I 

113TH CONGRESS 

1ST SESSION H. R. 1717 

To amend title XVIII of the Social Security Act to establish a market 

pricing program for durable medical equipment, prosthetics, orthotics, 

and supplies (DMEPOS) under part B of the Medicare program. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 24, 2013 

Mr. PRICE of Georgia (for himself, Mr. LARSON of Connecticut, Mr. THOMPSON of Pennsylvania, Mr. BRALEY of Iowa, Mr. ROE of Tennessee, Mr. 

RYAN of Ohio, Mr. TIBERI, Mr. LOEBSACK, Mr. JOYCE, Mr. MCKINLEY, 

Mrs. CAPITO, Mr. DESJARLAIS, Mrs. BLACKBURN, Mr. BARLETTA, Mr. 

GRIMM, Mr. AUSTIN SCOTT of Georgia, Mr. HARPER, Mr. MARINO, Mr. 

CRENSHAW, Mr. KING of New York, Mr. JOHNSON of Ohio, Mr. FORTENBERRY, Mr. CHABOT, Mr. POSEY, Mr. LANKFORD, and Mr. 

NUNNELEE) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on 

Ways and Means and Appropriations, 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 amend title XVIII of the Social Security Act to establish 

a market pricing program for durable medical equipment, 

prosthetics, orthotics, and supplies (DMEPOS) under 

part B of the Medicare program. 

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 ‘‘Medicare DMEPOS 

3 Market Pricing Program Act of 2013’’. 

4 SEC. 2. TERMINATION OF COMPETITIVE ACQUISITION PRO5 GRAM. 

6 Section 1847(a)(1) of the Social Security Act (42 

7 U.S.C. 1395w–3(a)(1)) is amended— 

8 (1) in subparagraph (B), by striking ‘‘The pro9 grams’’ and inserting ‘‘Subject to subparagraph (G), 

10 the programs’’; 

11 (2) in subparagraph (D), by striking clauses (ii) 

12 and (iii); and 

13 (3) by adding at the end the following new sub14 paragraph: 

15 ‘‘(G) TERMINATION OF PROGRAM; TRANSI16 TION.— 

17 ‘‘(i) NO ADDITIONAL COMPETITION

18 ROUNDS.—Notwithstanding subparagraph 

19 (B), the competition under this section 

20 shall end on December 31, 2013, with 

21 round 1. The Secretary shall take no fur22 ther action to implement round 2 of the 

23 competitive acquisition program, the na24 tional mail order competitive acquisition 

25 program, or any subsequent round of the 


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1 competitive acquisition program under this 

2 section. 

3 ‘‘(ii) CONTRACT TERMINATION.—The 

4 contracts awarded under this section be5 fore the date of the enactment of this sub6 paragraph shall terminate on July 1, 2013, 

7 and no payment shall be made under this 

8 title after such date based on such a con9 tract. To the extent that any damages may 

10 be applicable as a result of the termination 

11 of such contracts, such damages shall be 

12 payable from the Federal Supplementary 

13 Medical Insurance Trust Fund under sec14 tion 1841. Nothing in this clause shall be 

15 construed to provide an independent cause 

16 of action or right to administrative or judi17 cial review with regard to the termination 

18 provided under this clause.’’. 

19 SEC. 3. TRANSITIONAL PAYMENT AFTER TERMINATION OF 

20 DMEPOS COMPETITIVE BIDDING PROGRAM. 

21 (a) TRANSITIONAL PAYMENT RULES.— 

22 (1) PAYMENT FOR DURABLE MEDICAL EQUIP23 MENT.— 


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1 (A) IN GENERAL.—Section 1834(a)(1) of 

2 the Social Security Act (42 U.S.C. 

3 1395m(a)(1)) is amended— 

4 (i) in subparagraph (F)(i)— 

5 (I) by inserting ‘‘and before July 

6 1, 2013,’’ after ‘‘January 1, 2011,’’; 

7 (II) by striking ‘‘, subject to sub8 paragraphs (G) and (H),’’; and 

9 (III) by adding ‘‘and’’ at the end; 

10 (ii) in subparagraph (F)(ii)— 

11 (I) by striking ‘‘(and, in the case 

12 of covered items’’ and all that follows 

13 through ‘‘subject to clause (iii) 

14 shall)’’; and 

15 (II) by striking ‘‘; and’’ at the 

16 end and inserting a period; 

17 (iii) by striking clause (iii) of subpara18 graph (F); 

19 (iv) by striking subparagraphs (G) 

20 and (H); and 

21 (v) by adding at the end the following 

22 new subparagraph: 

23 ‘‘(G) PAYMENT RATES IN ROUND 1 AREAS

24 DURING TRANSITION.— 


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1 ‘‘(i) IN GENERAL.—In the case of cov2 ered items and services that are furnished 

3 in an area that had been designated by the 

4 Secretary as a competitive acquisition pro5 gram under section 1847(a)(1)(B)(i)(I) on 

6 or after the date on which contracts for 

7 the furnishing of such covered items and 

8 services expire, the payment basis under 

9 this subsection for such items and services 

10 furnished in such area shall be the amount 

11 described in clause (ii) or (iii), as the case 

12 may be. 

13 ‘‘(ii) PAYMENT RATES IN ROUND 2

14 FOR ITEMS AND SERVICES THAT ARE NOT

15 DIABETIC TESTING SUPPLIES.— 

16 ‘‘(I) IN GENERAL.—In the case 

17 of covered items that were selected to 

18 be furnished in the competitive acqui19 sition program (excluding diabetic 

20 supplies) in a competitive acquisition 

21 area selected pursuant to section 

22 1847(a)(1)(B)(i)(II) on or after July 

23 1, 2013, and before the date on which 

24 the Secretary implements the market 

25 pricing program under section 1847C, 


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1 subject to subclause (II), the payment 

2 basis under this subsection for such 

3 items and services furnished in such 

4 areas shall be 95 percent of the 

5 amount established under this sub6 section. 

7 ‘‘(II) FURTHER REDUCTIONS IN

8 2014 AND 2015.—In the case of covered 

9 items described in subclause (I) that 

10 are furnished during 2014, the pay11 ment basis under this subsection for 

12 such items furnished in such areas 

13 shall be reduced by 10 percent from 

14 the amount described in such sub15 clause. In the case of such items and 

16 services that are furnished in such 

17 areas on or after January 1, 2015, 

18 and before the date on which the Sec19 retary implements the market pricing 

20 program under section 1847C, the 

21 payment basis under this subsection 

22 for such items and services shall be 

23 further reduced by 10 percent after 

24 taking into account the reduction ef25 fected under the preceding sentence. 


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1 ‘‘(iii) PAYMENT RATES FOR DIABETIC

2 SUPPLIES.— 

3 ‘‘(I) IN GENERAL.—In the case 

4 of all diabetic testing supplies, mail 

5 order and non-mail order (HCPCS 

6 Codes A4233, A4234, A4235, A4236, 

7 A4253, A4256, A4258, and A4259, 

8 including the KL modifier), effective 

9 July 1, 2013, and before the date on 

10 which the Secretary implements the 

11 market pricing program under section 

12 1847C and subject to subclause (II), 

13 the payment basis under this sub14 section for such supplies shall be 90 

15 percent of the amount otherwise es16 tablished under this subsection. 

