II

106TH CONGRESS

1ST SESSION S. 1626

To amend title XVIII of the Social Security Act to improve the process

by which the Secretary of Health and Human Services makes coverage

determinations for items and services furnished under the medicare program, and for other purposes.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 23 (legislative day, SEPTEMBER 22), 1999

Mr. HATCH (for himself, Mr. NICKLES, Mr. BREAUX, Mr. GRASSLEY, Mr.

MURKOWSKI, and Mr. BAYH) 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 improve

the process by which the Secretary of Health and Human

Services makes coverage determinations for items and

services furnished 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; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Medicare Patient Access to Technology Act of 1999’’.

6 (b) TABLE OF CONTENTS.—The table of contents of

7 this Act is as follows:
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Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Establishment of Medicare Access to Technology Advisory Committee.

Sec. 4. Annual adjustments to medicare payment systems for changes in technology and medical practice.

Sec. 5. Treatment of new medical technologies under medicare OPD PPS.

Sec. 6. Clarification of standard for medicare coverage of drugs and biologicals.

Sec. 7. Process for making and implementing certain coding modifications.

Sec. 8. Retention of HCPCS level III codes.

1 SEC. 2. FINDINGS.

2 Congress finds the following:

3 (1) In order to ensure genuine access of medi4 care beneficiaries to medical technologies, the Sec5 retary of Health and Human Services has an obliga6 tion to integrate and coordinate its medical tech7 nology coverage policy determination process with

8 agency policies and practices that govern assignment

9 of procedure codes, establishment and adjustment of

10 payment levels and groupings, and issuance of time11 ly instructions to contractors.

12 (2) The effectiveness of the medicare program

13 in meeting beneficiary needs is compromised if ac14 cess to state-of-the-art medical care is denied as a

15 result of ineffective agency performance in the cov16 erage, coding, or payment processes; or in the inef17 fective administrative execution of medical tech18 nology decisions.

19 (3) The Secretary of Health and Human Serv20 ices owes medicare beneficiaries the assurance that

21 the various medicare payment systems (in both the
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1 fee-for-service and managed care areas) are operated

2 in a way that reflects developments in, and improve3 ments upon, medical technology by properly setting

4 and adjusting payment levels and payment groups.

5 (4) Clear, predictable, and well-functioning cov6 erage, coding, and payment systems are particularly

7 critical to this Nation’s small medical technology

8 companies, which are the originators of most med9 ical product innovations.

10 (5) Unless the administrators of the coverage,

11 coding, and payment systems under the medicare

12 program review products promptly, apply standards

13 appropriate for medical technology, and provide rea14 sonable reimbursement levels, small medical tech15 nology companies will experience difficulties in

16 bringing the benefits of medical innovation to medi17 care beneficiaries.

18 (6) By creating an internal task force to exam19 ine methods for integrating coverage, coding, and

20 payment decisions, the Secretary of Health and

21 Human Services has taken an important first step

22 toward preserving innovation, and should continue to

23 work to bring these 3 processes together.
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1 SEC. 3. ESTABLISHMENT OF MEDICARE ACCESS TO TECH2 NOLOGY ADVISORY COMMITTEE.

3 (a) IN GENERAL.—Title XVIII of the Social Security

4 Act (42 U.S.C. 1395 et seq.) is amended by adding at

5 the end the following:

6 ‘‘MEDICARE ACCESS TO TECHNOLOGY ADVISORY

7 COMMITTEE

8 ‘‘SEC. 1897. (a) MEDICARE ACCESS TO TECHNOLOGY

9 ADVISORY COMMITTEE.—

10 ‘‘(1) ESTABLISHMENT.—

11 ‘‘(A) IN GENERAL.—Not later than July 1,

12 2001, the Secretary shall establish the Medicare

13 Access to Technology Advisory Committee (in

14 this subsection referred to as the ‘Committee’)

15 under section 9(a)(1) of the Federal Advisory

16 Committee Act for the purpose of securing ad17 vice and recommendations on issues related to

18 coverage, payment, and coding decisions.

19 ‘‘(B) CONSULTATION.—The Secretary

20 shall consult with the Committee, and may con21 sult directly with any panel of the Committee

22 established under subsection (b)(1).

23 ‘‘(2) DUTIES.—The Committee, and the panels

24 of the Committee, shall provide advice and rec25 ommendations to the Secretary with respect to—
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1 ‘‘(A) the issues referred to the Medicare

2 Coverage Advisory Committee (established by

3 the Secretary on November 24, 1998, notice of

4 which was published in the Federal Register on

5 December 14, 1998 (63 Fed. Reg. 68780));

6 ‘‘(B) policies regarding payment issues and

7 policies regarding coding issues under this title,

8 including identification of—

9 ‘‘(i) policies and mechanisms to help

10 ensure that payment and coding decisions

11 are made—

12 ‘‘(I) in a way that encourages ac13 cess to high-quality medical care

14 under this title;

15 ‘‘(II) through processes that

16 allow for significant public participa17 tion; and

18 ‘‘(III) expeditiously, in accord19 ance with specified timeframes for

20 each significant step in the process of

21 making such decisions;

22 ‘‘(ii) an equitable mechanism for de23 termining fee schedule payment amounts

24 for items and services, except for physi-
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1 cians’ services (as defined in section

2 1861(q)); and

3 ‘‘(iii) processes for reconsideration

4 and appeal of determinations of fee sched5 ule payment amounts; and

6 ‘‘(C) the integration of policies on cov7 erage, payment, and coding under this title into

8 a process that ensures timely access to high9 quality medical care.

