretary shall 

recalculate and apply the covered item update under paragraph (14) as if subparagraph (J)(i) of such paragraph was 

amended by striking ‘‘but only if furnished through mail 

order’’. 

(b) FEE SCHEDULES FOR RADIOLOGIST SERVICES.— 

(1) DEVELOPMENT.—The Secretary shall develop— 

(A) a relative value scale to serve as the basis for the 

payment for radiologist services under this part, and 

(B) using such scale and appropriate conversion factors 

and subject to subsection (c)(1)(A), fee schedules (on a regional, statewide, locality, or carrier service area basis) for 

payment for radiologist services under this part, to be implemented for such services furnished during 1989. 

(2) CONSULTATION.—In carrying out paragraph (1), the Secretary shall regularly consult closely with the Physician Payment Review Commission, the American College of Radiology, 

and other organizations representing physicians or suppliers 

who furnish radiologist services and shall share with them the 

data and data analysis being used to make the determinations 

under paragraph (1), including data on variations in current 

medicare payments by geographic area, and by service and 

physician specialty. 

(3) CONSIDERATIONS.—In developing the relative value scale 

and fee schedules under paragraph (1), the Secretary— 

38 

(A) shall take into consideration variations in the cost of 

furnishing such services among geographic areas and 

among different sites where services are furnished, and 

(B) may also take into consideration such other factors 

respecting the manner in which physicians in different 

specialties furnish such services as may be appropriate to 

assure that payment amounts are equitable and designed 

to promote effective and efficient provision of radiologist 

services by physicians in the different specialties. 

(4) SAVINGS.— 

(A) BUDGET NEUTRAL FEE SCHEDULES.—The Secretary 

shall develop preliminary fee schedules for 1989, which are 

designed to result in the same amount of aggregate payments (net of any coinsurance and deductibles under sections 1833(a)(1)(J) and 1833(b)) for radiologist services furnished in 1989 as would have been made if this subsection 

had not been enacted. 

(B) INITIAL SAVINGS.—The fee schedules established for 

payment purposes under this subsection for services furnished in 1989 shall be 97 percent of the amounts permitted under these preliminary fee schedules developed 

under subparagraph (A). 

(C) 1990 FEE SCHEDULES.—For radiologist services (other 

than portable X-ray services) furnished under this part 

during 1990, after March 31 of such year, the conversion 

factors used under this subsection shall be 96 percent of 

the conversion factors that applied under this subsection 

as of December 31, 1989. 

(D) 1991 FEE SCHEDULES.—For radiologist services (other 

than portable X-ray services) furnished under this part 

during 1991, the conversion factors used in a locality 

under this subsection shall, subject to clause (vii), be reduced to the adjusted conversion factor for the locality determined as follows: 

(i) NATIONAL WEIGHTED AVERAGE CONVERSION FACTOR.—The Secretary shall estimate the national 

weighted average of the conversion factors used under 

this subsection for services furnished during 1990 beginning on April 1, using the best available data. 

(ii) REDUCED NATIONAL WEIGHTED AVERAGE.—The 

national weighted average estimated under clause (i) 

shall be reduced by 13 percent. 

(iii) COMPUTATION OF 1990 LOCALITY INDEX RELATIVE

TO NATIONAL AVERAGE.—The Secretary shall establish 

an index which reflects, for each locality, the ratio of 

the conversion factor used in the locality under this 

subsection to the national weighted average estimated 

under clause (i). 

(iv) ADJUSTED CONVERSION FACTOR.—The adjusted 

conversion factor for the professional or technical component of a service in a locality is the sum of 1⁄2 of the 

locally-adjusted amount determined under clause (v) 

and 1⁄2 of the GPCI-adjusted amount determined 

under clause (vi). 

39 

(v) LOCALLY-ADJUSTED AMOUNT.—For purposes of 

clause (iv), the locally adjusted amount determined 

under this clause is the product of (I) the national 

weighted average conversion factor computed under 

clause (ii), and (II) the index value established under 

clause (iii) for the locality. 

(vi) GPCI-ADJUSTED AMOUNT.—For purposes of 

clause (iv), the GPCI-adjusted amount determined 

under this clause is the sum of— 

(I) the product of (a) the portion of the reduced 

national weighted average conversion factor computed under clause (ii) which is attributable to 

physician work and (b) the geographic work index 

value for the locality (specified in Addendum C to 

the Model Fee Schedule for Physician Services 

(published on September 4, 1990, 55 Federal Register pp. 36238–36243)); and 

(II) the product of (a) the remaining portion of 

the reduced national weighted average conversion 

factor computed under clause (ii), and (b) the geographic practice cost index value specified in section 1842(b)(14)(C)(iv) for the locality. 

In applying this clause with respect to the professional 

component of a service, 80 percent of the conversion 

factor shall be considered to be attributable to physician work and with respect to the technical component 

of the service, 0 percent shall be considered to be attributable to physician work. 

(vii) LIMITS ON CONVERSION FACTOR.—The conversion factor to be applied to a locality to the professional or technical component of a service shall not be 

reduced under this subparagraph by more than 9.5 

percent below the conversion factor applied in the locality under subparagraph (C) to such component, but 

in no case shall the conversion factor be less than 60 

percent of the national weighted average of the conversion factors (computed under clause (i)). 

(E) RULE FOR CERTAIN SCANNING SERVICES.—In the case 

of the technical components of magnetic resonance imaging 

(MRI) services and computer assisted tomography (CAT) 

services furnished after December 31, 1990, the amount 

otherwise payable shall be reduced by 10 percent. 

(F) SUBSEQUENT UPDATING.—For radiologist services furnished in subsequent years, the fee schedules shall be the 

schedules for the previous year updated by the percentage 

increase in the MEI (as defined in section 1842(i)(3)) for 

the year. 

(G) NONPARTICIPATING PHYSICIANS AND SUPPLIERS.— 

Each fee schedule so established shall provide that the 

payment rate recognized for nonparticipating physicians 

and suppliers is equal to the appropriate percent (as defined in section 1842(b)(4)(A)(iv)) of the payment rate recognized for participating physicians and suppliers. 

(5) LIMITING CHARGES OF NONPARTICIPATING PHYSICIANS AND

SUPPLIERS.— 

40 

(A) IN GENERAL.—In the case of radiologist services furnished after January 1, 1989, for which payment is made 

under a fee schedule under this subsection, if a nonparticipating physician or supplier furnishes the service to an individual entitled to benefits under this part, the physician 

or supplier may not charge the individual more than the 

limiting charge (as defined in subparagraph (B)). 

(B) LIMITING CHARGE DEFINED.—In subparagraph (A), 

the term ‘‘limiting charge’’ means, with respect to a service 

furnished— 

(i) in 1989, 125 percent of the amount specified for 

the service in the appropriate fee schedule established 

under paragraph (1), 

(ii) in 1990, 120 percent of the amount specified for 

the service in the appropriate fee schedule established 

under paragraph (1), and 

(iii) after 1990, 115 percent of the amount specified 

for the service in the appropriate fee schedule established under paragraph (1). 

(C) ENFORCEMENT.—If a physician or supplier knowingly 

and willfully bills in violation of subparagraph (A), the 

Secretary may apply sanctions against such physician or 

supplier in accordance with section 1842(j)(2) in the same 

manner as such sanctions may apply to a physician. 

(6) RADIOLOGIST SERVICES DEFINED.—For the purposes of 

this subsection and section 1833(a)(1)(J), the term ‘‘radiologist 

services’’ only includes radiology services performed by, or 

under the direction or supervision of, a physician— 

(A) who is certified, or eligible to be certified, by the 

American Board of Radiology, or 

(B) for whom radiology services account for at least 50 

percent of the total amount of charges made under this 

part. 

(c) PAYMENT AND STANDARDS FOR SCREENING MAMMOGRAPHY.— 

(1) IN GENERAL.—With respect to expenses incurred for 

screening mammography (as defined in section 1861(jj)), payment may be made only— 

(A) for screening mammography conducted consistent 

with the frequency permitted under paragraph (2); and 

(B) if the screening mammography is conducted by a facility that has a certificate (or provisional certificate) 

issued under section 354 of the Public Health Service Act. 

(2) FREQUENCY COVERED.— 

(A) IN GENERAL.—Subject to revision by the Secretary 

under subparagraph (B)— 

(i) no payment may be made under this part for 

screening mammography performed on a woman 

under 35 years of age; 

(ii) payment may be made under this part for only 

one screening mammography performed on a woman 

over 34 years of age, but under 40 years of age; and 

(iii) in the case of a woman over 39 years of age, 

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lowing the month in which a previous screening mammography was performed. 

(B) REVISION OF FREQUENCY.— 

(i) REVIEW.—The Secretary, in consultation with the 

Director of the National Cancer Institute, shall review 

periodically the appropriate frequency for performing 

screening mammography, based on age and such other 

factors as the Secretary believes to be pertinent. 

(ii) REVISION OF FREQUENCY.—The Secretary, taking 

into consideration the review made under clause (i), 

may revise from time to time the frequency with 

which screening mammography may be paid for under 

this subsection. 

(d) FREQUENCY LIMITS AND PAYMENT FOR COLORECTAL CANCER

SCREENING TESTS.— 

(1) SCREENING FECAL-OCCULT BLOOD TESTS.— 

(A) PAYMENT AMOUNT.—The payment amount for 

colorectal cancer screening tests consisting of screening 

fecal-occult blood tests is equal to the payment amount established for diagnostic fecal-occult blood tests under section 1833(h). 

(B) FREQUENCY LIMIT.—No payment may be made under 

this part for a colorectal cancer screening test consisting of 

a screening fecal-occult blood test— 

(i) if the individual is under 50 years of age; or 

(ii) if the test is performed within the 11 months 

after a previous screening fecal-occult blood test. 

(2) SCREENING FLEXIBLE SIGMOIDOSCOPIES.— 

(A) FEE SCHEDULE.—With respect to colorectal cancer 

screening tests consisting of screening flexible 

sigmoidoscopies, payment under section 1848 shall be consistent with payment under such section for similar or related services. 

(B) PAYMENT LIMIT.—In the case of screening flexible 

sigmoidoscopy services, payment under this part shall not 

exceed such amount as the Secretary specifies, based upon 

the rates recognized for diagnostic flexible sigmoidoscopy 

services. 

(C) FACILITY PAYMENT LIMIT.— 

(i) IN GENERAL.—Notwithstanding subsections 

(i)(2)(A) and (t) of section 1833, in the case of screening flexible sigmoidoscopy services furnished on or 

after January 1, 1999, that— 

(I) in accordance with regulations, may be performed in an ambulatory surgical center and for 

which the Secretary permits ambulatory surgical 

center payments under this part, and 

(II) are performed in an ambulatory surgical 

center or hospital outpatient department, 

payment under this part shall be based on the lesser 

of the amount under the fee schedule that would apply 

to such services if they were performed in a hospital 

outpatient department in an area or the amount under 

the fee schedule that would apply to such services if 

42 

they were performed in an ambulatory surgical center 

in the same area. 

(ii) LIMITATION ON COINSURANCE.—Notwithstanding 

any other provision of this title, in the case of a beneficiary who receives the services described in clause 

(i)— 

(I) in computing the amount of any applicable 

copayment, the computation of such coinsurance 

shall be based upon the fee schedule under which 

payment is made for the services, and 

(II) the amount of such coinsurance is equal to 

25 percent of the payment amount under the fee 

schedule described in subclause (I). 

(D) SPECIAL RULE FOR DETECTED LESIONS.—If during the 

course of such screening flexible sigmoidoscopy, a lesion or 

growth is detected which results in a biopsy or removal of 

the lesion or growth, payment under this part shall not be 

made for the screening flexible sigmoidoscopy but shall be 

made for the procedure classified as a flexible 

sigmoidoscopy with such biopsy or removal. 

(E) FREQUENCY LIMIT.—No payment may be made under 

this part for a colorectal cancer screening test consisting of 

a screening flexible sigmoidoscopy— 

(i) if the individual is under 50 years of age; or 

(ii) if the procedure is performed within the 47 

months after a previous screening flexible 

sigmoidoscopy or, in the case of an individual who is 

not at high risk for colorectal cancer, if the procedure 

is performed within the 119 months after a previous 

screening colonoscopy. 

(3) SCREENING COLONOSCOPY.— 

(A) FEE SCHEDULE.—With respect to colorectal cancer 

screening test consisting of a screening colonoscopy, payment under section 1848 shall be consistent with payment 

amounts under such section for similar or related services. 

