I 

114TH CONGRESS 

1ST SESSION H. R. 4185 

To make adjustments, including by amending title XVIII of the Social Security Act, relating to competitive bidding program and durable medical 

equipment under the Medicare program, to amend such title to establish 

a DMEPOS market pricing program demonstration project, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 8, 2015 

Mr. TOM PRICE of Georgia (for himself, Mrs. MCMORRIS RODGERS, Mrs. 

BLACKBURN, Ms. DUCKWORTH, Mr. LOEBSACK, Mr. RYAN of Ohio, Mr. 

ROE of Tennessee, Mrs. NOEM, Mr. KING of New York, Mr. ZINKE, Mr. 

TIPTON, Mr. BLUM, Mr. CRAMER, Mr. MCCLINTOCK, Mr. KEATING, Mr. 

DUNCAN of Tennessee, Mrs. ELLMERS of North Carolina, Mr. HARPER, 

and Mr. AUSTIN SCOTT of Georgia) introduced the following bill; which 

was referred to the Committee on Energy and Commerce, and in addition 

to the Committee on Ways and Means, for a period to be subsequently 

determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To make adjustments, including by amending title XVIII 

of the Social Security Act, relating to competitive bidding 

program and durable medical equipment under the Medicare program, to amend such title to establish a 

DMEPOS market pricing program demonstration 

project, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Protecting Access 

3 through Competitive-pricing Transition Act of 2015’’ or 

4 as the ‘‘PACT Act of 2015’’. 

5 SEC. 2. REVISION OF PAYMENTS FOR DURABLE MEDICAL 

6 EQUIPMENT UNDER THE MEDICARE PRO7 GRAM. 

8 (a) TRANSITION TO IMPLEMENTATION OF FEE

9 SCHEDULE PAYMENT ADJUSTMENTS USING INFORMA10 TION FROM COMPETITIVE BIDDING PROGRAMS.—Section 

11 1834(a)(1) of the Social Security Act (42 U.S.C. 

12 1395m(a)(1)) is amended by adding at the end the fol13 lowing new subparagraph: 

14 ‘‘(J) TRANSITION TO IMPLEMENTATION OF

15 PAYMENT ADJUSTMENTS USING INFORMATION

16 FROM COMPETITIVE BIDDING PROGRAMS.— 

17 ‘‘(i) IN GENERAL.—In implementing 

18 subparagraph (F) and paragraphs (1) and 

19 (2) of section 414.210(g) of title 42, Code 

20 of Federal Regulations, with respect to 

21 items and services furnished on or after 

22 January 1, 2016, and before January 1, 

23 2019, the fee schedule amount that would 

24 otherwise be determined for each area 

25 under this section shall be adjusted to the 

26 lesser of— 


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1 ‘‘(I) 130 percent of the regional 

2 price determined under clause (i) of 

3 such paragraph (1) for the State in 

4 which such area is located (or, in the 

5 case of an area located within the Dis6 trict of Columbia, for such District); 

7 or 

8 ‘‘(II) the fee schedule amount 

9 that would otherwise be determined 

10 for such area under this section (with11 out the application of subsection 

12 (a)(1)(F) of such section) on January 

13 1, 2015, updated by the covered item 

14 update described in paragraph 

15 (14)(L) for the year in which the 

16 items and services to which such fee 

17 schedule applies are furnished. 

18 ‘‘(ii) PHASE-IN.—The adjustment de19 scribed in clause (i) shall be implemented 

20 over a two-year period and in a manner 

21 that phases in such adjustment in equal 

22 increments in each year of such two-year 

23 period, with such adjustment being fully 

24 implemented with respect to items and 

25 services furnished in 2017.’’. 


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1 (b) BID CEILING FOR COMPETITIVE ACQUISITION

2 FOR DURABLE MEDICAL EQUIPMENT UNDER THE MEDI3 CARE PROGRAM.—Section 1847(b)(5) of the Social Secu4 rity Act (42 U.S.C. 1395w–3(b)(5)) is amended— 

5 (1) in subparagraph (A)— 

6 (A) by inserting ‘‘, subject to subpara7 graph (E),’’ after ‘‘subsection (a)(2)’’; and 

8 (B) by inserting ‘‘, subject to subpara9 graph (E),’’ after ‘‘Based on such bids’’; and 

10 (2) by adding at the end the following new sub11 paragraph: 

12 ‘‘(E) BID CEILING FOR DURABLE MEDICAL

13 EQUIPMENT.— 

14 ‘‘(i) IN GENERAL.—Payment under 

15 this section for applicable covered items 

16 may not exceed the amount that would 

17 otherwise be paid for such items under sec18 tion 1834 (without the application of sub19 section (a)(1)(F) of such section) on Janu20 ary 1, 2015, updated by the covered item 

21 update described in section 1834(a)(14)(L) 

22 for the year in which such covered item is 

23 furnished. 

24 ‘‘(ii) APPLICATION TO NEW COVERED

25 ITEMS.—The Secretary shall establish a 


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1 process for purposes of applying clause (i) 

2 with respect to applicable covered items for 

3 which no amount would otherwise be paid 

4 under section 1834 (without the applica5 tion of subsection (a)(1)(F) of such sec6 tion) on January 1, 2015. 

7 ‘‘(iii) APPLICABLE COVERED ITEMS

8 DEFINED.—For purposes of this subpara9 graph, the term ‘applicable covered items’ 

10 means covered items (as defined in section 

11 1834(a)(13)) for which payment would 

12 otherwise be made under section 1834(a) 

13 that are furnished with respect to competi14 tive bid contracts that begin on or after 

15 January 1, 2017.’’. 

16 (c) REQUIREMENT IN DETERMINING ADJUSTMENTS

17 USING INFORMATION FROM COMPETITIVE BIDDING PRO18 GRAMS.—Section 1834(a)(1)(G) of the Social Security Act 

19 (42 U.S.C. 1395m(a)(1)(G)) is amended by adding at the 

20 end the following new sentence: ‘‘In the case of items and 

21 services furnished on or after January 1, 2019, in making 

22 any adjustments under clause (ii) or (iii) of subparagraph 

23 (F), the Secretary shall take into account the average 

24 travel distance and cost associated with furnishing items 

25 and services in a competitive acquisition area, the average 


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1 volume of items and services furnished by providers in 

2 such an area, the clearing price of items and services, and 

3 the number of providers in competitive acquisition areas 

4 compared to the number of providers in noncompetitive 

5 acquisition areas. In implementing the preceding sentence, 

6 the Secretary shall solicit and take into account stake7 holder input.’’. 

