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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3144 Introduced in Senate (IS)]

110th CONGRESS
  2d Session
                                S. 3144

To amend part B of title XVIII of the Social Security Act to delay and 
  reform the Medicare competitive acquisition program for purchase of 
    durable medical equipment, prosthetics, orthotics, and supplies.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             June 17, 2008

Mr. Baucus (for himself, Mr. Grassley, Ms. Stabenow, Mr. Voinovich, Mr. 
Salazar, Mr. Roberts, Mr. Brown, Mr. Smith, Mr. Casey, Ms. Collins, Mr. 
Levin, Mrs. Dole, Mr. Lieberman, Mr. Isakson, Mr. Wyden, Mr. Burr, Mr. 
Dodd, Ms. Snowe, Mr. Sanders, Mr. Hatch, Ms. Cantwell, Mr. Cardin, Mr. 
 Schumer, Mrs. Clinton, Ms. Mikulski, and Mrs. Lincoln) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL

 
To amend part B of title XVIII of the Social Security Act to delay and 
  reform the Medicare competitive acquisition program for purchase of 
    durable medical equipment, prosthetics, orthotics, and supplies.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare DMEPOS Competitive 
Acquisition Reform Act of 2008''.

SEC. 2. DELAY IN AND REFORM OF MEDICARE DMEPOS COMPETITIVE ACQUISITION 
              PROGRAM.

    (a) Temporary Delay and Reform.--
            (1) In general.--Section 1847(a)(1) of the Social Security 
        Act (42 U.S.C. 1395w-3(a)(1)) is amended--
                    (A) in paragraph (1)--
                            (i) in subparagraph (B)(i), in the matter 
                        before subclause (I), by inserting ``consistent 
                        with subparagraph (D)'' after ``in a manner'';
                            (ii) in subparagraph (B)(i)(II), by 
                        striking ``80'' and ``in 2009'' and inserting 
                        ``an additional 70'' and ``in 2011'', 
                        respectively;
                            (iii) in subparagraph (B)(i)(III), by 
                        striking ``after 2009'' and inserting ``after 
                        2011 (or, in the case of national mail order 
                        for items and services, after 2010)''; and
                            (iv) by adding at the end the following new 
                        subparagraphs:
                    ``(D) Changes in competitive acquisition 
                programs.--
                            ``(i) Round 1 of competitive acquisition 
                        program.--Notwithstanding subparagraph 
                        (B)(i)(I) and in implementing the first round 
                        of the competitive acquisition programs under 
                        this section--
                                    ``(I) the contracts awarded under 
                                this section before the date of the 
                                enactment of this subparagraph are 
                                terminated, no payment shall be made 
                                under this title on or after the date 
                                of the enactment of this subparagraph 
                                based on such a contract, and, to the 
                                extent that any damages may be 
                                applicable as a result of the 
                                termination of such contracts, such 
                                damages shall be payable from the 
                                Federal Supplementary Medical Insurance 
                                Trust Fund under section 1841;
                                    ``(II) the Secretary shall conduct 
                                the competition for such round in a 
                                manner so that it occurs in 2009 with 
                                respect to the same items and services 
                                and the same areas, except as provided 
                                in subclauses (III) and (IV);
                                    ``(III) the Secretary shall exclude 
                                Puerto Rico so that such round of 
                                competition covers 9, instead of 10, of 
                                the largest metropolitan statistical 
                                areas; and
                                    ``(IV) there shall be excluded 
                                negative pressure wound therapy items 
                                and services.
                        Nothing in subclause (I) shall be construed to 
                        provide an independent cause of action or right 
                        to administrative or judicial review with 
                        regard to the termination provided under such 
                        subclause.
                            ``(ii) Round 2 of competitive acquisition 
                        program.--In implementing the second round of 
                        the competitive acquisition programs under this 
                        section described in subparagraph (B)(i)(II)--
                                    ``(I) the metropolitan statistical 
                                areas to be included shall be those 
                                metropolitan statistical areas selected 
                                by the Secretary for such round as of 
                                June 1, 2008; and
                                    ``(II) the Secretary may subdivide 
                                metropolitan statistical areas with 
                                populations (based upon the most recent 
                                data from the Census Bureau) of at 
                                least 8,000,000 into separate areas for 
                                competitive acquisition purposes.