17 ‘‘(II) FURTHER REDUCTIONS IN

18 2014 AND 2015.—In the case of sup19 plies described in subclause (I) that 

20 are furnished during 2014, the pay21 ment basis under this subsection for 

22 such items furnished in such areas 

23 shall be reduced by 15 percent from 

24 the amount described in such sub25 clause. In the case of such supplies 


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1 that are furnished in such areas on or 

2 after January 1, 2015, and before the 

3 date on which the Secretary imple4 ments the market pricing program 

5 under section 1847C, the payment 

6 basis under this subsection for such 

7 supplies shall be further reduced by 

8 15 percent after taking into account 

9 the reduction effected under the pre10 ceding sentence.’’. 

11 (B) CONFORMING AMENDMENTS.—Section 

12 1842(s) of the Social Security Act (42 U.S.C. 

13 1395u(s)) is amended— 

14 (i) in paragraph (3), in the matter 

15 preceding subparagraph (A), by inserting 

16 ‘‘and that are furnished in such an area on 

17 or before July 1, 2013’’ after ‘‘section 

18 1847(a)’’; and 

19 (ii) by adding at the end the following 

20 new paragraph: 

21 ‘‘(4)(A)(i) In the case of items and services described 

22 in paragraph (2)(D) that are furnished in an area that 

23 had been designated by the Secretary as a competitive ac24 quisition area under section 1847(a)(1)(B)(i)(I) on or 

25 after the date on which contracts for the furnishing of 


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1 such covered items and services expire, the payment basis 

2 under this subsection for such items and services fur3 nished in such area shall be the amounts described in 

4 clause (ii). 

5 ‘‘(ii)(I) In the case of items and services described 

6 in paragraph (2)(D) that were selected to be furnished in 

7 the competitive acquisition program in a competitive ac8 quisition area selected pursuant to section 

9 1847(a)(1)(B)(i)(II) on or after July 1, 2013, and before 

10 the date on which the Secretary implements the market 

11 pricing program under section 1847C, subject to subclause 

12 (II), the payment basis under this subsection for such 

13 items and services furnished in such areas shall be 95 per14 cent of the amount otherwise established under this sub15 section. 

16 ‘‘(II) In the case of covered items and services de17 scribed in subclause (I) that are furnished during 2014, 

18 the payment basis under this subsection for such items 

19 and services furnished in such areas shall be reduced by 

20 10 percent from the amount described in such subclause. 

21 In the case of such items and services that are furnished 

22 in such areas on or after January 1, 2015, and before 

23 the date on which the Secretary implements the market 

24 pricing program under section 1847C, the payment basis 

25 under this subsection for such supplies shall be further 


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1 reduced by 10 percent after taking into account the reduc2 tion effected under the preceding sentence. 

3 ‘‘(B)(i) In the case of items and services described 

4 in paragraph (2)(D) that are included in the market pric5 ing program under section 1847C, the payment basis 

6 under this subsection for such items and services fur7 nished in such area shall be the payment basis determined 

8 under such competitive acquisition program. 

9 ‘‘(ii) The Secretary may use information on the pay10 ment determined under such market pricing program to 

11 adjust the payment amount otherwise applicable under 

12 clause (i) for an area that is not a market pricing area 

13 under section 1847C, and in the case of such adjustment, 

14 paragraphs (8) and (9) of subsection (b) shall not be ap15 plied.’’. 

16 (2) TREATMENT OF SUPPLIERS IN COMPETI17 TIVE ACQUISITION PROGRAM AREAS.—Section 

18 1847(b)(4) of the Social Security Act (42 U.S.C. 

19 1395w–3(b)(4)) is amended— 

20 (A) in subparagraph (A)— 

21 (i) in the first sentence, by striking 

22 ‘‘The Secretary may limit’’ and inserting 

23 ‘‘Until December 31, 2013, the Secretary 

24 may limit’’; and 


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1 (ii) by inserting after the first sen2 tence the following: ‘‘The preceding sen3 tence shall not apply to items and services 

4 furnished in an eligible auction area (with5 in the meaning of subsection (a)(4) of sec6 tion 1847C) on or after the date of the im7 plementation of the market pricing pro8 gram under such section.’’; and 

9 (B) by adding at the end the following new 

10 subparagraph: 

11 ‘‘(C) NON-CONTRACTED SUPPLIERS IN

12 MARKET PRICING PROGRAM.—The Secretary 

13 also shall award contracts to any supplier that 

14 meets eligibility requirements under this title 

15 for the furnishing of such items and services so 

16 long as the supplier accepts the price estab17 lished under such program as payment in full 

18 for such items and services.’’. 

19 (3) PAYMENT FOR OFF-THE-SHELF

20 ORTHOTICS.—Section 1834(h)(1) of the Social Secu21 rity Act (42 U.S.C. 1395m(h)(1)) is amended by 

22 adding at the end the following new subparagraph: 

23 ‘‘(I) APPLICATION OF MARKET PRICING

24 PROGRAM; LIMITATION OF INHERENT REASON25 ABLENESS AUTHORITY.—In the case of 


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1 orthotics described in subsection (b)(1)(K) of 

2 section 1847C furnished on or after January 1, 

3 2014, in an eligible auction area, that are in4 cluded in a market pricing program under such 

5 section— 

6 ‘‘(i) the payment basis under this sub7 section for such orthotics furnished in such 

8 area shall be the payment basis determined 

9 under such market pricing program; and 

10 ‘‘(ii) the Secretary may use informa11 tion on the payment determined under 

12 such market pricing program to adjust the 

13 payment amount otherwise recognized 

14 under subparagraph (B)(ii) for an area 

15 that is not an eligible auction area under 

16 section 1847C, and in the case of such ad17 justment, paragraphs (8) and (9) of sec18 tion 1842(b) shall not be applied.’’. 

19 (b) POLICY AFTER IMPLEMENTATION OF THE MAR20 KET PRICING PROGRAM.— 

21 (1) IN GENERAL.—Section 1834(a)(1) of the 

22 Social Security Act (42 U.S.C. 1395m(a)(1)), as 

23 amended by subsection (a)(1)(B), is amended by 

24 adding at the end the following new subparagraph: 


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1 ‘‘(H) APPLICATION OF MARKET PRICING

2 PROGRAM; LIMITATION OF INHERENT REASON3 ABLENESS AUTHORITY.— 

4 ‘‘(i) IN GENERAL.—In the case of 

5 market priced items and services described 

6 in section 1847C(b)(1) furnished on or 

7 after the date of implementation of a mar8 ket pricing program for which a price has 

9 been established under the program con10 ducted in an eligible auction area under 

11 section 1847C, the payment basis under 

12 this subsection— 

13 ‘‘(I) in the eligible auction area 

14 shall be the amount determined under 

15 the auction conducted in such eligible 

16 auction area for such items and serv17 ices; or 

18 ‘‘(II) in another eligible auction 

19 area shall be the amount determined 

20 under subclause (I) adjusted by the 

21 appropriate factor described in section 

22 1847C(d)(7)(B)(iv). 

