H. R. 1—160
‘‘(i) shall be phased in among competitive acquisi-
tion areas in a manner so that the competition under
the programs occurs in—
‘‘(I) 10 of the largest metropolitan statistical
areas in 2007;
‘‘(II) 80 of the largest metropolitan statistical
areas in 2009; and
‘‘(III) additional areas after 2009; and
‘‘(ii) may be phased in first among the highest
cost and highest volume items and services or those
items and services that the Secretary determines have
the largest savings potential.
‘‘(C) WAIVER OF CERTAIN PROVISIONS.—In carrying out
the programs, the Secretary may waive such provisions
of the Federal Acquisition Regulation as are necessary
for the efficient implementation of this section, other than
provisions relating to confidentiality of information and
such other provisions as the Secretary determines appro-
priate.
‘‘(2) ITEMS AND SERVICES DESCRIBED.—The items and serv-
ices referred to in paragraph (1) are the following:
‘‘(A) DURABLE MEDICAL EQUIPMENT AND MEDICAL SUP-
PLIES.—Covered items (as defined in section 1834(a)(13))
for which payment would otherwise be made under section
1834(a), including items used in infusion and drugs (other
than inhalation drugs) and supplies used in conjunction
with durable medical equipment, but excluding class III
devices under the Federal Food, Drug, and Cosmetic Act.
‘‘(B) OTHER EQUIPMENT AND SUPPLIES.—Items and serv-
ices described in section 1842(s)(2)(D), other than paren-
teral nutrients, equipment, and supplies.
‘‘(C) OFF-THE-SHELF
ORTHOTICS.—Orthotics described
in section 1861(s)(9) for which payment would otherwise
be made under section 1834(h) which require minimal self-
adjustment for appropriate use and do not require expertise
in trimming, bending, molding, assembling, or customizing
to fit to the individual.
‘‘(3) EXCEPTION AUTHORITY.—In carrying out the programs
under this section, the Secretary may exempt—
‘‘(A) rural areas and areas with low population density
within urban areas that are not competitive, unless there
is a significant national market through mail order for
a particular item or service; and
‘‘(B) items and services for which the application of
competitive acquisition is not likely to result in significant
savings.
‘‘(4) SPECIAL RULE FOR CERTAIN RENTED ITEMS OF DURABLE
MEDICAL EQUIPMENT AND OXYGEN.—In the case of a covered
item for which payment is made on a rental basis under section
1834(a) and in the case of payment for oxygen under section
1834(a)(5), the Secretary shall establish a process by which
rental agreements for the covered items and supply arrange-
ments with oxygen suppliers entered into before the application
of the competitive acquisition program under this section for
the item may be continued notwithstanding this section. In
the case of any such continuation, the supplier involved shall
H. R. 1—161
provide for appropriate servicing and replacement, as required
under section 1834(a).
‘‘(5) PHYSICIAN AUTHORIZATION.—
‘‘(A) IN GENERAL.—With respect to items or services
included within a particular HCPCS code, the Secretary
may establish a process for certain items and services
under which a physician may prescribe a particular brand
or mode of delivery of an item or service within such
code if the physician determines that use of the particular
item or service would avoid an adverse medical outcome
on the individual, as determined by the Secretary.
‘‘(B) NO EFFECT ON PAYMENT AMOUNT.—A prescription
under subparagraph (A) shall not affect the amount of
payment otherwise applicable for the item or service under
the code involved.
‘‘(6) APPLICATION.—For each competitive acquisition area
in which the program is implemented under this subsection
with respect to items and services, the payment basis deter-
mined under the competition conducted under subsection (b)
shall be substituted for the payment basis otherwise applied
under section 1834(a), section 1834(h), or section 1842(s), as
appropriate.
‘‘(b) PROGRAM REQUIREMENTS.—
‘‘(1) IN GENERAL.—The Secretary shall conduct a competi-
tion 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 acquisition area pursuant to paragraph
(1) to furnish such items or services unless the Secretary
finds all of the following:
‘‘(i) The entity meets applicable quality standards
specified by the Secretary under section 1834(a)(20).
‘‘(ii) The entity meets applicable financial stand-
ards specified by the Secretary, taking into account
the needs of small providers.
‘‘(iii) The total amounts to be paid to contractors
in a competitive acquisition area are expected to be
less than the total amounts that would otherwise be
paid.
‘‘(iv) Access of individuals to a choice of multiple
suppliers in the area is maintained.
‘‘(B) TIMELY IMPLEMENTATION OF PROGRAM.—Any delay
in the implementation of quality standards under section
1834(a)(20) or delay in the receipt of advice from the pro-
gram oversight committee established under subsection (c)
shall not delay the implementation of the competitive
acquisition program under this section.
‘‘(3) CONTENTS OF CONTRACT.—
‘‘(A) IN
GENERAL.—A contract entered into with an
entity under the competition conducted pursuant to para-
graph (1) is subject to terms and conditions that the Sec-
retary may specify.
H. R. 1—162
‘‘(B) TERM OF CONTRACTS.—The Secretary shall recom-
pete 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 individuals for such items
or services in the geographic area covered under the con-
tract on a timely basis.
‘‘(B) MULTIPLE WINNERS.—The Secretary shall award
contracts to multiple entities submitting bids in each area
for an item or service.
‘‘(5) PAYMENT.—
‘‘(A) IN
GENERAL.—Payment under this part for
competitively priced items and services described in sub-
section (a)(2) shall be based on bids submitted and accepted
under this section for such items and services. Based on
such bids the Secretary shall determine a single payment
amount for each item or service in each competitive acquisi-
tion area.
‘‘(B) REDUCED BENEFICIARY COST-SHARING.—
‘‘(i) 
APPLICATION
OF
COINSURANCE.—Payment
under this section for items and services shall be in
an amount equal to 80 percent of the payment basis
described in subparagraph (A).
‘‘(ii) APPLICATION OF DEDUCTIBLE.—Before applying
clause (i), the individual shall be required to meet
the deductible described in section 1833(b).
‘‘(C) PAYMENT
ON
ASSIGNMENT-RELATED
BASIS.—Pay-
ment for any item or service furnished by the entity may
only be made under this section on an assignment-related
basis.
‘‘(D) CONSTRUCTION.—Nothing in this section shall be
construed as precluding the use of an advanced beneficiary
notice with respect to a competitively priced item and
service.
‘‘(6) PARTICIPATING CONTRACTORS.—
‘‘(A) IN GENERAL.—Except as provided in subsection
(a)(4), 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 section
unless—
‘‘(i) the contractor has submitted a bid for such
items and services under this section; and
‘‘(ii) the Secretary has awarded a contract to the
contractor for such items and services under this sec-
tion.
‘‘(B) BID DEFINED.—In this section, the term ‘bid’ means
an offer to furnish an item or service for a particular
price and time period that includes, where appropriate,
any services that are attendant to the furnishing of the
item or service.
H. R. 1—163
‘‘(C) RULES
FOR
MERGERS
AND
ACQUISITIONS.—In
applying subparagraph (A) to a contractor, the contractor
shall include a successor entity in the case of a merger
or acquisition, if the successor entity assumes such contract
along with any liabilities that may have occurred there-
under.
‘‘(D) PROTECTION OF SMALL SUPPLIERS.—In developing
procedures relating to bids and the awarding of contracts
under this section, the Secretary shall take appropriate
steps to ensure that small suppliers of items and services
have an opportunity to be considered for participation in
the program under this section.
‘‘(7) CONSIDERATION
IN
DETERMINING
CATEGORIES
FOR
BIDS.—The Secretary may consider the clinical efficiency and
value of specific items within codes, including whether some
items have a greater therapeutic advantage to individuals.
‘‘(8) AUTHORITY TO CONTRACT FOR EDUCATION, MONITORING,
OUTREACH, AND
COMPLAINT
SERVICES.—The Secretary may
enter into contracts with appropriate entities to address com-
plaints from individuals who receive items and services from
an entity with a contract under this section and to conduct
appropriate education of and outreach to such individuals and
monitoring quality of services with respect to the program.
‘‘(9) AUTHORITY TO CONTRACT FOR IMPLEMENTATION.—The
Secretary may contract with appropriate entities to implement
the competitive bidding program under this section.
‘‘(10) NO ADMINISTRATIVE OR JUDICIAL REVIEW.—There shall
be no administrative or judicial review under section 1869,
section 1878, or otherwise, of—
‘‘(A) the establishment of payment amounts under
paragraph (5);
‘‘(B) the awarding of contracts under this section;
‘‘(C) the designation of competitive acquisition areas
under subsection (a)(1)(A);
‘‘(D) the phased-in implementation under subsection
(a)(1)(B);
‘‘(E) the selection of items and services for competitive
acquisition under subsection (a)(2); or
‘‘(F) the bidding structure and number of contractors
selected under this section.
‘‘(c) PROGRAM ADVISORY AND OVERSIGHT COMMITTEE.—
‘‘(1) ESTABLISHMENT.—The Secretary shall establish a Pro-
gram Advisory and Oversight Committee (hereinafter in this
section referred to as the ‘Committee’).
‘‘(2) MEMBERSHIP; TERMS.—The Committee shall consist of
such members as the Secretary may appoint who shall serve
for such term as the Secretary may specify.
‘‘(3) DUTIES.—
‘‘(A) ADVICE.—The Committee shall provide advice to
the Secretary with respect to the following functions:
‘‘(i) The implementation of the program under this
section.
‘‘(ii) The establishment of financial standards for
purposes of subsection (b)(2)(A)(ii).
‘‘(iii) The establishment of requirements for collec-
tion of data for the efficient management of the pro-
gram.
H. R. 1—164
‘‘(iv) The development of proposals for efficient
interaction among manufacturers, providers of services,
suppliers (as defined in section 1861(d)), and individ-
uals.
‘‘(v) The establishment of quality standards under
section 1834(a)(20).
