ant to such request, and may reduce such an amount only 
pursuant to section 1842(b)(8). 
‘‘(E)(i) Any non-governmental party may request (in 
such form and manner as the Secretary may require) that 
the Secretary— 
‘‘(I) reverse a determination of a medicare ad-
ministrative contractor under subparagraph (D) that 
is adverse to the non-governmental party requesting 
it; 
‘‘(II) correct an erroneous decision in the deter-
mination of a limitation amount under paragraph 
(4)(B); or 
‘‘(III) reverse a determination referred to in 
subclause (I) and correct an erroneous decision re-
ferred to in subclause (II). 
‘‘(ii) Any request under this subparagraph shall in-
clude a statement of the basis for the non-governmental 
party’s belief that an erroneous decision was made in de-
termining such amount, together with supporting evidence 
and a description of any additional data (other than data 
already in the possession of the Secretary or the appro-
priate medicare administrative contractor reviewing the 
request under subparagraph (D)) that– 
VerDate Aug 31 2005 
00:23 May 14, 2006
Jkt 049196
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H5369.IH
H5369
ccoleman on PROD1PC71 with BILLS
‘‘(I) are or may be in the possession of the Sec-
retary or an another medicare administrative con-
tractor; and 
‘‘(II) are necessary to demonstrate that such an 
erroneous decision exists. 
‘‘(iii) If the Secretary or another medicare adminis-
trative contractor is identified as possessing or potentially 
possessing additional data identified by a non-govern-
mental party in a request under this subparagraph, the 
Secretary or such contractor, as the case may be, shall 
make available to the non-governmental party within 30 
days after the date of the submission of the request any 
data in their possession that meet the description of the 
additional data identified in such request, with appro-
priate safeguards to protect confidential and proprietary 
information. 
‘‘(iv) If additional data are made available to a non- 
governmental party under clause (iii), such party may 
amend its request under this subparagraph to incorporate 
such data within 30 days after the date such data are 
made available to such party. 
‘‘(v) The Secretary shall make a determination of 
whether to correct the erroneous decision that is the sub-
ject of a request submitted under this subparagraph not 
later than 60 days after the date of the submission of such 
VerDate Aug 31 2005 
00:23 May 14, 2006
Jkt 049196
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H5369.IH
H5369
ccoleman on PROD1PC71 with BILLS
request, or if later, the submission of an amended request 
under clause (iv). The Secretary shall determine that the 
non-governmental party submitting the request— 
‘‘(I) has demonstrated that an erroneous deci-
sion clearly was made, correct such erroneous deci-
sion, and increase the fee schedule amount as of the 
first day of the next calendar quarter to reflect the 
correction of such erroneous decision; or 
‘‘(II) has failed to demonstrate that an erro-
neous decision clearly was made and decline to 
change the fee schedule amount or national limita-
tion amount, as the case may be, 
and shall provide to the non-governmental party with a 
written explanation of the basis for such determination. 
‘‘(vi) The Secretary may not reduce a fee schedule 
amount pursuant to a request under this subparagraph 
and may reduce such an amount only pursuant to section 
1842(b)(8). 
‘‘(F)(i) There shall be no administrative or judicial 
review under section 1869, 1878, or otherwise of any de-
termination made under subparagraph (D) or (E). 
‘‘(ii) Nothing in this paragraph shall be construed as 
precluding administrative or judicial review of determina-
tions of the amount of benefits that are available to a 
Medicare beneficiary in a particular case.’’. 
VerDate Aug 31 2005 
00:23 May 14, 2006
Jkt 049196
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H5369.IH
H5369
ccoleman on PROD1PC71 with BILLS
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall take effect on the date of the enact-
ment of this Act and shall apply to requests for corrections 
submitted on or after such date, without regard to whether 
final regulations to carry out such amendment have been 
issued. 
SEC. 102. ISSUANCE OF REGULATIONS ON GAP-FILLING 
FOR MEDICARE FEE SCHEDULE FOR CLIN-
ICAL DIAGNOSTIC LABORATORY TESTS. 