                            ``(iii) Exclusion of certain areas in 
                        subsequent rounds of competitive acquisition 
                        programs.--In implementing subsequent rounds of 
                        the competitive acquisition programs under this 
                        section, including under subparagraph 
                        (B)(i)(III), for competitions occurring before 
                        2015, the Secretary shall exempt from the 
                        competitive acquisition program (other than 
                        national mail order) the following:
                                    ``(I) Rural areas.
                                    ``(II) Metropolitan statistical 
                                areas not selected under round 1 or 
                                round 2 with a population of less than 
                                250,000.
                                    ``(III) Areas with a low population 
                                density within a metropolitan 
                                statistical area that is otherwise 
                                selected, as determined for purposes of 
                                paragraph (3)(A).
                    ``(E) Verification by oig.--The Inspector General 
                of the Department of Health and Human Services shall, 
                through post-award audit, survey, or otherwise, assess 
                the process used by the Centers for Medicare & Medicaid 
                Services to conduct competitive bidding and subsequent 
                pricing determinations under this section that are the 
                basis for pivotal bid amounts and single payment 
                amounts for items and services in competitive bidding 
                areas under rounds 1 and 2 of the competitive 
                acquisition programs under this section and may 
                continue to verify such calculations for subsequent 
                rounds of such programs.
                    ``(F) Supplier feedback on missing financial 
                documentation.--
                            ``(i) In general.--In the case of a bid 
                        where one or more covered documents in 
                        connection with such bid have been submitted 
                        not later than the covered document review date 
                        specified in clause (ii), the Secretary--
                                    ``(I) shall provide, by not later 
                                than 45 days (in the case of the first 
                                round of the competitive acquisition 
                                programs as described in subparagraph 
                                (B)(i)(I)) or 90 days (in the case of a 
                                subsequent round of such programs) 
                                after the covered document review date, 
                                for notice to the bidder of all such 
                                documents that are missing as of the 
                                covered document review date; and
                                    ``(II) may not reject the bid on 
                                the basis that any covered document is 
                                missing or has not been submitted on a 
                                timely basis, if all such missing 
                                documents identified in the notice 
                                provided to the bidder under subclause 
                                (I) are submitted to the Secretary not 
                                later than 10 business days after the 
                                date of such notice.
                            ``(ii) Covered document review date.--The 
                        covered document review date specified in this 
                        clause with respect to a competitive 
                        acquisition program is the later of--
                                    ``(I) the date that is 30 days 
                                before the final date specified by the 
                                Secretary for submission of bids under 
                                such program; or
                                    ``(II) the date that is 30 days 
                                after the first date specified by the 
                                Secretary for submission of bids under 
                                such program.
                            ``(iii) Limitations of process.--The 
                        process provided under this subparagraph--
                                    ``(I) applies only to the timely 
                                submission of covered documents;
                                    ``(II) does not apply to any 
                                determination as to the accuracy or 
                                completeness of covered documents 
                                submitted or whether such documents 
                                meet applicable requirements;
                                    ``(III) shall not prevent the 
                                Secretary from rejecting a bid based on 
                                any basis not described in clause 
                                (i)(II); and
                                    ``(IV) shall not be construed as 
                                permitting a bidder to change bidding 
                                amounts or to make other changes in a 
                                bid submission.
                            ``(iv) Covered document defined.--In this 
                        subparagraph, the term `covered document' means 
                        a financial, tax, or other document required to 
                        be submitted by a bidder as part of an original 
                        bid submission under a competitive acquisition 
                        program in order to meet required financial 
                        standards. Such term does not include other 
                        documents, such as the bid itself or 
                        accreditation documentation.''; and
                    (B) in paragraph (2)(A), by inserting before the 
                period at the end the following: ``and excluding 
                certain complex rehabilitative power wheelchairs 
                recognized by the Secretary as classified within group 
                3 or higher (and related accessories when furnished in 
                connection with such wheelchairs)''.
