II

107TH CONGRESS

1ST SESSION S. 1066

To amend title XVIII of the Social Security Act to establish procedures

for determining payment amounts for new clinical diagnostic laboratory

tests for which payment is made under the medicare program.

IN THE SENATE OF THE UNITED STATES

JUNE 20, 2001

Mr. HATCH (for himself and Mr. KERRY) introduced the following bill; which

was read twice and referred to the Committee on Finance

A BILL

To amend title XVIII of the Social Security Act to establish

procedures for determining payment amounts for new

clinical diagnostic laboratory tests for which payment

is made under the medicare program.

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 Patient Ac5 cess to Preventive and Diagnostic Tests Act’’.
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1 SEC. 2. CODING AND PAYMENT PROCEDURES FOR NEW

2 CLINICAL DIAGNOSTIC LABORATORY TESTS

3 UNDER MEDICARE.

4 (a) DETERMINING PAYMENT BASIS FOR NEW LAB

5 TESTS.—Section 1833(h) of the Social Security Act (42

6 U.S.C. 1395l(h)) is amended by adding at the end the fol7 lowing new paragraph:

8 ‘‘(9)(A) The Secretary shall establish procedures for

9 determining the basis for, and amount of, payment under

10 this subsection for any clinical diagnostic laboratory test

11 with respect to which a new or substantially revised

12 HCPCS code is assigned on or after January 1, 2002 (in

13 this subsection referred to as ‘new tests’). Such procedures

14 shall provide that—

15 ‘‘(i) the payment amount for such a test will be

16 established only on—

17 ‘‘(I) the basis described in paragraph

18 (10)(A); or

19 ‘‘(II) the basis described in paragraph

20 (10)(B); and

21 ‘‘(ii) the Secretary shall determine whether the

22 payment amount for such a test is established on the

23 basis described in paragraph (10)(A) or the basis

24 described in paragraph (10)(B) only after the proc25 ess described in subparagraph (B) has been com26 pleted with respect to such test.
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1 ‘‘(B) Determinations under subparagraph (A)(ii)

2 shall be made only after the Secretary—

3 ‘‘(i) makes available to the public (through an

4 Internet site and other appropriate mechanisms) a

5 list that includes any such test for which the estab6 lishment of a payment amount under paragraph

7 (10) is being considered for a year;

8 ‘‘(ii) on the same day such list is made avail9 able, causes to have published in the Federal Reg10 ister notice of a meeting to receive comments and

11 recommendations from the public on the appropriate

12 basis under paragraph (10) for establishing payment

13 amounts for the tests on such list;

14 ‘‘(iii) not less than 30 calendar days after publi15 cation of such notice, convenes a meeting to receive

16 such comments and recommendations, with such

17 meeting—

18 ‘‘(I) including representatives of each enti19 ty within the Health Care Financing Adminis20 tration (in this paragraph referred to as

21 ‘HCFA’) that will be involved in determining

22 the basis on which payment amounts will be es23 tablished for such tests under paragraph (10)

24 and implementing such determinations;
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1 ‘‘(II) encouraging the participation of in2 terested parties, including beneficiaries, device

3 manufacturers, clinical laboratories, laboratory

4 professionals, pathologists, and prescribing phy5 sicians, through outreach activities; and

6 ‘‘(III) affording opportunities for inter7 active dialogue between representatives of

8 HCFA and the public;

9 ‘‘(iv) makes minutes of such meeting available

10 to the public (through an Internet site and other ap11 propriate mechanisms) not later than 15 calendar

12 days after such meeting;

13 ‘‘(v) taking into account the comments and rec14 ommendations received at such meeting, develops

15 and makes available to the public (through an Inter16 net site and other appropriate mechanisms) a list of

17 proposed determinations with respect to the appro18 priate basis for establishing a payment amount

19 under paragraph (10) for each such code, together

20 with an explanation of the reasons for each such de21 termination, and the data on which the determina22 tion is based;

23 ‘‘(vi) on the same day such list is made avail24 able, causes to have published in the Federal Reg25 ister notice of a public meeting to receive comments
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1 and recommendations from the public on the pro2 posed determinations;

3 ‘‘(vii) not later than August 1 of each year, but

4 at least 30 calendar days after publication of such

5 notice, convenes a meeting to receive such comments

6 and recommendations, with such meeting being con7 ducted in the same manner as the meeting under

8 clause (iii);

9 ‘‘(viii) makes a transcript of such meeting avail10 able to the public (through an Internet site and

11 other appropriate mechanisms) as soon as is prac12 ticable after such meeting; and

13 ‘‘(ix) taking into account the comments and

14 recommendations received at such meeting, develops

15 and makes available to the public (through an Inter16 net site and other appropriate mechanisms) a list of

17 final determinations of whether the payment amount

18 for such tests will be determined on the basis de19 scribed in paragraph (10)(A) or the basis described

20 in paragraph (10)(B), together with the rationale for

21 each such determination, the data on which the de22 termination is based, and responses to comments

23 and suggestions received from the public.

