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116th Congress } { Rept. 116-324
HOUSE OF REPRESENTATIVES
1st Session } { Part 2
_______________________________________________________________________
ELIJAH E. CUMMINGS LOWER DRUG COSTS NOW ACT
----------
R E P O R T
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ON
H.R. 3
together with
DISSENTING VIEWS
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
December 6, 2019.--Ordered to be printed
116th Congress } { Rept. 116-324
HOUSE OF REPRESENTATIVES
1st Session } { Part 2
_______________________________________________________________________
ELIJAH E. CUMMINGS LOWER DRUG COSTS NOW ACT
__________
R E P O R T
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
on
H.R. 3
together with
DISSENTING VIEWS
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
December 6, 2019.--Ordered to be printed
__________
U.S. GOVERNMENT PUBLISHING OFFICE
38-525 WASHINGTON : 2019
C O N T E N T S
Page
I. SUMMARY AND BACKGROUND..........................................36
A. Purpose and Summary................................. 36
B. Background and Need for Legislation................. 36
C. Legislative History................................. 39
II. EXPLANATION OF THE BILL.........................................40
The Lower Drug Costs Now Act of 2019................... 40
III. VOTES OF THE COMMITTEE..........................................55
IV. BUDGET EFFECTS OF THE BILL......................................66
A. Committee Estimate of Budgetary Effects............. 66
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority...................... 66
C. Cost Estimate Prepared by the Congressional Budget
Office............................................. 66
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......66
A. Committee Oversight Findings and Recommendations.... 66
B. Statement of General Performance Goals and
Objectives......................................... 67
C. Information Relating to Unfunded Mandates........... 67
D. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits............................ 67
E. Duplication of Federal Programs..................... 67
F. Hearings............................................ 67
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........68
VII. DISSENTING VIEWS..............................................383
116th Congress } { Rept. 116-324
HOUSE OF REPRESENTATIVES
1st Session } { Part 2
======================================================================
ELIJAH E. CUMMINGS LOWER DRUG COSTS NOW ACT
_______
December 6, 2019.--Ordered to be printed
_______
Mr. Neal, from the Committee on Ways and Means, submitted the following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 3]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 3) to establish a fair price negotiation program,
protect the Medicare program from excessive price increases,
and establish an out-of-pocket maximum for Medicare part D
enrollees, and for other purposes, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Elijah E. Cummings
Lower Drug Costs Now Act''.
(b) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title; table of contents.
TITLE I--LOWERING PRICES THROUGH FAIR DRUG PRICE NEGOTIATION
Sec. 101. Providing for lower prices for certain high-priced single
source drugs.
Sec. 102. Selected drug manufacturer excise tax imposed during
noncompliance periods.
TITLE II--MEDICARE PARTS B AND D PRESCRIPTION DRUG INFLATION REBATES
Sec. 201. Medicare part B rebate by manufacturers.
Sec. 202. Medicare part D rebate by manufacturers.
TITLE III--PART D IMPROVEMENTS AND MAXIMUM OUT-OF-POCKET CAP FOR
MEDICARE BENEFICIARIES
Sec. 301. Medicare part D benefit redesign.
Sec. 302. Allowing certain enrollees of prescription drugs plans and
MA-PD plans under Medicare program to spread out cost-sharing under
certain circumstances.
Sec. 303. Establishment of pharmacy quality measures under Medicare
part D.
TITLE IV--PRESCRIPTION DRUG POLICIES FOR LOW-INCOME INDIVIDUALS
Sec. 401. Adjustments to Medicare part D cost-sharing reductions for
low-income individuals.
Sec. 402. Dissemination to Medicare part D subsidy eligible individuals
of information comparing premiums of certain prescription drug plans.
Sec. 403. Providing for intelligent assignment of certain subsidy
eligible individuals auto-enrolled under Medicare prescription drug
plans and MA-PD plans.
Sec. 404. Expanding eligibility for low-income subsidies under part D
of the Medicare program.
Sec. 405. Automatic eligibility of certain low-income territorial
residents for premium and cost-sharing subsidies under the Medicare
program; Sunset of enhanced allotment program.
Sec. 406. Automatic qualification of certain Medicaid beneficiaries for
premium and cost-sharing subsidies under part D of the Medicare
program.
Sec. 407. Eliminating the resource requirement with respect to subsidy
eligible individuals under part D of the Medicare program.
Sec. 408. Providing for certain rules regarding the treatment of
eligible retirement plans in determining the eligibility of individuals
for premium and cost-sharing subsidies under part D of the Medicare
program.
TITLE V--DRUG PRICE TRANSPARENCY
Sec. 501. Drug price transparency.
TITLE I--LOWERING PRICES THROUGH FAIR DRUG PRICE NEGOTIATION
SEC. 101. PROVIDING FOR LOWER PRICES FOR CERTAIN HIGH-PRICED SINGLE
SOURCE DRUGS.
(a) Program To Lower Prices for Certain High-Priced Single Source
Drugs.--Title XI of the Social Security Act (42 U.S.C. 1301 et seq.) is
amended by adding at the end the following new part:
``PART E--FAIR PRICE NEGOTIATION PROGRAM TO LOWER PRICES FOR CERTAIN
HIGH-PRICED SINGLE SOURCE DRUGS
``SEC. 1191. ESTABLISHMENT OF PROGRAM.
``(a) In General.--The Secretary shall establish a Fair Price
Negotiation Program (in this part referred to as the `program'). Under
the program, with respect to each price applicability period, the
Secretary shall--
``(1) publish a list of selected drugs in accordance with
section 1192;
``(2) enter into agreements with manufacturers of selected
drugs with respect to such period, in accordance with section
1193;
``(3) negotiate and, if applicable, renegotiate maximum fair
prices for such selected drugs, in accordance with section
1194; and
``(4) carry out the administrative duties described in
section 1196.
``(b) Definitions Relating to Timing.--For purposes of this part:
``(1) Initial price applicability year.--The term `initial
price applicability year' means a plan year (beginning with
plan year 2023) or, if agreed to in an agreement under section
1193 by the Secretary and manufacturer involved, a period of
more than one plan year (beginning on or after January 1,
2023).
``(2) Price applicability period.--The term `price
applicability period' means, with respect to a drug, the period
beginning with the initial price applicability year with
respect to which such drug is a selected drug and ending with
the last plan year during which the drug is a selected drug.
``(3) Selected drug publication date.--The term `selected
drug publication date' means, with respect to each initial
price applicability year, April 15 of the plan year that begins
2 years prior to such year.
``(4) Voluntary negotiation period.--The term `voluntary
negotiation period' means, with respect to an initial price
applicability year with respect to a selected drug, the
period--
``(A) beginning on the sooner of--
``(i) the date on which the manufacturer of
the drug and the Secretary enter into an
agreement under section 1193 with respect to
such drug; or
``(ii) June 15 following the selected drug
publication date with respect to such selected
drug; and
``(B) ending on March 31 of the year that begins one
year prior to the initial price applicability year.
``(c) Other Definitions.--For purposes of this part:
``(1) Fair price eligible individual.--The term `fair price
eligible individual' means, with respect to a selected drug--
``(A) in the case such drug is furnished or dispensed
to the individual at a pharmacy or by a mail order
service--
``(i) an individual who is enrolled under a
prescription drug plan under part D of title
XVIII or an MA-PD plan under part C of such
title under which coverage is provided for such
drug; and
``(ii) an individual who is enrolled under a
group health plan or health insurance coverage
offered in the group or individual market (as
such terms are defined in section 2791 of the
Public Health Service Act) with respect to
which there is in effect an agreement with the
Secretary under section 1197 with respect to
such selected drug as so furnished or
dispensed; and
``(B) in the case such drug is furnished or
administered to the individual by a hospital,
physician, or other provider of services or supplier--
``(i) an individual who is entitled to
benefits under part A of title XVIII or
enrolled under part B of such title if such
selected drug is covered under the respective
part; and
``(ii) an individual who is enrolled under a
group health plan or health insurance coverage
offered in the group or individual market (as
such terms are defined in section 2791 of the
Public Health Service Act) with respect to
which there is in effect an agreement with the
Secretary under section 1197 with respect to
such selected drug as so furnished or
administered.
``(2) Maximum fair price.--The term `maximum fair price'
means, with respect to a plan year during a price applicability
period and with respect to a selected drug (as defined in
section 1192(c)) with respect to such period, the price
published pursuant to section 1195 in the Federal Register for
such drug and year.
``(3) Average international market price defined.--
``(A) In general.--The terms `average international
market price' and `AIM price' mean, with respect to a
drug, the average price (which shall be the net average
price, if practicable, and volume-weighted, if
practicable) for a unit (as defined in paragraph (4))
of the drug for sales of such drug (calculated across
different dosage forms and strengths of the drug and
not based on the specific formulation or package size
or package type), as computed (as of the date of
publication of such drug as a selected drug under
section 1192(a)) in all countries described in clause
(ii) of subparagraph (B) that are applicable countries
(as described in clause (i) of such subparagraph) with
respect to such drug.
``(B) Applicable countries.--
``(i) In general.--For purposes of
subparagraph (A), a country described in clause
(ii) is an applicable country described in this
clause with respect to a drug if there is
available an average price for any unit for the
drug for sales of such drug in such country.
``(ii) Countries described.--For purposes of
this paragraph, the following are countries
described in this clause:
``(I) Australia.
``(II) Canada.
``(III) France.
``(IV) Germany.
``(V) Japan.
``(VI) The United Kingdom.
``(4) Unit.--The term `unit' means, with respect to a drug,
the lowest identifiable quantity (such as a capsule or tablet,
milligram of molecules, or grams) of the drug that is
dispensed.
``SEC. 1192. SELECTION OF NEGOTIATION-ELIGIBLE DRUGS AS SELECTED DRUGS.
``(a) In General.--Not later than the selected drug publication date
with respect to an initial price applicability year, the Secretary
shall select and publish in the Federal Register a list of--
``(1)(A) with respect to an initial price applicability year
during the period beginning with 2023 and ending with 2027, at
least 25 negotiation-eligible drugs described in subparagraphs
(A) and (B), but not subparagraph (C), of subsection (d)(1)
(or, with respect to an initial price applicability year during
such period beginning after 2023, the maximum number (if such
number is less than 25) of such negotiation-eligible drugs for
the year) with respect to such year;
``(B) with respect to an initial price applicability year
during the period beginning with 2028 and ending with 2032, at
least 30 negotiation-eligible drugs described in subparagraphs
(A) and (B), but not subparagraph (C), of subsection (d)(1)
(or, with respect to an initial price applicability year during
such period, the maximum number (if such number is less than
30) of such negotiation-eligible drugs for the year) with
respect to such year; and
``(C) with respect to an initial price applicability year
beginning after 2032, at least 35 negotiation-eligible drugs
described in subparagraphs (A) and (B), but not subparagraph
(C), of subsection (d)(1) (or, with respect to an initial price
applicability year during such period, the maximum number (if
such number is less than 35) of such negotiation-eligible drugs
for the year) with respect to such year;
``(2) all negotiation-eligible drugs described in
subparagraph (C) of such subsection with respect to such year;
and
``(3) all new-entrant negotiation-eligible drugs (as defined
in subsection (g)(1)) with respect to such year.
Each drug published on the list pursuant to the previous sentence shall
be subject to the negotiation process under section 1194 for the
voluntary negotiation period with respect to such initial price
applicability year (and the renegotiation process under such section as
applicable for any subsequent year during the applicable price
applicability period). In applying this subsection, any negotiation-
eligible drug that is selected under this subsection for an initial
price applicability year shall not count toward the required minimum
amount of drugs to be selected under paragraph (1) for any subsequent
year, including such a drug so selected that is subject to
renegotiation under section 1194.
``(b) Selection of Drugs.--In carrying out subsection (a)(1) the
Secretary shall select for inclusion on the published list described in
subsection (a) with respect to a price applicability period, the
negotiation-eligible drugs that the Secretary projects will result in
the greatest savings to the Federal Government or fair price eligible
individuals during the price applicability period. In making this
projection of savings for drugs for which there is an AIM price for a
price applicability period, the savings shall be projected across
different dosage forms and strengths of the drugs and not based on the
specific formulation or package size or package type of the drugs,
taking into consideration both the volume of drugs for which payment is
made, to the extent such data is available, and the amount by which the
net price for the drugs exceeds the AIM price for the drugs.
``(c) Selected Drug.--For purposes of this part, each drug included
on the list published under subsection (a) with respect to an initial
price applicability year shall be referred to as a `selected drug' with
respect to such year and each subsequent plan year beginning before the
first plan year beginning after the date on which the Secretary
determines two or more drug products--
``(1) are approved or licensed (as applicable)--
``(A) under section 505(j) of the Federal Food, Drug,
and Cosmetic Act using such drug as the listed drug; or
``(B) under section 351(k) of the Public Health
Service Act using such drug as the reference product;
and
``(2) continue to be marketed.
``(d) Negotiation-Eligible Drug.--
``(1) In general.--For purposes of this part, the term
`negotiation-eligible drug' means, with respect to the selected
drug publication date with respect to an initial price
applicability year, a qualifying single source drug, as defined
in subsection (e), that meets any of the following criteria:
``(A) Covered part d drugs.--The drug is among the
125 covered part D drugs (as defined in section 1860D-
2(e)) for which there was an estimated greatest net
spending under parts C and D of title XVIII, as
determined by the Secretary, during the most recent
plan year prior to such drug publication date for which
data are available.
``(B) Other drugs.--The drug is among the 125 drugs
for which there was an estimated greatest net spending
in the United States (including the 50 States, the
District of Columbia, and the territories of the United
States), as determined by the Secretary, during the
most recent plan year prior to such drug publication
date for which data are available.
``(C) Insulin.--The drug is a qualifying single
source drug described in subsection (e)(3).
``(2) Clarification.--In determining whether a qualifying
single source drug satisfies any of the criteria described in
paragraph (1), the Secretary shall, to the extent practicable,
use data that is aggregated across dosage forms and strengths
of the drug and not based on the specific formulation or
package size or package type of the drug.
``(3) Publication.--Not later than the selected drug
publication date with respect to an initial price applicability
year, the Secretary shall publish in the Federal Register a
list of negotiation-eligible drugs with respect to such
selected drug publication date.
``(e) Qualifying Single Source Drug.--For purposes of this part, the
term `qualifying single source drug' means any of the following:
``(1) Drug products.--A drug that--
``(A) is approved under section 505(c) of the Federal
Food, Drug, and Cosmetic Act and continues to be
marketed pursuant to such approval; and
``(B) is not the listed drug for any drug that is
approved and continues to be marketed under section
505(j) of such Act.
``(2) Biological products.--A biological product that--
``(A) is licensed under section 351(a) of the Public
Health Service Act, including any product that has been
deemed to be licensed under section 351 of such Act
pursuant to section 7002(e)(4) of the Biologics Price
Competition and Innovation Act of 2009, and continues
to be marketed under section 351 of such Act; and
``(B) is not the reference product for any biological
product that is licensed and continues to be marketed
under section 351(k) of such Act.
``(3) Insulin product.--Notwithstanding paragraphs (1) and
(2), any insulin product that is approved under subsection (c)
or (j) of section 505 of the Federal Food, Drug, and Cosmetic
Act or licensed under subsection (a) or (k) of section 351 of
the Public Health Service Act and continues to be marketed
under such section 505 or 351, including any insulin product
that has been deemed to be licensed under section 351(a) of the
Public Health Service Act pursuant to section 7002(e)(4) of the
Biologics Price Competition and Innovation Act of 2009 and
continues to be marketed pursuant to such licensure.
For purposes of applying paragraphs (1) and (2), a drug or biological
product that is marketed by the same sponsor or manufacturer (or an
affiliate thereof or a cross-licensed producer or distributor) as the
listed drug or reference product described in such respective paragraph
shall not be taken into consideration.
``(f) Information on International Drug Prices.--For purposes of
determining which negotiation-eligible drugs to select under subsection
(a) and, in the case of such drugs that are selected drugs, to
determine the maximum fair price for such a drug and whether such
maximum fair price should be renegotiated under section 1194, the
Secretary shall use data relating to the AIM price with respect to such
drug as available or provided to the Secretary and shall on an ongoing
basis request from manufacturers of selected drugs information on the
AIM price of such a drug.
``(g) New-entrant Negotiation-eligible Drugs.--
``(1) In general.--For purposes of this part, the term `new-
entrant negotiation-eligible drug' means, with respect to the
selected drug publication date with respect to an initial price
applicability year, a qualifying single source drug--
``(A) that is first approved or licensed, as
described in paragraph (1), (2), or (3) of subsection
(e), as applicable, during the year preceding such
selected drug publication date; and
``(B) that the Secretary determines under paragraph
(2) is likely to be included as a negotiation-eligible
drug with respect to the subsequent selected drug
publication date.
``(2) Determination.--In the case of a qualifying single
source drug that meets the criteria described in subparagraph
(A) of paragraph (1), with respect to an initial price
applicability year, if the wholesale acquisition cost at which
such drug is first marketed in the United States is equal to or
greater than the median household income (as determined
according to the most recent data collected by the United
States Census Bureau), the Secretary shall determine before the
selected drug publication date with respect to the initial
price applicability year, if the drug is likely to be included
as a negotiation-eligible drug with respect to the subsequent
selected drug publication date, based on the projected spending
under title XVIII or in the United States on such drug. For
purposes of this paragraph the term `United States' includes
the 50 States, the District of Columbia, and the territories of
the United States.
``SEC. 1193. MANUFACTURER AGREEMENTS.
``(a) In General.--For purposes of section 1191(a)(2), the Secretary
shall enter into agreements with manufacturers of selected drugs with
respect to a price applicability period, by not later than June 15
following the selected drug publication date with respect to such
selected drug, under which--
``(1) during the voluntary negotiation period for the initial
price applicability year for the selected drug, the Secretary
and manufacturer, in accordance with section 1194, negotiate to
determine (and, by not later than the last date of such period
and in accordance with subsection (c), agree to) a maximum fair
price for such selected drug of the manufacturer in order to
provide access to such price--
``(A) to fair price eligible individuals who with
respect to such drug are described in subparagraph (A)
of section 1191(c)(1) and are furnished or dispensed
such drug during, subject to subparagraph (2), the
price applicability period; and
``(B) to hospitals, physicians, and other providers
of services and suppliers with respect to fair price
eligible individuals who with respect to such drug are
described in subparagraph (B) of such section and are
furnished or administered such drug during, subject to
subparagraph (2), the price applicability period;
``(2) the Secretary and the manufacturer shall, in accordance
with a process and during a period specified by the Secretary
pursuant to rulemaking, renegotiate (and, by not later than the
last date of such period and in accordance with subsection (c),
agree to) the maximum fair price for such drug if the Secretary
determines that there is a material change in any of the
factors described in section 1194(d) relating to the drug,
including changes in the AIM price for such drug, in order to
provide access to such maximum fair price (as so
renegotiated)--
``(A) to fair price eligible individuals who with
respect to such drug are described in subparagraph (A)
of section 1191(c)(1) and are furnished or dispensed
such drug during any year during the price
applicability period (beginning after such
renegotiation) with respect to such selected drug; and
``(B) to hospitals, physicians, and other providers
of services and suppliers with respect to fair price
eligible individuals who with respect to such drug are
described in subparagraph (B) of such section and are
furnished or administered such drug during any year
described in subparagraph (A);
``(3) the maximum fair price (including as renegotiated
pursuant to paragraph (2)), with respect to such a selected
drug, shall be provided to fair price eligible individuals, who
with respect to such drug are described in subparagraph (A) of
section 1191(c)(1), at the pharmacy or by a mail order service
at the point-of-sale of such drug;
``(4) the manufacturer, subject to subsection (d), submits to
the Secretary, in a form and manner specified by the
Secretary--
``(A) for the voluntary negotiation period for the
price applicability period (and, if applicable, before
any period of renegotiation specified pursuant to
paragraph (2)) with respect to such drug all
information that the Secretary requires to carry out
the negotiation (or renegotiation process) under this
part, including information described in section
1192(f) and section 1194(d)(1); and
``(B) on an ongoing basis, information on changes in
prices for such drug that would affect the AIM price
for such drug or otherwise provide a basis for
renegotiation of the maximum fair price for such drug
pursuant to paragraph (2);
``(5) the manufacturer agrees that in the case the selected
drug of a manufacturer is a drug described in subsection (c),
the manufacturer will, in accordance with such subsection, make
any payment required under such subsection with respect to such
drug; and
``(6) the manufacturer complies with requirements imposed by
the Secretary for purposes of administering the program,
including with respect to the duties described in section 1196.
``(b) Agreement in Effect Until Drug Is No Longer a Selected Drug.--
An agreement entered into under this section shall be effective, with
respect to a drug, until such drug is no longer considered a selected
drug under section 1192(c).
``(c) Special Rule for Certain Selected Drugs Without AIM Price.--
``(1) In general.--In the case of a selected drug for which
there is no AIM price available with respect to the initial
price applicability year for such drug and for which an AIM
price becomes available beginning with respect to a subsequent
plan year during the price applicability period for such drug,
if the Secretary determines that the amount described in
paragraph (2)(A) for a unit of such drug is greater than the
amount described in paragraph (2)(B) for a unit of such drug,
then by not later than one year after the date of such
determination, the manufacturer of such selected drug shall pay
to the Treasury an amount equal to the product of--
``(A) the difference between such amount described in
paragraph (2)(A) for a unit of such drug and such
amount described in paragraph (2)(B) for a unit of such
drug; and
``(B) the number of units of such drug sold in the
United States, including the 50 States, the District of
Columbia, and the territories of the United States,
during the period described in paragraph (2)(B).
``(2) Amounts described.--
``(A) Weighted average price before aim price
available.--For purposes of paragraph (1), the amount
described in this subparagraph for a selected drug
described in such paragraph, is the amount equal to the
weighted average manufacturer price (as defined in
section 1927(k)(1)) for such dosage strength and form
for the drug during the period beginning with the first
plan year for which the drug is included on the list of
negotiation-eligible drugs published under section
1192(d) and ending with the last plan year during the
price applicability period for such drug with respect
to which there is no AIM price available for such drug.
``(B) Amount multiplier after aim price available.--
For purposes of paragraph (1), the amount described in
this subparagraph for a selected drug described in such
paragraph, is the amount equal to 200 percent of the
AIM price for such drug with respect to the first plan
year during the price applicability period for such
drug with respect to which there is an AIM price
available for such drug.
``(d) Confidentiality of Information.--Information submitted to the
Secretary under this part by a manufacturer of a selected drug that is
proprietary information of such manufacturer (as determined by the
Secretary) may be used only by the Secretary or disclosed to and used
by the Comptroller General of the United States or the Medicare Payment
Advisory Commission for purposes of carrying out this part.
``(e) Regulations.--
``(1) In general.--The Secretary shall, pursuant to
rulemaking, specify, in accordance with paragraph (2), the
information that must be submitted under subsection (a)(4).
``(2) Information specified.--Information described in
paragraph (1), with respect to a selected drug, shall include
information on sales of the drug (by the manufacturer of the
drug or by another entity under license or other agreement with
the manufacturer, with respect to the sales of such drug,
regardless of the name under which the drug is sold) in any
foreign country that is part of the AIM price. The Secretary
shall verify, to the extent practicable, such sales from
appropriate officials of the government of the foreign country
involved.
``(f) Compliance With Requirements for Administration of Program.--
Each manufacturer with an agreement in effect under this section shall
comply with requirements imposed by the Secretary or a third party with
a contract under section 1196(c)(1), as applicable, for purposes of
administering the program.
``SEC. 1194. NEGOTIATION AND RENEGOTIATION PROCESS.
``(a) In General.--For purposes of this part, under an agreement
under section 1193 between the Secretary and a manufacturer of a
selected drug, with respect to the period for which such agreement is
in effect and in accordance with subsections (b) and (c), the Secretary
and the manufacturer--
``(1) shall during the voluntary negotiation period with
respect to the initial price applicability year for such drug,
in accordance with this section, negotiate a maximum fair price
for such drug for the purpose described in section 1193(a)(1);
and
``(2) as applicable pursuant to section 1193(a)(2) and in
accordance with the process specified pursuant to such section,
renegotiate such maximum fair price for such drug for the
purpose described in such section.
``(b) Negotiating Methodology and Objective.--
``(1) In general.--The Secretary shall develop and use a
consistent methodology for negotiations under subsection (a)
that, in accordance with paragraph (2) and subject to paragraph
(3), achieves the lowest maximum fair price for each selected
drug while appropriately rewarding innovation.
``(2) Prioritizing factors.--In considering the factors
described in subsection (d) in negotiating (and, as applicable,
renegotiating) the maximum fair price for a selected drug, the
Secretary shall, to the extent practicable, consider all of the
available factors listed but shall prioritize the following
factors:
``(A) Research and development costs.--The factor
described in paragraph (1)(A) of subsection (d).
``(B) Market data.--The factor described in paragraph
(1)(B) of such subsection.
``(C) Unit costs of production and distribution.--The
factor described in paragraph (1)(C) of such
subsection.
``(D) Comparison to existing therapeutic
alternatives.--The factor described in paragraph (2)(A)
of such subsection.
``(3) Requirement.--
``(A) In general.--In negotiating the maximum fair
price of a selected drug, with respect to an initial
price applicability year for the selected drug, and, as
applicable, in renegotiating the maximum fair price for
such drug, with respect to a subsequent year during the
price applicability period for such drug, in the case
that the manufacturer of the selected drug offers under
the negotiation or renegotiation, as applicable, a
price for such drug that is not more than the target
price described in subparagraph (B) for such drug for
the respective year, the Secretary shall agree under
such negotiation or renegotiation, respectively, to
such offered price as the maximum fair price.
``(B) Target price.--
``(i) In general.--Subject to clause (ii),
the target price described in this subparagraph
for a selected drug with respect to a year, is
the average price (which shall be the net
average price, if practicable, and volume-
weighted, if practicable) for a unit of such
drug for sales of such drug, as computed
(across different dosage forms and strengths of
the drug and not based on the specific
formulation or package size or package type of
the drug) in the applicable country described
in section 1191(c)(3)(B) with respect to such
drug that, with respect to such year, has the
lowest average price for such drug as compared
to the average prices (as so computed) of such
drug with respect to such year in the other
applicable countries described in such section
with respect to such drug.
``(ii) Selected drugs without aim price.--In
applying this paragraph in the case of
negotiating the maximum fair price of a
selected drug for which there is no AIM price
available with respect to the initial price
applicability year for such drug, or, as
applicable, renegotiating the maximum fair
price for such drug with respect to a
subsequent year during the price applicability
period for such drug before the first plan year
for which there is an AIM price available for
such drug, the target price described in this
subparagraph for such drug and respective year
is the amount that is 80 percent of the average
manufacturer price (as defined in section
1927(k)(1)) for such drug and year.
``(4) Annual report.--After the completion of each voluntary
negotiation period, the Secretary shall submit to Congress a
report on the maximum fair prices negotiated (or, as
applicable, renegotiated) for such period. Such report shall
include information on how such prices so negotiated (or
renegotiated) meet the requirements of this part, including the
requirements of this subsection.
``(c) Limitation.--
``(1) In general.--Subject to paragraph (2), the maximum fair
price negotiated (including as renegotiated) under this section
for a selected drug, with respect to each plan year during a
price applicability period for such drug, shall not exceed 120
percent of the AIM price applicable to such drug with respect
to such year.
``(2) Selected drugs without aim price.--In the case of a
selected drug for which there is no AIM price available with
respect to the initial price applicability year for such drug,
for each plan year during the price applicability period before
the first plan year for which there is an AIM price available
for such drug, the maximum fair price negotiated (including as
renegotiated) under this section for the selected drug shall
not exceed the amount equal to 85 percent of the average
manufacturer price for the drug with respect to such year.
``(d) Considerations.--For purposes of negotiating and, as
applicable, renegotiating (including for purposes of determining
whether to renegotiate) the maximum fair price of a selected drug under
this part with the manufacturer of the drug, the Secretary shall,
consistent with subsection (b)(2), take into consideration the
following factors:
``(1) Manufacturer-specific information.--The following
information, including as submitted by the manufacturer:
``(A) Research and development costs of the
manufacturer for the drug and the extent to which the
manufacturer has recouped research and development
costs.
``(B) Market data for the drug, including the
distribution of sales across different programs and
purchasers and projected future revenues for the drug.
``(C) Unit costs of production and distribution of
the drug.
``(D) Prior Federal financial support for novel
therapeutic discovery and development with respect to
the drug.
``(E) Data on patents and on existing and pending
exclusivity for the drug.
``(F) National sales data for the drug.
``(G) Information on clinical trials for the drug in
the United States or in applicable countries described
in section 1191(c)(3)(B).
``(2) Information on alternative products.--The following
information:
``(A) The extent to which the drug represents a
therapeutic advance as compared to existing therapeutic
alternatives and, to the extent such information is
available, the costs of such existing therapeutic
alternatives.
``(B) Information on approval by the Food and Drug
Administration of alternative drug products.
``(C) Information on comparative effectiveness
analysis for such products, taking into consideration
the effects of such products on specific populations,
such as individuals with disabilities, the elderly,
terminally ill, children, and other patient
populations.
In considering information described in subparagraph (C), the
Secretary shall not use evidence or findings from comparative
clinical effectiveness research in a manner that treats
extending the life of an elderly, disabled, or terminally ill
individual as of lower value than extending the life of an
individual who is younger, nondisabled, or not terminally ill.
Nothing in the previous sentence shall affect the application
or consideration of an AIM price for a selected drug.
``(3) Foreign sales information.--To the extent available on
a timely basis, including as provided by a manufacturer of the
selected drug or otherwise, information on sales of the
selected drug in each of the countries described in section
1191(c)(3)(B).
``(4) Additional information.--Information submitted to the
Secretary, in accordance with a process specified by the
Secretary, by other parties that are affected by the
establishment of a maximum fair price for the selected drug.
``(e) Request for Information.--For purposes of negotiating and, as
applicable, renegotiating (including for purposes of determining
whether to renegotiate) the maximum fair price of a selected drug under
this part with the manufacturer of the drug, with respect to a price
applicability period, and other relevant data for purposes of this
section--
``(1) the Secretary shall, not later than the selected drug
publication date with respect to the initial price
applicability year of such period, request drug pricing
information from the manufacturer of such selected drug,
including information described in subsection (d)(1); and
``(2) by not later than October 1 following the selected drug
publication date, the manufacturer of such selected drug shall
submit to the Secretary such requested information in such form
and manner as the Secretary may require.
The Secretary shall request, from the manufacturer or others, such
additional information as may be needed to carry out the negotiation
and renegotiation process under this section.
``SEC. 1195. PUBLICATION OF MAXIMUM FAIR PRICES.
``(a) In General.--With respect to an initial price applicability
year and selected drug with respect to such year, not later than April
1 of the plan year prior to such initial price applicability year, the
Secretary shall publish in the Federal Register the maximum fair price
for such drug negotiated under this part with the manufacturer of such
drug.
``(b) Updates.--
``(1) Subsequent year maximum fair prices.--For a selected
drug, for each plan year subsequent to the initial price
applicability year for such drug with respect to which an
agreement for such drug is in effect under section 1193, the
Secretary shall publish in the Federal Register--
``(A) subject to subparagraph (B), the amount equal
to the maximum fair price published for such drug for
the previous year, increased by the annual percentage
increase in the consumer price index for all urban
consumers (all items; U.S. city average) as of
September of such previous year; or
``(B) in the case the maximum fair price for such
drug was renegotiated, for the first year for which
such price as so renegotiated applies, such
renegotiated maximum fair price.
``(2) Prices negotiated after deadline.--In the case of a
selected drug with respect to an initial price applicability
year for which the maximum fair price is determined under this
part after the date of publication under this section, the
Secretary shall publish such maximum fair price in the Federal
Register by not later than 30 days after the date such maximum
price is so determined.
``SEC. 1196. ADMINISTRATIVE DUTIES; COORDINATION PROVISIONS.
``(a) Administrative Duties.--
``(1) In general.--For purposes of section 1191, the
administrative duties described in this section are the
following:
``(A) The establishment of procedures (including
through agreements with manufacturers under this part,
contracts with prescription drug plans under part D of
title XVIII and MA-PD plans under part C of such title,
and agreements under section 1197 with group health
plans and health insurance issuers of health insurance
coverage offered in the individual or group market)
under which the maximum fair price for a selected drug
is provided to fair price eligible individuals, who
with respect to such drug are described in subparagraph
(A) of section 1191(c)(1), at pharmacies or by mail
order service at the point-of-sale of the drug for the
applicable price period for such drug and providing
that such maximum fair price is used for determining
cost-sharing under such plans or coverage for the
selected drug.
``(B) The establishment of procedures (including
through agreements with manufacturers under this part
and contracts with hospitals, physicians, and other
providers of services and suppliers and agreements
under section 1197 with group health plans and health
insurance issuers of health insurance coverage offered
in the individual or group market) under which, in the
case of a selected drug furnished or administered by
such a hospital, physician, or other provider of
services or supplier to fair price eligible individuals
(who with respect to such drug are described in
subparagraph (B) of section 1191(c)(1)), the maximum
fair price for the selected drug is provided to such
hospitals, physicians, and other providers of services
and suppliers (as applicable) with respect to such
individuals and providing that such maximum fair price
is used for determining cost-sharing under the
respective part, plan, or coverage for the selected
drug.
``(C) The establishment of procedures (including
through agreements and contracts described in
subparagraphs (A) and (B)) to ensure that, not later
than 90 days after the dispensing of a selected drug to
a fair price eligible individual by a pharmacy or mail
order service, the pharmacy or mail order service is
reimbursed for an amount equal to the difference
between--
``(i) the lesser of--
``(I) the wholesale acquisition cost
of the drug;
``(II) the national average drug
acquisition cost of the drug; and
``(III) any other similar
determination of pharmacy acquisition
costs of the drug, as determined by the
Secretary; and
``(ii) the maximum fair price for the drug.
``(D) The establishment of procedures to ensure that
the maximum fair price for a selected drug is applied
before--
``(i) any coverage or financial assistance
under other health benefit plans or programs
that provide coverage or financial assistance
for the purchase or provision of prescription
drug coverage on behalf of fair price eligible
individuals as the Secretary may specify; and
``(ii) any other discounts.
``(E) The establishment of procedures to enter into
appropriate agreements and protocols for the ongoing
computation of AIM prices for selected drugs,
including, to the extent possible, to compute the AIM
price for selected drugs and including by providing
that the manufacturer of such a selected drug should
provide information for such computation not later than
3 months after the first date of the voluntary
negotiation period for such selected drug.
``(F) The establishment of procedures to compute and
apply the maximum fair price across different strengths
and dosage forms of a selected drug and not based on
the specific formulation or package size or package
type of the drug.
``(G) The establishment of procedures to negotiate
and apply the maximum fair price in a manner that does
not include any dispensing or similar fee.
``(H) The establishment of procedures to carry out
the provisions of this part, as applicable, with
respect to--
``(i) fair price eligible individuals who are
enrolled under a prescription drug plan under
part D of title XVIII or an MA-PD plan under
part C of such title;
``(ii) fair price eligible individuals who
are enrolled under a group health plan or
health insurance coverage offered by a health
insurance issuer in the individual or group
market with respect to which there is an
agreement in effect under section 1197; and
``(iii) fair price eligible individuals who
are entitled to benefits under part A of title
XVIII or enrolled under part B of such title.
``(I) The establishment of a negotiation process and
renegotiation process in accordance with section 1194,
including a process for acquiring information described
in subsection (d) of such section and determining
amounts described in subsection (b) of such section.
``(J) The provision of a reasonable dispute
resolution mechanism to resolve disagreements between
manufacturers, fair price eligible individuals, and the
third party with a contract under subsection (c)(1).
``(2) Monitoring compliance.--
``(A) In general.--The Secretary shall monitor
compliance by a manufacturer with the terms of an
agreement under section 1193, including by establishing
a mechanism through which violations of such terms may
be reported.
``(B) Notification.--If a third party with a contract
under subsection (c)(1) determines that the
manufacturer is not in compliance with such agreement,
the third party shall notify the Secretary of such
noncompliance for appropriate enforcement under section
4192 of the Internal Revenue Code of 1986 or section
1198, as applicable.
``(b) Collection of Data.--
``(1) From prescription drug plans and ma-pd plans.--The
Secretary may collect appropriate data from prescription drug
plans under part D of title XVIII and MA-PD plans under part C
of such title in a timeframe that allows for maximum fair
prices to be provided under this part for selected drugs.