‘‘(B) ADDITIONAL DUTIES.—The Committee shall per-
form such additional functions to assist the Secretary in
carrying out this section as the Secretary may specify.
‘‘(4) INAPPLICABILITY OF FACA.—The provisions of the Fed-
eral Advisory Committee Act (5 U.S.C. App.) shall not apply.
‘‘(5) TERMINATION.—The Committee shall terminate on
December 31, 2009.
‘‘(d) REPORT.—Not later than July 1, 2009, the Secretary shall
submit to Congress a report on the programs under this section.
The report shall include information on savings, reductions in cost-
sharing, access to and quality of items and services, and satisfaction
of individuals.
‘‘(e) DEMONSTRATION PROJECT FOR CLINICAL LABORATORY SERV-
ICES.—
‘‘(1) IN
GENERAL.—The Secretary shall conduct a dem-
onstration project on the application of competitive acquisition
under this section to clinical diagnostic laboratory tests—
‘‘(A) for which payment would otherwise be made under
section 1833(h) (other than for pap smear laboratory tests
under paragraph (7) of such section) or section 1834(d)(1)
(relating to colorectal cancer screening tests); and
‘‘(B) which are furnished by entities that did not have
a face-to-face encounter with the individual.
‘‘(2) TERMS AND CONDITIONS.—
‘‘(A) IN GENERAL.—Except as provided in subparagraph
(B), such project shall be under the same conditions as
are applicable to items and services described in subsection
(a)(2), excluding subsection (b)(5)(B) and other conditions
as the Secretary determines to be appropriate.
‘‘(B) APPLICATION OF CLIA QUALITY STANDARDS.—The
quality standards established by the Secretary under sec-
tion 353 of the Public Health Service Act for clinical diag-
nostic laboratory tests shall apply to such tests under the
demonstration project under this section in lieu of quality
standards described in subsection (b)(2)(A)(i).
‘‘(3) REPORT.—The Secretary shall submit to Congress—
‘‘(A) an initial report on the project not later than
December 31, 2005; and
‘‘(B) such progress and final reports on the project
after such date as the Secretary determines appropriate.’’.
(2) CONFORMING
AMENDMENTS.—Section 1833(a)(1) (42
U.S.C. 1395l(a)(1)) is amended—
(A) by striking ‘‘and (U)’’ and inserting ‘‘(U)’’;
(B) by inserting before the semicolon at the end the
following: ‘‘, and (V) notwithstanding subparagraphs (I)
(relating to durable medical equipment), (M) (relating to
prosthetic devices and orthotics and prosthetics), and (Q)
(relating to 1842(s) items), with respect to competitively
priced items and services (described in section 1847(a)(2))
that are furnished in a competitive area, the amounts
H. R. 1—166
‘‘(I) for 2008—
‘‘(i) subject to clause (ii), in the case of class III
medical devices described in section 513(a)(1)(C) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C.
360(c)(1)(C)), the percentage increase described in
subparagraph (B) (as applied to the payment amount
for 2007 determined after the application of the
percentage change under subparagraph (H)(i)); and
‘‘(ii) in the case of covered items not described
in clause (i), 0 percentage points; and
‘‘(J) for a subsequent year, the percentage increase
in the consumer price index for all urban consumers (U.S.
urban average) for the 12-month period ending with June
of the previous year.’’.
(B) GAO REPORT ON CLASS III MEDICAL DEVICES.—Not
later than March 1, 2006, the Comptroller General of the
United States shall submit to Congress, and transmit to
the Secretary, a report containing recommendations on the
appropriate update percentage under section 1834(a)(14)
of the Social Security Act (42 U.S.C. 1395m(a)(14)) for
class III medical devices described in section 513(a)(1)(C)
of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
360(a)(1)(C)) furnished to medicare beneficiaries during
2007 and 2008.
(2) PAYMENT RULE FOR SPECIFIED ITEMS.—Section 1834(a)
(42 U.S.C. 1395m(a)), as amended by subsection (a), is further
amended by adding at the end the following new paragraph:
‘‘(21) SPECIAL
PAYMENT
RULE
FOR
SPECIFIED
ITEMS
AND
SUPPLIES.—
‘‘(A) IN
GENERAL.—Notwithstanding the preceding
provisions of this subsection, for specified items and sup-
plies (described in subparagraph (B)) furnished during
2005, the payment amount otherwise determined under
this subsection for such specified items and supplies shall
be reduced by the percentage difference between—
‘‘(i) the amount of payment otherwise determined
for the specified item or supply under this subsection
for 2002, and
‘‘(ii) the amount of payment for the specified item
or supply under chapter 89 of title 5, United States
Code, as identified in the column entitled ‘Median
FEHP Price’ in the table entitled ‘SUMMARY OF
MEDICARE PRICES COMPARED TO VA, MED-
ICAID, RETAIL, AND FEHP PRICES FOR 16 ITEMS’
included in the Testimony of the Inspector General
before the Senate Committee on Appropriations, June
12, 2002, or any subsequent report by the Inspector
General.
‘‘(B) SPECIFIED ITEM OR SUPPLY DESCRIBED.—For pur-
poses of subparagraph (A), a specified item or supply means
oxygen and oxygen equipment, standard wheelchairs
(including 
standard 
power 
wheelchairs), 
nebulizers,
diabetic supplies consisting of lancets and testing strips,
hospital beds, and air mattresses, but only if the HCPCS
code for the item or supply is identified in a table referred
to in subparagraph (A)(ii).
H. R. 1—167
‘‘(C) APPLICATION
OF
UPDATE
TO
SPECIAL
PAYMENT
AMOUNT.—The covered item update under paragraph (14)
for specified items and supplies for 2006 and each subse-
quent year shall be applied to the payment amount under
subparagraph (A) unless payment is made for such items
and supplies under section 1847.’’.
(3) PROSTHETIC
DEVICES
AND
ORTHOTICS
AND
PROS-
THETICS.—Section 1834(h)(4)(A) (42 U.S.C. 1395m(h)(4)(A)) is
amended—
(A) in clause (vii), by striking ‘‘and’’ at the end;
(B) in clause (viii), by striking ‘‘a subsequent year’’
and inserting ‘‘2003’’; and
(C) by adding at the end the following new clauses:
‘‘(ix) for 2004, 2005, and 2006, 0 percent; and
‘‘(x) for a subsequent year, the percentage increase
in the consumer price index for all urban consumers
(United States city average) for the 12-month period
ending with June of the previous year;’’.
(d) CONFORMING AMENDMENTS.—
(1) DURABLE MEDICAL EQUIPMENT; LIMITATION OF INHERENT
REASONABLENESS
AUTHORITY.—Section 1834(a) (42 U.S.C.
1395m(a)) is amended—
(A) in paragraph (1)(B), by striking ‘‘The payment
basis’’ and inserting ‘‘Subject to subparagraph (F)(i), the
payment basis’’;
(B) in paragraph (1)(C), by striking ‘‘This subsection’’
and inserting ‘‘Subject to subparagraph (F)(ii), this sub-
section’’;
(C) by adding at the end of paragraph (1) the following
new subparagraph:
‘‘(F) APPLICATION OF COMPETITIVE ACQUISITION; LIMITA-
TION OF INHERENT REASONABLENESS AUTHORITY.—In the
case of covered items furnished on or after January 1,
2009, that are included in a competitive acquisition pro-
gram in a competitive acquisition area under section
1847(a)—
‘‘(i) the payment basis under this subsection for
such items and services furnished in such area shall
be the payment basis determined under such competi-
tive acquisition program; and
‘‘(ii) the Secretary may use information on the
payment determined under such competitive acquisi-
tion programs to adjust the payment amount otherwise
recognized under subparagraph (B)(ii) for an area that
is not a competitive acquisition area under section
1847 and in the case of such adjustment, paragraph
(10)(B) shall not be applied.’’; and
(D) in paragraph (10)(B), by inserting ‘‘in an area and
with respect to covered items and services for which the
Secretary does not make a payment amount adjustment
under paragraph (1)(F)’’ after ‘‘under this subsection’’.
(2) OFF-THE-SHELF
ORTHOTICS; LIMITATION
OF
INHERENT
REASONABLENESS
AUTHORITY.—Section 1834(h) (42 U.S.C.
1395m(h)) is amended—
(A) in paragraph (1)(B), by striking ‘‘and (E)’’ and
inserting ‘‘, (E), and (H)(i)’’;
H. R. 1—168
(B) in paragraph (1)(D), by striking ‘‘This subsection’’
and inserting ‘‘Subject to subparagraph (H)(ii), this sub-
section’’; and
(C) by adding at the end of paragraph (1) the following
new subparagraph:
‘‘(H) APPLICATION
OF
COMPETITIVE
ACQUISITION
TO
ORTHOTICS; 
LIMITATION
OF
INHERENT
REASONABLENESS
AUTHORITY.—In the case of orthotics described in paragraph
(2)(C) of section 1847(a) furnished on or after January
1, 2009, that are included in a competitive acquisition
program in a competitive acquisition area under such
section—
‘‘(i) the payment basis under this subsection for
such orthotics furnished in such area shall be the
payment basis determined under such competitive
acquisition program; and
‘‘(ii) the Secretary may use information on the
payment determined under such competitive acquisi-
tion programs to adjust the payment amount otherwise
recognized under subparagraph (B)(ii) for an area that
is not a competitive acquisition area under section
1847, and in the case of such adjustment, paragraphs
(8) and (9) of section 1842(b) shall not be applied.’’.
(3) OTHER ITEMS AND SERVICES; LIMITATION OF INHERENT
REASONABLENESS
AUTHORITY.—Section 1842(s) (42 U.S.C.