24 ‘‘(C) Under the procedures established pursuant to

25 subparagraph (A), the Secretary shall—
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1 ‘‘(i) identify the rules and assumptions to be

2 applied by the Secretary in considering and making

3 determinations of whether the payment amount for

4 a new test should be established on the basis de5 scribed in paragraph (10)(A) or the basis described

6 in paragraph (10)(B);

7 ‘‘(ii) make available to the public the data

8 (other than proprietary data) considered in making

9 such determinations; and

10 ‘‘(iii) provide for a mechanism under which—

11 ‘‘(I) an interested party may request an

12 administrative review of an adverse determina13 tion;

14 ‘‘(II) upon the request of an interested

15 party, an administrative review is conducted

16 with respect to an adverse determination; and

17 ‘‘(III) such determination is revised, as

18 necessary, to reflect the results of such review.

19 ‘‘(D) For purposes of this subsection—

20 ‘‘(i) the term ‘HCPCS’ refers to the Health

21 Care Financing Administration Common Procedure

22 Coding System; and

23 ‘‘(ii) a code shall be considered to be ‘substan24 tially revised’ if there is a substantive change to the

25 definition of the test or procedure to which the code
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1 applies (such as a new analyte or a new methodology

2 for measuring an existing analyte-specific test).

3 ‘‘(10)(A) Notwithstanding paragraphs (1), (2), and

4 (4), if a new test is clinically similar to a test for which

5 a fee schedule amount has been established under para6 graph (5), the Secretary shall pay the same fee schedule

7 amount for the new test.

8 ‘‘(B)(i) Notwithstanding paragraphs (1), (2), (4),

9 and (5), if a new test is not clinically similar to a test

10 for which a fee schedule has been established under para11 graph (5), payment under this subsection for such test

12 shall be made on the basis of the lesser of—

13 ‘‘(I) the actual charge for the test; or

14 ‘‘(II) an amount equal to 60 percent (or in the

15 case of a test performed by a qualified hospital (as

16 defined in paragraph (1)(D)) for outpatients of such

17 hospital, 62 percent) of the prevailing charge level

18 determined pursuant to the third and fourth sen19 tences of section 1842(b)(3) for the test for a local20 ity or area for the year (determined without regard

21 to the year referred to in paragraph (2)(A)(i), or

22 any national limitation amount under paragraph

23 (4)(B), and adjusted annually by the percentage in24 crease or decrease under paragraph (2)(A)(i));
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1 until the beginning of the third full calendar year that be2 gins on or after the date on which an HCPCS code is

3 first assigned with respect to such test, or, if later, the

4 beginning of the first calendar year that begins on or after

5 the date on which the Secretary determines that there are

6 sufficient claims data to establish a fee schedule amount

7 pursuant to clause (ii).

8 ‘‘(ii) Notwithstanding paragraphs (2), (4), and (5),

9 the fee schedule amount for a clinical diagnostic labora10 tory test described in clause (i) that is performed—

11 ‘‘(I) during the first calendar year after clause

12 (i) ceases to apply to such test, shall be an amount

13 equal to the national limitation amount that the Sec14 retary determines (consistent with clause (iii)) would

15 have applied to such test under paragraph

16 (4)(B)(viii) during the preceding calendar year, ad17 justed by the percentage increase or decrease deter18 mined under paragraph (2)(A)(i) for such first cal19 endar year; and

20 ‘‘(II) during a subsequent year, is the fee

21 schedule amount determined under this clause for

22 the preceding year, adjusted by the percentage in23 crease or decrease that applies under paragraph

24 (5)(A) for such year.
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1 ‘‘(iii) For purposes of clause (ii)(I), the national limi2 tation amount for a test shall be set at 100 percent of

3 the median of the payment amounts determined under

4 clause (ii)(I) for all payment localities or areas for the last

5 calendar year for which payment for such test was deter6 mined under clause (i).

7 ‘‘(iv) Nothing in clause (ii) shall be construed as pro8 hibiting the Secretary from applying (or authorizing the

9 application of) the comparability provisions of the first

10 sentence of such section 1842(b)(3) with respect to

11 amounts determined under such clause.’’.