``(2) From health plans.--The Secretary may collect
appropriate data from group health plans or health insurance
issuers offering group or individual health insurance coverage
in a timeframe that allows for maximum fair prices to be
provided under this part for selected drugs.
``(c) Contract With Third Parties.--
``(1) In general.--The Secretary may enter into a contract
with 1 or more third parties to administer the requirements
established by the Secretary in order to carry out this part.
At a minimum, the contract with a third party under the
preceding sentence shall require that the third party--
``(A) receive and transmit information between the
Secretary, manufacturers, and other individuals or
entities the Secretary determines appropriate;
``(B) receive, distribute, or facilitate the
distribution of funds of manufacturers to appropriate
individuals or entities in order to meet the
obligations of manufacturers under agreements under
this part;
``(C) provide adequate and timely information to
manufacturers, consistent with the agreement with the
manufacturer under this part, as necessary for the
manufacturer to fulfill its obligations under this
part; and
``(D) permit manufacturers to conduct periodic
audits, directly or through contracts, of the data and
information used by the third party to determine
discounts for applicable drugs of the manufacturer
under the program.
``(2) Performance requirements.--The Secretary shall
establish performance requirements for a third party with a
contract under paragraph (1) and safeguards to protect the
independence and integrity of the activities carried out by the
third party under the program under this part.
``SEC. 1197. VOLUNTARY PARTICIPATION BY OTHER HEALTH PLANS.
``(a) Agreement to Participate Under Program.--
``(1) In general.--Subject to paragraph (2), under the
program under this part the Secretary shall be treated as
having in effect an agreement with a group health plan or
health insurance issuer offering health insurance coverage (as
such terms are defined in section 2791 of the Public Health
Service Act), with respect to a price applicability period and
a selected drug with respect to such period--
``(A) with respect to such selected drug furnished or
dispensed at a pharmacy or by mail order service if
coverage is provided under such plan or coverage during
such period for such selected drug as so furnished or
dispensed; and
``(B) with respect to such selected drug furnished or
administered by a hospital, physician, or other
provider of services or supplier if coverage is
provided under such plan or coverage during such period
for such selected drug as so furnished or administered.
``(2) Opting out of agreement.--The Secretary shall not be
treated as having in effect an agreement under the program
under this part with a group health plan or health insurance
issuer offering health insurance coverage with respect to a
price applicability period and a selected drug with respect to
such period if such a plan or issuer affirmatively elects,
through a process specified by the Secretary, not to
participate under the program with respect to such period and
drug.
``(b) Publication of Election.--With respect to each price
applicability period and each selected drug with respect to such
period, the Secretary and the Secretary of Labor and the Secretary of
the Treasury, as applicable, shall make public a list of each group
health plan and each issuer of health insurance coverage, with respect
to which coverage is provided under such plan or coverage for such
drug, that has elected under subsection (a) not to participate under
the program with respect to such period and drug.
``SEC. 1198. CIVIL MONETARY PENALTY.
``(a) Violations Relating To Offering of Maximum Fair Price.--Any
manufacturer of a selected drug that has entered into an agreement
under section 1193, with respect to a plan year during the price
applicability period for such drug, that does not provide access to a
price that is not more than the maximum fair price (or a lesser price)
for such drug for such year--
``(1) to a fair price eligible individual who with respect to
such drug is described in subparagraph (A) of section
1191(c)(1) and who is furnished or dispensed such drug during
such year; or
``(2) to a hospital, physician, or other provider of services
or supplier with respect to fair price eligible individuals who
with respect to such drug is described in subparagraph (B) of
such section and is furnished or administered such drug by such
hospital, physician, or provider or supplier during such year;
shall be subject to a civil monetary penalty equal to ten times the
amount equal to the difference between the price for such drug made
available for such year by such manufacturer with respect to such
individual or hospital, physician, provider, or supplier and the
maximum fair price for such drug for such year.
``(b) Violations of Certain Terms of Agreement.--Any manufacturer of
a selected drug that has entered into an agreement under section 1193,
with respect to a plan year during the price applicability period for
such drug, that is in violation of a requirement imposed pursuant to
section 1193(a)(6) shall be subject to a civil monetary penalty of not
more than $1,000,000 for each such violation.
``(c) Application.--The provisions of section 1128A (other than
subsections (a) and (b)) shall apply to a civil monetary penalty under
this section in the same manner as such provisions apply to a penalty
or proceeding under section 1128A(a).
``SEC. 1199. MISCELLANEOUS PROVISIONS.
``(a) Paperwork Reduction Act.--Chapter 35 of title 44, United States
Code, shall not apply to data collected under this part.
``(b) National Academy of Medicine Study.--Not later than December
31, 2025, the National Academy of Medicine shall conduct a study, and
submit to Congress a report, on recommendations for improvements to the
program under this part, including the determination of the limits
applied under section 1194(c).
``(c) MedPAC Study.--Not later than December 31, 2025, the Medicare
Payment Advisory Commission shall conduct a study, and submit to
Congress a report, on the program under this part with respect to the
Medicare program under title XVIII, including with respect to the
effect of the program on individuals entitled to benefits or enrolled
under such title.
``(d) Limitation on Judicial Review.--The following shall not be
subject to judicial review:
``(1) The selection of drugs for publication under section
1192(a).
``(2) The determination of whether a drug is a negotiation-
eligible drug under section 1192(d).
``(3) The determination of the maximum fair price of a
selected drug under section 1194.
``(4) The determination of units of a drug for purposes of
section 1191(c)(3).
``(e) Coordination.--In carrying out this part with respect to group
health plans or health insurance coverage offered in the group market
that are subject to oversight by the Secretary of Labor or the
Secretary of the Treasury, the Secretary of Health and Human Services
shall coordinate with such respective Secretary.
``(f) Data Sharing.--The Secretary shall share with the Secretary of
the Treasury such information as is necessary to determine the tax
imposed by section 4192 of the Internal Revenue Code of 1986.''.
(b) Application of Maximum Fair Prices and Conforming Amendments.--
(1) Under medicare.--
(A) Application to payments under part b.--Section
1847A(b)(1)(B) of the Social Security Act (42 U.S.C.
1395w-3a(b)(1)(B)) is amended by inserting ``or in the
case of such a drug or biological that is a selected
drug (as defined in section 1192(c)), with respect to a
price applicability period (as defined in section
1191(b)(2)), 106 percent of the maximum fair price (as
defined in section 1191(c)(2) applicable for such drug
and a plan year during such period'' after ``paragraph
(4)''.
(B) Exception to part d non-interference.--Section
1860D-11(i) of the Social Security Act (42 U.S.C.
1395w-111(i)) is amended by inserting ``, except as
provided under part E of title XI'' after ``the
Secretary''.
(C) Application as negotiated price under part d.--
Section 1860D-2(d)(1) of the Social Security Act (42
U.S.C. 1395w-102(d)(1)) is amended--
(i) in subparagraph (B), by inserting ``,
subject to subparagraph (D),'' after
``negotiated prices''; and
(ii) by adding at the end the following new
subparagraph:
``(D) Application of maximum fair price for selected
drugs.--In applying this section, in the case of a
covered part D drug that is a selected drug (as defined
in section 1192(c)), with respect to a price
applicability period (as defined in section
1191(b)(2)), the negotiated prices used for payment (as
described in this subsection) shall be the maximum fair
price (as defined in section 1191(c)(2)) for such drug
and for each plan year during such period.''.
(D) Information from prescription drug plans and ma-
pd plans required.--
(i) Prescription drug plans.--Section 1860D-
12(b) of the Social Security Act (42 U.S.C.
1395w-112(b)) is amended by adding at the end
the following new paragraph:
``(8) Provision of information related to maximum fair
prices.--Each contract entered into with a PDP sponsor under
this part with respect to a prescription drug plan offered by
such sponsor shall require the sponsor to provide information
to the Secretary as requested by the Secretary in accordance
with section 1196(b).''.
(ii) MA-PD plans.--Section 1857(f)(3) of the
Social Security Act (42 U.S.C. 1395w-27(f)(3))
is amended by adding at the end the following
new subparagraph:
``(E) Provision of information related to maximum
fair prices.--Section 1860D-12(b)(8).''.
(2) Under group health plans and health insurance coverage.--
(A) PHSA.--Part A of title XXVII of the Public Health
Service Act is amended by inserting after section 2729
the following new section:
``SEC. 2729A. FAIR PRICE DRUG NEGOTIATION PROGRAM AND APPLICATION OF
MAXIMUM FAIR PRICES.
``(a) In General.--In the case of a group health plan or health
insurance issuer offering health insurance coverage that is treated
under section 1197 of the Social Security Act as having in effect an
agreement with the Secretary under the Fair Price Drug Negotiation
Program under part E of title XI of such Act, with respect to a price
applicability period (as defined in section 1191(b) of such Act) and a
selected drug (as defined in section 1192(c) of such Act) with respect
to such period with respect to which coverage is provided under such
plan or coverage--
``(1) the provisions of such part shall apply to the plans or
coverage offered by such plan or issuer, and to the individuals
enrolled under such plans or coverage, during such period, with
respect to such selected drug, in the same manner as such
provisions apply to prescription drug plans and MA-PD plans,
and to individuals enrolled under such prescription drug plans
and MA-PD plans;
``(2) the plan or issuer shall apply any cost-sharing
responsibilities under such plan or coverage, with respect to
such selected drug, by substituting the maximum fair price
negotiated under such part for such drug in lieu of the
contracted rate under such plan or coverage for such selected
drug; and
``(3) the Secretary shall apply the provisions of such part
to such plan, issuer, and coverage, and such individuals so
enrolled in such plans.
``(b) Notification Regarding Nonparticipation in Fair Drug Price
Negotiation Program.--A group health plan or a health insurance issuer
offering group or individual health insurance coverage shall publicly
disclose in a manner and in accordance with a process specified by the
Secretary any election made under section 1197 of the Social Security
Act by the plan or issuer to not participate in the Fair Drug Price
Negotiation Program under part E of title XI of such Act with respect
to a selected drug (as defined in section 1192(c) of such Act) for
which coverage is provided under such plan or coverage before the
beginning of the plan year for which such election was made.''.
(B) ERISA.--
(i) In general.--Subpart B of part 7 of
subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29
U.S.C. 1181 et. seq.) is amended by adding at
the end the following new section:
``SEC. 716. FAIR PRICE DRUG NEGOTIATION PROGRAM AND APPLICATION OF
MAXIMUM FAIR PRICES.
``(a) In General.--In the case of a group health plan or health
insurance issuer offering group health insurance coverage that is
treated under section 1197 of the Social Security Act as having in
effect an agreement with the Secretary under the Fair Price Drug
Negotiation Program under part E of title XI of such Act, with respect
to a price applicability period (as defined in section 1191(b) of such
Act) and a selected drug (as defined in section 1192(c) of such Act)
with respect to such period with respect to which coverage is provided
under such plan or coverage--
``(1) the provisions of such part shall apply to the plans or
coverage offered by such plan or issuer, and to the individuals
enrolled under such plans or coverage, during such period, with
respect to such selected drug, in the same manner as such
provisions apply to prescription drug plans and MA-PD plans,
and to individuals enrolled under such prescription drug plans
and MA-PD plans;
``(2) the plan or issuer shall apply any cost-sharing
responsibilities under such plan or coverage, with respect to
such selected drug, by substituting the maximum fair price
negotiated under such part for such drug in lieu of the
contracted rate under such plan or coverage for such selected
drug; and
``(3) the Secretary shall apply the provisions of such part
to such plan, issuer, and coverage, and such individuals so
enrolled in such plans.
``(b) Notification Regarding Nonparticipation in Fair Drug Price
Negotiation Program.--A group health plan or a health insurance issuer
offering group health insurance coverage shall publicly disclose in a
manner and in accordance with a process specified by the Secretary any
election made under section 1197 of the Social Security Act by the plan
or issuer to not participate in the Fair Drug Price Negotiation Program
under part E of title XI of such Act with respect to a selected drug
(as defined in section 1192(c) of such Act) for which coverage is
provided under such plan or coverage before the beginning of the plan
year for which such election was made.''.
(ii) Clerical amendment.--The table of
sections for part 7 of subtitle B of title I of
the Employee Retirement Income Security Act of
1974 is amended by adding at the end the
following:
``Sec. 716. Fair Price Drug Negotiation Program and application of
maximum fair prices.''.
(C) IRC.--
(i) In general.--Subchapter B of chapter 100
of the Internal Revenue Code of 1986 is amended
by adding at the end the following new section:
``SEC. 9816. FAIR PRICE DRUG NEGOTIATION PROGRAM AND APPLICATION OF
MAXIMUM FAIR PRICES.
``(a) In General.--In the case of a group health plan that is treated
under section 1197 of the Social Security Act as having in effect an
agreement with the Secretary under the Fair Price Drug Negotiation
Program under part E of title XI of such Act, with respect to a price
applicability period (as defined in section 1191(b) of such Act) and a
selected drug (as defined in section 1192(c) of such Act) with respect
to such period with respect to which coverage is provided under such
plan--
``(1) the provisions of such part shall apply, as
applicable--
``(A) if coverage of such selected drug is provided
under such plan if the drug is furnished or dispensed
at a pharmacy or by a mail order service, to the plan,
and to the individuals enrolled under such plan during
such period, with respect to such selected drug, in the
same manner as such provisions apply to prescription
drug plans and MA-PD plans, and to individuals enrolled
under such prescription drug plans and MA-PD plans
during such period; and
``(B) if coverage of such selected drug is provided
under such plan if the drug is furnished or
administered by a hospital, physician, or other
provider of services or supplier, to the plan, to the
individuals enrolled under such plan, and to hospitals,
physicians, and other providers of services and
suppliers during such period, with respect to such drug
in the same manner as such provisions apply to the
Secretary, to individuals entitled to benefits under
part A of title XVIII or enrolled under part B of such
title, and to hospitals, physicians, and other
providers and suppliers participating under title XVIII
during such period;
``(2) the plan shall apply any cost-sharing responsibilities
under such plan, with respect to such selected drug, by
substituting an amount not more than the maximum fair price
negotiated under such part E of title XI for such drug in lieu
of the drug price upon which the cost-sharing would have
otherwise applied; and
``(3) the Secretary shall apply the provisions of such part E
to such plan and such individuals so enrolled in such plan.
``(b) Notification Regarding Nonparticipation in Fair Drug Price
Negotiation Program.--A group health plan shall publicly disclose in a
manner and in accordance with a process specified by the Secretary any
election made under section 1197 of the Social Security Act by the plan
to not participate in the Fair Drug Price Negotiation Program under
part E of title XI of such Act with respect to a selected drug (as
defined in section 1192(c) of such Act) for which coverage is provided
under such plan before the beginning of the plan year for which such
election was made.''.
(ii) Application to retiree and certain small
group health plans.--Section 9831(a)(2) of the
Internal Revenue Code of 1986 is amended by
inserting ``other than with respect to section
9816,'' before ``any group health plan''.
(iii) Clerical amendment.--The table of
sections for subchapter B of chapter 100 of
such Code is amended by adding at the end the
following new item:
``Sec. 9816. Fair Price Drug Negotiation Program and application of
maximum fair prices.''.
SEC. 102. SELECTED DRUG MANUFACTURER EXCISE TAX IMPOSED DURING
NONCOMPLIANCE PERIODS.
(a) In General.--Subchapter E of chapter 32 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new section:
``SEC. 4192. SELECTED DRUGS DURING NONCOMPLIANCE PERIODS.
``(a) In General.--There is hereby imposed on the sale by the
manufacturer, producer, or importer of any selected drug during a day
described in subsection (b) a tax in an amount such that the applicable
percentage is equal to the ratio of--
``(1) such tax, divided by
``(2) the sum of such tax and the price for which so sold.
``(b) Noncompliance Periods.--A day is described in this subsection
with respect to a selected drug if it is a day during one of the
following periods:
``(1) The period beginning on the June 16th immediately
following the selected drug publication date and ending on the
first date during which the manufacturer of the drug has in
place an agreement described in subsection (a) of section 1193
of the Social Security Act with respect to such drug.
``(2) The period beginning on the April 1st immediately
following the June 16th described in paragraph (1) and ending
on the first date during which the manufacturer of the drug has
agreed to a maximum fair price under such agreement.
``(3) In the case of a selected drug with respect to which
the Secretary of Health and Human Services has specified a
renegotiation period under such agreement, the period beginning
on the first date after the last date of such renegotiation
period and ending on the first date during which the
manufacturer of the drug has agreed to a renegotiated maximum
fair price under such agreement.
``(4) With respect to information that is required to be
submitted to the Secretary of Health and Human Services under
such agreement, the period beginning on the date on which such
Secretary certifies that such information is overdue and ending
on the date that such information is so submitted.
``(5) In the case of a selected drug with respect to which a
payment is due under subsection (c) of such section 1193, the
period beginning on the date on which the Secretary of Health
and Human Services certifies that such payment is overdue and
ending on the date that such payment is made in full.
``(c) Applicable Percentage.--For purposes of this section, the term
`applicable percentage' means--
``(1) in the case of sales of a selected drug during the
first 90 days described in subsection (b) with respect to such
drug, 65 percent,
``(2) in the case of sales of such drug during the 91st day
through the 180th day described in subsection (b) with respect
to such drug, 75 percent,
``(3) in the case of sales of such drug during the 181st day
through the 270th day described in subsection (b) with respect
to such drug, 85 percent, and
``(4) in the case of sales of such drug during any subsequent
day, 95 percent.
``(d) Selected Drug.--For purposes of this section--
``(1) In general.--The term `selected drug' means any
selected drug (within the meaning of section 1192 of the Social
Security Act) which is manufactured or produced in the United
States or entered into the United States for consumption, use,
or warehousing.
``(2) United states.--The term `United States' has the
meaning given such term by section 4612(a)(4).
``(3) Coordination with rules for possessions of the united
states.--Rules similar to the rules of paragraphs (2) and (4)
of section 4132(c) shall apply for purposes of this section.
``(e) Other Definitions.--For purposes of this section, the terms
`selected drug publication date' and `maximum fair price' have the
meaning given such terms in section 1191 of the Social Security Act.
``(f) Anti-Abuse Rule.--In the case of a sale which was timed for the
purpose of avoiding the tax imposed by this section, the Secretary may
treat such sale as occurring during a day described in subsection
(b).''.
(b) No Deduction for Excise Tax Payments.--Section 275 of the
Internal Revenue Code of 1986 is amended by adding ``or by section
4192'' before the period at the end of subsection (a)(6).
(c) Conforming Amendments.--
(1) Section 4221(a) of the Internal Revenue Code of 1986 is
amended by inserting ``or 4192'' after ``section 4191''.
(2) Section 6416(b)(2) of such Code is amended by inserting
``or 4192'' after ``section 4191''.
(d) Clerical Amendments.--
(1) The heading of subchapter E of chapter 32 of the Internal
Revenue Code of 1986 is amended by striking ``Medical Devices''
and inserting ``Other Medical Products''.
(2) The table of subchapters for chapter 32 of such Code is
amended by striking the item relating to subchapter E and
inserting the following new item:
``subchapter e. other medical products''.
(3) The table of sections for subchapter E of chapter 32 of
such Code is amended by adding at the end the following new
item:
``Sec. 4192. Selected drugs during noncompliance periods.''.
(e) Effective Date.--The amendments made by this section shall apply
to sales after the date of the enactment of this Act.
TITLE II--MEDICARE PARTS B AND D PRESCRIPTION DRUG INFLATION REBATES
SEC. 201. MEDICARE PART B REBATE BY MANUFACTURERS.
(a) In General.--Section 1834 of the Social Security Act (42 U.S.C.
1395m) is amended by adding at the end the following new subsection:
``(x) Rebate by Manufacturers for Single Source Drugs With Prices
Increasing Faster Than Inflation.--
``(1) Requirements.--
``(A) Secretarial provision of information.--Not
later than 6 months after the end of each calendar
quarter beginning on or after July 1, 2021, the
Secretary shall, for each part B rebatable drug, report
to each manufacturer of such part B rebatable drug the
following for such calendar quarter:
``(i) Information on the total number of
units of the billing and payment code described
in subparagraph (A)(i) of paragraph (3) with
respect to such drug and calendar quarter.
``(ii) Information on the amount (if any) of
the excess average sales price increase
described in subparagraph (A)(ii) of such
paragraph for such drug and calendar quarter.
``(iii) The rebate amount specified under
such paragraph for such part B rebatable drug
and calendar quarter.
``(B) Manufacturer requirement.--For each calendar
quarter beginning on or after July 1, 2021, the
manufacturer of a part B rebatable drug shall, for such
drug, not later than 30 days after the date of receipt
from the Secretary of the information described in
subparagraph (A) for such calendar quarter, provide to
the Secretary a rebate that is equal to the amount
specified in paragraph (3) for such drug for such
calendar quarter.
``(2) Part b rebatable drug defined.--
``(A) In general.--In this subsection, the term `part
B rebatable drug' means a single source drug or
biological (as defined in subparagraph (D) of section
1847A(c)(6)), including a biosimilar biological product
(as defined in subparagraph (H) of such section), paid
for under this part, except such term shall not include
such a drug or biological--
``(i) if the average total allowed charges
for a year per individual that uses such a drug
or biological, as determined by the Secretary,
are less than, subject to subparagraph (B),
$100; or
``(ii) that is a vaccine described in
subparagraph (A) or (B) of section 1861(s)(10).
``(B) Increase.--The dollar amount applied under
subparagraph (A)(i)--
``(i) for 2022, shall be the dollar amount
specified under such subparagraph for 2021,
increased by the percentage increase in the
consumer price index for all urban consumers
(United States city average) for the 12 month
period ending with June of the previous year;
and
``(ii) for a subsequent year, shall be the
dollar amount specified in this clause (or
clause (i)) for the previous year, increased by
the percentage increase in the consumer price
index for all urban consumers (United States
city average) for the 12 month period ending
with June of the previous year.
Any dollar amount specified under this subparagraph
that is not a multiple of $10 shall be rounded to the
nearest multiple of $10.
``(3) Rebate amount.--
``(A) In general.--For purposes of paragraph (1), the
amount specified in this paragraph for a part B
rebatable drug assigned to a billing and payment code
for a calendar quarter is, subject to paragraph (4),
the amount equal to the product of--
``(i) subject to subparagraphs (B) and (G),
the total number of units of the billing and
payment code for such part B rebatable drug
furnished under this part during the calendar
quarter; and
``(ii) the amount (if any) by which--
``(I) the payment amount under
subparagraph (B) or (C) of section
1847A(b)(1), as applicable, for such
part B rebatable drug during the
calendar quarter; exceeds
``(II) the inflation-adjusted payment
amount determined under subparagraph
(C) for such part B rebatable drug
during the calendar quarter.
``(B) Excluded units.--For purposes of subparagraph
(A)(i), the total number of units of the billing and
payment code for each part B rebatable drug furnished
during a calendar quarter shall not include--
``(i) units packaged into the payment for a
procedure or service under section 1833(t) or
under section 1833(i) (instead of separately
payable under such respective section);
``(ii) units included under the single
payment system for renal dialysis services
under section 1881(b)(14); or
``(iii) units of a part B rebatable drug of a
manufacturer furnished to an individual, if
such manufacturer, with respect to the
furnishing of such units of such drug, provides
for discounts under section 340B of the Public
Health Service Act or for rebates under section
1927.
``(C) Determination of inflation-adjusted payment
amount.--The inflation-adjusted payment amount
determined under this subparagraph for a part B
rebatable drug for a calendar quarter is--
``(i) the payment amount for the billing and
payment code for such drug in the payment
amount benchmark quarter (as defined in
subparagraph (D)); increased by
``(ii) the percentage by which the rebate
period CPI-U (as defined in subparagraph (F))
for the calendar quarter exceeds the benchmark
period CPI-U (as defined in subparagraph (E)).
``(D) Payment amount benchmark quarter.--The term
`payment amount benchmark quarter' means the calendar
quarter beginning January 1, 2016.
``(E) Benchmark period cpi-u.--The term `benchmark
period CPI-U' means the consumer price index for all
urban consumers (United States city average) for July
2015.
``(F) Rebate period cpi-u.--The term `rebate period
CPI-U' means, with respect to a calendar quarter
described in subparagraph (C), the greater of the
benchmark period CPI-U and the consumer price index for
all urban consumers (United States city average) for
the first month of the calendar quarter that is two
calendar quarters prior to such described calendar
quarter.
``(G) Counting units.--
``(i) Cut-off period to count units.--For
purposes of subparagraph (A)(i), subject to
clause (ii), to count the total number of
billing units for a part B rebatable drug for a
quarter, the Secretary may use a cut-off period
in order to exclude from such total number of
billing units for such quarter claims for
services furnished during such quarter that
were not processed at an appropriate time prior
to the end of the cut-off period.
``(ii) Counting units for claims processed
after cut-off period.--If the Secretary uses a
cut-off period pursuant to clause (i), in the
case of units of a part B rebatable drug
furnished during a quarter but pursuant to
application of such cut-off period excluded for
purposes of subparagraph (A)(i) from the total
number of billing units for the drug for such
quarter, the Secretary shall count such units
of such drug so furnished in the total number
of billing units for such drug for a subsequent
quarter, as the Secretary determines
appropriate.
``(4) Special treatment of certain drugs and exemption.--
``(A) Subsequently approved drugs.--Subject to
subparagraph (B), in the case of a part B rebatable
drug first approved or licensed by the Food and Drug
Administration after July 1, 2015, clause (i) of
paragraph (3)(C) shall be applied as if the term
`payment amount benchmark quarter' were defined under
paragraph (3)(D) as the third full calendar quarter
after the day on which the drug was first marketed and
clause (ii) of paragraph (3)(C) shall be applied as if
the term `benchmark period CPI-U' were defined under
paragraph (3)(E) as if the reference to `July 2015'
under such paragraph were a reference to `the first
month of the first full calendar quarter after the day
on which the drug was first marketed'.
``(B) Timeline for provision of rebates for
subsequently approved drugs.--In the case of a part B
rebatable drug first approved or licensed by the Food
and Drug Administration after July 1, 2015, paragraph
(1)(B) shall be applied as if the reference to `July 1,
2021' under such paragraph were a reference to the
later of the 6th full calendar quarter after the day on
which the drug was first marketed or July 1, 2021.
``(C) Exemption for shortages.--The Secretary may
reduce or waive the rebate amount under paragraph
(1)(B) with respect to a part B rebatable drug that is
described as currently in shortage on the shortage list
in effect under section 506E of the Federal Food, Drug,
and Cosmetic Act or in the case of other exigent
circumstances, as determined by the Secretary.
``(D) Selected drugs.--In the case of a part B
rebatable drug that is a selected drug (as defined in
section 1192(c)) for a price applicability period (as
defined in section 1191(b)(2)) and is determined
(pursuant to such section 1192(c)) to no longer be a
selected drug, for each applicable year beginning after
the price applicability period with respect to such
drug, clause (i) of paragraph (3)(C) shall be applied
as if the term `payment amount benchmark quarter' were
defined under paragraph (3)(D) as the calendar quarter
beginning January 1 of the last year beginning during
such price applicability period with respect to such
selected drug and clause (ii) of paragraph (3)(C) shall
be applied as if the term `benchmark period CPI-U' were
defined under paragraph (3)(E) as if the reference to
`July 2015' under such paragraph were a reference to
the July of the year preceding such last year.
``(5) Application to beneficiary coinsurance.--In the case of
a part B rebatable drug, if the payment amount for a quarter
exceeds the inflation adjusted payment for such quarter--
``(A) in computing the amount of any coinsurance
applicable under this title to an individual with
respect to such drug, the computation of such
coinsurance shall be based on the inflation-adjusted
payment amount determined under paragraph (3)(C) for
such part B rebatable drug; and
``(B) the amount of such coinsurance is equal to 20
percent of such inflation-adjusted payment amount so
determined.
``(6) Rebate deposits.--Amounts paid as rebates under
paragraph (1)(B) shall be deposited into the Federal
Supplementary Medical Insurance Trust Fund established under
section 1841.
``(7) Civil money penalty.--If a manufacturer of a part B
rebatable drug has failed to comply with the requirements under
paragraph (1)(B) for such drug for a calendar quarter, the
manufacturer shall be subject to, in accordance with a process
established by the Secretary pursuant to regulations, a civil
money penalty in an amount equal to at least 125 percent of the
amount specified in paragraph (3) for such drug for such
calendar quarter. The provisions of section 1128A (other than
subsections (a) (with respect to amounts of penalties or
additional assessments) and (b)) shall apply to a civil money
penalty under this paragraph in the same manner as such
provisions apply to a penalty or proceeding under section
1128A(a).
``(8) Study and report.--
``(A) Study.--The Secretary shall conduct a study of
the feasibility of and operational issues involved with
the following:
``(i) Including multiple source drugs (as
defined in section 1847A(c)(6)(C)) in the
rebate system under this subsection.
``(ii) Including drugs and biologicals paid
for under MA plans under part C in the rebate
system under this subsection.
``(iii) Including drugs excluded under
paragraph (2)(A) and units of the billing and
payment code of the drugs excluded under
paragraph (3)(B) in the rebate system under
this subsection.
``(B) Report.--Not later than 3 years after the date
of the enactment of this subsection, the Secretary
shall submit to Congress a report on the study
conducted under subparagraph (A).
``(9) Application to multiple source drugs.--The Secretary
may, based on the report submitted under paragraph (8) and
pursuant to rulemaking, apply the provisions of this subsection
to multiple source drugs (as defined in section
1847A(c)(6)(C)), including, for purposes of determining the
rebate amount under paragraph (3), by calculating manufacturer-
specific average sales prices for the benchmark period and the
rebate period.''.
(b) Amounts Payable; Cost-Sharing.--Section 1833 of the Social
Security Act (42 U.S.C. 1395l) is amended--
(1) in subsection (a)--
(A) in paragraph (1)--
(i) in subparagraph (S), by striking ``with
respect to'' and inserting ``subject to
subparagraph (DD), with respect to'';
(ii) by striking ``and (CC)'' and inserting
``(CC)''; and
(iii) by inserting before the semicolon at
the end the following: ``, and (DD) with
respect to a part B rebatable drug (as defined
in paragraph (2) of section 1834(x)) for which
the payment amount for a calendar quarter under
paragraph (3)(A)(ii)(I) of such section for
such quarter exceeds the inflation-adjusted
payment under paragraph (3)(A)(ii)(II) of such
section for such quarter, the amounts paid
shall be the difference between (i) the payment
amount under paragraph (3)(A)(ii)(I) of such
section for such drug, and (ii) 20 percent of
the inflation-adjusted payment amount under
paragraph (3)(A)(ii)(II) of such section for
such drug'';
(B) by adding at the end of the flush left matter
following paragraph (9), the following:
``For purposes of applying paragraph (1)(DD), subsections (i)(9) and
(t)(3)(H), and section 1834(x)(5), the Secretary shall make such
estimates and use such data as the Secretary determines appropriate,
and notwithstanding any other provision of law, may do so by program
instruction or otherwise.'';
(2) in subsection (i), by adding at the end the following new
paragraph:
``(9) In the case of a part B rebatable drug (as defined in paragraph
(2) of section 1834(x)) furnished on or after July 1, 2021, under the
system under this subsection, in lieu of calculation of coinsurance and
the amount of payment otherwise applicable under this subsection, the
provisions of section 1834(x)(5), paragraph (1)(DD) of subsection (a),
and the flush left matter following paragraph (9) of subsection (a),
shall, as determined appropriate by the Secretary, apply under this
subsection in the same manner as such provisions of section 1834(x)(5)
and subsection (a) apply under such section and subsection.''; and
(3) in subsection (t)(3), by adding at the end the following
new subparagraph:
``(H) Part b rebatable drugs.--In the case of a part
B rebatable drug (as defined in paragraph (2) of
section 1834(x)) furnished on or after July 1, 2021,
under the system under this subsection, in lieu of
calculation of coinsurance and the amount of payment
otherwise applicable under this subsection, the
provisions of section 1834(x)(5), paragraph (1)(DD) of
subsection (a), and the flush left matter following
paragraph (9) of subsection (a), shall, as determined
appropriate by the Secretary, apply under this
subsection in the same manner as such provisions of
section 1834(x)(5) and subsection (a) apply under such
section and subsection.''.
(c) Conforming Amendment to Part B ASP Calculation.--Section
1847A(c)(3) of the Social Security Act (42 U.S.C. 1395w-3a(c)(3)) is
amended by inserting ``or section 1834(x)'' after ``section 1927''.
SEC. 202. MEDICARE PART D REBATE BY MANUFACTURERS.
(a) In General.--Part D of title XVIII of the Social Security Act is
amended by inserting after section 1860D-14A (42 U.S.C. 1395w-114a) the
following new section:
``SEC. 1860D-14B. MANUFACTURER REBATE FOR CERTAIN DRUGS WITH PRICES
INCREASING FASTER THAN INFLATION.
``(a) In General.--
``(1) In general.--Subject to the provisions of this section,
in order for coverage to be available under this part for a
part D rebatable drug (as defined in subsection (h)(1)) of a
manufacturer (as defined in section 1927(k)(5)) dispensed
during an applicable year, the manufacturer must have entered
into and have in effect an agreement described in subsection
(b).
``(2) Authorizing coverage for drugs not covered under
agreements.--Paragraph (1) shall not apply to the dispensing of
a covered part D drug if--
``(A) the Secretary has made a determination that the
availability of the drug is essential to the health of
beneficiaries under this part; or
``(B) the Secretary determines that in the period
beginning on January 1, 2022, and ending on December
31, 2022, there were extenuating circumstances.
``(3) Applicable year.--For purposes of this section the term
`applicable year' means a year beginning with 2022.
``(b) Agreements.--
``(1) Terms of agreement.--An agreement described in this
subsection, with respect to a manufacturer of a part D
rebatable drug, is an agreement under which the following shall
apply:
``(A) Secretarial provision of information.--Not
later than 9 months after the end of each applicable
year with respect to which the agreement is in effect,
the Secretary, for each part D rebatable drug of the
manufacturer, shall report to the manufacturer the
following for such year:
``(i) Information on the total number of
units (as defined in subsection (h)(2)) for
each dosage form and strength with respect to
such part D rebatable drug and year.
``(ii) Information on the amount (if any) of
the excess average manufacturer price increase
described in subsection (c)(1)(B) for each
dosage form and strength with respect to such
drug and year.
``(iii) The rebate amount specified under
subsection (c) for each dosage form and
strength with respect to such drug and year.
``(B) Manufacturer requirements.--For each applicable
year with respect to which the agreement is in effect,
the manufacturer of the part D rebatable drug, for each
dosage form and strength with respect to such drug, not
later than 30 days after the date of receipt from the
Secretary of the information described in subparagraph
(A) for such year, shall provide to the Secretary a
rebate that is equal to the amount specified in
subsection (c) for such dosage form and strength with
respect to such drug for such year.
``(2) Length of agreement.--
``(A) In general.--An agreement under this section,
with respect to a part D rebatable drug, shall be
effective for an initial period of not less than one
year and shall be automatically renewed for a period of
not less than one year unless terminated under
subparagraph (B).
``(B) Termination.--
``(i) By secretary.--The Secretary may
provide for termination of an agreement under
this section for violation of the requirements
of the agreement or other good cause shown.
Such termination shall not be effective earlier
than 30 days after the date of notice of such
termination. The Secretary shall provide, upon
request, a manufacturer with a hearing
concerning such a termination, but such hearing
shall not delay the effective date of the
termination.
``(ii) By a manufacturer.--A manufacturer may
terminate an agreement under this section for
any reason. Any such termination shall be
effective, with respect to a plan year--
``(I) if the termination occurs
before January 30 of the plan year, as
of the day after the end of the plan
year; and
``(II) if the termination occurs on
or after January 30 of the plan year,
as of the day after the end of the
succeeding plan year.
``(C) Effectiveness of termination.--Any termination
under this paragraph shall not affect rebates due under
the agreement under this section before the effective
date of its termination.
``(D) Delay before reentry.--In the case of any
agreement under this section with a manufacturer that
is terminated in a plan year, the Secretary may not
enter into another such agreement with the manufacturer
(or a successor manufacturer) before the subsequent
plan year, unless the Secretary finds good cause for an
earlier reinstatement of such an agreement.