8 SEC. 3. ESTABLISHMENT OF DMEPOS MARKET PRICING 

9 PROGRAM DEMONSTRATION PROJECT. 

10 (a) IN GENERAL.—Part B of title XVIII of the Social 

11 Security Act is amended by inserting after section 1847B 

12 (42 U.S.C. 1395w–3b) the following new section: 

13 ‘‘DMEPOS MARKET PRICING PROGRAM DEMONSTRATION

14 PROJECT

15 ‘‘SEC. 1847C. 

16 ‘‘(a) ESTABLISHMENT.— 

17 ‘‘(1) IN GENERAL.—The Secretary shall estab18 lish and implement a six-year market pricing pro19 gram demonstration project (in this section referred 

20 to as the ‘demonstration project’) under which three 

21 auctions are conducted in eligible auction areas (as 

22 defined in paragraph (3)) throughout the United 

23 States for the furnishing of market-priced items and 

24 services (as defined in subsection (b)) for which pay25 ment is made under this part. Each such auction 

26 shall, in accordance with subsection 


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1 (c)(3)(D)(ii)(IV), be with respect to a contract pe2 riod of two years for each lead product. 

3 ‘‘(2) IMPLEMENTATION TIMELINE.—The dem4 onstration project shall be carried out in accordance 

5 with the following timeline: 

6 ‘‘(A) CONTRACTING WITH AUCTION EX7 PERT AND MARKET MONITOR.—Not later than 

8 3 months after the date of the enactment of 

9 this section, the Secretary shall contract with 

10 the auction expert contracted with under sub11 section (f)(1) (hereinafter referred to as the 

12 ‘auction expert’) and market monitor contracted 

13 with under such subsection (hereinafter referred 

14 to as the ‘market monitor’). 

15 ‘‘(B) INITIAL DESIGN OF AUCTION.—Not 

16 later than 5 months after such date of enact17 ment, the development of the initial auction de18 sign under subsection (c)(2)(B)(i) shall be com19 pleted. 

20 ‘‘(C) AUCTION DESIGN CONFERENCE.— 

21 Not later than 6 months after such date of en22 actment, the Secretary shall hold the auction 

23 design conference under subsection (c)(2)(C). 

24 ‘‘(D) FINALIZING AUCTION DETAILS.—Not 

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1 ment, the Secretary shall promulgate, through 

2 the expedited rulemaking process under sub3 section (c)(2)(D), the procedures to be used for 

4 auctions under the demonstration project. 

5 ‘‘(E) CONDUCT OF FIRST AUCTION.—Not 

6 later than 11 months after such date of enact7 ment, the first auction under the demonstration 

8 project shall occur under subsection (c)(3). 

9 ‘‘(F) AWARDING CONTRACTS UNDER FIRST

10 AUCTION.—Not later than 1 year after such 

11 date of enactment, contracts under such first 

12 auction shall be awarded. 

13 ‘‘(3) ELIGIBLE AUCTION AREAS.— 

14 ‘‘(A) DEFINITION.— 

15 ‘‘(i) IN GENERAL.—In this section, 

16 subject to clause (ii), the term ‘eligible 

17 auction area’ means, with respect to an 

18 auction under this section, a county, aggre19 gation of counties, or part of one or more 

20 counties specified by the Secretary for pur21 poses of such auction, in accordance with 

22 this paragraph. 

23 ‘‘(ii) SPECIAL RULE FOR DIABETIC

24 SUPPLIES.—In applying this section with 

25 respect to the product category described 


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1 in subsection (b)(11), the term ‘eligible 

2 auction area’ means, with respect to an 

3 auction under this section, a State speci4 fied by the Secretary for purposes of such 

5 auction, in accordance with subparagraph 

6 (B)(iii). 

7 ‘‘(B) SPECIFICATION OF ELIGIBLE AUC8 TION AREAS.—For purposes of this section, the 

9 Secretary shall specify eligible auction areas in 

10 accordance with the following: 

11 ‘‘(i) MARKET AREAS MUST REFLECT

12 ECONOMIC INTERDEPENDENCY.—The Sec13 retary shall choose counties, aggregations 

14 of counties, or parts of counties in such a 

15 manner as to provide for auction areas 

16 that form economically interdependent 

17 areas (as reflected in standard econometric 

18 market models). For purposes of specifying 

19 eligible auction areas in accordance with 

20 the preceding sentence, the Secretary may 

21 subdivide a large county to take into ac22 count population and geographic size. 

23 ‘‘(ii) ROUND 2 RECOMPETE COMPETI24 TIVE BIDDING AREAS.—The Secretary 

25 shall specify at least 10 eligible auction 


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1 areas that constituted Round 2 Recompete 

2 competitive bidding areas under section 

3 1847. To the extent possible, areas se4 lected for the demonstration project should 

5 represent a variety of economic markets 

6 (as reflected in standard econometric mar7 ket models). 

8 ‘‘(iii) MAIL ORDER DIABETIC SUP9 PLIES.—For purposes of subparagraph 

10 (A)(ii), with respect to the product cat11 egory described in subsection (b)(11), the 

12 Secretary shall specify two States as eligi13 ble auction areas for mail order diabetic 

14 supplies. Such two States, combined, shall 

15 represent at least 7 percent of the total 

16 population of individuals who are either en17 titled to benefits under part A or enrolled 

18 under part B (as determined based upon 

19 the most recent available data). 