10 ‘‘(3) POLICIES REGARDING CODING ISSUES.—

11 ‘‘(A) For purposes of paragraph (2)(B),

12 policies regarding coding issues include any pol13 icy resulting from an action described in clause

14 (i) of subparagraph (B).

15 ‘‘(B)(i) An action described in this clause

16 is the action of any person to create, revise, up17 date, modify, adopt, edit, abridge, or otherwise

18 affect the form of a code used by the Secretary

19 in the operation of the program under this title.

20 ‘‘(ii) As used in clause (i), the term ‘code’

21 means any code included in level I or II of the

22 Health Care Financing Administration Com23 mon Procedure Coding System.
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1 ‘‘(4) DURATION.—Section 14(a)(2)(B) of the

2 Federal Advisory Committee Act shall not apply to

3 the Committee.

4 ‘‘(b) COMMITTEE PROCEDURES.—In administering

5 the Committee under this section, the Secretary shall—

6 ‘‘(1) organize the Committee into panels of ex7 perts;

8 ‘‘(2) ensure participation on the Committee of

9 individuals who—

10 ‘‘(A) are experts in a variety of medical

11 specialties and fields of science, including—

12 ‘‘(i) specific areas of medical tech13 nology, including suppliers and manufac14 turers of clinical and diagnostic testing

15 supplies and durable medical equipment;

16 ‘‘(ii) medical research generally, in17 cluding experts in the study of treatment

18 outcomes; and

19 ‘‘(iii) other areas relevant to the du20 ties assigned to the Committee (taking into

21 account, as appropriate, any affiliations in22 dividuals may have with organizations pos23 sessing information, expertise, and other

24 resources that would contribute signifi-
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1 cantly to the work of the Committee and

2 its panels);

3 ‘‘(B) are qualified by training and experi4 ence to evaluate the matters referred to the

5 Committee, including a representative of con6 sumer interests and a representative of the in7 terests of manufacturers of medical technology

8 on each panel; and

9 ‘‘(C) have adequately diversified back10 grounds so that the Committee will provide bal11 anced advice and recommendations;

12 ‘‘(3) permit each panel to independently advise

13 the Secretary with regard to matters referred to the

14 panel, without the need to obtain the concurrence of

15 the full Committee;

16 ‘‘(4) provide for—

17 ‘‘(A) full public participation, to the extent

18 required or permitted under law, in any meet19 ing of the Committee or its panels;

20 ‘‘(B) publication of notice of any such

21 meeting on the official Internet site of the De22 partment of Health and Human Services at

23 least 60 days before such meeting, including—

24 ‘‘(i) a statement of the issues to be

25 considered by the Committee or panel;
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1 ‘‘(ii) a description of the specific in2 formation that is relevant to such issues;

3 and

4 ‘‘(iii) the text of any proposals the

5 Secretary will ask the Committee or panel

6 to consider;

7 ‘‘(C) consideration by the Committee or

8 panel of relevant information or testimony that

9 is submitted by the public;

10 ‘‘(D) public access in a central repository

11 to the information described in subparagraph

12 (C) at least 20 days before the meeting; and

13 ‘‘(E) the panels to meet at least once every

14 3 months unless there is no business to con15 duct;

16 ‘‘(5) require the Committee and its panels to

17 provide, with any recommendation, a summary of

18 the reasons for the recommendation and a summary

19 of the data upon which the recommendation is

20 based; and

21 ‘‘(6) make a verbatim transcript of each Com22 mittee and panel proceeding (other than those por23 tions that are closed to the public in accordance with

24 law) available to the public within 14 days on the of-
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1 ficial Internet site of the Department of Health and

2 Human Services.’’.

3 (b) TRANSITION, CONTINUING RESPONSIBILITY FOR

4 UNFINISHED DUTIES.—

5 (1) IN GENERAL.—Effective on the date the

6 Medicare Access to Technology Advisory Committee

7 is established, the Secretary of Health and Human

8 Services shall provide for the transfer to such com9 mittee of any assets and staff of the Medicare Cov10 erage Advisory Committee, without any loss of bene11 fits or seniority by virtue of such transfers.

12 (2) AVAILABILITY OF FUNDS.—Fund balances

13 available to the Medicare Coverage Advisory Com14 mittee for any period shall be available to the Medi15 care Access to Technology Advisory Committee for

16 such period for like purposes.

17 (c) REPORTING REQUIREMENTS.—

18 (1) Not later than December 1 of each year, be19 ginning with 2000, the Secretary of Health and

20 Human Services shall submit to Congress a report

21 describing the timeliness of the Secretary’s national

22 coverage policy decisionmaking during the preceding

23 fiscal year measured by the timeframes the Sec24 retary has published for the national coverage policy

25 determination process, and such report shall include
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1 the actual time periods that were necessary to com2 plete and fully implement national coverage policy

3 determinations and each significant step in the proc4 ess.

