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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1626 Introduced in Senate (IS)]

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.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare Patient 
Access to Technology Act of 1999''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

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.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) In order to ensure genuine access of medicare 
        beneficiaries to medical technologies, the Secretary of Health 
        and Human Services has an obligation to integrate and 
        coordinate its medical technology coverage policy determination 
        process with agency policies and practices that govern 
        assignment of procedure codes, establishment and adjustment of 
        payment levels and groupings, and issuance of timely 
        instructions to contractors.
            (2) The effectiveness of the medicare program in meeting 
        beneficiary needs is compromised if access to state-of-the-art 
        medical care is denied as a result of ineffective agency 
        performance in the coverage, coding, or payment processes; or 
        in the ineffective administrative execution of medical 
        technology decisions.
            (3) The Secretary of Health and Human Services owes 
        medicare beneficiaries the assurance that the various medicare 
        payment systems (in both the fee-for-service and managed care 
        areas) are operated in a way that reflects developments in, and 
        improvements upon, medical technology by properly setting and 
        adjusting payment levels and payment groups.
            (4) Clear, predictable, and well-functioning coverage, 
        coding, and payment systems are particularly critical to this 
        Nation's small medical technology companies, which are the 
        originators of most medical product innovations.
            (5) Unless the administrators of the coverage, coding, and 
        payment systems under the medicare program review products 
        promptly, apply standards appropriate for medical technology, 
        and provide reasonable reimbursement levels, small medical 
        technology companies will experience difficulties in bringing 
        the benefits of medical innovation to medicare beneficiaries.
            (6) By creating an internal task force to examine methods 
        for integrating coverage, coding, and payment decisions, the 
        Secretary of Health and Human Services has taken an important 
        first step toward preserving innovation, and should continue to 
        work to bring these 3 processes together.

SEC. 3. ESTABLISHMENT OF MEDICARE ACCESS TO TECHNOLOGY ADVISORY 
              COMMITTEE.

    (a) In General.--Title XVIII of the Social Security Act (42 U.S.C. 
1395 et seq.) is amended by adding at the end the following:

           ``medicare access to technology advisory committee

    ``Sec. 1897. (a) Medicare Access to Technology Advisory 
Committee.--
            ``(1) Establishment.--
                    ``(A) In general.--Not later than July 1, 2001, the 
                Secretary shall establish the Medicare Access to 
                Technology Advisory Committee (in this subsection 
                referred to as the `Committee') under section 9(a)(1) 
                of the Federal Advisory Committee Act for the purpose 
                of securing advice and recommendations on issues 
                related to coverage, payment, and coding decisions.
                    ``(B) Consultation.--The Secretary shall consult 
                with the Committee, and may consult directly with any 
                panel of the Committee established under subsection 
                (b)(1).
            ``(2) Duties.--The Committee, and the panels of the 
        Committee, shall provide advice and recommendations to the 
        Secretary with respect to--
                    ``(A) the issues referred to the Medicare Coverage 
                Advisory Committee (established by the Secretary on 
                November 24, 1998, notice of which was published in the 
                Federal Register on December 14, 1998 (63 Fed. Reg. 
                68780));
                    ``(B) policies regarding payment issues and 
                policies regarding coding issues under this title, 
                including identification of--
                            ``(i) policies and mechanisms to help 
                        ensure that payment and coding decisions are 
                        made--
                                    ``(I) in a way that encourages 
                                access to high-quality medical care 
                                under this title;
                                    ``(II) through processes that allow 
                                for significant public participation; 
                                and
                                    ``(III) expeditiously, in 
                                accordance with specified timeframes 
                                for each significant step in the 
                                process of making such decisions;
                            ``(ii) an equitable mechanism for 
                        determining fee schedule payment amounts for 
                        items and services, except for physicians' 
                        services (as defined in section 1861(q)); and
                            ``(iii) processes for reconsideration and 
                        appeal of determinations of fee schedule 
                        payment amounts; and
                    ``(C) the integration of policies on coverage, 
                payment, and coding under this title into a process 
                that ensures timely access to high-quality medical 
                care.
            ``(3) Policies regarding coding issues.--
                    ``(A) For purposes of paragraph (2)(B), policies 
                regarding coding issues include any policy resulting 
                from an action described in clause (i) of subparagraph 
                (B).
                    ``(B)(i) An action described in this clause is the 
                action of any person to create, revise, update, modify, 
                adopt, edit, abridge, or otherwise affect the form of a 
                code used by the Secretary in the operation of the 
                program under this title.
                    ``(ii) As used in clause (i), the term `code' means 
                any code included in level I or II of the Health Care 
                Financing Administration Common Procedure Coding 
                System.
            ``(4) Duration.--Section 14(a)(2)(B) of the Federal 
        Advisory Committee Act shall not apply to the Committee.
    ``(b) Committee Procedures.--In administering the Committee under 
this section, the Secretary shall--
            ``(1) organize the Committee into panels of experts;
            ``(2) ensure participation on the Committee of individuals 
        who--
                    ``(A) are experts in a variety of medical 
                specialties and fields of science, including--
                            ``(i) specific areas of medical technology, 
                        including suppliers and manufacturers of 
                        clinical and diagnostic testing supplies and 
                        durable medical equipment;
                            ``(ii) medical research generally, 
                        including experts in the study of treatment 
                        outcomes; and
                            ``(iii) other areas relevant to the duties 
                        assigned to the Committee (taking into account, 
                        as appropriate, any affiliations individuals 
                        may have with organizations possessing 
                        information, expertise, and other resources 
                        that would contribute significantly to the work 
                        of the Committee and its panels);
                    ``(B) are qualified by training and experience to 
                evaluate the matters referred to the Committee, 
                including a representative of consumer interests and a 
                representative of the interests of manufacturers of 
                medical technology on each panel; and
                    ``(C) have adequately diversified backgrounds so 
                that the Committee will provide balanced advice and 
                recommendations;
            ``(3) permit each panel to independently advise the 
        Secretary with regard to matters referred to the panel, without 
        the need to obtain the concurrence of the full Committee;
            ``(4) provide for--
                    ``(A) full public participation, to the extent 
                required or permitted under law, in any meeting of the 
                Committee or its panels;
                    ``(B) publication of notice of any such meeting on 
                the official Internet site of the Department of Health 
                and Human Services at least 60 days before such 
                meeting, including--
                            ``(i) a statement of the issues to be 
                        considered by the Committee or panel;
                            ``(ii) a description of the specific 
                        information that is relevant to such issues; 
                        and
                            ``(iii) the text of any proposals the 
                        Secretary will ask the Committee or panel to 
                        consider;
                    ``(C) consideration by the Committee or panel of 
                relevant information or testimony that is submitted by 
                the public;
                    ``(D) public access in a central repository to the 
                information described in subparagraph (C) at least 20 
                days before the meeting; and
                    ``(E) the panels to meet at least once every 3 
                months unless there is no business to conduct;
            ``(5) require the Committee and its panels to provide, with 
        any recommendation, a summary of the reasons for the 
        recommendation and a summary of the data upon which the 
        recommendation is based; and
            ``(6) make a verbatim transcript of each Committee and 
        panel proceeding (other than those portions that are closed to 
        the public in accordance with law) available to the public 
        within 14 days on the official Internet site of the Department 
        of Health and Human Services.''.
    (b) Transition, Continuing Responsibility for Unfinished Duties.--
            (1) In general.--Effective on the date the Medicare Access 
        to Technology Advisory Committee is established, the Secretary 
        of Health and Human Services shall provide for the transfer to 
        such committee of any assets and staff of the Medicare Coverage 
        Advisory Committee, without any loss of benefits or seniority 
        by virtue of such transfers.
            (2) Availability of funds.--Fund balances available to the 
        Medicare Coverage Advisory Committee for any period shall be 
        available to the Medicare Access to Technology Advisory 
        Committee for such period for like purposes.
    (c) Reporting Requirements.--
            (1) Not later than December 1 of each year, beginning with 
        2000, the Secretary of Health and Human Services shall submit 
        to Congress a report describing the timeliness of the 
        Secretary's national coverage policy decisionmaking during the 
        preceding fiscal year measured by the timeframes the Secretary 
        has published for the national coverage policy determination 
        process, and such report shall include the actual time periods 
        that were necessary to complete and fully implement national 
        coverage policy determinations and each significant step in the 
        process.
            (2) Not later than July 1, 2000, the Secretary of Health 
        and Human Services shall submit to Congress a report, on the 
        nature of the coverage policy determination processes used by 
        Medicare+Choice organizations established under part C of title 
        XVIII of the Social Security Act (42 U.S.C. 1395w-21 et seq.), 
        including a detailed explanation of any steps taken to ensure 
        that the coverage policy determination processes under the 
        Medicare+Choice program established under such part--
                    (A) produce results consistent with the coverage 
                policy determinations reached under parts A and B of 
                such title (42 U.S.C. 1395 et seq.); and
                    (B) treat any medical device being investigated 
                under section 520(g) of the Federal Food, Drug, and 
                Cosmetic Act (42 U.S.C. 360j(g)), in a manner 
                consistent with the treatment afforded such medical 
                device under parts A and B of the Social Security Act 
                (42 U.S.C. 1395 et seq.).

SEC. 4. ANNUAL ADJUSTMENTS TO MEDICARE PAYMENT SYSTEMS FOR CHANGES IN 
              TECHNOLOGY AND MEDICAL PRACTICE.