20 ‘‘(4) APPLICATION OF CERTAIN POLICIES AP21 PLICABLE TO COMPETITIVE ACQUISITION PRO22 GRAMS.—The following provisions of subsection 

23 (a)(1) of section 1847 shall apply to the demonstra24 tion project in the same manner as such provisions 


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1 apply to competitive acquisition programs under 

2 such section except as otherwise provided: 

3 ‘‘(A) Subparagraph (C) (relating to waiver 

4 of certain provisions). 

5 ‘‘(B) Subparagraph (E) (relating to 

6 verification by OIG), except that the assessment 

7 shall be of market pricing and subsequent pric8 ing determinations that are the basis for auc9 tion prices and single payment amounts for 

10 items and services in eligible auction areas and 

11 shall be conducted in the first two years of the 

12 demonstration project and may continue in sub13 sequent years of the project. 

14 ‘‘(C) Subparagraph (F) (relating to feed15 back on missing financial documentation), ex16 cept that any reference to a round of a program 

17 is deemed a reference to a year of the dem18 onstration project. 

19 ‘‘(b) MARKET-PRICED ITEMS AND SERVICES DE20 FINED.—In this section, the term ‘market-priced items 

21 and services’ means items and services in each of the fol22 lowing categories (each of which in this section referred 

23 to as a ‘product category’): 

24 ‘‘(1) Oxygen supplies and equipment. 


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1 ‘‘(2) Standard power wheelchairs, power scoot2 ers, and related accessories. 

3 ‘‘(3) Manual wheelchairs. 

4 ‘‘(4) Enteral nutrients, equipment, and sup5 plies. 

6 ‘‘(5) Continuous positive airway pressure de7 vices, respiratory assistive devices, and related sup8 plies. 

9 ‘‘(6) Hospital beds and related accessories. 

10 ‘‘(7) Walkers and related accessories. 

11 ‘‘(8) Support services (Group 2 mattresses and 

12 overlays). 

13 ‘‘(9) Negative pressure wound therapy pumps 

14 and related supplies and accessories. 

15 ‘‘(10) Off-the-shelf orthotics described in sub16 paragraph (C) of section 1847(a)(2) to the extent 

17 they are included pursuant to such subparagraph in 

18 items and services described under such section and 

19 included in a competitive bidding program in a com20 petitive acquisition area under section 1847(a). 

21 ‘‘(11) Mail order diabetic supplies. 

22 ‘‘(12) Other items and services (other than 

23 those items and services specified in paragraph (2)) 

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1 petitive acquisition programs under section 

2 1847(a)(1). 

3 ‘‘(c) DEMONSTRATION PRICING PROJECT REQUIRE4 MENTS.— 

5 ‘‘(1) IN GENERAL.—The Secretary shall estab6 lish, through the process described in paragraph (2), 

7 an auction design for each auction that meets the 

8 requirements of paragraph (3), and shall ensure that 

9 the first auction under the demonstration project 

10 will be conducted for all eligible auction areas speci11 fied under subsection (a)(3) not later than the date 

12 specified in subsection (a)(2)(E). 

13 ‘‘(2) AUCTION DESIGN PROCESS; STAKEHOLDER

14 INPUT.— 

15 ‘‘(A) TRANSPARENT PROCESS RE16 QUIRED.—In establishing the auction design de17 scribed in paragraph (1), the Secretary shall 

18 utilize an open and transparent process that in19 volves all eligible participants described in sub20 paragraph (C)(ii), including through the auc21 tion design conference and other outreach ef22 forts. 

23 ‘‘(B) INITIAL AUCTION DESIGN.—The auc24 tion expert shall, with respect to an auction and 

25 consistent with subsection (a)(2)(B), develop an 


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1 auction design (referred to in this section as the 

2 ‘initial auction design’) that shall propose for 

3 such auction eligible auction areas, lead prod4 ucts for each product category, weights to be 

5 assigned to products under paragraph 

6 (3)(B)(iv), and proposed rules for the conduct 

7 of the auction. 

8 ‘‘(C) AUCTION DESIGN CONFERENCE.— 

9 ‘‘(i) IN GENERAL.—The Secretary 

10 shall, consistent with subsection (a)(2)(C), 

11 convene a design conference (in this para12 graph referred to as the ‘design con13 ference’) for the auction process for each 

14 auction under this section. The auction ex15 pert shall chair the conference and the 

16 market monitor shall participate in the 

17 conference (including as described in 

18 clause (v)). 

19 ‘‘(ii) PARTICIPANTS.—The partici20 pants at the design conference shall in21 clude at least the following: 

22 ‘‘(I) MANUFACTURERS, SUP23 PLIERS AND TRADE ASSOCIATIONS OF

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1 ciations of market-priced items and 

2 services. 

3 ‘‘(II) BENEFICIARIES.—Rep4 resentatives of individuals enrolled 

5 under this part. 

6 ‘‘(III) CMS.—The Administrator 

7 of the Centers for Medicare & Med8 icaid Services and other appropriate 

9 Federal personnel. 

10 ‘‘(iii) PURPOSE OF CONFERENCE.— 

11 The purpose of the design conference shall 

12 be to review the initial auction design for 

13 the establishment of an efficient auction 

14 consistent with best practices and actuarial 

15 science and to provide stakeholders the op16 portunity to provide feedback on the initial 

17 auction design. 

18 ‘‘(iv) AUCTION EXPERT RESPONSIBIL19 ITIES AT CONFERENCE.—With respect to 

20 the design conference, the auction expert 

21 shall— 

22 ‘‘(I) provide a demonstration of 

23 the initial auction design; 

24 ‘‘(II) lead a mock auction based 

25 upon such initial auction design in 


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1 which the attendees will participate 

2 and offer comments and suggestions 

3 for improvement; 

4 ‘‘(III) invite input from suppliers 

5 as to the relationship between, with 

6 respect to a product category, the lead 

7 product in such product category and 

8 the value of other products in the 

9 same product category as such lead 

10 product (and may establish working 

11 committees on major issues related to 

12 such relationship); and 

13 ‘‘(IV) invite input from small 

14 suppliers as to the ways in which such 

15 initial auction design can be improved 

16 to ensure that small suppliers have 

17 the opportunity to participate in the 

18 auction. 

