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103D CONGRESS

1ST SESSION H. R. 475

To amend title XVIII of the Social Security Act to provide for improved

quality and cost control mechanisms to ensure the proper and prudent

purchasing of durable medical equipment under the medicare program,

and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 6, 1993

Mr. PANETTA introduced the following bill; which was referred jointly to the

Committees on Ways and Means, and Energy and Commerce

A BILL

To amend title XVIII of the Social Security Act to provide

for improved quality and cost control mechanisms to

ensure the proper and prudent purchasing of durable

medical equipment under the medicare program, 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,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Medicare Durable

5 Medical Equipment Patient Protection Act of 1993’’.
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1 SEC. 2. RESTRICTIONS ON CARRIERS.

2 (a) LIMIT ON NUMBER OF REGIONAL CARRIERS;

3 PROHIBITION AGAINST CARRIER FORUM SHOPPING.—

4 Section 1834(a)(12) of the Social Security Act (42 U.S.C.

5 1395m(a)(12)) is amended to read as follows:

6 ‘‘(12) USE OF CARRIERS TO PROCESS

7 CLAIMS.—

8 ‘‘(A) DESIGNATION OF REGIONAL CAR9 RIERS.—The Secretary may designate, by regu10 lation under section 1842, one carrier for one

11 or more entire regions (but not more than 5 for

12 all regions) to process all claims within the re13 gion for covered items under this section.

14 ‘‘(B) PROHIBITION AGAINST CARRIER

15 FORUM SHOPPING.—(i) No supplier of a cov16 ered item may present or cause to be presented

17 a claim for payment under this part unless such

18 claim is presented to the appropriate carrier.

19 ‘‘(ii) For purposes of clause (i), the term

20 ‘appropriate carrier’ means the carrier having

21 jurisdiction over the geographic area of the resi22 dence of the patient to whom the item is fur23 nished, except that—

24 ‘‘(I) in the case of a patient who re25 sides not more than 60 miles from a geo26 graphic area over which a second carrier
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1 has jurisdiction, such term may include the

2 second carrier;

3 ‘‘(II) in the case of a patient who, at

4 the time the item that is the subject of the

5 claim is furnished, is temporarily residing

6 in a geographic area other than the area of

7 the patient’s residence, such term may in8 clude the carrier having jurisdiction over

9 the geographic area in which the patient

10 temporarily resides; and

11 ‘‘(III) such term may include any

12 other carrier considered by the Secretary

13 to be the most appropriate carrier with re14 spect to the claim (based on the need to ef15 ficiently administer the processing of the

16 claim).’’.

17 (b) EFFECTIVE DATE.—The amendments made by

18 subsection (a) shall apply with respect to contracts with

19 carriers for items furnished on or after January 1, 1994.

20 SEC. 3. TREATMENT OF CERTAIN ITEMS AS COVERED

21 ITEMS; USING REASONABLE COST AS BASIS

22 FOR DETERMINING PAYMENT AMOUNTS.

23 (a) TREATMENT OF CERTAIN ITEMS AS COVERED

24 ITEMS.—
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1 (1) IN GENERAL.—Section 1861(n) of the So2 cial Security Act (42 U.S.C. 1395x(n)) is amended

3 by striking ‘‘iron lungs’’ and inserting ‘‘ostomy sup4 plies, tracheostomy supplies, urologicals, surgical

5 dressings and splints, casts, and other devices used

6 for reduction of fractures and dislocations, iron

7 lungs’’.

8 (2) TREATMENT AS INEXPENSIVE AND ROU9 TINELY PURCHASED ITEMS.—Section 1834(a)(2)(A)

10 of such Act (42 U.S.C. 1395m(a)(2)(A)) is amended

11 (A) by striking ‘‘or’’ at the end of clause

12 (i);

13 (B) by striking the comma at the end of

14 clause (ii) and inserting ‘‘, or’’; and

15 (C) by inserting after clause (ii) the follow16 ing new clause:

17 ‘‘(iii) which consists of an ostomy sup18 ply, tracheostomy supply, urological, or

19 surgical dressing or splint, cast, or other

20 device used for reduction of fractures and

21 dislocations,’’.