    (a) In General.--Title XVIII of the Social Security Act (42 U.S.C. 
1395 et seq.) is amended by inserting after section 1888 the following:

    ``annual adjustments to medicare payment systems for changes in 
                    technology and medical practice

    ``Sec. 1889. (a) In General.--Notwithstanding any other provision 
of this title, the Secretary shall adjust the appropriate elements of 
the payment systems established under sections 1833(i)(2)(A), 1833(t), 
1848, and 1886(d) (including relative payment weights, relative value 
units, weighting factors, classifications, and case assignments) at 
least annually to ensure that payments, classifications, and 
assignments under such systems--
            ``(1) appropriately reflect changes in medical technology 
        and medical practice affecting the items and services for which 
        payment may be made under such systems; and
            ``(2) promote the efficient and effective delivery of high-
        quality health care.
    ``(b) Rules for Determining Adjustments.--Except as provided in 
subsection (c), the provisions of sections 1833(i)(2)(A), 1833(t)(7), 
1848(c)(2)(B), and 1886(d)(4)(C) shall apply to the annual adjustments 
required by this section in the same manner and to the same extent as 
they apply to the adjustments of relative payment weights, relative 
value units, weighting factors, classification, and assignments, 
respectively, that are authorized or required by such sections.
    ``(c) Use of Internal Data Collected by the Secretary.--
            ``(1) In general.--In determining the adjustments required 
        by this section, the Secretary may not--
                    ``(A) decline to make an adjustment that is based 
                on data collected by the Secretary in the 
                administration of the program established under this 
                title if the data reflect a representative sample of 
                cases that is statistically valid; and
                    ``(B) establish a uniform period of time (such as 1 
                year) from which such data must be drawn.
            ``(2) Deadline for supplying internal data.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                Secretary shall establish a reasonable deadline for the 
                submission of data collected by the Secretary to be 
                used in making the adjustments required by this 
                section.
                    ``(B) Limitation.--In no event may the deadline 
                established under subparagraph (A) be more than 7 
                months before the first day of the provider payment 
                update period for which the adjustment or adjustments 
                to which the data relates would be effective.
    ``(d) Use of External Data.--
            ``(1) In general.--Subject to paragraph (2), in determining 
        the adjustments required by this section, the Secretary shall 
        utilize data other than data collected by the Secretary in the 
        administration of the program established under this title if--
                    ``(A) data collected by the Secretary in the 
                administration of such program are not available at the 
                time such adjustments are being determined; and
                    ``(B) such other data are reliable and verifiable.
            ``(2) External data facilitating the use of internal 
        data.--In determining the adjustments required by this section, 
        the Secretary may not--
                    ``(A) decline to use data other than data collected 
                by the Secretary if such other data--
                            ``(i) enable the Secretary to identify or 
                        refine data collected by the Secretary for use 
                        in making such an adjustment; and
                            ``(ii) are based on a representative sample 
                        of cases that is statistically valid; or
                    ``(B) establish a uniform period of time (such as 1 
                year) from which such data must be drawn.
            ``(3) Alternative sources of data.--In determining the 
        adjustments required by this section, the Secretary shall use 
        data, that otherwise meets the requirements of this subsection, 
        collected by (or on behalf of)--
                    ``(A) private payers;
                    ``(B) manufacturers of medical technologies;
                    ``(C) suppliers;
                    ``(D) groups representing physicians and other 
                health care professionals;
                    ``(E) groups representing providers;
                    ``(F) clinical trials; and
                    ``(G) such other sources as the Secretary 
                determines to be appropriate.
            ``(4) Clarification.--Nothing in this title shall be 
        construed as--
                    ``(A) requiring the Secretary to identify all 
                claims submitted under a payment system established 
                under section 1833(i)(2)(A), 1833(t), 1848, or 1886(d), 
                involving the use of a medical technology before the 
                Secretary may make the adjustments under this section 
                (or under section 1833(i)(2)(A), 1833(t), 1848, or 
                1886(d)) with respect to such technology; or
                    ``(B) authorizing the Secretary to defer action on 
                such an adjustment until all such claims are 
                identifiable.
            ``(5) Deadline for supplying external data.--The Secretary 
        shall establish a reasonable deadline for the submission of 
        data other than data collected by the Secretary to be used in 
        making the adjustments required by this section. In no event 
        may the deadline established under this paragraph be more than 
        9 months before the first day of the provider payment update 
        period for which the adjustment or adjustments to which the 
        data relates would be effective.
    ``(e) Timing of Adjustments.--
            ``(1) In general.--The annual adjustments required by this 
        section shall--
                    ``(A) apply to provider payment update periods 
                beginning on or after October 1, 2000; and
                    ``(B) be described in the proposed and final rules 
                published by the Secretary with respect to changes to a 
                payment system established under section 1833(i)(2)(A), 
                1833(t), 1848, or 1886(d), for the provider payment 
                update period to which they relate, together with a 
                description of the data on which such adjustments are 
                based.
            ``(2) Provider payment update period defined.--For purposes 
        of this section, the term `provider payment update period' 
        means--
                    ``(A) in the case of the payment systems 
                established under sections 1833(t) and 1848, a calendar 
                year; and
                    ``(B) in the case of the payment systems 
                established under sections 1833(i)(2)(A) and 1886(d), a 
                fiscal year beginning on October 1.''.
    (b) Conforming Amendments.--
            (1) Ambulatory surgical centers.--Section 1833(i)(2)(A) of 
        the Social Security Act (42 U.S.C. 1395l(i)(2)(A)) is amended 
        by striking ``Each'' in the second sentence and inserting 
        ``Subject to section 1889, each''.
            (2) Outpatient hospital prospective payment system.--
        Section 1833(t)(6)(A) of such Act (42 U.S.C. 1395l(t)(6)(A)) is 
        amended by striking ``The'' and inserting ``Subject to section 
        1889, the''.
            (3) Physician payment.--Section 1848(c)(2)(B)(i) of such 
        Act (42 U.S.C. 1395w-4(c)(2)(B)(i)) is amended by striking 
        ``The'' and inserting ``Subject to section 1889, the''.
            (4) Inpatient hospital prospective payment system.--Section 
        1886(d)(4)(C)(i) of such Act (42 U.S.C. 1395ww(d)(4)(C)(i)) is 
        amended by striking ``The'' and inserting ``Subject to section 
        1889, the''.