5 (2) Not later than July 1, 2000, the Secretary

6 of Health and Human Services shall submit to Con7 gress a report, on the nature of the coverage policy

8 determination processes used by Medicare+Choice

9 organizations established under part C of title XVIII

10 of the Social Security Act (42 U.S.C. 1395w–21 et

11 seq.), including a detailed explanation of any steps

12 taken to ensure that the coverage policy determina13 tion processes under the Medicare+Choice program

14 established under such part—

15 (A) produce results consistent with the

16 coverage policy determinations reached under

17 parts A and B of such title (42 U.S.C. 1395 et

18 seq.); and

19 (B) treat any medical device being inves20 tigated under section 520(g) of the Federal

21 Food, Drug, and Cosmetic Act (42 U.S.C.

22 360j(g)), in a manner consistent with the treat23 ment afforded such medical device under parts

24 A and B of the Social Security Act (42 U.S.C.

25 1395 et seq.).
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1 SEC. 4. ANNUAL ADJUSTMENTS TO MEDICARE PAYMENT

2 SYSTEMS FOR CHANGES IN TECHNOLOGY

3 AND MEDICAL PRACTICE.

4 (a) IN GENERAL.—Title XVIII of the Social Security

5 Act (42 U.S.C. 1395 et seq.) is amended by inserting after

6 section 1888 the following:

7 ‘‘ANNUAL ADJUSTMENTS TO MEDICARE PAYMENT SYS8 TEMS FOR CHANGES IN TECHNOLOGY AND MEDICAL

9 PRACTICE

10 ‘‘SEC. 1889. (a) IN GENERAL.—Notwithstanding any

11 other provision of this title, the Secretary shall adjust the

12 appropriate elements of the payment systems established

13 under sections 1833(i)(2)(A), 1833(t), 1848, and 1886(d)

14 (including relative payment weights, relative value units,

15 weighting factors, classifications, and case assignments) at

16 least annually to ensure that payments, classifications,

17 and assignments under such systems—

18 ‘‘(1) appropriately reflect changes in medical

19 technology and medical practice affecting the items

20 and services for which payment may be made under

21 such systems; and

22 ‘‘(2) promote the efficient and effective delivery

23 of high-quality health care.

24 ‘‘(b) RULES FOR DETERMINING ADJUSTMENTS.—

25 Except as provided in subsection (c), the provisions of sec26 tions 1833(i)(2)(A), 1833(t)(7), 1848(c)(2)(B), and
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1 1886(d)(4)(C) shall apply to the annual adjustments re2 quired by this section in the same manner and to the same

3 extent as they apply to the adjustments of relative pay4 ment weights, relative value units, weighting factors, clas5 sification, and assignments, respectively, that are author6 ized or required by such sections.

7 ‘‘(c) USE OF INTERNAL DATA COLLECTED BY THE

8 SECRETARY.—

9 ‘‘(1) IN GENERAL.—In determining the adjust10 ments required by this section, the Secretary may

11 not—

12 ‘‘(A) decline to make an adjustment that is

13 based on data collected by the Secretary in the

14 administration of the program established

15 under this title if the data reflect a representa16 tive sample of cases that is statistically valid;

17 and

18 ‘‘(B) establish a uniform period of time

19 (such as 1 year) from which such data must be

20 drawn.

21 ‘‘(2) DEADLINE FOR SUPPLYING INTERNAL

22 DATA.—

23 ‘‘(A) IN GENERAL.—Subject to subpara24 graph (B), the Secretary shall establish a rea25 sonable deadline for the submission of data col-
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1 lected by the Secretary to be used in making

2 the adjustments required by this section.

3 ‘‘(B) LIMITATION.—In no event may the

4 deadline established under subparagraph (A) be

5 more than 7 months before the first day of the

6 provider payment update period for which the

7 adjustment or adjustments to which the data

8 relates would be effective.

9 ‘‘(d) USE OF EXTERNAL DATA.—

10 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

11 in determining the adjustments required by this sec12 tion, the Secretary shall utilize data other than data

13 collected by the Secretary in the administration of

14 the program established under this title if—

15 ‘‘(A) data collected by the Secretary in the

16 administration of such program are not avail17 able at the time such adjustments are being de18 termined; and

19 ‘‘(B) such other data are reliable and

20 verifiable.

21 ‘‘(2) EXTERNAL DATA FACILITATING THE USE

22 OF INTERNAL DATA.—In determining the adjust23 ments required by this section, the Secretary may

24 not—
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1 ‘‘(A) decline to use data other than data

2 collected by the Secretary if such other data—

3 ‘‘(i) enable the Secretary to identify or

4 refine data collected by the Secretary for

5 use in making such an adjustment; and

6 ‘‘(ii) are based on a representative

7 sample of cases that is statistically valid;

8 or

9 ‘‘(B) establish a uniform period of time

10 (such as 1 year) from which such data must be

11 drawn.

12 ‘‘(3) ALTERNATIVE SOURCES OF DATA.—In de13 termining the adjustments required by this section,

14 the Secretary shall use data, that otherwise meets

15 the requirements of this subsection, collected by (or

16 on behalf of)—

17 ‘‘(A) private payers;

18 ‘‘(B) manufacturers of medical tech19 nologies;

20 ‘‘(C) suppliers;

21 ‘‘(D) groups representing physicians and

22 other health care professionals;

23 ‘‘(E) groups representing providers;

24 ‘‘(F) clinical trials; and
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1 ‘‘(G) such other sources as the Secretary

2 determines to be appropriate.

3 ‘‘(4) CLARIFICATION.—Nothing in this title

4 shall be construed as—

5 ‘‘(A) requiring the Secretary to identify all

6 claims submitted under a payment system es7 tablished under section 1833(i)(2)(A), 1833(t),

8 1848, or 1886(d), involving the use of a medical

9 technology before the Secretary may make the

10 adjustments under this section (or under sec11 tion 1833(i)(2)(A), 1833(t), 1848, or 1886(d))

12 with respect to such technology; or

13 ‘‘(B) authorizing the Secretary to defer ac14 tion on such an adjustment until all such claims

15 are identifiable.