23 ‘‘(ii) NO ADJUSTMENT IN PAYMENT

24 AMOUNT DURING INITIAL TWO-YEAR PE25 RIOD OF PRICING PROGRAM.—During the 


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1 term of any contract awarded pursuant to 

2 section 1847C(d)(6) for an item and serv3 ice described in clause (i), the Secretary 

4 may not adjust the payment basis estab5 lished under such clause to take into ac6 count the effects of a later-conducted auc7 tion during that two-year contract period. 

8 The Secretary may, at the termination of 

9 a contract awarded under section 

10 1847C(d)(6) for such an item or service, 

11 adjust such payment basis to take into ac12 count the effects of a later-conducted auc13 tion. 

14 ‘‘(iii) MARKET PRICING IN RURAL AND

15 NON-COMPETITIVE AREAS.—The Secretary, 

16 after consultation with the auction expert 

17 under section 1847C, may (and, in the 

18 case of covered items furnished on or after 

19 January 1, 2016, shall) use information on 

20 the payment determined under such mar21 ket pricing program to adjust the payment 

22 amount otherwise recognized under sub23 paragraph (B)(ii) for an area in which an 

24 auction has not been conducted pursuant 

25 to section 1847C(a). 


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1 ‘‘(iv) CONTINUED USE OF ADDI2 TIONAL INFORMATION.—In the case of cov3 ered items furnished on or after January 

4 1, 2016, the Secretary shall continue to 

5 make such adjustments described in clause 

6 (ii) as, under such market pricing pro7 gram, additional covered items are phased 

8 in or information is updated as contracts 

9 are renewed under such program.’’. 

10 (2) REGULATORY AUTHORITY.—Section 

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

12 1395w–3(a)(1)(G)) is amended— 

13 (A) in the subparagraph heading, by in14 serting ‘‘OR MARKET PRICING’’ before ‘‘RATES’’; 

15 (B) by striking ‘‘subparagraph (F)(ii)’’ 

16 and inserting ‘‘subparagraph (F)(ii), subpara17 graph (H)(iii),’’; and 

18 (C) by inserting ‘‘or eligible auction areas 

19 in which an auction has been conducted, after 

20 June 30, 2013,’’ after ‘‘competitive acquisition 

21 areas’’. 


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1 SEC. 4. ESTABLISHMENT OF DMEPOS MARKET PRICING 

2 PROGRAM. 

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

4 Security Act is amended by inserting after section 1847B 

5 (42 U.S.C. 1395w–3b) the following new section: 

6 ‘‘DMEPOS MARKET PRICING PROGRAM

7 ‘‘SEC. 1847C. (a) ESTABLISHMENT.— 

8 ‘‘(1) IN GENERAL.—The Secretary shall estab9 lish and implement a market pricing program (in 

10 this section referred to as ‘market pricing program’) 

11 under which auctions are conducted in eligible auc12 tion areas (as defined in paragraph (4)) throughout 

13 the United States for the furnishing of market 

14 priced items and services (as defined in subsection 

15 (b)) for which payment is made under this part. 

16 ‘‘(2) ROLES OF AUCTION EXPERT AND MARKET

17 MONITOR.—The elements of the market pricing pro18 gram, including eligible auction areas, auction de19 sign, establishing of clearing prices, and conduct of 

20 auctions, shall be established and operated in con21 sultation with, and after input and review by, the 

22 auction expert and the market monitor under sub23 section (g). In this section, the terms ‘auction ex24 pert’ and ‘market monitor’ refer to the respective 

25 auction expert and market monitor contracted with 

26 under subsection (g)(1). 


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1 ‘‘(3) IMPLEMENTATION.—The market pricing 

2 program shall be implemented in all eligible auction 

3 areas so that market pricing occurs nationwide in 

4 the first year of implementation consistent with the 

5 following: 

6 ‘‘(A) FIRST YEAR OF IMPLEMENTATION.— 

7 In the first year of implementation— 

8 ‘‘(i) auctions under the program shall 

9 be held in at least 20 percent of eligible 

10 auction areas; 

11 ‘‘(ii) prices in these areas will be set 

12 by such auctions; 

13 ‘‘(iii) in each eligible auction area 2 

14 categories of items shall be selected for 

15 auction; 

16 ‘‘(iv) prices for categories not selected 

17 for auction in the area shall be set by ref18 erence to auctions held for those categories 

19 in econometrically similar areas; and 

20 ‘‘(v) in those areas in which no auc21 tions are held, prices for all categories will 

22 be set by reference to auctions held for 

23 those categories in econometrically similar 

24 areas. 


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1 ‘‘(B) SECOND YEAR OF IMPLEMENTA2 TION.—In the second year of implementation— 

3 ‘‘(i) auctions shall be held in other eli4 gible auction areas that include 10 percent 

5 of eligible auction areas; and 

6 ‘‘(ii) prices in those areas in which no 

7 auctions are held or for categories in which 

8 an auction is not held, shall be set in the 

9 same manner as under subparagraph (A). 

10 ‘‘(C) SUBSEQUENT YEARS.—In each subse11 quent year of implementation— 

12 ‘‘(i) auctions shall be held in an addi13 tional 10 percent of eligible auction areas, 

14 selected by the Secretary annually on an 

15 ongoing and rotating basis, until all eligi16 ble auction areas have been covered; and 

17 ‘‘(ii) prices in those areas in which no 

18 auctions are held or for categories in which 

19 an auction is not held, shall be set in the 

20 same manner as under subparagraph (A). 

21 ‘‘(D) Once the market pricing program is 

22 applied throughout the United States under 

23 subparagraph (C), the Secretary shall conduct 

24 auctions for different eligible auction areas 

25 throughout the United States on an ongoing 


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1 and rotating basis covering 10 percent of eligi2 ble auction areas no later than March for each 

3 subsequent year. 

4 ‘‘(E) The requirements of this section shall 

5 apply to each subsequent round of market6 priced auctions in the same manner that such 

7 requirements apply to the initial market-priced 

8 auction. 

9 ‘‘(4) ELIGIBLE AUCTION AREAS.— 

10 ‘‘(A) IN GENERAL.—In this section and 

11 section 1834, the term ‘eligible auction areas’ 

12 means counties, aggregations of counties, or 

13 parts of counties, not excluded under subpara14 graph (D), as established by the Secretary. 

15 ‘‘(B) MARKET AREAS MUST REFLECT ECO16 NOMIC INTERDEPENDENCY.—In determining 

17 and selecting eligible auction areas, the Sec18 retary shall choose, from among counties, ag19 gregations of counties, or parts of counties, 

20 auction areas that form an economically inter21 dependent area reflecting standard econometric 

22 market models. Nothing in this subparagraph 

23 shall preclude the Secretary from subdividing a 

24 large county to take into account population 

25 and geographic size in establishing auction 


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1 areas in order to comply with this subpara2 graph. 

3 ‘‘(C) SELECTION OF AUCTION AREAS.—In 

4 selecting auction areas in which an auction will 

5 be conducted under this section, the Secretary 

6 shall ensure that several auction areas of each 

7 econometric model are chosen. 