1395u(s)) is amended—
(A) in the first sentence of paragraph (1), by striking
‘‘The Secretary’’ and inserting ‘‘Subject to paragraph (3),
the Secretary’’; and
(B) by adding at the end the following new paragraph:
‘‘(3) In the case of items and services described in paragraph
(2)(D) that are included in a competitive acquisition program in
a competitive acquisition area under section 1847(a)—
‘‘(A) the payment basis under this subsection for such items
and services furnished in such area shall be the payment basis
determined under such competitive acquisition program; and
‘‘(B) the Secretary may use information on the payment
determined under such competitive acquisition programs to
adjust the payment amount otherwise applicable under para-
graph (1) for an area that is not a competitive acquisition
area under section 1847, and in the case of such adjustment,
paragraphs (8) and (9) of section 1842(b) shall not be applied.’’.
(e) REPORT ON ACTIVITIES OF SUPPLIERS.—The Inspector Gen-
eral of the Department of Health and Human Services shall conduct
a study to determine the extent to which (if any) suppliers of
covered items of durable medical equipment that are subject to
the competitive acquisition program under section 1847 of the Social
Security Act, as amended by subsection (a), are soliciting physicians
to prescribe certain brands or modes of delivery of covered items
based on profitability. Not later than July 1, 2009, the Inspector
General shall submit to Congress a report on such study.
SEC. 303. PAYMENT REFORM FOR COVERED OUTPATIENT DRUGS AND
BIOLOGICALS.
(a) ADJUSTMENT TO PHYSICIAN FEE SCHEDULE.—
H. R. 1—169
(1) ADJUSTMENT
IN
PRACTICE
EXPENSE
RELATIVE
VALUE
UNITS.—Section 
1848(c)(2) 
(42 
U.S.C. 
1395w–4(c)(2)) 
is
amended—
(A) in subparagraph (B)—
(i) in clause (ii)(II), by striking ‘‘The adjustments’’
and inserting ‘‘Subject to clause (iv), the adjustments’’;
and
(ii) by adding at the end of subparagraph (B),
the following new clause:
‘‘(iv) EXEMPTION FROM BUDGET NEUTRALITY.—The
additional expenditures attributable to—
‘‘(I) subparagraph (H) shall not be taken into
account in applying clause (ii)(II) for 2004;
‘‘(II) subparagraph (I) insofar as it relates to
a physician fee schedule for 2005 or 2006 shall
not be taken into account in applying clause (ii)(II)
for drug administration services under the fee
schedule for such year for a specialty described
in subparagraph (I)(ii)(II); and
‘‘(III) subparagraph (J) insofar as it relates
to a physician fee schedule for 2005 or 2006 shall
not be taken into account in applying clause (ii)(II)
for drug administration services under the fee
schedule for such year.’’; and
(B) by adding at the end the following new subpara-
graphs:
‘‘(H) ADJUSTMENTS
IN
PRACTICE
EXPENSE
RELATIVE
VALUE UNITS FOR CERTAIN DRUG ADMINISTRATION SERVICES
BEGINNING IN 2004.—
‘‘(i) USE
OF
SURVEY
DATA.—In establishing the
physician fee schedule under subsection (b) with
respect to payments for services furnished on or after
January 1, 2004, the Secretary shall, in determining
practice expense relative value units under this sub-
section, utilize a survey submitted to the Secretary
as of January 1, 2003, by a physician specialty
organization pursuant to section 212 of the Medicare,
Medicaid, and SCHIP Balanced Budget Refinement Act
of 1999 if the survey—
‘‘(I) covers practice expenses for oncology drug
administration services; and
‘‘(II) meets criteria established by the Sec-
retary for acceptance of such surveys.
‘‘(ii) PRICING
OF
CLINICAL
ONCOLOGY
NURSES
IN
PRACTICE
EXPENSE
METHODOLOGY.—If the survey
described in clause (i) includes data on wages, salaries,
and compensation of clinical oncology nurses, the Sec-
retary shall utilize such data in the methodology for
determining practice expense relative value units
under subsection (c).
‘‘(iii) WORK RELATIVE VALUE UNITS FOR CERTAIN
DRUG ADMINISTRATION SERVICES.—In establishing the
relative value units under this paragraph for drug
administration services described in clause (iv) fur-
nished on or after January 1, 2004, the Secretary shall
establish work relative value units equal to the work
H. R. 1—170
relative value units for a level 1 office medical visit
for an established patient.
‘‘(iv) DRUG ADMINISTRATION SERVICES DESCRIBED.—
The drug administration services described in this
clause are physicians’ services—
‘‘(I) which are classified as of October 1, 2003,
within any of the following groups of procedures:
therapeutic or diagnostic infusions (excluding
chemotherapy); chemotherapy administration serv-
ices; and therapeutic, prophylactic, or diagnostic
injections;
‘‘(II) for which there are no work relative value
units assigned under this subsection as of such
date; and
‘‘(III) for which national relative value units
have been assigned under this subsection as of
such date.
‘‘(I) ADJUSTMENTS
IN
PRACTICE
EXPENSE
RELATIVE
VALUE UNITS FOR CERTAIN DRUG ADMINISTRATION SERVICES
BEGINNING WITH 2005.—
‘‘(i) IN GENERAL.—In establishing the physician fee
schedule under subsection (b) with respect to payments
for services furnished on or after January 1, 2005
or 2006, the Secretary shall adjust the practice expense
relative value units for such year consistent with clause
(ii).
‘‘(ii) USE OF SUPPLEMENTAL SURVEY DATA.—
‘‘(I) IN
GENERAL.—Subject to subclause (II),
if a specialty submits to the Secretary by not later
than March 1, 2004, for 2005, or March 1, 2005,
for 2006, data that includes expenses for the
administration of drugs and biologicals for which
the payment amount is determined pursuant to
section 1842(o), the Secretary shall use such
supplemental survey data in carrying out this
subparagraph for the years involved insofar as
they are collected and provided by entities and
organizations consistent with the criteria estab-
lished by the Secretary pursuant to section 212(a)
of the Medicare, Medicaid, and SCHIP Balanced
Budget Refinement Act of 1999.
‘‘(II) LIMITATION ON SPECIALTY.—Subclause (I)
shall apply to a specialty only insofar as not less
than 40 percent of payments for the specialty
under this title in 2002 are attributable to the
administration of drugs and biologicals, as deter-
mined by the Secretary.
‘‘(III) APPLICATION.—This clause shall not
apply with respect to a survey to which subpara-
graph (H)(i) applies.
‘‘(J) PROVISIONS
FOR
APPROPRIATE
REPORTING
AND
BILLING FOR PHYSICIANS’ SERVICES ASSOCIATED WITH THE
ADMINISTRATION
OF
COVERED
OUTPATIENT
DRUGS
AND
BIOLOGICALS.—
‘‘(i) EVALUATION OF CODES.—The Secretary shall
promptly evaluate existing drug administration codes
for physicians’ services to ensure accurate reporting
H. R. 1—171
and billing for such services, taking into account levels
of complexity of the administration and resource
consumption.
‘‘(ii) USE OF EXISTING PROCESSES.—In carrying out
clause (i), the Secretary shall use existing processes
for the consideration of coding changes and, to the
extent coding changes are made, shall use such proc-
esses in establishing relative values for such services.
‘‘(iii) IMPLEMENTATION.—In carrying out clause (i),
the Secretary shall consult with representatives of
physician specialties affected by the implementation
of section 1847A or section 1847B, and shall take such
steps within the Secretary’s authority to expedite such
considerations under clause (ii).
‘‘(iv) SUBSEQUENT, BUDGET NEUTRAL ADJUSTMENTS
PERMITTED.—Nothing in subparagraph (H) or (I) or
this subparagraph shall be construed as preventing
the Secretary from providing for adjustments in prac-
tice expense relative value units under (and consistent
with) subparagraph (B) for years after 2004, 2005,
or 2006, respectively.’’.
(2) TREATMENT OF OTHER SERVICES CURRENTLY IN THE NON-
PHYSICIAN WORK POOL.—The Secretary shall make adjustments
to the nonphysician work pool methodology (as such term is
used in the final rule promulgated by the Secretary in the
Federal Register on December 31, 2002 (67 Fed. Reg. 251)),
for the determination of practice expense relative value units
under the physician fee schedule under section 1848(c)(2)(C)(ii)
of the Social Security Act (42 U.S.C. 1395w–4(c)(2)(C)(ii)), so
that the practice expense relative value units for services deter-
mined under such methodology are not affected relative to
the practice expense relative value units of services not deter-
mined under such methodology, as a result of the amendments
made by paragraph (1).
(3) PAYMENT FOR MULTIPLE CHEMOTHERAPY AGENTS FUR-
NISHED ON A SINGLE DAY THROUGH THE PUSH TECHNIQUE.—
(A) REVIEW OF POLICY.—The Secretary shall review
the policy, as in effect on October 1, 2003, with respect
to payment under section 1848 of the Social Security Act
(42 U.S.C. 1395w–4) for the administration of more than
1 drug or biological to an individual on a single day through
the push technique.
(B) MODIFICATION
OF
POLICY.—After conducting the
review under subparagraph (A), the Secretary shall modify
such payment policy as the Secretary determines to be
appropriate.
(C) EXEMPTION
FROM
BUDGET
NEUTRALITY
UNDER
PHYSICIAN FEE SCHEDULE.—If the Secretary modifies such
payment policy pursuant to subparagraph (B), any
increased expenditures under title XVIII of the Social Secu-
rity Act resulting from such modification shall be treated
as additional expenditures attributable to subparagraph
(H) of section 1848(c)(2) of the Social Security Act (42
U.S.C. 1395w–4(c)(2)), as added by paragraph (1)(B), for
purposes of applying the exemption to budget neutrality
under subparagraph (B)(iv) of such section, as added by
paragraph (1)(A).
