I
107TH CONGRESS
2D SESSION
H. R. 5450
To amend title XVIII of the Social Security Act to provide for equitable
payments for health care services furnished to Medicare beneficiaries
in hospital outpatient departments, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 24, 2002
Mr. SHAW introduced the following bill; which was referred to the Committee
on Energy and Commerce, and in addition to the Committee on Ways
and Means, for a period to be subsequently determined by the Speaker,
in each case for consideration of such provisions as fall within the juris-
diction of the committee concerned
A BILL
To amend title XVIII of the Social Security Act to provide
for equitable payments for health care services furnished
to Medicare beneficiaries in hospital outpatient depart-
ments, and for other purposes.
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 ‘‘Beneficiary Access to
Care Act of 2002’’.
SEC. 2. FINDINGS.
The Congress finds and declares that—
(1) payments for drugs and biologicals under
the Medicare outpatient hospital prospective pay-
ment system should be based on all of the costs of
delivering outpatient pharmacy therapy (involving
the drug or biological) in the outpatient hospital set-
ting, including (but not limited to) acquisition costs,
and the costs associated with storage, handling,
processing, quality control, disposal, and pharmacy
overhead should be fully accounted for under such
system;
(2) the payment rates proposed in Centers for
Medicare & Medicaid Services, Medicare Program;
Changes to the Hospital Outpatient Prospective
Payment System and Calendar Year 2003 Payment
Rates; and Changes to Payment Suspension for Uni-
fied Cost Report; Proposed Rule, (67 Federal Reg-
ister 52092 et seq. (August 9, 2002)) do not fully
reflect such costs;
(3) the methodology implied by the statute es-
tablishing such system and used by the Centers for
Medicare & Medicaid Services to estimate acquisition
costs is flawed because it derives such estimates
from what hospitals charged for individual products
on patient bills without appropriate adjustment for
hospital charging practices;
(4) this methodology substantially underesti-
mates the acquisition costs of newer, more expensive
drugs and biologicals;
(5) the methodology used to develop such rates
produces erratic and unreliable results, with—
(A) the payment rate for one product in-
creasing 700 percent and the rates for many
others exceeding 100 percent of their average
wholesale price (AWP), and
(B) the payment rates for nine drugs and
biologicals used in cancer therapy experiencing
rate reductions of between 50 and 90 percent;
(6) beneficiary access may be jeopardized in the
outpatient hospital setting for those drugs and
biologicals for which program payments are substan-
tially below the costs of delivering them; and
(7) the payment rates proposed for most drugs
and biologicals under such system for calendar year
2003 are less than the payment rates established for
them in 2002, with the payment reductions exceed-
ing 30 percent in most cases.
SEC. 3. DURATION OF PERIOD FOR WHICH TRANSITIONAL,
PASS-THROUGH PAYMENTS ARE MADE FOR
DRUGS AND BIOLOGICALS.
(a) CONTINUATION IF DATA COLLECTED IN 2 TO 3
YEAR PERIOD ARE INADEQUATE.—Section 1833(t)(6) of
the Social Security Act (42 U.S.C. 1395l(t)(6)) is
amended—
(1) in subparagraph (C)(i), by striking ‘‘The
payment’’ and inserting ‘‘Except as provided in sub-
paragraph (F), the payment’’; and
(2) by adding at the end the following:
‘‘(F) EXTENSION
OF
PERIOD
OF
PAY-
MENT.—
‘‘(i) IN
GENERAL.—Notwithstanding
the 3-year limitation specified in subpara-
graph (C)(i), in the case of a drug or bio-
logical for which additional payments
under this paragraph would (but for this
subparagraph) cease to be made by reason
of such limitation, such additional pay-
ments shall continue to be made with re-
spect to the drug or biological during the
period that begins with the last day of the
period of payment under subparagraph
(C)(i) and ends on a date specified by the
Secretary that is no earlier than January
1 of the first calendar year beginning on or
after the date on which the Secretary has
met each of the requirements of clause (ii).
‘‘(ii) REQUIREMENTS.—The require-
ments 
of 
this 
clause 
are 
that 
the
Secretary—
‘‘(I) engage an appropriate out-
side contractor with substantial exper-
tise and experience in the method-
ology of prospective payment systems
to study and report to the Secretary
alternatives to the methodology used
by the Centers for Medicare & Med-
icaid Services for determining the rel-
ative weights under paragraphs (2)(C)
and (9) so that the relative weights
more accurately and equitably reflect
the variation in costs among items
and services;
‘‘(II) make public the report pre-
pared under subclause (I) together
with the Secretary’s recommendations
for changes in the methodology, and
provide for a public comment period
of at least 90 days on such report;
‘‘(III) find and certify that ade-
quate data are available reflecting all
of the costs of delivering outpatient
pharmacy therapy (involving the drug
or biological) in the outpatient hos-
pital setting, including acquisition,
storage, handling, processing, quality
control, disposal, and pharmacy over-
head costs;
‘‘(IV) find and certify that meth-
odology used to determine relative
payment 
weights 
for 
drugs 
and
biologicals, when used with such data,
produces a medicare OPD fee sched-
ule payment amount that accurately
and equitably reflects such costs;
‘‘(V) report such findings to the
Congress and release to the public the
data used to support such findings;
‘‘(VI) publish (on a date that is
no earlier than 180 days after the re-
quirements of subclause (V) have been
met) a notice of proposed rulemaking
on a relative payment weight to be
used to determine the medicare OPD
fee schedule payment amount for the
drug or biological under this sub-
section, with a period for public com-
ment of at least 90 days; and
‘‘(VII) taking into account the
comments received during the com-
ment period for such notice, publish a
final rule establishing a relative pay-
ment weight for the drug or biologi-
cal.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall be effective as if included in the enact-
ment of the Medicare, Medicaid, and SCHIP Balanced
Budget Refinement Act of 1999.
