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115th Congress   }                                   {   Rept. 115-447
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                   {          Part 1

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



 
           PROTECTING ACCESS TO DIABETES SUPPLIES ACT OF 2017

                                _______
                                

December 6, 2017.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Walden, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 3271]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 3271) to amend title XVIII of the Social 
Security Act in order to strengthen rules in case of 
competition for diabetic testing strips, and for other 
purposes, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     3
Background and Need for Legislation..............................     3
Committee Action.................................................     4
Committee Votes..................................................     4
Oversight Findings and Recommendations...........................     5
New Budget Authority, Entitlement Authority, and Tax Expenditures     5
Congressional Budget Office Estimate.............................     5
Federal Mandates Statement.......................................     7
Statement of General Performance Goals and Objectives............     7
Duplication of Federal Programs..................................     7
Committee Cost Estimate..........................................     7
Earmark, Limited Tax Benefits, and Limited Tariff Benefits.......     7
Disclosure of Directed Rule Makings..............................     7
Advisory Committee Statement.....................................     7
Applicability to Legislative Branch..............................     7
Section-by-Section Analysis of the Legislation...................     8
Changes in Existing Law Made by the Bill, as Reported............     8
Exchange of Letters with Additional Committees of Referral.......    20

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Protecting Access to Diabetes Supplies 
Act of 2017''.

SEC. 2. STRENGTHENING RULES IN CASE OF COMPETITION FOR DIABETIC TESTING 
                    STRIPS.

  (a) Special Rule in Case of Competition for Diabetic Testing 
Strips.--
          (1) In general.--Paragraph (10) of section 1847(b) of the 
        Social Security Act (42 U.S.C. 1395w-3(b)) is amended--
                  (A) in subparagraph (A), by striking the second 
                sentence and inserting the following new sentence: 
                ``With respect to bids to furnish such types of 
                products on or after January 1, 2019, the volume for 
                such types of products shall be determined by the 
                Secretary through the use of multiple sources of data 
                (from mail order and non-mail order Medicare markets), 
                including market-based data measuring sales of diabetic 
                testing strip products that are not exclusively sold by 
                a single retailer from such markets.''; and
                  (B) by adding at the end the following new 
                subparagraphs:
                  ``(C) Demonstration of ability to furnish types of 
                diabetic testing strip products.--With respect to bids 
                to furnish diabetic testing strip products on or after 
                January 1, 2019, under the program described in 
                subparagraph (A), the Secretary shall reject a bid 
                submitted by an entity if the entity does not attest to 
                the Secretary and demonstrate, through letters of 
                intent with manufacturers, wholesalers, or other 
                suppliers, or other evidence as the Secretary may 
                specify, that the entity has the ability to obtain an 
                inventory of the types and quantities of diabetic 
                testing strip products that will allow the entity to 
                furnish such products in a manner consistent with its 
                bid.
                  ``(D) Use of unlisted types in calculation of 
                percentage.--With respect to bids to furnish diabetic 
                testing strip products on or after January 1, 2019, in 
                determining under subparagraph (A) whether a bid 
                submitted by an entity under such subparagraph covers 
                50 percent (or such higher percentage as the Secretary 
                may specify) of all types of diabetic testing strip 
                products, the Secretary may not attribute a percentage 
                to types of diabetic testing strip products that the 
                Secretary does not identify by brand, model, and market 
                share volume.
                  ``(E) Adherence to demonstration.--
                          ``(i) In general.--In the case of an entity 
                        that is furnishing diabetic testing strip 
                        products on or after January 1, 2019, under a 
                        contract entered into under the competition 
                        conducted pursuant to paragraph (1), the 
                        Secretary shall establish a process to monitor, 
                        on an ongoing basis, the extent to which such 
                        entity continues to cover the product types 
                        included in the entity's bid.
                          ``(ii) Termination.--If the Secretary 
                        determines that an entity described in clause 
                        (i) fails to maintain in inventory, or 
                        otherwise maintain ready access to (through 
                        requirements, contracts, or otherwise) a type 
                        of product included in the entity's bid, the 
                        Secretary may terminate such contract unless 
                        the Secretary finds that the failure of the 
                        entity to maintain inventory of, or ready 
                        access to, the product is the result of the 
                        discontinuation of the product by the product 
                        manufacturer, a market-wide shortage of the 
                        product, or the introduction of a newer model 
                        or version of the product in the market 
                        involved.''.
  (b) Codifying and Expanding Anti-Switching Rule.--Section 1847(b) of 
the Social Security Act (42 U.S.C. 1395w-3(b)), as amended by 
subsection (a)(1), is further amended--
          (1) by redesignating paragraph (11) as paragraph (12); and
          (2) by inserting after paragraph (10) the following new 
        paragraph:
          ``(11) Additional special rules in case of competition for 
        diabetic testing strips.--
                  ``(A) In general.--With respect to an entity that is 
                furnishing diabetic testing strip products to 
                individuals under a contract entered into under the 
                competitive acquisition program established under this 
                section, the entity shall furnish to each individual a 
                brand of such products that is compatible with the home 
                blood glucose monitor selected by the individual.
                  ``(B) Prohibition on influencing and incentivizing.--
                An entity described in subparagraph (A) may not attempt 
                to influence or incentivize an individual to switch the 
                brand of glucose monitor or diabetic testing strip 
                product selected by the individual, including by--
                          ``(i) persuading, pressuring, or advising the 
                        individual to switch; or
                          ``(ii) furnishing information about 
                        alternative brands to the individual where the 
                        individual has not requested such information.
                  ``(C) Provision of information.--
                          ``(i) Standardized information.--Not later 
                        than January 1, 2019, the Secretary shall 
                        develop and make available to entities 
                        described in subparagraph (A) standardized 
                        information that describes the rights of an 
                        individual with respect to such an entity. The 
                        information described in the preceding sentence 
                        shall include information regarding--
                                  ``(I) the requirements established 
                                under subparagraphs (A) and (B);
                                  ``(II) the right of the individual to 
                                purchase diabetic testing strip 
                                products from another mail order 
                                supplier of such products or a retail 
                                pharmacy if the entity is not able to 
                                furnish the brand of such product that 
                                is compatible with the home blood 
                                glucose monitor selected by the 
                                individual; and
                                  ``(III) the right of the individual 
                                to return diabetic testing strip 
                                products furnished to the individual by 
                                the entity.
                          ``(ii) Requirement.--With respect to diabetic 
                        testing strip products furnished on or after 
                        the date on which the Secretary develops the 
                        standardized information under clause (i), an 
                        entity described in subparagraph (A) may not 
                        communicate directly to an individual until the 
                        entity has verbally provided the individual 
                        with such standardized information.
                  ``(D) Order refills.--With respect to diabetic 
                testing strip products furnished on or after January 1, 
                2019, the Secretary shall require an entity furnishing 
                diabetic testing strip products to an individual to 
                contact and receive a request from the individual for 
                such products not more than 14 days prior to dispensing 
                a refill of such products to the individual.''.
  (c) Implementation; Non-Application of the Paperwork Reduction Act.--
          (1) Implementation.--Notwithstanding any other provision of 
        law, the Secretary of Health and Human Services may implement 
        the provisions of, and amendments made by, this section by 
        program instruction or otherwise.
          (2) Non-application of the paperwork reduction act.--Chapter 
        35 of title 44, United States Code (commonly referred to as the 
        ``Paperwork Reduction Act of 1995''), shall not apply to this 
        section or the amendments made by this section.