H. R. 1—172
(4) TRANSITIONAL ADJUSTMENT.—
(A) IN GENERAL.—In order to provide for a transition
during 2004 and 2005 to the payment system established
under the amendments made by this section, in the case
of physicians’ services consisting of drug administration
services described in subparagraph (H)(iv) of section
1848(c)(2) of the Social Security Act (42 U.S.C. 1395w–
4(c)(2)), as added by paragraph (1)(B), furnished on or
after January 1, 2004, and before January 1, 2006, in
addition to the amount determined under the fee schedule
under section 1848(b) of such Act (42 U.S.C. 1395w–4(b))
there also shall be paid to the physician from the Federal
Supplementary Medical Insurance Trust Fund an amount
equal to the applicable percentage specified in subpara-
graph (B) of such fee schedule amount for the services
so determined.
(B) APPLICABLE PERCENTAGE.—The applicable percent-
age specified in this subparagraph for services furnished—
(i) during 2004, is 32 percent; and
(ii) during 2005, is 3 percent.
(5) 
MEDPAC
REVIEW
AND
REPORTS; 
SECRETARIAL
RESPONSE.—
(A) 
REVIEW.—The 
Medicare 
Payment 
Advisory
Commission shall review the payment changes made under
this section insofar as they affect payment under part
B of title XVIII of the Social Security Act—
(i) for items and services furnished by oncologists;
and
(ii) for drug administration services furnished by
other specialists.
(B) OTHER
MATTERS
STUDIED.—In conducting the
review under subparagraph (A), the Commission shall also
review such changes as they affect—
(i) the quality of care furnished to individuals
enrolled under part B and the satisfaction of such
individuals with that care;
(ii) the adequacy of reimbursement as applied in,
and the availability in, different geographic areas and
to different physician practice sizes; and
(iii) the impact on physician practices.
(C) REPORTS.—The Commission shall submit to the
Secretary and Congress—
(i) not later than January 1, 2006, a report on
the review conducted under subparagraph (A)(i); and
(ii) not later than January 1, 2007, a report on
the review conducted under subparagraph (A)(ii).
Each such report may include such recommendations
regarding further adjustments in such payments as the
Commission deems appropriate.
(D) SECRETARIAL
RESPONSE.—As part of the rule-
making with respect to payment for physicians services
under section 1848 of the Social Security Act (42 U.S.C.
1395w–4) for 2007, the Secretary may make appropriate
adjustments to payment for items and services described
in subparagraph (A)(i), taking into account the report sub-
mitted under such subparagraph (C)(i).
H. R. 1—173
(b) APPLICATION OF MARKET-BASED PAYMENT SYSTEMS.—Sec-
tion 1842(o) (42 U.S.C. 1395u(o)) is amended—
(1) in paragraph (1), by striking ‘‘equal to 95 percent of
the average wholesale price.’’ and inserting ‘‘equal to the fol-
lowing:
‘‘(A) In the case of any of the following drugs or biologicals,
95 percent of the average wholesale price:
‘‘(i) A drug or biological furnished before January 1,
2004.
‘‘(ii) Blood clotting factors furnished during 2004.
‘‘(iii) A drug or biological furnished during 2004 that
was not available for payment under this part as of April
1, 2003.
‘‘(iv) A vaccine described in subparagraph (A) or (B)
of section 1861(s)(10) furnished on or after January 1,
2004.
‘‘(v) A drug or biological furnished during 2004 in
connection with the furnishing of renal dialysis services
if separately billed by renal dialysis facilities.
‘‘(B) In the case of a drug or biological furnished during
2004 that is not described in—
‘‘(i) clause (ii), (iii), (iv), or (v) of subparagraph (A),
‘‘(ii) subparagraph (D)(i), or
‘‘(iii) subparagraph (F),
the amount determined under paragraph (4).
‘‘(C) In the case of a drug or biological that is not described
in subparagraph (A)(iv), (D)(i), or (F) furnished on or after
January 1, 2005, the amount provided under section 1847,
section 1847A, section 1847B, or section 1881(b)(13), as the
case may be for the drug or biological.
‘‘(D)(i) Except as provided in clause (ii), in the case of
infusion drugs furnished through an item of durable medical
equipment covered under section 1861(n) on or after January
1, 2004, 95 percent of the average wholesale price for such
drug in effect on October 1, 2003.
‘‘(ii) In the case of such infusion drugs furnished in a
competitive acquisition area under section 1847 on or after
January 1, 2007, the amount provided under section 1847.
‘‘(E) In the case of a drug or biological, consisting of intra-
venous immune globulin, furnished—
‘‘(i) in 2004, the amount of payment provided under
paragraph (4); and
‘‘(ii) in 2005 and subsequent years, the amount of
payment provided under section 1847A.
‘‘(F) In the case of blood and blood products (other than
blood clotting factors), the amount of payment shall be deter-
mined in the same manner as such amount of payment was
determined on October 1, 2003.
‘‘(G) The provisions of subparagraphs (A) through (F) of
this paragraph shall not apply to an inhalation drug or
biological furnished through durable medical equipment covered
under section 1861(n).’’; and
(2) by adding at the end the following new paragraph:
‘‘(4)(A) Subject to the succeeding provisions of this paragraph,
the amount of payment for a drug or biological under this paragraph
furnished in 2004 is equal to 85 percent of the average wholesale
price (determined as of April 1, 2003) for the drug or biological.
H. R. 1—174
‘‘(B) The Secretary shall substitute for the percentage under
subparagraph (A) for a drug or biological the percentage that would
apply to the drug or biological under the column entitled ‘Average
of GAO and OIG data (percent)’ in the table entitled ‘Table 3.—
Medicare Part B Drugs in the Most Recent GAO and OIG Studies’
published on August 20, 2003, in the Federal Register (68 Fed.
Reg. 50445).
‘‘(C)(i) The Secretary may substitute for the percentage under
subparagraph (A) a percentage that is based on data and informa-
tion submitted by the manufacturer of the drug or biological by
October 15, 2003.
‘‘(ii) The Secretary may substitute for the percentage under
subparagraph (A) with respect to drugs and biologicals furnished
during 2004 on or after April 1, 2004, a percentage that is based
on data and information submitted by the manufacturer of the
drug or biological after October 15, 2003, and before January 1,
2004.
‘‘(D) In no case may the percentage substituted under subpara-
graph (B) or (C) be less than 80 percent.’’.
(c) APPLICATION OF AVERAGE SALES PRICE METHODS BEGINNING
IN 2005.—
(1) IN GENERAL.—Title XVIII is amended by inserting after
section 1847 (42 U.S.C. 1395w–3), as amended by section 302(b),
the following new section:
‘‘USE OF AVERAGE SALES PRICE PAYMENT METHODOLOGY
‘‘SEC. 1847A. (a) APPLICATION.—
‘‘(1) IN GENERAL.—Except as provided in paragraph (2),
this section shall apply to payment for drugs and biologicals
that are described in section 1842(o)(1)(C) and that are fur-
nished on or after January 1, 2005.
‘‘(2) ELECTION.—This section shall not apply in the case
of a physician who elects under subsection (a)(1)(A)(ii) of section
1847B for that section to apply instead of this section for
the payment for drugs and biologicals.
‘‘(b) PAYMENT AMOUNT.—
‘‘(1) IN GENERAL.—Subject to subsections (d)(3)(C) and (e),
the amount of payment determined under this section for the
billing and payment code for a drug or biological (based on
a minimum dosage unit) is, subject to applicable deductible
and coinsurance—
‘‘(A) in the case of a multiple source drug (as defined
in subsection (c)(6)(C)), 106 percent of the amount deter-
mined under paragraph (3); or
‘‘(B) in the case of a single source drug or biological
(as defined in subsection (c)(6)(D)), 106 percent of the
amount determined under paragraph (4).
‘‘(2) SPECIFICATION OF UNIT.—
‘‘(A) SPECIFICATION BY MANUFACTURER.—The manufac-
turer of a drug or biological shall specify the unit associated
with each National Drug Code (including package size)
as part of the submission of data under section
1927(b)(3)(A)(iii).
‘‘(B) UNIT DEFINED.—In this section, the term ‘unit’
means, with respect to each National Drug Code (including
package size) associated with a drug or biological, the
lowest identifiable quantity (such as a capsule or tablet,
H. R. 1—175
milligram of molecules, or grams) of the drug or biological
that is dispensed, exclusive of any diluent without reference
to volume measures pertaining to liquids. For years after
2004, the Secretary may establish the unit for a manufac-
turer to report and methods for counting units as the
Secretary determines appropriate to implement this sec-
tion.
‘‘(3) MULTIPLE
SOURCE
DRUG.—For all drug products
included within the same multiple source drug billing and
payment code, the amount specified in this paragraph is the
volume-weighted average of the average sales prices reported
under section 1927(b)(3)(A)(iii) determined by—
‘‘(A) computing the sum of the products (for each
National Drug Code assigned to such drug products) of—
‘‘(i) the manufacturer’s average sales price (as
defined in subsection (c)); and
‘‘(ii) the total number of units specified under para-
graph (2) sold; and
‘‘(B) dividing the sum determined under subparagraph
(A) by the sum of the total number of units under subpara-
graph (A)(ii) for all National Drug Codes assigned to such
drug products.
‘‘(4) SINGLE SOURCE DRUG OR BIOLOGICAL.—The amount
specified in this paragraph for a single source drug or biological
is the lesser of the following:
‘‘(A) AVERAGE SALES PRICE.—The average sales price
as determined using the methodology applied under para-
graph (3) for all National Drug Codes assigned to such
drug or biological product.
‘‘(B) WHOLESALE ACQUISITION COST (WAC).—The whole-
sale acquisition cost (as defined in subsection (c)(6)(B))
using the methodology applied under paragraph (3) for
all National Drug Codes assigned to such drug or biological
product.
‘‘(5) BASIS FOR PAYMENT AMOUNT.—The payment amount
shall be determined under this subsection based on information
reported under subsection (f) and without regard to any special
packaging, labeling, or identifiers on the dosage form or product
or package.