16 ‘‘(5) DEADLINE FOR SUPPLYING EXTERNAL

17 DATA.—The Secretary shall establish a reasonable

18 deadline for the submission of data other than data

19 collected by the Secretary to be used in making the

20 adjustments required by this section. In no event

21 may the deadline established under this paragraph

22 be more than 9 months before the first day of the

23 provider payment update period for which the ad24 justment or adjustments to which the data relates

25 would be effective.
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1 ‘‘(e) TIMING OF ADJUSTMENTS.—

2 ‘‘(1) IN GENERAL.—The annual adjustments

3 required by this section shall—

4 ‘‘(A) apply to provider payment update pe5 riods beginning on or after October 1, 2000;

6 and

7 ‘‘(B) be described in the proposed and

8 final rules published by the Secretary with re9 spect to changes to a payment system estab10 lished under section 1833(i)(2)(A), 1833(t),

11 1848, or 1886(d), for the provider payment up12 date period to which they relate, together with

13 a description of the data on which such adjust14 ments are based.

15 ‘‘(2) PROVIDER PAYMENT UPDATE PERIOD DE16 FINED.—For purposes of this section, the term ‘pro17 vider payment update period’ means—

18 ‘‘(A) in the case of the payment systems

19 established under sections 1833(t) and 1848, a

20 calendar year; and

21 ‘‘(B) in the case of the payment systems

22 established under sections 1833(i)(2)(A) and

23 1886(d), a fiscal year beginning on October 1.’’.

24 (b) CONFORMING AMENDMENTS.—
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1 (1) AMBULATORY SURGICAL CENTERS.—Section

2 1833(i)(2)(A) of the Social Security Act (42 U.S.C.

3 1395l(i)(2)(A)) is amended by striking ‘‘Each’’ in

4 the second sentence and inserting ‘‘Subject to sec5 tion 1889, each’’.

6 (2) OUTPATIENT HOSPITAL PROSPECTIVE PAY7 MENT SYSTEM.—Section 1833(t)(6)(A) of such Act

8 (42 U.S.C. 1395l(t)(6)(A)) is amended by striking

9 ‘‘The’’ and inserting ‘‘Subject to section 1889, the’’.

10 (3) PHYSICIAN PAYMENT.—Section

11 1848(c)(2)(B)(i) of such Act (42 U.S.C. 1395w–

12 4(c)(2)(B)(i)) is amended by striking ‘‘The’’ and in13 serting ‘‘Subject to section 1889, the’’.

14 (4) INPATIENT HOSPITAL PROSPECTIVE PAY15 MENT SYSTEM.—Section 1886(d)(4)(C)(i) of such

16 Act (42 U.S.C. 1395ww(d)(4)(C)(i)) is amended by

17 striking ‘‘The’’ and inserting ‘‘Subject to section

18 1889, the’’.

19 SEC. 5. TREATMENT OF NEW MEDICAL TECHNOLOGIES

20 UNDER MEDICARE OPD PPS.

21 (a) TEMPORARY EXCLUSION OF CERTAIN MEDICAL

22 TECHNOLOGIES.—

23 (1) IN GENERAL.—Section 1833(t)(1) of the

24 Social Security Act (42 U.S.C. 1395l(t)(1)) is

25 amended—
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1 (A) in subparagraph (B)(iii)—

2 (i) by inserting ‘‘(I)’’ after ‘‘include’’;

3 (ii) by striking ‘‘or ambulance serv4 ices’’ and inserting ‘‘, (II) ambulance serv5 ices’’; and

6 (iii) by striking ‘‘1834(l).’’ and insert7 ing ‘‘1834(l), or (III) for the time period

8 specified in clause (ii) of subparagraph

9 (C), the medical technologies described in

10 clause (i) of such subparagraph, except

11 that this subclause shall not be construed

12 to constitute the sole basis on which any

13 such medical technologies may be excluded

14 from the payment system established

15 under this subsection.’’; and

16 (B) by adding at the end the following:

17 ‘‘(C) MEDICAL TECHNOLOGIES SUBJECT

18 TO TEMPORARY EXCLUSION.—

19 ‘‘(i) MEDICAL TECHNOLOGIES DE20 SCRIBED.—Subject to clause (v), the med21 ical technologies described in this clause

22 are the following:

23 ‘‘(I) Any medical technology that

24 was reimbursed as a hospital out25 patient service under this part during
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1 1996 for which sufficient, reliable,

2 and verifiable data drawn from such

3 year is not available.

4 ‘‘(II) Any medical technology

5 that was not reimbursed as a hospital

6 outpatient service under this part dur7 ing 1996 but was reimbursed as such

8 a service as of the day before the date

9 on which the system established under

10 this subsection first took effect.

11 ‘‘(III) Subject to clause (iv), any

12 medical technology that was not reim13 bursed as a hospital outpatient service

14 under this part as of the day before

15 such system took effect but that is

16 payable as such a service on or after

17 the date on which such system first

18 took effect.

19 ‘‘(IV) Drugs or biological prod20 ucts used as treatment or supportive

21 care for patients with cancer, includ22 ing chemotherapeutic agents,

23 antiemetics, hematopoietic growth fac24 tors, colony stimulating factors, and

25 biological response modifiers.
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1 ‘‘(V) Drugs or biological products

2 designated as a drug for a rare dis3 ease or condition under section 526 of

4 the Federal Food, Drug and Cosmetic

5 Act (21 U.S.C. 360bb) and approved

6 or licensed for introduction into inter7 state commerce by the Commissioner

8 of Food and Drugs.

9 ‘‘(VI) Drugs or biological prod10 ucts used for the treatment of end11 stage renal disease not included in the

12 composite rate under section 1881

13 and for which a payment methodology

14 is not specifically established by this

15 Act, other than by section 1842(o).

16 ‘‘(VII) Radiopharmaceutical

17 drugs or biological products used in

18 diagnostic, monitoring, and thera19 peutic nuclear medicine procedures.