                          Purpose and Summary

    H.R. 3271 was introduced on July 17, 2017, by Rep. Diana 
DeGette (D-CO). H.R. 3271 would address several issues 
beneficiaries have reported facing under the competitive 
bidding program regarding Diabetes Test Strips (DTS). Many of 
these issues stem from how the Centers for Medicare and 
Medicaid Services (CMS) has enforced certain beneficiary 
protections.

                  Background and Need for Legislation

    In establishing the Medicare Competitive Bidding Program 
(CBP), Congress and CMS included rules intended to ensure that 
beneficiaries would continue to have access to the blood 
glucose test systems of their choice. Unfortunately, based on 
testimony presented to the Subcommittee, the first rounds of 
the CBP and subsequent reports by the Office of Inspector 
General (OIG) revealed significant shortcomings in these 
protections. H.R. 3271 strengthens protections for Medicare 
beneficiaries purchasing blood glucose testing equipment and 
supplies through Medicare's National Mail Order Competitive 
Bidding Program. H.R. 3271 would address these shortcomings so 
that in future, CBP rounds beneficiaries have access to 
preferred and familiar test systems.
    H.R. 3271 will strengthen the ``50 Percent Rule'' first 
established by Congress in 2008. By requiring suppliers' bids 
to include at least 50 percent of the types of test systems on 
the market before the implementation of CBP, this rule seeks to 
ensure that beneficiaries are likely to have access to the 
testing systems they used before CBP. However, a recent study 
by the American Association of Diabetes Educators showed that 
under CBP, beneficiaries actually have access to far fewer 
types of testing systems. H.R. 3271 will require suppliers to 
demonstrate that they have an intent and ability to maintain an 
inventory of products consistent with their bid and require 
suppliers to adhere to the 50 percent rule throughout the life 
of their contract. Further, this bill bolsters the Anti-
Switching Rule, a beneficiary protection established by CMS 
through a regulation that prohibits suppliers from encouraging 
beneficiaries to switch from one testing system to another. 
H.R. 3271 would codify and enhance the Anti-Switching Rule by 
ensuring beneficiaries know their rights to receive compatible 
test strips with their blood glucose monitors.

                            Committee Action

    On July 20, 2017, the Subcommittee on Health held a hearing 
on H.R. 3271. The hearing was entitled ``Examining Bipartisan 
Legislation to Improve the Medicare Program.'' The Subcommittee 
received testimony from:
           Christel Aprigliano, CEO, Diabetes Patient 
        Advocacy Coalition;
           Lisa Bardach, Speech-Language Pathologist, 
        ALS of Michigan;
           K. Eric De Jonge, President-Elect, American 
        Academy of Home Care Medicine (AAHCM);
           Cletis Earle, Chairman-Elect, CHIME Board of 
        Trustees;
           Mary Grealy, President, Healthcare 
        Leadership Council;
           Deepak A. Kapoor, Chairman and CEO, 
        Integrated Medical Professionals;
           Brett Kissela, Chair, Department of 
        Neurology and Rehabilitation Medicine, University of 
        Cincinnati Gardner Neuroscience Institute, on behalf of 
        American Academy of Neurology;
           Justin Moore, CEO, American Physical Therapy 
        Association;
           Alan E. Morrison, Chair, Diagnostic Services 
        Committee, National Association for the Support of Long 
        Term Care (NASL);
           Varner Richards, Board Chair, National Home 
        Infusion Association; and
           Stacy Sanders, Federal Policy Director, 
        Medicare Rights Center.
    On September 13, 2017, the Subcommittee on Health met in 
open markup session and forwarded H.R. 3271, as amended, to the 
full Committee by a voice vote. On October 4, 2017, the full 
Committee on Energy and Commerce met in open markup session and 
ordered H.R. 1148, as amended, favorably reported to the House 
by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII requires the Committee to list the 
record votes on the motion to report legislation and amendments 
thereto. There were no record votes taken in connection with 
ordering H.R. 3271 reported.