Not later than one year after the date of the enact-
ment of this Act, the Secretary of Health and Human 
Services shall issue final regulations specifying how an ap-
propriate medicare administrative contractor (as defined 
in section 1874A(a)(3)(B) of the Social Security Act (42 
U.S.C. 1395kk–1(a)(3)(B)) shall apply a gap-filling meth-
odology in determining fee schedule amounts established 
under section 1833(h)(2)(A)(i) of such Act (42 U.S.C. 
1395l(h)(2)(A)(i)). Such regulations shall specify— 
(1) a process for ensuring that the resulting fee 
schedule amounts are fair, including a description of 
the types of data to be collected for use in such 
methodology and the minimum requirements such 
data shall meet in order to ensure that the data are 
valid, meaningful, and unbiased; 
VerDate Aug 31 2005 
00:23 May 14, 2006
Jkt 049196
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H5369.IH
H5369
ccoleman on PROD1PC71 with BILLS
(2) the principles to be employed to ensure that 
such data are statistically significant and alter-
natives to follow if statistically significant data are 
unavailable; 
(3) the principles to be followed in using data 
to calculate fee schedule amounts, including prin-
ciples for excluding data that do not meet the re-
quirements of paragraph (1) and (2); 
(4) the methods the Secretary will use to over-
see the application of a gap filling methodology by 
such contractors and the remedies that will be avail-
able in cases in which such a contractor fails to com-
ply with regulatory requirements; and 
(5) a process that provides opportunities for the 
public to participate in the development of fee sched-
ule amounts through the application of gap-filling 
methodologies, including release to the public of data 
collection protocols and the data derived from such 
protocols with an opportunity for public comment 
thereon. 
SEC. 103. INCREASED TRANSPARENCY OF PROCESS FOR 
DETERMINING 
FEE 
SCHEDULE 
AMOUNTS 
FOR NEW TESTS. 
Section 1833(h)(8) of the Social Security Act (42 
U.S.C. 1395l(h)(8) is amended— 
VerDate Aug 31 2005 
00:23 May 14, 2006
Jkt 049196
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H5369.IH
H5369
ccoleman on PROD1PC71 with BILLS
(1) in subparagraph (B)(iii), by inserting ‘‘to be 
conducted in an inter-active format,’’ after ‘‘meet-
ing,’’; 
(2) in subparagraph (B)(iv)— 
(A) by inserting ‘‘(I)’’ after ‘‘meeting,’’; 
(B) by striking ‘‘determination,’’ and in-
serting ‘‘determination and’’; and 
(C) by striking ‘‘a request for’’ and insert-
ing ‘‘(II) publishes in the Federal Register a 
notice of a period of not less than 60 days dur-
ing which the Secretary will receive’’; and 
(3) in subparagraph (C), by striking ‘‘Under 
the procedures’’ and inserting ‘‘In the regulations’’. 
SEC. 104. ADVANCE NOTICE OF CLINICAL DIAGNOSTIC LAB-
ORATORY TEST AMOUNTS BEING CONSID-
ERED FOR ADJUSTMENT UNDER INHERENT 
REASONABLENESS AUTHORITY. 
(a) LIMIT
ON INHERENT REASONABLENESS AU-
THORITY.—Section 1842(b)(9)(A) of the Social Security 
Act (42 U.S.C. 1395u(b)(9)(A)) is amended by adding at 
the end the following: ‘‘Before publishing a proposed no-
tice under subparagraph (B) with respect to any clinical 
diagnostic laboratory test being considered for adjustment 
under paragraph (8), advance notice that such test is 
being considered for such an adjustment shall be provided 
VerDate Aug 31 2005 
00:23 May 14, 2006
Jkt 049196
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H5369.IH
H5369
ccoleman on PROD1PC71 with BILLS
to non-governmental parties (as defined in section 
1833(h)(9)(A)(iv)) at the meeting required by section 
1833(h)(8)(B)(iii), together with an opportunity for such 
representatives and other individuals to make oral com-
ments on the appropriateness of such an adjustment for 
such test.’’. 
(b) CONFORMING CHANGE.—Section 1833(h)(8)(B) 
of such Act (42 U.S.C. 1395l(h)(8)(B)) is amended by 
adding at the end the following: 
‘‘At the meeting required by clause (iii), the Secretary 
shall provide advance notice of inherent reasonableness ad-
justments under section 1842(b)(8) that are being consid-
ered for clinical diagnostic laboratory tests, and afford an 
opportunity for non-governmental parties (as defined 
1833(h)(9)(A)(iv)) at the meeting to comment orally on 
the appropriateness of such an adjustment.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall become effective on January 1, 2007, 
and shall apply to inherent reasonableness adjustments 
that have not been proposed as of such date. 