20 ‘‘(VIII)(aa) Blood components

21 and blood products, including any

22 such component or product derived

23 from plasma fractionation or bio24 technology analog of such component

25 or product; and
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1 ‘‘(bb) Any medical technology or

2 service used in connection with blood

3 transfusion, blood product exchange,

4 or other blood-related therapy, includ5 ing plasmapheresis, photopheresis,

6 hematopoietic stem cell collection or

7 replacement therapy.

8 ‘‘(IX) Drugs or biological prod9 ucts with respect to which the mean

10 cost for a dose exceeds the otherwise

11 applicable fee schedule amount under

12 the system established under this sub13 section by 2 standard deviations from

14 such mean.

15 ‘‘(ii) TIME PERIOD SPECIFIED.—Sub16 ject to clause (iii), the time periods speci17 fied in this clause are not less than—

18 ‘‘(I) for a medical technology de19 scribed in subclause (I) or (II) of

20 clause (i), the period that begins with

21 the date on which the system estab22 lished under this subsection first takes

23 effect and ends with (and includes)

24 the last day of the fourth calendar
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1 year to begin on or after such date;

2 and

3 ‘‘(II) for a medical technology de4 scribed in subclause (III) of clause (i),

5 the period that begins with the date

6 on which a claim is first submitted

7 under this part with respect to such

8 technology and ends with (and in9 cludes) the last day of the fourth cal10 endar year to begin on or after such

11 date.

12 ‘‘(iii) PROCESS FOR INCLUSION OF

13 EXCLUDED MEDICAL TECHNOLOGIES.—No

14 medical technology excluded under clause

15 (i) may be designated as a covered OPD

16 service unless the Secretary completes the

17 following steps:

18 ‘‘(I) The Secretary shall assign a

19 unique code to the medical technology

20 to be designated as a covered OPD

21 service.

22 ‘‘(II) The Secretary shall issue

23 instructions for using any code as24 signed under subclause (I) and docu25 ment the usage of the medical tech-
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1 nology to which the code is assigned

2 in the hospital outpatient department.

3 ‘‘(III) The Secretary shall require

4 hospitals to use the codes assigned

5 under subclause (I) for not less than

6 2 years.

7 ‘‘(IV) The Secretary shall obtain

8 sufficient, reliable, and verifiable cost

9 and utilization data from a represent10 ative group of hospitals that use the

11 medical technology, including hos12 pitals of different sizes, geographic lo13 cations, degrees of specialization,

14 case-mix, and the dependence of the

15 hospitals on funds provided under the

16 medicare program under this title and

17 the medicaid program under title

18 XIX.

19 ‘‘(V) The Secretary, based on the

20 data obtained under subclause (IV),

21 shall develop a proposed OPD service

22 classification for the medical tech23 nology, paying particular attention to

24 the potential of the proposed classi25 fication to create economic incentives
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1 that could reduce patient access to the

2 medical technology.

3 ‘‘(VI) The Secretary shall publish

4 in the Federal Register a proposed

5 rule regarding the classification de6 scribed under subclause (V) and sup7 porting cost and utilization data.

8 ‘‘(VII) The Secretary shall pro9 vide for a comment period of not less

10 than 90 days, beginning on the date

11 on which the Secretary publishes the

12 proposed rule and supporting data de13 scribed in subclause (V).

14 ‘‘(iv) NEW TECHNOLOGIES DE15 SCRIBED.—As of the effective date of this

16 clause, the technologies to which clause

17 (i)(III) applies include—

18 ‘‘(I) existing technologies not

19 previously reimbursed as hospital out20 patient services;

21 ‘‘(II) newly developed tech22 nologies approved or licensed for in23 troduction into interstate commerce

24 by the Commissioner of Food and

25 Drugs after December 31, 1995; and
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1 ‘‘(III) new applications of exist2 ing technologies.

3 ‘‘(v) LOW-COST MEDICAL TECH4 NOLOGIES.—The medical technologies de5 scribed in clause (i) do not include any

6 medical technology if the cost of such tech7 nology is insignificant in relation to the

8 OPD fee schedule amount (as calculated

9 under paragraph (3)(D)) payable for the

10 service (or group of services).

11 ‘‘(vi) MEDICAL TECHNOLOGY DE12 FINED.—For purposes of this subsection,

13 the term ‘medical technology’ means any

14 discrete and identifiable regimen or modal15 ity used to diagnose or treat illness, pre16 vent disease, maintain patient well-being,

17 or facilitate the provision of health care

18 services.

19 ‘‘(D) TREATMENT OF IMPLANTABLE DE20 VICES.—

21 ‘‘(i) PAYMENT BASIS DURING AND

22 AFTER EXCLUSION PERIOD.—If a medical

23 technology that is an implantable device is

24 excluded from the payment system estab-
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1 lished under this subsection pursuant to

2 subparagraph (B)(iii)(III), such device—

3 ‘‘(I) shall be paid on the basis

4 described in subsection (a)(2)(B)(i)

5 during the period of such exclusion;

6 and

7 ‘‘(II) shall be paid for under the

8 system established under this sub9 section during the period following

10 such exclusion (and not under a fee

11 schedule established under subsection

12 (a) or (h) of section 1834).