19 ‘‘(v) MARKET MONITOR RESPONSIBIL20 ITIES AT CONFERENCE.—With respect to 

21 the design conference, the market monitor 

22 shall provide a presentation on the respon23 sibilities of the market monitor throughout 

24 the year and comment on key aspects of 


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1 the initial auction design and their pur2 pose. 

3 ‘‘(vi) INTERNET ACCESSIBILITY OF

4 CONFERENCE.—The design conference 

5 shall be recorded and made available on an 

6 Internet Web site (through simultaneous 

7 Web cast or otherwise). 

8 ‘‘(D) AUCTION DESIGN PROPOSED

9 THROUGH EXPEDITED RULEMAKING.— 

10 ‘‘(i) SUBMISSION TO SECRETARY.— 

11 The auction expert shall, with respect to 

12 an auction and in accordance with the 

13 timeline described in subsection (a)(2), 

14 submit to the Secretary an auction design 

15 for the auction (referred to in this section 

16 as the ‘revised auction design’) that takes 

17 into account the feedback on the initial 

18 auction design provided at the auction con19 ference for such auction. 

20 ‘‘(ii) PUBLICATION AND PROPOSAL.— 

21 Upon receiving the submission of the re22 vised auction design for an auction by the 

23 auction expert pursuant to clause (i), the 

24 Secretary shall— 


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1 ‘‘(I) make such modifications to 

2 such revised auction design as are 

3 necessary to ensure that the such auc4 tion design meets the requirements 

5 described in clause (viii); 

6 ‘‘(II) make such other modifica7 tions to such revised auction design as 

8 the Secretary determines appropriate; 

9 and 

10 ‘‘(III) publish and propose a rule 

11 for implementing such auction design 

12 for such auction, as modified pursu13 ant to subclauses (I) and (II), 

14 through an expedited rulemaking 

15 process. 

16 ‘‘(iii) SUBMISSION OF COMMENTS TO

17 AUCTION EXPERT AND MARKET MON18 ITOR.—The Secretary shall submit com19 ments received on an auction design pub20 lished under clause (ii)(III) to the auction 

21 expert and the market monitor to consider 

22 for modification of such auction design. 

23 ‘‘(iv) REVIEW OF COMMENTS BY AUC24 TION EXPERT AND MARKET MONITOR.— 

25 The market monitor and auction expert 


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1 shall review such comments and, within 

2 one month of the receipt of such comments 

3 pursuant to clause (iii), shall each provide 

4 public comment on such comments. 

5 ‘‘(v) DETERMINATION OF CHANGES

6 TO AUCTION DESIGN.—Taking into consid7 eration the comments submitted to the 

8 auction expert and market monitor pursu9 ant to clause (iii), such auction expert shall 

10 determine if any changes should be made 

11 in the auction design published under 

12 clause (ii)(III) for an auction in response 

13 to such comments. If the auction expert 

14 determines that changes should be made in 

15 such design in response to such comments, 

16 the auction expert shall submit to the Sec17 retary an auction design (referred to in 

18 this section as the ‘further revised auction 

19 design’) for such auction. 

20 ‘‘(vi) ADOPTION AND PUBLICATION OF

21 AUCTION DESIGN.—The Secretary shall 

22 adopt as the auction design to be used for 

23 purposes of an auction conducted under 

24 the demonstration project either— 


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1 ‘‘(I) the further revised auction 

2 design for such auction, modified as 

3 necessary by the Secretary to ensure 

4 that such auction design meets the re5 quirements described in clause (viii) 

6 (and, if such design is so established, 

7 shall publish by rule such design); or 

8 ‘‘(II) the auction design pub9 lished under clause (ii)(III) for such 

10 auction (and, if such design is so se11 lected despite a further revised auc12 tion design having been submitted to 

13 the Secretary under clause (v), shall 

14 notify the auction expert and market 

15 monitor of, and publish in the Federal 

16 Register, the reasons for electing to 

17 establish the revised auction design 

18 instead of the further revised auction 

19 design). 

20 ‘‘(vii) EXPEDITED RULEMAKING

21 PROCESS DEFINED.—In this subparagraph, 

22 the term ‘expedited rulemaking process’ 

23 means a process of publication of the re24 vised auction design (and, as applicable, 

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1 licitation of public comments on such de2 sign. The provisions of section 1871(b)(1) 

3 shall not apply to such process. 

4 ‘‘(viii) REQUIREMENTS DESCRIBED.— 

5 For purposes of this paragraph, the re6 quirements described in this clause are re7 quirements that, with respect to an auction 

8 design— 

9 ‘‘(I) the rates of payment under 

10 such auction design do not result in a 

11 diminution of access to market-priced 

12 items and services for individuals enti13 tled to benefits under part A or en14 rolled under part B in the eligible 

15 auction areas in which the demonstra16 tion project is conducted or of the 

17 quality of such items and services that 

18 are furnished to such individuals in 

19 such areas; 

20 ‘‘(II) the lead product proposed 

21 in such auction design for each prod22 uct category has been selected to be 

23 so proposed based upon the historical 

24 price and utilization of the product 

25 under this part; and 


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1 ‘‘(III) the weights assigned under 

2 paragraph (3)(B)(iv) to products that 

3 are not lead products take into consid4 eration input provided on such 

5 weights by providers at the design 

6 conference for the applicable auction. 