22 (3) CONFORMING AMENDMENTS.—(A) Section

23 1834(h)(4)(C) of such Act (42 U.S.C.

24 1395m(h)(4)(C)) is amended by striking ‘‘, catheter
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1 supplies’’ and all that follows through ‘‘ostomy care’’

2 and inserting ‘‘and catheter supplies’’.

3 (B) Section 1861(s) of such Act (42 U.S.C.

4 1395x(s)) is amended—

5 (i) by striking paragraph (5); and

6 (ii) in paragraph (9), by striking the semi7 colon at the end and inserting the following: ‘‘,

8 but not including ostomy supplies, tracheostomy

9 supplies, or urologicals;’’.

10 (4) EFFECTIVE DATE.—The amendments made

11 by this subsection shall apply to items furnished on

12 or after January 1, 1994.

13 (b) STUDY OF FEASIBILITY OF BASING PAYMENT

14 AMOUNTS ON REASONABLE COSTS.—

15 (1) STUDY.—The Secretary of Health and

16 Human Services, in consultation with carriers under

17 part B of the medicare program and representatives

18 of suppliers of durable medical equipment under the

19 program, shall conduct a study of the feasibility and

20 desirability of basing payment amounts for covered

21 items of durable medical equipment, prosthetic de22 vices, and orthotics and prosthetics under such pro23 gram on the reasonable costs of such items.

24 (2) REPORT.—Not later than January 1, 1995,

25 the Secretary shall submit a report on the study
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1 conducted under paragraph (1) to Congress, and

2 shall include in the report any recommendations con3 sidered appropriate by the Secretary for changes in

4 the manner in which payment amounts are deter5 mined under the medicare program for the items

6 that are the subject of the study.

7 (c) GUIDELINES FOR DETERMINING MEDICAL EF8 FECTIVENESS AND PERMITTING PAYMENT FOR UP9 GRADED ITEMS.—Not later than January 1, 1995, the

10 Secretary of Health and Human Services shall establish

11 and publish updated guidelines for carriers under part B

12 of the medicare program that describe the conditions

13 under which—

14 (1) covered items of durable medical equipment,

15 prosthetic devices, and orthotics and prosthetics

16 shall be considered medically effective when fur17 nished to an elderly patient and when furnished to

18 a disabled patient; and

19 (2) a supplier of such items may furnish a pa20 tient with an item in excess of or more expensive

21 than the standard version of the item for which pay22 ment may be made under the program.
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1 SEC. 4. CERTIFICATION AND DISCLOSURE REQUIREMENTS

2 FOR SUPPLIERS OF DURABLE MEDICAL

3 EQUIPMENT.

4 (a) MANDATORY SUPPLIER CERTIFICATION.—

5 (1) IN GENERAL.—Section 1834(a) of the So6 cial Security Act (42 U.S.C. 1395m(a)) is amended

7 by adding at the end the following new paragraph:

8 ‘‘(17) CERTIFICATION OF SUPPLIERS.—

9 ‘‘(A) IN GENERAL.—Notwithstanding any

10 other provision of this Act, no payment may be

11 made under this part for any covered item fur12 nished during a year (beginning with 1994) by

13 any supplier unless the Secretary certifies (or

14 has certified during the 4 years preceding the

15 year) that the supplier meets the certification

16 standards established under subparagraph (B).

17 ‘‘(B) ESTABLISHMENT OF STANDARDS.—

18 The Secretary shall establish and publish cer19 tification standards for suppliers on the basis of

20 such criteria as the Secretary considers appro21 priate, and shall include in the standards a re22 quirement that the supplier furnish the Sec23 retary with the following information:

24 ‘‘(i) Whether the items furnished by

25 the supplier are purchased, warehoused,
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1 and shipped directly by the supplier or

2 under arrangements with other suppliers.

3 ‘‘(ii) The identity of subcontracting or

4 subsidiary entities or entities with which

5 the provider is doing business which are

6 advertising or marketing firms directly or

7 indirectly involved in furnishing covered

8 items to individuals entitled to benefits

9 under this title.