(B) PAYMENT LIMIT.—In the case of screening 

colonoscopy services, payment under this part shall not exceed such amount as the Secretary specifies, based upon 

the rates recognized for diagnostic colonoscopy services. 

(C) FACILITY PAYMENT LIMIT.— 

(i) IN GENERAL.—Notwithstanding subsections 

(i)(2)(A) and (t) of section 1833, in the case of screening colonoscopy services furnished on or after January 

1, 1999, that are performed in an ambulatory surgical 

center or a hospital outpatient department, payment 

under this part shall be based on the lesser of the 

amount under the fee schedule that would apply to 

such services if they were performed in a hospital outpatient department in an area or the amount under 

the fee schedule that would apply to such services if 

they were performed in an ambulatory surgical center 

in the same area. 

(ii) LIMITATION ON COINSURANCE.—Notwithstanding 

any other provision of this title, in the case of a beneVerDate Sep 11 2014 02:46 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00042 Fmt 6659 Sfmt 6601 E:\HR\OC\HR481P1.XXX HR481P1
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ficiary who receives the services described in clause 

(i)— 

(I) in computing the amount of any applicable 

coinsurance, the computation of such coinsurance 

shall be based upon the fee schedule under which 

payment is made for the services, and 

(II) the amount of such coinsurance is equal to 

25 percent of the payment amount under the fee 

schedule described in subclause (I). 

(D) SPECIAL RULE FOR DETECTED LESIONS.—If during the 

course of such screening colonoscopy, a lesion or growth is 

detected which results in a biopsy or removal of the lesion 

or growth, payment under this part shall not be made for 

the screening colonoscopy but shall be made for the procedure classified as a colonoscopy with such biopsy or removal. 

(E) FREQUENCY LIMIT.—No payment may be made under 

this part for a colorectal cancer screening test consisting of 

a screening colonoscopy for individuals at high risk for 

colorectal cancer if the procedure is performed within the 

23 months after a previous screening colonoscopy or for 

other individuals if the procedure is performed within the 

119 months after a previous screening colonoscopy or within 47 months after a previous screening flexible 

sigmoidoscopy. 

(e) ACCREDITATION REQUIREMENT FOR ADVANCED DIAGNOSTIC IMAGING SERVICES.— 

(1) IN GENERAL.— 

(A) IN GENERAL.—Beginning with January 1, 2012, with 

respect to the technical component of advanced diagnostic 

imaging services for which payment is made under the fee 

schedule established under section 1848(b) and that are 

furnished by a supplier, payment may only be made if 

such supplier is accredited by an accreditation organization designated by the Secretary under paragraph (2)(B)(i). 

(B) ADVANCED DIAGNOSTIC IMAGING SERVICES DEFINED.— 

In this subsection, the term ‘‘advanced diagnostic imaging 

services’’ includes— 

(i) diagnostic magnetic resonance imaging, computed 

tomography, and nuclear medicine (including positron 

emission tomography); and 

(ii) such other diagnostic imaging services, including 

services described in section 1848(b)(4)(B) (excluding 

X-ray, ultrasound, and fluoroscopy), as specified by the 

Secretary in consultation with physician specialty organizations and other stakeholders. 

(C) SUPPLIER DEFINED.—In this subsection, the term 

‘‘supplier’’ has the meaning given such term in section 

1861(d). 

(2) ACCREDITATION ORGANIZATIONS.— 

(A) FACTORS FOR DESIGNATION OF ACCREDITATION ORGANIZATIONS.—The Secretary shall consider the following factors in designating accreditation organizations under subparagraph (B)(i) and in reviewing and modifying the list of 

44 

accreditation organizations designated pursuant to subparagraph (C): 

(i) The ability of the organization to conduct timely 

reviews of accreditation applications. 

(ii) Whether the organization has established a process for the timely integration of new advanced diagnostic imaging services into the organization’s accreditation program. 

(iii) Whether the organization uses random site visits, site audits, or other strategies for ensuring accredited suppliers maintain adherence to the criteria described in paragraph (3). 

(iv) The ability of the organization to take into account the capacities of suppliers located in a rural 

area (as defined in section 1886(d)(2)(D)). 

(v) Whether the organization has established reasonable fees to be charged to suppliers applying for accreditation. 

(vi) Such other factors as the Secretary determines 

appropriate. 

(B) DESIGNATION.—Not later than January 1, 2010, the 

Secretary shall designate organizations to accredit suppliers furnishing the technical component of advanced diagnostic imaging services. The list of accreditation organizations so designated may be modified pursuant to subparagraph (C). 

(C) REVIEW AND MODIFICATION OF LIST OF ACCREDITATION ORGANIZATIONS.— 

(i) IN GENERAL.—The Secretary shall review the list 

of accreditation organizations designated under subparagraph (B) taking into account the factors under 

subparagraph (A). Taking into account the results of 

such review, the Secretary may, by regulation, modify 

the list of accreditation organizations designated 

under subparagraph (B). 

(ii) SPECIAL RULE FOR ACCREDITATIONS DONE PRIOR

TO REMOVAL FROM LIST OF DESIGNATED ACCREDITATION

ORGANIZATIONS.—In the case where the Secretary removes an organization from the list of accreditation organizations designated under subparagraph (B), any 

supplier that is accredited by the organization during 

the period beginning on the date on which the organization is designated as an accreditation organization 

under subparagraph (B) and ending on the date on 

which the organization is removed from such list shall 

be considered to have been accredited by an organization designated by the Secretary under subparagraph 

(B) for the remaining period such accreditation is in 

effect. 

(3) CRITERIA FOR ACCREDITATION.—The Secretary shall establish procedures to ensure that the criteria used by an accreditation organization designated under paragraph (2)(B) to 

evaluate a supplier that furnishes the technical component of 

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45 

itation of such supplier is specific to each imaging modality. 

Such criteria shall include— 

(A) standards for qualifications of medical personnel who 

are not physicians and who furnish the technical component of advanced diagnostic imaging services; 

(B) standards for qualifications and responsibilities of 

medical directors and supervising physicians, including 

standards that recognize the considerations described in 

paragraph (4); 

(C) procedures to ensure that equipment used in furnishing the technical component of advanced diagnostic 

imaging services meets performance specifications; 

(D) standards that require the supplier have procedures 

in place to ensure the safety of persons who furnish the 

technical component of advanced diagnostic imaging services and individuals to whom such services are furnished; 

(E) standards that require the establishment and maintenance of a quality assurance and quality control program 

by the supplier that is adequate and appropriate to ensure 

the reliability, clarity, and accuracy of the technical quality of diagnostic images produced by such supplier; and 

(F) any other standards or procedures the Secretary determines appropriate. 

(4) RECOGNITION IN STANDARDS FOR THE EVALUATION OF

MEDICAL DIRECTORS AND SUPERVISING PHYSICIANS.—The standards described in paragraph (3)(B) shall recognize whether a 

medical director or supervising physician— 

(A) in a particular specialty receives training in advanced diagnostic imaging services in a residency program; 

(B) has attained, through experience, the necessary expertise to be a medical director or a supervising physician; 

(C) has completed any continuing medical education 

courses relating to such services; or 

(D) has met such other standards as the Secretary determines appropriate. 

(5) RULE FOR ACCREDITATIONS MADE PRIOR TO DESIGNA- TION.—In the case of a supplier that is accredited before January 1, 2010, by an accreditation organization designated by the 

Secretary under paragraph (2)(B) as of January 1, 2010, such 

supplier shall be considered to have been accredited by an organization designated by the Secretary under such paragraph 

as of January 1, 2012, for the remaining period such accreditation is in effect. 

(f) REDUCTION IN PAYMENTS FOR PHYSICIAN PATHOLOGY SERVICES

DURING 1991.— 

(1) IN GENERAL.—For physician pathology services furnished 

under this part during 1991, the prevailing charges used in a 

locality under this part shall be 7 percent below the prevailing 

charges used in the locality under this part in 1990 after 

March 31. 

(2) LIMITATION.—The prevailing charge for the technical and 

professional components of an physician pathology service furnished by a physician through an independent laboratory shall 

not be reduced pursuant to paragraph (1) to the extent that 

such reduction would reduce such prevailing charge below 115 

46 

percent of the prevailing charge for the professional component 

of such service when furnished by a hospital-based physician 

in the same locality. For purposes of the preceding sentence, 

an independent laboratory is a laboratory that is independent 

of a hospital and separate from the attending or consulting 

physicians’ office. 

(g) PAYMENT FOR OUTPATIENT CRITICAL ACCESS HOSPITAL SERV- ICES.— (1) IN GENERAL.—The amount of payment for outpatient critical access hospital services of a critical access hospital is equal 

to 101 percent of the reasonable costs of the hospital in providing such services, unless the hospital makes the election 

under paragraph (2). 

(2) ELECTION OF COST-BASED HOSPITAL OUTPATIENT SERVICE

PAYMENT PLUS FEE SCHEDULE FOR PROFESSIONAL SERVICES.—A 

critical access hospital may elect to be paid for outpatient critical access hospital services amounts equal to the sum of the 

following, less the amount that such hospital may charge as 

described in section 1866(a)(2)(A): 

(A) FACILITY FEE.—With respect to facility services, not 

including any services for which payment may be made 

under subparagraph (B), 101 percent of the reasonable 

costs of the critical access hospital in providing such services. 

(B) FEE SCHEDULE FOR PROFESSIONAL SERVICES.—With 

respect to professional services otherwise included within 

outpatient critical access hospital services, 115 percent of 

such amounts as would otherwise be paid under this part 

if such services were not included in outpatient critical access hospital services. Subsections (x) and (y) of section 

1833 shall not be taken into account in determining the 

amounts that would otherwise be paid pursuant to the preceding sentence. 

The Secretary may not require, as a condition for applying subparagraph (B) with respect to a critical access hospital, that 

each physician or other practitioner providing professional 

services in the hospital must assign billing rights with respect 

to such services, except that such subparagraph shall not apply 

to those physicians and practitioners who have not assigned 

such billing rights. 

(3) DISREGARDING CHARGES.—The payment amounts under 

this subsection shall be determined without regard to the 

amount of the customary or other charge. 

(4) TREATMENT OF CLINICAL DIAGNOSTIC LABORATORY SERVICES.—No coinsurance, deductible, copayment, or other costsharing otherwise applicable under this part shall apply with 

respect to clinical diagnostic laboratory services furnished as 

an outpatient critical access hospital service. Nothing in this 

title shall be construed as providing for payment for clinical diagnostic laboratory services furnished as part of outpatient 

critical access hospital services, other than on the basis described in this subsection. For purposes of the preceding sentence and section 1861(mm)(3), clinical diagnostic laboratory 

services furnished by a critical access hospital shall be treated 

as being furnished as part of outpatient critical access services 

47 

without regard to whether the individual with respect to whom 

such services are furnished is physically present in the critical 

access hospital, or in a skilled nursing facility or a clinic (including a rural health clinic) that is operated by a critical access hospital, at the time the specimen is collected. 

(5) COVERAGE OF COSTS FOR CERTAIN EMERGENCY ROOM ONCALL PROVIDERS.—In determining the reasonable costs of outpatient critical access hospital services under paragraphs (1) 

and (2)(A), the Secretary shall recognize as allowable costs, 

amounts (as defined by the Secretary) for reasonable compensation and related costs for physicians, physician assistants, nurse practitioners, and clinical nurse specialists who are 

on-call (as defined by the Secretary) to provide emergency services but who are not present on the premises of the critical access hospital involved, and are not otherwise furnishing services covered under this title and are not on-call at any other 

provider or facility. 

(h) PAYMENT FOR PROSTHETIC DEVICES AND ORTHOTICS AND

PROSTHETICS.— 

(1) GENERAL RULE FOR PAYMENT.— 

(A) IN GENERAL.—Payment under this subsection for 

prosthetic devices and orthotics and prosthetics shall be 

made in a lump-sum amount for the purchase of the item 

in an amount equal to 80 percent of the payment basis described in subparagraph (B). 

(B) PAYMENT BASIS.—Except as provided in subparagraphs (C), (E), and (H)(i), the payment basis described in 

this subparagraph is the lesser of— 

(i) the actual charge for the item; or 

(ii) the amount recognized under paragraph (2) as 

the purchase price for the item. 

