I 
112TH CONGRESS 
2D SESSION 
H. R. 6490 
To amend title XVIII of the Social Security Act to establish a market 
pricing program for durable medical equipment, prosthetics, orthotics, 
and supplies (DMEPOS) under part B of the Medicare program. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 21, 2012 
Mr. PRICE of Georgia (for himself, Mr. ALTMIRE, Mrs. BLACKBURN, Mr. 
DEUTCH, Mr. WILSON of South Carolina, Ms. CASTOR of Florida, Mr. 
TIBERI, Mr. BRALEY of Iowa, Mr. LATHAM, Mr. BARROW, Mr. KING of 
Iowa, Mr. KELLY, Mr. LATOURETTE, and Mrs. ELLMERS) introduced the 
following bill; which was referred to the Committee on Energy and Com-
merce, and in addition to the Committee on Ways and Means, for a pe-
riod to be subsequently determined by the Speaker, in each case for con-
sideration of such provisions as fall within the jurisdiction of the com-
mittee concerned 
A BILL 
To amend title XVIII of the Social Security Act to establish 
a market pricing program for durable medical equipment, 
prosthetics, orthotics, and supplies (DMEPOS) under 
part B of the Medicare program. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Medicare DMEPOS 
Market Pricing Program Act of 2012’’. 
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SEC. 2. ESTABLISHMENT OF DMEPOS MARKET PRICING 
PROGRAM AS REPLACEMENT FOR COMPETI-
TIVE BIDDING PROGRAM. 
(a) IN GENERAL.—Part B of title XVIII of the Social 
Security Act is amended by inserting after section 1847B 
the following new section: 
‘‘DMEPOS MARKET PRICING PROGRAM 
‘‘SEC. 1847C. (a) ESTABLISHMENT.— 
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish and implement a market pricing program (in 
this section referred to as ‘market pricing program’) 
under which auctions are conducted in eligible mar-
ket areas (as defined in paragraph (3)) throughout 
the United States for the furnishing under this part 
of market priced items and services (as defined in 
subsection (b)) for which payment is made under 
this part. 
‘‘(2) ROLES OF AUCTION EXPERT AND MARKET 
MONITOR.—The elements of the market pricing pro-
gram, including eligible market areas and auction 
design, shall be established and operated in consulta-
tion with, and after input and review by, the auction 
expert and the market monitor under subsection (g). 
In this section, the terms ‘auction expert’ and ‘mar-
ket monitor’ refer to the respective auction expert 
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and market monitor contracted with under para-
graph (1) or (2), respectively, of subsection (g). 
‘‘(3) IMPLEMENTATION.—The market pricing 
program shall be implemented in eligible market 
areas consistent with the following: 
‘‘(A) Market pricing is applied to payments 
under this part in 20 percent of eligible market 
areas for market priced items and services fur-
nished in 2014. 
‘‘(B) Market pricing is applied to pay-
ments under this part in an additional 10 per-
cent of eligible market areas for market priced 
items and services furnished in 2015. 
‘‘(C) Market pricing is applied to payments 
under this part in an additional 10 percent of 
eligible market areas in each subsequent year 
until the market pricing program is applying to 
items and services furnished in 100 percent of 
eligible market areas throughout the United 
States. 
‘‘(D) Once the market pricing program is 
applied throughout the United States under 
subparagraph (C), the Secretary shall conduct 
auctions for different eligible market areas 
throughout the United States on an ongoing 
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and rotating basis covering 10 percent of eligi-
ble market areas no later than March for each 
subsequent year. 
‘‘(E) The requirements of this section shall 
apply to each subsequent round of market- 
priced auctions in the same manner that such 
requirements apply to the initial market-priced 
auction. 
‘‘(4) ELIGIBLE MARKET AREAS.— 
‘‘(A) IN
GENERAL.—In this section and 
section 1834, the term ‘eligible market areas’ 
means areas of the United States established by 
the Secretary. 
‘‘(B) MARKET AREAS MUST REFLECT ECO-
NOMIC
INTERDEPENDENCY.—In 
determining 
and selecting eligible market areas, the Sec-
retary shall choose, from among counties, ag-
gregations of counties, or parts of counties, 
market areas that form an economically inter-
dependent area reflecting standard econometric 
market models. Nothing in this subparagraph 
shall preclude the Secretary from subdividing a 
large county (as determined by the Secretary, 
taking into account population and geographic 
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ing determinations that are the basis for auc-
tion prices and single payment amounts for 
items and services in eligible market areas and 
shall be conducted in the first two years of the 
market pricing program and may continue in 
subsequent years of the program. 