``(c) Rebate Amount.--
``(1) In general.--For purposes of this section, the amount
specified in this subsection for a dosage form and strength
with respect to a part D rebatable drug and applicable year is,
subject to subparagraphs (B) and (C) of paragraph (5), the
amount equal to the product of--
``(A) the total number of units of such dosage form
and strength with respect to such part D rebatable drug
and year; and
``(B) the amount (if any) by which--
``(i) the annual manufacturer price (as
determined in paragraph (2)) paid for such
dosage form and strength with respect to such
part D rebatable drug for the year; exceeds
``(ii) the inflation-adjusted payment amount
determined under paragraph (3) for such dosage
form and strength with respect to such part D
rebatable drug for the year.
``(2) Determination of annual manufacturer price.--The annual
manufacturer price determined under this paragraph for a dosage
form and strength, with respect to a part D rebatable drug and
an applicable year, is the sum of the products of--
``(A) the average manufacturer price (as defined in
subsection (h)(6)) of such dosage form and strength, as
calculated for a unit of such drug, with respect to
each of the calendar quarters of such year; and
``(B) the ratio of--
``(i) the total number of units of such
dosage form and strength dispensed during each
such calendar quarter of such year; to
``(ii) the total number of units of such
dosage form and strength dispensed during such
year.
``(3) Determination of inflation-adjusted payment amount.--
The inflation-adjusted payment amount determined under this
paragraph for a dosage form and strength with respect to a part
D rebatable drug for an applicable year, subject to
subparagraphs (A) and (D) of paragraph (5), is--
``(A) the benchmark year manufacturer price
determined under paragraph (4) for such dosage form and
strength with respect to such drug and an applicable
year; increased by
``(B) the percentage by which the applicable year
CPI-U (as defined in subsection (h)(5)) for the
applicable year exceeds the benchmark period CPI-U (as
defined in subsection (h)(4)).
``(4) Determination of benchmark year manufacturer price.--
The benchmark year manufacturer price determined under this
paragraph for a dosage form and strength, with respect to a
part D rebatable drug and an applicable year, is the sum of the
products of--
``(A) the average manufacturer price (as defined in
subsection (h)(6)) of such dosage form and strength, as
calculated for a unit of such drug, with respect to
each calendar quarter of the payment amount benchmark
year (as defined in subsection (h)(3)); and
``(B) the ratio of--
``(i) the total number of units of such
dosage form and strength dispensed during such
calendar quarter of the payment amount
benchmark year; to
``(ii) the total number of units of such
dosage form and strength dispensed during the
payment amount benchmark year.
``(5) Special treatment of certain drugs and exemption.--
``(A) Subsequently approved drugs.--In the case of a
part D rebatable drug first approved or licensed by the
Food and Drug Administration after January 1, 2016,
subparagraphs (A) and (B) of paragraph (4) shall be
applied as if the term `payment amount benchmark year'
were defined under subsection (h)(3) as the first
calendar year beginning after the day on which the drug
was first marketed by any manufacturer and subparagraph
(B) of paragraph (3) shall be applied as if the term
`benchmark period CPI-U' were defined under subsection
(h)(4) as if the reference to `January 2016' under such
subsection were a reference to `January of the first
year beginning after the date on which the drug was
first marketed by any manufacturer'.
``(B) Exemption for shortages.--The Secretary may
reduce or waive the rebate under paragraph (1) with
respect to a part D rebatable drug that is described as
currently in shortage on the shortage list in effect
under section 506E of the Federal Food, Drug, and
Cosmetic Act or in the case of other exigent
circumstances, as determined by the Secretary.
``(C) Treatment of new formulations.--
``(i) In general.--In the case of a part D
rebatable drug that is a line extension of a
part D rebatable drug that is an oral solid
dosage form, the Secretary shall establish a
formula for determining the amount specified in
this subsection with respect to such part D
rebatable drug and an applicable year with
consideration of the original part D rebatable
drug.
``(ii) Line extension defined.--In this
subparagraph, the term `line extension' means,
with respect to a part D rebatable drug, a new
formulation of the drug (as determined by the
Secretary), such as an extended release
formulation, but does not include an abuse-
deterrent formulation of the drug (as
determined by the Secretary), regardless of
whether such abuse-deterrent formulation is an
extended release formulation.
``(D) Selected drugs.--In the case of a part D
rebatable drug that is a selected drug (as defined in
section 1192(c)) for a price applicability period (as
defined in section 1191(b)(2)) and is determined
(pursuant to such section 1192(c)) to no longer be a
selected drug, for each applicable year beginning after
the price applicability period with respect to such
drug, subparagraphs (A) and (B) of paragraph (4) shall
be applied as if the term `payment amount benchmark
year' were defined under subsection (h)(3) as the last
year beginning during such price applicability period
with respect to such selected drug and subparagraph (B)
of paragraph (3) shall be applied as if the term
`benchmark period CPI-U' were defined under subsection
(h)(4) as if the reference to `January 2016' under such
subsection were a reference to January of the last year
beginning during such price applicability period with
respect to such drug.
``(d) Rebate Deposits.--Amounts paid as rebates under subsection (c)
shall be deposited into the Medicare Prescription Drug Account in the
Federal Supplementary Medical Insurance Trust Fund established under
section 1841.
``(e) Information.--For purposes of carrying out this section, the
Secretary shall use information submitted by manufacturers under
section 1927(b)(3).
``(f) Civil Money Penalty.--In the case of a manufacturer of a part D
rebatable drug with an agreement in effect under this section who has
failed to comply with the terms of the agreement under subsection
(b)(1)(B) with respect to such drug for an applicable year, the
Secretary may impose a civil money penalty on such manufacturer in an
amount equal to 125 percent of the amount specified in subsection (c)
for such drug for such year. The provisions of section 1128A (other
than subsections (a) (with respect to amounts of penalties or
additional assessments) and (b)) shall apply to a civil money penalty
under this subsection in the same manner as such provisions apply to a
penalty or proceeding under section 1128A(a).
``(g) Judicial Review.--There shall be no judicial review of the
following:
``(1) The determination of units under this section.
``(2) The determination of whether a drug is a part D
rebatable drug under this section.
``(3) The calculation of the rebate amount under this
section.
``(h) Definitions.--In this section:
``(1) Part d rebatable drug defined.--
``(A) In general.--The term `part D rebatable drug'
means a drug or biological that would (without
application of this section) be a covered part D drug,
except such term shall, with respect to an applicable
year, not include such a drug or biological if the
average annual total cost under this part for such year
per individual who uses such a drug or biological, as
determined by the Secretary, is less than, subject to
subparagraph (B), $100, as determined by the Secretary
using the most recent data available or, if data is not
available, as estimated by the Secretary.
``(B) Increase.--The dollar amount applied under
subparagraph (A)--
``(i) for 2023, shall be the dollar amount
specified under such subparagraph for 2022,
increased by the percentage increase in the
consumer price index for all urban consumers
(United States city average) for the 12-month
period beginning with January of 2022; and
``(ii) for a subsequent year, shall be the
dollar amount specified in this subparagraph
for the previous year, increased by the
percentage increase in the consumer price index
for all urban consumers (United States city
average) for the 12-month period beginning with
January of the previous year.
Any dollar amount specified under this subparagraph
that is not a multiple of $10 shall be rounded to the
nearest multiple of $10.
``(2) Unit defined.--The term `unit' means, with respect to a
part D rebatable drug, the lowest identifiable quantity (such
as a capsule or tablet, milligram of molecules, or grams) of
the part D rebatable drug that is dispensed to individuals
under this part.
``(3) Payment amount benchmark year.--The term `payment
amount benchmark year' means the year beginning January 1,
2016.
``(4) Benchmark period cpi-u.--The term `benchmark period
CPI-U' means the consumer price index for all urban consumers
(United States city average) for January 2016.
``(5) Applicable year cpi-u.--The term `applicable year CPI-
U' means, with respect to an applicable year, the consumer
price index for all urban consumers (United States city
average) for January of such year.
``(6) Average manufacturer price.--The term `average
manufacturer price' has the meaning, with respect to a part D
rebatable drug of a manufacturer, given such term in section
1927(k)(1), with respect to a covered outpatient drug of a
manufacturer for a rebate period under section 1927.''.
(b) Conforming Amendment to Part B ASP Calculation.--Section
1847A(c)(3) of the Social Security Act (42 U.S.C. 1395w-3a(c)(3)), as
amended by section 201(c), is further amended by striking ``section
1927 or section 1834(x)'' and inserting ``section 1927, section
1834(x), or section 1860D-14B''.
TITLE III--PART D IMPROVEMENTS AND MAXIMUM OUT-OF-POCKET CAP FOR
MEDICARE BENEFICIARIES
SEC. 301. MEDICARE PART D BENEFIT REDESIGN.
(a) Benefit Structure Redesign.--Section 1860D-2(b) of the Social
Security Act (42 U.S.C. 1395w-102(b)) is amended--
(1) in paragraph (2)--
(A) in subparagraph (A), in the matter preceding
clause (i), by inserting ``for a year preceding 2022
and for costs above the annual deductible specified in
paragraph (1) and up to the annual out-of-pocket
threshold specified in paragraph (4)(B) for 2022 and
each subsequent year'' after ``paragraph (3)'';
(B) in subparagraph (C)--
(i) in clause (i), in the matter preceding
subclause (I), by inserting ``for a year
preceding 2022,'' after ``paragraph (4),''; and
(ii) in clause (ii)(III), by striking ``and
each subsequent year'' and inserting ``and
2021''; and
(C) in subparagraph (D)--
(i) in clause (i)--
(I) in the matter preceding subclause
(I), by inserting ``for a year
preceding 2022,'' after ``paragraph
(4),''; and
(II) in subclause (I)(bb), by
striking ``a year after 2018'' and
inserting ``each of years 2018 through
2021''; and
(ii) in clause (ii)(V), by striking ``2019
and each subsequent year'' and inserting ``each
of years 2019 through 2021'';
(2) in paragraph (3)(A)--
(A) in the matter preceding clause (i), by inserting
``for a year preceding 2022,'' after ``and (4),''; and
(B) in clause (ii), by striking ``for a subsequent
year'' and inserting ``for each of years 2007 through
2021''; and
(3) in paragraph (4)--
(A) in subparagraph (A)--
(i) in clause (i)--
(I) by redesignating subclauses (I)
and (II) as items (aa) and (bb),
respectively, and moving the margin of
each such redesignated item 2 ems to
the right;
(II) in the matter preceding item
(aa), as redesignated by subclause (I),
by striking ``is equal to the greater
of--'' and inserting ``is equal to--
``(I) for a year preceding 2022, the
greater of--'';
(III) by striking the period at the
end of item (bb), as redesignated by
subclause (I), and inserting ``; and'';
and
(IV) by adding at the end the
following:
``(II) for 2022 and each succeeding
year, $0.''; and
(ii) in clause (ii), by striking ``clause
(i)(I)'' and inserting ``clause (i)(I)(aa)'';
(B) in subparagraph (B)--
(i) in clause (i)--
(I) in subclause (V), by striking
``or'' at the end;
(II) in subclause (VI)--
(aa) by striking ``for a
subsequent year'' and inserting
``for 2021''; and
(bb) by striking the period
at the end and inserting a
semicolon; and
(III) by adding at the end the
following new subclauses:
``(VII) for 2022, is equal to $2,000;
or
``(VIII) for a subsequent year, is
equal to the amount specified in this
subparagraph for the previous year,
increased by the annual percentage
increase described in paragraph (6) for
the year involved.''; and
(ii) in clause (ii), by striking ``clause
(i)(II)'' and inserting ``clause (i)'';
(C) in subparagraph (C)(i), by striking ``and for
amounts'' and inserting ``and, for a year preceding
2022, for amounts''; and
(D) in subparagraph (E), by striking ``In applying''
and inserting ``For each of years 2011 through 2021, in
applying''.
(b) Decreasing Reinsurance Payment Amount.--Section 1860D-15(b)(1) of
the Social Security Act (42 U.S.C. 1395w-115(b)(1)) is amended by
inserting after ``80 percent'' the following: ``(or, with respect to a
coverage year after 2021, 20 percent)''.
(c) Manufacturer Discount Program.--
(1) In general.--Part D of title XVIII of the Social Security
Act (42 U.S.C. 1395w-101 et seq.), as amended by section 202,
is further amended by inserting after section 1860D-14B the
following new section:
``SEC. 1860D-14C. MANUFACTURER DISCOUNT PROGRAM.
``(a) Establishment.--The Secretary shall establish a manufacturer
discount program (in this section referred to as the `program'). Under
the program, the Secretary shall enter into agreements described in
subsection (b) with manufacturers and provide for the performance of
the duties described in subsection (c). The Secretary shall establish a
model agreement for use under the program by not later than January 1,
2021, in consultation with manufacturers, and allow for comment on such
model agreement.
``(b) Terms of Agreement.--
``(1) In general.--
``(A) Agreement.--An agreement under this section
shall require the manufacturer to provide applicable
beneficiaries access to discounted prices for
applicable drugs of the manufacturer that are dispensed
on or after January 1, 2022.
``(B) Provision of discounted prices at the point-of-
sale.--The discounted prices described in subparagraph
(A) shall be provided to the applicable beneficiary at
the pharmacy or by the mail order service at the point-
of-sale of an applicable drug.
``(C) Timing of agreement.--
``(i) Special rule for 2022.--In order for an
agreement with a manufacturer to be in effect
under this section with respect to the period
beginning on January 1, 2022, and ending on
December 31, 2022, the manufacturer shall enter
into such agreement not later than 30 days
after the date of the establishment of a model
agreement under subsection (a).
``(ii) 2023 and subsequent years.--In order
for an agreement with a manufacturer to be in
effect under this section with respect to plan
year 2023 or a subsequent plan year, the
manufacturer shall enter into such agreement
(or such agreement shall be renewed under
paragraph (4)(A)) not later than January 30 of
the preceding year.
``(2) Provision of appropriate data.--Each manufacturer with
an agreement in effect under this section shall collect and
have available appropriate data, as determined by the
Secretary, to ensure that it can demonstrate to the Secretary
compliance with the requirements under the program.
``(3) Compliance with requirements for administration of
program.--Each manufacturer with an agreement in effect under
this section shall comply with requirements imposed by the
Secretary or a third party with a contract under subsection
(d)(3), as applicable, for purposes of administering the
program, including any determination under subparagraph (A) of
subsection (c)(1) or procedures established under such
subsection (c)(1).
``(4) Length of agreement.--
``(A) In general.--An agreement under this section
shall be effective for an initial period of not less
than 12 months and shall be automatically renewed for a
period of not less than 1 year unless terminated under
subparagraph (B).
``(B) Termination.--
``(i) By the secretary.--The Secretary may
provide for termination of an agreement under
this section for a knowing and willful
violation of the requirements of the agreement
or other good cause shown. Such termination
shall not be effective earlier than 30 days
after the date of notice to the manufacturer of
such termination. The Secretary shall provide,
upon request, a manufacturer with a hearing
concerning such a termination, and such hearing
shall take place prior to the effective date of
the termination with sufficient time for such
effective date to be repealed if the Secretary
determines appropriate.
``(ii) By a manufacturer.--A manufacturer may
terminate an agreement under this section for
any reason. Any such termination shall be
effective, with respect to a plan year--
``(I) if the termination occurs
before January 30 of a plan year, as of
the day after the end of the plan year;
and
``(II) if the termination occurs on
or after January 30 of a plan year, as
of the day after the end of the
succeeding plan year.
``(iii) Effectiveness of termination.--Any
termination under this subparagraph shall not
affect discounts for applicable drugs of the
manufacturer that are due under the agreement
before the effective date of its termination.
``(iv) Notice to third party.--The Secretary
shall provide notice of such termination to a
third party with a contract under subsection
(d)(3) within not less than 30 days before the
effective date of such termination.
``(c) Duties Described.--The duties described in this subsection are
the following:
``(1) Administration of program.--Administering the program,
including--
``(A) the determination of the amount of the
discounted price of an applicable drug of a
manufacturer;
``(B) the establishment of procedures under which
discounted prices are provided to applicable
beneficiaries at pharmacies or by mail order service at
the point-of-sale of an applicable drug;
``(C) the establishment of procedures to ensure that,
not later than the applicable number of calendar days
after the dispensing of an applicable drug by a
pharmacy or mail order service, the pharmacy or mail
order service is reimbursed for an amount equal to the
difference between--
``(i) the negotiated price of the applicable
drug; and
``(ii) the discounted price of the applicable
drug;
``(D) the establishment of procedures to ensure that
the discounted price for an applicable drug under this
section is applied before any coverage or financial
assistance under other health benefit plans or programs
that provide coverage or financial assistance for the
purchase or provision of prescription drug coverage on
behalf of applicable beneficiaries as the Secretary may
specify; and
``(E) providing a reasonable dispute resolution
mechanism to resolve disagreements between
manufacturers, applicable beneficiaries, and the third
party with a contract under subsection (d)(3).
``(2) Monitoring compliance.--
``(A) In general.--The Secretary shall monitor
compliance by a manufacturer with the terms of an
agreement under this section.
``(B) Notification.--If a third party with a contract
under subsection (d)(3) determines that the
manufacturer is not in compliance with such agreement,
the third party shall notify the Secretary of such
noncompliance for appropriate enforcement under
subsection (e).
``(3) Collection of data from prescription drug plans and ma-
pd plans.--The Secretary may collect appropriate data from
prescription drug plans and MA-PD plans in a timeframe that
allows for discounted prices to be provided for applicable
drugs under this section.
``(d) Administration.--
``(1) In general.--Subject to paragraph (2), the Secretary
shall provide for the implementation of this section, including
the performance of the duties described in subsection (c).
``(2) Limitation.--In providing for the implementation of
this section, the Secretary shall not receive or distribute any
funds of a manufacturer under the program.
``(3) Contract with third parties.--The Secretary shall enter
into a contract with 1 or more third parties to administer the
requirements established by the Secretary in order to carry out
this section. At a minimum, the contract with a third party
under the preceding sentence shall require that the third
party--
``(A) receive and transmit information between the
Secretary, manufacturers, and other individuals or
entities the Secretary determines appropriate;
``(B) receive, distribute, or facilitate the
distribution of funds of manufacturers to appropriate
individuals or entities in order to meet the
obligations of manufacturers under agreements under
this section;
``(C) provide adequate and timely information to
manufacturers, consistent with the agreement with the
manufacturer under this section, as necessary for the
manufacturer to fulfill its obligations under this
section; and
``(D) permit manufacturers to conduct periodic
audits, directly or through contracts, of the data and
information used by the third party to determine
discounts for applicable drugs of the manufacturer
under the program.
``(4) Performance requirements.--The Secretary shall
establish performance requirements for a third party with a
contract under paragraph (3) and safeguards to protect the
independence and integrity of the activities carried out by the
third party under the program under this section.
``(5) Implementation.--Notwithstanding any other provision of
law, the Secretary may implement the program under this section
by program instruction or otherwise.
``(6) Administration.--Chapter 35 of title 44, United States
Code, shall not apply to the program under this section.
``(e) Enforcement.--
``(1) Audits.--Each manufacturer with an agreement in effect
under this section shall be subject to periodic audit by the
Secretary.
``(2) Civil money penalty.--
``(A) In general.--The Secretary may impose a civil
money penalty on a manufacturer that fails to provide
applicable beneficiaries discounts for applicable drugs
of the manufacturer in accordance with such agreement
for each such failure in an amount the Secretary
determines is equal to the sum of--
``(i) the amount that the manufacturer would
have paid with respect to such discounts under
the agreement, which will then be used to pay
the discounts which the manufacturer had failed
to provide; and
``(ii) 25 percent of such amount.
``(B) Application.--The provisions of section 1128A
(other than subsections (a) and (b)) shall apply to a
civil money penalty under this paragraph in the same
manner as such provisions apply to a penalty or
proceeding under section 1128A(a).
``(f) Clarification Regarding Availability of Other Covered Part D
Drugs.--Nothing in this section shall prevent an applicable beneficiary
from purchasing a covered part D drug that is not an applicable drug
(including a generic drug or a drug that is not on the formulary of the
prescription drug plan or MA-PD plan that the applicable beneficiary is
enrolled in).
``(g) Definitions.--In this section:
``(1) Applicable beneficiary.--The term `applicable
beneficiary' means an individual who, on the date of dispensing
a covered part D drug--
``(A) is enrolled in a prescription drug plan or an
MA-PD plan;
``(B) is not enrolled in a qualified retiree
prescription drug plan; and
``(C) has incurred costs for covered part D drugs in
the year that are equal to or exceed the annual
deductible specified in section 1860D-2(b)(1) for such
year.
``(2) Applicable drug.--The term `applicable drug', with
respect to an applicable beneficiary--
``(A) means a covered part D drug--
``(i) approved under a new drug application
under section 505(c) of the Federal Food, Drug,
and Cosmetic Act or, in the case of a biologic
product, licensed under section 351 of the
Public Health Service Act; and
``(ii)(I) if the PDP sponsor of the
prescription drug plan or the MA organization
offering the MA-PD plan uses a formulary, which
is on the formulary of the prescription drug
plan or MA-PD plan that the applicable
beneficiary is enrolled in;
``(II) if the PDP sponsor of the prescription
drug plan or the MA organization offering the
MA-PD plan does not use a formulary, for which
benefits are available under the prescription
drug plan or MA-PD plan that the applicable
beneficiary is enrolled in; or
``(III) is provided through an exception or
appeal; and
``(B) does not include a selected drug (as defined in
section 1192(c)) during a price applicability period
(as defined in section 1191(b)(2)) with respect to such
drug.
``(3) Applicable number of calendar days.--The term
`applicable number of calendar days' means--
``(A) with respect to claims for reimbursement
submitted electronically, 14 days; and
``(B) with respect to claims for reimbursement
submitted otherwise, 30 days.
``(4) Discounted price.--
``(A) In general.--The term `discounted price' means,
with respect to an applicable drug of a manufacturer
furnished during a year to an applicable beneficiary--
``(i) who has not incurred costs for covered
part D drugs in the year that are equal to or
exceed the annual out-of-pocket threshold
specified in section 1860D-2(b)(4)(B)(i) for
the year, 90 percent of the negotiated price of
such drug; and
``(ii) who has incurred such costs in the
year that are equal to or exceed such threshold
for the year, 70 percent of the negotiated
price of such drug.
``(B) Clarification.--Nothing in this section shall
be construed as affecting the responsibility of an
applicable beneficiary for payment of a dispensing fee
for an applicable drug.
``(C) Special case for certain claims.--
``(i) Claims spanning deductible.--In the
case where the entire amount of the negotiated
price of an individual claim for an applicable
drug with respect to an applicable beneficiary
does not fall at or above the annual deductible
specified in section 1860D-2(b)(1) for the
year, the manufacturer of the applicable drug
shall provide the discounted price under this
section on only the portion of the negotiated
price of the applicable drug that falls at or
above such annual deductible.
``(ii) Claims spanning out-of-pocket
threshold.--In the case where the entire amount
of the negotiated price of an individual claim
for an applicable drug with respect to an
applicable beneficiary does not fall entirely
below or entirely above the annual out-of-
pocket threshold specified in section 1860D-
2(b)(4)(B)(i) for the year, the manufacturer of
the applicable drug shall provide the
discounted price--
``(I) in accordance with subparagraph
(A)(i) on the portion of the negotiated
price of the applicable drug that falls
below such threshold; and
``(II) in accordance with
subparagraph (A)(ii) on the portion of
such price of such drug that falls at
or above such threshold.
``(5) Manufacturer.--The term `manufacturer' means any entity
which is engaged in the production, preparation, propagation,
compounding, conversion, or processing of prescription drug
products, either directly or indirectly by extraction from
substances of natural origin, or independently by means of
chemical synthesis, or by a combination of extraction and
chemical synthesis. Such term does not include a wholesale
distributor of drugs or a retail pharmacy licensed under State
law.
``(6) Negotiated price.--The term `negotiated price' has the
meaning given such term in section 423.100 of title 42, Code of
Federal Regulations (or any successor regulation), except that,
with respect to an applicable drug, such negotiated price shall
not include any dispensing fee for the applicable drug.
``(7) Qualified retiree prescription drug plan.--The term
`qualified retiree prescription drug plan' has the meaning
given such term in section 1860D-22(a)(2).''.
(2) Sunset of medicare coverage gap discount program.--
Section 1860D-14A of the Social Security Act (42 U.S.C. 1395-
114a) is amended--
(A) in subsection (a), in the first sentence, by
striking ``The Secretary'' and inserting ``Subject to
subsection (h), the Secretary''; and
(B) by adding at the end the following new
subsection:
``(h) Sunset of Program.--
``(1) In general.--The program shall not apply with respect
to applicable drugs dispensed on or after January 1, 2022, and,
subject to paragraph (2), agreements under this section shall
be terminated as of such date.
``(2) Continued application for applicable drugs dispensed
prior to sunset.--The provisions of this section (including all
responsibilities and duties) shall continue to apply after
January 1, 2022, with respect to applicable drugs dispensed
prior to such date.''.
(3) Inclusion of actuarial value of manufacturer discounts in
bids.--Section 1860D-11 of the Social Security Act (42 U.S.C.
1395w-111) is amended--
(A) in subsection (b)(2)(C)(iii)--
(i) by striking ``assumptions regarding the
reinsurance'' and inserting ``assumptions
regarding--
``(I) the reinsurance''; and
(ii) by adding at the end the following:
``(II) for 2022 and each subsequent
year, the manufacturer discounts
provided under section 1860D-14C
subtracted from the actuarial value to
produce such bid; and''; and
(B) in subsection (c)(1)(C)--
(i) by striking ``an actuarial valuation of
the reinsurance'' and inserting ``an actuarial
valuation of--
``(i) the reinsurance'';
(ii) in clause (i), as inserted by clause (i)
of this subparagraph, by adding ``and'' at the
end; and
(iii) by adding at the end the following:
``(ii) for 2022 and each subsequent year, the
manufacturer discounts provided under section
1860D-14C;''.
(d) Conforming Amendments.--
(1) Section 1860D-2 of the Social Security Act (42 U.S.C.
1395w-102) is amended--
(A) in subsection (a)(2)(A)(i)(I), by striking ``, or
an increase in the initial'' and inserting ``or, for a
year preceding 2022, an increase in the initial'';
(B) in subsection (c)(1)(C)--
(i) in the subparagraph heading, by striking
``at initial coverage limit''; and
(ii) by inserting ``for a year preceding 2022
or the annual out-of-pocket threshold specified
in subsection (b)(4)(B) for the year for 2022
and each subsequent year'' after ``subsection
(b)(3) for the year'' each place it appears;
and
(C) in subsection (d)(1)(A), by striking ``or an
initial'' and inserting ``or, for a year preceding
2022, an initial''.
(2) Section 1860D-4(a)(4)(B)(i) of the Social Security Act
(42 U.S.C. 1395w-104(a)(4)(B)(i)) is amended by striking ``the
initial'' and inserting ``for a year preceding 2022, the
initial''.
(3) Section 1860D-14(a) of the Social Security Act (42 U.S.C.
1395w-114(a)) is amended--
(A) in paragraph (1)--
(i) in subparagraph (C), by striking ``The
continuation'' and inserting ``For a year
preceding 2022, the continuation'';
(ii) in subparagraph (D)(iii), by striking
``1860D-2(b)(4)(A)(i)(I)'' and inserting
``1860D-2(b)(4)(A)(i)(I)(aa)''; and
(iii) in subparagraph (E), by striking ``The
elimination'' and inserting ``For a year
preceding 2022, the elimination''; and
(B) in paragraph (2)--
(i) in subparagraph (C), by striking ``The
continuation'' and inserting ``For a year
preceding 2022, the continuation''; and
(ii) in subparagraph (E), by striking
``1860D-2(b)(4)(A)(i)(I)'' and inserting
``1860D-2(b)(4)(A)(i)(I)(aa)''.
(4) Section 1860D-21(d)(7) of the Social Security Act (42
U.S.C. 1395w-131(d)(7)) is amended by striking ``section 1860D-
2(b)(4)(B)(i)'' and inserting ``section 1860D-2(b)(4)(C)(i)''.
(5) Section 1860D-22(a)(2)(A) of the Social Security Act (42
U.S.C. 1395w-132(a)(2)(A)) is amended--
(A) by striking ``the value of any discount'' and
inserting the following: ``the value of--
``(i) for years prior to 2022, any
discount'';
(B) in clause (i), as inserted by subparagraph (A) of
this paragraph, by striking the period at the end and
inserting ``; and''; and
(C) by adding at the end the following new clause:
``(ii) for 2022 and each subsequent year, any
discount provided pursuant to section 1860D-
14C.''.
(6) Section 1860D-41(a)(6) of the Social Security Act (42
U.S.C. 1395w-151(a)(6)) is amended--
(A) by inserting ``for a year before 2022'' after
``1860D-2(b)(3)''; and
(B) by inserting ``for such year'' before the period.
(7) Section 1860D-43 of the Social Security Act (42 U.S.C.
1395w-153) is amended--
(A) in subsection (a)--
(i) by striking paragraph (1) and inserting
the following:
``(1) participate in--
``(A) for 2011 through 2021, the Medicare coverage
gap discount program under section 1860D-14A; and
``(B) for 2022 and each subsequent year, the
manufacturer discount program under section 1860D-
14C;'';
(ii) by striking paragraph (2) and inserting
the following:
``(2) have entered into and have in effect--
``(A) for 2011 through 2021, an agreement described
in subsection (b) of section 1860D-14A with the
Secretary; and
``(B) for 2022 and each subsequent year, an agreement
described in subsection (b) of section 1860D-14C with
the Secretary; and''; and
(iii) by striking paragraph (3) and inserting
the following:
``(3) have entered into and have in effect, under terms and
conditions specified by the Secretary--
``(A) for 2011 through 2021, a contract with a third
party that the Secretary has entered into a contract
with under subsection (d)(3) of section 1860D-14A; and
``(B) for 2022 and each subsequent year, a contract
with a third party that the Secretary has entered into
a contract with under subsection (d)(3) of section
1860D-14C.''; and
(B) by striking subsection (b) and inserting the
following:
``(b) Effective Date.--Paragraphs (1)(A), (2)(A), and (3)(A) of
subsection (a) shall apply to covered part D drugs dispensed under this
part on or after January 1, 2011, and before January 1, 2022, and
paragraphs (1)(B), (2)(B), and (3)(B) of such subsection shall apply to
covered part D drugs dispensed under this part on or after January 1,
2022.''.
(e) Effective Date.--The amendments made by this section shall apply
with respect to plan year 2022 and subsequent plan years.
SEC. 302. ALLOWING CERTAIN ENROLLEES OF PRESCRIPTION DRUGS PLANS AND
MA-PD PLANS UNDER MEDICARE PROGRAM TO SPREAD OUT
COST-SHARING UNDER CERTAIN CIRCUMSTANCES.
Section 1860D-2(b)(2) of the Social Security Act (42 U.S.C. 1395w-
102(b)(2)), as amended by section 301, is further amended--
(1) in subparagraph (A), by striking ``Subject to
subparagraphs (C) and (D)'' and inserting ``Subject to
subparagraphs (C), (D), and (E)''; and
(2) by adding at the end the following new subparagraph:
``(E) Enrollee option regarding spreading cost-
sharing.--The Secretary shall establish by regulation a
process under which, with respect to plan year 2022 and
subsequent plan years, a prescription drug plan or an
MA-PD plan shall, in the case of a part D eligible
individual enrolled with such plan for such plan year
who is not a subsidy eligible individual (as defined in
section 1860D-14(a)(3)) and with respect to whom the
plan projects that the dispensing of the first fill of
a covered part D drug to such individual will result in
the individual incurring costs that are equal to or
above the annual out-of-pocket threshold specified in
paragraph (4)(B) for such plan year, provide such
individual with the option to make the coinsurance
payment required under subparagraph (A) (for the
portion of such costs that are not above such annual
out-of-pocket threshold) in the form of periodic
installments over the remainder of such plan year.''.
SEC. 303. ESTABLISHMENT OF PHARMACY QUALITY MEASURES UNDER MEDICARE
PART D.
Section 1860D-4(c) of the Social Security Act (42 U.S.C. 1395w-
104(c)) is amended--
(1) by redesignating the paragraph (6), as added by section
50354 of division E of the Bipartisan Budget Act of 2018
(Public Law 115-123), as paragraph (7); and
(2) by adding at the end the following new paragraph:
``(8) Application of pharmacy quality measures.--
``(A) In general.--A PDP sponsor that implements
incentive payments to a pharmacy or price concessions
paid by a pharmacy based on quality measures shall use
measures established or approved by the Secretary under
subparagraph (B) with respect to payment for covered
part D drugs dispensed by such pharmacy.
``(B) Standard pharmacy quality measures.--The
Secretary shall establish or approve standard quality
measures from a consensus and evidence-based
organization for payments described in subparagraph
(A). Such measures shall focus on patient health
outcomes and be based on proven criteria measuring
pharmacy performance.
``(C) Effective date.--The requirement under
subparagraph (A) shall take effect for plan years
beginning on or after January 1, 2021, or such earlier
date specified by the Secretary if the Secretary
determines there are sufficient measures established or
approved under subparagraph (B) to meet the requirement
under subparagraph (A).''.
TITLE IV--PRESCRIPTION DRUG POLICIES FOR LOW-INCOME INDIVIDUALS
SEC. 401. ADJUSTMENTS TO MEDICARE PART D COST-SHARING REDUCTIONS FOR
LOW-INCOME INDIVIDUALS.
Section 1860D-14(a) of the Social Security Act (42 U.S.C. 1395w-
114(a)), as amended by section 301(d), is further amended--
(1) in paragraph (1)--
(A) in subparagraph (D)--
(i) in clause (ii)--
(I) by striking ``that does not
exceed $1 for'' and all that follows
through the period at the end and
inserting ``that does not exceed--
``(I) for plan years before plan year
2021--
``(aa) for a generic drug or
a preferred drug that is a
multiple source drug (as
defined in section
1927(k)(7)(A)(i)), $1 or, if
less, the copayment amount
applicable to an individual
under clause (iii); and
``(bb) for any other drug, $3
or, if less, the copayment
amount applicable to an
individual under clause (iii);
and''; and
(II) by adding at the end the
following new subclauses:
``(II) for plan year 2021--
``(aa) for a generic drug,
$0; and
``(bb) for any other drug,
the dollar amount applied under
this clause (after application
of paragraph (4)(A)) for plan
year 2020 for a drug described
in subclause (I)(bb); and
``(III) for a subsequent year, the
dollar amount applied under this clause
for the previous year for the drug,
increased by the annual percentage
increase in the consumer price index
(all items; U.S. city average) as of
September of such previous year.''; and
(ii) in clause (iii)--
(I) by striking ``does not exceed the
copayment amount specified under'' and
inserting ``does not exceed--
``(I) for plan years beginning before
plan year 2021, the copayment amount
specified under'';
(II) by striking the period at the
end and inserting ``; and''; and
(III) by adding at the end the
following new subclause:
``(II) for plan year 2021 and each
subsequent plan year, the copayment
amount applied under clause (ii) for
the drug and year involved.''; and
(B) by adding at the end the following new
subparagraph:
``(F) Rounding.--Any amount established under clause
(ii) of subparagraph (D), including as applied under
clause (iii) of such subparagraph or paragraph (2)(D),
that is based on an increase of $3, that is not a
multiple of 5 cents or 10 cents, respectively, shall be
rounded to the nearest multiple of 5 cents or 10 cents,
respectively.'';
(2) in paragraph (2)--
(A) in subparagraph (D)--
(i) by striking ``of coinsurance of'' and
inserting ``of--
``(i) for plan years before plan year 2021,
coinsurance of'';
(ii) by striking the period at the end and
inserting ``; and''; and
(iii) by adding at the end the following new
clause:
``(ii) for plan year 2021 and each subsequent
plan year, a copayment amount that does not
exceed the copayment amount applied under
paragraph (1)(D)(ii) for the drug and year
involved.''; and
(B) in subparagraph (E)--
(i) by striking ``subsection (c), the
substitution for'' and inserting ``subsection
(c)--
``(i) for plan years before plan year 2021,
the substitution for'';
(ii) by striking the period at the end and
inserting ``; and''; and
(iii) by adding at the end the following new
clause:
``(ii) for plan year 2021, the elimination of
any cost-sharing imposed under section 1860D-
2(b)(4)(A).''; and
(3) in paragraph (4)(A)(ii), by inserting ``(before 2021)''
after ``subsequent year''.