13 ‘‘(ii) PAYMENT BASIS FOR DEVICES

14 WITH NO EXCLUSION PERIOD.—If a med15 ical technology that is an implantable de16 vice was not excluded from the payment

17 system established under this subsection

18 pursuant to subparagraph (B)(iii)(III)—

19 ‘‘(I) such device shall be included

20 in such system (and not a fee sched21 ule established under subsection (a) or

22 (h) of section 1834); and

23 ‘‘(II) in determining the relative

24 payment weights (described in para25 graph (2)(C)) for the service or group
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1 of services within which such device is

2 classified under such system, the Sec3 retary shall meet the requirements of

4 clause (iii).

5 ‘‘(iii) DETERMINATION OF RELATIVE

6 PAYMENT WEIGHTS.—Subject to para7 graph (11), in determining the relative

8 payment weights described in clause

9 (ii)(II) for an implantable device, the

10 Secretary—

11 ‘‘(I) may not substitute data on

12 the amount that would be paid for

13 such device under a fee schedule es14 tablished under subsection (a) or (h)

15 of section 1843 for data on the

16 amounts paid for such device under

17 subsection (a)(2)(B)(i); and

18 ‘‘(II) shall rely solely on data on

19 the amounts paid for such item or

20 service under such subsection

21 (a)(2)(B)(i).’’.

22 (2) ADMINISTRATIVE AND JUDICIAL REVIEW.—

23 Section 1833(t)(9) of the Social Security Act (42

24 U.S.C. 1395l(t)(9)) is amended—
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1 (A) by striking ‘‘LIMITATION ON RE2 VIEW.—There’’ and inserting ‘‘LIMITATION ON

3 REVIEW.—

4 ‘‘(A) IN GENERAL.—Subject to subpara5 graph (B), there’’; and

6 (B) by adding at the end the following:

7 ‘‘(B) RULE OF CONSTRUCTION.—This

8 paragraph shall not be construed as limiting ad9 ministrative or judicial review of determinations

10 of whether a medical technology is required to

11 be excluded from the payment system estab12 lished under this subsection pursuant to para13 graph (1)(B)(iii)(III).’’.

14 (b) LIMITING VARIATION IN THE COSTS OF SERV15 ICES CLASSIFIED WITHIN THE SAME GROUP.—Section

16 1833(t)(2) of the Social Security Act (42 U.S.C.

17 1395l(t)(2)) is amended by adding at the end the fol18 lowing:

19 ‘‘For purposes of subparagraph (B), items and serv20 ices within a group shall not be treated as ‘com21 parable with respect to the use of resources’ if the

22 highest mean cost for an item or service within the

23 group is more than 2 times greater than the lowest

24 mean cost for an item or service within the group.’’.
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1 (c) ANNUAL REVIEW OF OPD PPS COMPONENTS.—

2 Section 1833(t)(6)(A) of the Social Security Act (42

3 U.S.C. 1395l(t)(6)(A)) (as amended by section 4(b)(2))

4 is amended by striking ‘‘may periodically review’’ and in5 serting ‘‘shall review not less than annually’’.

6 (d) SPECIAL RULES FOR EXCLUDED SERVICES.—

7 (1) UNADJUSTED CO-PAYMENT AMOUNT.—Sec8 tion 1833(t)(3)(B) of the Social Security Act (42

9 U.S.C 13951(t)(3)(B)) is amended—

10 (A) in clause (i), by inserting ‘‘or to a

11 service excluded under paragraph (1)(C)’’ after

12 ‘‘(or group of such services)’’;

13 (B) in clause (ii), by inserting ‘‘or excluded

14 service under paragraph (1)(C)’’ after ‘‘fur15 nished in a year’’; and

16 (C) by adding at the end the following:

17 ‘‘(iv) RULES FOR EXCLUDED SERV18 ICES.—The Secretary shall establish rules

19 for the establishment of an unadjusted co20 payment amount for medical technologies

21 excluded under paragraph (1)(C)(i) for

22 which no national median of charges is

23 available based on the unadjusted copay24 ment amount for medical technologies with

25 similar average wholesale prices.’’.
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1 (2) BENEFICIARY COST SHARING.—Section

2 1833(t) of the Social Security Act (42 U.S.C.

3 13951(t)) is amended.—

4 (A) by redesignating paragraphs (6)

5 through (9) (as amended by subsections (a)(2)

6 and (c) and section 4(b)(2)) as paragraphs (7)

7 through (10), respectively; and

8 (B) by inserting after paragraph (5) the

9 following:

10 ‘‘(6) PAYMENT AMOUNTS FOR EXCLUDED

11 SERVICES—

12 ‘‘(B) COPAYMENT AMOUNT FOR EXCLUDED

13 SERVICES—

14 ‘‘(i) IN GENERAL.—Except as pro15 vided in clause (ii), the copayment amount

16 for services excluded under subparagraph

17 (1)(C) shall be the unadjusted copayment

18 amount for such services as determined

19 under paragraph (3)(B).

20 ‘‘(ii) EXCEPTION.—If the copayment

21 amount determined under clause (i) is less

22 than 20 percent of the reasonable cost as

23 determined under subparagraph (A), the

24 copayment amount shall be 20 percent of

25 the reasonable cost as so determined.’’.
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1 (3) CONFORMING AMENDMENT.—Section

2 1833(a)(2)(B)(i) is amended by striking ‘‘furnished

3 before January 1, 1999,’’.