SEC. 5. TREATMENT OF NEW MEDICAL TECHNOLOGIES UNDER MEDICARE OPD PPS.

    (a) Temporary Exclusion of Certain Medical Technologies.--
            (1) In general.--Section 1833(t)(1) of the Social Security 
        Act (42 U.S.C. 1395l(t)(1)) is amended--
                    (A) in subparagraph (B)(iii)--
                            (i) by inserting ``(I)'' after ``include'';
                            (ii) by striking ``or ambulance services'' 
                        and inserting ``, (II) ambulance services''; 
                        and
                            (iii) by striking ``1834(l).'' and 
                        inserting ``1834(l), or (III) for the time 
                        period specified in clause (ii) of subparagraph 
                        (C), the medical technologies described in 
                        clause (i) of such subparagraph, except that 
                        this subclause shall not be construed to 
                        constitute the sole basis on which any such 
                        medical technologies may be excluded from the 
                        payment system established under this 
                        subsection.''; and
                    (B) by adding at the end the following:
                    ``(C) Medical technologies subject to temporary 
                exclusion.--
                            ``(i) Medical technologies described.--
                        Subject to clause (v), the medical technologies 
                        described in this clause are the following:
                                    ``(I) Any medical technology that 
                                was reimbursed as a hospital outpatient 
                                service under this part during 1996 for 
                                which sufficient, reliable, and 
                                verifiable data drawn from such year is 
                                not available.
                                    ``(II) Any medical technology that 
                                was not reimbursed as a hospital 
                                outpatient service under this part 
                                during 1996 but was reimbursed as such 
                                a service as of the day before the date 
                                on which the system established under 
                                this subsection first took effect.
                                    ``(III) Subject to clause (iv), any 
                                medical technology that was not 
                                reimbursed as a hospital outpatient 
                                service under this part as of the day 
                                before such system took effect but that 
                                is payable as such a service on or 
                                after the date on which such system 
                                first took effect.
                                    ``(IV) Drugs or biological products 
                                used as treatment or supportive care 
                                for patients with cancer, including 
                                chemotherapeutic agents, antiemetics, 
                                hematopoietic growth factors, colony 
                                stimulating factors, and biological 
                                response modifiers.
                                    ``(V) Drugs or biological products 
                                designated as a drug for a rare disease 
                                or condition under section 526 of the 
                                Federal Food, Drug and Cosmetic Act (21 
                                U.S.C. 360bb) and approved or licensed 
                                for introduction into interstate 
                                commerce by the Commissioner of Food 
                                and Drugs.
                                    ``(VI) Drugs or biological products 
                                used for the treatment of end-stage 
                                renal disease not included in the 
                                composite rate under section 1881 and 
                                for which a payment methodology is not 
                                specifically established by this Act, 
                                other than by section 1842(o).
                                    ``(VII) Radiopharmaceutical drugs 
                                or biological products used in 
                                diagnostic, monitoring, and therapeutic 
                                nuclear medicine procedures.
                                    ``(VIII)(aa) Blood components and 
                                blood products, including any such 
                                component or product derived from 
                                plasma fractionation or biotechnology 
                                analog of such component or product; 
                                and
                                    ``(bb) Any medical technology or 
                                service used in connection with blood 
                                transfusion, blood product exchange, or 
                                other blood-related therapy, including 
                                plasmapheresis, photopheresis, 
                                hematopoietic stem cell collection or 
                                replacement therapy.
                                    ``(IX) Drugs or biological products 
                                with respect to which the mean cost for 
                                a dose exceeds the otherwise applicable 
                                fee schedule amount under the system 
                                established under this subsection by 2 
                                standard deviations from such mean.
                            ``(ii) Time period specified.--Subject to 
                        clause (iii), the time periods specified in 
                        this clause are not less than--
                                    ``(I) for a medical technology 
                                described in subclause (I) or (II) of 
                                clause (i), the period that begins with 
                                the date on which the system 
                                established under this subsection first 
                                takes effect and ends with (and 
                                includes) the last day of the fourth 
                                calendar year to begin on or after such 
date; and
                                    ``(II) for a medical technology 
                                described in subclause (III) of clause 
                                (i), the period that begins with the 
