I
105TH CONGRESS
2D SESSION
H. R. 3139
To amend title XVIII of the Social Security Act to stop overpayment for
drugs and biologicals under the Medicare Program.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 3, 1998
Mr. BERRY (for himself, Mr. BROWN of Ohio, Mr. NEAL of Massachusetts,
Mr. STARK, Mr. FILNER, Mr. LEWIS of Georgia, Ms. DELAURO, Mr.
FROST, Mr. BAESLER, Mr. PETERSON of Minnesota, Mr. SANDLIN, Ms.
SLAUGHTER, Mr. STENHOLM, Mr. TANNER, Mr. SCHUMER, Mr.
PASCRELL, and Mr. DAVIS of Illinois) introduced the following bill; which
was referred to the Committee on Ways and Means, and in addition to
the Committee on Commerce, for a period to be subsequently determined
by the Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
A BILL
To amend title XVIII of the Social Security Act to stop
overpayment for drugs and biologicals under the Medi-
care Program.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Stop Medicare Over-
payment Act of 1998’’.
SEC. 
2. 
MEDICARE 
PAYMENT 
FOR 
DRUGS 
AND
BIOLOGICALS.
(a) IN GENERAL.—Section 1842(o) of the Social Se-
curity Act (42 U.S.C. 1395u(o)), as inserted by section
4556(a) of the Balanced Budget Act of 1997, is amend-
ed—
(1) by redesignating paragraph (2) as para-
graph (4);
(2) in paragraph (1), by striking ‘‘95 percent of
the average wholesale price.’’ and inserting ‘‘the low-
est of the following:
‘‘(A) The actual acquisition cost, as defined in
paragraph (2), to the person submitting the claim
for payment for the drug or biological.
‘‘(B) 95 percent of the average wholesale price
of such drug or biological, as determined by the Sec-
retary.
‘‘(C) For payments for drugs or biologicals fur-
nished on or after January 1, 2000, the median ac-
tual acquisition cost of all claims for payment for
such drugs or biologicals for the 12-month period
beginning July 1, 1998 (and adjusted annually, as
the Secretary determines appropriate, to reflect
changes in the cost of such drugs or biologicals due
to inflation and such other factors as the Secretary
determines appropriate).
‘‘(D) The amount otherwise determined under
this part.
‘‘(2) For purposes of paragraph (1)(A), the term ‘ac-
tual acquisition cost’ means, with respect to such drugs
or biologicals, the cost of the drugs or biologicals based
on the most economical case size in inventory on the date
of dispensing or, if less, the most economical case size pur-
chased within six months of the date of dispensing wheth-
er or not that specific drug or biological was furnished
to an individual whether or not enrolled under this part.
Such term includes appropriate adjustments, as deter-
mined by the Secretary, for all discounts, rebates, or any
other benefit in cash or in kind (including travel, equip-
ment, or free products). The Secretary may include an ad-
ditional payment for administrative, storage, and handling
costs.
‘‘(3)(A) No payment shall be made under this part
for drugs or biologicals to a person whose bill or request
for payment for such drugs or biologicals does not include
a statement of the person’s actual acquisition cost.
‘‘(B) A person may not bill an individual enrolled
under this part—
‘‘(i) any amount other than the payment
amount specified in paragraph (1) or (4) (plus any
applicable deductible and coinsurance amounts), or
‘‘(ii) any amount for such drugs or biologicals
for which payment may not be made pursuant to
subparagraph (A).
‘‘(C) If a person knowingly and willfully in repeated
cases bills one or more individuals in violation of subpara-
graph (B), the Secretary may apply sanctions against that
person in accordance with subsection (j)(2).’’; and
(3) in paragraph 4, as so redesignated in para-
graph (1) of this subsection, by striking ‘‘the Sec-
retary may pay a dispensing fee’’ and inserting ‘‘the
Secretary shall pay a dispensing fee’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to drugs and biologicals furnished on
or after January 1, 1998.
(c) CONFORMING AMENDMENT TO REPORT.—Section
4556(c) of the Balanced Budget Act of 1997 is amended
by striking ‘‘of the amendments made by subsection (a)’’
and inserting ‘‘the application of section 1842(o) of the
Social Security Act’’.
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