7 ‘‘(3) CONDUCT OF AUCTION.— 

8 ‘‘(A) IN GENERAL.—The market monitor 

9 shall, consistent with subsection (a)(2)(E) and 

10 in accordance with the auction design adopted 

11 under paragraph (2)(D), conduct auctions (each 

12 in this section referred to as a ‘market-priced 

13 auction’) among potential bidders that are iden14 tified as eligible bidders under subparagraph 

15 (B)(ii) by carrying out the activities described 

16 in subparagraph (B) and subparagraph (C)(i) 

17 and such other activities as specified by the 

18 Secretary. 

19 ‘‘(B) MARKET MONITOR ACTIONS BEFORE

20 AUCTION DATE.—In conducting a market-priced 

21 auction, the market monitor shall (subject, as 

22 appropriate, to review by the Secretary), on a 

23 date that is prior to the date of such auction, 

24 carry out the following: 


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1 ‘‘(i) DETAIL AUCTION RULES.—Detail 

2 auction rules and processes that are con3 sistent with the auction design adopted 

4 under paragraph (2)(D). The rules and 

5 processes described in the preceding sen6 tence shall, with respect to an auction, in7 clude the following: 

8 ‘‘(I) The requirements that an 

9 entity must meet in order to be con10 sidered an eligible bidder under sub11 paragraph (E)(ii) for purposes of such 

12 auction. 

13 ‘‘(II) Processes through which it 

14 will be determined for such auction, 

15 as a function of bids submitted by eli16 gible bidders at such auction, the eli17 gible bidders for lead products that 

18 are to be awarded contracts under 

19 this section and the prices for all 

20 products that are in the same product 

21 category as such lead product. 

22 ‘‘(III) Performance obligations of 

23 such eligible bidders that are awarded 

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1 tion program, and penalties that will 

2 apply in the case of such an eligible 

3 bidder that is awarded such a con4 tract and that fails satisfy the terms 

5 of such contract or such requirements. 

6 ‘‘(ii) IDENTIFY ELIGIBLE BIDDERS.— 

7 Review all applications for potential bid8 ders seeking to be eligible bidders in the 

9 auction and identify, for purposes of such 

10 auction, the eligible bidders (as defined in 

11 subparagraph (E)(ii)) by eligible auction 

12 area. 

13 ‘‘(iii) SPECIFY TARGET CAPACITY FOR

14 ELIGIBLE BIDDERS.—Specify, with respect 

15 to each eligible bidder for such auction, a 

16 target percentage for a product category 

17 that represents the percentage of the pro18 jected market for such product in an eligi19 ble auction area and contract period that it 

20 is estimated that the eligible bidder would 

21 have the capacity to serve. Each such tar22 get percentage shall be determined as fol23 lows: 

24 ‘‘(I) In the case of an eligible 

25 bidder with historic capacity in an 


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1 auction area with respect to the lead 

2 product in such product category, the 

3 target percentage shall be determined 

4 based on the historic capacity for such 

5 bidder for such product. 

6 ‘‘(II) In the case of an eligible 

7 bidder that has no historic capacity in 

8 an auction area with respect to such 

9 lead product, the target percentage 

10 shall be 1 percent of the projected 

11 market for such product. 

12 ‘‘(iv) SET PRODUCT WEIGHTS.— 

13 ‘‘(I) IN GENERAL.—Assign to 

14 each product (categorized by the 

15 health care common procedure coding 

16 system code) that is in the same prod17 uct category as a lead product a 

18 weight that is expressed as a number. 

19 ‘‘(II) WEIGHT AMOUNT FOR

20 LEAD PRODUCT.—With respect to a 

21 product category described in clause 

22 (i), the lead product in such product 

23 category shall, for purposes of such 

24 clause, be assigned a weight of 1.0. 


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1 ‘‘(C) AUCTION.—In conducting a market2 priced auction, the market monitor or Secretary 

3 (as applicable) shall, during such auction, carry 

4 out the following: 

5 ‘‘(i) ESTABLISHMENT OF CLEARING

6 PRICE.—The market monitor (subject, as 

7 appropriate, to review by the Secretary) 

8 shall establish a clearing price for each 

9 lead product selected under subparagraph 

10 (A) for each eligible area. Such clearing 

11 price shall, subject to clause (iii) and with 

12 respect to a lead product, be equal to the 

13 price (referred to in this clause as the ‘tar14 get price’) specified in the bid submitted 

15 by an eligible bidder with respect to such 

16 product and such area that, in conjunction 

17 with all bids submitted by eligible bidders 

18 for such product and such area that speci19 fy prices that are less than such target 

20 price, will provide for the total projected 

21 volume determined by the Secretary to be 

22 needed to fulfill demand for such product 

23 under this title in such area (as deter24 mined through the use of target percentVerDate Sep 11 2014 02:53 Dec 09, 2015 Jkt 059200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\H4185.IH H4185

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1 ages specified under subparagraph 

2 (B)(iii)). 

3 ‘‘(ii) AWARDING OF CONTRACTS.— 

4 ‘‘(I) IN GENERAL.—The Sec5 retary shall award, pursuant to an 

6 auction for a contract period and eli7 gible auction area, a contract for 

8 products in a product category to each 

9 eligible bidder whose bid submitted for 

10 the lead product in such product cat11 egory for such area is at or below the 

12 clearing price established for such 

13 lead product and area pursuant to 

14 clause (i). 

15 ‘‘(II) MANDATORY ACCEPTANCE

16 OF CONTRACT.—An eligible bidder 

17 that has been awarded a contract 

18 under subclause (I) based on a bid de19 scribed in such subclause by such bid20 der shall be treated, upon the conclu21 sion of the auction with respect to 

22 which such contract is awarded, as 

23 having agreed to and accepted the 

24 contract, including the requirements 

25 described in subclauses (III) and (IV), 


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1 based on the price of items included 

2 in such bid. 

3 ‘‘(III) VOLUME OF PRODUCTS

4 UNDER CONTRACT.—A contract 

5 awarded to an eligible bidder under 

6 subclause (I) with respect to market7 priced items and services in a product 

8 category for an eligible auction area 

9 and contract period shall include a re10 quirement that such bidder will fur11 nish such items and services in suffi12 cient quantities to meet the needs of 

13 individuals for such items and services 

14 in the eligible auction area during 

15 such period. An eligible bidder shall 

16 not satisfy the sufficient quantities re17 quirement described in the preceding 

18 sentence unless the bidder furnishes 

19 the percentage of the market for such 

20 item or service in such area that is 

21 equal to the target percentage speci22 fied for such bidder for the lead prod23 uct for such category under subpara24 graph (B)(iii) or, if lesser, the per25 centage of such market in such area 


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1 and period that seeks such item or 

2 service from such bidder. 