SEC. 402. DISSEMINATION TO MEDICARE PART D SUBSIDY ELIGIBLE INDIVIDUALS
OF INFORMATION COMPARING PREMIUMS OF CERTAIN
PRESCRIPTION DRUG PLANS.
Section 1860D-1(c)(3) of the Social Security Act (42 U.S.C. 1395w-
101(c)(3)) is amended by adding at the end the following new
subparagraph:
``(C) Information on premiums for subsidy eligible
individuals.--
``(i) In general.--For plan year 2022 and
each subsequent plan year, the Secretary shall
disseminate to each subsidy eligible individual
(as defined in section 1860D-14(a)(3))
information under this paragraph comparing
premiums that would apply to such individual
for prescription drug coverage under LIS
benchmark plans, including, in the case of an
individual enrolled in a prescription drug plan
under this part, information that compares the
premium that would apply if such individual
were to remain enrolled in such plan to
premiums that would apply if the individual
were to enroll in other LIS benchmark plans.
``(ii) LIS benchmark plan.--For purposes of
clause (i), the term `LIS benchmark plan'
means, with respect to an individual, a
prescription drug plan under this part that is
offered in the region in which the individual
resides and--
``(I) that provides for a premium
that is not more than the low-income
benchmark premium amount (as defined in
section 1860D-14(b)(2)) for such
region; or
``(II) with respect to which the
premium would be waived as de minimis
pursuant to section 1860D-14(a)(5) for
such individual.''.
SEC. 403. PROVIDING FOR INTELLIGENT ASSIGNMENT OF CERTAIN SUBSIDY
ELIGIBLE INDIVIDUALS AUTO-ENROLLED UNDER MEDICARE
PRESCRIPTION DRUG PLANS AND MA-PD PLANS.
(a) In General.--Section 1860D-1(b)(1) of the Social Security Act (42
U.S.C. 1395w-101(b)(1)) is amended--
(1) in subparagraph (C)--
(A) by inserting after ``PDP region'' the following:
``or through use of an intelligent assignment process
that is designed to maximize the access of such
individual to necessary prescription drugs while
minimizing costs to such individual and to the program
under this part to the greatest extent possible. In the
case the Secretary enrolls such individuals through use
of an intelligent assignment process, such process
shall take into account the extent to which
prescription drugs necessary for the individual are
covered in the case of a PDP sponsor of a prescription
drug plan that uses a formulary, the use of prior
authorization or other restrictions on access to
coverage of such prescription drugs by such a sponsor,
and the overall quality of a prescription drug plan as
measured by quality ratings established by the
Secretary''; and
(B) by striking ``Nothing in the previous sentence''
and inserting ``Nothing in this subparagraph''; and
(2) in subparagraph (D)--
(A) by inserting after ``PDP region'' the following:
``or through use of an intelligent assignment process
that is designed to maximize the access of such
individual to necessary prescription drugs while
minimizing costs to such individual and to the program
under this part to the greatest extent possible. In the
case the Secretary enrolls such individuals through use
of an intelligent assignment process, such process
shall take into account the extent to which
prescription drugs necessary for the individual are
covered in the case of a PDP sponsor of a prescription
drug plan that uses a formulary, the use of prior
authorization or other restrictions on access to
coverage of such prescription drugs by such a sponsor,
and the overall quality of a prescription drug plan as
measured by quality ratings established by the
Secretary''; and
(B) by striking ``Nothing in the previous sentence''
and inserting ``Nothing in this subparagraph''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply with respect to plan years beginning with plan year 2022.
SEC. 404. EXPANDING ELIGIBILITY FOR LOW-INCOME SUBSIDIES UNDER PART D
OF THE MEDICARE PROGRAM.
Section 1860D-14(a) of the Social Security Act (42 U.S.C. 1395w-
114(a)), as amended by sections 301(d) and 401, is further amended--
(1) in the subsection heading, by striking ``Individuals''
and all that follows through ``Line'' and inserting ``Certain
Individuals'';
(2) in paragraph (1)--
(A) by striking the paragraph heading and inserting
``Individuals with certain low incomes''; and
(B) in the matter preceding subparagraph (A), by
inserting ``(or, with respect to a plan year beginning
on or after January 1, 2022, 150 percent)'' after ``135
percent'';
(3) in paragraph (2)--
(A) by striking the paragraph heading and inserting
``Other low-income individuals''; and
(B) in subparagraph (A)--
(i) by inserting ``(or, with respect to a
plan year beginning on or after January 1,
2022, 150 percent)'' after ``135 percent''; and
(ii) by inserting ``(or, with respect to a
plan year beginning on or after January 1,
2022, 200 percent)'' after ``150 percent''; and
(4) in paragraph (3)(A)(ii), by inserting ``(or, with respect
to a plan year beginning on or after January 1, 2022, 200
percent)'' after ``150 percent''.
SEC. 405. AUTOMATIC ELIGIBILITY OF CERTAIN LOW-INCOME TERRITORIAL
RESIDENTS FOR PREMIUM AND COST-SHARING SUBSIDIES
UNDER THE MEDICARE PROGRAM; SUNSET OF ENHANCED
ALLOTMENT PROGRAM.
(a) Automatic Eligibility of Certain Low-Income Territorial Residents
for Premium and Cost-Sharing Subsidies Under the Medicare Program.--
(1) In general.--Section 1860D-14(a)(3) of the Social
Security Act (42 U.S.C. 1395w-114(a)(3)) is amended--
(A) in subparagraph (B)(v)--
(i) in subclause (I), by striking ``and'' at
the end;
(ii) in subclause (II), by striking the
period and inserting ``; and''; and
(iii) by inserting after subclause (II) the
following new subclause:
``(III) with respect to plan years
beginning on or after January 1, 2021,
shall provide that any part D eligible
individual who is enrolled for medical
assistance under the State Medicaid
plan of a territory (as defined in
section 1935(f)) under title XIX (or a
waiver of such a plan) shall be treated
as a subsidy eligible individual
described in paragraph (1).''; and
(B) in subparagraph (F), by adding at the end the
following new sentence: ``The previous sentence shall
not apply with respect to eligibility determinations
for premium and cost-sharing subsidies under this
section made on or after January 1, 2021.''.
(2) Conforming amendment.--Section 1860D-31(j)(2)(D) of the
Social Security Act (42 U.S.C. 1395w-141(j)(2)(D)) is amended
by adding at the end the following new sentence: ``The previous
sentence shall not apply with respect to amounts made available
to a State under this paragraph on or after January 1, 2021.''.
(b) Sunset of Enhanced Allotment Program.--
(1) In general.--Section 1935(e) of the Social Security Act
(42 U.S.C. 1396u-5(e)) is amended--
(A) in paragraph (1)(A), by inserting after ``such
State'' the following: ``before January 1, 2021''; and
(B) in paragraph (3)--
(i) in subparagraph (A), in the matter
preceding clause (i), by inserting after ``a
year'' the following: ``(before 2021)''; and
(ii) in subparagraph (B)(iii), by striking
``a subsequent year'' and inserting ``each of
fiscal years 2008 through 2020''.
(2) Territory defined.--Section 1935 of the Social Security
Act (42 U.S.C. 1396u-5) is amended by adding at the end the
following new subsection:
``(f) Territory Defined.--In this section, the term `territory' means
Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands,
and American Samoa.''.
SEC. 406. AUTOMATIC QUALIFICATION OF CERTAIN MEDICAID BENEFICIARIES FOR
PREMIUM AND COST-SHARING SUBSIDIES UNDER PART D OF
THE MEDICARE PROGRAM.
Clause (v) of section 1860D-14(a)(3)(B) of the Social Security Act
(42 U.S.C. 1395w-114(a)(3)(B)), as amended by section 405, is further
amended--
(1) in subclause (II), by striking ``and'' at the end;
(2) in subclause (III), by striking the period and inserting
``; and''; and
(3) by inserting after subclause (III) the following new
subclause:
``(IV) with respect to plan years
beginning on or after January 1, 2022,
shall, notwithstanding the preceding
clauses of this subparagraph, provide
that any part D eligible individual not
described in subclause (I), (II), or
(III) who is enrolled, as of the day
before the date on which such
individual attains the age of 65, for
medical assistance under a State plan
under title XIX (or a waiver of such
plan) pursuant to clause (i)(VIII) or
(ii)(XX) of section 1902(a)(10)(A), and
who has income below 200 percent of the
poverty line applicable to a family of
the size involved, shall be treated as
a subsidy eligible individual described
in paragraph (1) for a limited period
of time, as specified by the
Secretary.''.
SEC. 407. ELIMINATING THE RESOURCE REQUIREMENT WITH RESPECT TO SUBSIDY
ELIGIBLE INDIVIDUALS UNDER PART D OF THE MEDICARE
PROGRAM.
Section 1860D-14(a)(3)(A)(iii) of the Social Security Act (42 U.S.C.
1395w-114(a)(3)(A)(iii)) is amended by inserting ``in the case of a
plan year beginning before January 1, 2022,'' before ``meets''.
SEC. 408. PROVIDING FOR CERTAIN RULES REGARDING THE TREATMENT OF
ELIGIBLE RETIREMENT PLANS IN DETERMINING THE
ELIGIBILITY OF INDIVIDUALS FOR PREMIUM AND COST-
SHARING SUBSIDIES UNDER PART D OF THE MEDICARE
PROGRAM.
Section 1860D-14(a)(3)(C)(i) of the Social Security Act (42 U.S.C.
1395w-114(a)(3)(C)(i)) is amended, by striking ``except that support
and maintenance furnished in kind shall not be counted as income; and''
and inserting ``except that--
``(I) support and maintenance
furnished in kind shall not be counted
as income; and
``(II) for plan years beginning on or
after January 1, 2022, any distribution
or withdrawal from an eligible
retirement plan (as defined in
subparagraph (B) of section 402(c)(8)
of the Internal Revenue Code of 1986,
but excluding any defined benefit plan
described in clause (iv) or (v) of such
subparagraph and any qualified trust
(as defined in subparagraph (A) of such
section) which is part of such a
defined benefit plan) shall be counted
as income; and''.
TITLE V--DRUG PRICE TRANSPARENCY
SEC. 501. DRUG PRICE TRANSPARENCY.
Part A of title XI of the Social Security Act is amended by adding at
the end the following new sections:
``SEC. 1150C. REPORTING ON DRUG PRICES.
``(a) Definitions.--In this section:
``(1) Manufacturer.--The term `manufacturer' means the
person--
``(A) that holds the application for a drug approved
under section 505 of the Federal Food, Drug, and
Cosmetic Act or licensed under section 351 of the
Public Health Service Act; or
``(B) who is responsible for setting the wholesale
acquisition cost for the drug.
``(2) Qualifying drug.--The term `qualifying drug' means any
drug that is approved under subsection (c) or (j) of section
505 of the Federal Food, Drug, and Cosmetic Act or licensed
under subsection (a) or (k) of section 351 of the Public Health
Service Act--
``(A) that has a wholesale acquisition cost of $100
or more, adjusted for inflation occurring after the
date of enactment of this section, for a month's supply
or a typical course of treatment that lasts less than a
month, and is--
``(i) subject to section 503(b)(1) of the
Federal Food, Drug, and Cosmetic Act; and
``(ii) not a preventative vaccine; and
``(B) for which, during the previous calendar year,
at least 1 dollar of the total amount of sales were for
individuals enrolled under the Medicare program under
title XVIII or under a State Medicaid plan under title
XIX or under a waiver of such plan.
``(3) Wholesale acquisition cost.--The term `wholesale
acquisition cost' has the meaning given that term in section
1847A(c)(6)(B).
``(b) Report.--
``(1) Report required.--The manufacturer of a qualifying drug
shall submit a report to the Secretary if, with respect to the
qualifying drug--
``(A) there is an increase in the price of the
qualifying drug that results in an increase in the
wholesale acquisition cost of that drug that is equal
to--
``(i) 10 percent or more within a 12-month
period beginning on or after January 1, 2019;
or
``(ii) 25 percent or more within a 36-month
period beginning on or after January 1, 2019;
``(B) the estimated price of the qualifying drug or
spending per individual or per user of such drug (as
estimated by the Secretary) for the applicable year (or
per course of treatment in such applicable year as
determined by the Secretary) is at least $26,000
beginning on or after January 1, 2021; or
``(C) there was an increase in the price of the
qualifying drug that resulted in an increase in the
wholesale acquisition cost of that drug that is equal
to--
``(i) 10 percent or more within a 12-month
period that begins and ends during the 5-year
period preceding January 1, 2021; or
``(ii) 25 percent or more within a 36-month
period that begins and ends during the 5-year
period preceding January 1, 2021.
``(2) Report deadline.--Each report described in paragraph
(1) shall be submitted to the Secretary--
``(A) in the case of a report with respect to an
increase in the price of a qualifying drug that occurs
during the period beginning on January 1, 2019, and
ending on the day that is 60 days after the date of the
enactment of this section, not later than 90 days after
such date of enactment;
``(B) in the case of a report with respect to an
increase in the price of a qualifying drug that occurs
after the period described in subparagraph (A), not
later than 30 days prior to the planned effective date
of such price increase for such qualifying drug;
``(C) in the case of a report with respect to a
qualifying drug that meets the criteria under paragraph
(1)(B), not later than 30 days after such drug meets
such criteria; and
``(D) in the case of a report with respect to an
increase in the price of a qualifying drug that occurs
during a 12-month or 36-month period described in
paragraph (1)(C), not later than April 1, 2021.
``(c) Contents.--A report under subsection (b), consistent with the
standard for disclosures described in section 213.3(d) of title 12,
Code of Federal Regulations (as in effect on the date of enactment of
this section), shall, at a minimum, include--
``(1) with respect to the qualifying drug--
``(A) the percentage by which the manufacturer will
raise the wholesale acquisition cost of the drug within
the 12-month period or 36-month period as described in
subsection (b)(1)(A)(i), (b)(1)(A)(ii), (b)(1)(C)(i),
or (b)(1)(C)(ii), as applicable, and the effective date
of such price increase or the cost associated with a
qualifying drug if such drug meets the criteria under
subsection (b)(1)(B) and the effective date at which
such drug meets such criteria;
``(B) an explanation for, and description of, each
price increase for such drug that will occur during the
12-month period or the 36-month period described in
subsection (b)(1)(A)(i), (b)(1)(A)(ii), (b)(1)(C)(i),
or (b)(1)(C)(ii), as applicable;
``(C) an explanation for, and description of, the
cost associated with a qualifying drug if such drug
meets the criteria under subsection (b)(1)(B), as
applicable;
``(D) if known and different from the manufacturer of
the qualifying drug, the identity of--
``(i) the sponsor or sponsors of any
investigational new drug applications under
section 505(i) of the Federal Food, Drug, and
Cosmetic Act for clinical investigations with
respect to such drug, for which the full
reports are submitted as part of the
application--
``(I) for approval of the drug under
section 505 of such Act; or
``(II) for licensure of the drug
under section 351 of the Pubic Health
Service Act; and
``(ii) the sponsor of an application for the
drug approved under such section 505 of the
Federal Food, Drug, and Cosmetic Act or
licensed under section 351 of the Public Health
Service Act;
``(E) a description of the history of the
manufacturer's price increases for the drug since the
approval of the application for the drug under section
505 of the Federal Food, Drug, and Cosmetic Act or the
issuance of the license for the drug under section 351
of the Public Health Service Act, or since the
manufacturer acquired such approved application or
license, if applicable;
``(F) the current wholesale acquisition cost of the
drug;
``(G) the total expenditures of the manufacturer on--
``(i) materials and manufacturing for such
drug;
``(ii) acquiring patents and licensing for
such drug; and
``(iii) purchasing or acquiring such drug
from another manufacturer, if applicable;
``(H) the percentage of total expenditures of the
manufacturer on research and development for such drug
that was derived from Federal funds;
``(I) the total expenditures of the manufacturer on
research and development for such drug that is
necessary to demonstrate that it meets applicable
statutory standards for approval under section 505 of
the Federal Food, Drug, and Cosmetic Act or licensure
under section 351 of the Public Health Service Act, as
applicable;
``(J) the total expenditures of the manufacturer on
pursuing new or expanded indications or dosage changes
for such drug under section 505 of the Federal Food,
Drug, and Cosmetic Act or section 351 of the Public
Health Service Act;
``(K) the total expenditures of the manufacturer on
carrying out postmarket requirements related to such
drug, including under section 505(o)(3) of the Federal
Food, Drug, and Cosmetic Act;
``(L) the total revenue and the net profit generated
from the qualifying drug for each calendar year since
the approval of the application for the drug under
section 505 of the Federal Food, Drug, and Cosmetic Act
or the issuance of the license for the drug under
section 351 of the Public Health Service Act, or since
the manufacturer acquired such approved application or
license; and
``(M) the total costs associated with marketing and
advertising for the qualifying drug;
``(2) with respect to the manufacturer--
``(A) the total revenue and the net profit of the
manufacturer for each of the 12-month period described
in subsection (b)(1)(A)(i) or (b)(1)(C)(i) or the 36-
month period described in subsection (b)(1)(A)(ii) or
(b)(1)(C)(ii), as applicable;
``(B) all stock-based performance metrics used by the
manufacturer to determine executive compensation for
each of the 12-month periods described in subsection
(b)(1)(A)(i) or (b)(1)(C)(i) or the 36-month periods
described in subsection (b)(1)(A)(ii) or (b)(1)(C)(ii),
as applicable; and
``(C) any additional information the manufacturer
chooses to provide related to drug pricing decisions,
such as total expenditures on--
``(i) drug research and development; or
``(ii) clinical trials, including on drugs
that failed to receive approval by the Food and
Drug Administration; and
``(3) such other related information as the Secretary
considers appropriate and as specified by the Secretary.
``(d) Information Provided.--The manufacturer of a qualifying drug
that is required to submit a report under subsection (b), shall ensure
that such report and any explanation for, and description of, each
price increase described in subsection (c)(1) shall be truthful, not
misleading, and accurate.
``(e) Civil Monetary Penalty.--Any manufacturer of a qualifying drug
that fails to submit a report for the drug as required by this section,
following notification by the Secretary to the manufacturer that the
manufacturer is not in compliance with this section, shall be subject
to a civil monetary penalty of $75,000 for each day on which the
violation continues.
``(f) False Information.--Any manufacturer that submits a report for
a drug as required by this section that knowingly provides false
information in such report is subject to a civil monetary penalty in an
amount not to exceed $100,000 for each item of false information.
``(g) Public Posting.--
``(1) In general.--Subject to paragraph (4), the Secretary
shall post each report submitted under subsection (b) on the
public website of the Department of Health and Human Services
the day the price increase of a qualifying drug is scheduled to
go into effect.
``(2) Format.--In developing the format in which reports will
be publicly posted under paragraph (1), the Secretary shall
consult with stakeholders, including beneficiary groups, and
shall seek feedback from consumer advocates and readability
experts on the format and presentation of the content of such
reports to ensure that such reports are--
``(A) user-friendly to the public; and
``(B) written in plain language that consumers can
readily understand.
``(3) List.--In addition to the reports submitted under
subsection (b), the Secretary shall also post a list of each
qualifying drug with respect to which the manufacturer was
required to submit such a report in the preceding year and
whether such manufacturer was required to submit such report
based on a qualifying price increase or whether such drug meets
the criteria under subsection (b)(1)(B).
``(4) Protected information.--In carrying out this section,
the Secretary shall enforce applicable law concerning the
protection of confidential commercial information and trade
secrets.
``SEC. 1150D. ANNUAL REPORT TO CONGRESS.
``(a) In General.--Subject to subsection (b), the Secretary shall
submit to the Committees on Energy and Commerce and Ways and Means of
the House of Representatives and the Committees on Health, Education,
Labor, and Pensions and Finance of the Senate, and post on the public
website of the Department of Health and Human Services in a way that is
user-friendly to the public and written in plain language that
consumers can readily understand, an annual report--
``(1) summarizing the information reported pursuant to
section 1150C;
``(2) including copies of the reports and supporting detailed
economic analyses submitted pursuant to such section;
``(3) detailing the costs and expenditures incurred by the
Department of Health and Human Services in carrying out section
1150C; and
``(4) explaining how the Department of Health and Human
Services is improving consumer and provider information about
drug value and drug price transparency.
``(b) Protected Information.--In carrying out this section, the
Secretary shall enforce applicable law concerning the protection of
confidential commercial information and trade secrets.''.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
The bill, H.R. 3, the Lower Drug Costs Now Act of 2019, as
amended and ordered reported by the Committee on Ways and Means
on October 22, 2019, amends Part D of title XVIII of the Social
Security Act. H.R. 3 also amends the following: chapters 32 and
100, and sections 4221(a) and 9831(a)(2) of the Internal
Revenue Code of 1986; title XI of the Social Security Act;
title XXVII of the Public Health Service Act; and title I of
the Employee Retirement Income Security Act of 1974.
B. Background and Need for Legislation
With six in ten Americans reporting they currently take at
least one prescription medication (and one in four reporting
they take four or more), high drug prices have far-reaching
effects.\1\ According to a 2018 Kaiser Family Foundation poll,
79 percent of Americans believe the costs of prescription drugs
are unreasonable, and 26 percent are worried they may not be
able to afford the prescription drugs they need.\2\
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\1\Public Opinion on Prescription Drugs and Their Prices. Henry J.
Kaiser Family Foundation, (2019). Available at: https://www.kff.org/
slideshow/public-opinion-on-prescription-drugs-and-their-prices/
\2\Id.
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The U.S., on average, spends nearly four times more than
other similar countries on drugs. A recent report released by
the Ways and Means Committee found that on average, U.S. drug
prices are nearly four times higher than prices for the same
drugs in other countries. In some cases, Americans pay 67 times
more than consumers in other countries pay for the same
drug.\3\
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\3\A Painful Pill to Swallow: U.S. vs. International Prescription
Drug Prices. U.S. House of Representatives: The Committee on Ways and
Means, (2019). Available at: https://waysandmeans.house.gov/sites/
democrats.waysandmeans.house.gov/files/documents/U.S.%20vs.%20Inter
national%20Prescription%20Drug_2Prices_2.pdf
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In 2016, the U.S. spent $457 billion on combined retail
(dispensed at the pharmacy) and non-retail (dispensed in
physician offices) drugs.\4\\5\ During the same year, Medicare
spent nearly $130 billion on prescription drugs, of which $99.5
billion was spent on Part D pharmacy drugs and another $29.1
billion was spent on Part B physician-administered drugs.\6\ In
total, 30 percent of Medicare spending went to prescription
drug costs.\7\
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\4\Observation on Trends in Prescription Drug Spending. Department
of Health and Human Services, (2019). Available at: https://
aspe.hhs.gov/system/files/pdf/187586/Drugspending.pdf
\5\``Retail Prescription Drugs Filled at Pharmacies per Capita,''
Henry J. Kaiser Family Foundation, (2018). Available at: https://
www.kff.org/health-costs/state-indicator/retail-rx-drugs-per-capita/
?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%
22asc%22%7D
\6\``10 Essential Facts About Medicare and Prescription Drug
Spending,'' Henry J. Kaiser Family Foundation, (2019). Available at:
https://www.kff.org/infographic/10-essential-facts-about-medicare-and-
prescription-drug- spending/
\7\Id.
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The rise in spending for specialty drugs has in large part
driven the increase in overall drug costs under Part D and
Medicaid. In 2015, the average total cost of treating a patient
with specialty medications was more than $52,000, with patients
responsible for a bill in excess of $10,000.\8\ A 2019
Congressional Budget Office (CBO) report found that specialty
drugs accounted for 13 percent of Part D spending in 2010 and
rose to 31 percent by 2015.\9\ In Medicaid, 25 percent of
spending in 2010 was on specialty drugs rising to 35 percent by
2015.\10\
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\8\Trends in Retail Prices of Specialty Prescription Drugs Widely
Used by Older Americans, 2006 to 2015. AARP Public Policy Institute,
(2017). Available at: https://www.aarp.org/content/dam/aarp/ppi/2017/
11/full-report-trendsin-retail-prices-of-specialty-prescription-drugs-
widely-used-by-older-americans.pdf
\9\Prices for and Spending on Specialty Drugs in Medicare Part D
and Medicaid. Congressional Budget Office, (2019). Available at:
https://www.cbo.gov/system/files/2019-03/54964-Specialty_Drugs.pdf
\10\Id.
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While overall drug spending has grown significantly, a
relatively small number of drugs are responsible for a
disproportionately large share of Medicare costs. According to
the Centers for Medicare & Medicare Services (CMS) Medicare
Part D data, the 250 top-spending drugs (8.7 percent of Part D
drugs) account for 77.9 percent of total Part D spending.\11\
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\11\``10 Essential Facts About Medicare and Prescription Drug
Spending,'' Henry J. Kaiser Family Foundation, (2019). Available at:
https://www.kff.org/infographic/10-essential-facts-about-medicare-and-
prescription-drug-spending/
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Additionally, the Congressional Budget Office notes that
brand-name specialty drugs accounted for about 30 percent of
net spending on prescription drugs under Medicare Part D and
Medicaid, but they accounted for only about 1 percent of all
prescriptions dispensed in each program. Yet, the net prices
paid for these drugs are very high, due to the fact that
rebates in Medicare Part D are significantly lower than in
Medicaid. In fact, net of rebates and discounts, the average
price per standardized prescription was nearly twice as high in
Medicare Part D as in Medicaid for specialty drugs and three
times as high for top-selling non-specialty drugs. Because many
of these drugs have little or no competition, there are no
market forces to apply downward pressure to provide lowered
prices to the millions who have coverage for such medicines
under Medicare.\12\
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\12\Prices for and Spending on Specialty Drugs in Medicare Part D
and Medicaid. Congressional Budget Office, (2019). Available at:
https://www.cbo.gov/system/files/2019-03/54964-Specialty_Drugs.pdf
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In response to the rising cost of drugs, many have called
for Medicare to negotiate prices of prescription drugs on
behalf of beneficiaries. Current law requires
``noninterference,'' which explicitly prohibits the Secretary
from negotiating with drug manufacturers.\13\ Instead, Part D
plans negotiate directly with drug companies to obtain
discounts (rebates) for their enrollees, retaining the most
leverage when multiple drugs or therapies exist on the market
for the same condition. Negotiation is a tool that will
mitigate the potential for even higher launch prices because
manufacturers will attempt to avoid participating in such a
process. And as their leverage in such negotiations, Medicare
Part D plans can offer manufacturers preferred formulary
placement (e.g., a tier that has better patient cost-sharing or
fewer utilization management tools) to incentivize higher
utilization of the drug.
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\13\Section 1860D-11(i) of the Social Security Act.
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External Reference Pricing (ERP) is the practice of using
the price of a pharmaceutical product (generally an ex-factory
or list price) in one or several countries to create a
benchmark or reference price for the purposes of setting or
negotiating prices in a given country.\14\\15\ With the
exceptions of Denmark, Sweden, and the U.K., almost every
European country--and most other developed nations--has
established some form of an ERP, creating a ``basket'' of rates
in comparable countries and using the average of all prices in
the basket as a benchmark.\16\
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\14\Dimitra Panteli et al. Pharmaceutical Regulation in 15 European
Countries. Health Systems in Transition, (2016). Available at: http://
www.euro.who.int/data/assets/pdf_file/0019/322444/HiT-pharmaceutical-
regulation-15-European-countries.pdf?ua=1
\15\WHO Guideline on Country Pharmaceutical Pricing Policies. World
Health Organization, (2013). Available at: https://
www.ncbi.nlm.nih.gov/books/NBK258618/
\16\A Painful Pill to Swallow: U.S. vs. International Prescription
Drug Prices. U.S. House of Representatives: The Committee on Ways and
Means, (2019). Available at: https://waysandmeans.house.gov/sites/
democrats.waysandmeans.house.gov/files/documents/U.S.%20vs.%20Inter
national%20Prescription%20Drug%20Prices_0.pdf
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Empirical evidence shows ERPs are effective in moderating
drug prices within a market, resulting in price reductions of
about 15 percent over 10 years. Further as outlined in the Ways
and Means Committee report, purchasing the same drugs using an
index of average drug prices across the comparator countries
could reduce Part D spending by $48.8 billion annually.\17\\18\
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\17\Dimitra Panteli et al. Pharmaceutical Regulation in 15 European
Countries. Health Systems in Transition, (2016). Available at: http://
www.euro.who.int/data/assets/pdf_file/0019/322444/HiT-pharmaceutical-
regulation-15-European-countries.pdf?ua=1
\18\A Painful Pill to Swallow: U.S. vs. International Prescription
Drug Prices. U.S. House of Representatives: The Committee on Ways and
Means, (2019). Available at: https://waysandmeans.house.gov/sites/
democrats.waysandmeans.house.gov/files/documents/U.S.%20vs.%20Inter
national%20Prescription%20Drug%20Prices_0.pdf
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Drug manufacturers admit that they continue to make profits
in countries where drug prices are significantly lower.\19\
Yet, when presented proposals to relax the noninterference
clause, critics argue such a policy would limit patient access
to drugs and inhibit innovation among manufacturers. Many drug
manufacturers cite research and development costs as the reason
for high prices. Yet as reported by the Washington Post, nine
out of 10 large pharmaceutical companies spend more on sales,
marketing, and other overhead than on innovation or research
and development.\20\ And according to PhRMA's most recent
numbers, the industry spent nearly $30 billion on marketing and
promotion in 2016 and the industry will spend over $300 billion
over the next 10 years.\21\ While research is crucial to the
continued development of new, life-saving drugs and therapies,
innovation is of no use if Americans cannot afford its
benefits.
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\19\https://www.npr.org/sections/health-shots/2019/02/26/698136259/
pharmaceutical-company-ceos-face-grilling-in-senate-over-high-drug-
prices
\20\https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-
pharmaceutical-companies-are-spending-far-more-on-marketing-than-
research/
\21\https://phrma.org/-/media/Project/PhRMA/PhRMA-Org/PhRMA-Org/
PDF/PhRMA_Marketing_IssueBrief.pdf?utm_source=STAT+Newsletters&utm_campa
ign=cb1b1d3d39-RO_COPY_03&utm_medium=email&utm_term=0_8cab1d7961-
cb1b1d3d39-150975749
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While Medicare provides important financial and health
security for more than 60 million Americans, the program still
has gaps in coverage that pose significant financial hardship
for more than half of all Medicare beneficiaries who have
incomes of less than $2,200 a month.\22\ In addition, many
working-age adults who become disabled and can no longer work
are on Social Security Disability, which pays on average less
than $1400 a month.\23\ Addressing coverage gaps and working to
address out-of-pocket costs would go a long way toward
improving overall health by helping beneficiaries to avoid
depression and social isolation, and prevent health care costs
due to accidents, falls, cognitive impairments, an increase in
chronic conditions, and oral cancer.
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\22\Gretchen Jacobson et al., Income and Assets of Medicare
Beneficiaries, 2016-2035. Henry J. Kaiser Family Foundation, (2017).
Available at: https://www.kff.org/medicare/issue-brief/income-and-
assets-of-medicare- beneficiaries-2016-2035/
\23\Id.
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The Medicare Savings Programs (MSPs) and Low-Income Subsidy
(LIS) program, often collectively referred to as Extra Help
programs, help Medicare beneficiaries with out-of-pocket costs
such as premiums, deductibles, and cost sharing. These
programs, however, do not reach many beneficiaries with very
modest incomes, leaving them exposed to significant financial
risk. In addition, many eligible beneficiaries are not enrolled
in these programs, with as many as 85 percent of eligible
individuals in certain categories not receiving assistance with
their Medicare premiums.\24\ Eliminating barriers to enrollment
and improving availability of these programs will lower out-of-
pocket costs and improve access to care.
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\24\``Medicare Savings Programs: New Estimates Continue to Show
Many Eligible Individuals Not Enrolled,'' Medicaid and CHIP Payment
Advisory Commission (MACPAC), (2017). Available at: https://
www.macpac.gov/wp-content/uploads/2017/08/Medicare-Savings-Programs-
New-Estimates-Continue-to-Show-Many-Eligible-Individuals-Not-
Enrolled.pdf
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C. Legislative History
Background
H.R. 3 was introduced on September 19, 2019, and was
referred to the Committee on Energy and Commerce, and in
addition, the Committee on Ways and Means and the Committee on
Education and Labor.
Committee action
The Committee on Ways and Means met on October 22, 2019 to
consider H.R.3, and ordered the bill, as amended, favorably
reported by a vote of vote, 24-17, with one member voting
present.
Committee hearings
On October 17, 2019, the Committee on Ways and Means held a
full committee hearing entitled, ``Investing in the U.S. Health
system by lowering drug prices, reducing out-of-pocket costs,
and improving Medicare benefits,'' to discuss how H.R. 3, the
Lower Drug Costs Now Act, will lower prescription drug prices
in Medicare and the commercial market, improve affordability of
medicine, and reduce costs for patients and taxpayers.
On February 12, 2019, the Committee on Ways and Means held
a full committee hearing entitled, ``The Cost of Rising
Prescription Drug Prices,'' to discuss the drug pricing crisis.
Members heard testimony from expert witnesses about
relevant issues, including: rapidly escalating prices of older
medications; high launch prices; misalignment of incentives for
responsibly pricing products; and high out-of-pocket costs for
patients. Democrats invited four witnesses, including: 1)
Odunola Ojaumi (patient); 2) Mark Miller, PhD; 3) Rachel Sachs,
JD, MPH; and 4) Alan Reuther, JD. The minority invited Joe
Antos, PhD.
On March 7, 2019, the Committee on Ways and Means held a
health subcommittee hearing entitled ``Promoting Competition to
Lower Medicare Drug Prices,'' to discuss the complicated drug
pricing landscape, including how to lower prescription drug
prices through competition, pay for value, and lower out-of-
pocket costs for patients. Democrats invited four witnesses,
including: 1) Robin Feldman, JD; 2) Ameet Sarpatwari, JD, PhD;
3) Amy Kapczynski, MA, M.Phil, JD; and 4) Frederick Isasi, MPH.
The minority invited Douglas Holtz-Eakin, PhD.
On June 4, 2019, the Committee on Ways and Means held a
full committee Member Day hearing to hear member testimony on a
range of issues and proposals regarding prescription drug
pricing, dental, vision, and hearing coverage, and Medicare
Savings Program, the Low Income Subsidy (LIS) Program, and
Medigap improvements. Off-committee Member, Representatives
Sharice Davids (D-KS-3), Ben McAdams (D-UT-4), Xochitl Torres
Small (D-NM-2), and Elissa Slotkin (D-MI-8) discussed more
transparency and the need to ensure better affordability and
lower out-of-pocket costs for prescription drugs. On Committee
Republican Representatives Devin Nunes (R-CA-2) and David
Schweikert (R-AZ-6) discussed the importance of drug
affordability, and the former also opposed policies that would
establish federal price setting policies.
II. EXPLANATION OF THE BILL
The Lower Drug Costs Now Act of 2019
Title I: Lowering Prices Through Fair Drug Price Negotiation
PRESENT LAW
Medicare Part A (Hospital Insurance, or HI) covers
inpatient hospital services, skilled nursing care, hospice
care, and some home health services.\25\ Part A pays providers
for drugs as part of a predetermined, per episode payment.
Hospitals can also receive add-on payments for certain new
innovator drugs under Part A.
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\25\Section 1812 of the Social Security Act (42 U.S.C. Sec. 1395d).
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Medicare Part B (Supplementary Medical Insurance, or SMI)
covers physician services, outpatient services, and some home
health and preventive services.\26\ Providers who administer
prescription drugs under Part B are paid based on a list price
defined in statute (Average Sales Price or ASP). Beneficiaries
generally pay 20% coinsurance under Part B, including for
drugs.
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\26\Section 1832 of the Social Security Act (42 U.S.C. Sec. 1395k).
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The voluntary Medicare Part D outpatient prescription drug
benefit provides coverage to Medicare beneficiaries who enroll
in stand-alone private plans (PDP) or Medicare Part C managed
care plans (i.e., Medicare Advantage) with a Part D component
(MA-PD) (collectively referred to as ``Part D plans'').\27\ The
Part D noninterference provision bars the Department of Health
and Human Services (HHS) Secretary (Secretary) from negotiating
Part D drug prices and from requiring a set formulary or
pricing structure.\28\
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\27\Section 1860D-2 of the Social Security Act (42 U.S.C.
Sec. 1395w-102).