(C) EXCEPTION FOR CERTAIN PUBLIC HOME HEALTH AGENCIES.—Subparagraph (B)(i) shall not apply to an item furnished by a public home health agency (or by another 

home health agency which demonstrates to the satisfaction 

of the Secretary that a significant portion of its patients 

are low income) free of charge or at nominal charges to the 

public. 

(D) EXCLUSIVE PAYMENT RULE.—Subject to subparagraph 

(H)(ii), this subsection shall constitute the exclusive provision of this title for payment for prosthetic devices, 

orthotics, and prosthetics under this part or under part A 

to a home health agency. 

(E) EXCEPTION FOR CERTAIN ITEMS.—Payment for ostomy 

supplies, tracheostomy supplies, and urologicals shall be 

made in accordance with subparagraphs (B) and (C) of section 1834(a)(2). 

(F) SPECIAL PAYMENT RULES FOR CERTAIN PROSTHETICS

AND CUSTOM-FABRICATED ORTHOTICS.— 

(i) IN GENERAL.—No payment shall be made under 

this subsection for an item of custom-fabricated 

orthotics described in clause (ii) or for an item of prosthetics unless such item is— 

(I) furnished by a qualified practitioner; and 

48 

(II) fabricated by a qualified practitioner or a 

qualified supplier at a facility that meets such criteria as the Secretary determines appropriate. 

(ii) DESCRIPTION OF CUSTOM-FABRICATED ITEM.— (I) IN GENERAL.—An item described in this 

clause is an item of custom-fabricated orthotics 

that requires education, training, and experience 

to custom-fabricate and that is included in a list 

established by the Secretary in subclause (II). 

Such an item does not include shoes and shoe inserts. 

(II) LIST OF ITEMS.—The Secretary, in consultation with appropriate experts in orthotics (including national organizations representing manufacturers of orthotics), shall establish and update as 

appropriate a list of items to which this subparagraph applies. No item may be included in such 

list unless the item is individually fabricated for 

the patient over a positive model of the patient. 

(iii) QUALIFIED PRACTITIONER DEFINED.—In this subparagraph, the term ‘‘qualified practitioner’’ means a 

physician or other individual who— 

(I) is a qualified physical therapist or a qualified 

occupational therapist; 

(II) in the case of a State that provides for the 

licensing of orthotics and prosthetics, is licensed 

in orthotics or prosthetics by the State in which 

the item is supplied; or 

(III) in the case of a State that does not provide 

for the licensing of orthotics and prosthetics, is 

specifically trained and educated to provide or 

manage the provision of prosthetics and customdesigned or -fabricated orthotics, and is certified 

by the American Board for Certification in 

Orthotics and Prosthetics, Inc. or by the Board for 

Orthotist/Prosthetist Certification, or is 

credentialed and approved by a program that the 

Secretary determines, in consultation with appropriate experts in orthotics and prosthetics, has 

training and education standards that are necessary to provide such prosthetics and orthotics. 

(iv) QUALIFIED SUPPLIER DEFINED.—In this subparagraph, the term ‘‘qualified supplier’’ means any entity 

that is accredited by the American Board for Certification in Orthotics and Prosthetics, Inc. or by the 

Board for Orthotist/Prosthetist Certification, or accredited and approved by a program that the Secretary determines has accreditation and approval standards 

that are essentially equivalent to those of such Board. 

(G) REPLACEMENT OF PROSTHETIC DEVICES AND PARTS.— (i) IN GENERAL.—Payment shall be made for the replacement of prosthetic devices which are artificial 

limbs, or for the replacement of any part of such devices, without regard to continuous use or useful lifetime restrictions if an ordering physician determines 

49 

that the provision of a replacement device, or a replacement part of such a device, is necessary because 

of any of the following: 

(I) A change in the physiological condition of the 

patient. 

(II) An irreparable change in the condition of 

the device, or in a part of the device. 

(III) The condition of the device, or the part of 

the device, requires repairs and the cost of such 

repairs would be more than 60 percent of the cost 

of a replacement device, or, as the case may be, of 

the part being replaced. 

(ii) CONFIRMATION MAY BE REQUIRED IF DEVICE OR

PART BEING REPLACED IS LESS THAN 3 YEARS OLD.—If 

a physician determines that a replacement device, or 

a replacement part, is necessary pursuant to clause 

(i)— 

(I) such determination shall be controlling; and 

(II) such replacement device or part shall be 

deemed to be reasonable and necessary for purposes of section 1862(a)(1)(A); 

except that if the device, or part, being replaced is less 

than 3 years old (calculated from the date on which 

the beneficiary began to use the device or part), the 

Secretary may also require confirmation of necessity of 

the replacement device or replacement part, as the 

case may be. 

(H) APPLICATION OF COMPETITIVE ACQUISITION TO

ORTHOTICS; LIMITATION OF INHERENT REASONABLENESS AUTHORITY.—In the case of orthotics described in paragraph 

(2)(C) of section 1847(a) furnished on or after January 1, 

2009, subject to subsection (a)(1)(G), that are included in 

a competitive acquisition program in a competitive acquisition area under such section— 

(i) the payment basis under this subsection for such 

orthotics furnished in such area shall be the payment 

basis determined under such competitive acquisition 

program; and 

(ii) subject to subsection (a)(1)(G), the Secretary may 

use information on the payment determined under 

such competitive acquisition programs to adjust the 

payment amount otherwise recognized under subparagraph (B)(ii) for an area that is not a competitive acquisition area under section 1847, and in the case of 

such adjustment, paragraphs (8) and (9) of section 

1842(b) shall not be applied. 

(2) PURCHASE PRICE RECOGNIZED.—For purposes of paragraph (1), the amount that is recognized under this paragraph 

as the purchase price for prosthetic devices, orthotics, and 

prosthetics is the amount described in subparagraph (C) of this 

paragraph, determined as follows: 

(A) COMPUTATION OF LOCAL PURCHASE PRICE.—Each carrier under section 1842 shall compute a base local purchase price for the item as follows: 

50 

(i) The carrier shall compute a base local purchase 

price for each item equal to the average reasonable 

charge in the locality for the purchase of the item for 

the 12-month period ending with June 1987. 

(ii) The carrier shall compute a local purchase price, 

with respect to the furnishing of each particular 

item— 

(I) in 1989 and 1990, equal to the base local 

purchase price computed under clause (i) increased by the percentage increase in the consumer price index for all urban consumers (United 

States city average) for the 6-month period ending 

with December 1987, or 

(II) in 1991, 1992 or 1993, equal to the local 

purchase price computed under this clause for the 

previous year increased by the applicable percentage increase for the year. 

(B) COMPUTATION OF REGIONAL PURCHASE PRICE.—With 

respect to the furnishing of a particular item in each region (as defined by the Secretary), the Secretary shall compute a regional purchase price— 

(i) for 1992, equal to the average (weighted by relative volume of all claims among carriers) of the local 

purchase prices for the carriers in the region computed 

under subparagraph (A)(ii)(II) for the year, and 

(ii) for each subsequent year, equal to the regional 

purchase price computed under this subparagraph for 

the previous year increased by the applicable percentage increase for the year. 

(C) PURCHASE PRICE RECOGNIZED.—For purposes of paragraph (1) and subject to subparagraph (D), the amount 

that is recognized under this paragraph as the purchase 

price for each item furnished— 

(i) in 1989, 1990, or 1991, is 100 percent of the local 

purchase price computed under subparagraph (A)(ii); 

(ii) in 1992, is the sum of (I) 75 percent of the local 

purchase price computed under subparagraph 

(A)(ii)(II) for 1992, and (II) 25 percent of the regional 

purchase price computed under subparagraph (B) for 

1992; 

(iii) in 1993, is the sum of (I) 50 percent of the local 

purchase price computed under subparagraph 

(A)(ii)(II) for 1993, and (II) 50 percent of the regional 

purchase price computed under subparagraph (B) for 

1993; and 

(iv) in 1994 or a subsequent year, is the regional 

purchase price computed under subparagraph (B) for 

that year. 

(D) RANGE ON AMOUNT RECOGNIZED.—The amount that 

is recognized under subparagraph (C) as the purchase 

price for an item furnished— 

(i) in 1992, may not exceed 125 percent, and may 

not be lower than 85 percent, of the average of the 

purchase prices recognized under such subparagraph 

51 

for all the carrier service areas in the United States 

in that year; and 

(ii) in a subsequent year, may not exceed 120 percent, and may not be lower than 90 percent, of the average of the purchase prices recognized under such 

subparagraph for all the carrier service areas in the 

United States in that year. 

(3) APPLICABILITY OF CERTAIN PROVISIONS RELATING TO DURABLE MEDICAL EQUIPMENT.—Paragraphs (12) and (17) and subparagraphs (A) and (B) of paragraph (10) and paragraph (11) 

of subsection (a) shall apply to prosthetic devices, orthotics, 

and prosthetics in the same manner as such provisions apply 

to covered items under such subsection. 

(4) DEFINITIONS.—In this subsection— 

(A) the term ‘‘applicable percentage increase’’ means— 

(i) for 1991, 0 percent; 

(ii) for 1992 and 1993, the percentage increase in 

the consumer price index for all urban consumers 

(United States city average) for the 12-month period 

ending with June of the previous year; 

(iii) for 1994 and 1995, 0 percent; 

(iv) for 1996 and 1997, the percentage increase in 

the consumer price index for all urban consumers 

(United States city average) for the 12-month period 

ending with June of the previous year; 

(v) for each of the years 1998 through 2000, 1 percent; 

(vi) for 2001, the percentage increase in the consumer price index for all urban consumers (U.S. city 

average) for the 12-month period ending with June 

2000; 

(vii) for 2002, 1 percent; 

(viii) for 2003, the percentage increase in the consumer price index for all urban consumers (United 

States city average) for the 12-month period ending 

with June of the previous year; 

(ix) for 2004, 2005, and 2006, 0 percent; 

(x) for for each of 2007 through 2010, the percentage 

increase in the consumer price index for all urban consumers (United States city average) for the 12-month 

period ending with June of the previous year; and 

(xi) for 2011 and each subsequent year— 

(I) the percentage increase in the consumer 

price index for all urban consumers (United States 

city average) for the 12-month period ending with 

June of the previous year, reduced by— 

(II) the productivity adjustment described in 

section 1886(b)(3)(B)(xi)(II). 

(B) the term ‘‘prosthetic devices’’ has the meaning given 

such term in section 1861(s)(8), except that such term does 

not include parenteral and enteral nutrition nutrients, 

supplies, and equipment and does not include an 

implantable item for which payment may be made under 

section 1833(t); and 

52 

(C) the term ‘‘orthotics and prosthetics’’ has the meaning 

given such term in section 1861(s)(9) (and includes shoes 

described in section 1861(s)(12)), but does not include 

intraocular lenses or medical supplies (including catheters, 

catheter supplies, ostomy bags, and supplies related to 

ostomy care) furnished by a home health agency under section 1861(m)(5). 

The application of subparagraph (A)(xi)(II) may result in the 

applicable percentage increase under subparagraph (A) being 

less than 0.0 for a year, and may result in payment rates 

under this subsection for a year being less than such payment 

rates for the preceding year. 

(i) PAYMENT FOR SURGICAL DRESSINGS.— 

(1) IN GENERAL.—Payment under this subsection for surgical 

dressings (described in section 1861(s)(5)) shall be made in a 

lump sum amount for the purchase of the item in an amount 

equal to 80 percent of the lesser of— 

(A) the actual charge for the item; or 

(B) a payment amount determined in accordance with 

the methodology described in subparagraphs (B) and (C) of 

subsection (a)(2) (except that in applying such methodology, the national limited payment amount referred to in 

such subparagraphs shall be initially computed based on 

local payment amounts using average reasonable charges 

for the 12-month period ending December 31, 1992, increased by the covered item updates described in such subsection for 1993 and 1994). 

(2) EXCEPTIONS.—Paragraph (1) shall not apply to surgical 

dressings that are— 

(A) furnished as an incident to a physician’s professional 

service; or 

(B) furnished by a home health agency. 

(j) REQUIREMENTS FOR SUPPLIERS OF MEDICAL EQUIPMENT AND

SUPPLIES.— 

(1) ISSUANCE AND RENEWAL OF SUPPLIER NUMBER.— (A) PAYMENT.—Except as provided in subparagraph (C), 

no payment may be made under this part after the date 

of the enactment of the Social Security Act Amendments 

of 1994 for items furnished by a supplier of medical equipment and supplies unless such supplier obtains (and renews at such intervals as the Secretary may require) a 

supplier number. 