‘‘(c) MANUFACTURER’S AVERAGE SALES PRICE.—
‘‘(1) IN
GENERAL.—For purposes of this section, subject
to paragraphs (2) and (3), the manufacturer’s ‘average sales
price’ means, of a drug or biological for a National Drug Code
for a calendar quarter for a manufacturer for a unit—
‘‘(A) the manufacturer’s sales to all purchasers
(excluding sales exempted in paragraph (2)) in the United
States for such drug or biological in the calendar quarter;
divided by
‘‘(B) the total number of such units of such drug or
biological sold by the manufacturer in such quarter.
‘‘(2) CERTAIN SALES EXEMPTED FROM COMPUTATION.—In cal-
culating the manufacturer’s average sales price under this sub-
section, the following sales shall be excluded:
‘‘(A) SALES EXEMPT FROM BEST PRICE.—Sales exempt
from the inclusion in the determination of ‘best price’ under
section 1927(c)(1)(C)(i).
H. R. 1—176
‘‘(B) SALES AT NOMINAL CHARGE.—Such other sales as
the Secretary identifies as sales to an entity that are merely
nominal in amount (as applied for purposes of section
1927(c)(1)(C)(ii)(III), except as the Secretary may otherwise
provide).
‘‘(3) SALE
PRICE
NET
OF
DISCOUNTS.—In calculating the
manufacturer’s average sales price under this subsection, such
price shall include volume discounts, prompt pay discounts,
cash discounts, free goods that are contingent on any purchase
requirement, chargebacks, and rebates (other than rebates
under section 1927). For years after 2004, the Secretary may
include in such price other price concessions, which may be
based on recommendations of the Inspector General, that would
result in a reduction of the cost to the purchaser.
‘‘(4) PAYMENT
METHODOLOGY
IN
CASES
WHERE
AVERAGE
SALES PRICE DURING FIRST QUARTER OF SALES IS UNAVAILABLE.—
In the case of a drug or biological during an initial period
(not to exceed a full calendar quarter) in which data on the
prices for sales for the drug or biological is not sufficiently
available from the manufacturer to compute an average sales
price for the drug or biological, the Secretary may determine
the amount payable under this section for the drug or biological
based on—
‘‘(A) the wholesale acquisition cost; or
‘‘(B) the methodologies in effect under this part on
November 1, 2003, to determine payment amounts for
drugs or biologicals.
‘‘(5) FREQUENCY OF DETERMINATIONS.—
‘‘(A) IN GENERAL ON A QUARTERLY BASIS.—The manu-
facturer’s average sales price, for a drug or biological of
a manufacturer, shall be calculated by such manufacturer
under this subsection on a quarterly basis. In making
such calculation insofar as there is a lag in the reporting
of the information on rebates and chargebacks under para-
graph (3) so that adequate data are not available on a
timely basis, the manufacturer shall apply a methodology
based on a 12-month rolling average for the manufacturer
to estimate costs attributable to rebates and chargebacks.
For years after 2004, the Secretary may establish a uniform
methodology under this subparagraph to estimate and
apply such costs.
‘‘(B) UPDATES
IN
PAYMENT
AMOUNTS.—The payment
amounts under subsection (b) shall be updated by the Sec-
retary on a quarterly basis and shall be applied based
upon the manufacturer’s average sales price calculated for
the most recent calendar quarter for which data is avail-
able.
‘‘(C) USE OF CONTRACTORS; IMPLEMENTATION.—The Sec-
retary may contract with appropriate entities to calculate
the payment amount under subsection (b). Notwithstanding
any other provision of law, the Secretary may implement,
by program instruction or otherwise, any of the provisions
of this section.
‘‘(6) DEFINITIONS AND OTHER RULES.—In this section:
‘‘(A) MANUFACTURER.—The term ‘manufacturer’ means,
with respect to a drug or biological, the manufacturer (as
defined in section 1927(k)(5)).
H. R. 1—177
‘‘(B) WHOLESALE ACQUISITION COST.—The term ‘whole-
sale acquisition cost’ means, with respect to a drug or
biological, the manufacturer’s list price for the drug or
biological to wholesalers or direct purchasers in the United
States, not including prompt pay or other discounts, rebates
or reductions in price, for the most recent month for which
the information is available, as reported in wholesale price
guides or other publications of drug or biological pricing
data.
‘‘(C) MULTIPLE SOURCE DRUG.—
‘‘(i) IN GENERAL.—The term ‘multiple source drug’
means, for a calendar quarter, a drug for which there
are 2 or more drug products which—
‘‘(I) are rated as therapeutically equivalent
(under the Food and Drug Administration’s most
recent publication of ‘Approved Drug Products with
Therapeutic Equivalence Evaluations’),
‘‘(II) except as provided in subparagraph (E),
are pharmaceutically equivalent and bioequiva-
lent, as determined under subparagraph (F) and
as determined by the Food and Drug Administra-
tion, and
‘‘(III) are sold or marketed in the United States
during the quarter.
‘‘(ii) EXCEPTION.—With respect to single source
drugs or biologicals that are within the same billing
and payment code as of October 1, 2003, the Secretary
shall treat such single source drugs or biologicals as
if the single source drugs or biologicals were multiple
source drugs.
‘‘(D) SINGLE SOURCE DRUG OR BIOLOGICAL.—The term
‘single source drug or biological’ means—
‘‘(i) a biological; or
‘‘(ii) a drug which is not a multiple source drug
and which is produced or distributed under a new
drug application approved by the Food and Drug
Administration, including a drug product marketed by
any cross-licensed producers or distributors operating
under the new drug application.
‘‘(E) EXCEPTION FROM PHARMACEUTICAL EQUIVALENCE
AND BIOEQUIVALENCE REQUIREMENT.—Subparagraph (C)(ii)
shall not apply if the Food and Drug Administration
changes by regulation the requirement that, for purposes
of the publication described in subparagraph (C)(i), in order
for drug products to be rated as therapeutically equivalent,
they must be pharmaceutically equivalent and bioequiva-
lent, as defined in subparagraph (F).
‘‘(F) DETERMINATION OF PHARMACEUTICAL EQUIVALENCE
AND BIOEQUIVALENCE.—For purposes of this paragraph—
‘‘(i) drug products are pharmaceutically equivalent
if the products contain identical amounts of the same
active drug ingredient in the same dosage form and
meet compendial or other applicable standards of
strength, quality, purity, and identity; and
‘‘(ii) drugs are bioequivalent if they do not present
a known or potential bioequivalence problem, or, if
H. R. 1—178
they do present such a problem, they are shown to
meet an appropriate standard of bioequivalence.
‘‘(G) INCLUSION OF VACCINES.—In applying provisions
of section 1927 under this section, ‘other than a vaccine’
is deemed deleted from section 1927(k)(2)(B).
‘‘(d) MONITORING OF MARKET PRICES.—
‘‘(1) IN GENERAL.—The Inspector General of the Department
of Health and Human Services shall conduct studies, which
may include surveys, to determine the widely available market
prices of drugs and biologicals to which this section applies,
as the Inspector General, in consultation with the Secretary,
determines to be appropriate.
‘‘(2) COMPARISON OF PRICES.—Based upon such studies and
other data for drugs and biologicals, the Inspector General
shall compare the average sales price under this section for
drugs and biologicals with—
‘‘(A) the widely available market price for such drugs
and biologicals (if any); and
‘‘(B) the average manufacturer price (as determined
under section 1927(k)(1)) for such drugs and biologicals.
‘‘(3) LIMITATION ON AVERAGE SALES PRICE.—
‘‘(A) IN GENERAL.—The Secretary may disregard the
average sales price for a drug or biological that exceeds
the widely available market price or the average manufac-
turer price for such drug or biological by the applicable
threshold percentage (as defined in subparagraph (B)).
‘‘(B) APPLICABLE THRESHOLD PERCENTAGE DEFINED.—
In this paragraph, the term ‘applicable threshold percent-
age’ means—
‘‘(i) in 2005, in the case of an average sales price
for a drug or biological that exceeds widely available
market price or the average manufacturer price, 5
percent; and
‘‘(ii) in 2006 and subsequent years, the percentage
applied under this subparagraph subject to such
adjustment as the Secretary may specify for the widely
available market price or the average manufacturer
price, or both.
‘‘(C) AUTHORITY TO ADJUST AVERAGE SALES PRICE.—
If the Inspector General finds that the average sales price
for a drug or biological exceeds such widely available
market price or average manufacturer price for such drug
or biological by the applicable threshold percentage, the
Inspector General shall inform the Secretary (at such times
as the Secretary may specify to carry out this subpara-
graph) and the Secretary shall, effective as of the next
quarter, substitute for the amount of payment otherwise
determined under this section for such drug or biological
the lesser of—
‘‘(i) the widely available market price for the drug
or biological (if any); or
‘‘(ii) 103 percent of the average manufacturer price
(as determined under section 1927(k)(1)) for the drug
or biological.
‘‘(4) CIVIL MONEY PENALTY.—
‘‘(A) IN GENERAL.—If the Secretary determines that
a manufacturer has made a misrepresentation in the
H. R. 1—179
reporting of the manufacturer’s average sales price for a
drug or biological, the Secretary may apply a civil money
penalty in an amount of up to $10,000 for each such price
misrepresentation and for each day in which such price
misrepresentation was applied.
‘‘(B) PROCEDURES.—The provisions of section 1128A
(other than subsections (a) and (b)) shall apply to civil
money penalties under subparagraph (B) in the same
manner as they apply to a penalty or proceeding under
section 1128A(a).
‘‘(5) WIDELY AVAILABLE MARKET PRICE.—
‘‘(A) IN GENERAL.—In this subsection, the term ‘widely
available market price’ means the price that a prudent
physician or supplier would pay for the drug or biological.
In determining such price, the Inspector General shall
take into account the discounts, rebates, and other price
concessions routinely made available to such prudent physi-
cians or suppliers for such drugs or biologicals.
‘‘(B) CONSIDERATIONS.—In determining the price under
subparagraph (A), the Inspector General shall consider
information from one or more of the following sources:
‘‘(i) Manufacturers.
‘‘(ii) Wholesalers.
‘‘(iii) Distributors.