4 (e) PAYMENT.—Section 1833(t) of the Social Secu5 rity Act (42 U.S.C. 1395l(t)) is amended—

6 (1) by redesignating paragraph (10) (as redes7 ignated by subsection (d)(2)(A)) as paragraph (12);

8 and

9 (2) by inserting after paragraph (9) the fol10 lowing:

11 ‘‘(10) PAYMENT DURING AND AFTER EXCLU12 SION PERIOD.—

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

14 other provision of this title, items and services

15 excluded from the system established under this

16 subsection pursuant to paragraph

17 (1)(B)(iii)(III) (other than any implantable de18 vices to which paragraph (1)(D) applies)—

19 ‘‘(i) shall be paid on the basis de20 scribed in subsection (a)(2)(B)(i) during

21 the period of such exclusion; and

22 ‘‘(ii) shall be paid for under the sys23 tem established under this subsection dur24 ing the period following such exclusion.
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1 ‘‘(B) DETERMINING RELATIVE PAYMENT

2 WEIGHTS.—Subject to paragraph (11), in deter3 mining the relative payment weights (described

4 in paragraph (2)(C)) for the service or group of

5 services within which an item or service is clas6 sified pursuant to the payment system estab7 lished under this subsection, the Secretary—

8 ‘‘(i) may not substitute data on the

9 amount that would be paid for such item

10 or service under a fee schedule established

11 under subsection (a) or (h) of section 1843

12 for data on the amounts paid for such de13 vice under subsection (a)(2)(B)(i); and

14 ‘‘(ii) shall rely solely on data on the

15 amounts paid for such item or service

16 under such subsection (a)(2)(B)(i).

17 ‘‘(11) EXCLUSION OF DATA FOR CERTAIN MED18 ICAL TECHNOLOGIES.—The Secretary may not uti19 lize data with respect to a device for which an ex20 emption granted under section 520(g) of the Federal

21 Food, Drug, and Cosmetic Act (21 U.S.C. 360j(g))

22 is in effect—

23 ‘‘(A) in determining whether there is ade24 quate data with respect to the device for pur-
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1 poses of clauses (i)(I) and (iii) of paragraph

2 (1)(C); or

3 ‘‘(B) in determining the relative payment

4 weights for the device pursuant to paragraph

5 (1)(D)(iii) or (10)(B).’’.

6 (f) REQUIRED CONSULTATION BEFORE LIMITING

7 COVERAGE BY SITE OF SERVICE.—

8 (1) IN GENERAL.—Notwithstanding any other

9 provision of law, the Secretary may not implement

10 on or after September 8, 1998, any regulatory guid11 ance of the type described in paragraph (2) until the

12 Secretary has consulted with groups representing

13 hospitals, physicians, beneficiaries under the medi14 care program under title XVIII of the Social Secu15 rity Act (42 U.S.C. 1395 et seq.), and manufactur16 ers of medical technologies.

17 (2) REGULATORY GUIDANCE.—The types of

18 regulatory guidance described in this paragraph are

19 proposed, interim final, and final regulations, man20 ual instructions, statements of policy, and other

21 forms of regulatory guidance that would—

22 (A) deny coverage or payment for an item

23 or service under title XVIII of the Social Secu24 rity Act (42 U.S.C. 1395 et seq.) unless the
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1 item or service is furnished on an inpatient

2 basis; or

3 (B) deny coverage or payment for an item

4 or service under such title unless the item or

5 service is furnished on an outpatient basis.

6 (g) BASIS FOR DETERMINING WEIGHTING FAC7 TORS.—Section 1833(t)(2)(C) of the Social Security Act

8 (42 U.S.C. 1395l(t)(2)(C)) is amended by striking ‘‘me9 dian’’ and inserting ‘‘mean’’.

10 (h) BUDGET NEUTRALITY ADJUSTMENT.—The Sec11 retary of Health and Human Services shall make such ad12 justments to the amounts payable under section 1833(t)

13 of the Social Security Act (42 U.S.C. 1395l(t)) as may

14 be necessary to ensure that there is no increase or de15 crease in the expenditures under title XVIII of the Social

16 Security Act (42 U.S.C. 1395 et seq.) as a result of the

17 amendments made by this section.

18 (i) MONITORING ACCESS TO MEDICAL TECH19 NOLOGY.—

20 (1) MONITORING AND ANNUAL REPORTS OF

21 THE SECRETARY.—

22 (A) MONITORING ACCESS.—The Secretary

23 of Health and Human Services shall monitor

24 the utilization of medical technology in hospital

25 outpatient departments.
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1 (B) ANNUAL REPORTS.—The Secretary of

2 Health and Human Services shall annually sub3 mit to Congress a report on the utilization of

4 the medical technology monitored under sub5 paragraph (A) together with an analysis of the

6 extent to which access by beneficiaries under

7 the medicare program under title XVIII of the

8 Social Security Act (42 U.S.C. 1395 et seq.) to

9 new medical technologies is affected by the in10 clusion or exclusion of such technologies in the

11 payment system established under section

12 1833(t) of such Act (42 U.S.C. 1395l(t)).

13 (2) COMMENTS AND REPORTS OF MEDPAC.—

14 (A) COMMENTS.—The Medicare Payment

15 Advisory Commission established under section

16 1805 of the Social Security Act (42 U.S.C.

17 1395b–6) (in this paragraph referred to as

18 ‘‘MedPAC’’) shall submit to the Secretary of

19 Health and Human Services comments on any

20 proposed rule regarding the classification of

21 medical technologies excluded from the prospec22 tive payment system established under section

23 1833 of the Social Security Act (42 U.S.C.

24 1395l(t)).

25 (B) ANNUAL REPORTS.—
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1 (i) IN GENERAL.—MedPAC shall an2 nually submit to the appropriate commit3 tees of Congress a report on the changes

4 in utilization of and access to medical tech5 nologies furnished under title XVIII of the

6 Social Security Act (42 U.S.C. 1395 et

7 seq.) together with its recommendations

8 for such legislation and administrative ac9 tions as it considers appropriate to improve

10 access of beneficiaries under the medicare

11 program under title XVIII of the Social

12 Security Act (42 U.S.C. 1395 et seq.) to

13 appropriate medical technologies.