(B) STANDARDS FOR POSSESSING A SUPPLIER NUMBER.—A 

supplier may not obtain a supplier number unless— 

(i) for medical equipment and supplies furnished on 

or after the date of the enactment of the Social Security Act Amendments of 1994 and before January 1, 

1996, the supplier meets standards prescribed by the 

Secretary in regulations issued on June 18, 1992; and 

(ii) for medical equipment and supplies furnished on 

or after January 1, 1996, the supplier meets revised 

standards prescribed by the Secretary (in consultation 

with representatives of suppliers of medical equipment 

and supplies, carriers, and consumers) that shall include requirements that the supplier— 

53 

(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) EXCEPTION FOR ITEMS FURNISHED AS INCIDENT TO A

PHYSICIAN’S SERVICE.—Subparagraph (A) shall not apply 

with respect to medical equipment and supplies furnished 

incident to a physician’s service. 

(D) PROHIBITION AGAINST MULTIPLE SUPPLIER NUMBERS.—The Secretary may not issue more than one supplier number to any supplier of medical equipment and 

supplies unless the issuance of more than one number is 

appropriate to identify subsidiary or regional entities 

under the supplier’s ownership or control. 

(E) PROHIBITION AGAINST DELEGATION OF SUPPLIER DETERMINATIONS.—The Secretary may not delegate (other 

than by contract under section 1842) the responsibility to 

determine whether suppliers meet the standards necessary 

to obtain a supplier number. 

(2) CERTIFICATES OF MEDICAL NECESSITY.— 

(A) LIMITATION ON INFORMATION PROVIDED BY SUPPLIERS

ON CERTIFICATES OF MEDICAL NECESSITY.— 

(i) IN GENERAL.—Effective 60 days after the date of 

the enactment of the Social Security Act Amendments 

of 1994, a supplier of medical equipment and supplies 

may distribute to physicians, or to individuals entitled 

to benefits under this part, a certificate of medical necessity for commercial purposes which contains no 

more than the following information completed by the 

supplier: 

(I) An identification of the supplier and the beneficiary to whom such medical equipment and 

supplies are furnished. 

(II) A description of such medical equipment 

and supplies. 

(III) Any product code identifying such medical 

equipment and supplies. 

(IV) Any other administrative information 

(other than information relating to the beneficiary’s medical condition) identified by the Secretary. 

(ii) INFORMATION ON PAYMENT AMOUNT AND

CHARGES.—If a supplier distributes a certificate of 

medical necessity containing any of the information 

permitted to be supplied under clause (i), the supplier 

shall also list on the certificate of medical necessity 

the fee schedule amount and the supplier’s charge for 

the medical equipment or supplies being furnished 

prior to distribution of such certificate to the physician. 

54 

(iii) PENALTY.—Any supplier of medical equipment 

and supplies who knowingly and willfully distributes a 

certificate of medical necessity in violation of clause (i) 

or fails to provide the information required under 

clause (ii) 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). 

(B) DEFINITION.—For purposes of this paragraph, the 

term ‘‘certificate of medical necessity’’ means a form or 

other document containing information required by the 

carrier to be submitted to show that an item is reasonable 

and necessary for the diagnosis or treatment of illness or 

injury or to improve the functioning of a malformed body 

member. 

(3) COVERAGE AND REVIEW CRITERIA.—The Secretary shall 

annually review the coverage and utilization of items of medical equipment and supplies to determine whether such items 

should be made subject to coverage and utilization review criteria, and if appropriate, shall develop and apply such criteria 

to such items. 

(4) LIMITATION ON PATIENT LIABILITY.—If a supplier of medical equipment and supplies (as defined in paragraph (5))— 

(A) furnishes an item or service to a beneficiary for 

which no payment may be made by reason of paragraph 

(1); 

(B) furnishes an item or service to a beneficiary for 

which payment is denied in advance under subsection 

(a)(15); or 

(C) 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 not on an assigned 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. The provisions of subsection 

(a)(18) shall apply to refunds required under the previous sentence in the same manner as such provisions apply to refunds 

under such subsection. 

(5) DEFINITION.—The term ‘‘medical equipment and supplies’’ 

means— 

(A) durable medical equipment (as defined in section 

1861(n)); 

(B) prosthetic devices (as described in section 1861(s)(8)); 

(C) orthotics and prosthetics (as described in section 

1861(s)(9)); 

(D) surgical dressings (as described in section 

1861(s)(5)); 

(E) such other items as the Secretary may determine; 

and 

55 

(F) for purposes of paragraphs (1) and (3)— 

(i) home dialysis supplies and equipment (as described in section 1861(s)(2)(F)), 

(ii) immunosuppressive drugs (as described in section 1861(s)(2)(J)), 

(iii) therapeutic shoes for diabetics (as described in 

section 1861(s)(12)), 

(iv) oral drugs prescribed for use as an anticancer 

therapeutic agent (as described in section 

1861(s)(2)(Q)), and 

(v) self-administered erythropoetin (as described in 

section 1861(s)(2)(P)). 

(k) PAYMENT FOR OUTPATIENT THERAPY SERVICES AND COMPREHENSIVE OUTPATIENT REHABILITATION SERVICES.— 

(1) IN GENERAL.—With respect to services described in section 1833(a)(8) or 1833(a)(9) for which payment is determined 

under this subsection, the payment basis shall be— 

(A) for services furnished during 1998, the amount determined under paragraph (2); or 

(B) for services furnished during a subsequent year, 80 

percent of the lesser of— 

(i) the actual charge for the services, or 

(ii) the applicable fee schedule amount (as defined in 

paragraph (3)) for the services. 

(2) PAYMENT IN 1998 BASED UPON ADJUSTED REASONABLE

COSTS.—The amount under this paragraph for services is the 

lesser of— 

(A) the charges imposed for the services, or 

(B) the adjusted reasonable costs (as defined in paragraph (4)) for the services, 

less 20 percent of the amount of the charges imposed for such 

services. 

(3) APPLICABLE FEE SCHEDULE AMOUNT.—In this subsection, 

the term ‘‘applicable fee schedule amount’’ means, with respect 

to services furnished in a year, the amount determined under 

the fee schedule established under section 1848 for such services furnished during the year or, if there is no such fee schedule established for such services, the amount determined under 

the fee schedule established for such comparable services as 

the Secretary specifies. 

(4) ADJUSTED REASONABLE COSTS.—In paragraph (2), the 

term ‘‘adjusted reasonable costs’’ means, with respect to any 

services, reasonable costs determined for such services, reduced by 10 percent. The 10-percent reduction shall not apply 

to services described in section 1833(a)(8)(B) (relating to services provided by hospitals). 

(5) UNIFORM CODING.—For claims for services submitted on 

or after April 1, 1998, for which the amount of payment is determined under this subsection, the claim shall include a code 

(or codes) under a uniform coding system specified by the Secretary that identifies the services furnished. 

(6) RESTRAINT ON BILLING.—The provisions of subparagraphs 

(A) and (B) of section 1842(b)(18) shall apply to therapy services for which payment is made under this subsection in the 

56 

same manner as they apply to services provided by a practitioner described in section 1842(b)(18)(C). 

(7) ADJUSTMENT IN DISCOUNT FOR CERTAIN MULTIPLE THER- APY SERVICES.—In the case of therapy services furnished on or 

after April 1, 2013, and for which payment is made under this 

subsection pursuant to the applicable fee schedule amount (as 

defined in paragraph (3)), instead of the 25 percent multiple 

procedure payment reduction specified in the final rule published by the Secretary in the Federal Register on November 

29, 2010, the reduction percentage shall be 50 percent. 

(l) ESTABLISHMENT OF FEE SCHEDULE FOR AMBULANCE SERVICES.— 

(1) IN GENERAL.—The Secretary shall establish a fee schedule for payment for ambulance services whether provided directly by a supplier or provider or under arrangement with a 

provider under this part through a negotiated rulemaking process described in title 5, United States Code, and in accordance 

with the requirements of this subsection. 

(2) CONSIDERATIONS.—In establishing such fee schedule, the 

Secretary shall— 

(A) establish mechanisms to control increases in expenditures for ambulance services under this part; 

(B) establish definitions for ambulance services which 

link payments to the type of services provided; 

(C) consider appropriate regional and operational differences; 

(D) consider adjustments to payment rates to account for 

inflation and other relevant factors; and 

(E) phase in the application of the payment rates under 

the fee schedule in an efficient and fair manner consistent 

with paragraph (11), except that such phase-in shall provide for full payment of any national mileage rate for ambulance services provided by suppliers that are paid by 

carriers in any of the 50 States where payment by a carrier for such services for all such suppliers in such State 

did not, prior to the implementation of the fee schedule, include a separate amount for all mileage within the county 

from which the beneficiary is transported. 

(3) SAVINGS.—In establishing such fee schedule, the Secretary shall— 

(A) ensure that the aggregate amount of payments made 

for ambulance services under this part during 2000 does 

not exceed the aggregate amount of payments which would 

have been made for such services under this part during 

such year if the amendments made by section 4531(a) of 

the Balanced Budget Act of 1997 continued in effect, except that in making such determination the Secretary 

shall assume an update in such payments for 2002 equal 

to percentage increase in the consumer price index for all 

urban consumers (U.S. city average) for the 12-month period ending with June of the previous year reduced in the 

case of 2002 by 1.0 percentage points; 

(B) set the payment amounts provided under the fee 

schedule for services furnished in 2001 and each subsequent year at amounts equal to the payment amounts 

57 

under the fee schedule for services furnished during the 

previous year, increased, subject to subparagraph (C) and 

the succeeding sentence of this paragraph, by the percentage increase in the consumer price index for all urban consumers (U.S. city average) for the 12-month period ending 

with June of the previous year reduced in the case of 2002 

by 1.0 percentage points; and 

(C) for 2011 and each subsequent year, after determining the percentage increase under subparagraph (B) 

for the year, reduce such percentage increase by the productivity adjustment described in section 

1886(b)(3)(B)(xi)(II). 

The application of subparagraph (C) may result in the percentage increase under subparagraph (B) being less than 0.0 for a 

year, and may result in payment rates under the fee schedule 

under this subsection for a year being less than such payment 

rates for the preceding year. 

(4) CONSULTATION.—In establishing the fee schedule for ambulance services under this subsection, the Secretary shall consult with various national organizations representing individuals and entities who furnish and regulate ambulance services 

and share with such organizations relevant data in establishing such schedule. 

(5) LIMITATION ON REVIEW.—There shall be no administrative or judicial review under section 1869 or otherwise of the 

amounts established under the fee schedule for ambulance 

services under this subsection, including matters described in 

paragraph (2). 

(6) RESTRAINT ON BILLING.—The provisions of subparagraphs 

(A) and (B) of section 1842(b)(18) shall apply to ambulance 

services for which payment is made under this subsection in 

the same manner as they apply to services provided by a practitioner described in section 1842(b)(18)(C). 

(7) CODING SYSTEM.—The Secretary may require the claim 

for any services for which the amount of payment is determined under this subsection to include a code (or codes) under 

a uniform coding system specified by the Secretary that identifies the services furnished. 

(8) SERVICES FURNISHED BY CRITICAL ACCESS HOSPITALS.— Notwithstanding any other provision of this subsection, the 

Secretary shall pay 101 percent of the reasonable costs incurred in furnishing ambulance services if such services are 

furnished— 

(A) by a critical access hospital (as defined in section 

1861(mm)(1)), or 

(B) by an entity that is owned and operated by a critical 

access hospital, 

but only if the critical access hospital or entity is the only provider or supplier of ambulance services that is located within 

a 35-mile drive of such critical access hospital. 

(9) TRANSITIONAL ASSISTANCE FOR RURAL PROVIDERS.—In the 

case of ground ambulance services furnished on or after July 

1, 2001, and before January 1, 2004, for which the transportation originates in a rural area (as defined in section 

1886(d)(2)(D)) or in a rural census tract of a metropolitan staVerDate Sep 11 2014 02:46 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00057 Fmt 6659 Sfmt 6601 E:\HR\OC\HR481P1.XXX HR481P1
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tistical area (as determined under the most recent modification 

of the Goldsmith Modification, originally published in the Federal Register on February 27, 1992 (57 Fed. Reg. 6725)), the 

fee schedule established under this subsection shall provide 

that, with respect to the payment rate for mileage for a trip 

above 17 miles, and up to 50 miles, the rate otherwise established shall be increased by not less than 1⁄2 of the additional 

payment per mile established for the first 17 miles of such a 

trip originating in a rural area. 