\28\Section 1860D-11(i) of the Social Security Act (42 U.S.C.
Sec. 1395w-111(i)).
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Part D plan sponsors (insurers), working with pharmacy
benefit managers (PBMs), negotiate prescription drug price
discounts and rebates with manufacturers and dispensing
pharmacies. Sponsors must offer enrollees their negotiated
price for covered drugs. Under the HHS definition of negotiated
prices, sponsors have latitude to decide whether to pass on
rebates and certain other price concessions to enrollees at the
pharmacy at the point of sale; however, the vast majority do
not. Instead sponsors generally use rebates to buy down or
reduce premiums for all plan enrollees.
In the commercial market, which includes group health plans
and health insurance offered in the individual and group
markets, health plans, in conjunction with PBMs, negotiate
discounts and rebates with manufacturers. Currently, there are
no federal statutes or regulations related to the prices that
health plans pay for prescription drugs.
REASONS FOR CHANGES
To establish a new program at Title XI of the Social
Security Act (SSA) that would require the Secretary of Health
and Human Services (HHS Secretary) to annually negotiate a
maximum price for a group of select, single source prescription
drugs dispensed to certain enrollees in Medicare and in
commercial health plans (prices will first be available to
certain eligible Medicare beneficiaries and enrollees in
participating commercial plans in 2023).
EXPLANATION OF PROVISIONS
Section 1 establishes the short title as the Elijah E.
Cummings Lower Drug Costs Now Act of 2019.
Section 101, ``Providing for Lower Prices for Certain High-
Priced Single Source Drugs'', directs the Secretary to
establish a Fair Price Negotiation Program by amending Title XI
of the Social Security Act to add a new Part E. The Secretary
shall publish a list of selected drugs; enter into agreements
with manufacturers of selected drugs; negotiate and renegotiate
maximum fair price (MFP) for each selected drug; and carry out
other administrative duties. Prices negotiated under section
101 shall apply beginning in plan year 2023.
Selected Drugs. Every year, the Secretary will identify the
250 brand-name drugs that lack price competition and have the
greatest net spending in the U.S. The legislation targets the
area of the market failure in which competition between
products does not exist and is not successful in lowering
prices. By focusing on the most expensive drugs, the Secretary
will most effectively utilize the federal government's
resources to lower costs. The 25 most expensive drugs in the
Medicare Part D program represent 23 percent of total Part D
spending.
The Secretary will use data provided by Medicare, Medicaid,
and commercial insurance to make the determination about
aggregate cost, which is a measure of price and volume of
sales. The Secretary is required to select 125 drugs from
Medicare and 125 from the commercial market, and in addition to
the 250 drugs, identify any new drugs that are eligible for
negotiation that would otherwise make the list of high cost
drugs, beginning no later than April 15, 2021. The Secretary
should adhere to any public notice requirements that are
relevant to the annual selection of negotiation eligible drugs,
including adhering to standards that require solicitation of
public comment.
An eligible drug that lacks price competition is to be
defined as a brand-name drug that does not have a generic or
biosimilar competitor on the market. Insulin is also included
for negotiation. Drugs placed on a selected drug list for a
price applicability year would be considered selected drugs for
that year and each subsequent plan year until the first plan
year beginning after the date the Secretary were to determine
that the drug is no longer a qualifying single source drug.
In prioritizing drugs for negotiation each year, the
Secretary would take into account the drugs for which the
greatest savings to taxpayers, patients, and all payers may be
achieved. Recognizing the practical capacity and administrative
constraints on HHS, the Secretary will negotiate as many drugs
as possible each year, beginning with at least 25 drugs (from
calendar year (CY) 2023--CY 2027), and, progressively
increasing to 30 drugs (from CY 2028--CY 2032) and 35 drugs by
2032. A drug selected for negotiation would continue to be
included in the program until two generic or biosimilar
competitors enter the market. CBO believes the first group of
selected drugs will yield the greatest savings, even as the
overall number increases in 2028 and again in 2032.
Additionally, the 25 to 30 to 35 drug thresholds are the bare
minimum number of drugs for which prices should be negotiated,
and the Secretary has discretion to be more aggressive in
pursuing savings for American consumers.
Following the publication of the list of selected drugs by
April 15, 2021, the Secretary would need to enter into
agreements with manufacturers of selected drugs no later than
June 15, 2021. The agreements would specify the process and
requirements for negotiating, renegotiating, and administering
the MFP for a selected drug during the coming applicability
year or period.
Negotiation. The Secretary is required under the
legislation to directly negotiate with drug manufacturers to
establish a maximum fair price. The legislation does not
broadly repeal the non-interference clause, as simply ending
the ban on negotiation would not result in a CBO score that
reflects savings for patients or the federal government. In
contrast, in a preliminary estimate, this bill saves Medicare
alone $345 billion through lower prices, lower premiums, and
lower out-of-pocket costs by empowering the Secretary to
negotiate while ensuring a structure is in place to achieve
savings for patients and the government.\29\
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\29\Letter to Hon. Frank Pallone, Jr., ``Effects of Drug Price
Negotiation Stemming from Title I of H.R. 3, the Lower Drugs Costs Now
Act of 2019, on Spending and Revenues Related to Part D of Medicare,
Congressional Budget Office (October 11, 2019). Available at: https://
www.cbo.gov/system/files/2019-10/hr3ltr.pdf
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While negotiating the price, the Secretary will consider:
research and development costs of the drug as well as cost of
production; information on alternative treatments and the value
of the drug; and domestic and international sales information.
The legislation also establishes an upper limit for the price
reached in any negotiation as no more than 1.2 times (or 120
percent) of the volume-weighted average of the price of six
countries (Australia, Canada, France, Germany, Japan, and the
United Kingdom), known as the Average International Market
(AIM) price.
A selected drug's ``target price'' would depend on whether
an available AIM price exists for a negotiation or
renegotiation period. The legislation defines ``target price''
as follows:
Available AIM Price: The average price (net average
volume weighted price, if practicable) for any dosage
form and strength of a drug unit for sale in an AIM
price-applicable country that had the lowest average
price compared to the drug's average prices in other
AIM price- applicable countries.
No Available AIM Price: If no AIM price were to be
available for the negotiation or renegotiation period,
the target price would be 80 percent of the drug's AMP
for such year.
In price negotiations or renegotiations, to the extent
practicable, the Secretary would consider information that is
manufacturer specific, related to alternative products, foreign
sales, and additional information. As part of the negotiation
or renegotiation process, H.R. 3 compels the Secretary to
accept a manufacturer's offer to sell a selected drug at or
below a specified ``target price.'' Specifically, if a
manufacturer, in negotiation or renegotiation of an MFP for a
selected drug, were to offer a price that was not more than a
specified target price, the Secretary would then agree to such
price as the MFP.
Maximum Fair Price. The goal is for the Secretary and the
manufacturer to negotiate a mutually agreed maximum fair price
that is below the AIM price through a voluntary, bi-lateral
negotiation process. The maximum fair price would be applied to
Medicare, with flexibility for Medicare Advantage and Medicare
Part D plans to use additional tools to negotiate even lower
prices. A manufacturer would also be required to offer the
negotiated price to the commercial market, to group and
individual health insurance plans. It is at the discretion of
these payers whether to accept the negotiated price. No later
than May 1st of a Part D plan year before the initial price
applicability year (May 1, 2022, for 2023), the Secretary would
publish in the Federal Register the MFP for a selected drug
that it negotiated with the manufacturer. If the MFP for a
selected drug for an initial price applicability year were to
be agreed upon after the MFP publication deadline, the
Secretary would need to publish the MFP in the Federal Register
no later than 30 days after the MFP had been determined.
Once the MFP is established, that drug's maximum fair price
will remain in place until there are two or more generic or
biosimilar products available. If a manufacturer has agreed to
a maximum fair price, and then overcharges Medicare or
commercial payers, the manufacturer will be subject to a civil
monetary penalty equal to 10 times the difference between the
price charged and the maximum fair price for the drug. The
Secretary or the manufacturer may request a re-negotiation if
new information becomes available after the maximum fair price
is agreed to.
Judicial Review. Section 101 excludes the selection of
drugs (including qualifying insulin products) for publication
as selected drugs and determinations of whether a drug is a
negotiation-eligible drug, the MFP, and units of a drug for
calculating the AIM price under the MDP Program from being
subject to judicial review. This provision is similar to other
provision in Medicare statutes where Secretarial determinations
are not subject to such review, including sections 1899(g) and
1848(q)(13)(B) of the Social Security Act, and a number of
instances in the Medicare Access and CHIP Reauthorization Act
(MACRA) (H.R. 2, P.L. 114-10).
Section 102, ``Selected Drug Manufacturer Excise Tax
Imposed During Noncompliance Periods,'' establishes an excise
tax that will be levied against manufacturers during periods
when the manufacturer is noncompliant with the requirements of
the fair price negotiation program by adding a new section 4192
to Subchapter E of Chapter 32 of the Internal Revenue Code. The
Joint Committee on Taxation estimates that this tax will not
yield revenues because drug manufacturers would come to the
table to negotiate drug prices rather than pay the tax.\30\
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\30\``Description of the Revenue Provisions of H.R. 3, the Lower
Drug Costs Now Act Of 2019,'' The Joint Committee on Taxation, Congress
of the United States (October 19, 2019). Available at: https://
www.jct.gov/publications.html?func=startdown&id=5224
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EFFECTIVE DATES
Section 101: Effective beginning on or after January 1,
2021 (negotiations) and January 1, 2023 (fair prices in use).
Section 102: Effective beginning after the date of
enactment.
Title II: Medicare Parts B and D Prescription Drug Inflation Rebates
PRESENT LAW
Medicare pays for certain outpatient drugs and biologics
under Part B (which covers physician, outpatient, and some home
health and preventive services) rather than under the Part D
retail prescription drug benefit.\31\ Part B-covered drugs
include: 1) those administered ``incident to physician
services'' where providers purchase ``separately payable''
drugs and bill Medicare after administering the products to
patients; and 2) those that are not separately payable, but are
covered under Part B as part of a procedure or treatment, such
as end-stage renal disease dialysis, vaccinations, or new drugs
included in outpatient hospital new technology transitional
pass-through payments.\32\
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\31\Section 1833 of the Social Security Act (42 U.S.C. Sec. 1395l).
\32\Id.
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With some exceptions, Part B payment for separately payable
drugs or biologics is based on a product's average sales price
(ASP) plus a 6 percent add-on payment.\33\ The ASP is a market
price that excludes manufacturer price concessions, government
sales, and other adjustments. Each ASP is based on a
manufacturer's quarterly sales of a drug to most U.S.
purchasers, divided by the total units of the drug sold to
those purchasers in the quarter. To encourage the development
of lower-priced biosimilar substitutes for biological products,
the Part B payment rate for a biosimilar is the ASP of the
biosimilar plus an add-on payment equal to 6 percent of the ASP
of the more expensive, reference biological. For most Part B
services, Medicare beneficiaries are responsible for
coinsurance of 20 percent of the cost of the item or service.
For Part B drugs, the 20 percent coinsurance is based on a
drug's ASP plus the 6 percent add-on payment.\34\
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\33\Section 1847A of the Social Security Act (42 U.S.C. Sec. 1395w-
3a).
\34\Id.
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The Secretary sets Part B drug payments by aggregating ASP
data for individual drugs into Medicare billing codes. A
payment amount for a billing code is the volume-weighted
average of the ASPs for all drugs grouped into the code.
Generally, there is one drug in a billing code for biological,
biosimilar and single source brand name products. In the case
of multiple source drugs, brand-name and generic products can
be grouped within a billing code.\35\
---------------------------------------------------------------------------
\35\Id.
---------------------------------------------------------------------------
Manufacturers are not required to pay rebates to Medicare
as a condition for having their drugs covered under Part B. By
comparison, drug and biological manufacturers that choose to
market their products to state Medicaid programs are required
to provide rebates on their sales of outpatient drugs and
biological products to state Medicaid programs. Medicaid's
statutory rebates, which are shared between the federal
government and states, include a basic rebate and an inflation
rebate.\36\
---------------------------------------------------------------------------
\36\Section 1927 of the Social Security Act (42 U.S.C. Sec. 1396r-
8).
---------------------------------------------------------------------------
Computation of the Medicaid basic rebate varies depending
on whether a drug is a generic or a brand name product and
other characteristics, but is based on either: 1) a percentage
of a drug's average manufacturer price (AMP), or 2) the
difference between the AMP and the lowest statutorily-defined
``best'' price at which the drug was sold to most retail
pharmacies in the United States during the rebate period. The
AMP, defined at section 1927(k)(1) of the Social Security Act,
is the average price a manufacturer receives in the United
States for sales to wholesalers that supply retail community
pharmacies and for sales directly to retail community
pharmacies. The AMP does not include manufacturer rebates or
discounts to PBMs and health plans, certain manufacturer prompt
pay discounts, sales to other government programs, and consumer
coupons. Certain other types of sales are exempt for purposes
of calculating the AMP.
Manufacturers must pay an additional rebate to Medicaid if
they increase a drug's AMP faster than the inflation rate since
it was first marketed (with some exceptions), as measured by
the change in the CPI-U. The total rebate owed by manufacturers
is the sum of the per-drug basic and inflation rebates, up to
the drug's rebate period AMP.\37\
---------------------------------------------------------------------------
\37\42 C.F.R. Sec. 447.504.
---------------------------------------------------------------------------
To carry out the Medicaid drug rebate program,
participating manufacturers must report drug pricing data each
calendar quarter. Manufacturers are required to report AMP data
and to pay rebates on a quarterly basis for each dosage form
and strength of a drug.\38\
---------------------------------------------------------------------------
\38\42 C.F.R. Sec. 447.509.
---------------------------------------------------------------------------
REASONS FOR CHANGES
To make modifications to Medicare at Title XVIII of the SSA
to impose inflation-based rebates for certain prescription
drugs administered in Part B and dispensed in Part D.
EXPLANATION OF PROVISIONS
Section 201, ``Medicare Part B Rebate by Manufacturers,''
amends sections 1833, 1834, and 1847(A) of the Social Security
Act and outlines standards for inflation rebates for
manufacturers of drugs covered under Part B. To reverse
unjustified price hikes, all of the single source drugs and
biologicals in Part B would face a new inflation rebate. Drugs
with annual total allowed charges less than $100 and vaccines
are excluded. If a drug company has raised the price of a drug
in Part B above the Consumer Price Index for All Urban
Consumers (CPI-U), the above-inflation portion of the price
(multiplied by units sold to the program) would be refunded to
the Treasury and deposited into the Federal Supplementary
Medical Insurance Trust Fund. If manufacturers do not comply
with the rebate requirement under Part B, the Secretary may
assess a civil money penalty (CMP) equal to at least 125
percent of the rebate amount.
Section 201 also directs the Secretary to study the
feasibility of incorporating multiple source drugs, biologicals
and drugs paid for under Medicare Advantage (MA), and other
drugs excluded from the rebate system. Pending the results of
this report, Section 201 grants the Secretary discretion to
expand the rebate system to include multiple source drugs under
Part B. Section 201 would be effective beginning July 1, 2021.
Section 202, ``Medicare Part D Rebate by Manufacturers,''
amends Part D of title XVIII of the Social Security Act by
adding a new section 1860D-14B. Section 202 outlines standards
for inflation rebates for manufacturers of drugs covered under
Part D. To reverse unjustified price hikes, all of the covered
drugs and biologicals in Part D would face a new inflation
rebate. Drugs with annual total allowed charges less than $100
are excluded. If a drug company has raised the price of a drug
in Part D above the CPI-U, the above-inflation portion of the
price (multiplied by units sold to the program) would be
refunded to the Treasury and deposited into the Federal
Supplementary Medical Insurance Trust Fund. If manufacturers do
not comply with the rebate requirement under Part B, the
Secretary may assess a CMP equal to at least 125 percent of the
rebate amount. Section 202 would be effective beginning in plan
year 2022.
The inflation rebate penalty is designed to discourage
manufacturers from increasing prices in all markets because the
drug prices on which the rebate are paid based on the average
prices market-wide. The inflation rebate penalty will
indirectly apply to the private market and will result in fewer
price increases across the board. CBO's estimate of the
inflation rebate provision in the Senate Finance bill notes
that, ``CBO expects that the inflation rebate provision would
reduce costs for prescription drug benefits offered by
commercial plans.'' The HHS Office of the Actuary (OACT) notes
as a result of this legislation, private health insurance (PHI)
enrollees are expected to save $55 billion under the bill. And
PHI sponsors will save $28 billion (federal/state) and $46
billion (employer sponsored insurance).
The policies established in Sections 201 and 202 will help
to minimize prescription drug price hikes because rather than
pay the rebate, manufacturers will choose to minimize increases
over time, resulting in savings to Medicare and the private
market.
EFFECTIVE DATES
Section 201: Effective beginning on or after July 1, 2021.
Section 202: Effective beginning on or after January 1,
2022.
Title III: Part D Improvements and Maximum Out-of-Pocket Cap for
Medicare Beneficiaries
PRESENT LAW
Part D provides a voluntary, outpatient prescription drug
benefit for Medicare beneficiaries and is the primary source of
drug coverage for dual-eligible individuals enrolled in both
Medicare and the state-federal Medicaid program.\39\ Part D
coverage is provided by private insurers, or plan sponsors,
that submit annual bids to offer drug-only plans or Part C
Medicare Advantage managed care plans with a Part D benefit.
Congress designed Part D as a market- oriented program in which
sponsors compete for enrollees based on plan premiums and scope
of benefits, including cost-sharing requirements. Private drug
plans participating in Part D bear some financial risk,
although federal subsidies cover most program costs in an
effort to encourage participation and keep benefits affordable.
Plans are offered on a calendar year basis and enrollees may
change plans each year during an annual enrollment period.
---------------------------------------------------------------------------
\39\Section 1395w-101 et seq. of the Social Security Act (42 U.S.C.
Sec. 1395w-101 et seq.).
---------------------------------------------------------------------------
At a minimum, Part D sponsors must offer a ``standard
coverage'' package of benefits as defined in law.\40\ Plan
sponsors may also offer alternative or enhanced coverage that
is at least actuarially equivalent to a standard plan. Medicare
provides subsidies to plan sponsors for each enrollee in a Part
D plan that, on average, equal 74.5 percent of the value of
standard coverage.\41\ Part D subsidies include direct
subsidies, under which Medicare pays drug plans a risk-adjusted
per enrollee payment and reinsurance under which Medicare
subsidizes 80 percent of a plan's drug spending above a
catastrophic threshold.\42\ Medicare covers a greater portion
of costs for low-income individuals through the low-income
subsidy (LIS), which varies by specified income and assets
thresholds.
---------------------------------------------------------------------------
\40\Section 1395w-102 of the Social Security Act (42 U.S.C.
Sec. 1395w-102).
\41\Section 1395w-115 of the Social Security Act (42 U.S.C.
Sec. 1395w-115).
\42\Id.
---------------------------------------------------------------------------
In terms of beneficiary cost-sharing, under the standard
Part D benefit in 2019, a beneficiary first pays a deductible
($415). After the deductible has been met, the beneficiary is
responsible for 25 percent of the cost of drugs (with the plan
covering the remaining 75 percent) up to the initial coverage
limit ($3,820).\43\
---------------------------------------------------------------------------
\43\Section 1395w-102 of the Social Security Act (42 U.S.C.
Sec. 1395w-102).
---------------------------------------------------------------------------
After the initial coverage limit has been reached, a
beneficiary enters the coverage gap (``doughnut hole'') and is
responsible for coinsurance of 25 percent of the cost of brand-
name drugs and 37 percent of the cost of generic drugs until
accumulating $5,100 in total out-of-pocket costs. While
enrollees are in the coverage gap, plans cover the remaining 63
percent of generic drug costs and 5 percent of brand-name drug
costs, with the remaining 70 percent of costs for brand-name
drugs, biologics and biosimilars covered through manufacturer
discounts. Enrollee out-of-pocket costs in the coverage gap are
calculated based on both the required beneficiary coinsurance
and the manufacturer discounts. (The manufacturer discounts do
not apply to drugs provided to LIS Part D beneficiaries in the
coverage gap; rather, Medicare covers the full cost of the drug
minus some lower cost-sharing for specified LIS beneficiaries.)
At $5,100 in total out-of-pocket-costs, a beneficiary
reaches the out-of-pocket threshold after which cost sharing is
the greater of a nominal set co-payment for drugs ($3.40 for
generic drugs and $8.50 brand-name drugs in 2019), or 5 percent
coinsurance.\44\ There is no annual cap on cost-sharing for
beneficiaries, with the exception of LIS beneficiaries with the
lowest income and assets. During this catastrophic coverage
period, plans are responsible for 15 percent of costs and
Medicare subsidizes 80 percent of costs (the reinsurance
subsidy).\45\ Total spending (beneficiary and plan costs
together) needed for an enrollee to move to the catastrophic
threshold is estimated at about $8,139.54 in 2019.
---------------------------------------------------------------------------
\44\Id.
\45\Section 1395w-115 of the Social Security Act (42 U.S.C.
Sec. 1395w-115).
---------------------------------------------------------------------------
Part D coverage parameters based on dollar amounts are
generally updated for each plan year based on the percentage
increase in average per-capita spending for covered Part D
drugs during the 12-month period ending in July of the previous
year. In addition, Part D enrollees also pay monthly premiums,
which are based on a rate equal to 25.5 percent of the annual
nationwide average of plan bids for standard benefits; however,
actual premiums vary widely by the plan selected.
REASONS FOR CHANGES
To make modifications to Medicare at Title XVIII of the SSA
to reconfigure the Part D benefit to modify enrollee cost-
sharing, including capping annual out-of-pocket spending;
reduce Medicare reinsurance subsidies to plan sponsors, and
modify an existing manufacturer drug discount program.
EXPLANATION OF PROVISIONS
Section 301, ``Medicare Part D Benefit Redesign,'' amends
Part D of title XVIII of the Social Security Act by adding a
new section 1860D-14C. Section 301 creates a cap on the costs
for prescription drugs by setting the annual out-of-pocket
limit at $2,000. Beneficiaries who have more than $2,000 in
out-of-pocket prescription drug spending will face no
additional cost-sharing over that amount. Section 301 reduces
from 80 percent to 20 percent the government reinsurance in the
catastrophic phase of Part D coverage, and increases plan
responsibility from 20 percent to 50 percent. Reinsurance for
the catastrophic spending grew by over 500 percent from $8.0
billion in 2007 to nearly $40.9 billion in 2018--and is now the
single-largest component of total Part D spending. The shift in
plan responsibility will improve incentives for plans to better
manage drug spending.
Section 301 also converts the current coverage gap discount
program into a benefit-wide responsibility, requiring
manufacturers of single source drugs to contribute to payments
in both the initial and catastrophic phases of the benefit.
Under current law, manufacturers pay 70 percent of the costs
for beneficiaries in the coverage gap. Changes made by section
301 require that drug manufacturers be responsible for 30
percent of costs in the catastrophic coverage phase, to ensure
that drug companies help pay more of the costs for expensive
drugs in catastrophic coverage. Additionally, manufacturers
would be required to pay 10 percent costs in the initial
coverage phase. The new manufacturer discount program would
apply to applicable drugs, which would be defined as brand-name
drugs, biologics, and biosimilars on the formulary of a Part D
plan or otherwise covered by a Part D plan, including through
an enrollee exception or appeal. Single source drugs selected
by the Secretary for price negotiation under Section 101 of
H.R. 3 would be exempt from the manufacturer discount program
as long as the drug was covered under a price applicability
period. Section 301 program enhancements would be implemented
beginning in plan year 2022.
Section 302, ``Allowing Certain Enrollees of Prescription
Drugs Plans and MA-PD Plans Under Medicare Program to Spread
Out Cost-Sharing under Certain Circumstances,'' amends Part D
of title XVIII of the Social Security Act to direct the
Secretary to engage in rulemaking in order to allow PDPs to
give beneficiaries with high drug costs the option to pay for
such costs in installments throughout the year, known as
``smoothing.'' Eligible beneficiaries would be those who would
meet the $2000 annual out-of-pocket deductible in a single
prescription fill. Section 302 would be implemented beginning
in plan year 2022.
Section 303, ``Establishment of Pharmacy Quality Measures
Under Medicare Part D,'' amends Part D of title XVIII of the
Social Security Act and establishes pharmacy quality measures
for the purposes of providing pharmacy incentive payments or
price concessions. This section would require the Secretary to
establish standardized pharmacy quality metrics that PDPs must
use in any pharmacy incentive payment program. The Secretary
would require PDPs to use these measures as soon as they are
sufficient in number, but no later than in plan year January 1,
2021.
EFFECTIVE DATES
Section 301: Effective beginning on or after January 1,
2022.
Section 302: Effective beginning on or after January 1,
2022.
Section 303: Effective beginning on or after January 1,
2021.
Title IV: Prescription Drug Policies for Low-Income Individuals
PRESENT LAW
Medicare Part D Low Income Subsidy (LIS) Program
Private insurers participating in Part D bear some
financial risk, although federal subsidies cover most program
costs in an effort to encourage participation and keep benefits
affordable. Beneficiaries with limited incomes and resources
may qualify for additional Medicare LIS that reduce their out-
of-pocket spending by covering all, or some, of the Part D
monthly premiums and annual deductible, and limiting co-
payments or coinsurance.\46\ The LIS is progressive, with
lower-income beneficiaries receiving greater assistance.\47\
---------------------------------------------------------------------------
\46\Section 1395w-114 of the Social Security Act (42 U.S.C.
Sec. 1395w-114).
\47\Id.
---------------------------------------------------------------------------
Certain groups of Medicare beneficiaries automatically
qualify (and are deemed eligible) for the full LIS including
the following: (1) full benefit dual-eligible individuals who
qualify for Medicaid based on income and resources; (2)
individuals who receive cost-sharing assistance from Medicaid
through MSP; and (3) individuals eligible for SSI cash
assistance. Medicare beneficiaries may apply to have their LIS
eligibility determined by Social Security Administration or by
their state Medicaid agency.
For 2019, individuals may qualify for the full LIS if they
have annual incomes below 135 percent of FPL (as applicable to
family size) and resources that do not exceed $9,230 for a
single person and $14,600 for a couple. Individuals may qualify
for a partial LIS if they have incomes between 135 percent and
150 percent of FPL (applicable to family size) and resources
below $14,390 for a single person and $28,720 for a couple. The
resource limits include $1,500 per person for burial expenses.
There is a clear need to improve the programs that provide
assistance with Medicare Part D premiums and cost sharing.
Currently, an estimated 40 percent of low-income Medicare
beneficiaries spend 20 percent or more of their incomes on
premiums and health care costs.\48\ Roughly 3 in 10, or 13
million, Part D enrollees receive cost sharing assistance
through the LIS program. An additional 1 million LIS
beneficiaries are paying premiums for Part D coverage even
though they may be able to obtain coverage without a premium
through a benchmark PDP.\49\ One-third (18 million people) had
incomes below 150 percent of the federal poverty level (less
than $18,000 annually for an individual), and at best, limited
assets to last for the duration of their lifetimes.\50\
---------------------------------------------------------------------------
\48\Cathy Schoen, et al., ``A Policy Option to Enhance Access and
Affordability for Medicare's Low-Income Beneficiaries,'' The
Commonwealth Foundation, (2018). Available at: https://
www.commonwealthfund.org/publications/issue-briefs/2018/sep/medicare-
low-income-beneficiaries
\49\``10 Essential Facts About Medicare and Prescription Drug
Spending,'' Henry J. Kaiser Family Foundation, (2019). Available at:
https://www.kff.org/infographic/10-essential-facts-about-medicare-and-
prescription-drug- spending/
\50\Cathy Schoen, et al., ``A Policy Option to Enhance Access and
Affordability for Medicare's Low-Income Beneficiaries,'' The
Commonwealth Foundation, (2018). Available at: https://
www.commonwealthfund.org/publications/issue-briefs/2018/sep/medicare-
low-income-beneficiaries
---------------------------------------------------------------------------
For people with incomes near poverty ($12,120 per year for
an individual), the sum of the Part A hospital deductible, Part
B premium, and deductibles for other medical care could amount
to nearly 25 percent of income. Prescription drug premiums and
cost-sharing responsibilities are in addition to Part A and B
cost-sharing obligations, indicating how critical it is to
expand and improve these assistance programs for low- and
moderate-income beneficiaries.
State Health Insurance Assistance Program (SHIP)
The SHIP provides funding to states and U.S. territories
for outreach, counseling, and information assistance to
Medicare beneficiaries and their families and caregivers on
Medicare and other health insurance issues. Authorized under
Section 4360 of the Omnibus Budget Reconciliation Act of 1990
(OBRA '90; P.L. 101-508; 42 U.S.C. 1395b-4), SHIP grants are
administered by the Administration for Community Living within
HHS. There are SHIP projects in all 50 states, as well as the
District of Columbia, Guam, Puerto Rico, and the Virgin
Islands.
The majority of SHIP funding is provided annually under
discretionary budget authority in appropriations for Labor,
Health and Human Services, Education, and Related Agencies
(LHHS). SHIPs received $49 million in discretionary
appropriations for FY2019 and grants are provided to states
(including certain U.S. territories) based on formulas
specified in regulation and guidance. In addition to
discretionary funding, beginning in FY2009, the Medicare
Improvements for Patients and Providers Act of 2008 (MIPPA)
provided funding for specific outreach and assistance
activities to Medicare beneficiaries to SHIPs and other
entities.\51\ This mandatory funding was extended multiple
times, most recently under the Bipartisan Budget Act of 2018
through FY2019.\52\ MIPPA funding for SHIPs provided for
outreach and assistance to low-income Medicare beneficiaries
including those who may be eligible for LIS and MSP. The HHS
Secretary was required to transfer specified amounts for MIPPA
program activities from the Medicare Trust Funds. SHIPs
received $13 million in mandatory funding for FY2019 which was
provided to states based on a statutory funding formula.
---------------------------------------------------------------------------
\51\Medicare Improvements for Patients and Providers Act of 2008,
(H.R. 6331; P.L. 110-275) (July 15, 2008).
\52\Bipartisan Budget Act of 2018, (H.R. 1892; P.L. 115-123)
(February 9, 2018).
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REASONS FOR CHANGES
To make modifications to Medicare at Title XVIII of the SSA
to refine eligibility standards and administration of the Low
Income Subsidy (LIS) program under Part D.
EXPLANATION OF PROVISIONS
Section 401, ``Adjustments to Medicare Part D Cost-Sharing
Reductions for Low-Income Individuals,'' amends section 1860D-
14 of title XVIII of the Social Security Act to eliminate cost-
sharing for beneficiaries who receive generic drugs under Part
D. PDP sponsors are required under current law to apply
specific copayments for generic drugs obtained by LIS eligible
enrollees and enrollees with spending above the out-of-pocket
threshold (catastrophic coverage). PDPs must ensure that the
appropriate cost-sharing is applied to the generic drug as
defined under CMS regulations, and when a drug is provided
across multiple phases of Part D, each requiring different co-
payments, Part D sponsors charge beneficiaries only one
copayment per prescription. Section 401 fully incorporates H.R.
2757, the Creating Lower Cost Alternative for Your Prescription
Drugs Act.
Section 402, ``Dissemination to Medicare Part D Subsidy
Eligible Individuals of Information Comparing Premiums of
Certain Prescription Drug Plans,'' amends section 1860D-1 of
title XVIII of the Social Security Act to require CMS to send a
``choosers notice'' to all LIS beneficiaries with any premium
under their current plan, not just those who opt to retain
their existing PDP. Under current law, LIS enrolled
beneficiaries receive an annual notice prior to each plan year
if their plan requires a premium, but they actively chose to
retain their current plan instead of a $0 premium plan. CMS
refers to these beneficiaries as ``choosers.'' Medicare
beneficiaries on LIS are eligible for premium-free prescription
drug plans. The chooser's notice would outline the out-of-
pocket costs associated with coverage under comparable PDPs.
Section 402 fully incorporates H.R. 4632, the Better
Transparency in Information for Medicare Beneficiaries Act.
Section 403, ``Providing for Intelligent Assignment of
Certain Subsidy Eligible Individuals Auto-Enrolled Under
Medicare Prescription Drug Plans and MA-PD Plans,'' amends
section 1860D-1 of title XVIII of the Social Security Act to
require ``intelligent assignment'' of LIS-eligible individuals
so Medicare can better prioritize enrolling patients into high-
quality plans that can reduce the costs and improve access to
the drugs that individual needs. Under current law, CMS
annually automatically enrolls certain Medicare beneficiaries
who have not already chosen a plan into a Part D plan. CMS
auto-enrolls full-benefit dual eligible individuals who have
not elected a Part D plan, and also ``passively enrolls'' low-
income beneficiaries from plans with premiums above the
regional LIS benchmark and those that are terminating. These
passively enrolled beneficiaries are reassigned into a plan
with premiums below the regional LIS benchmark. Unless the plan
in which a beneficiary is enrolled is terminating or reducing
its service area and the beneficiary would be without Part D
coverage, CMS does not reassign beneficiaries that are eligible
for a full LIS premium subsidy and who have voluntarily elected
a plan. Section 403 fully incorporates H.R. 4669, the
Maximizing Drug Coverage for Low-Income Seniors Act.
Section 404, ``Expanding Eligibility for Low-Income
Subsidies Under Part D of the Medicare Program,'' amends
section 1860D-14 of title XVIII of the Social Security Act to
authorize expansion of the income eligibility thresholds for
the LIS Program. The bill increases the income thresholds for
partial subsidy LIS benefits from 150 percent to 200 percent of
the federal poverty level (FPL) (or from $25,365 to $33,820 for
a married couple, and for full LIS program benefits, from 135
to 150 percent of FPL ($22,829 to $25,365 for a married
couple), beginning January 1, 2022. Most beneficiaries who are
dually eligible for Medicare and Medicaid are ``deemed
eligible'' for LIS and automatically enrolled into the program.
Those who are not dually eligible individuals may also receive
subsidies, but they must apply for the LIS program and
demonstrate that their income and assets meet the program's
thresholds. Section 404 fully incorporates H.R. 4620, the More
Help for Seniors Act.
Section 405, ``Automatic Eligibility of Certain Low-Income
Territorial Residents for Premium and Cost-Sharing Subsidies
under the Medicare Program; Sunset of Enhanced Allotment
Program,'' amends sections 1860D-14 and 1860D-31of title XVIII
and section 1935 of the Social Security Act, to make
territorial residents to eligible for the Medicare Part D LIS
program, beginning January 1, 2021. Currently, territorial
residents are prohibited under law from receiving LIS under
Part D. In lieu of LIS, territories receive a fixed amount of
funding to provide Medicaid covered prescription drugs for low-
income beneficiaries. This funding is provided under the
enhanced allotment program and can be substantially less than
the amount of out-of-pocket assistance low-income territorial
residents would receive if were eligible for the LIS program.
Section 406, ``Automatic Qualification of Certain Medicaid
Beneficiaries for Premium and Cost-Sharing Subsidies Under Part
D of the Medicare Program,'' amends section 1860D-14 of title
XVIII of the Social Security Act to require automatic
enrollment into LIS for all adults who reach age 65 with
incomes below 200 percent of FPL and who were enrolled in
Medicaid, either through the State Plan or after January 1,
2014 under the ACA Medicaid expansion. The LIS program
automatic enrollment on or after January 1, 2022, will be for a
limited period of time, to be defined by the Secretary of the
Department of Health and Human Services.
The Patient Protection and Affordable Care Act (ACA)
directed states to cover lower income adults with incomes up to
133 percent of the FPL, and offered states the option to add
coverage for adults whose incomes exceed 133 percent of FPL.
This ``Medicaid expansion'' created a pathway to coverage for
millions of Americans with lower incomes. While individuals on
Medicaid expansion are likely eligible for LIS because of the
income thresholds, when individuals reach age 65 and enroll in
Medicare, they experience an unnecessary delay in LIS
enrollment. This delay not only has an adverse impact on one's
ability to afford and adhere to prescription drugs, but it also
exposes the individual to late enrollment penalties when they
do eventually apply to the LIS program. Section 406 fully
incorporates H.R. 4661, the Advancing Enrollment and Reducing
Drug Costs Act.