                 Oversight Findings and Recommendations

    Pursuant to clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII, the Committee held a hearing and made findings that 
are reflected in this report.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    Pursuant to clause 3(c)(2) of rule XIII, the Committee 
finds that H.R. 3271 would result in no new or increased budget 
authority, entitlement authority, or tax expenditures or 
revenues.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII, the following is 
the cost estimate provided by the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 24, 2017.
Hon. Greg Walden,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3271, the 
Protecting Access to Diabetes Supplies Act of 2017.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Lara 
Robillard.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 3271--Protecting Access to Diabetes Supplies Act of 2017

    Summary: H.R. 3271 would codify certain requirements with 
respect to Medicare coverage of diabetic testing supplies 
(DTS). Based on current Medicare program and payment rules for 
DTS, CBO estimates that enacting H.R. 3271 would have no effect 
on the federal budget.
    Enacting H.R. 3271 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply. CBO 
estimates that enacting H.R. 3271 would not increase net direct 
spending or on-budget deficits in one or more of the four 
consecutive 10-year periods beginning in 2028.
    H.R. 3271 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Basis of estimate: Durable medical equipment (DME), which 
includes items like wheelchairs, hospital beds, and oxygen 
supplies, is a benefit within the Medicare program. The DME 
benefit includes supplies necessary to monitor blood sugar 
levels for people with diabetes, including glucose monitors and 
strips used to test blood samples collectively called diabetic 
testing supplies (DTS). For some DME items, Medicare payment is 
based on a system in which suppliers compete to furnish DME, 
including DTS, to Medicare beneficiaries, with prices based on 
supplier bids. For DTS, Medicare payments are set for the 
nation as a whole and are pegged to prices for items delivered 
by mail-order suppliers. Beneficiaries can choose to receive 
DTS by mail or go to a local pharmacy. Suppliers who furnish 
DTS to Medicare beneficiaries must meet certain standards, 
including coverage of commonly-available brands of test strips, 
and may not switch beneficiaries from one brand to another 
without their permission.
    In CBO's judgment, H.R. 3271 would codify current practice 
with respect to diabetic testing strips, including the 
requirement that suppliers demonstrate the ability to furnish 
the strips on which their bids are based. The bill would also 
require the Centers for Medicare and Medicaid Services (CMS) to 
monitor suppliers to ensure that they continue to offer the 
brand of strips included in their bids.
    CBO estimates that enacting H.R. 3271 would not affect the 
federal budget, but there is some uncertainty in that estimate. 
The legislation that established Medicare's DME competitive 
bidding program left considerable discretion to CMS to 
administer the program and to set its parameters through 
notice-and-comment rule-making and other guidance. If CMS 
continues to manage the competitive bidding program as it has, 
then CBO estimates that H.R. 3271 would codify current practice 
with respect to DTS and would have no budgetary impact. It is 
possible, however, that CMS could change how the DME 
competitive bidding system works in such a way that the 
requirements of H.R. 3271 would have a budgetary impact. For 
example, if CMS announced that Medicare would cover only one 
brand of testing strip and do so at a price below the current 
payment amount, then H.R. 3271, which codifies requirements for 
offering multiple brands, would probably increase direct 
spending in the Medicare program.
    Another source of uncertainty with respect to H.R. 3271 is 
timing. Medicare uses supplier bids to set payment amounts for 
a set period of time, generally three years (for example, 
December 1, 2016 through December 31, 2018). In the past, it 
has taken CMS about 18 months to prepare for each round. A new 
round of competitively bid prices is set to take effect on 
January 1, 2019, so CBO expected that CMS would have announced 
any policy changes earlier this year. As yet, CMS has not made 
any public pronouncement about the January 2019 round and has 
not established any requirements for suppliers who wish to bid. 
H.R. 3271 would apply to ``bids to furnish such types of 
products on or after January 1, 2019.'' As a result, CBO 
anticipates that its provisions would apply to the next round 
of competitive bidding, whenever it begins. Although the 
uncertainty around timing does not affect CBO's estimate of 
H.R. 3271, it does underscore the overall uncertainty of CBO's 
estimate, as it does not have updated information to inform its 
analysis.
    Increase in long-term direct spending and deficits: CBO 
estimates that enacting the legislation would not increase net 
direct spending or on-budget deficits in one or more of the 
four consecutive 10-year periods beginning in 2028.
    Estimated impact on state, local, and tribal governments: 
H.R. 3271 contains no intergovernmental or private-sector 
mandates as defined in UMRA.
    Estimate prepared by: Federal costs: Lara Robillard; Impact 
on state, local, and tribal governments and the private sector: 
Amy Petz.
    Estimate approved by: Theresa Gullo, Assistant Director for 
Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

         Statement of General Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII, the general 
performance goal or objective of this legislation is to address 
several issues beneficiaries have reported facing under the 
competitive bidding program regarding DTS.

                    Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII, no provision of 
H.R. 3271 is known to be duplicative of another Federal 
program, including any program that was included in a report to 
Congress pursuant to section 21 of Public Law 111-139 or the 
most recent Catalog of Federal Domestic Assistance.

                        Committee Cost Estimate

    Pursuant to clause 3(d)(1) of rule XIII, the Committee 
adopts as its own the cost estimate prepared by the Director of 
the Congressional Budget Office pursuant to section 402 of the 
Congressional Budget Act of 1974.

       Earmark, Limited Tax Benefits, and Limited Tariff Benefits

    Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the 
Committee finds that H.R. 3271 contains no earmarks, limited 
tax benefits, or limited tariff benefits.

                  Disclosure of Directed Rule Makings

    Pursuant to section 3(i) of H. Res. 5, the Committee finds 
that H.R. 3271 contains no directed rule makings.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    Section 1 provides that the Act may be cited as the 
``Protecting Access to Diabetes Supplies Act of 2017.''