‘‘(iv) Physician supply houses.
‘‘(v) Specialty pharmacies.
‘‘(vi) Group purchasing arrangements.
‘‘(vii) Surveys of physicians.
‘‘(viii) Surveys of suppliers.
‘‘(ix) Information on such market prices from
insurers.
‘‘(x) Information on such market prices from pri-
vate health plans.
‘‘(e) AUTHORITY TO USE ALTERNATIVE PAYMENT IN RESPONSE
TO PUBLIC HEALTH EMERGENCY.—In the case of a public health
emergency under section 319 of the Public Health Service Act
in which there is a documented inability to access drugs and
biologicals, and a concomitant increase in the price, of a drug
or biological which is not reflected in the manufacturer’s average
sales price for one or more quarters, the Secretary may use the
wholesale acquisition cost (or other reasonable measure of drug
or biological price) instead of the manufacturer’s average sales
price for such quarters and for subsequent quarters until the price
and availability of the drug or biological has stabilized and is
substantially reflected in the applicable manufacturer’s average
sales price.
‘‘(f) QUARTERLY
REPORT
ON
AVERAGE
SALES
PRICE.—For
requirements for reporting the manufacturer’s average sales price
(and, if required to make payment, the manufacturer’s wholesale
acquisition cost) for the drug or biological under this section, see
section 1927(b)(3).
‘‘(g) JUDICIAL REVIEW.—There shall be no administrative or
judicial review under section 1869, section 1878, or otherwise, of—
‘‘(1) determinations of payment amounts under this section,
including the assignment of National Drug Codes to billing
and payment codes;
H. R. 1—180
‘‘(2) the identification of units (and package size) under
subsection (b)(2);
‘‘(3) the method to allocate rebates, chargebacks, and other
price concessions to a quarter if specified by the Secretary;
‘‘(4) the manufacturer’s average sales price when it is used
for the determination of a payment amount under this section;
and
‘‘(5) the disclosure of the average manufacturer price by
reason of an adjustment under subsection (d)(3)(C) or (e).’’.
(2) REPORT ON SALES TO PHARMACY BENEFIT MANAGERS.—
(A) STUDY.—The Secretary shall conduct a study on
sales of drugs and biologicals to large volume purchasers,
such as pharmacy benefit managers and health mainte-
nance organizations, for purposes of determining whether
the price at which such drugs and biologicals are sold
to such purchasers does not represent the price such drugs
and biologicals are made available for purchase to prudent
physicians.
(B) REPORT.—Not later than January 1, 2006, the Sec-
retary shall submit to Congress a report on the study
conducted under paragraph (1), and shall include rec-
ommendations on whether such sales to large volume pur-
chasers should be excluded from the computation of a
manufacturer’s average sales price under section 1847A
of the Social Security Act, as added by paragraph (1).
(3) 
INSPECTOR
GENERAL
REPORT
ON
ADEQUACY
OF
REIMBURSEMENT RATE UNDER AVERAGE SALES PRICE METHOD-
OLOGY.—
(A) STUDY.—The Inspector General of the Department
of Health and Human Services shall conduct a study on
the ability of physician practices in the specialties of hema-
tology, hematology/oncology, and medical oncology of dif-
ferent sizes, especially particularly large practices, to obtain
drugs and biologicals for the treatment of cancer patients
at 106 percent of the average sales price for the drugs
and biologicals. In conducting the study, the Inspector Gen-
eral shall conduct an audit of a representative sample
of such practices to determine the adequacy of reimburse-
ment under section 1847A of the Social Security Act, as
added by paragraph (1).
(B) REPORT.—Not later October 1, 2005, the Inspector
General shall submit to Congress a report on the study
conducted under subparagraph (A), and shall include rec-
ommendations on the adequacy of reimbursement for such
drugs and biologicals under such section 1847A.
(d) PAYMENT BASED ON COMPETITION.—
(1) IN GENERAL.—Title XVIII is amended by inserting after
section 1847A, as added by subsection (c), the following new
section:
‘‘COMPETITIVE ACQUISITION OF OUTPATIENT DRUGS AND BIOLOGICALS
‘‘SEC. 1847B. (a) IMPLEMENTATION OF COMPETITIVE ACQUISI-
TION.—
‘‘(1) IMPLEMENTATION OF PROGRAM.—
‘‘(A) IN GENERAL.—The Secretary shall establish and
implement a competitive acquisition program under
which—
H. R. 1—181
‘‘(i) competitive acquisition areas are established
for contract award purposes for acquisition of and pay-
ment for categories of competitively biddable drugs
and biologicals (as defined in paragraph (2)) under
this part;
‘‘(ii) each physician is given the opportunity
annually to elect to obtain drugs and biologicals under
the program, rather than under section 1847A; and
‘‘(iii) each physician who elects to obtain drugs
and biologicals under the program makes an annual
selection under paragraph (5) of the contractor through
which drugs and biologicals within a category of drugs
and biologicals will be acquired and delivered to the
physician under this part.
This section shall not apply in the case of a physician
who elects section 1847A to apply.
‘‘(B) IMPLEMENTATION.—For purposes of implementing
the program, the Secretary shall establish categories of
competitively biddable drugs and biologicals. The Secretary
shall phase in the program with respect to those categories
beginning in 2006 in such manner as the Secretary deter-
mines to be appropriate.
‘‘(C) WAIVER OF CERTAIN PROVISIONS.—In order to pro-
mote competition, in carrying out the program the Sec-
retary may waive such provisions of the Federal Acquisition
Regulation as are necessary for the efficient implementa-
tion of this section, other than provisions relating to con-
fidentiality of information and such other provisions as
the Secretary determines appropriate.
‘‘(D) EXCLUSION
AUTHORITY.—The Secretary may
exclude competitively biddable drugs and biologicals
(including a class of such drugs and biologicals) from the
competitive bidding system under this section if the
application of competitive bidding to such drugs or
biologicals—
‘‘(i) is not likely to result in significant savings;
or
‘‘(ii) is likely to have an adverse impact on access
to such drugs or biologicals.
‘‘(2) COMPETITIVELY BIDDABLE DRUGS AND BIOLOGICALS AND
PROGRAM DEFINED.—For purposes of this section—
‘‘(A) COMPETITIVELY BIDDABLE DRUGS AND BIOLOGICALS
DEFINED.—The term ‘competitively biddable drugs and
biologicals’ means a drug or biological described in section
1842(o)(1)(C) and furnished on or after January 1, 2006.
‘‘(B) 
PROGRAM.—The 
term 
‘program’ 
means 
the
competitive acquisition program under this section.
‘‘(C) COMPETITIVE ACQUISITION AREA; AREA.—The terms
‘competitive acquisition area’ and ‘area’ mean an appro-
priate geographic region established by the Secretary under
the program.
‘‘(D) CONTRACTOR.—The term ‘contractor’ means an
entity that has entered into a contract with the Secretary
under this section.
‘‘(3) APPLICATION OF PROGRAM PAYMENT METHODOLOGY.—
‘‘(A) IN GENERAL.—With respect to competitively bid-
dable drugs and biologicals which are supplied under the
H. R. 1—182
program in an area and which are prescribed by a physician
who has elected this section to apply—
‘‘(i) the claim for such drugs and biologicals shall
be submitted by the contractor that supplied the drugs
and biologicals;
‘‘(ii) collection of amounts of any deductible and
coinsurance applicable with respect to such drugs and
biologicals shall be the responsibility of such contractor
and shall not be collected unless the drug or biological
is administered to the individual involved; and
‘‘(iii) the payment under this section (and related
amounts of any applicable deductible and coinsurance)
for such drugs and biologicals—
‘‘(I) shall be made only to such contractor;
and
‘‘(II) shall be conditioned upon the administra-
tion of such drugs and biologicals.
‘‘(B) PROCESS FOR ADJUSTMENTS.—The Secretary shall
provide a process for adjustments to payments in the case
in which payment is made for drugs and biologicals which
were billed at the time of dispensing but which were not
actually administered.
‘‘(C) INFORMATION FOR PURPOSES OF COST-SHARING.—
The Secretary shall provide a process by which physicians
submit information to contractors for purposes of the collec-
tion of any applicable deductible or coinsurance amounts
under subparagraph (A)(ii).
‘‘(4) CONTRACT
REQUIRED.—Payment may not be made
under this part for competitively biddable drugs and biologicals
prescribed by a physician who has elected this section to apply
within a category and a competitive acquisition area with
respect to which the program applies unless—
‘‘(A) the drugs or biologicals are supplied by a con-
tractor with a contract under this section for such category
of drugs and biologicals and area; and
‘‘(B) the physician has elected such contractor under
paragraph (5) for such category and area.
‘‘(5) CONTRACTOR SELECTION PROCESS.—
‘‘(A) ANNUAL SELECTION.—
‘‘(i) IN GENERAL.—The Secretary shall provide a
process for the selection of a contractor, on an annual
basis and in such exigent circumstances as the Sec-
retary may provide and with respect to each category
of competitively biddable drugs and biologicals for an
area by selecting physicians.
‘‘(ii) TIMING OF SELECTION.—The selection of a con-
tractor under clause (i) shall be made at the time
of the election described in section 1847A(a) for this
section to apply and shall be coordinated with agree-
ments entered into under section 1842(h).
‘‘(B) INFORMATION
ON
CONTRACTORS.—The Secretary
shall make available to physicians on an ongoing basis,
through a directory posted on the Internet website of the
Centers for Medicare & Medicaid Services or otherwise
and upon request, a list of the contractors under this sec-
tion in the different competitive acquisition areas.
H. R. 1—183
‘‘(C) SELECTING PHYSICIAN DEFINED.—For purposes of
this section, the term ‘selecting physician’ means, with
respect to a contractor and category and competitive
acquisition area, a physician who has elected this section
to apply and has selected to apply under this section such
contractor for such category and area.