12 (b) ESTABLISHMENT OF NATIONAL FEE SCHEDULE

13 AMOUNTS.—

14 (1) IN GENERAL.—Section 1833(h) of the So15 cial Security Act, as amended by subsection (a), is

16 amended—

17 (A) in paragraph (2), by striking ‘‘para18 graph (4)’’ and inserting ‘‘paragraphs (4), (5),

19 and (10)’’;

20 (B) in paragraph (4)(B)(viii), by inserting

21 ‘‘and before January 1, 2002,’’ after ‘‘Decem22 ber 31, 1997,’’;

23 (C) by redesignating paragraphs (5), (6),

24 and (7), as paragraphs (6), (7), and (8), re25 spectively; and
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1 (D) by inserting after paragraph (4) the

2 following new paragraph:

3 ‘‘(5) Notwithstanding paragraphs (2) and (4), the

4 Secretary shall set the fee schedule amount for a test

5 (other than a test to which paragraph (10)(B) applies)

6 at—

7 ‘‘(A) for tests performed during 2002, an

8 amount equal to the national limitation amount for

9 that test for 2001, and adjusted by the percentage

10 increase or decrease determined under paragraph

11 (2)(A)(i) for such year; and

12 ‘‘(B) for tests performed during a year after

13 2002, the amount determined under this subpara14 graph for the preceding year, adjusted by the per15 centage increase or decrease determined under para16 graph (2)(A)(i) for such year.’’.

17 (2) CONFORMING AMENDMENTS.—Paragraphs

18 (1)(D)(i) and (2)(D)(i) of section 1833(a) of the So19 cial Security Act (42 U.S.C. 1395l(a)) are each

20 amended by striking ‘‘the limitation amount for that

21 test determined under subsection (h)(4)(B),’’.

22 (c) MECHANISM FOR REVIEW OF ADEQUACY OF PAY23 MENT AMOUNTS.—Section 1833(h) of the Social Security

24 Act (42 U.S.C. 1395l(h)), as amended by subsection (b),

25 is amended by adding at the end the following:
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1 ‘‘(11) The Secretary shall establish a mechanism

2 under which—

3 ‘‘(A) an interested party may request a timely

4 review of the adequacy of the existing payment

5 amount under this subsection for a particular test;

6 and

7 ‘‘(B) upon the receipt of such a request, a time8 ly review is carried out.’’.

9 (d) USE OF INHERENT REASONABLENESS AUTHOR10 ITY.—Section 1842(b)(8) of the Social Security Act (42

11 U.S.C. 1395u(b)(8)) is amended by adding at the end the

12 following:

13 ‘‘(E)(i) The Secretary may not delegate the authority

14 to make determinations with respect to clinical diagnostic

15 laboratory tests under this paragraph to a regional office

16 of the Health Care Financing Administration or to an en17 tity with a contract under subsection (a).

18 ‘‘(ii) In making determinations with respect to clin19 ical diagnostic laboratory tests under this paragraph, the

20 Secretary—

21 ‘‘(I) shall base such determinations on data

22 from affected payment localities and all sites of care;

23 and

24 ‘‘(II) may not use a methodology that assigns

25 undue weight to the prevailing charge levels for any
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1 1 type of entity with a contract under subsection

2 (a).’’.

3 (e) PROHIBITION.—Section 1833(h) of the Social Se4 curity Act (42 U.S.C. 1395l(h)), as amended by sub5 section (c), is amended by adding at the end the following

6 new paragraph:

7 ‘‘(12)(1) Notwithstanding the preceding provisions of

8 this subsection, the Secretary may not establish a payment

9 level for a new test that is lower than the level for an

10 existing, clinically similar test solely on the basis that the

11 new test may be performed by a laboratory with a certifi12 cate of waiver under section 353(d)(2) of the Public

13 Health Service Act (42 U.S.C. 263a(d)(2)).

14 ‘‘(2) Nothing in paragraph (1) shall be construed to

15 limit the authority of the Secretary to establish a payment

16 level for a new test that is lower than the level for an

17 existing, clinically similar test if such payment level is de18 termined on a basis other than the basis described in such

19 paragraph or on more than 1 basis.’’.

20 (f) EFFECTIVE DATES.—

21 (1) ESTABLISHMENT OF PROCEDURES.—The

22 Secretary of Health and Human Services shall es23 tablish the procedures required to implement para24 graphs (9), (10), (11), and (12) of section 1833(h)

25 of the Social Security Act (42 U.S.C. 1395l(h)), as
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1 added by this section, by not later than January 1,

2 2002.

3 (2) INHERENT REASONABLENESS.—The

4 amendments made by subsection (d) shall apply to

5 determinations made on or after the date of enact6 ment of this Act.

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