Section 2. Strengthening rules in case of competition for diabetic 
        testing strips

    Section 2 would specify the types of data the Department of 
Health and Human Services (HHS) must collect from entities 
entering the competitive acquisition program for diabetic 
testing strips when verifying that an entity's bid satisfies 
the requirement of covering at least 50 percent of all types of 
diabetic testing strip products and would create additional 
requirements on the Centers for Medicare and Medicaid Services 
to provide oversight and enforcement of the requirement.
    The section also would require entities furnishing diabetic 
testing strip products under the competitive acquisition 
program to furnish strips compatible with a given beneficiary's 
home blood glucose monitor, and prohibits entities from 
incentivizing a beneficiary to switch to a different brand. HHS 
would be required to make available information describing the 
rights of beneficiaries in the program. Entities would not be 
allowed to solicit orders from individuals enrolled in the 
program more than 14 days prior to dispensing said order.
    Finally, the section specifies how HHS may implement the 
provisions of the bill and specifies that the Paperwork 
Reduction Act of 1995 shall not apply to the amendments made by 
the bill.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

                          SOCIAL SECURITY ACT




           *       *       *       *       *       *       *
TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED

           *       *       *       *       *       *       *



   Part B--Supplementary Medical Insurance Benefits for the Aged and 
Disabled

           *       *       *       *       *       *       *



         competitive acquisition of certain items and services

  Sec. 1847. (a) Establishment of Competitive Acquisition 
Programs.--
          (1) Implementation of programs.--
                  (A) In general.--The Secretary shall 
                establish and implement programs under which 
                competitive acquisition areas are established 
                throughout the United States for contract award 
                purposes for the furnishing under this part of 
                competitively priced items and services 
                (described in paragraph (2)) for which payment 
                is made under this part. Such areas may differ 
                for different items and services.
                  (B) Phased-in implementation.--The programs--
                          (i) shall be phased in among 
                        competitive acquisition areas in a 
                        manner consistent with subparagraph (D) 
                        so that the competition under the 
                        programs occurs in--
                                  (I) 10 of the largest 
                                metropolitan statistical areas 
                                in 2007;
                                  (II) an additional 91 of the 
                                largest metropolitan 
                                statistical areas in 2011; and
                                  (III) additional areas after 
                                2011 (or, in the case of 
                                national mail order for items 
                                and services, after 2010); and
                          (ii) may be phased in first among the 
                        highest cost and highest volume items 
                        and services or those items and 
                        services that the Secretary determines 
                        have the largest savings potential.
                  (C) Waiver of certain provisions.--In 
                carrying out the programs, the Secretary may 
                waive such provisions of the Federal 
                Acquisition Regulation as are necessary for the 
                efficient implementation of this section, other 
                than provisions relating to confidentiality of 
                information and such other provisions as the 
                Secretary determines appropriate.
          (D) Changes in competitive acquisition programs.--
                  (i) Round 1 of competitive acquisition 
                program.--Notwithstanding subparagraph 
                (B)(i)(I) and in implementing the first round 
                of the competitive acquisition programs under 
                this section--
                          (I) the contracts awarded under this 
                        section before the date of the 
                        enactment of this subparagraph are 
                        terminated, no payment shall be made 
                        under this title on or after the date 
                        of the enactment of this subparagraph 
                        based on such a contract, and, to the 
                        extent that any damages may be 
                        applicable as a result of the 
                        termination of such contracts, such 
                        damages shall be payable from the 
                        Federal Supplementary Medical Insurance 
                        Trust Fund under section 1841;
                          (II) the Secretary shall conduct the 
                        competition for such round in a manner 
                        so that it occurs in 2009 with respect 
                        to the same items and services and the 
                        same areas, except as provided in 
                        subclauses (III) and (IV);
                          (III) the Secretary shall exclude 
                        Puerto Rico so that such round of 
                        competition covers 9, instead of 10, of 
                        the largest metropolitan statistical 
                        areas; and
                          (IV) there shall be excluded negative 
                        pressure wound therapy items and 
                        services.
                Nothing in subclause (I) shall be construed to 
                provide an independent cause of action or right 
                to administrative or judicial review with 
                regard to the termination provided under such 
                subclause.
                  (ii) Round 2 of competitive acquisition 
                program.--In implementing the second round of 
                the competitive acquisition programs under this 
                section described in subparagraph (B)(i)(II)--
                          (I) the metropolitan statistical 
                        areas to be included shall be those 
                        metropolitan statistical areas selected 
                        by the Secretary for such round as of 
                        June 1, 2008;
                          (II) the Secretary shall include the 
                        next 21 largest metropolitan 
                        statistical areas by total population 
                        (after those selected under subclause 
                        (I)) for such round; and
                          (III) the Secretary may subdivide 
                        metropolitan statistical areas with 
                        populations (based upon the most recent 
                        data from the Census Bureau) of at 
                        least 8,000,000 into separate areas for 
                        competitive acquisition purposes.
                  (iii) Exclusion of certain areas in 
                subsequent rounds of competitive acquisition 
                programs.--In implementing subsequent rounds of 
                the competitive acquisition programs under this 
                section, including under subparagraph 
                (B)(i)(III), for competitions occurring before 
                2015, the Secretary shall exempt from the 
                competitive acquisition program (other than 
                national mail order) the following:
                          (I) Rural areas.
                          (II) Metropolitan statistical areas 
                        not selected under round 1 or round 2 
                        with a population of less than 250,000.
                          (III) Areas with a low population 
                        density within a metropolitan 
                        statistical area that is otherwise 
                        selected, as determined for purposes of 
                        paragraph (3)(A).
  (E) Verification by oig.--The Inspector General of the 
Department of Health and Human Services shall, through post-
award audit, survey, or otherwise, assess the process used by 
the Centers for Medicare & Medicaid Services to conduct 
competitive bidding and subsequent pricing determinations under 
this section that are the basis for pivotal bid amounts and 