3 ‘‘(IV) DURATION OF CON4 TRACT.—A contract awarded under 

5 subclause (I) shall be valid for 2 

6 years. 

7 ‘‘(iii) RULE IF TOTAL BIDS INAD8 EQUATE TO FULFILL DEMAND.—In the 

9 case that the capacity represented by all 

10 bids submitted by eligible bidders for a 

11 lead product for an eligible area does not 

12 provide for the total projected volume de13 termined by the Secretary to be needed to 

14 fulfill demand for such product under this 

15 title in such area, the Secretary shall— 

16 ‘‘(I) establish a clearing price for 

17 such lead product and area that is 

18 equal to the initial bid price estab19 lished at such auction by the market 

20 monitor for such product and area 

21 and, pursuant to clause (ii)(I), award 

22 contracts to all eligible bidders for 

23 such lead product and area whose bid 

24 submitted for such product and area 

25 is at or below such price; 


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1 ‘‘(II) announce the remaining ag2 gregate supply needed for such prod3 uct and area in order to fulfill de4 mand for such product under this title 

5 in such area; and 

6 ‘‘(III) conduct among eligible 

7 bidders an additional auction round, 

8 in such manner as is specified by the 

9 Secretary, to fulfill such remaining 

10 supply. 

11 ‘‘(D) ANNOUNCEMENT OF INFORMATION

12 AFTER AUCTION.—Immediately after a market13 priced auction is completed, the Secretary shall 

14 publish on the Internet Web site of the Centers 

15 for Medicare & Medicaid Services and in the 

16 Federal Register the following: 

17 ‘‘(i) A list of eligible bidders awarded 

18 contracts under such auction. 

19 ‘‘(ii) The price determined at such 

20 auction for each product in a product cat21 egory that is subject to the auction. 

22 ‘‘(E) BID-RELATED TERMS DEFINED.—For 

23 purposes of this section: 

24 ‘‘(i) The term ‘bid’ means, with re25 spect to a lead product in a product catVerDate Sep 11 2014 02:53 Dec 09, 2015 Jkt 059200 PO 00000 Frm 00030 Fmt 6652 Sfmt 6201 E:\BILLS\H4185.IH H4185

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1 egory that is subject to a market-priced 

2 auction under the demonstration project, 

3 an offer made at the auction by an eligible 

4 bidder to furnish a lead product in a vol5 ume specified in such bid for a particular 

6 price and time period for one or more eligi7 ble auction areas. 

8 ‘‘(ii) The term ‘eligible bidder’ means, 

9 with respect to an auction and an eligible 

10 auction area and lead product, a supplier 

11 that— 

12 ‘‘(I) applies to the Secretary to 

13 participate in such auction with re14 spect to such area and lead product; 

15 ‘‘(II) is identified by the Sec16 retary as a supplier of a market17 priced item or service that is the sub18 ject of a market-priced auction in an 

19 eligible auction area; 

20 ‘‘(III) would meet the licensure 

21 and performance guarantee require22 ments under section 1847(a)(1)(G) if 

23 such requirements applied for pur24 poses of auctions conducted under the 

25 demonstration project in the same 


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1 manner that they apply with respect 

2 to such section; and 

3 ‘‘(IV) meets such other licensure, 

4 bid-bond, and other requirements as 

5 the Secretary may specify. 

6 ‘‘(4) MONITORING ACCESS AND QUALITY.— 

7 ‘‘(A) IN GENERAL.—The Secretary, in con8 sultation with the market monitor, shall mon9 itor the performance of eligible bidders that are 

10 awarded contracts under paragraph (3)(C)(ii) 

11 and the effects of the demonstration project to 

12 ensure compliance with the requirements of this 

13 section, including the requirements and obliga14 tions established in the auction design adopted 

15 under paragraph (2)(D)(v). 

16 ‘‘(B) PROVIDE TRANSPARENCY OF INFOR17 MATION.—The market monitor shall make pub18 licly available the number of suppliers providing 

19 market-priced items and services in an eligible 

20 auction area during each year of the operation 

21 of the demonstration project. 

22 ‘‘(C) ENFORCEMENT.—If the Secretary, 

23 after consultation with the market monitor, de24 termines that there has been a material failure 

25 of an eligible bidder that has been awarded a 


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1 contract under paragraph (3)(C)(ii) to comply 

2 with such requirements, the Secretary, after 

3 consultation with the market monitor, shall im4 plement, consistent with subparagraph (D), en5 forcement measures, which may include the ter6 mination of a contract awarded under para7 graph (3)(C)(ii). 

8 ‘‘(D) ENFORCEMENT MEASURES.— 

9 ‘‘(i) WARNING LETTERS AND OPPOR10 TUNITY FOR CORRECTIVE ACTION.—The 

11 Secretary shall provide for the following 

12 before terminating, pursuant to subpara13 graph (B), a contract awarded under para14 graph (3)(C)(ii): 

15 ‘‘(I) WARNING LETTER.—The 

16 Secretary shall issue a formal warning 

17 letter at least 90 days before the date 

18 on which the Secretary terminates 

19 such contract. The warning letter 

20 shall describe the reason (or reasons) 

21 for the termination. 

22 ‘‘(II) OPPORTUNITY FOR COR23 RECTIVE ACTION.—The Secretary 

24 shall provide an opportunity for the 

25 supplier to take corrective action to 


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1 come into compliance with the con2 tract and avoid termination of the 

3 contract. 