10 ‘‘(iii) A description of all items and

11 services furnished by the supplier to indi12 viduals eligible for benefits under this title

13 and to providers of services or other enti14 ties furnishing items and services for which

15 payment may be made under this title.

16 ‘‘(iv) A list of all States and counties

17 in which individuals reside to whom the

18 supplier furnishes items or services for

19 which payment is made under this title or

20 under a State plan for medical assistance

21 under title XIX.

22 ‘‘(v) Any additional information the

23 Secretary considers appropriate.

24 ‘‘(C) FEES AUTHORIZED FOR CERTIFI25 CATION.—The Secretary of Health and Human
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1 Services may require a supplier to make a pay2 ment of an administrative fee (not to exceed

3 $100) with respect to a certification or renewal

4 of a certification under this paragraph. Any

5 fees collected by the Secretary pursuant to this

6 subparagraph shall be deposited in the Federal

7 Supplementary Medical Insurance Trust Fund

8 and shall be available only for the administra9 tion of this part.

10 ‘‘(D) WAIVER OF REQUIREMENTS FOR

11 CERTAIN SUPPLIERS.—The Secretary may

12 waive or modify any of the certification stand13 ards established under subparagraph (B) or the

14 payment of a fee required under subparagraph

15 (C) with respect to a supplier if the Secretary

16 determines that the majority of the items fur17 nished by the supplier are inexpensive or rou18 tinely purchased items under paragraph (2) or

19 that less than 25 percent of the supplier’s an20 nual gross revenues is attributable to the fur21 nishing of covered items under this title.’’.

22 (2) CONFORMING AMENDMENT.—Section

23 1834(h)(3) of such Act (42 U.S.C. 1395m(h)(3)) is

24 amended by striking ‘‘Paragraph (12)’’ and insert25 ing ‘‘Paragraphs (12) and (17)’’.
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1 (b) PROHIBITION AGAINST ISSUANCE OF MULTIPLE

2 PROVIDER NUMBERS.—Section 1834(a)(12) of such Act

3 (42 U.S.C. 1395m(a)(12)), as amended by section 2(a),

4 is further amended by adding at the end the following new

5 subparagraph:

6 ‘‘(C) PROHIBITION AGAINST ISSUANCE OF

7 MULTIPLE PROVIDER NUMBERS.—A carrier

8 may not issue more than one provider number

9 to a supplier of a covered item unless the issu10 ance of multiple provider numbers is appro11 priate because of significant differences among

12 the items the supplier furnishes or the geo13 graphic regions the provider serves. Nothing in

14 the previous sentence shall be construed to pro15 hibit a carrier from issuing a new provider

16 number to a supplier to replace an inactive or

17 obsolete provider number.’’.

18 (c) LIMITATION ON EMPLOYMENT RELATIONSHIPS

19 CONSIDERED BONA FIDE FOR EXEMPTION FROM ANTI20 KICKBACK REQUIREMENTS.—Section 1128B(b)(3)(B) of

21 such Act (42 U.S.C. 1320a–7b(b)(3)(B)) is amended by

22 striking the semicolon at the end and inserting the follow23 ing: ‘‘, except that any employment relationship between

24 an employee of a nursing facility and a supplier of covered

25 items under section 1834(a) or items described in section
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1 1834(h) shall not be considered a bona fide employment

2 relationship for purposes of this subparagraph;’’.

3 (d) EFFECTIVE DATE.—The amendments made by

4 this section shall apply with respect to items or services

5 furnished on or after January 1, 1994.

