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Calendar No. 184
114th Congress } { Report
SENATE
1st Session } { 114-105
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PATIENT ACCESS TO DISPOSABLE MEDICAL TECHNOLOGY ACT OF 2015
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July 30, 2015.--Ordered to be printed
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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]
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2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2016-20 2016-25
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- - - 0 4 4 1 1 0 -5 -7 -8 -10 9 -21
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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.
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\2\Pub. L. No. 93-344.
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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).
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By fiscal year, in millions of dollars--
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2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2016-2020 2016-2025
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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
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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.
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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.
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\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.
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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
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By fiscal year, in millions of dollars--
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2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2015-2020 2015-2025
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NET DECREASE IN THE DEFICIT
Statutory Pay-As-You-Go Impact............ 0 0 4 4 1 1 0 -5 -7 -8 -10 9 -21
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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).
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