VerDate Aug 31 2005 
00:23 May 14, 2006
Jkt 049196
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H5369.IH
H5369
ccoleman on PROD1PC71 with BILLS
TITLE II—FUTURE REFORM 
SEC. 201. ESTABLISHMENT OF MEDICARE DEMONSTRATION 
PROJECT TO EVALUATE NEW APPROACHES 
TO CODING AND PAYMENT FOR CERTAIN MO-
LECULAR DIAGNOSTIC TESTS. 
(a) ESTABLISHMENT OF DEMONSTRATION.— 
(1) DEMONSTRATION OF NEW APPROACHES TO 
CODING AND PAYMENT.—The Secretary of Health 
and Human Services (in this section referred to as 
the ‘‘Secretary’’) shall establish a demonstration 
project under this section (in this section referred to 
as the ‘‘demonstration’’) to evaluate new approaches 
to coding and payment under the medicare program 
for clinical diagnostic laboratory tests included in 
the demonstration (in this section referred to as ‘‘in-
cluded tests’’). 
(2) DURATION.—The demonstration and any 
payment amounts assigned under the demonstration 
shall apply solely to claims submitted for included 
tests during the 12-calendar-quarter period that be-
gins with the first day of the first calendar quarter 
to begin at least 250 days after the date of the en-
actment of this Act. 
(3) SCOPE.—The demonstration shall apply on 
a national basis to included tests in all settings for 
VerDate Aug 31 2005 
00:23 May 14, 2006
Jkt 049196
PO 00000
Frm 00014
Fmt 6652
Sfmt 6201
E:\BILLS\H5369.IH
H5369
ccoleman on PROD1PC71 with BILLS
which payment for such tests would (but for the 
demonstration) be made under the fee schedules and 
limitation 
amounts 
established 
under 
section 
1833(h) of the Social Security Act (42 U.S.C. 
1395l(h)). 
(4) ISSUANCE OF TEMPORARY HCPCS CODES; 
CONTINUED
APPLICATION
OF
SUCH
CODES.—The 
Secretary shall issue a temporary code or codes 
under the Health Care Procedure Coding System 
(HCPCS) when needed for an included test, and 
such code or codes— 
(A) shall continue to apply to the test until 
a permanent code or codes is assigned; and 
(B) shall not cease to apply solely because 
the demonstration ends. 
(b) INCLUDED TESTS.— 
(1) ELIGIBLE TESTS.—A clinical diagnostic lab-
oratory test is eligible to be an included test under 
the demonstration if— 
(A) the test is a new or existing molecular 
diagnostic test that (but for its inclusion in the 
demonstration) could be paid under the fee 
schedules and national limitation amount estab-
lished under section 1833(h) of the Social Secu-
rity Act (42 U.S.C. 1395l(h)) for the test; and 
VerDate Aug 31 2005 
00:23 May 14, 2006
Jkt 049196
PO 00000
Frm 00015
Fmt 6652
Sfmt 6201
E:\BILLS\H5369.IH
H5369
ccoleman on PROD1PC71 with BILLS
(B) there is the prospect— 
(i) for wide usage of the test in mul-
tiple geographic areas; and 
(ii) that development of a new code, 
or payment, or both, for the test under the 
demonstration will result in reduced ad-
ministrative complexity and improved effi-
ciency. 