            (2) Budget neutral offset.--
                    (A) In general.--Section 1834(a)(14) of such Act 
                (42 U.S.C. 1395m(a)(14)) is amended--
                            (i) by striking ``and'' at the end of 
                        subparagraphs (H) and (I);
                            (ii) by redesignating subparagraph (J) as 
                        subparagraph (M); and
                            (iii) by inserting after subparagraph (I) 
                        the following new subparagraphs:
                    ``(J) for 2009--
                            ``(i) in the case of items and services 
                        furnished in any geographic area, if such items 
                        or services were selected for competitive 
                        acquisition in any area under the competitive 
                        acquisition program under section 
                        1847(a)(1)(B)(i)(I) before July 1, 2008, 
                        including diabetic supplies but only if 
                        furnished through mail order, - 9.5 percent; or
                            ``(ii) in the case of other items and 
                        services, the percentage increase in the 
                        consumer price index for all urban consumers 
                        (U.S. urban average) for the 12-month period 
                        ending with June 2008;
                    ``(K) for 2010, 2011, 2012, and 2013, the 
                percentage increase in the consumer price index for all 
                urban consumers (U.S. urban average) for the 12-month 
                period ending with June of the previous year;
                    ``(L) for 2014--
                            ``(i) in the case of items and services 
                        described in subparagraph (J)(i) for which a 
                        payment adjustment has not been made under 
                        subsection (a)(1)(F)(ii) in any previous year, 
                        the percentage increase in the consumer price 
                        index for all urban consumers (U.S. urban 
                        average) for the 12-month period ending with 
                        June 2013, plus 2.0 percentage points; or
                            ``(ii) in the case of other items and 
                        services, the percentage increase in the 
                        consumer price index for all urban consumers 
                        (U.S. urban average) for the 12-month period 
                        ending with June 2013; and''.
                    (B) Conforming treatment for certain items and 
                services.--The second sentence of section 1842(s)(1) of 
                such Act (42 U.S.C. 1395u(s)(1)) is amended by striking 
                ``except that'' and all that follows and inserting the 
                following: ``except that for items and services 
                described in paragraph (2)(D)--
            ``(A) for 2009 section 1834(a)(14)(J)(i) shall apply under 
        this paragraph instead of the percentage increase otherwise 
        applicable; and
            ``(B) for 2014, if subparagraph (A) applied to the items 
        and services and there has not been a payment adjustment under 
        subsection (h)(1)(H) for the items and services for any 
        previous year, the percentage increase computed under section 
        1834(a)(14)(L)(i) shall apply instead of the percentage 
        increase otherwise applicable.''.
            (3) Conforming delay.--Subsections (a)(1)(F) and (h)(1)(H) 
        of section 1834 of the Social Security Act (42 U.S.C. 1395m) 
        are each amended by striking ``January 1, 2009'' and inserting 
        ``January 1, 2011''.
            (4) Considerations in application.--Section 1834 of such 
        Act (42 U.S.C. 1395m) is amended--
                    (A) in subsection (a)(1)--
                            (i) in subparagraph (F), by inserting 
                        ``subject to subparagraph (G),'' before ``that 
                        are included''; and
                            (ii) by adding at the end the following new 
                        subparagraph:
                    ``(G) Use of information on competitive bid 
                rates.--The Secretary shall specify by regulation the 
                methodology to be used in applying the provisions of 
                subparagraph (F)(ii) and subsection (h)(1)(H)(ii). In 
                promulgating such regulation, the Secretary shall 
                consider the costs of items and services in areas in 
                which such provisions would be applied compared to the 
                payment rates for such items and services in 
                competitive acquisition areas.''; and
                    (B) in subsection (h)(1)(H), by inserting ``subject 
                to subsection (a)(1)(G),'' before ``that are 
                included''.
