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                                                      Calendar No. 184
114th Congress    }                                     {       Report
                                 SENATE
 1st Session      }                                     {      114-105

======================================================================



 
      PATIENT ACCESS TO DISPOSABLE MEDICAL TECHNOLOGY ACT OF 2015

                                _______
                                

                 July 30, 2015.--Ordered to be printed

                                _______
                                

               Mr. Hatch, from the Committee on Finance, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 1253]

    The Committee on Finance, to which was referred the bill 
(S. 1253) to amend title XVIII of the Social Security Act to 
provide coverage of certain disposable medical technologies 
under the Medicare program, and for other purposes, having 
considered the same, reports favorably thereon with an 
amendment and an amendment to the title and recommends that the 
bill, as amended, do pass.

                       I. LEGISLATIVE BACKGROUND


Background and need for legislative action

    The Medicare Supplementary Medical Insurance Program (Part 
B) currently covers a wide variety of durable medical equipment 
(DME) if they are medically necessary and are ordered by a 
physician or qualified non-physician practitioner.
    Durable medical equipment (DME) is equipment that (1) can 
withstand repeated use, (2) has an expected life of at least 
three years (effective for items classified as DME after 
January 1, 2012), (3) is used to serve a medical purpose, (4) 
generally is not useful in the absence of an illness or injury, 
and (5) is appropriate for use in the home. DME also includes 
the drugs necessary for the proper function of certain DME, and 
supplies, such as surgical dressings, used in conjunction with 
the DME.
    In the past, Medicare has struggled to cover disposable 
medical technologies because they did not fit neatly into the 
criteria for DME. Beneficiaries were often denied coverage of 
these products and therefore could not take advantage of the 
benefits of potentially more efficient and effective products.
    Under current law, Medicare beneficiaries may receive 
negative pressure wound therapy (NPWT), which uses a vacuum 
pump and special dressings to promote wound healing. If a home 
health agency (HHA) furnishes a beneficiary with durable NPWT, 
Medicare makes a payment to the HHA for the visit and to a DME 
supplier for the NPWT. If the HHA uses a disposable NPWT, 
Medicare does not make an additional payment and the HHA 
absorbs the cost of the disposable NPWT.
    This bill specifically provides for a new add-on payment to 
home health agencies (HHAs) that furnish disposable NPWT 
equipment to Medicare beneficiaries, in the home setting.

                              PRESENT LAW

In general

    Under Section 1861 of title XVIII of the Social Security 
Act,\1\ Medicare covers durable medical equipment (DME) if it 
is medically necessary and prescribed by a physician. 
Specifically the criteria requiring that a piece of equipment 
have an expected life of at least three years, has kept some 
disposable products that would otherwise serve the same 
function, from being covered by Medicare.
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    \1\Pub. L. No. 74-271.
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                           REASONS FOR CHANGE

    The Committee recognizes the importance of allowing 
Medicare beneficiaries to have access to new and innovative 
medical technologies that could make their lives better, both 
through high quality healthcare products and convenience in 
use. Most DME products would never have a disposable 
counterpart (i.e., hospital beds, wheelchairs, etc.), so this 
bill--which is limited to disposable NPWT--is a first step in 
coverage of disposable medical technologies.

                      II. EXPLANATION OF THE BILL

    This bill, as modified by the committee, amends Medicare to 
provide a new add-on payment to HHAs that furnish disposable 
negative pressure wound therapy (NPWT) to Medicare 
beneficiaries. This device, called an applicable disposable 
device, is defined as an integrated system comprising a non-
manual vacuum pump, a receptacle for collecting exudate and 
dressings for the purpose of wound therapy. In addition, it is 
a substitute for and used in lieu of a durable NPWT that would 
otherwise be covered.
    The Secretary would be required to establish the separate 
payment amount for 2017, 2018 and 2019 at the greater of (1) 
the amount that would be paid for applicable disposable devices 
under the hospital outpatient department (OPD) prospective 
payment system (PPS) for the year involved or (2) an amount 
equal to 150 percent of the amount paid for applicable 
disposable devices under the OPD PPS for 2015. For those 
services furnished after 2019, the payment amount would be the 
payment that would be made for applicable disposable devices 
under the OPD PPS for the year involved.
    Traditional coinsurance of 20 percent for Medicare 
beneficiaries will continue to apply for disposable NPWT.
    Not later than 18 months after enactment, the GAO would 
submit a report on the value of disposable devices and the role 
of disposable devices as substitutes for durable medical 
equipment, along with recommendations for any legislation and 
administrative actions, as appropriate. Not later than four 
years after enactment, the GAO would submit a report on the 
impact of coverage of, and payment for disposable NPWT as 
established by this bill. The report will include the impact on 
utilization and program and beneficiary spending as a result of 
this bill, and would also contain recommendations for any 
legislation and administrative actions, as appropriate.