8 ‘‘(D) EXCLUSION OF CERTAIN AUCTION

9 AREAS.—The Secretary shall not subject areas 

10 described in clause (iii) of section 

11 1847(a)(1)(D) to market program reimburse12 ment rates before the year specified in such 

13 clause. 

14 ‘‘(5) APPLICATION OF CERTAIN POLICIES AP15 PLICABLE TO COMPETITIVE ACQUISITION PRO16 GRAMS.—The following provisions of subsection 

17 (a)(1) of section 1847 shall apply to the market 

18 pricing program in the same manner as they apply 

19 to competitive acquisition programs under such sec20 tion except as otherwise provided: 

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

22 of certain provisions). 

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

24 verification by OIG), except that the assessment 

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1 ing determinations that are the basis for auc2 tion prices and single payment amounts for 

3 items and services in eligible auction areas and 

4 shall be conducted in the first two years of the 

5 market pricing program and may continue in 

6 subsequent years of the program. 

7 ‘‘(C) Subparagraph (F) (relating to feed8 back on missing financial documentation), ex9 cept that any reference to a round of a program 

10 is deemed a reference to a year of the market 

11 pricing program. 

12 ‘‘(b) MARKET PRICED ITEMS AND SERVICES DE13 FINED.— 

14 ‘‘(1) IN GENERAL.—In this section, subject to 

15 paragraph (2), the term ‘market priced items and 

16 services’ means the following: 

17 ‘‘(A) Oxygen supplies and equipment. 

18 ‘‘(B) Standard power wheelchairs, power 

19 scooters, and related accessories. 

20 ‘‘(C) Manual wheelchairs. 

21 ‘‘(D) Enteral nutrients, equipment, and 

22 supplies. 

23 ‘‘(E) Continuous positive airway pressure 

24 devices, respiratory assistive devices, and re25 lated supplies. 


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1 ‘‘(F) Hospital beds and related accessories. 

2 ‘‘(G) Walkers and related accessories. 

3 ‘‘(H) Support services (Group 2 mattresses 

4 and overlays). 

5 ‘‘(I) Negative pressure wound therapy 

6 pumps and related supplies and accessories. 

7 ‘‘(J) Diabetic supplies. 

8 ‘‘(K) Off-the-shelf orthotics described in 

9 section 1847(a)(2)(C) furnished on or after 

10 July 1, 2013. 

11 ‘‘(L) External infusion pumps and sup12 plies. 

13 ‘‘(M) Other items and services (other than 

14 those items and services specified in paragraph 

15 (2)) that could have been subject to participa16 tion in competitive acquisition programs under 

17 section 1847(a)(1). 

18 ‘‘(2) EXCLUDED ITEMS.—Such term does not 

19 include the following: 

20 ‘‘(A) An adjustable skin protection cushion 

21 used in connection with a wheelchair. 

22 ‘‘(B) A complex rehabilitative power wheel23 chair and related accessories. 


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1 ‘‘(C) A manual wheelchair billed using cur2 rent HCPCS Codes K0005 or E1161, and re3 lated accessories for such a wheelchair. 

4 ‘‘(D) A medical device classified in class 

5 III under the Federal Food, Drug, and Cos6 metic Act. 

7 ‘‘(c) MARKET PRICING PROGRAM REQUIREMENTS.— 

8 ‘‘(1) IN GENERAL.—The Secretary shall estab9 lish an auction design through the process described 

10 in paragraph (2), that meets the requirements of 

11 paragraph (3), and shall ensure that the first auc12 tion will be conducted for all eligible auction areas 

13 no later than 14 months after the date of entering 

14 into the contract with the auction expert under sub15 section (g)(1). 

16 ‘‘(2) AUCTION PROCESS; INPUT OF STAKE17 HOLDERS; DESIGN.— 

18 ‘‘(A) TRANSPARENT PROCESS RE19 QUIRED.— 

20 ‘‘(i) IN GENERAL.—In establishing 

21 such auction design, the Secretary shall 

22 utilize an open and transparent process 

23 that involves all relevant stakeholders (as 

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1 cluding through the auction plan con2 ference and other outreach efforts. 

3 ‘‘(ii) RELEVANT STAKEHOLDERS.— 

4 For purposes of clause (i), the term ‘rel5 evant stakeholders’ means suppliers and 

6 manufacturers of market priced items and 

7 services (and trade associations rep8 resenting such suppliers and manufactur9 ers), physicians, and individuals entitled to 

10 benefits under this title (and representa11 tives of such individuals). 

12 ‘‘(B) DRAFT AUCTION DESIGN.—Not later 

13 than 2 months after the date the auction expert 

14 first begins service under subsection (g)(1), the 

15 auction expert shall develop a draft auction de16 sign that shall propose auction areas nation17 wide, lead products for each product category, 

18 and the price index associated with each lead 

19 product, and proposed rules for the conduct of 

20 auctions. 

21 ‘‘(C) DESIGN CONFERENCE.— 

22 ‘‘(i) IN GENERAL.—Not later than 4 

23 months after the date the auction expert 

24 first begins service under subsection (g)(1), 

25 the Secretary shall convene a design conVerDate Mar 15 2010 15:57 Apr 30, 2013 Jkt 029200 PO 00000 Frm 00024 Fmt 6652 Sfmt 6201 E:\BILLS\H1717.IH H1717

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1 ference (in this paragraph referred to as 

2 the ‘design conference’) for the auction 

3 process under this section. The auction ex4 pert shall chair the conference. 

5 ‘‘(ii) PARTICIPANTS.—The partici6 pants at the design conference shall in7 clude at least the following: 

8 ‘‘(I) MANUFACTURERS AND SUP9 PLIERS OF DMEPOS.—Representatives 

10 of market priced items and services. 

11 ‘‘(II) BENEFICIARIES.—Rep12 resentatives of individuals entitled to 

13 benefits under this part. 

14 ‘‘(III) CMS.—The Administrator 

15 of the Centers for Medicare & Med16 icaid Services and other appropriate 

17 Federal personnel. 

18 ‘‘(IV) PROGRAM ADVISORY AND

19 OVERSIGHT COMMITTEE.—The mem20 bers of the committee referred to in 

21 paragraph (3). 

22 ‘‘(iii) PURPOSE OF CONFERENCE.— 

23 The purpose of the design conference shall 

24 be to review the auction design developed 

25 by the auction expert under subparagraph 


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1 (B) for the establishment of an efficient 

2 auction consistent with best practices and 

3 actuarial science. 

4 ‘‘(iv) ELEMENTS OF CONFERENCE.— 

5 With respect to the design conference— 

6 ‘‘(I) the auction expert shall pro7 vide a demonstration of the prelimi8 nary auction design; 

9 ‘‘(II) the auction expert shall 

10 lead a mock auction based upon such 

11 design in which the attendees will par12 ticipate and offer comments and sug13 gestions for improvement; 

14 ‘‘(III) the auction expert may es15 tablish working committees on major 

16 issues; and 

17 ‘‘(IV) the design conference shall 

18 be recorded and made available over 

19 the Internet through simultaneous 

20 Web cast or otherwise. 

21 ‘‘(D) RECOMMENDATIONS.— 

22 ‘‘(i) WORKING COMMITTEES.—Not 

23 later than 2 months after the last day of 

24 the design conference, each working com25 mittee established under subparagraph 


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1 (C)(iv)(III) shall submit to the auction ex2 pert the committee’s recommendations on 

3 the final design for auctions under this 

4 section. 