4 ‘‘(ii) ADDITIONAL CONSEQUENCES OF

5 TERMINATION.—In the case of a termi6 nation of such a contract with an eligible 

7 bidder, the Secretary may require for8 feiture of amounts submitted as a bid and 

9 performance bond pursuant to section 

10 1847(a)(1)(G)(ii). 

11 ‘‘(d) APPLICATION OF COMPETITIVE ACQUISITION

12 PROGRAM PROVISIONS.—In implementing the demonstra13 tion project under this section, the provisions of section 

14 1847(b) shall be applied as follows: 

15 ‘‘(1) Paragraph (3) shall apply, except that, for 

16 purposes of contracts awarded under the demonstra17 tion project, subparagraph (B) of such paragraph 

18 shall be applied by substituting ‘2 years’ for ‘3 

19 years’. 

20 ‘‘(2) Paragraph (4) shall apply. 

21 ‘‘(3) Paragraph (5) shall apply, except that— 

22 ‘‘(A) the reference in subparagraph (A) of 

23 such paragraph to subsection (a)(2) is deemed 

24 a reference to subsection (b) of this section; and 


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1 ‘‘(B) the reference in subparagraph (B)(i) 

2 of such paragraph to subparagraph (A) is 

3 deemed a reference to subsection (a) of this sec4 tion. 

5 ‘‘(4) Paragraph (7) shall not apply. 

6 ‘‘(5) Paragraph (8) shall apply. 

7 ‘‘(6) Paragraph (9) shall apply, except that 

8 such paragraph shall be applied as if a reference to 

9 a bidding program includes a reference to the dem10 onstration project. 

11 ‘‘(7) Paragraph (10) shall apply, except that 

12 such paragraph shall be applied as if a reference to 

13 a competitive acquisition program includes a ref14 erence to the demonstration project. 

15 ‘‘(8) Paragraph (11) shall not apply, except 

16 that— 

17 ‘‘(A) the pendency of any claim for review 

18 under this section shall not delay any auction 

19 conducted pursuant to this section; and 

20 ‘‘(B) there shall be no administrative or ju21 dicial review of any claim to enjoin the oper22 ation of a market-priced auction conducted dur23 ing the first round of the demonstration 

24 project. 


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1 ‘‘(e) TRANSPARENCY REQUIREMENTS FOR DEM2 ONSTRATION PROJECT.—In implementing the demonstra3 tion project, the Secretary shall provide for the publica4 tion, on an Internet Web site operated by the Secretary, 

5 of the following information with respect to an auction: 

6 ‘‘(1) The qualifications necessary to be an eligi7 ble bidder. 

8 ‘‘(2) The standards developed for purposes of 

9 subsection (c)(2)(B)(ii)(II). 

10 ‘‘(3) The calculation of the total market capac11 ity of an eligible auction area for purposes of speci12 fying the target percentage under subsection 

13 (c)(3)(B)(iii) for eligible bidders in the auction for 

14 such area. 

15 ‘‘(4) The process for soliciting and accepting 

16 bids for purposes of subsection (c)(3)(D)(ii). 

17 ‘‘(5) For purposes of such subsection— 

18 ‘‘(A) the number of eligible bidders at the 

19 auction; 

20 ‘‘(B) the number of eligible bidders at the 

21 auction that were awarded a contract under 

22 such subsection at the auction; and 

23 ‘‘(C) with respect to prospective bidders at 

24 the auction that were determined by the Sec25 retary not to be eligible bidders— 


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1 ‘‘(i) the specific reasons for such de2 termination; and 

3 ‘‘(ii) a means and process by which 

4 such prospective bidders may appeal, or 

5 otherwise obtain a review of, such deter6 mination. 

7 ‘‘(6) The calculation of and compliance with the 

8 requirement of section 1847(b)(6)(D), as made ap9 plicable to the demonstration project by subsection 

10 (d). 

11 ‘‘(f) RELIANCE ON AUCTION EXPERT AND MARKET

12 MONITOR IN ESTABLISHING AND OPERATING MARKET13 PRICING DEMONSTRATION PROJECT; ADVISORY COM14 MITTEE REPORT AND MONITORING.— 

15 ‘‘(1) AUCTION EXPERT AND MARKET MON16 ITOR.— 

17 ‘‘(A) IN GENERAL.—The Secretary shall, 

18 consistent with subsection (a)(2)(A) and 

19 through the Office of the Assistant Secretary 

20 for Planning and Evaluation, enter into a con21 tract with an individual to serve as the auction 

22 expert and a contract with an individual to 

23 serve as a market monitor to assist in the de24 sign, development, implementation and func25 tioning of the auctions to be conducted pursuVerDate Sep 11 2014 02:53 Dec 09, 2015 Jkt 059200 PO 00000 Frm 00037 Fmt 6652 Sfmt 6201 E:\BILLS\H4185.IH H4185

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1 ant to subsection (c). Under each such contract, 

2 the auction expert and market monitor shall re3 port and be accountable to the Secretary in the 

4 manner described in this section. 

5 ‘‘(B) SELECTION OF AUCTION EXPERT

6 AND MARKET MONITOR; TERM; ACCESS TO IN7 FORMATION.— 

8 ‘‘(i) COMPETITIVE PROCESS.—The se9 lection of the individual to serve as the 

10 auction expert and as a market monitor 

11 under subparagraph (A) shall be under12 taken through a competitive process. 

13 ‘‘(ii) DISQUALIFICATIONS.—An indi14 vidual may not be selected as the auction 

15 expert if such individual— 

16 ‘‘(I) is a current or former em17 ployee of the Centers for Medicare & 

18 Medicaid Services; 

19 ‘‘(II) is a current or former con20 tractor for the Centers for Medicare & 

21 Medicaid Services that participated in 

22 the implementation of the competitive 

23 acquisition program under section 

24 1847(a); 


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1 ‘‘(III) does not have significant 

2 experience in implementing auctions 

3 of similar complexity in Government 

4 programs; or 

5 ‘‘(IV) does not have appropriate 

6 educational credentials. 