    (b) Quality Standards.--
            (1) Application of accreditation requirement.--
                    (A) In general.--Section 1834(a)(20) of the Social 
                Security Act (42 U.S.C. 1395m(a)(20)) is amended--
                            (i) in subparagraph (E), by inserting 
                        ``including subparagraph (F),'' after ``under 
                        this paragraph,''; and
                            (ii) by adding at the end the following new 
                        subparagraph:
                    ``(F) Application of accreditation requirement.--In 
                implementing quality standards under this paragraph--
                            ``(i) subject to clause (ii), the Secretary 
                        shall require suppliers furnishing items and 
                        services described in subparagraph (D) on or 
                        after October 1, 2009, directly or as a 
                        subcontractor for another entity, to have 
                        submitted to the Secretary evidence of 
                        accreditation by an accreditation organization 
                        designated under subparagraph (B) as meeting 
                        applicable quality standards; and
                            ``(ii) in applying such standards and the 
                        accreditation requirement of clause (i) with 
                        respect to eligible professionals (as defined 
                        in section 1848(k)(3)(B)), and including such 
                        other persons, such as orthotists and 
                        prosthetists, as specified by the Secretary, 
                        furnishing such items and services--
                                    ``(I) such standards and 
                                accreditation requirement shall not 
                                apply to such professionals and persons 
                                unless the Secretary determines that 
                                the standards being applied are 
                                designed specifically to be applied to 
                                such professionals and persons; and
                                    ``(II) the Secretary may exempt 
                                such professionals and persons from 
                                such standards and requirement if the 
                                Secretary determines that licensing, 
                                accreditation, or other mandatory 
                                quality requirements apply to such 
                                professionals and persons with respect 
                                to the furnishing of such items and 
                                services.''.
                    (B) Construction.--Section 1834(a)(20)(F)(ii) of 
                the Social Security Act, as added by subparagraph (A), 
                shall not be construed as preventing the Secretary of 
                Health and Human Services from implementing the first 
                round of competition under section 1847 of such Act on 
                a timely basis.
            (2) Disclosure of subcontractors under competitive 
        acquisition program.--Section 1847(b)(3) of such Act (42 U.S.C. 
        1395w-3(b)(3)) is amended by adding at the end the following 
        new subparagraph:
                    ``(C) Disclosure of subcontractors.--
                            ``(i) Initial disclosure.--Not later than 
                        10 days after the date a supplier enters into a 
                        contract with the Secretary under this section, 
                        such supplier shall disclose to the Secretary, 
                        in a form and manner specified by the 
                        Secretary, the information on--
                                    ``(I) each subcontracting 
                                relationship that such supplier has in 
                                furnishing items and services under the 
                                contract; and
                                    ``(II) whether each such 
                                subcontractor meets the requirement of 
                                section 1834(a)(20)(F)(i), if 
                                applicable to such subcontractor.
                            ``(ii) Subsequent disclosure.--Not later 
                        than 10 days after such a supplier subsequently 
                        enters into a subcontracting relationship 
                        described in clause (i)(II), such supplier 
                        shall disclose to the Secretary, in such form 
                        and manner, the information described in 
                        subclauses (I) and (II) of clause (i).''.
            (3) Competitive acquisition ombudsman.--Such section is 
        further amended by adding at the end the following new 
        subsection:
    ``(f) Competitive Acquisition Ombudsman.--The Secretary shall 
provide for a competitive acquisition ombudsman within the Centers for 
Medicare & Medicaid Services in order to respond to complaints and 
inquiries made by suppliers and individuals relating to the application 
of the competitive acquisition program under this section. The 
ombudsman may be within the office of the Medicare Beneficiary 
Ombudsman appointed under section 1808(c). The ombudsman shall submit 
to Congress an annual report on the activities under this subsection, 
which report shall be coordinated with the report provided under 
section 1808(c)(2)(C).''.