‘‘(C) Subparagraph (F) (relating to feed-
back on missing financial documentation), ex-
cept that any reference to a round of a program 
is deemed a reference to a year of the market 
pricing program. 
‘‘(b) MARKET PRICED ITEMS AND SERVICES DE-
FINED.— 
‘‘(1) IN GENERAL.—In this section, subject to 
paragraph (2), the term ‘market priced items and 
services’ means the following: 
‘‘(A) Oxygen supplies and equipment. 
‘‘(B) Standard power wheelchairs, power 
scooters and related accessories. 
‘‘(C) Manual wheelchairs. 
‘‘(D) Enteral nutrients, equipment, and 
supplies. 
‘‘(E) Continuous positive airway pressure 
devices, respiratory assistive devices, and re-
lated supplies. 
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‘‘(F) Hospital beds and related accessories. 
‘‘(G) Walkers and related accessories. 
‘‘(H) Support services (Group 2 mattresses 
and overlays). 
‘‘(I) Negative pressure wound therapy 
pumps and related supplies and accessories. 
‘‘(J) Diabetic supplies. 
‘‘(K) Off-the-shelf orthotics described in 
section 1847(a)(2)(C). 
‘‘(L) Other items and services (other than 
those items and services specified in paragraph 
(2)) that could have been subject to participa-
tion in the competitive acquisition programs 
under section 1847(a)(1). 
‘‘(2) EXCLUDED ITEMS.—Such term does not 
include the following: 
‘‘(A) Adjustable skin protection cushions 
used in connection with a wheelchair. 
‘‘(B) Complex rehabilitative power wheel-
chairs and related accessories. 
‘‘(C) Manual wheelchairs billed using cur-
rent HCPCS Codes K0005 or E1161, and re-
lated accessories for such wheelchairs. 
‘‘(c) MARKET PRICING PROGRAM REQUIREMENTS.— 
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‘‘(1) IN GENERAL.—The Secretary shall estab-
lish an auction design through the process described 
in paragraph (2), that meets the requirements of 
paragraph (3), and shall ensure that the first auc-
tion will be conducted for all eligible market areas 
no later than March 1, 2013. 
‘‘(2) AUCTION
PROCESS; INPUT
OF
STAKE-
HOLDERS; DESIGN.— 
‘‘(A) 
TRANSPARENT
PROCESS
RE-
QUIRED.— 
‘‘(i) IN
GENERAL.—In establishing 
such auction design, the Secretary shall 
utilize an open and transparent process 
that involves all relevant stakeholders (as 
defined in clause (ii)) in the market. 
‘‘(ii) RELEVANT
STAKEHOLDERS.— 
For purposes of clause (i), the term ‘rel-
evant stakeholders’ means suppliers of 
market priced items and services (and 
trade associations representing such sup-
pliers), physicians, and individuals entitled 
to benefits under this title (or representa-
tives of such individuals). 
‘‘(B) DRAFT AUCTION DESIGN.— 
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‘‘(i) IN GENERAL.—Not later than 2 
months after the date the auction expert 
first begins service under subsection (g)(1), 
the auction expert shall develop a draft 
auction design for all eligible areas and all 
market priced items and services. 
‘‘(ii) 
STANDARDS.—In 
developing 
such auction design, the auction expert 
shall develop standards for eligible bidders, 
including— 
‘‘(I) the financial qualifications 
for an entity to participate in the 
market pricing program; and 
‘‘(II) the quality of products and 
related services. 
‘‘(iii) DESIGN
USED
IN
EXPEDITED 
RULEMAKING PROCESS.—Such design shall 
serve as the basis for an expedited rule-
making process for the publication of the 
proposed auction design and solicitation of 
public comments on such design. Section 
1871(b)(1) shall not apply to such process. 
‘‘(C) DESIGN CONFERENCE.— 
‘‘(i) IN GENERAL.—Not later than 4 
months after the date the auction expert 
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first begins service under subsection (g)(1), 
the auction expert shall convene a design 
conference (in this paragraph referred to 
as the ‘design conference’) for the auction 
process under this section. The auction ex-
pert shall chair the conference. 