single payment amounts for items and services in competitive 
bidding areas under rounds 1 and 2 of the competitive 
acquisition programs under this section and may continue to 
verify such calculations for subsequent rounds of such 
programs.
  (F) Supplier feedback on missing financial documentation.--
          (i) In general.--In the case of a bid where one or 
        more covered documents in connection with such bid have 
        been submitted not later than the covered document 
        review date specified in clause (ii), the Secretary--
                  (I) shall provide, by not later than 45 days 
                (in the case of the first round of the 
                competitive acquisition programs as described 
                in subparagraph (B)(i)(I)) or 90 days (in the 
                case of a subsequent round of such programs) 
                after the covered document review date, for 
                notice to the bidder of all such documents that 
                are missing as of the covered document review 
                date; and
                  (II) may not reject the bid on the basis that 
                any covered document is missing or has not been 
                submitted on a timely basis, if all such 
                missing documents identified in the notice 
                provided to the bidder under subclause (I) are 
                submitted to the Secretary not later than 10 
                business days after the date of such notice.
          (ii) Covered document review date.--The covered 
        document review date specified in this clause with 
        respect to a competitive acquisition program is the 
        later of--
                  (I) the date that is 30 days before the final 
                date specified by the Secretary for submission 
                of bids under such program; or
                  (II) the date that is 30 days after the first 
                date specified by the Secretary for submission 
                of bids under such program.
          (iii) Limitations of process.--The process provided 
        under this subparagraph--
                  (I) applies only to the timely submission of 
                covered documents;
                  (II) does not apply to any determination as 
                to the accuracy or completeness of covered 
                documents submitted or whether such documents 
                meet applicable requirements;
                  (III) shall not prevent the Secretary from 
                rejecting a bid based on any basis not 
                described in clause (i)(II); and
                  (IV) shall not be construed as permitting a 
                bidder to change bidding amounts or to make 
                other changes in a bid submission.
          (iv) Covered document defined.--In this subparagraph, 
        the term ``covered document'' means a financial, tax, 
        or other document required to be submitted by a bidder 
        as part of an original bid submission under a 
        competitive acquisition program in order to meet 
        required financial standards. Such term does not 
        include other documents, such as the bid itself or 
        accreditation documentation.
                  (G) Requiring bid bonds for bidding 
                entities.--With respect to rounds of 
                competitions beginning under this subsection 
                for contracts beginning not earlier than 
                January 1, 2017, and not later than January 1, 
                2019, an entity may not submit a bid for a 
                competitive acquisition area unless, as of the 
                deadline for bid submission, the entity has 
                obtained (and provided the Secretary with proof 
                of having obtained) a bid surety bond (in this 
                paragraph referred to as a ``bid bond'') in a 
                form specified by the Secretary consistent with 
                subparagraph (H) and in an amount that is not 
                less than $50,000 and not more than $100,000 
                for each competitive acquisition area in which 
                the entity submits the bid.
                  (H) Treatment of bid bonds submitted.--
                          (i) For bidders that submit bids at 
                        or below the median and are offered but 
                        do not accept the contract.--In the 
                        case of a bidding entity that is 
                        offered a contract for any product 
                        category for a competitive acquisition 
                        area, if--
                                  (I) the entity's composite 
                                bid for such product category 
                                and area was at or below the 
                                median composite bid rate for 
                                all bidding entities included 
                                in the calculation of the 
                                single payment amounts for such 
                                product category and area; and
                                  (II) the entity does not 
                                accept the contract offered for 
                                such product category and area,
                        the bid bond submitted by such entity 
                        for such area shall be forfeited by the 
                        entity and the Secretary shall collect 
                        on it.
                          (ii) Treatment of other bidders.--In 
                        the case of a bidding entity for any 
                        product category for a competitive 
                        acquisition area, if the entity does 
                        not meet the bid forfeiture conditions 
                        in subclauses (I) and (II) of clause 
                        (i) for any product category for such 
                        area, the bid bond submitted by such 
                        entity for such area shall be returned 
                        within 90 days of the public 
                        announcement of the contract suppliers 
                        for such area.
          (2) Items and services described.--The items and 
        services referred to in paragraph (1) are the 
        following:
                  (A) Durable medical equipment and medical 
                supplies.--Covered items (as defined in section 
                1834(a)(13)) for which payment would otherwise 
                be made under section 1834(a), including items 
                used in infusion and drugs (other than 
                inhalation drugs) and supplies used in 
                conjunction with durable medical equipment, but 
                excluding class III devices under the Federal 
                Food, Drug, and Cosmetic Act, excluding certain 
                complex rehabilitative power wheelchairs 
                recognized by the Secretary as classified 
                within group 3 or higher (and related 
                accessories when furnished in connection with 
                such wheelchairs), and excluding drugs and 
                biologicals describedin section 1842(o)(1)(D).
                  (B) Other equipment and supplies.--Items and 
                services described in section 1842(s)(2)(D), 
                other than parenteral nutrients, equipment, and 
                supplies.
                  (C) Off-the-shelf orthotics.--Orthotics 
                described in section 1861(s)(9) for which 
                payment would otherwise be made under section 
                1834(h) which require minimal self-adjustment 
                for appropriate use and do not require 
                expertise in trimming, bending, molding, 
                assembling, or customizing to fit to the 
                individual.
          (3) Exception authority.--In carrying out the 
        programs under this section, the Secretary may exempt--
                  (A) rural areas and areas with low population 
                density within urban areas that are not 
                competitive, unless there is a significant 
                national market through mail order for a 
                particular item or service; and
                  (B) items and services for which the 
                application of competitive acquisition is not 
                likely to result in significant savings.
          (4) Special rule for certain rented items of durable 
        medical equipment and oxygen.--In the case of a covered 
        item for which payment is made on a rental basis under 
        section 1834(a) and in the case of payment for oxygen 
        under section 1834(a)(5), the Secretary shall establish 
        a process by which rental agreements for the covered 
        items and supply arrangements with oxygen suppliers 