‘‘(b) PROGRAM REQUIREMENTS.—
‘‘(1) CONTRACT FOR COMPETITIVELY BIDDABLE DRUGS AND
BIOLOGICALS.—The Secretary shall conduct a competition
among entities for the acquisition of competitively biddable
drugs and biologicals. Notwithstanding any other provision of
this title, in the case of a multiple source drug, the Secretary
shall conduct such competition among entities for the acquisi-
tion of at least one competitively biddable drug and biological
within each billing and payment code within each category
for each competitive acquisition area.
‘‘(2) CONDITIONS FOR AWARDING CONTRACT.—
‘‘(A) IN GENERAL.—The Secretary may not award a
contract to any entity under the competition conducted
in a competitive acquisition area pursuant to paragraph
(1) with respect to the acquisition of competitively biddable
drugs and biologicals within a category unless the Secretary
finds that the entity meets all of the following with respect
to the contract period involved:
‘‘(i) CAPACITY TO SUPPLY COMPETITIVELY BIDDABLE
DRUG OR BIOLOGICAL WITHIN CATEGORY.—
‘‘(I) IN
GENERAL.—The entity has sufficient
arrangements to acquire and to deliver competi-
tively biddable drugs and biologicals within such
category in the area specified in the contract.
‘‘(II) SHIPMENT
METHODOLOGY.—The entity
has arrangements in effect for the shipment at
least 5 days each week of competitively biddable
drugs and biologicals under the contract and for
the timely delivery (including for emergency situa-
tions) of such drugs and biologicals in the area
under the contract.
‘‘(ii) QUALITY, SERVICE, FINANCIAL
PERFORMANCE
AND SOLVENCY STANDARDS.—The entity meets quality,
service, financial performance, and solvency standards
specified by the Secretary, including—
‘‘(I) the establishment of procedures for the
prompt response and resolution of complaints of
physicians and individuals and of inquiries
regarding the shipment of competitively biddable
drugs and biologicals; and
‘‘(II) a grievance and appeals process for the
resolution of disputes.
‘‘(B) ADDITIONAL CONSIDERATIONS.—The Secretary may
refuse to award a contract under this section, and may
terminate such a contract, with an entity based upon—
‘‘(i) the suspension or revocation, by the Federal
Government or a State government, of the entity’s
license for the distribution of drugs or biologicals
(including controlled substances); or
‘‘(ii) the exclusion of the entity under section 1128
from participation under this title.
H. R. 1—184
‘‘(C) APPLICATION
OF
MEDICARE
PROVIDER
OMBUDS-
MAN.—For provision providing for a program-wide Medicare
Provider Ombudsman to review complaints, see section
1868(b), as added by section 923 of the Medicare Prescrip-
tion Drug, Improvement, and Modernization Act of 2003.
‘‘(3) AWARDING MULTIPLE CONTRACTS FOR A CATEGORY AND
AREA.—The Secretary may limit (but not below 2) the number
of qualified entities that are awarded such contracts for any
category and area. The Secretary shall select among qualified
entities based on the following:
‘‘(A) The bid prices for competitively biddable drugs
and biologicals within the category and area.
‘‘(B) Bid price for distribution of such drugs and
biologicals.
‘‘(C) Ability to ensure product integrity.
‘‘(D) Customer service.
‘‘(E) Past experience in the distribution of drugs and
biologicals, including controlled substances.
‘‘(F) Such other factors as the Secretary may specify.
‘‘(4) TERMS OF CONTRACTS.—
‘‘(A) IN
GENERAL.—A contract entered into with an
entity under the competition conducted pursuant to para-
graph (1) is subject to terms and conditions that the Sec-
retary may specify consistent with this section.
‘‘(B) PERIOD OF CONTRACTS.—A contract under this sec-
tion shall be for a term of 3 years, but may be terminated
by the Secretary or the entity with appropriate, advance
notice.
‘‘(C) INTEGRITY OF DRUG AND BIOLOGICAL DISTRIBUTION
SYSTEM.—A contractor (as defined in subsection (a)(2)(D))
shall—
‘‘(i) acquire all drug and biological products it
distributes directly from the manufacturer or from a
distributor that has acquired the products directly from
the manufacturer; and
‘‘(ii) comply with any product integrity safeguards
as may be determined to be appropriate by the Sec-
retary.
Nothing in this subparagraph shall be construed to relieve
or exempt any contractor from the provisions of the Federal
Food, Drug, and Cosmetic Act that relate to the wholesale
distribution of prescription drugs or biologicals.
‘‘(D) COMPLIANCE WITH CODE OF CONDUCT AND FRAUD
AND ABUSE RULES.—Under the contract—
‘‘(i) the contractor shall comply with a code of
conduct, specified or recognized by the Secretary, that
includes standards relating to conflicts of interest; and
‘‘(ii) the contractor shall comply with all applicable
provisions relating to prevention of fraud and abuse,
including compliance with applicable guidelines of the
Department of Justice and the Inspector General of
the Department of Health and Human Services.
‘‘(E) DIRECT DELIVERY OF DRUGS AND BIOLOGICALS TO
PHYSICIANS.—Under the contract the contractor shall only
supply competitively biddable drugs and biologicals directly
to the selecting physicians and not directly to individuals,
H. R. 1—185
except under circumstances and settings where an indi-
vidual currently receives a drug or biological in the individ-
ual’s home or other non-physician office setting as the
Secretary may provide. The contractor shall not deliver
drugs and biologicals to a selecting physician except upon
receipt of a prescription for such drugs and biologicals,
and such necessary data as may be required by the Sec-
retary to carry out this section. This section does not—
‘‘(i) require a physician to submit a prescription
for each individual treatment; or
‘‘(ii) change a physician’s flexibility in terms of
writing a prescription for drugs or biologicals for a
single treatment or a course of treatment.
‘‘(5) PERMITTING ACCESS TO DRUGS AND BIOLOGICALS.—The
Secretary shall establish rules under this section under which
drugs and biologicals which are acquired through a contractor
under this section may be used to resupply inventories of such
drugs and biologicals which are administered consistent with
safe drug practices and with adequate safeguards against fraud
and abuse. The previous sentence shall apply if the physicians
can demonstrate to the Secretary all of the following:
‘‘(A) The drugs or biologicals are required immediately.
‘‘(B) The physician could not have reasonably antici-
pated the immediate requirement for the drugs or
biologicals.
‘‘(C) The contractor could not deliver to the physician
the drugs or biologicals in a timely manner.
‘‘(D) The drugs or biologicals were administered in
an emergency situation.
‘‘(6) CONSTRUCTION.—Nothing in this section shall be con-
strued as waiving applicable State requirements relating to
licensing of pharmacies.
‘‘(c) BIDDING PROCESS.—
‘‘(1) IN GENERAL.—In awarding a contract for a category
of drugs and biologicals in an area under the program, the
Secretary shall consider with respect to each entity seeking
to be awarded a contract the bid price and the other factors
referred to in subsection (b)(3).
‘‘(2) BID DEFINED.—In this section, the term ‘bid’ means
an offer to furnish a competitively biddable drug or biological
for a particular price and time period.
‘‘(3) BIDDING ON A NATIONAL OR REGIONAL BASIS.—Nothing
in this section shall be construed as precluding a bidder from
bidding for contracts in all areas of the United States or as
requiring a bidder to submit a bid for all areas of the United
States.
‘‘(4) UNIFORMITY OF BIDS WITHIN AREA.—The amount of
the bid submitted under a contract offer for any competitively
biddable drug or biological for an area shall be the same for
that drug or biological for all portions of that area.
‘‘(5) CONFIDENTIALITY OF BIDS.—The provisions of subpara-
graph (D) of section 1927(b)(3) shall apply to periods during
which a bid is submitted with respect to a competitively bid-
dable drug or biological under this section in the same manner
as it applies to information disclosed under such section, except
that any reference—
H. R. 1—186
‘‘(A) in that subparagraph to a ‘manufacturer or whole-
saler’ is deemed a reference to a ‘bidder’ under this section;
‘‘(B) in that section to ‘prices charged for drugs’ is
deemed a reference to a ‘bid’ submitted under this section;
and
‘‘(C) in clause (i) of that section to ‘this section’, is
deemed a reference to ‘part B of title XVIII’.
‘‘(6) INCLUSION OF COSTS.—The bid price submitted in a
contract offer for a competitively biddable drug or biological
shall—
‘‘(A) include all costs related to the delivery of the
drug or biological to the selecting physician (or other point
of delivery); and
‘‘(B) include the costs of dispensing (including shipping)
of such drug or biological and management fees, but shall
not include any costs related to the administration of the
drug or biological, or wastage, spillage, or spoilage.
‘‘(7) PRICE ADJUSTMENTS DURING CONTRACT PERIOD; DISCLO-
SURE OF COSTS.—Each contract awarded shall provide for—
‘‘(A) disclosure to the Secretary the contractor’s reason-
able, net acquisition costs for periods specified by the Sec-
retary, not more often than quarterly, of the contract; and
‘‘(B) appropriate price adjustments over the period of
the contract to reflect significant increases or decreases
in a contractor’s reasonable, net acquisition costs, as so
disclosed.
‘‘(d) COMPUTATION OF PAYMENT AMOUNTS.—
‘‘(1) IN GENERAL.—Payment under this section for competi-
tively biddable drugs or biologicals shall be based on bids
submitted and accepted under this section for such drugs or
biologicals in an area. Based on such bids the Secretary shall
determine a single payment amount for each competitively
biddable drug or biological in the area.
‘‘(2) SPECIAL RULES.—The Secretary shall establish rules
regarding the use under this section of the alternative payment
amount provided under section 1847A to the use of a price
for specific competitively biddable drugs and biologicals in the
following cases:
‘‘(A) NEW DRUGS AND BIOLOGICALS.—A competitively
biddable drug or biological for which a payment and billing
code has not been established.
‘‘(B) OTHER CASES.—Such other exceptional cases as
the Secretary may specify in regulations.