(2) INCLUDED
TESTS.—A clinical diagnostic 
laboratory test shall be treated as an included test 
if— 
(A) an interested party submits a request 
to the standing panel established under sub-
section (c) that the test be included in the dem-
onstration; and 
(B) the standing panel determines that the 
test is an eligible test under paragraph (1); or 
(3) DEFINITIONS.—For purposes of this sec-
tion— 
(A) the term ‘‘molecular diagnostic test’’ 
means a clinical diagnostic laboratory test per-
formed on deoxyribonucleic (DNA), ribonucleic 
acid (RNA), or protein that is drawn from a 
human being or from a disease-causing orga-
nism; and 
VerDate Aug 31 2005 
00:23 May 14, 2006
Jkt 049196
PO 00000
Frm 00016
Fmt 6652
Sfmt 6201
E:\BILLS\H5369.IH
H5369
ccoleman on PROD1PC71 with BILLS
(B) the term ‘‘interested party’’ means, 
with respect to a request for inclusion of molec-
ular diagnostic test in the demonstration, an in-
dividual entitled to benefits under title XVIII of 
the Social Security Act, a manufacturer of the 
test, a clinical laboratory offering the test, a 
professional society, the Centers for Medicare & 
Medicaid Services, a private payer for such test, 
and a physician or other health care practi-
tioner. 
(c) STANDING PANEL.— 
(1) APPOINTMENT.—Not later than 60 days 
after the date of the enactment of this section, the 
Secretary shall appoint a standing panel (in this sec-
tion referred to as the ‘‘standing panel’’ or ‘‘panel’’) 
to determine whether a test is an included test and 
make recommendations to the Secretary on the ap-
propriate coding of, and payment for, designated 
clinical diagnostic laboratory tests under the dem-
onstration. 
(2) COMPOSITION OF PANEL.— 
(A) IN
GENERAL.—The standing panel 
shall be comprised of 12 members. Two of such 
members shall be non-voting representatives of 
the Administrator of the Centers for Medicare 
VerDate Aug 31 2005 
00:23 May 14, 2006
Jkt 049196
PO 00000
Frm 00017
Fmt 6652
Sfmt 6201
E:\BILLS\H5369.IH
H5369
ccoleman on PROD1PC71 with BILLS
& Medicaid Services. The Secretary shall ap-
point the other 10 members from— 
(i) organizations representing large 
clinical laboratories; 
(ii) organizations representing small 
clinical laboratories; 
(iii) organizations representing physi-
cians with expertise in clinical diagnostic 
laboratory tests; 
(iv) organizations representing other 
health professionals with expertise in such 
tests; 
(v) organizations representing manu-
facturers of such tests; 
(vi) organizations representing indi-
viduals entitled to benefits under title 
XVIII of the Social Security Act; 
(vii) organizations representing pri-
vate payers for such tests (but not more 
than one member may be appointed to rep-
resent such organizations); 
(viii) individuals with expertise in clin-
ical laboratory cost accounting (both macro 
and micro); and 
VerDate Aug 31 2005 
00:23 May 14, 2006
Jkt 049196
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H5369.IH
H5369
ccoleman on PROD1PC71 with BILLS
(ix) individuals with other relevant ex-
pertise. 
(B) TERMS OF OFFICE.—Each member of 
the panel shall be appointed for the life of the 
panel, except that any individual appointed to 
fill a vacancy shall be appointed for the remain-
der of the term of the individual who is being 
replaced. Any vacancy shall be filled in the 
same manner, and with a representative of the 
same category under subparagraph (A), as the 
individual being replaced. 
(3) RULES GOVERNING PANEL.— 
(A) IN GENERAL.—The panel shall elect its 
chair. A quorum shall be required to conduct 
the business of the panel, and eight members of 
the panel shall constitute a quorum. 
(B) COMPENSATION.—While serving on 
the business of the panel (including travel 
time), a member of the panel shall be entitled 
to compensation at the per diem equivalent rate 
provided for level IV of the Executive Schedule 
under section 5315 of title 5, United States 
Code, and while so serving away from home and 
the member’s regular place of business, a mem-
VerDate Aug 31 2005 
00:23 May 14, 2006
Jkt 049196
PO 00000
Frm 00019
Fmt 6652
Sfmt 6201
E:\BILLS\H5369.IH
H5369
ccoleman on PROD1PC71 with BILLS
ber may be allowed travel expenses as author-
ized by the chair of the panel. 
(C) STAFFING.— 
(i) DETAILING.—The panel may seek 
such assistance and support of its duties 
from appropriate Federal Departments 
and agencies. 
(ii) OUTSIDE
EXPERTS.—The panel 
may retain the services of such outside ex-
perts as are necessary for the evaluation of 
a request under this section, and such ex-
perts shall not be voting members of the 
panel. 