        entered into before the application of the competitive 
        acquisition program under this section for the item may 
        be continued notwithstanding this section. In the case 
        of any such continuation, the supplier involved shall 
        provide for appropriate servicing and replacement, as 
        required under section 1834(a).
          (5) Physician authorization.--
                  (A) In general.--With respect to items or 
                services included within a particular HCPCS 
                code, the Secretary may establish a process for 
                certain items and services under which a 
                physician may prescribe a particular brand or 
                mode of delivery of an item or service within 
                such code if the physician determines that use 
                of the particular item or service would avoid 
                an adverse medical outcome on the individual, 
                as determined by the Secretary.
                  (B) No effect on payment amount.--A 
                prescription under subparagraph (A) shall not 
                affect the amount of payment otherwise 
                applicable for the item or service under the 
                code involved.
          (6) Application.--For each competitive acquisition 
        area in which the program is implemented under this 
        subsection with respect to items and services, the 
        payment basis determined under the competition 
        conducted under subsection (b) shall be substituted for 
        the payment basis otherwise applied under section 
        1834(a), section 1834(h), or section 1842(s), as 
        appropriate.
          (7) Exemption from competitive acquisition.--The 
        programs under this section shall not apply to the 
        following:
                  (A) Certain off-the-shelf orthotics.--Items 
                and services described in paragraph (2)(C) if 
                furnished--
                          (i) by a physician or other 
                        practitioner (as defined by the 
                        Secretary) to the physician's or 
                        practitioner's own patients as part of 
                        the physician's or practitioner's 
                        professional service; or
                          (ii) by a hospital to the hospital's 
                        own patients during an admission or on 
                        the date of discharge.
                  (B) Certain durable medical equipment.--Those 
                items and services described in paragraph 
                (2)(A)--
                          (i) that are furnished by a hospital 
                        to the hospital's own patients during 
                        an admission or on the date of 
                        discharge; and
                          (ii) to which such programs would not 
                        apply, as specified by the Secretary, 
                        if furnished by a physician to the 
                        physician's own patients as part of the 
                        physician's professional service.
  (b) Program Requirements.--
          (1) In general.--The Secretary shall conduct a 
        competition among entities supplying items and services 
        described in subsection (a)(2) for each competitive 
        acquisition area in which the program is implemented 
        under subsection (a) with respect to such items and 
        services.
          (2) Conditions for awarding contract.--
                  (A) In general.--The Secretary may not award 
                a contract to any entity under the competition 
                conducted in an competitive acquisition area 
                pursuant to paragraph (1) to furnish such items 
                or services unless the Secretary finds all of 
                the following:
                          (i) The entity meets applicable 
                        quality standards specified by the 
                        Secretary under section 1834(a)(20).
                          (ii) The entity meets applicable 
                        financial standards specified by the 
                        Secretary, taking into account the 
                        needs of small providers.
                          (iii) The total amounts to be paid to 
                        contractors in a competitive 
                        acquisition area are expected to be 
                        less than the total amounts that would 
                        otherwise be paid.
                          (iv) Access of individuals to a 
                        choice of multiple suppliers in the 
                        area is maintained.
                          (v) The entity meets applicable State 
                        licensure requirements.
                  (B) Timely implementation of program.--Any 
                delay in the implementation of quality 
                standards under section 1834(a)(20) or delay in 
                the receipt of advice from the program 
                oversight committee established under 
                subsection (c) shall not delay the 
                implementation of the competitive acquisition 
                program under this section.
          (3) Contents of contract.--
                  (A) In general.--A contract entered into with 
                an entity under the competition conducted 
                pursuant to paragraph (1) is subject to terms 
                and conditions that the Secretary may specify.
                  (B) Term of contracts.--The Secretary shall 
                recompete contracts under this section not less 
                often than once every 3 years.
                  (C) Disclosure of subcontractors.--
                          (i) Initial disclosure.--Not later 
                        than 10 days after the date a supplier 
                        enters into a contract with the 
                        Secretary under this section, such 
                        supplier shall disclose to the 
                        Secretary, in a form and manner 
                        specified by the Secretary, the 
                        information on--
                                  (I) each subcontracting 
                                relationship that such supplier 
                                has in furnishing items and 
                                services under the contract; 
                                and
                                  (II) whether each such 
                                subcontractor meets the 
                                requirement of section 
                                1834(a)(20)(F)(i), if 
                                applicable to such 
                                subcontractor.
                          (ii) Subsequent disclosure.--Not 
                        later than 10 days after such a 
                        supplier subsequently enters into a 
                        subcontracting relationship described 
                        in clause (i)(II), such supplier shall 
                        disclose to the Secretary, in such form 
                        and manner, the information described 
                        in subclauses (I) and (II) of clause 
                        (i).
          (4) Limit on number of contractors.--
                  (A) In general.--The Secretary may limit the 
                number of contractors in a competitive 
                acquisition area to the number needed to meet 
                projected demand for items and services covered 
                under the contracts. In awarding contracts, the 
                Secretary shall take into account the ability 
                of bidding entities to furnish items or 
                services in sufficient quantities to meet the 
                anticipated needs of individuals for such items 
                or services in the geographic area covered 
                under the contract on a timely basis.
                  (B) Multiple winners.--The Secretary shall 
                award contracts to multiple entities submitting 
                bids in each area for an item or service.
          (5) Payment.--
                  (A) In general.--Payment under this part for 
                competitively priced items and services 
                described in subsection (a)(2) shall be based 
                on bids submitted and accepted under this 
                section for such items and services. Based on 
                such bids the Secretary shall determine a 
                single payment amount for each item or service 
                in each competitive acquisition area.
                  (B) Reduced beneficiary cost-sharing.--
                          (i) Application of coinsurance.--