    (c) Change in Reports and Deadlines.--
            (1) GAO report.--Section 302(b)(3) of the Medicare 
        Prescription Drug, Improvement, and Modernization Act of 2003 
        (Public Law 108-173) is amended--
                    (A) in subparagraph (A)--
                            (i) by inserting ``and as amended by 
                        section 2 of the Medicare DMEPOS Competitive 
                        Acquisition Reform Act of 2008'' after ``as 
                        amended by paragraph (1)''; and
                            (ii) by inserting before the period at the 
                        end the following: ``and the topics specified 
                        in subparagraph (C)'';
                    (B) in subparagraph (B), by striking ``Not later 
                than January 1, 2009,'' and inserting ``Not later than 
                1 year after the first date that payments are made 
                under section 1847 of the Social Security Act,''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(C) Topics.--The topics specified in this 
                subparagraph, for the study under subparagraph (A) 
                concerning the competitive acquisition program, are the 
                following:
                            ``(i) Beneficiary access to items and 
                        services under the program, including the 
                        impact on such access of awarding contracts to 
                        bidders that--
                                    ``(I) did not have a physical 
                                presence in an area where they received 
                                a contract; or
                                    ``(II) had no previous experience 
                                providing the product category they 
                                were contracted to provide.
                            ``(ii) Beneficiary satisfaction with the 
                        program and cost savings to beneficiaries under 
                        the program.
                            ``(iii) Costs to suppliers of participating 
                        in the program and recommendations about ways 
                        to reduce those costs without compromising 
                        quality standards or savings to the Medicare 
                        program.
                            ``(iv) Impact of the program on small 
                        business suppliers.
                            ``(v) Analysis of the impact on utilization 
                        of different items and services paid within the 
                        same Healthcare Common Procedure Coding System 
                        (HCPCS) code.
                            ``(vi) Costs to the Centers for Medicare & 
                        Medicaid Services, including payments made to 
                        contractors, for administering the program 
                        compared with administration of a fee schedule, 
                        in comparison with the relative savings of the 
                        program.
                            ``(vii) Impact on access, Medicare 
                        spending, and beneficiary spending of any 
                        difference in treatment for diabetic testing 
                        supplies depending on how such supplies are 
                        furnished.
                            ``(viii) Such other topics as the 
                        Comptroller General determines to be 
                        appropriate.''.
            (2) Delay in other deadlines.--
                    (A) Program advisory and oversight committee.--
                Section 1847(c)(5) of the Social Security Act (42 
                U.S.C. 1395w-3(c)(5)) is amended by striking ``December 
                31, 2009'' and inserting ``December 31, 2011''.
                    (B) Secretarial report.--Section 1847(d) of such 
                Act (42 U.S.C. 1395w-3(d)) is amended by striking 
                ``July 1, 2009'' and inserting ``July 1, 2011''.
                    (C) IG report.--Section 302(e) of the Medicare 
                Prescription Drug, Improvement, and Modernization Act 
                of 2003 (Public Law 108-173) is amended by striking 
                ``July 1, 2009'' and inserting ``July 1, 2011''.
            (3) Evaluation of certain code.--The Secretary of Health 
        and Human Services shall evaluate the existing Healthcare 
        Common Procedure Coding System (HCPCS) code for negative 
        pressure wound therapy to ensure accurate reporting and billing 
        for items and services under such code. In carrying out such 
        evaluation, the Secretary shall use the existing process for 
        the consideration of coding changes and consider all relevant 
        studies and information furnished pursuant to such process.
    (d) Other Provisions.--
            (1) Exemption from competitive acquisition for certain off-
        the-shelf orthotics.--Section 1847(a) of the Social Security 
        Act (42 U.S.C. 1395w-3(a)) is amended by adding at the end the 
        following new paragraph:
            ``(7) Exemption from competitive acquisition.--The programs 
        under this section shall not apply to the following:
                    ``(A) Certain off-the-shelf orthotics.--Items and 
                services described in paragraph (2)(C) if furnished--
                            ``(i) by a physician or other practitioner 
                        (as defined by the Secretary) to the 
                        physician's or practitioner's own patients as 
                        part of the physician's or practitioner's 
                        professional service; or
                            ``(ii) by a hospital to the hospital's own 
                        patients during an admission or on the date of 
                        discharge.