5 ‘‘(ii) FINAL DESIGN RECOMMENDA6 TION.—Not later than 3 months after the 

7 last day of the design conference, the auc8 tion expert shall submit to the Secretary 

9 final recommendations on the auction de10 sign for approval for expedited rulemaking. 

11 In this clause, the term ‘expedited rule12 making process’ means a process of publi13 cation of the proposed auction design and 

14 solicitation of public comments on such de15 sign. The provisions of section 1871(b)(1) 

16 shall not apply to such process. 

17 ‘‘(3) REQUIREMENTS.—In establishing the auc18 tion design, the Secretary shall ensure that rates of 

19 payment developed through the auction process— 

20 ‘‘(A) are market-based and based on bind21 ing bids and clearing prices; and 

22 ‘‘(B) do not result in a diminution of ac23 cess to or quality of items of market priced 

24 items and services in the applicable market 

25 areas. 


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1 ‘‘(d) CONDUCT OF AUCTION.— 

2 ‘‘(1) INITIAL AUCTION.—No later than 14 

3 months after the date a contract is first entered into 

4 with an auction expert under subsection (g), the 

5 Secretary shall conduct auctions (each in this section 

6 referred to as a ‘market-priced auction’) among enti7 ties supplying market priced items and services in 

8 eligible auction areas that are selected in the auction 

9 design and consistent with subsection (a)(3). Each 

10 auction shall conclude no later than 2 months after 

11 its commencement. Market-based auctions shall be 

12 conducted in accordance with an auction design de13 veloped under subsection (c). 

14 ‘‘(2) ITEMS AND SERVICES SUBJECT TO AUC15 TION.— 

16 ‘‘(A) IN GENERAL.—In each eligible auc17 tion area in which a market-priced auction is 

18 conducted, the Secretary shall select to be sub19 ject to auction a combination of 2 categories of 

20 items and services from among the market 

21 priced items and services. 

22 ‘‘(B) ALL LISTED ITEMS AND SERVICES TO

23 BE SUBJECT TO AUCTION.—The Secretary shall 

24 ensure in the market-priced auction that each 

25 lead product that is identified under paragraph 


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1 (4) from among each market priced item and 

2 service is subject to auction among all eligible 

3 auction areas. The Secretary shall ensure that 

4 each product category is auctioned in at least a 

5 sufficient number of eligible auction areas to 

6 produce a sample of bids based on the percent7 ages set forth in subsection (a)(3). 

8 ‘‘(3) REQUIREMENTS TO SUBMIT BID IN AUC9 TION.— 

10 ‘‘(A) SUBMISSION OF BIDS.—Any supplier 

11 that complies with the requirements of subpara12 graph (B) and that is identified by the Sec13 retary pursuant to paragraph (5)(C) as a sup14 plier of a market priced item or service that is 

15 the subject of a market-priced auction in an eli16 gible auction area may submit a bid at such 

17 auction. 

18 ‘‘(B) FINANCIAL ASSURANCES.— 

19 ‘‘(i) IN GENERAL.—In order to be eli20 gible to participate in a market-priced auc21 tion, a supplier must submit a cash deposit 

22 in an amount determined by the Secretary. 

23 ‘‘(ii) LETTER OF CREDIT IN LIEU OF

24 CASH DEPOSIT.—The Secretary may, in 

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1 ter of credit from a financial institution ac2 ceptable to the Secretary instead of the 

3 cash deposit otherwise required under 

4 clause (i). 

5 ‘‘(C) TREATMENT OF DEPOSITS SUB6 MITTED BY SUPPLIERS.— 

7 ‘‘(i) SUCCESSFUL BIDDERS.—The 

8 Secretary shall retain as a performance 

9 guarantee the deposit submitted under 

10 subparagraph (B)(i) of a supplier that has 

11 submitted a winning bid at a market12 priced auction. 

13 ‘‘(ii) UNSUCCESSFUL BIDS.—If a sup14 plier submits a bid that is not accepted at 

15 the auction, any such deposit shall be re16 turned to the supplier. 

17 ‘‘(iii) DEPOSIT RETURN REQUIRE18 MENTS FOR PARTIALLY SUCCESSFUL SUP19 PLIERS.—If a supplier submits a bid that 

20 is accepted at the auction, but the supplier 

21 is not awarded a contract for the full 

22 amount of the bid, the Secretary shall pro23 vide for a proportionate return of any such 

24 deposit. 


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1 ‘‘(4) LEAD PRODUCT SELECTION FOR ESTAB2 LISHING CLEARING PRICES.— 

3 ‘‘(A) IN GENERAL.—For each product cat4 egory of items and services specified in sub5 section (b)(1) that is the subject of a market6 priced auction, the Secretary shall establish a 

7 lead product. Such lead product shall be se8 lected based upon the price and utilization of 

9 the product under this part. 

10 ‘‘(B) LEAD PRODUCT CLEARING PRICE ES11 TABLISHES CLEARING PRICE FOR OTHER PROD12 UCTS.— 

13 ‘‘(i) LEAD PRODUCT AS REFERENCE

14 POINT FOR OTHER PRODUCTS.—The lead 

15 product selected under subparagraph (A) 

16 shall be used as a reference point for all 

17 other products (categorized by the 

18 healthcare common procedure coding sys19 tem code) in the same category as the lead 

20 product. Such lead product shall be as21 signed a weight of 100 percent. 

22 ‘‘(ii) ADDITIONAL PRODUCTS IN EACH

23 PRODUCT CATEGORY.—Every other prod24 uct in the same product category as the 

25 lead product identified under subparagraph 


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1 (A) shall be assigned based upon each auc2 tion a weight expressed as a percentage of 

3 the lead product, which percentage of the 

4 clearing price, established by the auction 

5 expert in the plan design and adjusted 

6 after input from providers at the design 

7 plan conference, establishes the price of 

8 each item and service in the category. 

9 ‘‘(iii) ESTABLISHING CLEARING PRICE

10 FOR ITEMS AND SERVICES.—The Secretary 

11 shall establish the clearing price for each 

12 market priced item and service that is sub13 ject to the auction based upon the data 

14 submitted under this subparagraph. Such 

15 clearing price shall be equal to the highest 

16 cost bid that will meet capacity targets in 

17 the eligible auction area for such item and 

18 service. 

19 ‘‘(5) CONDUCT OF AUCTION.— 

20 ‘‘(A) IN GENERAL.—The Secretary shall 

21 conduct the market-priced auctions consistent 

22 with the provisions of this paragraph. 