(10) PHASE-IN PROVIDING FLOOR USING BLEND OF FEE SCHED- ULE AND REGIONAL FEE SCHEDULES.—In carrying out the 

phase-in under paragraph (2)(E) for each level of ground service furnished in a year, the portion of the payment amount 

that is based on the fee schedule shall be the greater of the 

amount determined under such fee schedule (without regard to 

this paragraph) or the following blended rate of the fee schedule under paragraph (1) and of a regional fee schedule for the 

region involved: 

(A) For 2004 (for services furnished on or after July 1, 

2004), the blended rate shall be based 20 percent on the 

fee schedule under paragraph (1) and 80 percent on the regional fee schedule. 

(B) For 2005, the blended rate shall be based 40 percent 

on the fee schedule under paragraph (1) and 60 percent on 

the regional fee schedule. 

(C) For 2006, the blended rate shall be based 60 percent 

on the fee schedule under paragraph (1) and 40 percent on 

the regional fee schedule. 

(D) For 2007, 2008, and 2009, the blended rate shall be 

based 80 percent on the fee schedule under paragraph (1) 

and 20 percent on the regional fee schedule. 

(E) For 2010 and each succeeding year, the blended rate 

shall be based 100 percent on the fee schedule under paragraph (1). 

For purposes of this paragraph, the Secretary shall establish 

a regional fee schedule for each of the nine census divisions 

(referred to in section 1886(d)(2)) using the methodology (used 

in establishing the fee schedule under paragraph (1)) to calculate a regional conversion factor and a regional mileage payment rate and using the same payment adjustments and the 

same relative value units as used in the fee schedule under 

such paragraph. 

(11) ADJUSTMENT IN PAYMENT FOR CERTAIN LONG TRIPS.—In 

the case of ground ambulance services furnished on or after 

July 1, 2004, and before January 1, 2009, regardless of where 

the transportation originates, the fee schedule established 

under this subsection shall provide that, with respect to the 

payment rate for mileage for a trip above 50 miles the per mile 

rate otherwise established shall be increased by 1⁄4 of the payment per mile otherwise applicable to miles in excess of 50 

miles in such trip. 

(12) ASSISTANCE FOR RURAL PROVIDERS FURNISHING SERVICES

IN LOW POPULATION DENSITY AREAS.— 

(A) IN GENERAL.—In the case of ground ambulance services furnished on or after July 1, 2004, and before January 

59 

1, ø2018¿ 2023, for which the transportation originates in 

a qualified rural area (identified under subparagraph 

(B)(iii)), the Secretary shall provide for a percent increase 

in the base rate of the fee schedule for a trip established 

under this subsection. In establishing such percent increase, the Secretary shall estimate the average cost per 

trip for such services (not taking into account mileage) in 

the lowest quartile as compared to the average cost per 

trip for such services (not taking into account mileage) in 

the highest quartile of all rural county populations. 

(B) IDENTIFICATION OF QUALIFIED RURAL AREAS.— 

(i) DETERMINATION OF POPULATION DENSITY IN

AREA.—Based upon data from the United States decennial census for the year 2000, the Secretary shall 

determine, for each rural area, the population density 

for that area. 

(ii) RANKING OF AREAS.—The Secretary shall rank 

each such area based on such population density. 

(iii) IDENTIFICATION OF QUALIFIED RURAL AREAS.— 

The Secretary shall identify those areas (in subparagraph (A) referred to as ‘‘qualified rural areas’’) with 

the lowest population densities that represent, if each 

such area were weighted by the population of such 

area (as used in computing such population densities), 

an aggregate total of 25 percent of the total of the population of all such areas. 

(iv) RURAL AREA.—For purposes of this paragraph, 

the term ‘‘rural area’’ has the meaning given such 

term in section 1886(d)(2)(D). If feasible, the Secretary 

shall treat a rural census tract of a metropolitan statistical area (as determined under the most recent 

modification of the Goldsmith Modification, originally 

published in the Federal Register on February 27, 

1992 (57 Fed. Reg. 6725) as a rural area for purposes 

of this paragraph. 

(v) JUDICIAL REVIEW.—There shall be no administrative or judicial review under section 1869, 1878, or 

otherwise, respecting the identification of an area 

under this subparagraph. 

(13) TEMPORARY INCREASE FOR GROUND AMBULANCE SERVICES.— 

(A) IN GENERAL.—After computing the rates with respect 

to ground ambulance services under the other applicable 

provisions of this subsection, in the case of such services 

furnished on or after July 1, 2004, and before January 1, 

2007, and for such services furnished on or after July 1, 

2008, and before January 1, ø2018¿ 2023, for which the 

transportation originates in— 

(i) a rural area described in paragraph (9) or in a 

rural census tract described in such paragraph, the fee 

schedule established under this section shall provide 

that the rate for the service otherwise established, 

after the application of any increase under paragraphs 

(11) and (12), shall be increased by 2 percent (or 3 perVerDate Sep 11 2014 02:46 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00059 Fmt 6659 Sfmt 6601 E:\HR\OC\HR481P1.XXX HR481P1
60 

cent if such service is furnished on or after July 1, 

2008, and before January 1, ø2018¿ 2023); and 

(ii) an area not described in clause (i), the fee schedule established under this subsection shall provide 

that the rate for the service otherwise established, 

after the application of any increase under paragraph 

(11), shall be increased by 1 percent (or 2 percent if 

such service is furnished on or after July 1, 2008, and 

before January 1, ø2018¿ 2023). 

(B) APPLICATION OF INCREASED PAYMENTS AFTER APPLI- CABLE PERIOD.—The increased payments under subparagraph (A) shall not be taken into account in calculating 

payments for services furnished after the applicable period 

specified in such subparagraph. 

(14) PROVIDING APPROPRIATE COVERAGE OF RURAL AIR AMBULANCE SERVICES.— 

(A) IN GENERAL.—The regulations described in section 

1861(s)(7) shall provide, to the extent that any ambulance 

services (whether ground or air) may be covered under 

such section, that a rural air ambulance service (as defined 

in subparagraph (C)) is reimbursed under this subsection 

at the air ambulance rate if the air ambulance service— 

(i) is reasonable and necessary based on the health 

condition of the individual being transported at or immediately prior to the time of the transport; and 

(ii) complies with equipment and crew requirements 

established by the Secretary. 

(B) SATISFACTION OF REQUIREMENT OF MEDICALLY NECESSARY.—The requirement of subparagraph (A)(i) is 

deemed to be met for a rural air ambulance service if— 

(i) subject to subparagraph (D), such service is requested by a physician or other qualified medical personnel (as specified by the Secretary) who certifies or 

reasonably determines that the individual’s condition 

is such that the time needed to transport the individual by land or the instability of transportation by 

land poses a threat to the individual’s survival or seriously endangers the individual’s health; or 

(ii) such service is furnished pursuant to a protocol 

that is established by a State or regional emergency 

medical service (EMS) agency and recognized or approved by the Secretary under which the use of an air 

ambulance is recommended, if such agency does not 

have an ownership interest in the entity furnishing 

such service. 

(C) RURAL AIR AMBULANCE SERVICE DEFINED.—For purposes of this paragraph, the term ‘‘rural air ambulance 

service’’ means fixed wing and rotary wing air ambulance 

service in which the point of pick up of the individual occurs in a rural area (as defined in section 1886(d)(2)(D)) or 

in a rural census tract of a metropolitan statistical area 

(as determined under the most recent modification of the 

Goldsmith Modification, originally published in the Federal Register on February 27, 1992 (57 Fed. Reg. 6725)). 

(D) LIMITATION.— 

61 

(i) IN GENERAL.—Subparagraph (B)(i) shall not apply 

if there is a financial or employment relationship between the person requesting the rural air ambulance 

service and the entity furnishing the ambulance service, or an entity under common ownership with the entity furnishing the air ambulance service, or a financial relationship between an immediate family member of such requester and such an entity. 

(ii) EXCEPTION.—Where a hospital and the entity 

furnishing rural air ambulance services are under 

common ownership, clause (i) shall not apply to remuneration (through employment or other relationship) 

by the hospital of the requester or immediate family 

member if the remuneration is for provider-based physician services furnished in a hospital (as described in 

section 1887) which are reimbursed under part A and 

the amount of the remuneration is unrelated directly 

or indirectly to the provision of rural air ambulance 

services. 

(15) PAYMENT ADJUSTMENT FOR NON-EMERGENCY AMBULANCE

TRANSPORTS FOR ESRD BENEFICIARIES.—The fee schedule 

amount otherwise applicable under the preceding provisions of 

this subsection shall be reduced by 10 percent for ambulance 

services furnished øon or after October 1, 2013¿ during the period beginning on October 1, 2013, and ending on September 

30, 2018, and by 32 percent for such services furnished on or 

after October 1, 2018, consisting of non-emergency basic life 

support services involving transport of an individual with endstage renal disease for renal dialysis services (as described in 

section 1881(b)(14)(B)) furnished other than on an emergency 

basis by a provider of services or a renal dialysis facility. 

(16) PRIOR AUTHORIZATION FOR REPETITIVE SCHEDULED NONEMERGENT AMBULANCE TRANSPORTS.— (A) IN GENERAL.—Beginning January 1, 2017, if the expansion to all States of the model of prior authorization 

described in paragraph (2) of section 515(a) of the Medicare Access and CHIP Reauthorization Act of 2015 meets 

the requirements described in paragraphs (1) through (3) 

of section 1115A(c), then the Secretary shall expand such 

model to all States. 

(B) FUNDING.—The Secretary shall use funds made 

available under section 1893(h)(10) to carry out this paragraph. 

(C) CLARIFICATION REGARDING BUDGET NEUTRALITY.— 

Nothing in this paragraph may be construed to limit or 

modify the application of section 1115A(b)(3)(B) to models 

described in such section, including with respect to the 

model described in subparagraph (A) and expanded beginning on January 1, 2017, under such subparagraph. 

(17) REQUIREMENT TO SUBMIT COST REPORT AND AUTHORITY

TO SUSPEND PAYMENTS AND DEEM CERTAIN PAYMENTS OVERPAY- MENTS FOR GROUND AMBULANCE SERVICES.— (A) IN GENERAL.—With respect to ground ambulance 

services furnished by a supplier of such services during cost 

reporting periods (as defined in subparagraph (I)) beginVerDate Sep 11 2014 02:46 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00061 Fmt 6659 Sfmt 6603 E:\HR\OC\HR481P1.XXX HR481P1
62 

ning on or after January 1, 2020, such supplier shall make 

reports to the Secretary of information described in section 

1121(a) in accordance with the uniform reporting system 

established under such section for such suppliers and, as 

may be required by the Secretary, of any of the information 

described in subparagraph (B). 

(B) ADDITIONAL INFORMATION.—The Secretary may, with 

respect to a supplier of ground ambulance services, require 

the following information (to be reported to the extent practicable under the uniform reporting system established 

under section 1121(a) for such suppliers): 

(i) Whether the supplier is part of an emergency services department, a governmental organization, or another type of entity (as described by the Secretary). 

(ii) The number of hours in a week during which the 

supplier is available for furnishing ground ambulance 

services. 

(iii) The average number of volunteer hours a week 

used by the supplier. 

(C) SUSPENSION OF PAYMENT.—Subject to subparagraph 

(E), in the case that the Secretary determines that a supplier of ground ambulance services has not made to the 

Secretary a timely report described in subparagraph (A) 

with respect to a cost reporting period beginning on or after 

January 1, 2020, and before January 1, 2022, the Secretary 

may suspend payments made under this subsection, in 

whole or in part, to such supplier until the Secretary finds 

that such supplier has made such a report. 

(D) DEEMING CERTAIN PAYMENTS OVERPAYMENTS.—Subject to subparagraphs (E) and (F), in the case that the Secretary determines that a supplier of ground ambulance 

services has not made to the Secretary a complete, accurate, 

and timely report described in subparagraph (A) with respect to a cost reporting period beginning on or after January 1, 2022, the Secretary may deem payments made under 

this subsection to such supplier for such period to be overpayments and recoup such overpayments. 

(E) HARDSHIP DELAY.—The Secretary shall establish a 

process whereby a supplier of ground ambulance services 

may request a delay in making a report described in subparagraph (A) with respect to a cost reporting period for 

reason of significant hardship (as determined by the Secretary). 