                             EFFECTIVE DATE

    The provision applies to services furnished on or after 
January 1, 2017.

                    III. BUDGET EFFECTS OF THE BILL


                         A. Committee Estimates

    In compliance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate, the following statement is made 
concerning the estimated budget effects of the revenue 
provisions of the ``Patient Access to Disposable Medical 
Technology Act of 2015'' as reported.
    The bill is estimated to have the following effects on 
Federal budget receipts for fiscal years 2015-2025:

                                                                      FISCAL YEARS
                                                                  [Millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
      2015         2016       2017       2018       2019       2020       2021       2022       2023       2024       2025       2016-20       2016-25
--------------------------------------------------------------------------------------------------------------------------------------------------------
        - - -          0         4          4          1          1          0         -5         -7         -8        -10             9           -21
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOTE: Details do not add to totals due to rounding.
Source: Estimate provided by the staff of the Congressional Budget Office.

                B. Budget Authority and Tax Expenditures


Budget authority

    In compliance with section 308(a)(1) of the Congressional 
Budget and Impoundment Control Act of 1974 (``Budget Act''),\2\ 
the Committee states that no provisions of the bill as reported 
involve new or increased budget authority.
---------------------------------------------------------------------------
    \2\Pub. L. No. 93-344.
---------------------------------------------------------------------------

Tax expenditures

    In compliance with section 308(a)(1) of the Budget Act, the 
Committee states that the revenue-reducing provisions of the 
bill involve increased tax expenditures (see revenue table in 
Part A., above).

S. 1253--Patient Access to Disposable Medical Technology Act of 2015

    Summary: S. 1253 would modify Medicare coverage and payment 
rules for negative pressure wound therapy (NPWT) equipment that 
includes a disposable pump. CBO estimates that enacting S. 1253 
would reduce direct spending by about $21 million over the 
2016-2025 period. Pay-as-you-go procedures apply because 
enacting the legislation would affect direct spending. Enacting 
the legislation would not affect revenues.
    S. 1253 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary effect of S. 1253 is shown in the following table. 
The costs of this legislation fall within budget function 570 
(Medicare).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  By fiscal year, in millions of dollars--
                                                   -----------------------------------------------------------------------------------------------------
                                                     2016    2017    2018    2019    2020    2021    2022    2023    2024    2025   2016-2020  2016-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDINGa
 
Estimated Budget Authority........................       0       4       4       1       1       0      -5      -7      -8     -10         9        -21
Estimated Outlays.................................       0       4       4       1       1       0      -5      -7      -8     -10         9        -21
--------------------------------------------------------------------------------------------------------------------------------------------------------
aEnacting S. 1253 would also affect spending subject to appropriation but CBO estimates that spending would total less than $500,000 per year and over
  the 2016-2025 period.