7 ‘‘(iii) ACCESS TO INFORMATION.—The 

8 Secretary shall make available to the auc9 tion expert and the market monitor all ap10 plicable information (including confidential 

11 information) on the relevant markets 

12 throughout the duration of the demonstra13 tion project. 

14 ‘‘(iv) TERM OF CONTRACT.—The con15 tract for the auction expert and for the 

16 market monitor under this paragraph shall 

17 be for a period of 6 years. 

18 ‘‘(2) REPORTS.— 

19 ‘‘(A) SEMIANNUAL REPORTS TO SEC20 RETARY.—The market monitor shall provide to 

21 the Secretary semiannual reports in the initial 

22 two years of the demonstration project and an23 nual reports in each subsequent year of the 

24 demonstration project on the development and 


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1 operations of the demonstration project. In each 

2 report, the market monitor shall— 

3 ‘‘(i) identify potential problems with 

4 the demonstration project; and 

5 ‘‘(ii) recommend solutions to potential 

6 problems so identified. 

7 ‘‘(B) ANNUAL REPORT.—The market mon8 itor shall submit to the Committees on Ways 

9 and Means and Energy and Commerce of the 

10 House of Representatives and the Committee 

11 on Finance of the Senate an annual report on 

12 the operation and functioning of the demonstra13 tion project. Each such report shall include in14 formation on— 

15 ‘‘(i) potential problems with the 

16 project; 

17 ‘‘(ii) recommended solutions to prob18 lems identified pursuant to clause (i); 

19 ‘‘(iii) the appropriateness of HCPCS 

20 codes selected for auctions; 

21 ‘‘(iv) an evaluation on the ability of 

22 individuals eligible for benefits under this 

23 part to obtain items and services subject to 

24 the demonstration project; 


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1 ‘‘(v) any adverse health effects result2 ing from implementation of the project; 

3 ‘‘(vi) any material deterioration in the 

4 quality of items and services provided 

5 under the project; 

6 ‘‘(vii) the costs of any preventable or 

7 prolonged hospitalizations due to lack of 

8 timely access to market-priced items and 

9 services; and 

10 ‘‘(viii) any negative business con11 sequences to the supplier of any market12 priced items and services occurring as a re13 sult of errors made in the conduct of the 

14 project.’’. 

15 (b) LICENSURE REQUIREMENTS AND FINANCIAL AS16 SURANCES UNDER COMPETITIVE BIDDING.—Section 

17 1847(a)(1) of the Social Security Act (42 U.S.C. 1395w– 

18 3(a)(1)) is amended by adding at the end the following 

19 new subparagraphs: 

20 ‘‘(G) REQUIRING STATE LICENSURE AND

21 PERFORMANCE GUARANTEES FOR BIDDING EN22 TITIES.—With respect to rounds of competi23 tions beginning under this subsection on or 

24 after the date of enactment of this subpara25 graph, the Secretary may not accept a bid from 


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1 an entity for an area unless, as of the deadline 

2 for bid submission— 

3 ‘‘(i) the entity meets applicable State 

4 licensure requirements for such area for all 

5 items in such bid for a product category; 

6 and 

7 ‘‘(ii) the entity has submitted a cash 

8 deposit as a bid and performance bond in 

9 an amount determined by the Secretary 

10 after consultation with the auction expert, 

11 except that the Secretary may, in the Sec12 retary’s sole discretion, accept a letter of 

13 credit from a financial institution accept14 able to the Secretary in lieu of the cash de15 posit required to be submitted under this 

16 clause. 

17 ‘‘(H) TREATMENT OF BID AND PERFORM18 ANCE BONDS SUBMITTED.— 

19 ‘‘(i) FOR SUCCESSFUL BIDDERS.—The 

20 Secretary shall retain as a performance 

21 guarantee the deposit submitted by a sup22 plier that is selected at an auction con23 ducted pursuant to subparagraph (G)(ii) 

24 and such deposit— 


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1 ‘‘(I) shall be returned to the enti2 ty within 90 days of the date of com3 pletion of the contract; or 

4 ‘‘(II) shall be retained by the 

5 Secretary if the contract is terminated 

6 before the expiration of the contract. 

7 ‘‘(ii) UNSUCCESSFUL BIDDERS.—If a 

8 bidding entity submits a bid that is not ac9 cepted for an area, the bid and perform10 ance deposit submitted for the entity for 

11 such area shall be returned within 90 days 

12 of the date of notice of nonacceptance.’’. 

13 (c) CLARIFICATION ABOUT INDIVIDUAL SELF-AD14 JUSTMENT FOR OFF-THE-SHELF ORTHOTICS.— 

15 (1) IN GENERAL.—Section 1847(a)(2)(C) of the 

16 Social Security Act (42 U.S.C. 1395w–3(a)(2)(C)) is 

17 amended— 

18 (A) by inserting ‘‘furnished to an indi19 vidual’’ after ‘‘section 1861(s)(9)’’; 

20 (B) by inserting after ‘‘minimal self-adjust21 ment’’ the following: ‘‘by that individual (and 

22 not by another person)’’; and 

23 (C) by striking ‘‘to fit to the individual’’ 

24 and inserting ‘‘to fit to that individual’’. 


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1 (2) EFFECTIVE DATE.—The amendments made 

2 by paragraph (1) shall apply to off-the-shelf 

3 orthotics (as defined in section 1847(a)(2)(C) of the 

4 Social Security Act (42 U.S.C. 1395w–3(a)(2)(C)), 

5 as amended by paragraph (1)) furnished in rounds 

6 of competitive bidding under section 1847 of such 

7 Act (42 U.S.C. 1395w–3) initiated on or after such 

8 date, as soon as practicable after the date of the en9 actment of this Act, as the Secretary of Health and 

10 Human Services determines appropriate. Such 

11 amendments only apply to the demonstration project 

12 under section 1847C of such Act, as added by sub13 section (a), if the Secretary implements competitive 

14 bidding for such off-the-shelf orthotics under the 

15 competitive bidding program under such section 

16 1847. 

Æ 


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