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SECTION 1. SHORT TITLE.

This Act may be cited as the ''Improving Diagnostic Innovations Act
of 2012''.

SEC. 2. CREATING INCENTIVES FOR INNOVATIVE DIAGNOSTICS.

(a) Improvements to Process for Determining Fee Schedule Amounts
for New Tests.--
(1) Clarifying factors for rate-setting.--
(A) In general.--In determining the payment amount
under gapfilling procedures (as described in section
414.508(b) of title 42, Code of Federal Regulations, or
any successor regulation to such section) for new
clinical diagnostic laboratory tests under section
1833(h)(8) of the Social Security Act (42 U.S.C.
1395l(h)(8)), the Secretary of Health and Human
Services (in this section referred to as the
''Secretary'') shall take into account, as applicable
and available, the following factors with respect to
such a new test:
(i) Impact on patient care.--The impact of
the new test on patient care, patient
management, or patient treatment.
(ii) Technical characteristics.--The
technical characteristics of the new test, and
the resources required to develop, validate,
and perform the new test.
(iii) Claims data.--Data from claims for
which payment is made under part B of title
XVIII of the Social Security Act.
(iv) Laboratory charges.--Amounts charged
by laboratories to self-pay patients for the
new test.
(v) Private insurance rates.--Amounts paid
to laboratories for such new test under private
health insurance coverage offered in the group
market and the individual market.
(vi) Advisory panel recommendations.--The
findings and recommendations of the independent
advisory panel convened under paragraph (2)
with respect to that new test and any comments
received during the open meeting of the
advisory panel.
(vii) Additional factors.--Such other
factors as the Secretary may specify.
(2) Input from patients, clinicians, and technical
experts.--
(A) Requirement for independent advisory panel.--
The Secretary shall convene an independent advisory
panel from which the Secretary shall request
information and recommendations regarding any new test
(as referred to under subparagraph (A) of section
1833(h)(8) of the Social Security Act (42 U.S.C.
1395l(h)(8))) for which payment is made under such
section, including technical, clinical, and quality
information.
(B) Composition of independent advisory panel.--The
independent advisory panel shall be comprised of 19
members, including--
(i) 4 individuals with expertise and
experience with advanced clinical diagnostic
laboratory tests, including expertise in the
technical characteristics of the new test;
(ii) 3 representatives of patients,
including a patient representative for rare
disorders;
(iii) 3 clinicians who use results of the
new test in patient care;
(iv) 3 individuals with expertise in the
requirements to develop, validate, and perform
the new test;
(v) 2 laboratorians;
(vi) 2 experts in the area of
pharmacoeconomics or health technology
assessment; and
(vii) 2 individuals with expertise on the
impact of new tests on quality of patient care,
including genetic counselors.
(C) Terms.--A member of the panel shall be
appointed to serve a term of 6 years, except with
respect to the members first appointed, whose terms of
appointment shall be staggered evenly over 2-year
increments.
(D) Expert consultants.--The Secretary may include
to serve temporarily on the panel individuals who have
expertise pertaining to the new test involved.
(E) Open meetings.--The Secretary shall receive or
review the findings and recommendations of the
independent advisory panel with respect to the new
tests described in subparagraph (A) involved during a
meeting open to the public and provide opportunity for
public comment.
(F) Clarification of authority of secretary to
consult carriers.--Nothing in this section shall be
construed as affecting the authority of the Secretary
to consult with appropriate Medicare administrative
contractors.
(b) Process for Assignment of Temporary Codes for Diagnostic
Tests.--The Secretary shall establish a process for application for the
assignment of a temporary national HCPCS code to uniquely identify a
diagnostic test until a permanent national HCPCS code is available for
assignment to that test. Assignments of a temporary national HCPCS code
shall occur on a quarterly basis. The Secretary shall provide public
notice through the Centers for Medicare & Medicaid Services Web site of
applications made for such temporary national HCPCS codes. Upon
assignment of a temporary code under this process, the Secretary shall
treat such test as a new test for purposes of section 1833(h)(8) of the
Social Security Act.
(c) Development of Further Improvements in Rate-Setting
Processes.--The Secretary shall analyze the process used for the
gapfilling procedure used in determining payment amounts for new
clinical diagnostic laboratory tests under section 1833(h)(8) of the
Social Security Act. Taking into account the changes made by this
section, the Secretary shall identify further changes to improve the
accuracy and appropriateness of resulting rates and the openness,
transparency, and predictability of the process. The Secretary shall
examine what and how many entities should perform gapfilling, under
contract or otherwise, and how to ensure that the process is informed
by appropriate expertise and proceeds in a transparent and accountable
manner. The Secretary shall implement improvements in the process,
insofar as these are possible under the law through regulations, after
public notice and opportunity for comment. For changes the Secretary
determines would require a change in law, the Secretary shall transmit
recommendations to the Speaker of the House and the President of the
Senate not later than July 1, 2013.
(d) Definitions.--For purposes of this section:
(1) New clinical diagnostic laboratory tests.--The term
''new clinical diagnostic laboratory test'' means a clinical
diagnostic laboratory test--
(A) that is assigned a new or substantially revised
code on or after January 1, 2013; or
(B) for which an application for a temporary
national HCPCS code is made under subsection (b) on or
after January 1, 2013.
(2) Self-pay patient.--The term ''self-pay patient'' means,
with respect to a health care item or service, an individual
who pays out of pocket for such item or service and who does
not have health insurance coverage for such item or service.
(e) Effective Date.--This section shall take effect on the date of
enactment of this Act, and shall apply with respect to new clinical
diagnostic laboratory tests.
Improving Diagnostic Innovations Act of 2012 - Sets forth additional factors for the Secretary of Health and Human Services (HHS) to consider in determining the payment amount for new clinical diagnostic laboratory tests under gap filling procedures which are used when no comparable existing test is available.

Directs the Secretary to convene an independent advisory panel to inform and make recommendations to the Secretary regarding any new test.

Directs the Secretary to: (1) establish a process for application for the assignment of a temporary national HCPCS (Healthcare Common Procedure Coding System) code to uniquely identify a diagnostic test until a permanent national HCPCS code is available for assignment to that test, (2) analyze the process used for the gapfilling procedures used in determining payment amounts for new clinical diagnostic laboratory tests, and (3) implement improvements in the process after public notice and opportunity for comment.