(D) MEETINGS.—The panel shall meet at 
the call of the chair and at such intervals 
(which shall not be less than quarterly) as may 
be necessary for the conduct of its business. 
The agenda of each meeting and a notice of its 
date shall be published at least 30 days before 
the date the meeting occurs, and, except as pro-
vided in subparagraph (E), meetings of the 
panel shall be open to the public. 
(E) FACA.—The Federal Advisory Com-
mittee Act (5 U.S.C. App.) shall not apply to 
the panel, but the panel may close any portion 
VerDate Aug 31 2005 
00:23 May 14, 2006
Jkt 049196
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H5369.IH
H5369
ccoleman on PROD1PC71 with BILLS
of a meeting that could be closed if such Act 
applied. 
(F) TERMINATION OF PANEL.—The panel 
shall terminate not more than 180 days after 
the close of the demonstration. 
(d) FORM AND CONTENT OF REQUESTS FOR INCLU-
SION IN THE DEMONSTRATION.—A request for inclusion 
of a clinical diagnostic laboratory test in the demonstra-
tion shall be submitted in such form, and shall contain 
such information as the standing panel may require, in-
cluding at least— 
(1) any coding and payment determinations re-
quested with respect to the test; and 
(2) any documentation in support of— 
(A) the eligibility of the test for inclusion 
in the demonstration; and 
(B) any coding and payment determina-
tions requested with respect to the test, includ-
ing data on the typical direct and indirect lab-
oratory costs (including test acquisition costs) 
of the test. 
The Secretary shall cause to have published in the 
Federal Register and on an appropriate internet site 
public notice of each such request. Such information 
VerDate Aug 31 2005 
00:23 May 14, 2006
Jkt 049196
PO 00000
Frm 00021
Fmt 6652
Sfmt 6201
E:\BILLS\H5369.IH
H5369
ccoleman on PROD1PC71 with BILLS
shall be supplied to the Secretary by the standing 
panel. 
(e) CRITERIA FOR EVALUATING REQUESTS FOR DE-
TERMINATIONS IN CODING AND PAYMENT.— 
(1) IN GENERAL.—In determining whether a 
requested payment determination should be granted, 
and what the new payment amount for a test should 
be, the standing panel (in making its recommenda-
tions to the Secretary) and the Secretary (in deter-
mining whether to grant such a determination) shall 
take into account typical direct and indirect labora-
tory costs (including test acquisition costs), the ex-
pected impact of the test on patient care manage-
ment, and such other factors as the standing panel 
and the Secretary, respectively, determine to be rel-
evant to the determination. 
(2) STANDING
PANEL.—Not later than 180 
days after the appointment of all of the members of 
the panel, the panel shall, after consultation with the 
Secretary, establish and make available to the pub-
lic— 
(A) standards and parameters for deter-
mining whether to recommend to the Secretary 
a coding or payment determination specified in 
a request for inclusion of a test in the dem-
VerDate Aug 31 2005 
00:23 May 14, 2006
Jkt 049196
PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H5369.IH
H5369
ccoleman on PROD1PC71 with BILLS
onstration, which shall include a listing of data 
elements necessary to support a request and a 
standardized procedure for collecting and sub-
mitting data on typical costs to the panel; 
(B) policies and procedures for protecting 
the confidentiality of financial and other propri-
etary data submitted to the panel in support of 
a request; and 
(C) cost intervals or cost bands (as de-
scribed in subsection (g)(1)) that the panel rec-
ommends that the Secretary should use for the 
assignment of included tests under the dem-
onstration. 
(3) SECRETARIAL DETERMINATIONS.—The Sec-
retary shall develop and make available to public on 
an internet site guidance documents on the stand-
ards and parameters that will be applied in making 
Secretarial determinations and on the cost intervals 
or cost bands to be used under the demonstration 
and on whether to grant a request for a payment or 
coding determination. Such guidance documents 
shall be developed, which shall be made available to 
the public at least 10 days before the beginning of 
the demonstration, in a manner similar to the man-
ner in which guidance documents are developed 
VerDate Aug 31 2005 
00:23 May 14, 2006
Jkt 049196
PO 00000
Frm 00023
Fmt 6652
Sfmt 6201
E:\BILLS\H5369.IH
H5369
ccoleman on PROD1PC71 with BILLS