‘‘(e) COST-SHARING.—
‘‘(1) APPLICATION OF COINSURANCE.—Payment under this
section for competitively biddable drugs and biologicals shall
be in an amount equal to 80 percent of the payment basis
described in subsection (d)(1).
‘‘(2) DEDUCTIBLE.—Before applying paragraph (1), the indi-
vidual shall be required to meet the deductible described in
section 1833(b).
‘‘(3) COLLECTION.—Such coinsurance and deductible shall
be collected by the contractor that supplies the drug or
biological involved. Subject to subsection (a)(3)(B), such coinsur-
ance and deductible may be collected in a manner similar
to the manner in which the coinsurance and deductible are
collected for durable medical equipment under this part.
H. R. 1—187
‘‘(f) SPECIAL PAYMENT RULES.—
‘‘(1) USE IN EXCLUSION CASES.—If the Secretary excludes
a drug or biological (or class of drugs or biologicals) under
subsection (a)(1)(D), the Secretary may provide for payment
to be made under this part for such drugs and biologicals
(or class) using the payment methodology under section 1847A.
‘‘(2) APPLICATION OF REQUIREMENT FOR ASSIGNMENT.—For
provision requiring assignment of claims for competitively bid-
dable drugs and biologicals, see section 1842(o)(3).
‘‘(3) PROTECTION
FOR
BENEFICIARY
IN
CASE
OF
MEDICAL
NECESSITY
DENIAL.—For protection of individuals against
liability in the case of medical necessity determinations, see
section 1842(b)(3)(B)(ii)(III).
‘‘(g) JUDICIAL REVIEW.—There shall be no administrative or
judicial review under section 1869, section 1878, or otherwise, of—
‘‘(1) the establishment of payment amounts under sub-
section (d)(1);
‘‘(2) the awarding of contracts under this section;
‘‘(3) the establishment of competitive acquisition areas
under subsection (a)(2)(C);
‘‘(4) the phased-in implementation under subsection
(a)(1)(B);
‘‘(5) the selection of categories of competitively biddable
drugs and biologicals for competitive acquisition under such
subsection or the selection of a drug in the case of multiple
source drugs; or
‘‘(6) the bidding structure and number of contractors
selected under this section.’’.
(2) REPORT.—Not later than July 1, 2008, the Secretary
shall submit to Congress a report on the program conducted
under section 1847B of the Social Security Act, as added by
paragraph (1). Such report shall include information on savings,
reductions in cost-sharing, access to competitively biddable
drugs and biologicals, the range of choices of contractors avail-
able to physicians, the satisfaction of physicians and of individ-
uals enrolled under this part, and information comparing prices
for drugs and biologicals under such section and section 1847A
of such Act, as added by subsection (c).
(e) ADJUSTMENTS TO PAYMENT AMOUNTS FOR ADMINISTRATION
OF DRUGS AND BIOLOGICALS.—
(1) ITEMS AND SERVICES RELATING TO FURNISHING OF BLOOD
CLOTTING FACTORS.—Section 1842(o) (42 U.S.C. 1395u(o)), as
amended by subsection (b)(2), is amended by adding at the
end the following new paragraph:
‘‘(5)(A) Subject to subparagraph (B), in the case of clotting
factors furnished on or after January 1, 2005, the Secretary shall,
after reviewing the January 2003 report to Congress by the Comp-
troller General of the United States entitled ‘Payment for Blood
Clotting Factor Exceeds Providers Acquisition Cost’, provide for
a separate payment, to the entity which furnishes to the patient
blood clotting factors, for items and services related to the fur-
nishing of such factors in an amount that the Secretary determines
to be appropriate. Such payment amount may take into account
any or all of the following:
‘‘(i) The mixing (if appropriate) and delivery of factors
to an individual, including special inventory management and
storage requirements.
H. R. 1—188
‘‘(ii) Ancillary supplies and patient training necessary for
the self-administration of such factors.
‘‘(B) In determining the separate payment amount under
subparagraph (A) for blood clotting factors furnished in 2005, the
Secretary shall ensure that the total amount of payments under
this part (as estimated by the Secretary) for such factors under
paragraph (1)(C) and such separate payments for such factors does
not exceed the total amount of payments that would have been
made for such factors under this part (as estimated by the Sec-
retary) if the amendments made by section 303 of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003
had not been enacted.
‘‘(C) The separate payment amount under this subparagraph
for blood clotting factors furnished in 2006 or a subsequent year
shall be equal to the separate payment amount determined under
this paragraph for the previous year increased by the percentage
increase in the consumer price index for medical care for the 12-
month period ending with June of the previous year.’’.
(2) PHARMACY
SUPPLYING
FEE
FOR
CERTAIN
DRUGS
AND
BIOLOGICALS.—Section 1842(o) (42 U.S.C. 1395u(o)), as pre-
viously amended, is amended by adding at the end the following
new paragraph:
‘‘(6) In the case of an immunosuppressive drug described in
subparagraph (J) of section 1861(s)(2) and an oral drug described
in subparagraph (Q) or (T) of such section, the Secretary shall
pay to the pharmacy a supplying fee for such a drug determined
appropriate by the Secretary (less the applicable deductible and
coinsurance amounts).’’.
(f) LINKAGE OF REVISED DRUG PAYMENTS AND INCREASES FOR
DRUG ADMINISTRATION.—The Secretary shall not implement the
revisions in payment amounts for drugs and biologicals adminis-
tered by physicians as a result of the amendments made by sub-
section (b) with respect to 2004 unless the Secretary concurrently
makes adjustments to the practice expense payment adjustment
under the amendments made by subsection (a).
(g) PROHIBITION OF ADMINISTRATIVE AND JUDICIAL REVIEW.—
(1) DRUGS.—Section 1842(o) (42 U.S.C. 1395u(o)), as pre-
viously amended, is amended by adding at the end the following
new paragraph:
‘‘(7) There shall be no administrative or judicial review under
section 1869, section 1878, or otherwise, of determinations of pay-
ment amounts, methods, or adjustments under paragraphs (4)
through (6).’’.
(2) PHYSICIAN
FEE
SCHEDULE.—Section 1848(i)(1)(B) (42
U.S.C. 1395w–4(i)(1)(B)) is amended by striking ‘‘subsection
(c)(2)(F)’’ and inserting ‘‘subsections (c)(2)(F), (c)(2)(H), and
(c)(2)(I)’’.
(3) MULTIPLE
CHEMOTHERAPY
AGENTS, OTHER
SERVICES
CURRENTLY ON THE NON-PHYSICIAN WORK POOL, AND TRANSI-
TIONAL
ADJUSTMENT.—There shall be no administrative or
judicial review under section 1869, section 1878, or otherwise,
of determinations of payment amounts, methods, or adjust-
ments under paragraphs (2) through (4) of subsection (a).
(h) CONTINUATION
OF PAYMENT METHODOLOGY
FOR RADIO-
PHARMACEUTICALS.—Nothing in the amendments made by this sec-
tion shall be construed as changing the payment methodology under
H. R. 1—189
part B of title XVIII of the Social Security Act for radiopharma-
ceuticals, including the use by carriers of invoice pricing method-
ology.
(i) CONFORMING AMENDMENTS.—
(1) APPLICATION OF ASP AND COMPETITIVE BIDDING.—Section
1842(o)(2) (42 U.S.C. 1395u(o)(2)) is amended by adding at
the end the following: ‘‘This paragraph shall not apply in the
case of payment under paragraph (1)(C).’’.
(2) NO CHANGE IN COVERAGE BASIS.—Section 1861(s)(2)(A)
(42 U.S.C. 1395x(s)(2)(A)) is amended by inserting ‘‘(or would
have been so included but for the application of section 1847B)’’
after ‘‘included in the physicians’ bills’’.
(3) 
PAYMENT.—(A) 
Section 
1833(a)(1)(S) 
(42 
U.S.C.
1395l(a)(1)(S)) is amended by inserting ‘‘(or, if applicable, under
section 1847, 1847A, or 1847B)’’ after ‘‘1842(o)’’.
(B) Section 1862(a)(1) (42 U.S.C. 1395y(a)(1)) is amended—
(i) by striking ‘‘and’’ at the end of subparagraph (H);
(ii) by striking the semicolon at the end of subpara-
graph (I) and inserting ‘‘, and’’; and
(iii) by adding at the end the following new subpara-
graph:
‘‘(J) in the case of a drug or biological specified in section
1847A(c)(6)(C) for which payment is made under part B that
is furnished in a competitive area under section 1847B, that
is not furnished by an entity under a contract under such
section;’’.
(4) CONSOLIDATED REPORTING OF PRICING INFORMATION.—
Section 1927 (42 U.S.C. 1396r–8) is amended—
(A) in subsection (a)(1), by inserting ‘‘or under part
B of title XVIII’’ after ‘‘section 1903(a)’’;
(B) in subsection (b)(3)(A)—
(i) in clause (i), by striking ‘‘and’’ at the end and
inserting a semicolon;
(ii) in clause (ii), by striking the period and
inserting ‘‘; and’’; and
(iii) by adding at the end the following:
‘‘(iii) for calendar quarters beginning on or after
January 1, 2004, in conjunction with reporting required
under clause (i) and by National Drug Code (including
package size)—
‘‘(I) the manufacturer’s average sales price (as
defined in section 1847A(c)) and the total number
of units specified under section 1847A(b)(2)(A);
‘‘(II) if required to make payment under sec-
tion 1847A, the manufacturer’s wholesale acquisi-
tion cost, as defined in subsection (c)(6) of such
section; and
‘‘(III) information on those sales that were
made at a nominal price or otherwise described
in section 1847A(c)(2)(B);
for a drug or biological described in subparagraph (C),
(D), (E), or (G) of section 1842(o)(1) or section
1881(b)(13)(A)(ii).
Information reported under this subparagraph is subject
to audit by the Inspector General of the Department of
Health and Human Services.’’;
(C) in subsection (b)(3)(B)—