    Basis of estimate: For this estimate, CBO assumes that S. 
1253 will be enacted near the end of fiscal year 2015.
    Under current law, Medicare beneficiaries may receive NPWT, 
which uses a vacuum pump and special dressings to promote wound 
healing. NPWT equipment is available using either a durable 
pump or a disposable pump, which can be used at home, in a 
physician's office, or in a hospital. If a home health agency 
(HHA) furnishes a beneficiary with NPWT using a durable form of 
the pump, Medicare makes a payment to the home health agency 
for the home health visits and to the supplier of the durable 
medical equipment. If instead the HHA uses a disposable pump, 
Medicare does not make an additional payment for the NPWT 
equipment and the HHA absorbs that cost.\1\
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    \1\Payments for durable NPWT equipment in the home setting are made 
on a monthly basis for up to 13 months of use. After 13 months, the 
beneficiary can take ownership of the NPWT equipment or return it to 
the supplier.
---------------------------------------------------------------------------
    S. 1253 would establish a new add-on payment to HHAs that 
furnish disposable NPWT equipment to Medicare beneficiaries. In 
2017, 2018, and 2019, that rate would be the greater of 150 
percent of the amount paid in 2015 for the disposable NPWT 
equipment in the outpatient hospital setting or the actual 
amount paid in 2017 in that setting. After 2019, the payment 
would equal the rate paid in the hospital outpatient setting.
    CBO estimates that, in 2017, the monthly payment for NPWT 
with a durable pump, including the associated dressings and 
equipment, will be about $1,200. CBO projects that Medicare's 
payment for the disposable version and the necessary 
ancillaries would be about $700 per month in 2017 and would be 
lower than the payment for the durable pump throughout the 
2017-2025 period.
    The availability of separate payments for disposable NPWT 
equipment in the home health setting under S. 1253 would have 
competing effects on spending. First, CBO expects that some 
beneficiaries who would have used durable NPWT equipment would 
instead use disposable NPWT equipment.\2\ Because the price of 
disposable NPWT equipment would be lower than the price for 
durable equipment, that shift would reduce spending. CBO also 
projects that additional beneficiaries would use NPWT because 
the new payment rules under S. 1253 would make it more likely 
that home health agencies would offer beneficiaries the option 
of using the disposable version, which some people might find 
more convenient. In the first years of the policy, CBO expects 
that the effect of greater utilization would increase spending 
by more than would be saved by switching from durable to 
disposable NPWT equipment, resulting in an increase in Federal 
spending. By 2022, however, CBO expects that savings from the 
lower price of the disposable NPWT equipment would exceed the 
costs from greater utilization. Over the 2017-2025 period, CBO 
estimates that enacting S. 1253 would reduce spending by $21 
million, out of total spending for NPWT equipment of about $1.3 
billion.
---------------------------------------------------------------------------
    \2\NPWT is generally used for wounds like diabetic ulcers and 
bedsores. Some beneficiaries may not want to use durable NPWT equipment 
because the pump limits mobility. The disposable NPWT equipment is more 
portable and probably more convenient for beneficiaries.
---------------------------------------------------------------------------
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays that are subject to those 
pay-as-you-go procedures are shown in the following table.

  CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR S. 1253, THE PATIENT ACCESS TO DISPOSABLE MEDICAL TECHNOLOGY ACT OF 2015, AS ORDERED REPORTED BY THE SENATE
                                                          COMMITTEE ON FINANCE ON JUNE 24, 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                             2015    2016    2017    2018    2019    2020    2021    2022    2023    2024    2025   2015-2020  2015-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               NET DECREASE IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact............       0       0       4       4       1       1       0      -5      -7      -8     -10         9        -21
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: S. 1253 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Estimate prepared by: Federal costs: Lara Robillard; Impact 
on state, local, and tribal governments: J'nell Blanco Suchy; 
Impact on the private sector: Amy Petz.
    Estimate approved by: Holly Harvey, Deputy Assistant 
Director for Budget Analysis.

                       IV. VOTES OF THE COMMITTEE

    In compliance with paragraph 7(b) of rule XXVI of the 
standing rules of the Senate, the Committee states that, with a 
majority present, the ``Patient Access to Disposable Medical 
Technology Act of 2015,'' as modified was ordered favorably 
reported on June 24, 2015 as follows:
    Final Passage of ``Patient Access to Disposable Medical 
Technology Act of 2015''--approved, as modified, by a voice 
vote.

                 V. REGULATORY IMPACT AND OTHER MATTERS


                          A. Regulatory Impact

    Pursuant to paragraph 11(b) of rule XXVI of the Standing 
Rules of the Senate, the Committee makes the following 
statement concerning the regulatory impact that might be 
incurred in carrying out the provisions of the bill as amended.

Impact on individuals and businesses, personal privacy and paperwork

    The bill is not expected to impose additional 
administrative requirements or regulatory burdens on 
individuals. The bill is expected to reduce administrative 
requirements and regulatory burdens on some businesses.
    The provisions of the bill do not impact personal privacy.

                     B. Unfunded Mandates Statement

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the bill does not contain 
any private sector mandates. The Committee has determined that 
the bill contains no intergovernmental mandate.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    In the opinion of the Committee, it is necessary in order 
to expedite the business of the Senate, to dispense with the 
requirements of paragraph 12 of rule XXVI of the Standing Rules 
of the Senate (relating to the showing of changes in existing 
law made by the bill as reported by the Committee).

                                  [all]