Section 407, ``Eliminating the Resource Requirement with
Respect to Subsidy Eligible Individuals Under Part D of the
Medicare Program,'' amends section 1860D-14 of title XVIII of
the Social Security Act to reduce red tape by eliminating the
resource and asset requirement to streamline the eligibility
process for the Part D LIS program. LIS program eligibility
includes income and asset requirements, and the application
process is administered through the Social Security
Administration and state governments. Section 407 fully
incorporates H.R. 4628, the Better Tools to Lower Costs Act.
Section 408, ``Providing for Certain Rules Regarding the
Treatment of Eligible Retirement Plans in Determining the
Eligibility of Individuals for Premium and Cost-Sharing
Subsidies Under Part D of the Medicare Program,'' amends
section 1860D-14 of title XVIII of the Social Security Act to
include disbursements from covered retirement accounts as
income for LIS eligibility determinations. Section 408
partially incorporates H.R. 4655, the Enhancing Retirement
Security for Medicare Beneficiaries Act, and in conjunction
with Section 407, will to help incentivize savings and provide
more out-of-pocket protection for Medicare beneficiaries by
counting disbursements from those accounts in income
calculations for prescription drug plan years beginning 2022.
EFFECTIVE DATES
Section 401: Effective beginning on or after date January
1, 2021.
Section 402: Effective beginning after the of enactment.
Section 403: Effective beginning on or after date January
1, 2022.
Section 404: Effective beginning on or after date January
1, 2022.
Section 405: Effective beginning on or after date January
1, 2021.
Section 406: Effective beginning on or after date January
1, 2022.
Section 407: Effective beginning on or after date January
1, 2022.
Section 408: Effective beginning on or after date January
1, 2022.
Title V: Drug Price Transparency
PRESENT LAW
Drug prices have been increasing astronomically over the
past 20 years, and the lack of transparency around pricing
leaves patients and the public at the mercy of drug
manufacturers. Pharmaceutical companies are free to price their
drugs as they wish, knowing there will be few to no
repercussions. The recent scandals surrounding pricing of
EpiPen and Daraprim were among the few times a drug company has
been publicly shamed for drug prices. The dramatic 50 percent
drop in price just announced by Eli Lilly also highlights
exactly how unnecessary and unjustifiable the price was to
begin with. The discount cost is still a significant jump in
price from just a few years ago and may still be unaffordable
to many diabetic patients. These realities spurred a demand for
public accountability and transparency into the rationale
behind prescription drug cost increases and high launch prices.
REASONS FOR CHANGES
To make modifications to Medicare at Title XVIII of the SSA
to require manufacturer transparency in prescription drug price
setting.
EXPLANATION OF PROVISIONS
Section 501, ``Drug Price Transparency,'' amends Part A of
title XI of the Social Security Act to require drug
manufacturers to submit a report to the Secretary 30 days
before increasing the wholesale acquisition cost (WAC) of a
qualifying drug if the estimated price of a qualifying drug for
an applicable year per course of treatment is at least $26,000;
if the manufacturer increases the price by 10 percent or more
over a 12-month period or by 25 percent or more over a 36-month
period; or if there was an increase in the price of the
qualifying drug that resulted in an increase of the WAC that is
equal to 10 percent or more within a 12 month period in the 5
year period preceding January 1, 2021, or 25 percent or more
within a 26 month period that begins and ends during the five
year period preceding January 1, 2021. Qualifying drugs have a
WAC of $100 and for which during the previous calendar year at
least $1 of total sales were for individuals enrolled under
Part D or Medicaid.
In addition, a manufacturer of a qualifying drug will be
required to report the total expenditures for manufacturing the
drug, the research and development expenditures for the drug,
and total revenue and net profit generated by the drug, as well
as other documentation as applicable. The information provided
by the manufacturer will be published unless it is considered
trade secret and confidential. Section 501 also includes a
civil monetary penalty of $75,000 per day should a manufacturer
fail to comply. Section 501 incorporates elements of H.R. 2069,
the Stopping the Pharmaceutical Industry from Keeping drugs
Expensive Act.
EFFECTIVE DATE
Section 501: Effective beginning after the of enactment.
III. VOTES OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the House of
Representatives, the following statement is made concerning the
votes of the Committee on Ways and Means during the markup
consideration of H.R. 3, the ``Lower Drug Costs Act Now Act of
2019'' on October 23, 2019.
An amendment to the amendment in the nature of a substitute
to change the name of the bill to ``Elijah E. Cummings Lower
Drug Costs Now Act'' was offered by Rep. Pascrell. The
amendment was agreed to by voice vote (with a quorum being
present).
An amendment to the amendment in the nature of a substitute
offered by Mr. Brady was ruled nongermane. Mr. Brady moved to
appeal the ruling of the Chair and Mr. Thompson moved to table
the appeal. Mr. Thompson's motion to table the appeal of the
ruling of the Chair was agreed to by a vote of 25 yeas to 16
nays. The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... X ....... ......... Mr. Brady.......... ....... X .........
Mr. Lewis........................ X ....... ......... Mr. Nunes.......... ....... ....... .........
Mr. Doggett...................... X ....... ......... Mr. Buchanan....... ....... X .........
Mr. Thompson..................... X ....... ......... Mr. Smith.......... ....... X .........
Mr. Larson....................... X ....... ......... Mr. Marchant....... ....... X .........
Mr. Blumenauer................... X ....... ......... Mr. Reed........... ....... X .........
Mr. Kind......................... X ....... ......... Mr. Kelly.......... ....... X .........
Mr. Pascrell..................... X ....... ......... Mr. Holding........ ....... X .........
Mr. Davis........................ X ....... ......... Mr. Smith.......... ....... X .........
Ms. Sanchez...................... X ....... ......... Mr. Rice........... ....... X .........
Mr. Higgins...................... X ....... ......... Mr. Schweikert..... ....... X .........
Ms. Sewell....................... X ....... ......... Ms. Walorski....... ....... X .........
Ms. DelBene...................... X ....... ......... Mr. LaHood (IL).... ....... X .........
Ms. Chu (CA)..................... X ....... ......... Mr. Wenstrup....... ....... X .........
Ms. Moore........................ X ....... ......... Mr. Arrington...... ....... X .........
Mr. Kildee....................... X ....... ......... Mr. Ferguson....... ....... X .........
Mr. Boyle........................ X ....... ......... Mr. Estes.......... ....... X .........
Mr. Beyer........................ X ....... .........
Mr. Evans........................ X ....... .........
Mr. Schneider.................... X ....... .........
Mr. Suozzi....................... X ....... .........
Mr. Panetta...................... X ....... .........
Ms. Murphy....................... X ....... .........
Mr. Gomez........................ X ....... .........
Mr. Horsford..................... X ....... .........
----------------------------------------------------------------------------------------------------------------
An amendment to the amendment in the nature of a substitute
that would redesign and modernize the Medicare Part D program
to add an out-of-office pocket spending cap for beneficiaries
and for other purposes was offered by Mr. Brady. The amendment
was defeated by a vote of 16 yeas to 24 nays. The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... ....... X ......... Mr. Brady.......... X ....... .........
Mr. Lewis........................ ....... ....... ......... Mr. Nunes.......... ....... ....... .........
Mr. Doggett...................... ....... X ......... Mr. Buchanan....... X ....... .........
Mr. Thompson..................... ....... X ......... Mr. Smith (NE)..... X ....... .........
Mr. Larson....................... ....... X ......... Mr. Marchant....... X ....... .........
Mr. Blumenauer................... ....... X ......... Mr. Reed........... X ....... .........
Mr. Kind......................... ....... X ......... Mr. Kelly.......... X ....... .........
Mr. Pascrell..................... ....... X ......... Mr. Holding........ X ....... .........
Mr. Davis........................ ....... X ......... Mr. Smith.......... X ....... .........
Ms. Sanchez...................... ....... X ......... Mr. Rice........... X ....... .........
Mr. Higgins...................... ....... X ......... Mr. Schweikert..... X ....... .........
Ms. Sewell....................... ....... X ......... Ms. Walorski....... X ....... .........
Ms. DelBene...................... ....... X ......... Mr. LaHood (IL).... X ....... .........
Ms. Chu (CA)..................... ....... X ......... Mr. Wenstrup....... X ....... .........
Ms. Moore........................ ....... X ......... Mr. Arrington...... X ....... .........
Mr. Kildee....................... ....... X ......... Mr. Ferguson....... X ....... .........
Mr. Boyle........................ ....... X ......... Mr. Estes.......... X ....... .........
Mr. Beyer........................ ....... X .........
Mr. Evans........................ ....... X .........
Mr. Schneider.................... ....... X .........
Mr. Suozzi....................... ....... X ......... ...................
Mr. Panetta...................... ....... X .........
Ms. Murphy....................... ....... X .........
Mr. Gomez........................ ....... X .........
Mr. Horsford..................... ....... X .........
----------------------------------------------------------------------------------------------------------------
An amendment to the amendment in the nature of a substitute
that would improve incentives of the add-on payment and cap the
add-on amount for Part B drugs was offered by Mr. Smith of
Nebraska. The amendment was defeated by a vote of 17 yeas to 24
nays. The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... ....... X ......... Mr. Brady.......... X ....... .........
Mr. Lewis........................ ....... ....... ......... Mr. Nunes.......... X ....... .........
Mr. Doggett...................... ....... X ......... Mr. Buchanan....... X ....... .........
Mr. Thompson..................... ....... X ......... Mr. Smith.......... X ....... .........
Mr. Larson....................... ....... X ......... Mr. Marchant....... X ....... .........
Mr. Blumenauer................... ....... X ......... Mr. Reed........... X ....... .........
Mr. Kind......................... ....... X ......... Mr. Kelly.......... X ....... .........
Mr. Pascrell..................... ....... X ......... Mr. Holding........ X ....... .........
Mr. Davis........................ ....... X ......... Mr. Smith.......... X ....... .........
Ms. Sanchez...................... ....... X ......... Mr. Rice........... X ....... .........
Mr. Higgins...................... ....... X ......... Mr. Schweikert..... X ....... .........
Ms. Sewell....................... ....... X ......... Ms. Walorski....... X ....... .........
Ms. DelBene...................... ....... X ......... Mr. LaHood (IL).... X ....... .........
Ms. Chu (CA)..................... ....... X ......... Mr. Wenstrup....... X ....... .........
Ms. Moore........................ ....... X ......... Mr. Arrington...... X ....... .........
Mr. Kildee....................... ....... X ......... Mr. Ferguson....... X ....... .........
Mr. Boyle........................ ....... X ......... Mr. Estes.......... X ....... .........
Mr. Beyer........................ ....... X .........
Mr. Evans........................ ....... X .........
Mr. Schneider.................... ....... X .........
Mr. Suozzi....................... ....... X .........
Mr. Panetta...................... ....... X .........
Ms. Murphy....................... ....... X .........
Mr. Gomez........................ ....... X .........
Mr. Horsford..................... ....... X .........
----------------------------------------------------------------------------------------------------------------
An amendment to the amendment in the nature of a substitute
that would improve transparency of out-of-pocket costs for
patients getting their Part B drugs in certain hospital
settings or in a hospital-owned physician practice was offered
by Mr. Wenstrup. The amendment was defeated by a vote of 19
yeas to 23 nays. The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... ....... X ......... Mr. Brady.......... X ....... .........
Mr. Lewis........................ ....... X ......... Mr. Nunes.......... X ....... .........
Mr. Doggett...................... X ....... ......... Mr. Buchanan....... X ....... .........
Mr. Thompson..................... ....... X ......... Mr. Smith.......... X ....... .........
Mr. Larson....................... ....... X ......... Mr. Marchant....... X ....... .........
Mr. Blumenauer................... ....... X ......... Mr. Reed........... X ....... .........
Mr. Kind......................... ....... X ......... Mr. Kelly.......... X ....... .........
Mr. Pascrell..................... ....... X ......... Mr. Holding........ X ....... .........
Mr. Davis........................ ....... X ......... Mr. Smith.......... X ....... .........
Ms. Sanchez...................... ....... X ......... Mr. Rice........... X ....... .........
Mr. Higgins...................... ....... X ......... Mr. Schweikert..... X ....... .........
Ms. Sewell....................... ....... X ......... Ms. Walorski....... X ....... .........
Ms. DelBene...................... ....... X ......... Mr. LaHood (IL).... X ....... .........
Ms. Chu (CA)..................... ....... X ......... Mr. Wenstrup....... X ....... .........
Ms. Moore........................ ....... X ......... Mr. Arrington...... X ....... .........
Mr. Kildee....................... ....... X ......... Mr. Ferguson....... X ....... .........
Mr. Boyle........................ ....... X ......... Mr. Estes.......... X ....... .........
Mr. Beyer........................ X ....... .........
Mr. Evans........................ ....... X .........
Mr. Schneider.................... ....... X .........
Mr. Suozzi....................... ....... X .........
Mr. Panetta...................... ....... X .........
Ms. Murphy....................... ....... X .........
Mr. Gomez........................ ....... X .........
Mr. Horsford..................... ....... X .........
----------------------------------------------------------------------------------------------------------------
An amendment to the amendment in the nature of a substitute
that would require a partial passthrough of Part D rebates at
the point of sale was offered by Mr. Arrington. The amendment
was defeated by voice vote (with a quorum being present).
An amendment to the amendment in the nature of a substitute
that would expand the cap on PDP offerings from three to four
and allow plans that passthrough a portion of rebates at the
point of sale to offer PDP's was offered by Mr. Reed. The
amendment was defeated by a vote of 17 yeas to 23 nays. The
vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... ....... X ......... Mr. Brady.......... X ....... .........
Mr. Lewis........................ ....... X ......... Mr. Nunes.......... X ....... .........
Mr. Doggett...................... ....... X ......... Mr. Buchanan....... X ....... .........
Mr. Thompson..................... ....... X ......... Mr. Smith.......... X ....... .........
Mr. Larson....................... ....... X ......... Mr. Marchant....... X ....... .........
Mr. Blumenauer................... ....... ....... ......... Mr. Reed........... X ....... .........
Mr. Kind......................... ....... X ......... Mr. Kelly.......... X ....... .........
Mr. Pascrell..................... ....... X ......... Mr. Holding........ X ....... .........
Mr. Davis........................ ....... X ......... Mr. Smith.......... X ....... .........
Ms. Sanchez...................... ....... X ......... Mr. Rice........... X ....... .........
Mr. Higgins...................... ....... X ......... Mr. Schweikert..... X ....... .........
Ms. Sewell....................... ....... X ......... Ms. Walorski....... X ....... .........
Ms. DelBene...................... ....... X ......... Mr. LaHood (IL).... X ....... .........
Ms. Chu (CA)..................... ....... X ......... Mr. Wenstrup....... X ....... .........
Ms. Moore........................ ....... X ......... Mr. Arrington...... X ....... .........
Mr. Kildee....................... ....... X ......... Mr. Ferguson....... X ....... .........
Mr. Boyle........................ ....... X ......... Mr. Estes.......... X ....... .........
Mr. Beyer........................ ....... X .........
Mr. Evans........................ ....... X .........
Mr. Schneider.................... ....... X .........
Mr. Suozzi....................... ....... X .........
Mr. Panetta...................... ....... X .........
Ms. Murphy....................... ....... ....... .........
Mr. Gomez........................ ....... X .........
Mr. Horsford..................... ....... X .........
----------------------------------------------------------------------------------------------------------------
An amendment to the amendment in the nature of a substitute
that would require rebates on insulin products in Part D to be
delivered at the point of sale was offered by Mr. Reed. The
amendment was defeated by a vote of 17 yeas to 24 nays. The
vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... ....... X ......... Mr. Brady.......... X ....... .........
Mr. Lewis........................ ....... X ......... Mr. Nunes.......... X ....... .........
Mr. Doggett...................... ....... X ......... Mr. Buchanan....... X ....... .........
Mr. Thompson..................... ....... X ......... Mr. Smith.......... X ....... .........
Mr. Larson....................... ....... X ......... Mr. Marchant....... X ....... .........
Mr. Blumenauer................... ....... X ......... Mr. Reed........... X ....... .........
Mr. Kind......................... ....... X ......... Mr. Kelly.......... X ....... .........
Mr. Pascrell..................... ....... X ......... Mr. Holding........ X ....... .........
Mr. Davis........................ ....... X ......... Mr. Smith.......... X ....... .........
Ms. Sanchez...................... ....... X ......... Mr. Rice........... X ....... .........
Mr. Higgins...................... ....... X ......... Mr. Schweikert..... X ....... .........
Ms. Sewell....................... ....... X ......... Ms. Walorski....... X ....... .........
Ms. DelBene...................... ....... X ......... Mr. LaHood (IL).... X ....... .........
Ms. Chu (CA)..................... ....... X ......... Mr. Wenstrup....... X ....... .........
Ms. Moore........................ ....... X ......... Mr. Arrington...... X ....... .........
Mr. Kildee....................... ....... X ......... Mr. Ferguson....... X ....... .........
Mr. Boyle........................ ....... X ......... Mr. Estes.......... X ....... .........
Mr. Beyer........................ ....... X .........
Mr. Evans........................ ....... X .........
Mr. Schneider.................... ....... X .........
Mr. Suozzi....................... ....... X .........
Mr. Panetta...................... ....... X .........
Ms. Murphy....................... ....... ....... .........
Mr. Gomez........................ ....... X .........
Mr. Horsford..................... ....... X .........
----------------------------------------------------------------------------------------------------------------
An amendment to the amendment in the nature of a substitute
that would require hospitals to pass along savings from the
340B program directly to consumers to help lower their out of
pocket costs for drugs was offered by Mr. Wenstrup. The
amendment was withdrawn.
An amendment to the amendment in the nature of a substitute
that would promote competition in the market for drugs and
biological products by stopping anti-competitive practices and
reforming certain exclusivity conditions was offered by Mr.
Ferguson. The amendment was withdrawn.
An amendment to the amendment in the nature of a substitute
that would strike the 95% excise tax imposed on certain drug
manufacturers during noncompliance periods, repeal the 2.3
percent excise tax on certain medical devices, and set the
income threshold for the medical expense deduction at 7.5
percent of adjusted gross income was offered by Ms. Walorski.
The amendment was withdrawn.
An amendment to the amendment in the nature of a substitute
that would strike Title I of H.R. 3 was offered by Mr. Nunes.
The amendment was defeated by a vote of 17 yeas to 24 nays.
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... ....... X ......... Mr. Brady.......... X ....... .........
Mr. Lewis........................ ....... X ......... Mr. Nunes.......... X ....... .........
Mr. Doggett...................... ....... X ......... Mr. Buchanan....... X ....... .........
Mr. Thompson..................... ....... X ......... Mr. Smith.......... X ....... .........
Mr. Larson....................... ....... X ......... Mr. Marchant....... X ....... .........
Mr. Blumenauer................... ....... X ......... Mr. Reed........... X ....... .........
Mr. Kind......................... ....... X ......... Mr. Kelly.......... X ....... .........
Mr. Pascrell..................... ....... X ......... Mr. Holding........ X ....... .........
Mr. Davis........................ ....... X ......... Mr. Smith.......... X ....... .........
Ms. Sanchez...................... ....... X ......... Mr. Rice........... X ....... .........
Mr. Higgins...................... ....... X ......... Mr. Schweikert..... X ....... .........
Ms. Sewell....................... ....... X ......... Ms. Walorski....... X ....... .........
Ms. DelBene...................... ....... X ......... Mr. LaHood (IL).... X ....... .........
Ms. Chu (CA)..................... ....... X ......... Mr. Wenstrup....... X ....... .........
Ms. Moore........................ ....... X ......... Mr. Arrington...... X ....... .........
Mr. Kildee....................... ....... X ......... Mr. Ferguson....... X ....... .........
Mr. Boyle........................ ....... X ......... Mr. Estes.......... X ....... .........
Mr. Beyer........................ ....... X .........
Mr. Evans........................ ....... X .........
Mr. Schneider.................... ....... X .........
Mr. Suozzi....................... ....... X .........
Mr. Panetta...................... ....... X .........
Ms. Murphy....................... ....... X .........
Mr. Gomez........................ ....... ....... .........
Mr. Horsford..................... ....... X .........
----------------------------------------------------------------------------------------------------------------
An amendment to the amendment in the nature of a substitute
that would eliminate international reference pricing from H.R.
3 was offered by Mr. Holding. The amendment was defeated by a
vote of 17 yeas to 25 nays. The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... ....... X ......... Mr. Brady.......... X ....... .........
Mr. Lewis........................ ....... X ......... Mr. Nunes.......... X ....... .........
Mr. Doggett...................... ....... X ......... Mr. Buchanan....... X ....... .........
Mr. Thompson..................... ....... X ......... Mr. Smith.......... X ....... .........
Mr. Larson....................... ....... X ......... Mr. Marchant....... X ....... .........
Mr. Blumenauer................... ....... X ......... Mr. Reed........... X ....... .........
Mr. Kind......................... ....... X ......... Mr. Kelly.......... X ....... .........
Mr. Pascrell..................... ....... X ......... Mr. Holding........ X ....... .........
Mr. Davis........................ ....... X ......... Mr. Smith.......... X ....... .........
Ms. Sanchez...................... ....... X ......... Mr. Rice........... X ....... .........
Mr. Higgins...................... ....... X ......... Mr. Schweikert..... X ....... .........
Ms. Sewell....................... ....... X ......... Ms. Walorski....... X ....... .........
Ms. DelBene...................... ....... X ......... Mr. LaHood (IL).... X ....... .........
Ms. Chu (CA)..................... ....... X ......... Mr. Wenstrup....... X ....... .........
Ms. Moore........................ ....... X ......... Mr. Arrington...... X ....... .........
Mr. Kildee....................... ....... X ......... Mr. Ferguson....... X ....... .........
Mr. Boyle........................ ....... X ......... Mr. Estes.......... X ....... .........
Mr. Beyer........................ ....... X .........
Mr. Evans........................ ....... X .........
Mr. Schneider.................... ....... X .........
Mr. Suozzi....................... ....... X .........
Mr. Panetta...................... ....... X .........
Ms. Murphy....................... ....... X .........
Mr. Gomez........................ ....... X .........
Mr. Horsford..................... ....... X .........
----------------------------------------------------------------------------------------------------------------
An amendment to the amendment in the nature of a substitute
that would exempt any drug used to treat Alzheimer's disease
from price setting was offered by Mr. LaHood. The amendment was
defeated by a vote of 17 yeas to 23 nays. The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... ....... X ......... Mr. Brady.......... X ....... .........
Mr. Lewis........................ ....... X ......... Mr. Nunes.......... ....... ....... .........
Mr. Doggett...................... ....... X ......... Mr. Buchanan....... ....... ....... .........
Mr. Thompson..................... ....... X ......... Mr. Smith.......... X ....... .........
Mr. Larson....................... ....... X ......... Mr. Marchant....... X ....... .........
Mr. Blumenauer................... ....... X ......... Mr. Reed........... X ....... .........
Mr. Kind......................... ....... X ......... Mr. Kelly.......... X ....... .........
Mr. Pascrell..................... ....... ....... ......... Mr. Holding........ X ....... .........
Mr. Davis........................ ....... X ......... Mr. Smith.......... X ....... .........
Ms. Sanchez...................... ....... X ......... Mr. Rice........... X ....... .........
Mr. Higgins...................... ....... X ......... Mr. Schweikert..... X ....... .........
Ms. Sewell....................... ....... X ......... Ms. Walorski....... X ....... .........
Ms. DelBene...................... ....... X ......... Mr. LaHood (IL).... X ....... .........
Ms. Chu (CA)..................... ....... X ......... Mr. Wenstrup....... X ....... .........
Ms. Moore........................ ....... X ......... Mr. Arrington...... X ....... .........
Mr. Kildee....................... ....... X ......... Mr. Ferguson....... X ....... .........
Mr. Boyle........................ ....... X ......... Mr. Estes.......... X ....... .........
Mr. Beyer........................ ....... X .........
Mr. Evans........................ ....... X .........
Mr. Schneider.................... ....... X .........
Mr. Suozzi....................... ....... ....... .........
Mr. Panetta...................... ....... X .........
Ms. Murphy....................... ....... X .........
Mr. Gomez........................ ....... X .........
Mr. Horsford..................... ....... X .........
----------------------------------------------------------------------------------------------------------------
An amendment to the amendment in the nature of a substitute
that would exempt any drug used to treat or cure Cancer from
price setting was offered by Ms. Walorski. The amendment was
defeated by a vote of 16 yeas to 24 nays. The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... ....... X ......... Mr. Brady.......... X ....... .........
Mr. Lewis........................ ....... X ......... Mr. Nunes.......... X ....... .........
Mr. Doggett...................... ....... X ......... Mr. Buchanan....... X ....... .........
Mr. Thompson..................... ....... X ......... Mr. Smith.......... X ....... .........
Mr. Larson....................... ....... X ......... Mr. Marchant....... X ....... .........
Mr. Blumenauer................... ....... X ......... Mr. Reed........... X ....... .........
Mr. Kind......................... ....... X ......... Mr. Kelly.......... X ....... .........
Mr. Pascrell..................... ....... ....... ......... Mr. Holding........ X ....... .........
Mr. Davis........................ ....... X ......... Mr. Smith.......... X ....... .........
Ms. Sanchez...................... ....... X ......... Mr. Rice........... X ....... .........
Mr. Higgins...................... ....... X ......... Mr. Schweikert..... X ....... .........
Ms. Sewell....................... ....... X ......... Ms. Walorski....... X ....... .........
Ms. DelBene...................... ....... X ......... Mr. LaHood (IL).... X ....... .........
Ms. Chu (CA)..................... ....... X ......... Mr. Wenstrup....... X ....... .........
Ms. Moore........................ ....... X ......... Mr. Arrington...... X ....... .........
Mr. Kildee....................... ....... X ......... Mr. Ferguson....... ....... ....... .........
Mr. Boyle........................ ....... X ......... Mr. Estes.......... X ....... .........
Mr. Beyer........................ ....... X .........
Mr. Evans........................ ....... X .........
Mr. Schneider.................... ....... X .........
Mr. Suozzi....................... ....... X .........
Mr. Panetta...................... ....... X .........
Ms. Murphy....................... ....... X .........
Mr. Gomez........................ ....... X .........
Mr. Horsford..................... ....... X .........
----------------------------------------------------------------------------------------------------------------
An amendment to the amendment in the nature of a substitute
that would exempt any drug used to treat or cure any disease or
any other disease most prevalent to seniors from price setting
was offered by Mr. Smith of Nebraska. The amendment was
defeated by a voice vote (with a quorum being present).
An amendment to the amendment in the nature of a substitute
that would allow New Drug applications for unmet medical needs
that benefit Medicare beneficiaries was offered by Mr. Kelly.
The amendment was defeated by a voice vote (with a quorum being
present).
An amendment to the amendment in the nature of a substitute
offered by Mr. LaHood was ruled nongermane. Mr. LaHood moved to
appeal the ruling of the Chair and Mr. Thompson moved to table
the appeal. Mr. Thompson's motion to table the appeal of the
ruling of the Chair was agreed to by a vote of 24 yeas to 16
nays. The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... X ....... ......... Mr. Brady.......... ....... X .........
Mr. Lewis........................ X ....... ......... Mr. Nunes.......... ....... X .........
Mr. Doggett...................... X ....... ......... Mr. Buchanan....... ....... X .........
Mr. Thompson..................... X ....... ......... Mr. Smith.......... ....... X .........
Mr. Larson....................... X ....... ......... Mr. Marchant....... ....... X .........
Mr. Blumenauer................... X ....... ......... Mr. Reed........... ....... X .........
Mr. Kind......................... X ....... ......... Mr. Kelly.......... ....... X .........
Mr. Pascrell..................... X ....... ......... Mr. Holding........ ....... X .........
Mr. Davis........................ X ....... ......... Mr. Smith.......... ....... X .........
Ms. Sanchez...................... ....... ....... ......... Mr. Rice........... ....... X .........
Mr. Higgins...................... X ....... ......... Mr. Schweikert..... ....... X .........
Ms. Sewell....................... X ....... ......... Ms. Walorski....... ....... ....... .........
Ms. DelBene...................... X ....... ......... Mr. LaHood (IL).... ....... X .........
Ms. Chu (CA)..................... X ....... ......... Mr. Wenstrup....... ....... X .........
Ms. Moore........................ X ....... ......... Mr. Arrington...... ....... X .........
Mr. Kildee....................... X ....... ......... Mr. Ferguson....... ....... X .........
Mr. Boyle........................ X ....... ......... Mr. Estes.......... ....... X .........
Mr. Beyer........................ X ....... .........
Mr. Evans........................ X ....... .........
Mr. Schneider.................... X ....... .........
Mr. Suozzi....................... X ....... .........
Mr. Panetta...................... X ....... .........
Ms. Murphy....................... X ....... .........
Mr. Gomez........................ X ....... .........
Mr. Horsford..................... X ....... .........
----------------------------------------------------------------------------------------------------------------
An amendment to the amendment in the nature of a substitute
that would require no provision of H.R. 3 be implemented until
the Secretary of Health and Human Services certifies in writing
that H.R. 3 will not reduce access to life-saving medications
in rural areas within the United States was offered by Mr.
Smith of Missouri. The amendment was defeated by a vote of 17
yeas to 25 nays. The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... ....... X ......... Mr. Brady.......... X ....... .........
Mr. Lewis........................ ....... X ......... Mr. Nunes.......... X ....... .........
Mr. Doggett...................... ....... X ......... Mr. Buchanan....... X ....... .........
Mr. Thompson..................... ....... X ......... Mr. Smith.......... X ....... .........
Mr. Larson....................... ....... X ......... Mr. Marchant....... X ....... .........
Mr. Blumenauer................... ....... X ......... Mr. Reed........... X ....... .........
Mr. Kind......................... ....... X ......... Mr. Kelly.......... X ....... .........
Mr. Pascrell..................... ....... X ......... Mr. Holding........ X ....... .........
Mr. Davis........................ ....... X ......... Mr. Smith.......... X ....... .........
Ms. Sanchez...................... ....... ....... ......... Mr. Rice........... X ....... .........
Mr. Higgins...................... ....... X ......... Mr. Schweikert..... X ....... .........
Ms. Sewell....................... ....... X ......... Ms. Walorski....... X ....... .........
Ms. DelBene...................... ....... X ......... Mr. LaHood (IL).... X ....... .........
Ms. Chu (CA)..................... ....... X ......... Mr. Wenstrup....... X ....... .........
Ms. Moore........................ ....... X ......... Mr. Arrington...... X ....... .........
Mr. Kildee....................... ....... X ......... Mr. Ferguson....... X ....... .........
Mr. Boyle........................ ....... X ......... Mr. Estes.......... X ....... .........
Mr. Beyer........................ ....... X .........
Mr. Evans........................ ....... X .........
Mr. Schneider.................... ....... X .........
Mr. Suozzi....................... ....... X .........
Mr. Panetta...................... ....... X .........
Ms. Murphy....................... ....... X .........
Mr. Gomez........................ ....... X .........
Mr. Horsford..................... ....... X .........
----------------------------------------------------------------------------------------------------------------
An amendment to the amendment in the nature of a substitute
offered by Mr. Ferguson was ruled nongermane. Mr. Ferguson
moved to appeal the ruling of the Chair and Mr. Thompson moved
to table the appeal. Mr. Thompson's motion to table the appeal
of the ruling of the Chair was agreed to by a vote of 25 yeas
to 17 nays. The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... X ....... ......... Mr. Brady.......... ....... X .........
Mr. Lewis........................ X ....... ......... Mr. Nunes.......... ....... X .........
Mr. Doggett...................... X ....... ......... Mr. Buchanan....... ....... X .........
Mr. Thompson..................... X ....... ......... Mr. Smith.......... ....... X .........
Mr. Larson....................... X ....... ......... Mr. Marchant....... ....... X .........
Mr. Blumenauer................... X ....... ......... Mr. Reed........... ....... X .........
Mr. Kind......................... X ....... ......... Mr. Kelly.......... ....... X .........
Mr. Pascrell..................... X ....... ......... Mr. Holding........ ....... X .........
Mr. Davis........................ X ....... ......... Mr. Smith.......... ....... X .........
Ms. Sanchez...................... X ....... ......... Mr. Rice........... ....... X .........
Mr. Higgins...................... X ....... ......... Mr. Schweikert..... ....... X .........
Ms. Sewell....................... X ....... ......... Ms. Walorski....... ....... X .........
Ms. DelBene...................... X ....... ......... Mr. LaHood (IL).... ....... X .........
Ms. Chu (CA)..................... X ....... ......... Mr. Wenstrup....... ....... X .........
Ms. Moore........................ X ....... ......... Mr. Arrington...... ....... X .........
Mr. Kildee....................... X ....... ......... Mr. Ferguson....... ....... X .........
Mr. Boyle........................ X ....... ......... Mr. Estes.......... ....... X .........
Mr. Beyer........................ X ....... .........
Mr. Evans........................ X ....... .........
Mr. Schneider.................... X ....... .........
Mr. Suozzi....................... X ....... .........
Mr. Panetta...................... X ....... .........
Ms. Murphy....................... X ....... .........
Mr. Gomez........................ X ....... .........
Mr. Horsford..................... X ....... .........
----------------------------------------------------------------------------------------------------------------
An amendment to the amendment in the nature of a substitute
that would create a Chief Pharmaceutical Negotiator at the
Office of the United States Trade Representative was offered by
Mr. Arrington. The amendment was withdrawn.
An amendment to the amendment in the nature of a substitute
that would create a technical expert panel to provide
recommendations on alternative payment models under Medicare in
order to encourage the development of cures was offered by Mr.
Schweikert. The amendment was withdrawn.
An amendment to the amendment in the nature of a substitute
that would create a medication adherence pilot program was
offered by Mr. Schweikert. The amendment was withdrawn.
An amendment to the amendment in the nature of a substitute
offered by Mr. Kelly was ruled nongermane. Mr. Kelly moved to
appeal the ruling of the Chair and Mr. Thompson moved to table
the appeal. Mr. Thompson's motion to table the appeal of the
ruling of the Chair was agreed to by a vote of 25 yeas to 17
nays. The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... X ....... ......... Mr. Brady.......... ....... X .........
Mr. Lewis........................ X ....... ......... Mr. Nunes.......... ....... X .........
Mr. Doggett...................... X ....... ......... Mr. Buchanan....... ....... X .........
Mr. Thompson..................... X ....... ......... Mr. Smith.......... ....... X .........
Mr. Larson....................... X ....... ......... Mr. Marchant....... ....... X .........
Mr. Blumenauer................... X ....... ......... Mr. Reed........... ....... X .........
Mr. Kind......................... X ....... ......... Mr. Kelly.......... ....... X .........
Mr. Pascrell..................... X ....... ......... Mr. Holding........ ....... X .........
Mr. Davis........................ X ....... ......... Mr. Smith.......... ....... X .........
Ms. Sanchez...................... X ....... ......... Mr. Rice........... ....... X .........
Mr. Higgins...................... X ....... ......... Mr. Schweikert..... ....... X .........
Ms. Sewell....................... X ....... ......... Ms. Walorski....... ....... X .........
Ms. DelBene...................... X ....... ......... Mr. LaHood (IL).... ....... X .........
Ms. Chu (CA)..................... X ....... ......... Mr. Wenstrup....... ....... X .........
Ms. Moore........................ X ....... ......... Mr. Arrington...... ....... X .........
Mr. Kildee....................... X ....... ......... Mr. Ferguson....... ....... X .........
Mr. Boyle........................ X ....... ......... Mr. Estes.......... ....... X .........
Mr. Beyer........................ X ....... .........
Mr. Evans........................ X ....... .........
Mr. Schneider.................... X ....... .........
Mr. Suozzi....................... X ....... .........
Mr. Panetta...................... X ....... .........
Ms. Murphy....................... X ....... .........
Mr. Gomez........................ X ....... .........
Mr. Horsford..................... X ....... .........
----------------------------------------------------------------------------------------------------------------
An amendment to the amendment in the nature of a substitute
offered by Mr. Estes was ruled nongermane. Mr. Estes moved to
appeal the ruling of the Chair and Mr. Thompson moved to table
the appeal. Mr. Thompson's motion to table the appeal of the
ruling of the Chair was agreed to by a vote of 25 yeas to 16
nays. The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... X ....... ......... Mr. Brady.......... ....... X .........
Mr. Lewis........................ X ....... ......... Mr. Nunes.......... ....... X .........
Mr. Doggett...................... X ....... ......... Mr. Buchanan....... ....... X .........
Mr. Thompson..................... X ....... ......... Mr. Smith.......... ....... X .........