14 (ii) CONSULTATION.—In preparing

15 the annual report under clause (i),

16 MedPAC shall convene and consult a panel

17 of experts to evaluate the implications of

18 medical technology utilization patterns for

19 the quality of and access to care of bene20 ficiaries under the medicare program

21 under title XVIII of the Social Security

22 Act (42 U.S.C. 1395 et seq.).

23 (j) EFFECTIVE DATES.—The amendments made by

24 subsections (a), (b), (c), (d), (e), and (g) take effect as

25 if included in the amendments made by section 4523(a)
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1 of the Balanced Budget Act of 1997 (Public Law 105–

2 33; 111 Stat. 445).

3 SEC. 6. CLARIFICATION OF STANDARD FOR MEDICARE

4 COVERAGE OF DRUGS AND BIOLOGICALS.

5 (a) IN GENERAL.—Section 1862(a) of the Social Se6 curity Act (42 U.S.C. 1395y(a)) is amended by adding at

7 the end the following: ‘‘A drug or biological may not be

8 excluded from coverage under this title by reason of para9 graph (1)(A) if the drug or biological has been approved

10 by the Food and Drug Administration and is prescribed

11 for a use that has been approved by the Food and Drug

12 Administration or that is supported by 1 or more citations

13 that are included (or approved for inclusion) in 1 or more

14 of the compendia referred to in section

15 1861(t)(2)(B)(ii)(l).’’.

16 (b) EFFECTIVE DATE.—The amendment made by

17 subsection (a) shall apply to coverage determinations

18 made on or after the date of enactment of this Act.

19 SEC. 7. PROCESS FOR MAKING AND IMPLEMENTING CER20 TAIN CODING MODIFICATIONS.

21 (a) TIMELY ASSIGNMENT OF CODES.—

22 (1) IN GENERAL.—Notwithstanding title XVIII

23 of the Social Security Act (42 U.S.C. 1395 et seq.),

24 the Secretary of Health and Human Services (in this

25 section referred to as the ‘‘Secretary’’) shall—
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1 (A) accept recommendations for HCPCS

2 level II code modifications from the public

3 throughout the year;

4 (B) cause determinations on recommenda5 tions received during the 3 months immediately

6 preceding the last month of a calendar quarter

7 to be made not later than the first day of the

8 following calendar quarter; and

9 (C) implement approved modifications to

10 HCPCS level II codes established under title

11 XVIII of the Social Security Act (including the

12 medicare fee schedule database) with respect to

13 the payment system not later than 180 days

14 after the date on which the determination ap15 proving a modification was made.

16 (2) SPECIAL RULE FOR CERTAIN MEDICAL

17 TECHNOLOGIES.—For purposes of subparagraph

18 (C), any modification to a HCPCS level II code that

19 is implemented with respect to the payment systems

20 established under title XVIII of the Social Security

21 Act (including the medicare fee schedule database)

22 and that relates to a medical technology described in

23 section 1833(t)(1)(C)(i) of such Act shall be in ef24 fect only for—
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1 (A) the purpose of permitting data to be

2 collected with respect to such technology on the

3 basis described in paragraph (1)(D)(i) or

4 (10)(A)(i) (as amended by this Act) of section

5 1833(t) of such Act; and

6 (B) the period for which such technology is

7 excluded from such system pursuant to para8 graph (1)(B)(iii)(III) of such section.

9 (b) ELIMINATION OF MARKETING EXPERIENCE RE10 QUIREMENT.—Notwithstanding any provision of title

11 XVIII of the Social Security Act, the Secretary may not

12 require a minimum period of marketing experience with

13 respect to a drug or device as a condition of consideration

14 or approval of a recommendation for a HCPCS level II

15 code modification for such drug or device.

16 (c) HCPCS LEVEL II CODE MODIFICATION DE17 FINED.—For purposes of this section, the term ‘‘HCPCS

18 level II code modification’’ means an addition, deletion,

19 or change to the alpha-numeric codes for items not in20 cluded in level I or level III of the Health Care Financing

21 Administration Common Procedure Coding System

22 (HCPCS).

23 (d) REPORT.—

24 (1) IN GENERAL.—Not later than 180 days

25 after the date of enactment of this Act, the Sec-
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1 retary of Health and Human Services shall submit

2 to Congress a report on the feasibility and desir3 ability of opening meetings of the Alpha-Numeric

4 Editorial Panel of the Department of Health and

5 Human Services to the public.

6 (2) REASONS FOR DETERMINATION.—If the

7 Secretary determines that opening such meetings to

8 the public is not feasible or desirable, the Secretary

9 shall include in the report a detailed explanation of

10 the reasons for such determination.

11 (e) EFFECTIVE DATE.—This section takes effect on

12 January 1, 2000.

13 SEC. 8. RETENTION OF HCPCS LEVEL III CODES.

14 (a) IN GENERAL.—The Secretary of Health and

15 Human Services shall maintain and continue the use of

16 HCPCS level III codes (as in effect on June 1, 1999),

17 and shall make such codes available to the public.

18 (b) HCPCS LEVEL III CODES DEFINED.—For pur19 poses of this section, the term ‘‘HCPCS level III codes’’

20 means the alpha-numeric codes for local use under the

21 Health Care Financing Administration Common Proce22 dure Coding System (HCPCS).

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