6 SEC. 5. PRIOR APPROVAL AUTHORIZED FOR ITEMS FUR7 NISHED BY SUPPLIERS ENGAGED IN FRAUD

8 OR OTHER ABUSIVE PRACTICES.

9 (a) IN GENERAL.—Section 1834(a) of the Social Se10 curity Act (42 U.S.C. 1395m(a)), as amended by section

11 4(a), is further amended by adding at the end the follow12 ing new paragraph:

13 ‘‘(18) CARRIER DETERMINATIONS OF ITEMS

14 FURNISHED BY CERTAIN SUPPLIERS IN ADVANCE.—

15 ‘‘(A) DEVELOPMENT OF LIST OF SUPPLI16 ERS BY SECRETARY.—The Secretary shall de17 velop and periodically update a list of suppliers

18 that the Secretary determines (on the basis of

19 criteria developed and published by the Sec20 retary in consultation with representatives of

21 suppliers, which may include prior payment ex22 perience)—

23 ‘‘(i) have engaged in activities which

24 make the suppliers subject to a civil mone-
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1 tary penalty under section 1128A or to a

2 criminal penalty under section 1128B;

3 ‘‘(ii) have furnished a substantial

4 number of items for which payment was

5 not made because of the application of sec6 tion 1862(a)(1); or

7 ‘‘(iii) have engaged in a pattern of

8 overutilization of items.

9 ‘‘(B) DETERMINATIONS OF COVERAGE IN

10 ADVANCE.—A carrier shall determine in ad11 vance whether payment for an item furnished

12 by a supplier included on the list developed by

13 the Secretary under subparagraph (A) may not

14 be made because of the application of section

15 1862(a)(1).’’.

16 (b) CONFORMING AMENDMENT.—Section 1834(h)(3)

17 of such Act (42 U.S.C. 1395m(h)(3)), as amended by sec18 tion 4(a)(2), is amended by striking ‘‘(12) and (17)’’ and

19 inserting ‘‘(12), (15), (17), and (18)’’.

20 (c) EFFECTIVE DATE.—The amendments made by

21 this section shall apply to items and services furnished on

22 or after January 1, 1994.
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1 SEC. 6. STUDY OF IMPACT OF REFORMS ON ACCESS TO

2 AND COSTS OF DURABLE MEDICAL EQUIP3 MENT FOR MEDICARE BENEFICIARIES.

4 (a) STUDY.—

5 (1) IN GENERAL.—The Comptroller General

6 shall conduct a study of the impact of the amend7 ments made by this Act on the access of individuals

8 enrolled under part B of the medicare program to

9 items of durable medical equipment under the pro10 gram and the costs imposed on such individuals

11 under the program for such items, and shall include

12 in the study an analysis of the impact of the amend13 ments on individuals enrolled under part B of the

14 program who reside in rural areas.

15 (2) DURABLE MEDICAL EQUIPMENT DE16 FINED.—For purposes of paragraph (1), the term

17 ‘‘durable medical equipment’’ means covered items

18 under section 1834(a) of the Social Security Act and

19 items described in section 1834(h) of such Act.

20 (b) REPORT.—Not later than January 1, 1995, the

21 Comptroller General shall submit a report to Congress on

22 the study conducted under subsection (a), and shall in23 clude in the report any recommendations considered ap24 propriate for legislative or regulatory changes to improve

25 the access of medicare beneficiaries to items of durable

26 medical equipment and to control the costs imposed on
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1 beneficiaries for such items under the medicare program,

2 including recommendations to impose maximum allowable

3 limits on the amounts suppliers of such items may charge

4 beneficiaries in the same manner as the limits imposed

5 under the program on the amounts physicians may charge

6 beneficiaries for physicians’ services.

7 SEC. 7. STUDY OF ITEMS FURNISHED TO RESIDENTS OF

8 NURSING FACILITIES.

9 (a) STUDY.—

10 (1) IN GENERAL.—The Comptroller General

11 shall conduct a study of the types, volume, and utili12 zation of items of durable medical equipment fur13 nished under part B of the medicare program to in14 dividuals residing in skilled nursing facilities and in15 termediate care facilities, and shall include in the

16 study an analysis of the need to apply additional

17 controls on the utilization of such items by such in18 dividuals.

19 (2) DURABLE MEDICAL EQUIPMENT DE20 FINED.—For purposes of paragraph (1), the term

21 ‘‘durable medical equipment’’ means covered items

22 under section 1834(a) of the Social Security Act and

23 items described in section 1834(h) of such Act.
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1 (b) REPORT.—Not later than January 1, 1995, the

2 Comptroller General shall submit a report to Congress on

3 the study conducted under subsection (a).

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