163
‘‘(i) at least 1⁄3 of such areas in 2008;
and
‘‘(ii) at least 2⁄3 of such areas in
2009.
‘‘(C) WAIVER OF CERTAIN PROVISIONS.—
In carrying out the programs, the Secretary
may waive such provisions of the Federal Ac-
quisition Regulation as are necessary for the ef-
ficient implementation of this section, other
than provisions relating to confidentiality of in-
formation and such other provisions as the Sec-
retary determines appropriate.
‘‘(2) ITEMS AND SERVICES DESCRIBED.—The
items and services referred to in paragraph (1) are
the following:
‘‘(A) DURABLE MEDICAL EQUIPMENT AND
INHALATION
DRUGS
USED
IN
CONNECTION
WITH
DURABLE
MEDICAL
EQUIPMENT.—Cov-
ered items (as defined in section 1834(a)(13))
for which payment is otherwise made under sec-
tion 1834(a), other than items used in infusion,
and inhalation drugs used in conjunction with
durable medical equipment.
‘‘(B) 
OFF-THE-SHELF
ORTHOTICS.—
Orthotics (described in section 1861(s)(9)) for
164
which payment is otherwise made under section
1834(h) which require minimal self-adjustment
for appropriate use and does not require exper-
tise in trimming, bending, molding, assembling,
or customizing to fit to the patient.
‘‘(3) EXEMPTION AUTHORITY.—In carrying out
the programs under this section, the Secretary may
exempt—
‘‘(A) areas that are not competitive due to
low population density; and
‘‘(B) items and services for which the ap-
plication of competitive acquisition is not likely
to result in significant savings.
‘‘(b) PROGRAM REQUIREMENTS.—
‘‘(1) IN GENERAL.—The Secretary shall con-
duct a competition among entities supplying items
and services described in subsection (a)(2) for each
competitive acquisition area in which the program is
implemented under subsection (a) with respect to
such items and services.
‘‘(2) CONDITIONS FOR AWARDING CONTRACT.—
‘‘(A) IN
GENERAL.—The Secretary may
not award a contract to any entity under the
competition conducted in an competitive acqui-
sition area pursuant to paragraph (1) to fur-
165
nish such items or services unless the Secretary
finds all of the following:
‘‘(i) The entity meets quality and fi-
nancial standards specified by the Sec-
retary or developed by accreditation enti-
ties or organizations recognized by the Sec-
retary.
‘‘(ii) The total amounts to be paid
under the contract (including costs associ-
ated with the administration of the con-
tract) are expected to be less than the total
amounts that would otherwise be paid.
‘‘(iii) Beneficiary access to a choice of
multiple suppliers in the area is main-
tained.
‘‘(iv) Beneficiary liability is limited to
the applicable percentage of contract
award price.
‘‘(B) QUALITY STANDARDS.—The quality
standards specified under subparagraph (A)(i)
shall not be less than the quality standards that
would otherwise apply if this section did not
apply and shall include consumer services
standards. The Secretary shall consult with an
expert outside advisory panel composed of an
166
appropriate selection of representatives of phy-
sicians, practitioners, and suppliers to review
(and advise the Secretary concerning) such
quality standards.
‘‘(3) CONTENTS OF CONTRACT.—
‘‘(A) IN
GENERAL.—A contract entered
into with an entity under the competition con-
ducted pursuant to paragraph (1) is subject to
terms and conditions that the Secretary may
specify.
‘‘(B) TERM
OF
CONTRACTS.—The Sec-
retary shall rebid contracts under this section
not less often than once every 3 years.
‘‘(4) LIMIT ON NUMBER OF CONTRACTORS.—
‘‘(A) IN
GENERAL.—The Secretary may
limit the number of contractors in a competitive
acquisition area to the number needed to meet
projected demand for items and services covered
under the contracts. In awarding contracts, the
Secretary shall take into account the ability of
bidding entities to furnish items or services in
sufficient quantities to meet the anticipated
needs of beneficiaries for such items or services
in the geographic area covered under the con-
tract on a timely basis.
167
‘‘(B) MULTIPLE WINNERS.—The Secretary
shall award contracts to more than one entity
submitting a bid in each area for an item or
service.
‘‘(5) PARTICIPATING CONTRACTORS.—Payment
shall not be made for items and services described
in subsection (a)(2) furnished by a contractor and
for which competition is conducted under this sec-
tion unless—
‘‘(A) the contractor has submitted a bid
for such items and services under this section;
and
‘‘(B) the Secretary has awarded a contract
to the contractor for such items and services
under this section.
‘‘(6) AUTHORITY
TO
CONTRACT
FOR
EDU-
CATION, OUTREACH
AND
COMPLAINT
SERVICES.—
The Secretary may enter into a contract with an ap-
propriate entity to address complaints from bene-
ficiaries who receive items and services from an enti-
ty with a contract under this section and to conduct
appropriate education of and outreach to such bene-
ficiaries with respect to the program.
‘‘(c) ANNUAL REPORTS.—The Secretary shall submit
to Congress an annual management report on the pro-
168
grams under this section. Each such report shall include
information on savings, reductions in cost-sharing, access
to items and services, and beneficiary satisfaction.
‘‘(d) DEMONSTRATION PROJECT FOR CLINICAL LAB-
ORATORY SERVICES.—
‘‘(1) IN GENERAL.—The Secretary shall, begin-
ning in 2008, conduct a demonstration project on
the application of competitive acquisition under this
section to clinical diagnostic laboratory tests—
‘‘(A) for which payment is otherwise made
under section 1833(h) or 1834(d)(1) (relating
to colorectal cancer screening tests); and
‘‘(B) which are furnished without a face-
to-face encounter between the individual and
the hospital or physician ordering the tests.
‘‘(2) TERMS
AND
CONDITIONS.—Such project
shall be under the same conditions as are applicable
to items and services described in subsection (a)(2).
‘‘(3) REPORT.—The Secretary shall submit to
Congress—
‘‘(A) an initial report on the project not
later than December 31, 2009; and
‘‘(B) such progress and final reports on
the project after such date as the Secretary de-
termines appropriate.’’.