                                date on which a claim is first 
                                submitted under this part with respect 
                                to such technology and ends with (and 
                                includes) the last day of the fourth 
                                calendar year to begin on or after such 
                                date.
                            ``(iii) Process for inclusion of excluded 
                        medical technologies.--No medical technology 
                        excluded under clause (i) may be designated as 
                        a covered OPD service unless the Secretary 
                        completes the following steps:
                                    ``(I) The Secretary shall assign a 
                                unique code to the medical technology 
                                to be designated as a covered OPD 
                                service.
                                    ``(II) The Secretary shall issue 
                                instructions for using any code 
                                assigned under subclause (I) and 
                                document the usage of the medical 
                                technology to which the code is 
                                assigned in the hospital outpatient 
                                department.
                                    ``(III) The Secretary shall require 
                                hospitals to use the codes assigned 
                                under subclause (I) for not less than 2 
                                years.
                                    ``(IV) The Secretary shall obtain 
                                sufficient, reliable, and verifiable 
                                cost and utilization data from a 
                                representative group of hospitals that 
                                use the medical technology, including 
                                hospitals of different sizes, 
                                geographic locations, degrees of 
                                specialization, case-mix, and the 
                                dependence of the hospitals on funds 
                                provided under the medicare program 
                                under this title and the medicaid 
                                program under title XIX.
                                    ``(V) The Secretary, based on the 
                                data obtained under subclause (IV), 
                                shall develop a proposed OPD service 
                                classification for the medical 
                                technology, paying particular attention 
                                to the potential of the proposed 
                                classification to create economic 
                                incentives that could reduce patient 
                                access to the medical technology.
                                    ``(VI) The Secretary shall publish 
                                in the Federal Register a proposed rule 
                                regarding the classification described 
                                under subclause (V) and supporting cost 
                                and utilization data.
                                    ``(VII) The Secretary shall provide 
                                for a comment period of not less than 
                                90 days, beginning on the date on which 
                                the Secretary publishes the proposed 
                                rule and supporting data described in 
                                subclause (V).
                            ``(iv) New technologies described.--As of 
                        the effective date of this clause, the 
                        technologies to which clause (i)(III) applies 
                        include--
                                    ``(I) existing technologies not 
                                previously reimbursed as hospital 
                                outpatient services;
                                    ``(II) newly developed technologies 
                                approved or licensed for introduction 
                                into interstate commerce by the 
                                Commissioner of Food and Drugs after 
                                December 31, 1995; and
                                    ``(III) new applications of 
                                existing technologies.
                            ``(v) Low-cost medical technologies.--The 
                        medical technologies described in clause (i) do 
                        not include any medical technology if the cost 
                        of such technology is insignificant in relation 
                        to the OPD fee schedule amount (as calculated 
                        under paragraph (3)(D)) payable for the service 
                        (or group of services).
                            ``(vi) Medical technology defined.--For 
                        purposes of this subsection, the term `medical 
                        technology' means any discrete and identifiable 
                        regimen or modality used to diagnose or treat 
                        illness, prevent disease, maintain patient 
                        well-being, or facilitate the provision of 
                        health care services.
                    ``(D) Treatment of implantable devices.--
                            ``(i) Payment basis during and after 
                        exclusion period.--If a medical technology that 
                        is an implantable device is excluded from the 
                        payment system established under this 
                        subsection pursuant to subparagraph 
                        (B)(iii)(III), such device--
                                    ``(I) shall be paid on the basis 
                                described in subsection (a)(2)(B)(i) 
                                during the period of such exclusion; 
                                and
                                    ``(II) shall be paid for under the 
                                system established under this 
                                subsection during the period following 
                                such exclusion (and not under a fee 
                                schedule established under subsection 
                                (a) or (h) of section 1834).
                            ``(ii) Payment basis for devices with no 
                        exclusion period.--If a medical technology that 
                        is an implantable device was not excluded from 
                        the payment system established under this 