(F) AUTHORITY TO MODIFY COST REPORTING ELEMENTS

AND ENFORCEMENT.—Not earlier than January 1, 2023, the 

Secretary may provide that subparagraph (D) no longer applies to ground ambulance services suppliers or a category 

of such suppliers after— 

(i) taking into account the recommendation of the 

Medicare Payment Advisory Commission in the most 

recent report available to the Secretary submitted 

under section 3 of the Comprehensive Operations, Sustainability, and Transport Act of 2017 regarding 

whether cost reports made by suppliers or a category of 

suppliers (as specified for purposes of the report subVerDate Sep 11 2014 02:46 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00062 Fmt 6659 Sfmt 6603 E:\HR\OC\HR481P1.XXX HR481P1
63 

mitted under such section) should be required or modified; and 

(ii) undertaking notice and comment rulemaking. 

(G) AUDIT OF COST REPORTS.—The Secretary shall audit 

reports described in subparagraph (A) made with respect to 

cost reporting periods beginning on or after January 1, 

2021. 

(H) APPEALS.—The Secretary shall establish a process 

whereby a supplier of ground ambulance services may appeal a determination described in subparagraph (C) or (D) 

made with respect to a cost report required to be made by 

such supplier under subparagraph (A). 

(I) DEFINITION.—In this paragraph, the term ‘‘cost reporting period’’ means, with respect to a year, the 12-month period beginning on January 1 of such year. 

(m) PAYMENT FOR TELEHEALTH SERVICES.— 

(1) IN GENERAL.—The Secretary shall pay for telehealth services that are furnished via a telecommunications system by a 

physician (as defined in section 1861(r)) or a practitioner (described in section 1842(b)(18)(C)) to an eligible telehealth individual enrolled under this part notwithstanding that the individual physician or practitioner providing the telehealth service is not at the same location as the beneficiary. For purposes 

of the preceding sentence, in the case of any Federal telemedicine demonstration program conducted in Alaska or Hawaii, 

the term ‘‘telecommunications system’’ includes store-and-forward technologies that provide for the asynchronous transmission of health care information in single or multimedia formats. 

(2) PAYMENT AMOUNT.— 

(A) DISTANT SITE.—The Secretary shall pay to a physician or practitioner located at a distant site that furnishes 

a telehealth service to an eligible telehealth individual an 

amount equal to the amount that such physician or practitioner would have been paid under this title had such service been furnished without the use of a telecommunications system. 

(B) FACILITY FEE FOR ORIGINATING SITE.—With respect to 

a telehealth service, subject to section 1833(a)(1)(U), there 

shall be paid to the originating site a facility fee equal to— 

(i) for the period beginning on October 1, 2001, and 

ending on December 31, 2001, and for 2002, $20; and 

(ii) for a subsequent year, the facility fee specified in 

clause (i) or this clause for the preceding year increased by the percentage increase in the MEI (as defined in section 1842(i)(3)) for such subsequent year. 

(C) TELEPRESENTER NOT REQUIRED.—Nothing in this 

subsection shall be construed as requiring an eligible telehealth individual to be presented by a physician or practitioner at the originating site for the furnishing of a service 

via a telecommunications system, unless it is medically 

necessary (as determined by the physician or practitioner 

at the distant site). 

(3) LIMITATION ON BENEFICIARY CHARGES.— 

64 

(A) PHYSICIAN AND PRACTITIONER.—The provisions of 

section 1848(g) and subparagraphs (A) and (B) of section 

1842(b)(18) shall apply to a physician or practitioner receiving payment under this subsection in the same manner 

as they apply to physicians or practitioners under such 

sections. 

(B) ORIGINATING SITE.—The provisions of section 

1842(b)(18) shall apply to originating sites receiving a facility fee in the same manner as they apply to practitioners under such section. 

(4) DEFINITIONS.—For purposes of this subsection: 

(A) DISTANT SITE.—The term ‘‘distant site’’ means the 

site at which the physician or practitioner is located at the 

time the service is provided via a telecommunications system. 

(B) ELIGIBLE TELEHEALTH INDIVIDUAL.—The term ‘‘eligible telehealth individual’’ means an individual enrolled 

under this part who receives a telehealth service furnished 

at an originating site. 

(C) ORIGINATING SITE.— 

(i) IN GENERAL.—The term ‘‘originating site’’ means 

only those sites described in clause (ii) at which the eligible telehealth individual is located at the time the 

service is furnished via a telecommunications system 

and only if such site is located— 

(I) in an area that is designated as a rural 

health professional shortage area under section 

332(a)(1)(A) of the Public Health Service Act (42 

U.S.C. 254e(a)(1)(A)); 

(II) in a county that is not included in a Metropolitan Statistical Area; or 

(III) from an entity that participates in a Federal telemedicine demonstration project that has 

been approved by (or receives funding from) the 

Secretary of Health and Human Services as of December 31, 2000. 

(ii) SITES DESCRIBED.—The sites referred to in clause 

(i) are the following sites: 

(I) The office of a physician or practitioner. 

(II) A critical access hospital (as defined in section 1861(mm)(1)). 

(III) A rural health clinic (as defined in section 

1861(aa)(2)). 

(IV) A Federally qualified health center (as defined in section 1861(aa)(4)). 

(V) A hospital (as defined in section 1861(e)). 

(VI) A hospital-based or critical access hospitalbased renal dialysis center (including satellites). 

(VII) A skilled nursing facility (as defined in 

section 1819(a)). 

(VIII) A community mental health center (as defined in section 1861(ff)(3)(B)). 

(D) PHYSICIAN.—The term ‘‘physician’’ has the meaning 

given that term in section 1861(r). 

65 

(E) PRACTITIONER.—The term ‘‘practitioner’’ has the 

meaning given that term in section 1842(b)(18)(C). 

(F) TELEHEALTH SERVICE.— (i) IN GENERAL.—The term ‘‘telehealth service’’ 

means professional consultations, office visits, and office psychiatry services (identified as of July 1, 2000, 

by HCPCS codes 99241–99275, 99201–99215, 90804– 

90809, and 90862 (and as subsequently modified by 

the Secretary)), and any additional service specified by 

the Secretary. 

(ii) YEARLY UPDATE.—The Secretary shall establish a 

process that provides, on an annual basis, for the addition or deletion of services (and HCPCS codes), as appropriate, to those specified in clause (i) for authorized 

payment under paragraph (1). 

(n) AUTHORITY TO MODIFY OR ELIMINATE COVERAGE OF CERTAIN

PREVENTIVE SERVICES.—Notwithstanding any other provision of 

this title, effective beginning on January 1, 2010, if the Secretary 

determines appropriate, the Secretary may— 

(1) modify— 

(A) the coverage of any preventive service described in 

subparagraph (A) of section 1861(ddd)(3) to the extent that 

such modification is consistent with the recommendations 

of the United States Preventive Services Task Force; and 

(B) the services included in the initial preventive physical examination described in subparagraph (B) of such 

section; and 

(2) provide that no payment shall be made under this title 

for a preventive service described in subparagraph (A) of such 

section that has not received a grade of A, B, C, or I by such 

Task Force. 

(o) DEVELOPMENT AND IMPLEMENTATION OF PROSPECTIVE PAYMENT SYSTEM.— (1) DEVELOPMENT.— 

(A) IN GENERAL.—The Secretary shall develop a prospective payment system for payment for Federally qualified 

health center services furnished by Federally qualified 

health centers under this title. Such system shall include 

a process for appropriately describing the services furnished by Federally qualified health centers and shall establish payment rates for specific payment codes based on 

such appropriate descriptions of services. Such system 

shall be established to take into account the type, intensity, and duration of services furnished by Federally qualified health centers. Such system may include adjustments, 

including geographic adjustments, determined appropriate 

by the Secretary. 

(B) COLLECTION OF DATA AND EVALUATION.—By not later 

than January 1, 2011, the Secretary shall require Federally qualified health centers to submit to the Secretary 

such information as the Secretary may require in order to 

develop and implement the prospective payment system 

under this subsection, including the reporting of services 

using HCPCS codes. 

(2) IMPLEMENTATION.— 

66 

(A) IN GENERAL.—Notwithstanding section 1833(a)(3)(A), 

the Secretary shall provide, for cost reporting periods beginning on or after October 1, 2014, for payments of prospective payment rates for Federally qualified health center services furnished by Federally qualified health centers 

under this title in accordance with the prospective payment system developed by the Secretary under paragraph 

(1). 

(B) PAYMENTS.— (i) INITIAL PAYMENTS.—The Secretary shall implement such prospective payment system so that the estimated aggregate amount of prospective payment 

rates (determined prior to the application of section 

1833(a)(1)(Z)) under this title for Federally qualified 

health center services in the first year that such system is implemented is equal to 100 percent of the estimated amount of reasonable costs (determined without 

the application of a per visit payment limit or productivity screen and prior to the application of section 

1866(a)(2)(A)(ii)) that would have occurred for such 

services under this title in such year if the system had 

not been implemented. 

(ii) PAYMENTS IN SUBSEQUENT YEARS.—Payment 

rates in years after the year of implementation of such 

system shall be the payment rates in the previous 

year increased— 

(I) in the first year after implementation of such 

system, by the percentage increase in the MEI (as 

defined in section 1842(i)(3)) for the year involved; 

and 

(II) in subsequent years, by the percentage increase in a market basket of Federally qualified 

health center goods and services as promulgated 

through regulations, or if such an index is not 

available, by the percentage increase in the MEI 

(as defined in section 1842(i)(3)) for the year involved. 

(C) PREPARATION FOR PPS IMPLEMENTATION.—Notwithstanding any other provision of law, the Secretary may establish and implement by program instruction or otherwise the payment codes to be used under the prospective 

payment system under this section. 

(p) QUALITY INCENTIVES TO PROMOTE PATIENT SAFETY AND PUBLIC HEALTH IN COMPUTED TOMOGRAPHY.— 

(1) QUALITY INCENTIVES.—In the case of an applicable computed tomography service (as defined in paragraph (2)) for 

which payment is made under an applicable payment system 

(as defined in paragraph (3)) and that is furnished on or after 

January 1, 2016, using equipment that is not consistent with 

the CT equipment standard (described in paragraph (4)), the 

payment amount for such service shall be reduced by the applicable percentage (as defined in paragraph (5)). 

(2) APPLICABLE COMPUTED TOMOGRAPHY SERVICES DEFINED.— 

In this subsection, the term ‘‘applicable computed tomography 

service’’ means a service billed using diagnostic radiological imVerDate Sep 11 2014 02:46 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00066 Fmt 6659 Sfmt 6601 E:\HR\OC\HR481P1.XXX HR481P1
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aging codes for computed tomography (identified as of January 

1, 2014, by HCPCS codes 70450–70498, 71250–71275, 72125– 

72133, 72191–72194, 73200–73206, 73700–73706, 74150– 

74178, 74261–74263, and 75571–75574 (and any succeeding 

codes). 

(3) APPLICABLE PAYMENT SYSTEM DEFINED.—In this subsection, the term ‘‘applicable payment system’’ means the following: 

(A) The technical component and the technical component of the global fee under the fee schedule established 

under section 1848(b). 

(B) The prospective payment system for hospital outpatient department services under section 1833(t). 

(4) CONSISTENCY WITH CT EQUIPMENT STANDARD.—In this 

subsection, the term ‘‘not consistent with the CT equipment 

standard’’ means, with respect to an applicable computed tomography service, that the service was furnished using equipment that does not meet each of the attributes of the National 

Electrical Manufacturers Association (NEMA) Standard XR– 

29–2013, entitled ‘‘Standard Attributes on CT Equipment Related to Dose Optimization and Management’’. Through rulemaking, the Secretary may apply successor standards. 

(5) APPLICABLE PERCENTAGE DEFINED.—In this subsection, 

the term ‘‘applicable percentage’’ means— 

(A) for 2016, 5 percent; and 

(B) for 2017 and subsequent years, 15 percent. 

(6) IMPLEMENTATION.— (A) INFORMATION.—The Secretary shall require that information be provided and attested to by a supplier and a 

hospital outpatient department that indicates whether an 

applicable computed tomography service was furnished 

that was not consistent with the CT equipment standard 

(described in paragraph (4)). Such information may be included on a claim and may be a modifier. Such information 

shall be verified, as appropriate, as part of the periodic accreditation of suppliers under section 1834(e) and hospitals 

under section 1865(a). 

(B) ADMINISTRATION.—Chapter 35 of title 44, United 

States Code, shall not apply to information described in 

subparagraph (A). 