Mr. Larson....................... X ....... ......... Mr. Marchant....... ....... X .........
Mr. Blumenauer................... X ....... ......... Mr. Reed........... ....... X .........
Mr. Kind......................... X ....... ......... Mr. Kelly.......... ....... X .........
Mr. Pascrell..................... X ....... ......... Mr. Holding........ ....... X .........
Mr. Davis........................ X ....... ......... Mr. Smith.......... ....... X .........
Ms. Sanchez...................... X ....... ......... Mr. Rice........... ....... X .........
Mr. Higgins...................... X ....... ......... Mr. Schweikert..... ....... ....... .........
Ms. Sewell....................... X ....... ......... Ms. Walorski....... ....... X .........
Ms. DelBene...................... X ....... ......... Mr. LaHood (IL).... ....... X .........
Ms. Chu (CA)..................... X ....... ......... Mr. Wenstrup....... ....... X .........
Ms. Moore........................ X ....... ......... Mr. Arrington...... ....... X .........
Mr. Kildee....................... X ....... ......... Mr. Ferguson....... ....... X .........
Mr. Boyle........................ X ....... ......... Mr. Estes.......... ....... X .........
Mr. Beyer........................ X ....... .........
Mr. Evans........................ X ....... .........
Mr. Schneider.................... X ....... .........
Mr. Suozzi....................... X ....... .........
Mr. Panetta...................... X ....... .........
Ms. Murphy....................... X ....... .........
Mr. Gomez........................ X ....... .........
Mr. Horsford..................... X ....... .........
----------------------------------------------------------------------------------------------------------------
An amendment to the amendment in the nature of a substitute
that would provide relief from Obamacare's tax on branded drugs
was offered by Mr. Rice. The amendment was defeated by a vote
of 17 yeas to 25 nays. The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... ....... X ......... Mr. Brady.......... X ....... .........
Mr. Lewis........................ ....... X ......... Mr. Nunes.......... X ....... .........
Mr. Doggett...................... ....... X ......... Mr. Buchanan....... X ....... .........
Mr. Thompson..................... ....... X ......... Mr. Smith.......... X ....... .........
Mr. Larson....................... ....... X ......... Mr. Marchant....... X ....... .........
Mr. Blumenauer................... ....... X ......... Mr. Reed........... X ....... .........
Mr. Kind......................... ....... X ......... Mr. Kelly.......... X ....... .........
Mr. Pascrell..................... ....... X ......... Mr. Holding........ X ....... .........
Mr. Davis........................ ....... X ......... Mr. Smith.......... X ....... .........
Ms. Sanchez...................... ....... X ......... Mr. Rice........... X ....... .........
Mr. Higgins...................... ....... X ......... Mr. Schweikert..... X ....... .........
Ms. Sewell....................... ....... X ......... Ms. Walorski....... X ....... .........
Ms. DelBene...................... ....... X ......... Mr. LaHood (IL).... X ....... .........
Ms. Chu (CA)..................... ....... X ......... Mr. Wenstrup....... X ....... .........
Ms. Moore........................ ....... X ......... Mr. Arrington...... X ....... .........
Mr. Kildee....................... ....... X ......... Mr. Ferguson....... X ....... .........
Mr. Boyle........................ ....... X ......... Mr. Estes.......... X ....... .........
Mr. Beyer........................ ....... X .........
Mr. Evans........................ ....... X .........
Mr. Schneider.................... ....... X .........
Mr. Suozzi....................... ....... X .........
Mr. Panetta...................... ....... X .........
Ms. Murphy....................... ....... X .........
Mr. Gomez........................ ....... X .........
Mr. Horsford..................... ....... X .........
----------------------------------------------------------------------------------------------------------------
An amendment to the amendment in the nature of a substitute
that would amend the ``Fair Price Eligible Individual''
definition to include the uninsured was offered by Mr. Doggett.
The amendment was defeated by a vote of 4 yeas to 20 nays, with
17 voting present. The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... ....... X ......... Mr. Brady.......... ....... ....... X
Mr. Lewis........................ ....... X ......... Mr. Nunes.......... ....... ....... X
Mr. Doggett...................... X ....... ......... Mr. Buchanan....... ....... ....... X
Mr. Thompson..................... ....... X ......... Mr. Smith.......... ....... ....... X
Mr. Larson....................... ....... X ......... Mr. Marchant....... ....... ....... X
Mr. Blumenauer................... ....... X ......... Mr. Reed........... ....... ....... X
Mr. Kind......................... ....... X ......... Mr. Kelly.......... ....... ....... X
Mr. Pascrell..................... ....... X ......... Mr. Holding........ ....... ....... X
Mr. Davis........................ ....... X ......... Mr. Smith.......... ....... ....... X
Ms. Sanchez...................... ....... ....... ......... Mr. Rice........... ....... ....... X
Mr. Higgins...................... ....... X ......... Mr. Schweikert..... ....... ....... X
Ms. Sewell....................... ....... X ......... Ms. Walorski....... ....... ....... X
Ms. DelBene...................... ....... X ......... Mr. LaHood (IL).... ....... ....... X
Ms. Chu (CA)..................... X ....... ......... Mr. Wenstrup....... ....... ....... X
Ms. Moore........................ X ....... ......... Mr. Arrington...... ....... ....... X
Mr. Kildee....................... ....... X ......... Mr. Ferguson....... ....... ....... X
Mr. Boyle........................ ....... ....... ......... Mr. Estes.......... ....... ....... X
Mr. Beyer........................ X ....... .........
Mr. Evans........................ ....... X .........
Mr. Schneider.................... ....... X .........
Mr. Suozzi....................... ....... X .........
Mr. Panetta...................... ....... X .........
Ms. Murphy....................... ....... X .........
Mr. Gomez........................ ....... X .........
Mr. Horsford..................... ....... X .........
----------------------------------------------------------------------------------------------------------------
An amendment to the amendment in the nature of a substitute
that would increase the minimum number of drugs to be
negotiated to 50 within 5 years and 100 within 10 years was
offered by Mr. Doggett. The amendment was defeated by a vote of
3 yeas to 39 nays. The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... ....... X ......... Mr. Brady.......... ....... X .........
Mr. Lewis........................ ....... X ......... Mr. Nunes.......... ....... X .........
Mr. Doggett...................... X ....... ......... Mr. Buchanan....... ....... X .........
Mr. Thompson..................... ....... X ......... Mr. Smith.......... ....... X .........
Mr. Larson....................... ....... X ......... Mr. Marchant....... ....... X .........
Mr. Blumenauer................... ....... X ......... Mr. Reed........... ....... X .........
Mr. Kind......................... ....... X ......... Mr. Kelly.......... ....... X .........
Mr. Pascrell..................... ....... X ......... Mr. Holding........ ....... X .........
Mr. Davis........................ ....... X ......... Mr. Smith.......... ....... X .........
Ms. Sanchez...................... ....... ....... ......... Mr. Rice........... ....... X .........
Mr. Higgins...................... ....... X ......... Mr. Schweikert..... ....... X .........
Ms. Sewell....................... ....... X ......... Ms. Walorski....... ....... X .........
Ms. DelBene...................... ....... X ......... Mr. LaHood (IL).... ....... X .........
Ms. Chu (CA)..................... X ....... ......... Mr. Wenstrup....... ....... X .........
Ms. Moore........................ ....... X ......... Mr. Arrington...... ....... X .........
Mr. Kildee....................... ....... X ......... Mr. Ferguson....... ....... X .........
Mr. Boyle........................ ....... ....... ......... Mr. Estes.......... ....... X .........
Mr. Beyer........................ X ....... .........
Mr. Evans........................ ....... X .........
Mr. Schneider.................... ....... X .........
Mr. Suozzi....................... ....... X .........
Mr. Panetta...................... ....... X .........
Ms. Murphy....................... ....... X .........
Mr. Gomez........................ ....... X .........
Mr. Horsford..................... ....... X .........
----------------------------------------------------------------------------------------------------------------
The amendment in the nature of a substitute to H.R. 3 was
agreed to by voice vote (with a quorum being present).
H.R. 3 was ordered favorably reported to the House of
Representatives as amended by an amendment in the nature of a
substitute offered by Chairman Neal by a vote of 24 yeas to 17
nays, with one voting present.
The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal......................... X ....... ......... Mr. Brady.......... ....... X .........
Mr. Lewis........................ X ....... ......... Mr. Nunes.......... ....... X .........
Mr. Doggett...................... ....... ....... X Mr. Buchanan....... ....... X .........
Mr. Thompson..................... X ....... ......... Mr. Smith (NE)..... ....... X .........
Mr. Larson....................... X ....... ......... Mr. Marchant....... ....... X .........
Mr. Blumenauer................... X ....... ......... Mr. Reed........... ....... X .........
Mr. Kind......................... X ....... ......... Mr. Kelly.......... ....... X .........
Mr. Pascrell..................... X ....... ......... Mr. Holding........ ....... X .........
Mr. Davis........................ X ....... ......... Mr. Smith (MO)..... ....... X .........
Ms. Sanchez...................... X ....... ......... Mr. Rice........... ....... X .........
Mr. Higgins...................... X ....... ......... Mr. Schweikert..... ....... X .........
Ms. Sewell....................... X ....... ......... Ms. Walorski....... ....... X .........
Ms. DelBene...................... X ....... ......... Mr. LaHood (IL).... ....... X .........
Ms. Chu (CA)..................... X ....... ......... Mr. Wenstrup....... ....... X .........
Ms. Moore........................ X ....... ......... Mr. Arrington...... ....... X .........
Mr. Kildee....................... X ....... ......... Mr. Ferguson....... ....... X .........
Mr. Boyle........................ X ....... ......... Mr. Estes.......... ....... X .........
Mr. Beyer........................ X ....... .........
Mr. Evans........................ X ....... .........
Mr. Schneider.................... X ....... .........
Mr. Suozzi....................... X ....... .........
Mr. Panetta...................... X ....... .........
Ms. Murphy....................... X ....... .........
Mr. Gomez........................ X ....... .........
Mr. Horsford..................... X ....... .........
----------------------------------------------------------------------------------------------------------------
III. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
Clause 3(d)(1) of the Rules of the House of Representatives
requires an estimate and a comparison of costs that would be
incurred in carrying out H.R. 3. The Committee traditionally
adopts as its own the cost estimate prepared by the Director of
the Congressional Budget Office (CBO) pursuant to section 402
of the Congressional Budget Act of 1974. The Committee reports
that because this cost estimate was not timely submitted to the
Committee before the filing of this report, the Committee is
not in a position to make a cost estimate for H.R. 3, as
amended.
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
Pursuant to clause 3(c)(2) of rule XIII of the Rules of the
House of Representatives, the Committee states that the bill
involves no new or increased budget authority. The Committee
further states that the bill involves no new tax expenditure.
C. Cost Estimate Prepared by the Congressional Budget Office
With respect to the requirements of clause 3(c)(3) of rule
XIII of the Rules of the House of Representatives, the
Committee has requested but not received a cost estimate for
the bill from the Director of the Congressional Budget Office.
IV. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee made findings and recommendations that are
reflected in this report.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.
C. Information Relating to Unfunded Mandates
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
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.
D. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill, and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
E. Duplication of Federal Programs
In compliance with clause 3(c)(5) of rule XIII of the Rules
of the House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes: (1) a
program of the Federal Government known to be duplicative of
another Federal program; (2) a program included in any report
to Congress pursuant to section 21 of Public Law 111-139; or
(3) a program related to a program identified in the most
recent Catalog of Federal Domestic Assistance, published
pursuant section 6104 of title 31, United States Code.
F. Hearings
In compliance with Sec. 103(i) of H. Res. 6 (116th
Congress) the following hearing was used to develop or consider
H.R. 3:
(1) On October 17, 2019, the Committee on Ways and Means
held a full committee hearing entitled, ``Investing in the U.S.
Health system by lowering drug prices, reducing out-of-pocket
costs, and improving Medicare benefits'' to discuss how H.R. 3,
the Lower Drug Costs Now Act, will lower prescription drug
prices in Medicare and the commercial market, improve
affordability of medicine, and reduce costs for patients and
taxpayers in addition to ways savings from H.R. 3 can be
reinvested to improve care and lower costs for seniors and
people with disabilities enrolled in Medicare.
(2) the following related hearings were also held:
On February 12, 2019, the Committee on Ways and Means
held a full committee hearing entitled, ``The Cost of
Rising Prescription Drug Prices,'' to discuss the drug
pricing crisis.
On March 7, 2019, the Committee on Ways and Means
held a health subcommittee hearing entitled,
``Promoting Competition to Lower Medicare Drug
Prices,'' to discuss the complicated drug pricing
landscape, including how to lower prescription drug
prices through competition, pay for value, and lower
out-of-pocket costs for patients.
On June 4, 2019, the Committee on Ways and Means held
a full committee Member Day hearing to discuss the
range of issues, concerns, and proposals among on-
committee and off-committee members.
V. Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e)(1)(B) of rule XIII of the
Rules of the House of Representatives, changes in existing law
proposed 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, existing law in
which no change is proposed is shown in roman):
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 XI--GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE
SIMPLIFICATION
* * * * * * *
Part A--General Provisions
* * * * * * *
SEC. 1150C. REPORTING ON DRUG PRICES.
(a) Definitions.--In this section:
(1) Manufacturer.--The term ``manufacturer'' means
the person--
(A) that holds the application for a drug
approved under section 505 of the Federal Food,
Drug, and Cosmetic Act or licensed under
section 351 of the Public Health Service Act;
or
(B) who is responsible for setting the
wholesale acquisition cost for the drug.
(2) Qualifying drug.--The term ``qualifying drug''
means any drug that is approved under subsection (c) or
(j) of section 505 of the Federal Food, Drug, and
Cosmetic Act or licensed under subsection (a) or (k) of
section 351 of the Public Health Service Act--
(A) that has a wholesale acquisition cost of
$100 or more, adjusted for inflation occurring
after the date of enactment of this section,
for a month's supply or a typical course of
treatment that lasts less than a month, and
is--
(i) subject to section 503(b)(1) of
the Federal Food, Drug, and Cosmetic
Act; and
(ii) not a preventative vaccine; and
(B) for which, during the previous calendar
year, at least 1 dollar of the total amount of
sales were for individuals enrolled under the
Medicare program under title XVIII or under a
State Medicaid plan under title XIX or under a
waiver of such plan.
(3) Wholesale acquisition cost.--The term ``wholesale
acquisition cost'' has the meaning given that term in
section 1847A(c)(6)(B).
(b) Report.--
(1) Report required.--The manufacturer of a
qualifying drug shall submit a report to the Secretary
if, with respect to the qualifying drug--
(A) there is an increase in the price of the
qualifying drug that results in an increase in
the wholesale acquisition cost of that drug
that is equal to--
(i) 10 percent or more within a 12-
month period beginning on or after
January 1, 2019; or
(ii) 25 percent or more within a 36-
month period beginning on or after
January 1, 2019;
(B) the estimated price of the qualifying
drug or spending per individual or per user of
such drug (as estimated by the Secretary) for
the applicable year (or per course of treatment
in such applicable year as determined by the
Secretary) is at least $26,000 beginning on or
after January 1, 2021; or
(C) there was an increase in the price of the
qualifying drug that resulted in an increase in
the wholesale acquisition cost of that drug
that is equal to--
(i) 10 percent or more within a 12-
month period that begins and ends
during the 5-year period preceding
January 1, 2021; or
(ii) 25 percent or more within a 36-
month period that begins and ends
during the 5-year period preceding
January 1, 2021.
(2) Report deadline.--Each report described in
paragraph (1) shall be submitted to the Secretary--
(A) in the case of a report with respect to
an increase in the price of a qualifying drug
that occurs during the period beginning on
January 1, 2019, and ending on the day that is
60 days after the date of the enactment of this
section, not later than 90 days after such date
of enactment;
(B) in the case of a report with respect to
an increase in the price of a qualifying drug
that occurs after the period described in
subparagraph (A), not later than 30 days prior
to the planned effective date of such price
increase for such qualifying drug;
(C) in the case of a report with respect to a
qualifying drug that meets the criteria under
paragraph (1)(B), not later than 30 days after
such drug meets such criteria; and
(D) in the case of a report with respect to
an increase in the price of a qualifying drug
that occurs during a 12-month or 36-month
period described in paragraph (1)(C), not later
than April 1, 2021.
(c) Contents.--A report under subsection (b), consistent with
the standard for disclosures described in section 213.3(d) of
title 12, Code of Federal Regulations (as in effect on the date
of enactment of this section), shall, at a minimum, include--
(1) with respect to the qualifying drug--
(A) the percentage by which the manufacturer
will raise the wholesale acquisition cost of
the drug within the 12-month period or 36-month
period as described in subsection (b)(1)(A)(i),
(b)(1)(A)(ii), (b)(1)(C)(i), or (b)(1)(C)(ii),
as applicable, and the effective date of such
price increase or the cost associated with a
qualifying drug if such drug meets the criteria
under subsection (b)(1)(B) and the effective
date at which such drug meets such criteria;
(B) an explanation for, and description of,
each price increase for such drug that will
occur during the 12-month period or the 36-
month period described in subsection
(b)(1)(A)(i), (b)(1)(A)(ii), (b)(1)(C)(i), or
(b)(1)(C)(ii), as applicable;
(C) an explanation for, and description of,
the cost associated with a qualifying drug if
such drug meets the criteria under subsection
(b)(1)(B), as applicable;
(D) if known and different from the
manufacturer of the qualifying drug, the
identity of--
(i) the sponsor or sponsors of any
investigational new drug applications
under section 505(i) of the Federal
Food, Drug, and Cosmetic Act for
clinical investigations with respect to
such drug, for which the full reports
are submitted as part of the
application--
(I) for approval of the drug
under section 505 of such Act;
or
(II) for licensure of the
drug under section 351 of the
Pubic Health Service Act; and
(ii) the sponsor of an application
for the drug approved under such
section 505 of the Federal Food, Drug,
and Cosmetic Act or licensed under
section 351 of the Public Health
Service Act;
(E) a description of the history of the
manufacturer's price increases for the drug
since the approval of the application for the
drug under section 505 of the Federal Food,
Drug, and Cosmetic Act or the issuance of the
license for the drug under section 351 of the
Public Health Service Act, or since the
manufacturer acquired such approved application
or license, if applicable;
(F) the current wholesale acquisition cost of
the drug;
(G) the total expenditures of the
manufacturer on--
(i) materials and manufacturing for
such drug;
(ii) acquiring patents and licensing
for such drug; and
(iii) purchasing or acquiring such
drug from another manufacturer, if
applicable;
(H) the percentage of total expenditures of
the manufacturer on research and development
for such drug that was derived from Federal
funds;
(I) the total expenditures of the
manufacturer on research and development for
such drug that is necessary to demonstrate that
it meets applicable statutory standards for
approval under section 505 of the Federal Food,
Drug, and Cosmetic Act or licensure under
section 351 of the Public Health Service Act,
as applicable;
(J) the total expenditures of the
manufacturer on pursuing new or expanded
indications or dosage changes for such drug
under section 505 of the Federal Food, Drug,
and Cosmetic Act or section 351 of the Public
Health Service Act;
(K) the total expenditures of the
manufacturer on carrying out postmarket
requirements related to such drug, including
under section 505(o)(3) of the Federal Food,
Drug, and Cosmetic Act;
(L) the total revenue and the net profit
generated from the qualifying drug for each
calendar year since the approval of the
application for the drug under section 505 of
the Federal Food, Drug, and Cosmetic Act or the
issuance of the license for the drug under
section 351 of the Public Health Service Act,
or since the manufacturer acquired such
approved application or license; and
(M) the total costs associated with marketing
and advertising for the qualifying drug;
(2) with respect to the manufacturer--
(A) the total revenue and the net profit of
the manufacturer for each of the 12-month
period described in subsection (b)(1)(A)(i) or
(b)(1)(C)(i) or the 36-month period described
in subsection (b)(1)(A)(ii) or (b)(1)(C)(ii),
as applicable;
(B) all stock-based performance metrics used
by the manufacturer to determine executive
compensation for each of the 12-month periods
described in subsection (b)(1)(A)(i) or
(b)(1)(C)(i) or the 36-month periods described
in subsection (b)(1)(A)(ii) or (b)(1)(C)(ii),
as applicable; and
(C) any additional information the
manufacturer chooses to provide related to drug
pricing decisions, such as total expenditures
on--
(i) drug research and development; or
(ii) clinical trials, including on
drugs that failed to receive approval
by the Food and Drug Administration;
and
(3) such other related information as the Secretary
considers appropriate and as specified by the
Secretary.
(d) Information Provided.--The manufacturer of a qualifying
drug that is required to submit a report under subsection (b),
shall ensure that such report and any explanation for, and
description of, each price increase described in subsection
(c)(1) shall be truthful, not misleading, and accurate.
(e) Civil Monetary Penalty.--Any manufacturer of a qualifying
drug that fails to submit a report for the drug as required by
this section, following notification by the Secretary to the
manufacturer that the manufacturer is not in compliance with
this section, shall be subject to a civil monetary penalty of
$75,000 for each day on which the violation continues.
(f) False Information.--Any manufacturer that submits a
report for a drug as required by this section that knowingly
provides false information in such report is subject to a civil
monetary penalty in an amount not to exceed $100,000 for each
item of false information.
(g) Public Posting.--
(1) In general.--Subject to paragraph (4), the
Secretary shall post each report submitted under
subsection (b) on the public website of the Department
of Health and Human Services the day the price increase
of a qualifying drug is scheduled to go into effect.
(2) Format.--In developing the format in which
reports will be publicly posted under paragraph (1),
the Secretary shall consult with stakeholders,
including beneficiary groups, and shall seek feedback
from consumer advocates and readability experts on the
format and presentation of the content of such reports
to ensure that such reports are--
(A) user-friendly to the public; and
(B) written in plain language that consumers
can readily understand.
(3) List.--In addition to the reports submitted under
subsection (b), the Secretary shall also post a list of
each qualifying drug with respect to which the
manufacturer was required to submit such a report in
the preceding year and whether such manufacturer was
required to submit such report based on a qualifying
price increase or whether such drug meets the criteria
under subsection (b)(1)(B).
(4) Protected information.--In carrying out this
section, the Secretary shall enforce applicable law
concerning the protection of confidential commercial
information and trade secrets.
SEC. 1150D. ANNUAL REPORT TO CONGRESS.
(a) In General.--Subject to subsection (b), the Secretary
shall submit to the Committees on Energy and Commerce and Ways
and Means of the House of Representatives and the Committees on
Health, Education, Labor, and Pensions and Finance of the
Senate, and post on the public website of the Department of
Health and Human Services in a way that is user-friendly to the
public and written in plain language that consumers can readily
understand, an annual report--
(1) summarizing the information reported pursuant to
section 1150C;
(2) including copies of the reports and supporting
detailed economic analyses submitted pursuant to such
section;
(3) detailing the costs and expenditures incurred by
the Department of Health and Human Services in carrying
out section 1150C; and
(4) explaining how the Department of Health and Human
Services is improving consumer and provider information
about drug value and drug price transparency.
(b) Protected Information.--In carrying out this section, the
Secretary shall enforce applicable law concerning the
protection of confidential commercial information and trade
secrets.
* * * * * * *
PART E--FAIR PRICE NEGOTIATION PROGRAM TO LOWER PRICES FOR CERTAIN
HIGH-PRICED SINGLE SOURCE DRUGS
SEC. 1191. ESTABLISHMENT OF PROGRAM.
(a) In General.--The Secretary shall establish a Fair Price
Negotiation Program (in this part referred to as the
``program''). Under the program, with respect to each price
applicability period, the Secretary shall--
(1) publish a list of selected drugs in accordance
with section 1192;
(2) enter into agreements with manufacturers of
selected drugs with respect to such period, in
accordance with section 1193;
(3) negotiate and, if applicable, renegotiate maximum
fair prices for such selected drugs, in accordance with
section 1194; and
(4) carry out the administrative duties described in
section 1196.
(b) Definitions Relating to Timing.--For purposes of this
part:
(1) Initial price applicability year.--The term
``initial price applicability year'' means a plan year
(beginning with plan year 2023) or, if agreed to in an
agreement under section 1193 by the Secretary and
manufacturer involved, a period of more than one plan
year (beginning on or after January 1, 2023).
(2) Price applicability period.--The term ``price
applicability period'' means, with respect to a drug,
the period beginning with the initial price
applicability year with respect to which such drug is a
selected drug and ending with the last plan year during
which the drug is a selected drug.
(3) Selected drug publication date.--The term
``selected drug publication date'' means, with respect
to each initial price applicability year, April 15 of
the plan year that begins 2 years prior to such year.
(4) Voluntary negotiation period.--The term
``voluntary negotiation period'' means, with respect to
an initial price applicability year with respect to a
selected drug, the period--
(A) beginning on the sooner of--
(i) the date on which the
manufacturer of the drug and the
Secretary enter into an agreement under
section 1193 with respect to such drug;
or
(ii) June 15 following the selected
drug publication date with respect to
such selected drug; and
(B) ending on March 31 of the year that
begins one year prior to the initial price
applicability year.
(c) Other Definitions.--For purposes of this part:
(1) Fair price eligible individual.--The term ``fair
price eligible individual'' means, with respect to a
selected drug--
(A) in the case such drug is furnished or
dispensed to the individual at a pharmacy or by
a mail order service--
(i) an individual who is enrolled
under a prescription drug plan under
part D of title XVIII or an MA-PD plan
under part C of such title under which
coverage is provided for such drug; and
(ii) an individual who is enrolled
under a group health plan or health
insurance coverage offered in the group
or individual market (as such terms are
defined in section 2791 of the Public
Health Service Act) with respect to
which there is in effect an agreement
with the Secretary under section 1197
with respect to such selected drug as
so furnished or dispensed; and
(B) in the case such drug is furnished or
administered to the individual by a hospital,
physician, or other provider of services or
supplier--
(i) an individual who is entitled to
benefits under part A of title XVIII or
enrolled under part B of such title if
such selected drug is covered under the
respective part; and
(ii) an individual who is enrolled
under a group health plan or health
insurance coverage offered in the group
or individual market (as such terms are
defined in section 2791 of the Public
Health Service Act) with respect to
which there is in effect an agreement
with the Secretary under section 1197
with respect to such selected drug as
so furnished or administered.
(2) Maximum fair price.--The term ``maximum fair
price'' means, with respect to a plan year during a
price applicability period and with respect to a
selected drug (as defined in section 1192(c)) with
respect to such period, the price published pursuant to
section 1195 in the Federal Register for such drug and
year.
(3) Average international market price defined.--
(A) In general.--The terms ``average
international market price'' and ``AIM price''
mean, with respect to a drug, the average price
(which shall be the net average price, if
practicable, and volume-weighted, if
practicable) for a unit (as defined in
paragraph (4)) of the drug for sales of such
drug (calculated across different dosage forms
and strengths of the drug and not based on the
specific formulation or package size or package
type), as computed (as of the date of
publication of such drug as a selected drug
under section 1192(a)) in all countries
described in clause (ii) of subparagraph (B)
that are applicable countries (as described in
clause (i) of such subparagraph) with respect
to such drug.
(B) Applicable countries.--
(i) In general.--For purposes of
subparagraph (A), a country described
in clause (ii) is an applicable country
described in this clause with respect
to a drug if there is available an
average price for any unit for the drug
for sales of such drug in such country.
(ii) Countries described.--For
purposes of this paragraph, the
following are countries described in
this clause:
(I) Australia.
(II) Canada.
(III) France.
(IV) Germany.
(V) Japan.
(VI) The United Kingdom.
(4) Unit.--The term ``unit'' means, with respect to a
drug, the lowest identifiable quantity (such as a
capsule or tablet, milligram of molecules, or grams) of
the drug that is dispensed.
SEC. 1192. SELECTION OF NEGOTIATION-ELIGIBLE DRUGS AS SELECTED DRUGS.
(a) In General.--Not later than the selected drug publication
date with respect to an initial price applicability year, the
Secretary shall select and publish in the Federal Register a
list of--
(1)(A) with respect to an initial price applicability
year during the period beginning with 2023 and ending
with 2027, at least 25 negotiation-eligible drugs
described in subparagraphs (A) and (B), but not
subparagraph (C), of subsection (d)(1) (or, with
respect to an initial price applicability year during
such period beginning after 2023, the maximum number
(if such number is less than 25) of such negotiation-
eligible drugs for the year) with respect to such year;
(B) with respect to an initial price applicability
year during the period beginning with 2028 and ending
with 2032, at least 30 negotiation-eligible drugs
described in subparagraphs (A) and (B), but not
subparagraph (C), of subsection (d)(1) (or, with
respect to an initial price applicability year during
such period, the maximum number (if such number is less
than 30) of such negotiation-eligible drugs for the
year) with respect to such year; and
(C) with respect to an initial price applicability
year beginning after 2032, at least 35 negotiation-
eligible drugs described in subparagraphs (A) and (B),
but not subparagraph (C), of subsection (d)(1) (or,
with respect to an initial price applicability year
during such period, the maximum number (if such number
is less than 35) of such negotiation-eligible drugs for
the year) with respect to such year;
(2) all negotiation-eligible drugs described in
subparagraph (C) of such subsection with respect to
such year; and
(3) all new-entrant negotiation-eligible drugs (as
defined in subsection (g)(1)) with respect to such
year.
Each drug published on the list pursuant to the previous
sentence shall be subject to the negotiation process under
section 1194 for the voluntary negotiation period with respect
to such initial price applicability year (and the renegotiation
process under such section as applicable for any subsequent
year during the applicable price applicability period). In
applying this subsection, any negotiation-eligible drug that is
selected under this subsection for an initial price
applicability year shall not count toward the required minimum
amount of drugs to be selected under paragraph (1) for any
subsequent year, including such a drug so selected that is
subject to renegotiation under section 1194.
(b) Selection of Drugs.--In carrying out subsection (a)(1)
the Secretary shall select for inclusion on the published list
described in subsection (a) with respect to a price
applicability period, the negotiation-eligible drugs that the
Secretary projects will result in the greatest savings to the
Federal Government or fair price eligible individuals during
the price applicability period. In making this projection of
savings for drugs for which there is an AIM price for a price
applicability period, the savings shall be projected across
different dosage forms and strengths of the drugs and not based
on the specific formulation or package size or package type of
the drugs, taking into consideration both the volume of drugs
for which payment is made, to the extent such data is
available, and the amount by which the net price for the drugs
exceeds the AIM price for the drugs.
(c) Selected Drug.--For purposes of this part, each drug
included on the list published under subsection (a) with
respect to an initial price applicability year shall be
referred to as a ``selected drug'' with respect to such year
and each subsequent plan year beginning before the first plan
year beginning after the date on which the Secretary determines
two or more drug products--
(1) are approved or licensed (as applicable)--
(A) under section 505(j) of the Federal Food,
Drug, and Cosmetic Act using such drug as the
listed drug; or
(B) under section 351(k) of the Public Health
Service Act using such drug as the reference
product; and
(2) continue to be marketed.
(d) Negotiation-eligible Drug.--
(1) In general.--For purposes of this part, the term
``negotiation-eligible drug'' means, with respect to
the selected drug publication date with respect to an
initial price applicability year, a qualifying single
source drug, as defined in subsection (e), that meets
any of the following criteria:
(A) Covered part d drugs.--The drug is among
the 125 covered part D drugs (as defined in
section 1860D-2(e)) for which there was an
estimated greatest net spending under parts C
and D of title XVIII, as determined by the
Secretary, during the most recent plan year
prior to such drug publication date for which
data are available.
(B) Other drugs.--The drug is among the 125
drugs for which there was an estimated greatest
net spending in the United States (including
the 50 States, the District of Columbia, and
the territories of the United States), as
determined by the Secretary, during the most
recent plan year prior to such drug publication
date for which data are available.
(C) Insulin.--The drug is a qualifying single
source drug described in subsection (e)(3).
(2) Clarification.--In determining whether a
qualifying single source drug satisfies any of the
criteria described in paragraph (1), the Secretary
shall, to the extent practicable, use data that is
aggregated across dosage forms and strengths of the
drug and not based on the specific formulation or
package size or package type of the drug.
(3) Publication.--Not later than the selected drug
publication date with respect to an initial price
applicability year, the Secretary shall publish in the
Federal Register a list of negotiation-eligible drugs
with respect to such selected drug publication date.
(e) Qualifying Single Source Drug.--For purposes of this
part, the term ``qualifying single source drug'' means any of
the following:
(1) Drug products.--A drug that--
(A) is approved under section 505(c) of the
Federal Food, Drug, and Cosmetic Act and
continues to be marketed pursuant to such
approval; and
(B) is not the listed drug for any drug that
is approved and continues to be marketed under
section 505(j) of such Act.
(2) Biological products.--A biological product that--
(A) is licensed under section 351(a) of the
Public Health Service Act, including any
product that has been deemed to be licensed
under section 351 of such Act pursuant to
section 7002(e)(4) of the Biologics Price
Competition and Innovation Act of 2009, and
continues to be marketed under section 351 of
such Act; and
(B) is not the reference product for any
biological product that is licensed and
continues to be marketed under section 351(k)
of such Act.
(3) Insulin product.--Notwithstanding paragraphs (1)
and (2), any insulin product that is approved under
subsection (c) or (j) of section 505 of the Federal
Food, Drug, and Cosmetic Act or licensed under
subsection (a) or (k) of section 351 of the Public
Health Service Act and continues to be marketed under
such section 505 or 351, including any insulin product
that has been deemed to be licensed under section
351(a) of the Public Health Service Act pursuant to
section 7002(e)(4) of the Biologics Price Competition
and Innovation Act of 2009 and continues to be marketed
pursuant to such licensure.
For purposes of applying paragraphs (1) and (2), a drug or
biological product that is marketed by the same sponsor or
manufacturer (or an affiliate thereof or a cross-licensed
producer or distributor) as the listed drug or reference
product described in such respective paragraph shall not be
taken into consideration.
(f) Information on International Drug Prices.--For purposes
of determining which negotiation-eligible drugs to select under
subsection (a) and, in the case of such drugs that are selected
drugs, to determine the maximum fair price for such a drug and
whether such maximum fair price should be renegotiated under
section 1194, the Secretary shall use data relating to the AIM
price with respect to such drug as available or provided to the
Secretary and shall on an ongoing basis request from
manufacturers of selected drugs information on the AIM price of
such a drug.
(g) New-entrant Negotiation-eligible Drugs.--
(1) In general.--For purposes of this part, the term
``new-entrant negotiation-eligible drug'' means, with
respect to the selected drug publication date with
respect to an initial price applicability year, a
qualifying single source drug--
(A) that is first approved or licensed, as
described in paragraph (1), (2), or (3) of
subsection (e), as applicable, during the year
preceding such selected drug publication date;
and
(B) that the Secretary determines under
paragraph (2) is likely to be included as a
negotiation-eligible drug with respect to the
subsequent selected drug publication date.
(2) Determination.--In the case of a qualifying
single source drug that meets the criteria described in
subparagraph (A) of paragraph (1), with respect to an
initial price applicability year, if the wholesale
acquisition cost at which such drug is first marketed
in the United States is equal to or greater than the
median household income (as determined according to the
most recent data collected by the United States Census
Bureau), the Secretary shall determine before the
selected drug publication date with respect to the
initial price applicability year, if the drug is likely
to be included as a negotiation-eligible drug with
respect to the subsequent selected drug publication
date, based on the projected spending under title XVIII
or in the United States on such drug. For purposes of
this paragraph the term ``United States'' includes the
50 States, the District of Columbia, and the
territories of the United States.
SEC. 1193. MANUFACTURER AGREEMENTS.