                        subsection pursuant to subparagraph 
                        (B)(iii)(III)--
                                    ``(I) such device shall be included 
                                in such system (and not a fee schedule 
                                established under subsection (a) or (h) 
                                of section 1834); and
                                    ``(II) in determining the relative 
                                payment weights (described in paragraph 
                                (2)(C)) for the service or group of 
                                services within which such device is 
                                classified under such system, the 
                                Secretary shall meet the requirements 
                                of clause (iii).
                            ``(iii) Determination of relative payment 
                        weights.--Subject to paragraph (11), in 
                        determining the relative payment weights 
                        described in clause (ii)(II) for an implantable 
                        device, the Secretary--
                                    ``(I) may not substitute data on 
                                the amount that would be paid for such 
                                device under a fee schedule established 
                                under subsection (a) or (h) of section 
                                1843 for data on the amounts paid for 
                                such device under subsection 
                                (a)(2)(B)(i); and
                                    ``(II) shall rely solely on data on 
                                the amounts paid for such item or 
                                service under such subsection 
                                (a)(2)(B)(i).''.
            (2) Administrative and judicial review.--Section 1833(t)(9) 
        of the Social Security Act (42 U.S.C. 1395l(t)(9)) is amended--
                    (A) by striking ``Limitation on review.--There'' 
                and inserting ``Limitation on review.--
                    ``(A) In general.--Subject to subparagraph (B), 
                there''; and
                    (B) by adding at the end the following:
                    ``(B) Rule of construction.--This paragraph shall 
                not be construed as limiting administrative or judicial 
                review of determinations of whether a medical 
                technology is required to be excluded from the payment 
                system established under this subsection pursuant to 
                paragraph (1)(B)(iii)(III).''.
    (b) Limiting Variation in the Costs of Services Classified Within 
the Same Group.--Section 1833(t)(2) of the Social Security Act (42 
U.S.C. 1395l(t)(2)) is amended by adding at the end the following:
        ``For purposes of subparagraph (B), items and services within a 
        group shall not be treated as `comparable with respect to the 
        use of resources' if the highest mean cost for an item or 
        service within the group is more than 2 times greater than the 
        lowest mean cost for an item or service within the group.''.
    (c) Annual Review of OPD PPS Components.--Section 1833(t)(6)(A) of 
the Social Security Act (42 U.S.C. 1395l(t)(6)(A)) (as amended by 
section 4(b)(2)) is amended by striking ``may periodically review'' and 
inserting ``shall review not less than annually''.
    (d) Special Rules for Excluded Services.--
            (1) Unadjusted co-payment amount.--Section 1833(t)(3)(B) of 
        the Social Security Act (42 U.S.C 13951(t)(3)(B)) is amended--
                    (A) in clause (i), by inserting ``or to a service 
                excluded under paragraph (1)(C)'' after ``(or group of 
                such services)'';
                    (B) in clause (ii), by inserting ``or excluded 
                service under paragraph (1)(C)'' after ``furnished in a 
                year''; and
                    (C) by adding at the end the following:
                            ``(iv) Rules for excluded services.--The 
                        Secretary shall establish rules for the 
                        establishment of an unadjusted copayment amount 
                        for medical technologies excluded under 
                        paragraph (1)(C)(i) for which no national 
                        median of charges is available based on the 
                        unadjusted copayment amount for medical 
                        technologies with similar average wholesale 
                        prices.''.
            (2) Beneficiary cost sharing.--Section 1833(t) of the 
        Social Security Act (42 U.S.C. 13951(t)) is amended.--
                    (A) by redesignating paragraphs (6) through (9) (as 
                amended by subsections (a)(2) and (c) and section 
                4(b)(2)) as paragraphs (7) through (10), respectively; 
                and
                    (B) by inserting after paragraph (5) the following:
            ``(6) Payment amounts for excluded services--
                    ``(B) Copayment amount for excluded services--
                            ``(i) In general.--Except as provided in 
                        clause (ii), the copayment amount for services 
                        excluded under subparagraph (1)(C) shall be the 
                        unadjusted copayment amount for such services 
                        as determined under paragraph (3)(B).
                            ``(ii) Exception.--If the copayment amount 
                        determined under clause (i) is less than 20 
                        percent of the reasonable cost as determined 
                        under subparagraph (A), the copayment amount 
                        shall be 20 percent of the reasonable cost as 
                        so determined.''.
            (3) Conforming amendment.--Section 1833(a)(2)(B)(i) is 
        amended by striking ``furnished before January 1, 1999,''.
    (e) Payment.--Section 1833(t) of the Social Security Act (42 U.S.C. 
1395l(t)) is amended--
            (1) by redesignating paragraph (10) (as redesignated by 
        subsection (d)(2)(A)) as paragraph (12); and
            (2) by inserting after paragraph (9) the following:
            ``(10) Payment during and after exclusion period.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this title, items and services excluded 
                from the system established under this subsection 
                pursuant to paragraph (1)(B)(iii)(III) (other than any 
                implantable devices to which paragraph (1)(D) 
                applies)--
                            ``(i) shall be paid on the basis described 
                        in subsection (a)(2)(B)(i) during the period of 
                        such exclusion; and
                            ``(ii) shall be paid for under the system 