23 ‘‘(B) 3 MONTHS BEFORE AUCTION DATE.— 

24 Approximately 3 months before the scheduled 

25 auction date, the Secretary shall detail auction 


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1 rules that are consistent with the auction plan 

2 developed under this section. These rules shall 

3 include the following: 

4 ‘‘(i) Financial and other qualification 

5 requirements for bidders. 

6 ‘‘(ii) Algorithms for determining win7 ners and prices as a function of bids. 

8 ‘‘(iii) Performance obligations of con9 tract suppliers, guarantees, and penalties 

10 for non-conformance. 

11 ‘‘(iv) The product categories to be se12 lected (and their related healthcare com13 mon procedure coding system codes) from 

14 within the market priced items and serv15 ices. 

16 ‘‘(v) The lead product for each prod17 uct category selected under paragraph 

18 (4)(A) and the price grid for such cat19 egory. 

20 ‘‘(vi) The eligible auction areas na21 tionwide (and areas identified as having 

22 the same econometric model) and those eli23 gible auction areas in which a market24 priced auction will be conducted each year. 


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1 ‘‘(C) 30 DAYS BEFORE AUCTION DATE.— 

2 Thirty days before a scheduled auction date, 

3 the Secretary shall review all applicants and 

4 identify the qualified suppliers eligible to submit 

5 bids. In carrying out this subparagraph, the 

6 Secretary shall specify the following: 

7 ‘‘(i) The historic capacity for each eli8 gible bidder for each category that will be 

9 subject to the auction. 

10 ‘‘(ii) Bidder eligibility by eligible auc11 tion area. 

12 ‘‘(iii) For each auction area, the lead 

13 product established under paragraph 

14 (4)(A). 

15 ‘‘(iv) The price index (described in 

16 subsection (c)(2)(B)) in each auction area. 

17 ‘‘(D) BIDDERS CONFERENCE.—Prior to 

18 conducting each such auction, the auction ex19 pert shall conduct a conference of prospective 

20 bidders in eligible auction areas in which an 

21 auction will be conducted. 

22 ‘‘(E) DURING AUCTION.—During the con23 duct of the auction, the Secretary shall an24 nounce the following: 


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1 ‘‘(i) The time of the end of the round 

2 of auctioning. 

3 ‘‘(ii) The history of prior rounds in4 cluding the aggregate supply at the end of 

5 the round price for each product category 

6 by round. 

7 ‘‘(F) IMMEDIATELY AFTER EACH AUCTION

8 ROUND.—Not later than 15 minutes after the 

9 end of each auction, the Secretary shall an10 nounce the following: 

11 ‘‘(i) The aggregate supply for each 

12 item and service that is the subject of the 

13 auction at the price established during the 

14 auction. 

15 ‘‘(ii) For each supplier that has par16 ticipated in the auction, its own supply for 

17 all prices (from the initial starting price to 

18 the end of round price) for each item and 

19 service that is the subject of the auction. 

20 ‘‘(iii) Revised schedule of rounds for 

21 the next bidding day. 

22 ‘‘(G) AT CONCLUSION OF FINAL AUCTION

23 ROUND.—Not later than 15 minutes after the 

24 end of the final auction round, the Secretary 

25 shall announce the following: 


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1 ‘‘(i) A list of winning suppliers. 

2 ‘‘(ii) The market clearing price for 

3 each item and service that is the subject of 

4 the auction. 

5 ‘‘(H) FINAL ACTIONS.—Not later than 30 

6 days after the end of the final auction round, 

7 the Secretary shall adjust the performance 

8 guarantees received from each bidder to reflect 

9 the outcome of the auction in accordance with 

10 paragraph (3)(B). 

11 ‘‘(6) CONDITIONS OF AWARDING CONTRACT.— 

12 ‘‘(A) IN GENERAL.—The Secretary shall 

13 award a contract to any entity in an eligible 

14 auction area in which an auction is conducted 

15 and whose bid submitted pursuant to paragraph 

16 (3)(A) is at or below the clearing price estab17 lished pursuant to paragraph (4)(G)(ii). 

18 ‘‘(B) TERMS OF CONTRACT.— 

19 ‘‘(i) MANDATORY ACCEPTANCE OF

20 CONTRACT.—A supplier that submits a bid 

21 at or below such clearing price shall be 

22 treated as having agreed to and accept the 

23 contract awarded pursuant to subpara24 graph (A). 


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1 ‘‘(ii) CONTRACT TERMS.—A contract 

2 awarded pursuant to subparagraph (A) 

3 shall be valid for 2 years. 

4 ‘‘(iii) NO REQUIREMENT TO SUPPLY

5 UP TO BID AMOUNT.—Nothing in this sub6 section shall require a supplier that is 

7 awarded a contract pursuant to subpara8 graph (A) to supply a marked priced item 

9 or service that is the subject of an auction 

10 in the eligible auction area beyond the level 

11 of demand for such item or service in the 

12 eligible auction area, even if such level is 

13 below the level that the supplier assumed 

14 in its bid. 

15 ‘‘(C) ENSURING ADEQUATE SELECTION OF

16 CONTRACTORS.—The Secretary may not award 

17 a contract to any entity under the auction to 

18 furnish such items or services unless the Sec19 retary finds that the conditions described in 

20 section 1847(b)(2)(A) apply with respect to an 

21 entity receiving a contract under this para22 graph. 

23 ‘‘(D) SUFFICIENT CAPACITY.— 

24 ‘‘(i) IN GENERAL.—The Secretary 

25 shall identify the capacity of each supplier 


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1 that applies to participate in an auction 

2 under this section. A supplier’s capacity 

3 shall be based upon the capacity of the 

4 supplier in the preceding year in the auc5 tion area. 

6 ‘‘(ii) NEW SUPPLIERS.—Each bidding 

7 supplier that has no historic capacity in 

8 the auction area shall be assigned a base 

9 capacity for each produce category made 

10 available under the auction of 1 percent of 

11 the total dollar value of that item or serv12 ice made available in the eligible auction 

13 area. 

14 ‘‘(7) PAYMENT AMOUNT SHALL EQUAL AUCTION

15 CLEARING PRICE.— 

16 ‘‘(A) IN GENERAL.—With respect to mar17 ket priced items or services that are provided in 

18 an eligible auction area in which— 

19 ‘‘(i) a market-priced auction is con20 ducted, the auction price determined at 

21 such auction for such item in such eligible 

22 auction area; or 

23 ‘‘(ii) such an auction is not conducted, 

24 the auction price determined at an auction 

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1 other eligible auction area, as adjusted by 

2 the factor described in subparagraph 

3 (B)(iv), if appropriate, 

4 shall constitute the payment amount under sec5 tion 1834(a)(1)(H)(i)(I) or section 1842(s), as 

6 the case may be. 

7 ‘‘(B) SUPPLYING ITEMS OR SERVICES.— 

8 ‘‘(i) IN GENERAL.—No entity other 

9 than a supplier of a market priced item or 

10 service that is the subject of a market11 priced auction in an eligible auction area 

12 and that is a winning bidder in that eligi13 ble auction area shall be eligible to receive 

14 a contract under paragraph (6)(A) in such 

15 auction area. 