(q) RECOGNIZING APPROPRIATE USE CRITERIA FOR CERTAIN IMAGING SERVICES.— 

(1) PROGRAM ESTABLISHED.— 

(A) IN GENERAL.—The Secretary shall establish a program to promote the use of appropriate use criteria (as defined in subparagraph (B)) for applicable imaging services 

(as defined in subparagraph (C)) furnished in an applicable 

setting (as defined in subparagraph (D)) by ordering professionals and furnishing professionals (as defined in subparagraphs (E) and (F), respectively). 

(B) APPROPRIATE USE CRITERIA DEFINED.—In this subsection, the term ‘‘appropriate use criteria’’ means criteria, 

only developed or endorsed by national professional medical specialty societies or other provider-led entities, to assist ordering professionals and furnishing professionals in 

68 

making the most appropriate treatment decision for a specific clinical condition for an individual. To the extent feasible, such criteria shall be evidence-based. 

(C) APPLICABLE IMAGING SERVICE DEFINED.—In this subsection, the term ‘‘applicable imaging service’’ means an 

advanced diagnostic imaging service (as defined in subsection (e)(1)(B)) for which the Secretary determines— 

(i) one or more applicable appropriate use criteria 

specified under paragraph (2) apply; 

(ii) there are one or more qualified clinical decision 

support mechanisms listed under paragraph (3)(C); 

and 

(iii) one or more of such mechanisms is available 

free of charge. 

(D) APPLICABLE SETTING DEFINED.—In this subsection, 

the term ‘‘applicable setting’’ means a physician’s office, a 

hospital outpatient department (including an emergency 

department), an ambulatory surgical center, and any other 

provider-led outpatient setting determined appropriate by 

the Secretary. 

(E) ORDERING PROFESSIONAL DEFINED.—In this subsection, the term ‘‘ordering professional’’ means a physician (as defined in section 1861(r)) or a practitioner described in section 1842(b)(18)(C) who orders an applicable 

imaging service. 

(F) FURNISHING PROFESSIONAL DEFINED.—In this subsection, the term ‘‘furnishing professional’’ means a physician (as defined in section 1861(r)) or a practitioner described in section 1842(b)(18)(C) who furnishes an applicable imaging service. 

(2) ESTABLISHMENT OF APPLICABLE APPROPRIATE USE CRITERIA.— 

(A) IN GENERAL.—Not later than November 15, 2015, the 

Secretary shall through rulemaking, and in consultation 

with physicians, practitioners, and other stakeholders, 

specify applicable appropriate use criteria for applicable 

imaging services only from among appropriate use criteria 

developed or endorsed by national professional medical 

specialty societies or other provider-led entities. 

(B) CONSIDERATIONS.—In specifying applicable appropriate use criteria under subparagraph (A), the Secretary 

shall take into account whether the criteria— 

(i) have stakeholder consensus; 

(ii) are scientifically valid and evidence based; and 

(iii) are based on studies that are published and reviewable by stakeholders. 

(C) REVISIONS.—The Secretary shall review, on an annual basis, the specified applicable appropriate use criteria 

to determine if there is a need to update or revise (as appropriate) such specification of applicable appropriate use 

criteria and make such updates or revisions through rulemaking. 

(D) TREATMENT OF MULTIPLE APPLICABLE APPROPRIATE

USE CRITERIA.—In the case where the Secretary determines that more than one appropriate use criterion applies 

69 

with respect to an applicable imaging service, the Secretary shall apply one or more applicable appropriate use 

criteria under this paragraph for the service. 

(3) MECHANISMS FOR CONSULTATION WITH APPLICABLE APPRO- PRIATE USE CRITERIA.— (A) IDENTIFICATION OF MECHANISMS TO CONSULT WITH

APPLICABLE APPROPRIATE USE CRITERIA.— (i) IN GENERAL.—The Secretary shall specify qualified clinical decision support mechanisms that could 

be used by ordering professionals to consult with applicable appropriate use criteria for applicable imaging 

services. 

(ii) CONSULTATION.—The Secretary shall consult 

with physicians, practitioners, health care technology 

experts, and other stakeholders in specifying mechanisms under this paragraph. 

(iii) INCLUSION OF CERTAIN MECHANISMS.—Mechanisms specified under this paragraph may include any 

or all of the following that meet the requirements described in subparagraph (B)(ii): 

(I) Use of clinical decision support modules in 

certified EHR technology (as defined in section 

1848(o)(4)). 

(II) Use of private sector clinical decision support mechanisms that are independent from certified EHR technology, which may include use of 

clinical decision support mechanisms available 

from medical specialty organizations. 

(III) Use of a clinical decision support mechanism established by the Secretary. 

(B) QUALIFIED CLINICAL DECISION SUPPORT MECHANISMS.— 

(i) IN GENERAL.—For purposes of this subsection, a 

qualified clinical decision support mechanism is a 

mechanism that the Secretary determines meets the 

requirements described in clause (ii). 

(ii) REQUIREMENTS.—The requirements described in 

this clause are the following: 

(I) The mechanism makes available to the ordering professional applicable appropriate use criteria specified under paragraph (2) and the supporting documentation for the applicable imaging 

service ordered. 

(II) In the case where there is more than one 

applicable appropriate use criterion specified 

under such paragraph for an applicable imaging 

service, the mechanism indicates the criteria that 

it uses for the service. 

(III) The mechanism determines the extent to 

which an applicable imaging service ordered is 

consistent with the applicable appropriate use criteria so specified. 

(IV) The mechanism generates and provides to 

the ordering professional a certification or documentation that documents that the qualified clinVerDate Sep 11 2014 02:46 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00069 Fmt 6659 Sfmt 6601 E:\HR\OC\HR481P1.XXX HR481P1
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ical decision support mechanism was consulted by 

the ordering professional. 

(V) The mechanism is updated on a timely basis 

to reflect revisions to the specification of applicable appropriate use criteria under such paragraph. 

(VI) The mechanism meets privacy and security 

standards under applicable provisions of law. 

(VII) The mechanism performs such other functions as specified by the Secretary, which may include a requirement to provide aggregate feedback 

to the ordering professional. 

(C) LIST OF MECHANISMS FOR CONSULTATION WITH APPLICABLE APPROPRIATE USE CRITERIA.— 

(i) INITIAL LIST.—Not later than April 1, 2016, the 

Secretary shall publish a list of mechanisms specified 

under this paragraph. 

(ii) PERIODIC UPDATING OF LIST.—The Secretary 

shall identify on an annual basis the list of qualified 

clinical decision support mechanisms specified under 

this paragraph. 

(4) CONSULTATION WITH APPLICABLE APPROPRIATE USE CRI- TERIA.— 

(A) CONSULTATION BY ORDERING PROFESSIONAL.—Beginning with January 1, 2017, subject to subparagraph (C), 

with respect to an applicable imaging service ordered by 

an ordering professional that would be furnished in an applicable setting and paid for under an applicable payment 

system (as defined in subparagraph (D)), an ordering professional shall— 

(i) consult with a qualified decision support mechanism listed under paragraph (3)(C); and 

(ii) provide to the furnishing professional the information described in clauses (i) through (iii) of subparagraph (B). 

(B) REPORTING BY FURNISHING PROFESSIONAL.—Beginning with January 1, 2017, subject to subparagraph (C), 

with respect to an applicable imaging service furnished in 

an applicable setting and paid for under an applicable payment system (as defined in subparagraph (D)), payment 

for such service may only be made if the claim for the 

service includes the following: 

(i) Information about which qualified clinical decision support mechanism was consulted by the ordering 

professional for the service. 

(ii) Information regarding— 

(I) whether the service ordered would adhere to 

the applicable appropriate use criteria specified 

under paragraph (2); 

(II) whether the service ordered would not adhere to such criteria; or 

(III) whether such criteria was not applicable to 

the service ordered. 

(iii) The national provider identifier of the ordering 

professional (if different from the furnishing professional). 

71 

(C) EXCEPTIONS.—The provisions of subparagraphs (A) 

and (B) and paragraph (6)(A) shall not apply to the following: 

(i) EMERGENCY SERVICES.—An applicable imaging 

service ordered for an individual with an emergency 

medical condition (as defined in section 1867(e)(1)). 

(ii) INPATIENT SERVICES.—An applicable imaging 

service ordered for an inpatient and for which payment is made under part A. 

(iii) SIGNIFICANT HARDSHIP.—An applicable imaging 

service ordered by an ordering professional who the 

Secretary may, on a case-by-case basis, exempt from 

the application of such provisions if the Secretary determines, subject to annual renewal, that consultation 

with applicable appropriate use criteria would result 

in a significant hardship, such as in the case of a professional who practices in a rural area without sufficient Internet access. 

(D) APPLICABLE PAYMENT SYSTEM DEFINED.—In this subsection, the term ‘‘applicable payment system’’ means the 

following: 

(i) The physician fee schedule established under section 1848(b). 

(ii) The prospective payment system for hospital outpatient department services under section 1833(t). 

(iii) The ambulatory surgical center payment systems under section 1833(i). 

(5) IDENTIFICATION OF OUTLIER ORDERING PROFESSIONALS.— (A) IN GENERAL.—With respect to applicable imaging 

services furnished beginning with 2017, the Secretary 

shall determine, on an annual basis, no more than five 

percent of the total number of ordering professionals who 

are outlier ordering professionals. 

(B) OUTLIER ORDERING PROFESSIONALS.—The determination of an outlier ordering professional shall— 

(i) be based on low adherence to applicable appropriate use criteria specified under paragraph (2), 

which may be based on comparison to other ordering 

professionals; and 

(ii) include data for ordering professionals for whom 

prior authorization under paragraph (6)(A) applies. 

(C) USE OF TWO YEARS OF DATA.—The Secretary shall 

use two years of data to identify outlier ordering professionals under this paragraph. 

(D) PROCESS.—The Secretary shall establish a process 

for determining when an outlier ordering professional is no 

longer an outlier ordering professional. 

(E) CONSULTATION WITH STAKEHOLDERS.—The Secretary 

shall consult with physicians, practitioners and other 

stakeholders in developing methods to identify outlier ordering professionals under this paragraph. 

(6) PRIOR AUTHORIZATION FOR ORDERING PROFESSIONALS WHO

ARE OUTLIERS.— 

(A) IN GENERAL.—Beginning January 1, 2020, subject to 

paragraph (4)(C), with respect to services furnished during 

72 

a year, the Secretary shall, for a period determined appropriate by the Secretary, apply prior authorization for applicable imaging services that are ordered by an outlier ordering professional identified under paragraph (5). 

(B) APPROPRIATE USE CRITERIA IN PRIOR AUTHORIZA- TION.—In applying prior authorization under subparagraph (A), the Secretary shall utilize only the applicable 

appropriate use criteria specified under this subsection. 

(C) FUNDING.—For purposes of carrying out this paragraph, the Secretary shall provide for the transfer, from 

the Federal Supplementary Medical Insurance Trust Fund 

under section 1841, of $5,000,000 to the Centers for Medicare & Medicaid Services Program Management Account 

for each of fiscal years 2019 through 2021. Amounts transferred under the preceding sentence shall remain available 

until expended. 

(7) CONSTRUCTION.—Nothing in this subsection shall be construed as granting the Secretary the authority to develop or 

initiate the development of clinical practice guidelines or appropriate use criteria. 

(r) PAYMENT FOR RENAL DIALYSIS SERVICES FOR INDIVIDUALS

WITH ACUTE KIDNEY INJURY.— (1) PAYMENT RATE.—In the case of renal dialysis services (as 

defined in subparagraph (B) of section 1881(b)(14)) furnished 

under this part by a renal dialysis facility or provider of services paid under such section during a year (beginning with 

2017) to an individual with acute kidney injury (as defined in 

paragraph (2)), the amount of payment under this part for 

such services shall be the base rate for renal dialysis services 

determined for such year under such section, as adjusted by 

any applicable geographic adjustment factor applied under subparagraph (D)(iv)(II) of such section and may be adjusted by 

the Secretary (on a budget neutral basis for payments under 

this paragraph) by any other adjustment factor under subparagraph (D) of such section. 

(2) INDIVIDUAL WITH ACUTE KIDNEY INJURY DEFINED.—In this 

subsection, the term ‘‘individual with acute kidney injury’’ 

means an individual who has acute loss of renal function and 

does not receive renal dialysis services for which payment is 

made under section 1881(b)(14). 