                        established under this subsection during the 
                        period following such exclusion.
                    ``(B) Determining relative payment weights.--
                Subject to paragraph (11), in determining the relative 
                payment weights (described in paragraph (2)(C)) for the 
                service or group of services within which an item or 
                service is classified pursuant to the payment system 
                established under this subsection, the Secretary--
                            ``(i) may not substitute data on the amount 
                        that would be paid for such item or service 
                        under a fee schedule established under 
                        subsection (a) or (h) of section 1843 for data 
                        on the amounts paid for such device under 
                        subsection (a)(2)(B)(i); and
                            ``(ii) shall rely solely on data on the 
                        amounts paid for such item or service under 
                        such subsection (a)(2)(B)(i).
            ``(11) Exclusion of data for certain medical 
        technologies.--The Secretary may not utilize data with respect 
        to a device for which an exemption granted under section 520(g) 
        of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360j(g)) 
        is in effect--
                    ``(A) in determining whether there is adequate data 
                with respect to the device for purposes of clauses 
                (i)(I) and (iii) of paragraph (1)(C); or
                    ``(B) in determining the relative payment weights 
                for the device pursuant to paragraph (1)(D)(iii) or 
                (10)(B).''.
    (f) Required Consultation Before Limiting Coverage by Site of 
Service.--
            (1) In general.--Notwithstanding any other provision of 
        law, the Secretary may not implement on or after September 8, 
        1998, any regulatory guidance of the type described in 
        paragraph (2) until the Secretary has consulted with groups 
        representing hospitals, physicians, beneficiaries under the 
        medicare program under title XVIII of the Social Security Act 
        (42 U.S.C. 1395 et seq.), and manufacturers of medical 
        technologies.
            (2) Regulatory guidance.--The types of regulatory guidance 
        described in this paragraph are proposed, interim final, and 
        final regulations, manual instructions, statements of policy, 
        and other forms of regulatory guidance that would--
                    (A) deny coverage or payment for an item or service 
                under title XVIII of the Social Security Act (42 U.S.C. 
                1395 et seq.) unless the item or service is furnished 
on an inpatient basis; or
                    (B) deny coverage or payment for an item or service 
                under such title unless the item or service is 
                furnished on an outpatient basis.
    (g) Basis for Determining Weighting Factors.--Section 1833(t)(2)(C) 
of the Social Security Act (42 U.S.C. 1395l(t)(2)(C)) is amended by 
striking ``median'' and inserting ``mean''.
    (h) Budget Neutrality Adjustment.--The Secretary of Health and 
Human Services shall make such adjustments to the amounts payable under 
section 1833(t) of the Social Security Act (42 U.S.C. 1395l(t)) as may 
be necessary to ensure that there is no increase or decrease in the 
expenditures under title XVIII of the Social Security Act (42 U.S.C. 
1395 et seq.) as a result of the amendments made by this section.
    (i) Monitoring Access to Medical Technology.--
            (1) Monitoring and annual reports of the secretary.--
                    (A) Monitoring access.--The Secretary of Health and 
                Human Services shall monitor the utilization of medical 
                technology in hospital outpatient departments.
                    (B) Annual reports.--The Secretary of Health and 
                Human Services shall annually submit to Congress a 
                report on the utilization of the medical technology 
                monitored under subparagraph (A) together with an 
                analysis of the extent to which access by beneficiaries 
                under the medicare program under title XVIII of the 
                Social Security Act (42 U.S.C. 1395 et seq.) to new 
                medical technologies is affected by the inclusion or 
                exclusion of such technologies in the payment system 
                established under section 1833(t) of such Act (42 
                U.S.C. 1395l(t)).
            (2) Comments and reports of medpac.--
                    (A) Comments.--The Medicare Payment Advisory 
                Commission established under section 1805 of the Social 
                Security Act (42 U.S.C. 1395b-6) (in this paragraph 
                referred to as ``MedPAC'') shall submit to the 
                Secretary of Health and Human Services comments on any 
                proposed rule regarding the classification of medical 
                technologies excluded from the prospective payment 
                system established under section 1833 of the Social 
                Security Act (42 U.S.C. 1395l(t)).
                    (B) Annual reports.--
                            (i) In general.--MedPAC shall annually 
                        submit to the appropriate committees of 
                        Congress a report on the changes in utilization 
                        of and access to medical technologies furnished 
                        under title XVIII of the Social Security Act 
                        (42 U.S.C. 1395 et seq.) together with its 
                        recommendations for such legislation and 
                        administrative actions as it considers 
                        appropriate to improve access of beneficiaries 
                        under the medicare program under title XVIII of 
                        the Social Security Act (42 U.S.C. 1395 et 
                        seq.) to appropriate medical technologies.
                            (ii) Consultation.--In preparing the annual 
                        report under clause (i), MedPAC shall convene 
                        and consult a panel of experts to evaluate the 
                        implications of medical technology utilization 
                        patterns for the quality of and access to care 
                        of beneficiaries under the medicare program 
                        under title XVIII of the Social Security Act 
                        (42 U.S.C. 1395 et seq.).
    (j) Effective Dates.--The amendments made by subsections (a), (b), 
(c), (d), (e), and (g) take effect as if included in the amendments 
made by section 4523(a) of the Balanced Budget Act of 1997 (Public Law 
105-33; 111 Stat. 445).