                        Payment under this section for items 
                        and services shall be in an amount 
                        equal to 80 percent of the payment 
                        basis described in subparagraph (A).
                          (ii) Application of deductible.--
                        Before applying clause (i), the 
                        individual shall be required to meet 
                        the deductible described in section 
                        1833(b).
                  (C) Payment on assignment-related basis.--
                Payment for any item or service furnished by 
                the entity may only be made under this section 
                on an assignment-related basis.
                  (D) Construction.--Nothing in this section 
                shall be construed as precluding the use of an 
                advanced beneficiary notice with respect to a 
                competitively priced item and service.
          (6) Participating contractors.--
                  (A) In general.--Except as provided in 
                subsection (a)(4), payment shall not be made 
                for items and services described in subsection 
                (a)(2) furnished by a contractor and for which 
                competition is conducted under this section 
                unless--
                          (i) the contractor has submitted a 
                        bid for such items and services under 
                        this section; and
                          (ii) the Secretary has awarded a 
                        contract to the contractor for such 
                        items and services under this section.
                  (B) Bid defined.--In this section, the term 
                ``bid'' means an offer to furnish an item or 
                service for a particular price and time period 
                that includes, where appropriate, any services 
                that are attendant to the furnishing of the 
                item or service.
                  (C) Rules for mergers and acquisitions.--In 
                applying subparagraph (A) to a contractor, the 
                contractor shall include a successor entity in 
                the case of a merger or acquisition, if the 
                successor entity assumes such contract along 
                with any liabilities that may have occurred 
                thereunder.
                  (D) Protection of small suppliers.--In 
                developing procedures relating to bids and the 
                awarding of contracts under this section, the 
                Secretary shall take appropriate steps to 
                ensure that small suppliers of items and 
                services have an opportunity to be considered 
                for participation in the program under this 
                section.
          (7) Consideration in determining categories for 
        bids.--The Secretary may consider the clinical 
        efficiency and value of specific items within codes, 
        including whether some items have a greater therapeutic 
        advantage to individuals.
          (8) Authority to contract for education, monitoring, 
        outreach, and complaint services.--The Secretary may 
        enter into contracts with appropriate entities to 
        address complaints from individuals who receive items 
        and services from an entity with a contract under this 
        section and to conduct appropriate education of and 
        outreach to such individuals and monitoring quality of 
        services with respect to the program.
          (9) Authority to contract for implementation.--The 
        Secretary may contract with appropriate entities to 
        implement the competitive bidding program under this 
        section.
          (10) Special rule in case of competition for diabetic 
        testing strips.--
                  (A) In general.--With respect to the 
                competitive acquisition program for diabetic 
                testing strips conducted after the first round 
                of the competitive acquisition programs, if an 
                entity does not demonstrate to the Secretary 
                that its bid covers types of diabetic testing 
                strip products that, in the aggregate and 
                taking into account volume for the different 
                products, cover 50 percent (or such higher 
                percentage as the Secretary may specify) of all 
                such types of products, the Secretary shall 
                reject such bid. [The volume for such types of 
                products may be determined in accordance with 
                such data (which may be market based data) as 
                the Secretary recognizes.] With respect to bids 
                to furnish such types of products on or after 
                January 1, 2019, the volume for such types of 
                products shall be determined by the Secretary 
                through the use of multiple sources of data 
                (from mail order and non-mail order Medicare 
                markets), including market-based data measuring 
                sales of diabetic testing strip products that 
                are not exclusively sold by a single retailer 
                from such markets.
                  (B) Study of types of testing strip 
                products.--Before 2011, the Inspector General 
                of the Department of Health and Human Services 
                shall conduct a study to determine the types of 
                diabetic testing strip products by volume that 
                could be used to make determinations pursuant 
                to subparagraph (A) for the first competition 
                under the competitive acquisition program 
                described in such subparagraph and submit to 
                the Secretary a report on the results of the 
                study. The Inspector General shall also conduct 
                such a study and submit such a report before 
                the Secretary conducts a subsequent competitive 
                acquistion program described in subparagraph 
                (A).
                  (C) Demonstration of ability to furnish types 
                of diabetic testing strip products.--With 
                respect to bids to furnish diabetic testing 
                strip products on or after January 1, 2019, 
                under the program described in subparagraph 
                (A), the Secretary shall reject a bid submitted 
                by an entity if the entity does not attest to 
                the Secretary and demonstrate, through letters 
                of intent with manufacturers, wholesalers, or 
                other suppliers, or other evidence as the 
                Secretary may specify, that the entity has the 
                ability to obtain an inventory of the types and 
                quantities of diabetic testing strip products 
                that will allow the entity to furnish such 
                products in a manner consistent with its bid.
                  (D) Use of unlisted types in calculation of 
                percentage.--With respect to bids to furnish 
                diabetic testing strip products on or after 
                January 1, 2019, in determining under 
                subparagraph (A) whether a bid submitted by an 
                entity under such subparagraph covers 50 
                percent (or such higher percentage as the 
                Secretary may specify) of all types of diabetic 
                testing strip products, the Secretary may not 
                attribute a percentage to types of diabetic 
                testing strip products that the Secretary does 
                not identify by brand, model, and market share 
                volume.
                  (E) Adherence to demonstration.--
                          (i) In general.--In the case of an 
                        entity that is furnishing diabetic 
                        testing strip products on or after 
                        January 1, 2019, under a contract 
                        entered into under the competition 
                        conducted pursuant to paragraph (1), 
                        the Secretary shall establish a process 
                        to monitor, on an ongoing basis, the 
                        extent to which such entity continues 
                        to cover the product types included in 
                        the entity's bid.
                          (ii) Termination.--If the Secretary 
                        determines that an entity described in 
                        clause (i) fails to maintain in 
                        inventory, or otherwise maintain ready 
                        access to (through requirements, 