16 ‘‘(ii) SUPPLYING ITEMS IN ECONOMI17 CALLY EQUIVALENT MARKETS.—A supplier 

18 of a market priced item or service that is 

19 not a winning bidder in the eligible auction 

20 area described in clause (i) shall, subject to 

21 clauses (iii) and (iv), be eligible to supply 

22 any other market priced item or service 

23 that was not the subject of an auction in 

24 that eligible auction area but that was the 

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1 other econometrically similar eligible auc2 tion area (as determined by the Secretary). 

3 ‘‘(iii) SUPPLIER MUST ACCEPT AUC4 TION PRICE.—Clause (ii) shall only apply 

5 to a supplier that agrees to accept the 

6 price determined at an auction in another 

7 eligible auction area for a market priced 

8 item or service. 

9 ‘‘(iv) APPROPRIATE ADJUSTMENTS.— 

10 The Secretary shall develop an adjustment 

11 factor to reflect economic differences be12 tween the auction area that was the sub13 ject of the market-priced auction for the 

14 item or service and the auction area in 

15 which the supplier is located. The Sec16 retary shall use such adjustment factor to 

17 adjust the payment amount made to a sup18 plier pursuant to clause (iii). The Sec19 retary, auction expert, and market monitor 

20 shall consult with relevant stakeholders in 

21 developing such factors. 

22 ‘‘(8) MONITOR ACCESS AND QUALITY.— 

23 ‘‘(A) IN GENERAL.—The Secretary shall 

24 monitor the performance of suppliers that are 

25 awarded a contract pursuant to paragraph (6) 


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1 to ensure compliance with the requirements of 

2 this subsection, including the requirements and 

3 obligations established by the auction expert 

4 under paragraph (5)(B). 

5 ‘‘(B) ENFORCEMENT.—If the Secretary, 

6 after consultation with the market monitor, de7 termines that there has been a material failure 

8 of a supplier that has been awarded a contract 

9 pursuant to paragraph (6) to comply with such 

10 requirements, the Secretary, after consultation 

11 with the market monitor, shall implement en12 forcement measures. Such enforcement meas13 ures may include the following: 

14 ‘‘(i) A formal warning letter. 

15 ‘‘(ii) Forfeiture of amounts submitted 

16 as a performance deposit pursuant to sub17 section (d)(3)(B). 

18 ‘‘(iii) Termination of a contract 

19 awarded under paragraph (6). 

20 ‘‘(iv) Termination of the supplier’s 

21 agreement to participate in the program 

22 under this title for up to 2 years. 

23 ‘‘(e) APPLICATION OF COMPETITIVE ACQUISITION

24 PROGRAM PROVISIONS.—In implementing the market 


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1 pricing program under this section, the provisions of sec2 tion 1847(b) shall be applied as follows: 

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

4 purposes of contracts awarded under the market 

5 pricing program, subparagraph (B) of such para6 graph shall be applied by substituting ‘2 years’ for 

7 ‘3 years’. 

8 ‘‘(2) Subject to subsection (d)(7)(B), paragraph 

9 (4) shall apply. 

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

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

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

13 a reference to subsection (b)(1) of this section; 

14 and 

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

16 of such paragraph to subparagraph (A) is 

17 deemed a reference to subsection (d)(4) of this 

18 section. 

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

20 ‘‘(5) Paragraph (8) shall apply. 

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

22 such paragraph shall be applied as if a reference to 

23 a bidding program includes a reference to the mar24 ket pricing program. 


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

2 such paragraph shall be applied as if a reference to 

3 a competitive acquisition program includes a ref4 erence to the market pricing program. 

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

6 that— 

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

8 under this section shall not delay any auction 

9 round conducted pursuant to subsection (a)(3) 

10 or (d)(1); and 

11 ‘‘(B) there shall be no administrative or ju12 dicial review of any claim to enjoin the oper13 ation of a market-priced auction conducted. 

14 ‘‘(f) TRANSPARENCY REQUIREMENTS FOR MARKET

15 PRICING PROGRAM.—In implementing the market pricing 

16 program, the Secretary shall provide for publication, on 

17 an Internet Web site operated by the Secretary, of the 

18 following information: 

19 ‘‘(1) The qualifications necessary to submit a 

20 bid pursuant to subsection (d)(3). 

21 ‘‘(2) The financial requirements that are appli22 cable for purposes of subsection (d)(3)(B). 

23 ‘‘(3) The quality standards and the perform24 ance standards developed pursuant to subsection 

25 (c)(3)(B). 


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1 ‘‘(4) The calculation of the total market capac2 ity of an eligible auction area for purposes of sub3 section (d)(5)(C)(i). 

4 ‘‘(5) The methodology developed for an adjust5 ment factor applied pursuant to subsection 

6 (d)(7)(B)(iv). 

7 ‘‘(6) The process for soliciting and accepting 

8 bids for purposes of paragraphs (3) and (5) of sub9 section (d). 

10 ‘‘(7) For purposes of subsection (d)(5)— 

11 ‘‘(A) the number of bidders at the auction; 

12 ‘‘(B) the number of winning and losing 

13 bidders at the auction; and 

14 ‘‘(C) with respect to rejected bidders, the 

15 specific reasons for rejections of any bid, and, 

16 with respect to any such rejection, a means of 

17 ensuring the availability of the process of review 

18 or appeal to a rejected bidder. 

19 ‘‘(8) The calculation of and compliance with the 

20 requirement of section 1847(b)(6)(D), as made ap21 plicable to the market pricing program by subsection 

22 (e). 

23 ‘‘(g) RELIANCE ON AUCTION EXPERT AND MARKET

24 MONITOR IN ESTABLISHING AND OPERATING MARKET


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1 PRICING PROGRAM; ADVISORY COMMITTEE REPORT AND

2 MONITORING.— 

3 ‘‘(1) AUCTION EXPERT AND MARKET MON4 ITOR.— 

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

6 not later than 3 months after the date of the 

7 enactment of this section, through the Office of 

8 the Assistant Secretary for Planning and Eval9 uation, enter into a contract with an individual 

10 to serve as the auction expert and such a con11 tract to serve as a market monitor to assist in 

12 the design, development, implementation and 

13 functioning of the auction to be conducted pur14 suant to subsection (b). The auction expert and 

15 market monitor shall report and be accountable 

16 to the Secretary. 

17 ‘‘(B) SELECTION OF AUCTION EXPERT

18 AND MARKET MONITOR; TERM; ACCESS TO IN19 FORMATION.— 

20 ‘‘(i) COMPETITIVE PROCESS.—The se21 lection of the individual to serve as the 

22 auction expert and as a market monitor 

23 under subparagraph (A) shall be under24 taken through a competitive process. 


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1 ‘‘(ii) DISQUALIFICATIONS.—An indi2 vidual may not be selected as the auction 

3 expert if such individual— 

4 ‘‘(I) is a current or former em5 ployee of the Centers for Medicare & 

6 Medicaid Services; 

7 ‘‘(II) is a current or former con8 tractor for the Centers for Medicare & 

9 Medicaid Services that participated in 

10 the implementation of the competitive 

11 acquisition program under section 

12 1847(a); 

13 ‘‘(III) does not have significant 

14 experience in implementing auctions 

15 of similar complexity in government 

16 programs; and 

17 ‘‘(IV) does not have appropriate 

18 educational credentials. 