(s) PAYMENT FOR APPLICABLE DISPOSABLE DEVICES.— 

(1) SEPARATE PAYMENT.—The Secretary shall make a payment (separate from the payments otherwise made under section 1895) in the amount established under paragraph (3) to a 

home health agency for an applicable disposable device (as defined in paragraph (2)) when furnished on or after January 1, 

2017, to an individual who receives home health services for 

which payment is made under section 1895(b). 

(2) APPLICABLE DISPOSABLE DEVICE.—In this subsection, the 

term applicable disposable device means a disposable device 

that, as determined by the Secretary, is— 

(A) a disposable negative pressure wound therapy device 

that is an integrated system comprised of a non-manual 

vacuum pump, a receptacle for collecting exudate, and 

dressings for the purposes of wound therapy; and 

73 

(B) a substitute for, and used in lieu of, a negative pressure wound therapy durable medical equipment item that 

is an integrated system of a negative pressure vacuum 

pump, a separate exudate collection canister, and 

dressings that would otherwise be covered for individuals 

for such wound therapy. 

(3) PAYMENT AMOUNT.—The separate payment amount established under this paragraph for an applicable disposable device 

for a year shall be equal to the amount of the payment that 

would be made under section 1833(t) (relating to payment for 

covered OPD services) for the year for the Level I Healthcare 

Common Procedure Coding System (HCPCS) code for which 

the description for a professional service includes the furnishing of such device. 

(t) SITE-OF-SERVICE PRICE TRANSPARENCY.— 

(1) IN GENERAL.—In order to facilitate price transparency 

with respect to items and services for which payment may be 

made either to a hospital outpatient department or to an ambulatory surgical center under this title, the Secretary shall, 

for 2018 and each year thereafter, make available to the public 

via a searchable Internet website, with respect to an appropriate number of such items and services— 

(A) the estimated payment amount for the item or service under the outpatient department fee schedule under 

subsection (t) of section 1833 and the ambulatory surgical 

center payment system under subsection (i) of such section; and 

(B) the estimated amount of beneficiary liability applicable to the item or service. 

(2) CALCULATION OF ESTIMATED BENEFICIARY LIABILITY.—For 

purposes of paragraph (1)(B), the estimated amount of beneficiary liability, with respect to an item or service, is the 

amount for such item or service for which an individual who 

does not have coverage under a Medicare supplemental policy 

certified under section 1882 or any other supplemental insurance coverage is responsible. 

(3) IMPLEMENTATION.—In carrying out this subsection, the 

Secretary— 

(A) shall include in the notice described in section 

1804(a) a notification of the availability of the estimated 

amounts made available under paragraph (1); and 

(B) may utilize mechanisms in existence on the date of 

enactment of this subsection, such as the portion of the 

Internet website of the Centers for Medicare & Medicaid 

Services on which information comparing physician performance is posted (commonly referred to as the Physician 

Compare Internet website), to make available such estimated amounts under such paragraph. 

(4) FUNDING.—For purposes of implementing this subsection, 

the Secretary shall provide for the transfer, from the Federal 

Supplementary Medical Insurance Trust Fund under section 

1841 to the Centers for Medicare & Medicaid Services Program 

Management Account, of $6,000,000 for fiscal year 2017, to remain available until expended. 

74 

(u) PAYMENT AND RELATED REQUIREMENTS FOR HOME INFUSION

THERAPY.— (1) PAYMENT.— (A) SINGLE PAYMENT.— (i) IN GENERAL.—Subject to clause (iii) and subparagraphs (B) and (C), the Secretary shall implement a 

payment system under which a single payment is 

made under this title to a qualified home infusion 

therapy supplier for items and services described in 

subparagraphs (A) and (B) of section 1861(iii)(2)) furnished by a qualified home infusion therapy supplier 

(as defined in section 1861(iii)(3)(D)) in coordination 

with the furnishing of home infusion drugs (as defined 

in section 1861(iii)(3)(C)) under this part. 

(ii) UNIT OF SINGLE PAYMENT.—A unit of single payment under the payment system implemented under 

this subparagraph is for each infusion drug administration calendar day in the individual’s home. The Secretary shall, as appropriate, establish single payment 

amounts for types of infusion therapy, including to 

take into account variation in utilization of nursing 

services by therapy type. 

(iii) LIMITATION.—The single payment amount determined under this subparagraph after application of 

subparagraph (B) and paragraph (3) shall not exceed 

the amount determined under the fee schedule under 

section 1848 for infusion therapy services furnished in 

a calendar day if furnished in a physician office setting, except such single payment shall not reflect more 

than 5 hours of infusion for a particular therapy in a 

calendar day. 

(B) REQUIRED ADJUSTMENTS.—The Secretary shall adjust 

the single payment amount determined under subparagraph (A) for home infusion therapy services under section 

1861(iii)(1) to reflect other factors such as— 

(i) a geographic wage index and other costs that may 

vary by region; and 

(ii) patient acuity and complexity of drug administration. 

(C) DISCRETIONARY ADJUSTMENTS.— 

(i) IN GENERAL.—Subject to clause (ii), the Secretary 

may adjust the single payment amount determined 

under subparagraph (A) (after application of subparagraph (B)) to reflect outlier situations and other factors as the Secretary determines appropriate. 

(ii) REQUIREMENT OF BUDGET NEUTRALITY.—Any adjustment under this subparagraph shall be made in a 

budget neutral manner. 

(2) CONSIDERATIONS.—In developing the payment system 

under this subsection, the Secretary may consider the costs of 

furnishing infusion therapy in the home, consult with home infusion therapy suppliers, consider payment amounts for similar 

items and services under this part and part A, and consider 

payment amounts established by Medicare Advantage plans 

under part C and in the private insurance market for home inVerDate Sep 11 2014 02:46 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00074 Fmt 6659 Sfmt 6601 E:\HR\OC\HR481P1.XXX HR481P1
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fusion therapy (including average per treatment day payment 

amounts by type of home infusion therapy). 

(3) ANNUAL UPDATES.— (A) IN GENERAL.—Subject to subparagraph (B), the Secretary shall update the single payment amount under this 

subsection from year to year beginning in 2022 by increasing the single payment amount from the prior year by the 

percentage increase in the Consumer Price Index for all 

urban consumers (United States city average) for the 12- 

month period ending with June of the preceding year. 

(B) ADJUSTMENT.—For each year, the Secretary shall reduce the percentage increase described in subparagraph 

(A) by the productivity adjustment described in section 

1886(b)(3)(B)(xi)(II). The application of the preceding sentence may result in a percentage being less than 0.0 for a 

year, and may result in payment being less than such payment rates for the preceding year. 

(4) AUTHORITY TO APPLY PRIOR AUTHORIZATION.—The Secretary may, as determined appropriate by the Secretary, apply 

prior authorization for home infusion therapy services under 

section 1861(iii)(1). 

(5) ACCREDITATION OF QUALIFIED HOME INFUSION THERAPY

SUPPLIERS.— (A) FACTORS FOR DESIGNATION OF ACCREDITATION ORGA- NIZATIONS.—The Secretary shall consider the following factors in designating accreditation organizations under subparagraph (B) and in reviewing and modifying the list of 

accreditation organizations designated pursuant to subparagraph (C): 

(i) The ability of the organization to conduct timely 

reviews of accreditation applications. 

(ii) The ability of the organization to take into account the capacities of suppliers located in a rural 

area (as defined in section 1886(d)(2)(D)). 

(iii) Whether the organization has established reasonable fees to be charged to suppliers applying for accreditation. 

(iv) Such other factors as the Secretary determines 

appropriate. 

(B) DESIGNATION.—Not later than January 1, 2021, the 

Secretary shall designate organizations to accredit suppliers furnishing home infusion therapy. The list of accreditation organizations so designated may be modified pursuant to subparagraph (C). 

(C) REVIEW AND MODIFICATION OF LIST OF ACCREDITATION ORGANIZATIONS.— 

(i) IN GENERAL.—The Secretary shall review the list 

of accreditation organizations designated under subparagraph (B) taking into account the factors under 

subparagraph (A). Taking into account the results of 

such review, the Secretary may, by regulation, modify 

the list of accreditation organizations designated 

under subparagraph (B). 

(ii) SPECIAL RULE FOR ACCREDITATIONS DONE PRIOR

TO REMOVAL FROM LIST OF DESIGNATED ACCREDITATION

76 

ORGANIZATIONS.—In the case where the Secretary removes an organization from the list of accreditation organizations designated under subparagraph (B), any 

supplier that is accredited by the organization during 

the period beginning on the date on which the organization is designated as an accreditation organization 

under subparagraph (B) and ending on the date on 

which the organization is removed from such list shall 

be considered to have been accredited by an organization designated by the Secretary under subparagraph 

(B) for the remaining period such accreditation is in 

effect. 

(D) RULE FOR ACCREDITATIONS MADE PRIOR TO DESIGNATION.—In the case of a supplier that is accredited before 

January 1, 2021, by an accreditation organization designated by the Secretary under subparagraph (B) as of 

January 1, 2019, such supplier shall be considered to have 

been accredited by an organization designated by the Secretary under such paragraph as of January 1, 2023, for the 

remaining period such accreditation is in effect. 

(6) NOTIFICATION OF INFUSION THERAPY OPTIONS AVAILABLE

PRIOR TO FURNISHING HOME INFUSION THERAPY.—Prior to the 

furnishing of home infusion therapy to an individual, the physician who establishes the plan described in section 1861(iii)(1) 

for the individual shall provide notification (in a form, manner, 

and frequency determined appropriate by the Secretary) of the 

options available (such as home, physician’s office, hospital 

outpatient department) for the furnishing of infusion therapy 

under this part. 

* * * * * * * 

77 


Insert graphic folio 86 HR481P1.001

VII. EXCHANGES OF LETTERS WITH ADDITIONAL 

COMMITTEES OF REFERRAL 

Q::ongrrss of the ilnitrd ~totes 

B.S. Jlousc of 1\cprcscntatincs COMMITTEE ON WAYS AND MEANS 

1102 LONGWORTH HOUSE OFFICE 8U!LOING 

(202) 225-3625 

DA~10STtWARl 

STAFOJfiECTI)!l 

The Honorable Greg Walden 

Chairman 

Committee on Energy and Commerce 

2125 Rayburn House Office Building 

Washington. DC 20515 

Dear Chainnan Walden. 

lllJshingron, '!?Ill: ~om-o;~s 

http://waysandrneans.house.gov 

December 5. 2017 

UflANOONCAS(Y 

M!~IORITYCHIFOfSTAH 

Thank you for your letter conceming H.R. 3729. the "Comprehensive Operations. Sustainability. and 

Transport Act of20I7.'' on which the Energy and Commerce Committee was granted an additional 

referral. 

I am most appreciative of your decision to waive formal consideration ofH.R. 3729. I acknowledge 

that although you waived formal consideration of the bill. the Energy and Commerce Committee is in 

no way waiving its jurisdiction over the subject matter contained in those provisions of the bill that fall 

within your Rule X jurisdiction. I would support your effort to seek appointment of an appropriate 

number of conferees on any House-Senate conference involving this legislation. 

I will include a copy of our letters in our committee report and in the Congressional Record should this 

legislation be considered on the House floor. 

The Honorable Frank Pallone 

Thomas J. Wickham. Jr .. .Parliamentarian 
78 


Insert graphic folio 87 HR481P1.002

ONE HUNDRED CONGRESS 

<CongrrfSs of tl)r ~nttrb fetatrs 

!!)ou!lr of l\cprr!lcutatibr!l 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN HousE 0Ft'1CE Bu1LDJNG 

Wt8HINGTON, DC 20515-6115 

The Honorable Kevin Brady 

Chairman 

Committee on Ways and Means 

December 5, 2017 

II 02 Longworth House Office Building 

Washington, DC 20515 

Dear Chairman Brady: 

PALLONL JR , NEW 

Rt,NKING MEMBFR 

l '-'Tite conceming llR 3729, Comprehensive Operations, Sustainability, and Transport 

Act of2017, which was additionally referred to the Committee on Energy and Commerce, 

I wanted to notify you that the Committee will !t>rgo action on RK 3729 so that it may 

proceed expeditiously to the House floor tor consideration, This is dooc with the understanding 

that the Committee'sjurisdictional interests over this and similar legislation are in no way 

diminished or altered, In addition, the Committee reserves the right to seek conferees on H,R, 

3 729 and requests your support when such a request is made, 

I would appreciate your response continuing this understanding with respect to H,R, 

3729 and ask that of our exchange of letters on this matter be included in the 

consideration of the bill on the !louse floor. 

Sincerely, 

0