                        contracts, or otherwise) a type of 
                        product included in the entity's bid, 
                        the Secretary may terminate such 
                        contract unless the Secretary finds 
                        that the failure of the entity to 
                        maintain inventory of, or ready access 
                        to, the product is the result of the 
                        discontinuation of the product by the 
                        product manufacturer, a market-wide 
                        shortage of the product, or the 
                        introduction of a newer model or 
                        version of the product in the market 
                        involved.
          (11) Additional special rules in case of competition 
        for diabetic testing strips.--
                  (A) In general.--With respect to an entity 
                that is furnishing diabetic testing strip 
                products to individuals under a contract 
                entered into under the competitive acquisition 
                program established under this section, the 
                entity shall furnish to each individual a brand 
                of such products that is compatible with the 
                home blood glucose monitor selected by the 
                individual.
                  (B) Prohibition on influencing and 
                incentivizing.--An entity described in 
                subparagraph (A) may not attempt to influence 
                or incentivize an individual to switch the 
                brand of glucose monitor or diabetic testing 
                strip product selected by the individual, 
                including by--
                          (i) persuading, pressuring, or 
                        advising the individual to switch; or
                          (ii) furnishing information about 
                        alternative brands to the individual 
                        where the individual has not requested 
                        such information.
                  (C) Provision of information.--
                          (i) Standardized information.--Not 
                        later than January 1, 2019, the 
                        Secretary shall develop and make 
                        available to entities described in 
                        subparagraph (A) standardized 
                        information that describes the rights 
                        of an individual with respect to such 
                        an entity. The information described in 
                        the preceding sentence shall include 
                        information regarding--
                                  (I) the requirements 
                                established under subparagraphs 
                                (A) and (B);
                                  (II) the right of the 
                                individual to purchase diabetic 
                                testing strip products from 
                                another mail order supplier of 
                                such products or a retail 
                                pharmacy if the entity is not 
                                able to furnish the brand of 
                                such product that is compatible 
                                with the home blood glucose 
                                monitor selected by the 
                                individual; and
                                  (III) the right of the 
                                individual to return diabetic 
                                testing strip products 
                                furnished to the individual by 
                                the entity.
                          (ii) Requirement.--With respect to 
                        diabetic testing strip products 
                        furnished on or after the date on which 
                        the Secretary develops the standardized 
                        information under clause (i), an entity 
                        described in subparagraph (A) may not 
                        communicate directly to an individual 
                        until the entity has verbally provided 
                        the individual with such standardized 
                        information.
                  (D) Order refills.--With respect to diabetic 
                testing strip products furnished on or after 
                January 1, 2019, the Secretary shall require an 
                entity furnishing diabetic testing strip 
                products to an individual to contact and 
                receive a request from the individual for such 
                products not more than 14 days prior to 
                dispensing a refill of such products to the 
                individual.
          [(11)] (12) No administrative or judicial review.--
        There shall be no administrative or judicial review 
        under section 1869, section 1878, or otherwise, of--
                  (A) the establishment of payment amounts 
                under paragraph (5);
                  (B) the awarding of contracts under this 
                section;
                  (C) the designation of competitive 
                acquisition areas under subsection (a)(1)(A) 
                and the identification of areas under 
                subsection (a)(1)(D)(iii);
                  (D) the phased-in implementation under 
                subsection (a)(1)(B) and implementation of 
                subsection (a)(1)(D);
                  (E) the selection of items and services for 
                competitive acquisition under subsection 
                (a)(2);
                  (F) the bidding structure and number of 
                contractors selected under this section; or
                  (G) the implementation of the special rule 
                described in paragraph (10).
  (c) Program Advisory and Oversight Committee.--
          (1) Establishment.--The Secretary shall establish a 
        Program Advisory and Oversight Committee (hereinafter 
        in this section referred to as the ``Committee'').
          (2) Membership; terms.--The Committee shall consist 
        of such members as the Secretary may appoint who shall 
        serve for such term as the Secretary may specify.
          (3) Duties.--
                  (A) Advice.--The Committee shall provide 
                advice to the Secretary with respect to the 
                following functions:
                          (i) The implementation of the program 
                        under this section.
                          (ii) The establishment of financial 
                        standards for purposes of subsection 
                        (b)(2)(A)(ii).
                          (iii) The establishment of 
                        requirements for collection of data for 
                        the efficient management of the 
                        program.
                          (iv) The development of proposals for 
                        efficient interaction among 
                        manufacturers, providers of services, 
                        suppliers (as defined in section 
                        1861(d)), and individuals.
                          (v) The establishment of quality 
                        standards under section 1834(a)(20).
                  (B) Additional duties.--The Committee shall 
                perform such additional functions to assist the 
                Secretary in carrying out this section as the 
                Secretary may specify.
          (4) Inapplicability of faca.--The provisions of the 
        Federal Advisory Committee Act (5 U.S.C. App.) shall 
        not apply.
          (5) Termination.--The Committee shall terminate on 
        December 31, 2011.
  (d) Report.--Not later than July 1, 2011, the Secretary shall 
submit to Congress a report on the programs under this section. 
The report shall include information on savings, reductions in 
cost-sharing, access to and quality of items and services, and 
satisfaction of individuals.
  (f) Competitive Acquisition Ombudsman.--The Secretary shall 
provide for a competitive acquisition ombudsman within the 
Centers for Medicare & Medicaid Services in order to respond to 
complaints and inquiries made by suppliers and individuals 
relating to the application of the competitive acquisition 
program under this section. The ombudsman may be within the 
office of the Medicare Beneficiary Ombudsman appointed under 
section 1808(c). The ombudsman shall submit to Congress an 
annual report on the activities under this subsection, which 
report shall be coordinated with the report provided under 
section 1808(c)(2)(C).

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