19 ‘‘(iii) ACCESS TO INFORMATION.—The 

20 Secretary shall make available to the auc21 tion expert and the market monitor all ap22 plicable information (including confidential 

23 information) on the relevant markets 

24 throughout the duration of the market 

25 pricing program. 


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1 ‘‘(iv) TERM OF CONTRACT.—The con2 tract for the auction expert and for the 

3 market monitor under this paragraph shall 

4 be for a period of 4 years. 

5 ‘‘(2) FUNCTIONS OF AUCTION EXPERT.—The 

6 auction expert shall conduct the activities as de7 scribed in this section, including— 

8 ‘‘(A) development of a draft auction design 

9 and design conference under subparagraphs (B) 

10 and (C) of subsection (c)(2); 

11 ‘‘(B) conducting bidders conferences under 

12 subsection (d)(5)(D); and 

13 ‘‘(C) lead the auction, contracting, and 

14 other aspects of implementing the market pric15 ing program with the advice of the market mon16 itor. 

17 ‘‘(3) FUNCTIONS OF MARKET MONITOR.— 

18 ‘‘(A) PARTICIPATE IN DESIGN CON19 FERENCE.—The market monitor shall partici20 pate in the design conference under subsection 

21 (c)(2)(C) and, at the conference, provide a pres22 entation on the responsibilities of the market 

23 monitor throughout the year and common on 

24 key aspects of the design and their purpose. 


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1 ‘‘(B) REVIEW OF FINAL DESIGN.—The 

2 market monitor shall review the final auction 

3 design recommendations submitted under sub4 section (c)(2)(D) and, within one month of the 

5 release of such recommendations, provide public 

6 comment on them. 

7 ‘‘(C) MONITORING.— 

8 ‘‘(i) IN GENERAL.—The market mon9 itor shall provide ongoing monitoring of 

10 the performance of suppliers and the ef11 fects of the market pricing program to 

12 guard against the occurrence of any nega13 tive effects specified in subsection (d)(8). 

14 ‘‘(ii) PROVIDE TRANSPARENCY OF IN15 FORMATION.—The monitoring under 

16 clause (i) shall include public availability of 

17 the number of suppliers providing market 

18 priced items and services in an eligible 

19 auction area during each year of the oper20 ation of the market pricing program. 

21 ‘‘(D) BIANNUAL REPORTS TO SEC22 RETARY.—The market monitor shall provide bi23 annual reports to the Secretary in the initial 

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1 opment and operations of the market pricing 

2 program. In each report, the monitor shall— 

3 ‘‘(i) identify potential problems with 

4 the program; and 

5 ‘‘(ii) recommend solutions to problems 

6 so identified. 

7 ‘‘(E) ANNUAL REPORT.—The market mon8 itor shall provide an annual report to Congress 

9 on the operation and functioning of the market 

10 pricing program. Each such report shall include 

11 information on— 

12 ‘‘(i) potential problems with the pro13 gram; 

14 ‘‘(ii) recommended solutions to prob15 lems identified pursuant to subclause (I); 

16 ‘‘(iii) the appropriateness of HCPCS 

17 codes selected for auctions; 

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

19 individuals eligible for benefits under this 

20 part to obtain items and services subject to 

21 the market pricing program; 

22 ‘‘(v) any adverse health effects result23 ing from implementation of the program; 


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1 ‘‘(vi) any material deterioration in the 

2 quality of items and services provided 

3 under the program; 

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

5 prolonged hospitalizations due to lack of 

6 timely access to market priced items and 

7 services; and 

8 ‘‘(viii) any negative business con9 sequences to the supplier of any market 

10 priced items and services occurring as a re11 sult of errors made in the conduct of the 

12 program.’’. 

13 SEC. 5. APPLICATION OF EXISTING PROVISIONS. 

14 (a) REVISIONS TO PROGRAM ADVISORY AND OVER15 SIGHT COMMITTEE.—Section 1847(c) of the Social Secu16 rity Act (42 U.S.C. 1395w–3(c)) is amended— 

17 (1) in paragraph (1), by adding at the end the 

18 following: ‘‘The Secretary shall reconstitute the 

19 Committee and extend the terms of its members.’’; 

20 (2) in paragraph (3), by adding at the end the 

21 following new subparagraph: 

22 ‘‘(C) ADDITIONAL REPORT TO CON23 GRESS.—Not later than 1 year after the date of 

24 the appointment of the auction expert under 

25 section 1847C(g)(1), the Committee shall subVerDate Mar 15 2010 15:57 Apr 30, 2013 Jkt 029200 PO 00000 Frm 00050 Fmt 6652 Sfmt 6201 E:\BILLS\H1717.IH H1717

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•HR 1717 IH

1 mit to the Congress a report on the market 

2 pricing program established under section 

3 1847C. The report shall include information on 

4 the design of the market pricing program, ac5 cess to and quality of market priced items and 

6 services by beneficiaries under the program.’’; 

7 (3) by striking paragraph (4) (relating to 

8 FACA); and 

9 (4) in paragraph (5), by inserting before the pe10 riod at the end the following: ‘‘, except that the re11 constituted Committee shall terminate 2 years after 

12 the date of the appointment of the auction expert 

13 and the market monitor under section 

14 1847C(g)(1)’’. 

15 (b) NEGATIVE PRESSURE WOUND THERAPY STAND16 ARDS.—The Secretary of Health and Human Services, in 

17 consultation with relevant stakeholders (as defined in sec18 tion 1847C(c)(2)(A)(ii) of the Social Security Act, as 

19 added by section 4), shall develop standards for coverage 

20 and quality of negative pressure wound therapy items and 

21 services (within the meaning of section 

22 1847(a)(1)(D)(i)(IV) of such Act, 42 U.S.C. 1395w– 

23 3(a)(1)(D)(i)(IV)). 


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1 SEC. 6. ADDITIONAL BUDGETARY OFFSET. 

2 (a) IN GENERAL.—In addition to the payment reduc3 tions specified in the amendments made by section 

4 3(a)(1), unobligated balances of all discretionary appro5 priations for each fiscal year (beginning with fiscal year 

6 2013) are hereby rescinded in an amount equal to the 

7 amount necessary to make this Act budget neutral for 

8 such fiscal year. 

9 (b) IMPLEMENTATION.—The Director of the Office of 

10 Management and Budget shall determine and identify 

11 each account, program, project, and activity to which the 

12 rescission under subsection (a) shall apply and the amount 

13 of such rescission that shall apply to each such account, 

14 program, project and activity. Not later than 60 days after 

15 the date of the enactment of this Act, the Director of the 

16 Office of Management and Budget shall submit a report 

17 to the Secretary of the Treasury and to Congress of the 

18 accounts, programs, projects, activities, and amounts de19 termined and identified for rescission under the preceding 

20 sentence. 

21 (c) EXCEPTION.—This section shall not apply to ac22 counts, programs, projects and activities operated by the 

23 Department of Defense or the Department of Veteran’s 

24 Affairs. 

Æ 


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