                    ``(B) Certain durable medical equipment.--Those 
                items and services described in paragraph (2)(A)--
                            ``(i) that are furnished by a hospital to 
                        the hospital's own patients during an admission 
                        or on the date of discharge; and
                            ``(ii) to which such programs would not 
                        apply, as specified by the Secretary, if 
                        furnished by a physician to the physician's own 
                        patients as part of the physician's 
                        professional service.''.
            (2) Correction in face-to-face examination requirement.--
        Section 1834(a)(1)(E)(ii) of such Act (42 U.S.C. 
        1395m(a)(1)(E)(ii)) is amended by striking ``1861(r)(1)'' and 
        inserting ``1861(r)''.
            (3) Special rule in case of national mail-order competition 
        for diabetic testing strips.--Section 1847(b) of such Act (42 
        U.S.C. 1395w-3(b)) is amended--
                    (A) by redesignating paragraph (10) as paragraph 
                (11); and
                    (B) by inserting after paragraph (9) the following 
                new paragraph:
            ``(10) Special rule in case of competition for diabetic 
        testing strips.--
                    ``(A) In general.--With respect to the competitive 
                acquisition program for diabetic testing strips 
                conducted after the first round of the competitive 
                acquisition programs, if an entity does not demonstrate 
                to the Secretary that its bid covers types of diabetic 
                testing strip products that, in the aggregate and 
                taking into account volume for the different products, 
                cover 50 percent (or such higher percentage as the 
                Secretary may specify) of all such types of products, 
                the Secretary shall reject such bid. The volume for 
                such types of products may be determined in accordance 
                with such data (which may be market based data) as the 
                Secretary recognizes.
                    ``(B) Study of types of testing strip products.--
                Before 2011, the Inspector General of the Department of 
                Health and Human Services shall conduct a study to 
                determine the types of diabetic testing strip products 
                by volume that could be used to make determinations 
                pursuant to subparagraph (A) for the first competition 
                under the competitive acquisition program described in 
                such subparagraph and submit to the Secretary a report 
                on the results of the study. The Inspector General 
                shall also conduct such a study and submit such a 
                report before the Secretary conducts a subsequent 
                competitive acquisition program described in 
                subparagraph (A).''.
            (4) Other conforming amendments.--Section 1847(b)(11) of 
        such Act, as redesignated by paragraph (3), is amended--
                    (A) in subparagraph (C), by inserting ``and the 
                identification of areas under subsection 
                (a)(1)(D)(iii)'' after ``(a)(1)(A)'';
                    (B) in subparagraph (D), by inserting ``and 
                implementation of subsection (a)(1)(D)'' after 
                ``(a)(1)(B)'';
                    (C) in subparagraph (E), by striking ``or'' at the 
                end;
                    (D) in subparagraph (F), by striking the period at 
                the end and inserting ``; or''; and
                    (E) by adding at the end the following new 
                subparagraph:
                    ``(G) the implementation of the special rule 
                described in paragraph (10).''.
            (5) Funding for implementation.--In addition to funds 
        otherwise available, for purposes of implementing the 
        provisions of, and amendments made by, this section, other than 
        the amendment made by subsection (c)(1) and other than section 
        1847(a)(1)(E) of the Social Security Act, the Secretary of 
        Health and Human Services shall provide for the transfer from 
        the Federal Supplementary Medical Insurance Trust Fund 
        established under section 1841 of the Social Security Act (42 
        U.S.C. 1395t) to the Centers for Medicare & Medicaid Services 
        Program Management Account of $20,000,000 for fiscal year 2008, 
        and $25,000,000 for each of fiscal years 2009 through 2012. 
        Amounts transferred under this paragraph for a fiscal year 
        shall be available until expended.
    (e) Effective Date.--The amendments made by this section shall take 
effect as of June 30, 2008.
                                 <all>
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