‘‘(ii) 
PARTICIPANTS.—The 
partici-
pants at the design conference shall in-
clude at least the following: 
‘‘(I) SUPPLIERS
OF
DMEPOS.— 
Representatives 
of 
market 
priced 
items and services. 
‘‘(II) 
BENEFICIARIES.—Rep-
resentatives of individuals entitled to 
benefits under this part. 
‘‘(III) CMS.—The Administrator 
of the Centers for Medicare & Med-
icaid Services and other appropriate 
Federal personnel. 
‘‘(IV) PROGRAM
ADVISORY
AND 
OVERSIGHT
COMMITTEE.—The mem-
bers of the committee referred to in 
paragraph (3). 
‘‘(iii) PURPOSE
OF
CONFERENCE.— 
The purpose of the design conference shall 
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be to establish an efficient auction con-
sistent with best practices and actuarial 
science. 
‘‘(iv) ELEMENTS OF CONFERENCE.— 
‘‘(I) At the design conference the 
auction expert shall provide a dem-
onstration of the preliminary auction 
design. 
‘‘(II) Attendees at the conference 
will participate in a mock auction 
based upon the preliminary design. 
‘‘(III) The auction expert shall 
establish 
working 
committees 
on 
major issues. 
‘‘(IV) The design conference shall 
be recorded and made available over 
the Internet either through simulta-
neous Web cast or otherwise. 
‘‘(V) The Federal Advisory Com-
mittee Act shall not apply with re-
spect to the working committee estab-
lished under subclause (III). 
‘‘(D) RECOMMENDATIONS.— 
‘‘(i) 
WORKING
COMMITTEES.—Not 
later than 2 months after the last day of 
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the design conference, each working com-
mittee established under subparagraph 
(C)(iv)(III) shall submit to the auction ex-
pert the committee’s recommendations on 
the final design for auctions under this 
section. 
‘‘(ii) FINAL
DESIGN
RECOMMENDA-
TION.—Not later than 3 months after the 
last day of the design conference, the auc-
tion expert shall submit to the Secretary 
final recommendations on the auction de-
sign. 
‘‘(3) REQUIREMENTS.—In establishing the auc-
tion design, the Secretary shall ensure that rates of 
payment developed through the auction process— 
‘‘(A) are market-based and based on bind-
ing bids and clearing prices; and 
‘‘(B) do not result in a diminution of ac-
cess to or quality of items of market priced 
items and services in the applicable market 
areas. 
‘‘(d) CONDUCT OF AUCTION.— 
‘‘(1) INITIAL AUCTION.—No later than March 1 
of each year (beginning with 2013), the Secretary 
shall conduct an auction (in this section referred to 
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as a ‘market-priced auction’) from among entities 
supplying market priced items and services in an eli-
gible market area that is selected in the auction de-
sign. The first such auction shall conclude no later 
than March 30, 2013. Market-based auctions shall 
be conducted in accordance with an auction design 
developed under subsection (c). 
‘‘(2) ITEMS AND SERVICES SUBJECT TO AUC-
TION.— 
‘‘(A) IN GENERAL.—In each eligible mar-
ket area in which a market-priced auction is 
conducted, the Secretary shall select 2 items 
and services from among the market priced 
items and services. 
‘‘(B) ALL LISTED ITEMS AND SERVICES TO 
BE SUBJECT TO AUCTION.—The Secretary shall 
ensure in the market-priced auction that each 
lead product that is identified under paragraph 
(4) from among each market priced item and 
service is subject to auction among all eligible 
market areas. The Secretary shall ensure that 
each product category is auctioned in at least a 
sufficient number of eligible market areas to 
produce a sample of bids based on the percent-
ages set forth in subsection (a)(3). 
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‘‘(3) REQUIREMENTS TO SUBMIT BID IN AUC-
TION.— 
‘‘(A) SUBMISSION OF BIDS.—Any supplier 
that complies with the requirements of subpara-
graph (B) and that is identified by the Sec-
retary pursuant to paragraph (5)(C) as a sup-
plier of a market priced item or service that is 
the subject of a market-priced auction in an eli-
gible market area may submit a bid at such 
auction. 
‘‘(B) FINANCIAL ASSURANCES.— 
‘‘(i) IN GENERAL.—In order to be eli-
gible to participate in a market-priced auc-
tion, a supplier must submit a cash deposit 
in an amount determined by the Secretary. 