SEC. 4. AMBULATORY PAYMENT CLASSIFICATIONS FOR
DRUGS AND BIOLOGICALS AFTER PERIOD OF
TRANSITIONAL PASS-THROUGH PAYMENTS.
(a) IN GENERAL.—Section 1833(t)(2) of the Social
Security Act (42 U.S.C. 1395l(t)(2) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (F);
(2) striking the period at the end of subpara-
graph (G) and inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(H) the Secretary shall, in determining
the amount of payment under this subsection
for a drug or biological furnished on or after
the date on which transitional, pass-through
payments under paragraph (6) cease to be
made with respect to the drug or biological—
‘‘(i) treat the drug and biological as a
separate group of covered OPD services;
and
‘‘(ii) to the greatest extent practicable,
use the same designation for such group as
was used for the group to which the drug
or biological was assigned during the pe-
riod for which transitional, pass-through
payments were made with respect to the
drug or biological.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall be effective as if included in the enact-
ment of the Medicare, Medicaid, and SCHIP Balanced
Budget Refinement Act of 1999.
SEC. 5. STUDY OF PHARMACY SERVICES USED TO PROVIDE
CANCER 
DRUG 
THERAPIES 
IN 
HOSPITAL
OUTPATIENT SETTING.
(a) IN GENERAL.—The Comptroller General of the
United States shall conduct a study of payments under
part B of title XVIII of the Social Security Act for phar-
macy service costs and related costs that are incurred in
acquiring chemotherapy and supportive care drugs and
providing these therapies to cancer patients in hospital
outpatient departments. The study shall—
(1) identify pharmacy costs, including the costs
of storage, handling, processing, quality control, dis-
posal, compliance with safety protocols and regula-
tions, establishing dosage regimens that avoid drug
interactions and contraindications, and pharmacy
overhead;
(2) include a review of the adequacy of the cur-
rent payment methodology for pharmacy service
costs and related costs; and
(3) identify any changes to that methodology
that are necessary to ensure recognition of and ap-
propriate payment for all of the services and func-
tions inherent in the provision of cancer treatment
in hospital outpatient settings.
(b) REPORT
TO CONGRESS.—Not later than 12
months after the date of the enactment of this Act, the
Comptroller General shall submit to Congress a report on
the results of the study under subsection (a), including
any recommendations for legislation that is necessary to
implement the changes identified under subsection (a)(3).
SEC. 6. LIMIT ON REDUCTIONS FOR TRANSITIONAL, PASS-
THROUGH 
PAYMENTS 
FOR 
DRUGS 
AND
BIOLOGICALS.
Section 1833(t)(6)(E) of the Social Security Act (42
U.S.C. 1395l(t)(6)(E)) is amended—
(1) in clause (i)—
(A) by striking ‘‘IN GENERAL.—’’and in-
serting ‘‘YEARS BEFORE 2003.—’’;
(B) by striking ‘‘in a year’’ and inserting
‘‘in a year before 2003’’; and
(C) by striking ‘‘clause (ii))’’ and inserting
‘‘clause (iv))’’;
(2) by striking clause (ii) and redesignating
clause (iii) as clause (ii); and
(3) by adding at the end the following:
‘‘(iii) YEARS AFTER 2002.—Before the
beginning of 2003 and each subsequent
year, the Secretary shall estimate the total
of the additional payments to be made
under this paragraph for covered OPD
services furnished in the year (determined
without regard to any limitation on the
total amount of such payments) and shall
adjust the conversion factor established
under paragraph (3)(C) for the year by a
budget neutrality percentage that, notwith-
standing paragraph (2)(E), does not ex-
ceed the lesser of—
‘‘(I) the ratio (expressed as a
percentage) of the Secretary’s esti-
mate of such total additional pay-
ments for such year to the Secretary’s
estimate of the total payments to be
made under this subsection for all
covered OPD services furnished in
that year; or
‘‘(II) the applicable percentage
(specified in clause (iv)) for that year.
‘‘(iv) 
APPLICABLE
PERCENTAGE.—
For purposes of clauses (i) and (iii), the
term ‘applicable percentage’ means—
‘‘(I) for a year (or portion of a
year) before 2004, 2.5 percent; and
‘‘(II) for 2004 and each subse-
quent year, a percentage specified by
the Secretary up to (but not to ex-
ceed) 2.0 percent.’’.
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