SEC. 6. CLARIFICATION OF STANDARD FOR MEDICARE COVERAGE OF DRUGS AND 
              BIOLOGICALS.

    (a) In General.--Section 1862(a) of the Social Security Act (42 
U.S.C. 1395y(a)) is amended by adding at the end the following: ``A 
drug or biological may not be excluded from coverage under this title 
by reason of paragraph (1)(A) if the drug or biological has been 
approved by the Food and Drug Administration and is prescribed for a 
use that has been approved by the Food and Drug Administration or that 
is supported by 1 or more citations that are included (or approved for 
inclusion) in 1 or more of the compendia referred to in section 
1861(t)(2)(B)(ii)(l).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to coverage determinations made on or after the date of enactment 
of this Act.

SEC. 7. PROCESS FOR MAKING AND IMPLEMENTING CERTAIN CODING 
              MODIFICATIONS.

    (a) Timely Assignment of Codes.--
            (1) In general.--Notwithstanding title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.), the Secretary of Health 
        and Human Services (in this section referred to as the 
        ``Secretary'') shall--
                    (A) accept recommendations for HCPCS level II code 
                modifications from the public throughout the year;
                    (B) cause determinations on recommendations 
                received during the 3 months immediately preceding the 
                last month of a calendar quarter to be made not later 
                than the first day of the following calendar quarter; 
                and
                    (C) implement approved modifications to HCPCS level 
                II codes established under title XVIII of the Social 
                Security Act (including the medicare fee schedule 
                database) with respect to the payment system not later 
                than 180 days after the date on which the determination 
                approving a modification was made.
            (2) Special rule for certain medical technologies.--For 
        purposes of subparagraph (C), any modification to a HCPCS level 
        II code that is implemented with respect to the payment systems 
        established under title XVIII of the Social Security Act 
        (including the medicare fee schedule database) and that relates 
        to a medical technology described in section 1833(t)(1)(C)(i) 
        of such Act shall be in effect only for--
                    (A) the purpose of permitting data to be collected 
                with respect to such technology on the basis described 
                in paragraph (1)(D)(i) or (10)(A)(i) (as amended by 
                this Act) of section 1833(t) of such Act; and
                    (B) the period for which such technology is 
                excluded from such system pursuant to paragraph 
                (1)(B)(iii)(III) of such section.
    (b) Elimination of Marketing Experience Requirement.--
Notwithstanding any provision of title XVIII of the Social Security 
Act, the Secretary may not require a minimum period of marketing 
experience with respect to a drug or device as a condition of 
consideration or approval of a recommendation for a HCPCS level II code 
modification for such drug or device.
    (c) HCPCS Level II Code Modification Defined.--For purposes of this 
section, the term ``HCPCS level II code modification'' means an 
addition, deletion, or change to the alpha-numeric codes for items not 
included in level I or level III of the Health Care Financing 
Administration Common Procedure Coding System (HCPCS).
    (d) Report.--
            (1) In general.--Not later than 180 days after the date of 
        enactment of this Act, the Secretary of Health and Human 
        Services shall submit to Congress a report on the feasibility 
        and desirability of opening meetings of the Alpha-Numeric 
        Editorial Panel of the Department of Health and Human Services 
        to the public.
            (2) Reasons for determination.--If the Secretary determines 
        that opening such meetings to the public is not feasible or 
        desirable, the Secretary shall include in the report a detailed 
        explanation of the reasons for such determination.
    (e) Effective Date.--This section takes effect on January 1, 2000.

SEC. 8. RETENTION OF HCPCS LEVEL III CODES.

    (a) In General.--The Secretary of Health and Human Services shall 
maintain and continue the use of HCPCS level III codes (as in effect on 
June 1, 1999), and shall make such codes available to the public.
    (b) HCPCS Level III Codes Defined.--For purposes of this section, 
the term ``HCPCS level III codes'' means the alpha-numeric codes for 
local use under the Health Care Financing Administration Common 
Procedure Coding System (HCPCS).
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