‘‘(ii) LETTER OF CREDIT IN LIEU OF 
CASH
DEPOSIT.—The Secretary may, in 
the Secretary’s sole discretion, accept a let-
ter of credit from a financial institution ac-
ceptable to the Secretary instead of the 
cash deposit otherwise required under 
clause (i). 
‘‘(C) TREATMENT
OF
DEPOSITS
SUB-
MITTED BY SUPPLIERS.— 
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‘‘(i) 
SUCCESSFUL
BIDDERS.—The 
Secretary shall retain as a performance 
guarantee the deposit submitted under 
subparagraph (B)(i) of a supplier that has 
submitted a bid that is selected at a mar-
ket-priced auction. 
‘‘(ii) UNSUCCESSFUL BIDS.—If a sup-
plier submits a bid that is not accepted at 
the auction, any such deposit shall be re-
turned to the supplier. 
‘‘(iii) DEPOSIT
RETURN
REQUIRE-
MENTS FOR PARTIALLY SUCCESSFUL SUP-
PLIERS.—If a supplier submits a bid that 
is accepted at the auction, but the supplier 
is not awarded a contract for the full 
amount of the bid, the Secretary shall pro-
vide for a proportionate return of any such 
deposit. 
‘‘(4) LEAD PRODUCT SELECTION.— 
‘‘(A) IN
GENERAL.—For each item and 
service that is the subject of a market-priced 
auction, the Secretary shall establish a lead 
product for each product category specified in 
subsection (b)(1). Such lead product shall be 
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selected based upon cost and utilization of the 
product under this part. 
‘‘(B) LEAD PRODUCT CLEARING PRICE ES-
TABLISHES CLEARING PRICE FOR OTHER PROD-
UCTS.— 
‘‘(i) LEAD PRODUCT AS REFERENCE 
POINT FOR OTHER PRODUCTS.—The lead 
product selected under subparagraph (A) 
shall be used as a reference point for all 
other products (categorized by healthcare 
common procedure coding system code) in 
the same category as the lead product. 
Such lead product shall be assigned a 
weight of 100 percent. 
‘‘(ii) ADDITIONAL PRODUCTS IN EACH 
PRODUCT
CATEGORY.—Every other prod-
uct in the same product category as the 
lead product identified under subparagraph 
(A) shall be assigned based upon each auc-
tion a weight expressed as a percentage of 
the lead product. The Secretary shall es-
tablish a single capacity-weighted average 
for each such other product in the same 
product category based upon the relative 
price value submitted from eligible bidders 
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in advance of the auction for such other 
product relative to the price of the lead 
product. The Secretary shall establish a 
price index that is the single capacity- 
weighted average for each product in a 
product category in a market area. 
‘‘(iii) 
ESTABLISHING
CLEARING 
PRICE.—The Secretary shall establish the 
clearing price for each market priced item 
and service that is subject to the auction 
based upon the data submitted under this 
subparagraph. Such clearing price shall be 
equal to the highest cost bid (or, in the 
case of a product described in clause (ii), 
such price bid weighted by the single ca-
pacity-weighted average established under 
clause (ii)) that will meet capacity targets 
in the eligible market area for such item 
and service. 
‘‘(5) CONDUCT OF AUCTION.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
establish timelines for the conduct of the mar-
ket-priced auction that are consistent with the 
provisions of this paragraph. 
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priced auction in an eligible market area 
and that has been selected as the winning 
bidder in that eligible market area shall be 
eligible to receive a contract under para-
graph (6)(A) in such market area. 
‘‘(ii) SUPPLYING ITEMS IN ECONOMI-
CALLY EQUIVALENT MARKETS.—A supplier 
of a market priced item or service that has 
not been selected as the winning bidder in 
the eligible market area described in clause 
(i) shall, subject to clauses (iii) and (iv), be 
eligible to supply any other market priced 
item or service that was not the subject of 
an auction in that eligible market area but 
that was the subject of a market-priced 
auction in another economically similar eli-
gible market area (as determined by the 
Secretary). 
‘‘(iii) SUPPLIER
MUST
ACCEPT
AUC-
TION PRICE.—Clause (ii) shall only apply 
to a supplier that agrees to accept the 
price determined at an auction in another 
eligible market area for a market priced 
item or service. 
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