(a) In General.--For purposes of section 1191(a)(2), the
Secretary shall enter into agreements with manufacturers of
selected drugs with respect to a price applicability period, by
not later than June 15 following the selected drug publication
date with respect to such selected drug, under which--
(1) during the voluntary negotiation period for the
initial price applicability year for the selected drug,
the Secretary and manufacturer, in accordance with
section 1194, negotiate to determine (and, by not later
than the last date of such period and in accordance
with subsection (c), agree to) a maximum fair price for
such selected drug of the manufacturer in order to
provide access to such price--
(A) to fair price eligible individuals who
with respect to such drug are described in
subparagraph (A) of section 1191(c)(1) and are
furnished or dispensed such drug during,
subject to subparagraph (2), the price
applicability period; and
(B) to hospitals, physicians, and other
providers of services and suppliers with
respect to fair price eligible individuals who
with respect to such drug are described in
subparagraph (B) of such section and are
furnished or administered such drug during,
subject to subparagraph (2), the price
applicability period;
(2) the Secretary and the manufacturer shall, in
accordance with a process and during a period specified
by the Secretary pursuant to rulemaking, renegotiate
(and, by not later than the last date of such period
and in accordance with subsection (c), agree to) the
maximum fair price for such drug if the Secretary
determines that there is a material change in any of
the factors described in section 1194(d) relating to
the drug, including changes in the AIM price for such
drug, in order to provide access to such maximum fair
price (as so renegotiated)--
(A) to fair price eligible individuals who
with respect to such drug are described in
subparagraph (A) of section 1191(c)(1) and are
furnished or dispensed such drug during any
year during the price applicability period
(beginning after such renegotiation) with
respect to such selected drug; and
(B) to hospitals, physicians, and other
providers of services and suppliers with
respect to fair price eligible individuals who
with respect to such drug are described in
subparagraph (B) of such section and are
furnished or administered such drug during any
year described in subparagraph (A);
(3) the maximum fair price (including as renegotiated
pursuant to paragraph (2)), with respect to such a
selected drug, shall be provided to fair price eligible
individuals, who with respect to such drug are
described in subparagraph (A) of section 1191(c)(1), at
the pharmacy or by a mail order service at the point-
of-sale of such drug;
(4) the manufacturer, subject to subsection (d),
submits to the Secretary, in a form and manner
specified by the Secretary--
(A) for the voluntary negotiation period for
the price applicability period (and, if
applicable, before any period of renegotiation
specified pursuant to paragraph (2)) with
respect to such drug all information that the
Secretary requires to carry out the negotiation
(or renegotiation process) under this part,
including information described in section
1192(f) and section 1194(d)(1); and
(B) on an ongoing basis, information on
changes in prices for such drug that would
affect the AIM price for such drug or otherwise
provide a basis for renegotiation of the
maximum fair price for such drug pursuant to
paragraph (2);
(5) the manufacturer agrees that in the case the
selected drug of a manufacturer is a drug described in
subsection (c), the manufacturer will, in accordance
with such subsection, make any payment required under
such subsection with respect to such drug; and
(6) the manufacturer complies with requirements
imposed by the Secretary for purposes of administering
the program, including with respect to the duties
described in section 1196.
(b) Agreement in Effect Until Drug is No Longer a Selected
Drug.--An agreement entered into under this section shall be
effective, with respect to a drug, until such drug is no longer
considered a selected drug under section 1192(c).
(c) Special Rule for Certain Selected Drugs Without AIM
Price.--
(1) In general.--In the case of a selected drug for
which there is no AIM price available with respect to
the initial price applicability year for such drug and
for which an AIM price becomes available beginning with
respect to a subsequent plan year during the price
applicability period for such drug, if the Secretary
determines that the amount described in paragraph
(2)(A) for a unit of such drug is greater than the
amount described in paragraph (2)(B) for a unit of such
drug, then by not later than one year after the date of
such determination, the manufacturer of such selected
drug shall pay to the Treasury an amount equal to the
product of--
(A) the difference between such amount
described in paragraph (2)(A) for a unit of
such drug and such amount described in
paragraph (2)(B) for a unit of such drug; and
(B) the number of units of such drug sold in
the United States, including the 50 States, the
District of Columbia, and the territories of
the United States, during the period described
in paragraph (2)(B).
(2) Amounts described.--
(A) Weighted average price before aim price
available.--For purposes of paragraph (1), the
amount described in this subparagraph for a
selected drug described in such paragraph, is
the amount equal to the weighted average
manufacturer price (as defined in section
1927(k)(1)) for such dosage strength and form
for the drug during the period beginning with
the first plan year for which the drug is
included on the list of negotiation-eligible
drugs published under section 1192(d) and
ending with the last plan year during the price
applicability period for such drug with respect
to which there is no AIM price available for
such drug.
(B) Amount multiplier after aim price
available.--For purposes of paragraph (1), the
amount described in this subparagraph for a
selected drug described in such paragraph, is
the amount equal to 200 percent of the AIM
price for such drug with respect to the first
plan year during the price applicability period
for such drug with respect to which there is an
AIM price available for such drug.
(d) Confidentiality of Information.--Information submitted to
the Secretary under this part by a manufacturer of a selected
drug that is proprietary information of such manufacturer (as
determined by the Secretary) may be used only by the Secretary
or disclosed to and used by the Comptroller General of the
United States or the Medicare Payment Advisory Commission for
purposes of carrying out this part.
(e) Regulations.--
(1) In general.--The Secretary shall, pursuant to
rulemaking, specify, in accordance with paragraph (2),
the information that must be submitted under subsection
(a)(4).
(2) Information specified.--Information described in
paragraph (1), with respect to a selected drug, shall
include information on sales of the drug (by the
manufacturer of the drug or by another entity under
license or other agreement with the manufacturer, with
respect to the sales of such drug, regardless of the
name under which the drug is sold) in any foreign
country that is part of the AIM price. The Secretary
shall verify, to the extent practicable, such sales
from appropriate officials of the government of the
foreign country involved.
(f) Compliance With Requirements for Administration of
Program.--Each manufacturer with an agreement in effect under
this section shall comply with requirements imposed by the
Secretary or a third party with a contract under section
1196(c)(1), as applicable, for purposes of administering the
program.
SEC. 1194. NEGOTIATION AND RENEGOTIATION PROCESS.
(a) In General.--For purposes of this part, under an
agreement under section 1193 between the Secretary and a
manufacturer of a selected drug, with respect to the period for
which such agreement is in effect and in accordance with
subsections (b) and (c), the Secretary and the manufacturer--
(1) shall during the voluntary negotiation period
with respect to the initial price applicability year
for such drug, in accordance with this section,
negotiate a maximum fair price for such drug for the
purpose described in section 1193(a)(1); and
(2) as applicable pursuant to section 1193(a)(2) and
in accordance with the process specified pursuant to
such section, renegotiate such maximum fair price for
such drug for the purpose described in such section.
(b) Negotiating Methodology and Objective.--
(1) In general.--The Secretary shall develop and use
a consistent methodology for negotiations under
subsection (a) that, in accordance with paragraph (2)
and subject to paragraph (3), achieves the lowest
maximum fair price for each selected drug while
appropriately rewarding innovation.
(2) Prioritizing factors.--In considering the factors
described in subsection (d) in negotiating (and, as
applicable, renegotiating) the maximum fair price for a
selected drug, the Secretary shall, to the extent
practicable, consider all of the available factors
listed but shall prioritize the following factors:
(A) Research and development costs.--The
factor described in paragraph (1)(A) of
subsection (d).
(B) Market data.--The factor described in
paragraph (1)(B) of such subsection.
(C) Unit costs of production and
distribution.--The factor described in
paragraph (1)(C) of such subsection.
(D) Comparison to existing therapeutic
alternatives.--The factor described in
paragraph (2)(A) of such subsection.
(3) Requirement.--
(A) In general.--In negotiating the maximum
fair price of a selected drug, with respect to
an initial price applicability year for the
selected drug, and, as applicable, in
renegotiating the maximum fair price for such
drug, with respect to a subsequent year during
the price applicability period for such drug,
in the case that the manufacturer of the
selected drug offers under the negotiation or
renegotiation, as applicable, a price for such
drug that is not more than the target price
described in subparagraph (B) for such drug for
the respective year, the Secretary shall agree
under such negotiation or renegotiation,
respectively, to such offered price as the
maximum fair price.
(B) Target price.--
(i) In general.--Subject to clause
(ii), the target price described in
this subparagraph for a selected drug
with respect to a year, is the average
price (which shall be the net average
price, if practicable, and volume-
weighted, if practicable) for a unit of
such drug for sales of such drug, as
computed (across different dosage forms
and strengths of the drug and not based
on the specific formulation or package
size or package type of the drug) in
the applicable country described in
section 1191(c)(3)(B) with respect to
such drug that, with respect to such
year, has the lowest average price for
such drug as compared to the average
prices (as so computed) of such drug
with respect to such year in the other
applicable countries described in such
section with respect to such drug.
(ii) Selected drugs without aim
price.--In applying this paragraph in
the case of negotiating the maximum
fair price of a selected drug for which
there is no AIM price available with
respect to the initial price
applicability year for such drug, or,
as applicable, renegotiating the
maximum fair price for such drug with
respect to a subsequent year during the
price applicability period for such
drug before the first plan year for
which there is an AIM price available
for such drug, the target price
described in this subparagraph for such
drug and respective year is the amount
that is 80 percent of the average
manufacturer price (as defined in
section 1927(k)(1)) for such drug and
year.
(4) Annual report.--After the completion of each
voluntary negotiation period, the Secretary shall
submit to Congress a report on the maximum fair prices
negotiated (or, as applicable, renegotiated) for such
period. Such report shall include information on how
such prices so negotiated (or renegotiated) meet the
requirements of this part, including the requirements
of this subsection.
(c) Limitation.--
(1) In general.--Subject to paragraph (2), the
maximum fair price negotiated (including as
renegotiated) under this section for a selected drug,
with respect to each plan year during a price
applicability period for such drug, shall not exceed
120 percent of the AIM price applicable to such drug
with respect to such year.
(2) Selected drugs without aim price.--In the case of
a selected drug for which there is no AIM price
available with respect to the initial price
applicability year for such drug, for each plan year
during the price applicability period before the first
plan year for which there is an AIM price available for
such drug, the maximum fair price negotiated (including
as renegotiated) under this section for the selected
drug shall not exceed the amount equal to 85 percent of
the average manufacturer price for the drug with
respect to such year.
(d) Considerations.--For purposes of negotiating and, as
applicable, renegotiating (including for purposes of
determining whether to renegotiate) the maximum fair price of a
selected drug under this part with the manufacturer of the
drug, the Secretary shall, consistent with subsection (b)(2),
take into consideration the following factors:
(1) Manufacturer-specific information.--The following
information, including as submitted by the
manufacturer:
(A) Research and development costs of the
manufacturer for the drug and the extent to
which the manufacturer has recouped research
and development costs.
(B) Market data for the drug, including the
distribution of sales across different programs
and purchasers and projected future revenues
for the drug.
(C) Unit costs of production and distribution
of the drug.
(D) Prior Federal financial support for novel
therapeutic discovery and development with
respect to the drug.
(E) Data on patents and on existing and
pending exclusivity for the drug.
(F) National sales data for the drug.
(G) Information on clinical trials for the
drug in the United States or in applicable
countries described in section 1191(c)(3)(B).
(2) Information on alternative products.--The
following information:
(A) The extent to which the drug represents a
therapeutic advance as compared to existing
therapeutic alternatives and, to the extent
such information is available, the costs of
such existing therapeutic alternatives.
(B) Information on approval by the Food and
Drug Administration of alternative drug
products.
(C) Information on comparative effectiveness
analysis for such products, taking into
consideration the effects of such products on
specific populations, such as individuals with
disabilities, the elderly, terminally ill,
children, and other patient populations.
In considering information described in subparagraph
(C), the Secretary shall not use evidence or findings
from comparative clinical effectiveness research in a
manner that treats extending the life of an elderly,
disabled, or terminally ill individual as of lower
value than extending the life of an individual who is
younger, nondisabled, or not terminally ill. Nothing in
the previous sentence shall affect the application or
consideration of an AIM price for a selected drug.
(3) Foreign sales information.--To the extent
available on a timely basis, including as provided by a
manufacturer of the selected drug or otherwise,
information on sales of the selected drug in each of
the countries described in section 1191(c)(3)(B).
(4) Additional information.--Information submitted to
the Secretary, in accordance with a process specified
by the Secretary, by other parties that are affected by
the establishment of a maximum fair price for the
selected drug.
(e) Request for Information.--For purposes of negotiating
and, as applicable, renegotiating (including for purposes of
determining whether to renegotiate) the maximum fair price of a
selected drug under this part with the manufacturer of the
drug, with respect to a price applicability period, and other
relevant data for purposes of this section--
(1) the Secretary shall, not later than the selected
drug publication date with respect to the initial price
applicability year of such period, request drug pricing
information from the manufacturer of such selected
drug, including information described in subsection
(d)(1); and
(2) by not later than October 1 following the
selected drug publication date, the manufacturer of
such selected drug shall submit to the Secretary such
requested information in such form and manner as the
Secretary may require.
The Secretary shall request, from the manufacturer or others,
such additional information as may be needed to carry out the
negotiation and renegotiation process under this section.
SEC. 1195. PUBLICATION OF MAXIMUM FAIR PRICES.
(a) In General.--With respect to an initial price
applicability year and selected drug with respect to such year,
not later than April 1 of the plan year prior to such initial
price applicability year, the Secretary shall publish in the
Federal Register the maximum fair price for such drug
negotiated under this part with the manufacturer of such drug.
(b) Updates.--
(1) Subsequent year maximum fair prices.--For a
selected drug, for each plan year subsequent to the
initial price applicability year for such drug with
respect to which an agreement for such drug is in
effect under section 1193, the Secretary shall publish
in the Federal Register--
(A) subject to subparagraph (B), the amount
equal to the maximum fair price published for
such drug for the previous year, increased by
the annual percentage increase in the consumer
price index for all urban consumers (all items;
U.S. city average) as of September of such
previous year; or
(B) in the case the maximum fair price for
such drug was renegotiated, for the first year
for which such price as so renegotiated
applies, such renegotiated maximum fair price.
(2) Prices negotiated after deadline.--In the case of
a selected drug with respect to an initial price
applicability year for which the maximum fair price is
determined under this part after the date of
publication under this section, the Secretary shall
publish such maximum fair price in the Federal Register
by not later than 30 days after the date such maximum
price is so determined.
SEC. 1196. ADMINISTRATIVE DUTIES; COORDINATION PROVISIONS.
(a) Administrative Duties.--
(1) In general.--For purposes of section 1191, the
administrative duties described in this section are the
following:
(A) The establishment of procedures
(including through agreements with
manufacturers under this part, contracts with
prescription drug plans under part D of title
XVIII and MA-PD plans under part C of such
title, and agreements under section 1197 with
group health plans and health insurance issuers
of health insurance coverage offered in the
individual or group market) under which the
maximum fair price for a selected drug is
provided to fair price eligible individuals,
who with respect to such drug are described in
subparagraph (A) of section 1191(c)(1), at
pharmacies or by mail order service at the
point-of-sale of the drug for the applicable
price period for such drug and providing that
such maximum fair price is used for determining
cost-sharing under such plans or coverage for
the selected drug.
(B) The establishment of procedures
(including through agreements with
manufacturers under this part and contracts
with hospitals, physicians, and other providers
of services and suppliers and agreements under
section 1197 with group health plans and health
insurance issuers of health insurance coverage
offered in the individual or group market)
under which, in the case of a selected drug
furnished or administered by such a hospital,
physician, or other provider of services or
supplier to fair price eligible individuals
(who with respect to such drug are described in
subparagraph (B) of section 1191(c)(1)), the
maximum fair price for the selected drug is
provided to such hospitals, physicians, and
other providers of services and suppliers (as
applicable) with respect to such individuals
and providing that such maximum fair price is
used for determining cost-sharing under the
respective part, plan, or coverage for the
selected drug.
(C) The establishment of procedures
(including through agreements and contracts
described in subparagraphs (A) and (B)) to
ensure that, not later than 90 days after the
dispensing of a selected drug to a fair price
eligible individual by a pharmacy or mail order
service, the pharmacy or mail order service is
reimbursed for an amount equal to the
difference between--
(i) the lesser of--
(I) the wholesale acquisition
cost of the drug;
(II) the national average
drug acquisition cost of the
drug; and
(III) any other similar
determination of pharmacy
acquisition costs of the drug,
as determined by the Secretary;
and
(ii) the maximum fair price for the
drug.
(D) The establishment of procedures to ensure
that the maximum fair price for a selected drug
is applied before--
(i) any coverage or financial
assistance under other health benefit
plans or programs that provide coverage
or financial assistance for the
purchase or provision of prescription
drug coverage on behalf of fair price
eligible individuals as the Secretary
may specify; and
(ii) any other discounts.
(E) The establishment of procedures to enter
into appropriate agreements and protocols for
the ongoing computation of AIM prices for
selected drugs, including, to the extent
possible, to compute the AIM price for selected
drugs and including by providing that the
manufacturer of such a selected drug should
provide information for such computation not
later than 3 months after the first date of the
voluntary negotiation period for such selected
drug.
(F) The establishment of procedures to
compute and apply the maximum fair price across
different strengths and dosage forms of a
selected drug and not based on the specific
formulation or package size or package type of
the drug.
(G) The establishment of procedures to
negotiate and apply the maximum fair price in a
manner that does not include any dispensing or
similar fee.
(H) The establishment of procedures to carry
out the provisions of this part, as applicable,
with respect to--
(i) fair price eligible individuals
who are enrolled under a prescription
drug plan under part D of title XVIII
or an MA-PD plan under part C of such
title;
(ii) fair price eligible individuals
who are enrolled under a group health
plan or health insurance coverage
offered by a health insurance issuer in
the individual or group market with
respect to which there is an agreement
in effect under section 1197; and
(iii) fair price eligible individuals
who are entitled to benefits under part
A of title XVIII or enrolled under part
B of such title.
(I) The establishment of a negotiation
process and renegotiation process in accordance
with section 1194, including a process for
acquiring information described in subsection
(d) of such section and determining amounts
described in subsection (b) of such section.
(J) The provision of a reasonable dispute
resolution mechanism to resolve disagreements
between manufacturers, fair price eligible
individuals, and the third party with a
contract under subsection (c)(1).
(2) Monitoring compliance.--
(A) In general.--The Secretary shall monitor
compliance by a manufacturer with the terms of
an agreement under section 1193, including by
establishing a mechanism through which
violations of such terms may be reported.
(B) Notification.--If a third party with a
contract under subsection (c)(1) determines
that the manufacturer is not in compliance with
such agreement, the third party shall notify
the Secretary of such noncompliance for
appropriate enforcement under section 4192 of
the Internal Revenue Code of 1986 or section
1198, as applicable.
(b) Collection of Data.--
(1) From prescription drug plans and ma-pd plans.--
The Secretary may collect appropriate data from
prescription drug plans under part D of title XVIII and
MA-PD plans under part C of such title in a timeframe
that allows for maximum fair prices to be provided
under this part for selected drugs.
(2) From health plans.--The Secretary may collect
appropriate data from group health plans or health
insurance issuers offering group or individual health
insurance coverage in a timeframe that allows for
maximum fair prices to be provided under this part for
selected drugs.
(c) Contract With Third Parties.--
(1) In general.--The Secretary may enter into a
contract with 1 or more third parties to administer the
requirements established by the Secretary in order to
carry out this part. At a minimum, the contract with a
third party under the preceding sentence shall require
that the third party--
(A) receive and transmit information between
the Secretary, manufacturers, and other
individuals or entities the Secretary
determines appropriate;
(B) receive, distribute, or facilitate the
distribution of funds of manufacturers to
appropriate individuals or entities in order to
meet the obligations of manufacturers under
agreements under this part;
(C) provide adequate and timely information
to manufacturers, consistent with the agreement
with the manufacturer under this part, as
necessary for the manufacturer to fulfill its
obligations under this part; and
(D) permit manufacturers to conduct periodic
audits, directly or through contracts, of the
data and information used by the third party to
determine discounts for applicable drugs of the
manufacturer under the program.
(2) Performance requirements.--The Secretary shall
establish performance requirements for a third party
with a contract under paragraph (1) and safeguards to
protect the independence and integrity of the
activities carried out by the third party under the
program under this part.
SEC. 1197. VOLUNTARY PARTICIPATION BY OTHER HEALTH PLANS.
(a) Agreement to Participate Under Program.--
(1) In general.--Subject to paragraph (2), under the
program under this part the Secretary shall be treated
as having in effect an agreement with a group health
plan or health insurance issuer offering health
insurance coverage (as such terms are defined in
section 2791 of the Public Health Service Act), with
respect to a price applicability period and a selected
drug with respect to such period--
(A) with respect to such selected drug
furnished or dispensed at a pharmacy or by mail
order service if coverage is provided under
such plan or coverage during such period for
such selected drug as so furnished or
dispensed; and
(B) with respect to such selected drug
furnished or administered by a hospital,
physician, or other provider of services or
supplier if coverage is provided under such
plan or coverage during such period for such
selected drug as so furnished or administered.
(2) Opting out of agreement.--The Secretary shall not
be treated as having in effect an agreement under the
program under this part with a group health plan or
health insurance issuer offering health insurance
coverage with respect to a price applicability period
and a selected drug with respect to such period if such
a plan or issuer affirmatively elects, through a
process specified by the Secretary, not to participate
under the program with respect to such period and drug.
(b) Publication of Election.--With respect to each price
applicability period and each selected drug with respect to
such period, the Secretary and the Secretary of Labor and the
Secretary of the Treasury, as applicable, shall make public a
list of each group health plan and each issuer of health
insurance coverage, with respect to which coverage is provided
under such plan or coverage for such drug, that has elected
under subsection (a) not to participate under the program with
respect to such period and drug.
SEC. 1198. CIVIL MONETARY PENALTY.
(a) Violations Relating to Offering of Maximum Fair Price.--
Any manufacturer of a selected drug that has entered into an
agreement under section 1193, with respect to a plan year
during the price applicability period for such drug, that does
not provide access to a price that is not more than the maximum
fair price (or a lesser price) for such drug for such year--
(1) to a fair price eligible individual who with
respect to such drug is described in subparagraph (A)
of section 1191(c)(1) and who is furnished or dispensed
such drug during such year; or
(2) to a hospital, physician, or other provider of
services or supplier with respect to fair price
eligible individuals who with respect to such drug is
described in subparagraph (B) of such section and is
furnished or administered such drug by such hospital,
physician, or provider or supplier during such year;
shall be subject to a civil monetary penalty equal to ten times
the amount equal to the difference between the price for such
drug made available for such year by such manufacturer with
respect to such individual or hospital, physician, provider, or
supplier and the maximum fair price for such drug for such
year.
(b) Violations of Certain Terms of Agreement.--Any
manufacturer of a selected drug that has entered into an
agreement under section 1193, with respect to a plan year
during the price applicability period for such drug, that is in
violation of a requirement imposed pursuant to section
1193(a)(6) shall be subject to a civil monetary penalty of not
more than $1,000,000 for each such violation.
(c) Application.--The provisions of section 1128A (other than
subsections (a) and (b)) shall apply to a civil monetary
penalty under this section in the same manner as such
provisions apply to a penalty or proceeding under section
1128A(a).
SEC. 1199. MISCELLANEOUS PROVISIONS.
(a) Paperwork Reduction Act.--Chapter 35 of title 44, United
States Code, shall not apply to data collected under this part.
(b) National Academy of Medicine Study.--Not later than
December 31, 2025, the National Academy of Medicine shall
conduct a study, and submit to Congress a report, on
recommendations for improvements to the program under this
part, including the determination of the limits applied under
section 1194(c).
(c) MedPAC Study.--Not later than December 31, 2025, the
Medicare Payment Advisory Commission shall conduct a study, and
submit to Congress a report, on the program under this part
with respect to the Medicare program under title XVIII,
including with respect to the effect of the program on
individuals entitled to benefits or enrolled under such title.
(d) Limitation on Judicial Review.--The following shall not
be subject to judicial review:
(1) The selection of drugs for publication under
section 1192(a).
(2) The determination of whether a drug is a
negotiation-eligible drug under section 1192(d).
(3) The determination of the maximum fair price of a
selected drug under section 1194.
(4) The determination of units of a drug for purposes
of section 1191(c)(3).
(e) Coordination.--In carrying out this part with respect to
group health plans or health insurance coverage offered in the
group market that are subject to oversight by the Secretary of
Labor or the Secretary of the Treasury, the Secretary of Health
and Human Services shall coordinate with such respective
Secretary.
(f) Data Sharing.--The Secretary shall share with the
Secretary of the Treasury such information as is necessary to
determine the tax imposed by section 4192 of the Internal
Revenue Code of 1986.
* * * * * * *
TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED
* * * * * * *
Part B--Supplementary Medical Insurance Benefits for the Aged and
Disabled
* * * * * * *
PAYMENT OF BENEFITS
Sec. 1833. (a) Except as provided in section 1876, and
subject to the succeeding provisions of this section, there
shall be paid from the Federal Supplementary Medical Insurance
Trust Fund, in the case of each individual who is covered under
the insurance program established by this part and incurs
expenses for services with respect to which benefits are
payable under this part, amounts equal to--(1) in the case of
services described in section 1832(a)(1)--80 percent of the
reasonable charges for the services; except that (A) an
organization which provides medical and other health services
(or arranges for their availability) on a prepayment basis (and
either is sponsored by a union or employer, or does not
provide, or arrange for the provision of, any inpatient
hospital services) may elect to be paid 80 percent of the
reasonable cost of services for which payment may be made under
this part on behalf of individuals enrolled in such
organization in lieu of 80 percent of the reasonable charges
for such services if the organization undertakes to charge such
individuals no more than 20 percent of such reasonable cost
plus any amounts payable by them as a result of subsection (b),
(B) with respect to items and services described in section
1861(s)(10)(A), the amounts paid shall be 100 percent of the
reasonable charges for such items and services, (C) with
respect to expenses incurred for those physicians' services for
which payment may be made under this part that are described in
section 1862(a)(4), the amounts paid shall be subject to such
limitations as may be prescribed by regulations, (D) with
respect to clinical diagnostic laboratory tests for which
payment is made under this part (i)(I) on the basis of a fee
schedule under subsection (h)(1) (for tests furnished before
January 1, 2017) or section 1834(d)(1), the amount paid shall
be equal to 80 percent (or 100 percent, in the case of such
tests for which payment is made on an assignment-related basis)
of the lesser of the amount determined under such fee schedule,
the limitation amount for that test determined under subsection
(h)(4)(B), or the amount of the charges billed for the tests,
or (II) undersection 1834A (for tests furnished on or after
January1, 2017), the amount paid shall be equal to 80
percent(or 100 percent, in the case of such tests for
whichpayment is made on an assignment-related basis) ofthe
lesser of the amount determined under such sectionor the amount
of the charges billed for the tests, or (ii) for tests
furnished before January 1, 2017,on the basis of a negotiated
rate established under subsection (h)(6), the amount paid shall
be equal to 100 percent of such negotiated rate,,(E) with
respect to services furnished to individuals who have been
determined to have end stage renal disease, the amounts paid
shall be determined subject to the provisions of section
1881,(F) with respect to clinical social worker services under
section 1861(s)(2)(N), the amounts paid shall be 80 percent of
the lesser of (i) the actual charge for the services or (ii) 75
percent of the amount determined for payment of a psychologist
under clause (L),
(G) with respect to facility services
furnished in connection with a surgical
procedure specified pursuant to subsection
(i)(1)(A) and furnished to an individual in an
ambulatory surgical center described in such
subsection, for services furnished beginning
with the implementation date of a revised
payment system for such services in such
facilities specified in subsection (i)(2)(D),
the amounts paid shall be 80 percent of the
lesser of the actual charge for the services or
the amount determined by the Secretary under
such revised payment system,
(H) with respect to services of a certified
registered nurse anesthetist under section 1861(s)(11),
the amounts paid shall be 80 percent of the least of
the actual charge, the prevailing charge that would be
recognized (or, for services furnished on or after
January 1, 1992, the fee schedule amount provided under
section 1848) if the services had been performed by an
anesthesiologist, or the fee schedule for such services
established by the Secretary in accordance with
subsection (l), (I) with respect to covered items
(described in section 1834(a)(13)), the amounts paid
shall be the amounts described in section 1834(a)(1),
and(J) with respect to expenses incurred for
radiologist services (as defined in section
1834(b)(6)), subject to section 1848, the amounts paid
shall be 80 percent of the lesser of the actual charge
for the services or the amount provided under the fee
schedule established under section 1834(b), (K) with
respect to certified nurse-midwife services under
section 1861(s)(2)(L), the amounts paid shall be 80
percent of the lesser of the actual charge for the
services or the amount determined by a fee schedule
established by the Secretary for the purposes of this
subparagraph (but in no event shall such fee schedule
exceed 65 percent of the prevailing charge that would
be allowed for the same service performed by a
physician, or, for services furnished on or after
January 1, 1992, 65 percent (or 100 percent for
services furnished on or after January 1, 2011) of the
fee schedule amount provided under section 1848 for the
same service performed by a physician), (L) with
respect to qualified psychologist services under
section 1861(s)(2)(M), the amounts paid shall be 80
percent of the lesser of the actual charge for the
services or the amount determined by a fee schedule
established by the Secretary for the purposes of this
subparagraph, (M) with respect to prosthetic devices
and orthotics and prosthetics (as defined in section
1834(h)(4)), the amounts paid shall be the amounts
described in section 1834(h)(1), (N) with respect to
expenses incurred for physicians' services (as defined
in section 1848(j)(3)) other than personalized
prevention plan services (as defined in section
1861(hhh)(1)), the amounts paid shall be 80 percent of
the payment basis determined under section 1848(a)(1),
(O) with respect to services described in section
1861(s)(2)(K) (relating to services furnished by
physician assistants, nurse practitioners, or clinic
nurse specialists), the amounts paid shall be equal to
80 percent of (i) the lesser of the actual charge or 85
percent of the fee schedule amount provided under
section 1848, or (ii) in the case of services as an
assistant at surgery, the lesser of the actual charge
or 85 percent of the amount that would otherwise be
recognized if performed by a physician who is serving
as an assistant at surgery, (P) with respect to
surgical dressings, the amounts paid shall be the
amounts determined under section 1834(i), (Q) with
respect to items or services for which fee schedules
are established pursuant to section 1842(s), the
amounts paid shall be 80 percent of the lesser of the
actual charge or the fee schedule established in such
section, (R) with respect to ambulance services, (i)
the amounts paid shall be 80 percent of the lesser of
the actual charge for the services or the amount
determined by a fee schedule established by the
Secretary under section 1834(l) and (ii) with respect
to ambulance services described in section 1834(l)(8),
the amounts paid shall be the amounts determined under
section 1834(g) for outpatient critical access hospital
services, (S) [with respect to] subject to subparagraph
(DD), with respect to drugs and biologicals (including
intravenous immune globulin (as defined in section
1861(zz))) not paid on a cost or prospective payment
basis as otherwise provided in this part (other than
items and services described in subparagraph (B)), the
amounts paid shall be 80 percent of the lesser of the
actual charge or the payment amount established in
section 1842(o) (or, if applicable, under section 1847,
1847A, or 1847B), (T) with respect to medical nutrition
therapy services (as defined in section 1861(vv)), the
amount paid shall be 80 percent (or 100 percent if such
services are recommended with a grade of A or B by the
United States Preventive Services Task Force for any
indication or population and are appropriate for the
individual) of the lesser of the actual charge for the
services or 85 percent of the amount determined under
the fee schedule established under section 1848(b) for
the same services if furnished by a physician, (U) with
respect to facility fees described in section
1834(m)(2)(B), the amounts paid shall be 80 percent of
the lesser of the actual charge or the amounts
specified in such section, (V) notwithstanding
subparagraphs (I) (relating to durable medical
equipment), (M) (relating to prosthetic devices and
orthotics and prosthetics), and (Q) (relating to
1842(s) items), with respect to competitively priced
items and services (described in section 1847(a)(2))
that are furnished in a competitive area, the amounts
paid shall be the amounts described in section
1847(b)(5), (W) with respect to additional preventive
services (as defined in section 1861(ddd)(1)), the
amount paid shall be (i) in the case of such services
which are clinical diagnostic laboratory tests, the
amount determined under subparagraph (D) (if such
subparagraph were applied, by substituting ``100
percent'' for ``80 percent''), and (ii) in the case of
all other such services, 100 percent of the lesser of
the actual charge for the service or the amount
determined under a fee schedule established by the
Secretary for purposes of this subparagraph, (X) with
respect to personalized prevention plan services (as
defined in section 1861(hhh)(1)), the amount paid shall
be 100 percent of the lesser of the actual charge for
the services or the amount determined under the payment
basis determined under section 1848, (Y) with respect
to preventive services described in subparagraphs (A)
and (B) of section 1861(ddd)(3) that are appropriate
for the individual and, in the case of such services
described in subparagraph (A), are recommended with a
grade of A or B by the United States Preventive
Services Task Force for any indication or population,
the amount paid shall be 100 percent of (i) except as
provided in clause (ii), the lesser of the actual
charge for the services or the amount determined under
the fee schedule that applies to such services under
this part, and (ii) in the case of such services that
are covered OPD services (as defined in subsection
(t)(1)(B)), the amount determined under subsection (t),
(Z) with respect to Federally qualified health center
services for which payment is made under section
1834(o), the amounts paid shall be 80 percent of the
lesser of the actual charge or the amount determined
under such section, (AA) with respect to an applicable
disposable device (as defined in paragraph (2) of
section 1834(s)) furnished to an individual pursuant to
paragraph (1) of such section, the amount paid shall be
equal to 80 percent of the lesser of the actual charge
or the amount determined under paragraph (3) of such
section, (BB) with respect to home infusion therapy,
the amount paid shall be an amount equal to 80 percent
of the lesser of the actual charge for the services or
the amount determined under section 1834(u), [and (CC)]
(CC) with respect to opioid use disorder treatment
services furnished during an episode of care, the
amount paid shall be equal to the amount payable under
section 1834(w) less any copayment required as
specified by the Secretary, and (DD) with respect to a
part B rebatable drug (as defined in paragraph (2) of
section 1834(x)) for which the payment amount for a
calendar quarter under paragraph (3)(A)(ii)(I) of such
section for such quarter exceeds the inflation-adjusted
payment under paragraph (3)(A)(ii)(II) of such section
for such quarter, the amounts paid shall be the
difference between (i) the payment amount under
paragraph (3)(A)(ii)(I) of such section for such drug,
and (ii) 20 percent of the inflation-adjusted payment
amount under paragraph (3)(A)(ii)(II) of such section
for such drug;
(2) in the case of services described in section
1832(a)(2) (except those services described in
subparagraphs (C), (D), (E), (F), (G), (H), and (I) of
such section and unless otherwise specified in section
1881)--
(A) with respect to home health services
(other than a covered osteoporosis drug) (as
defined in section 1861(kk)), the amount
determined under the prospective payment system
under section 1895;
(B) with respect to other items and services
(except those described in subparagraph (C),
(D), or (E) of this paragraph and except as may
be provided in section 1886 or section
1888(e)(9))--
(i) furnished before January 1, 1999,
the lesser of--
(I) the reasonable cost of
such services, as determined
under section 1861(v), or
(II) the customary charges
with respect to such
services,--less the amount a
provider may charge as
described in clause (ii) of
section 1866(a)(2)(A), but in
no case may the payment for
such other services exceed 80
percent of such reasonable
cost, or
(ii) if such services are furnished
before January 1, 1999, by a public
provider of services, or by another
provider which demonstrates to the
satisfaction of the Secretary that a
significant portion of its patients are
low-income (and requests that payment
be made under this clause), free of
charge or at nominal charges to the
public, 80 percent of the amount
determined in accordance with section
1814(b)(2), or
(iii) if such services are furnished
on or after January 1, 1999, the amount
determined under subsection (t), or
(iv) if (and for so long as) the
conditions described in section
1814(b)(3) are met, the amounts
determined under the reimbursement
system described in such section;
(C) with respect to services described in the
second sentence of section 1861(p), 80 percent
of the reasonable charges for such services;
(D) with respect to clinical diagnostic
laboratory tests for which payment is made
under this part (i)(I)on the basis of a fee
schedule determined under subsection(h)(1) (for
tests furnished before January 1, 2017) or
section 1834(d)(1), the amount paid shall be
equal to 80 percent (or 100 percent, in the
case of such tests for which payment is made on
an assignment-related basis or to a provider
having an agreement under section 1866) of the
lesser of the amount determined under such fee
schedule, the limitation amount for that test
determined under subsection (h)(4)(B), or the
amount of the charges billed for the tests, or
(II) under section 1834A (for tests furnished
on or after January 1, 2017), the amount paid
shall be equal to 80 percent (or 100 percent,
in the case of such tests for which payment is
made on an assignment-related basis or to a
provider having an agreement under section
1866) of the lesser of the amount determined
under such section or the amount of the charges
billed for the tests, or (ii) for tests
furnished before January 1, 2017, on the basis
of a negotiated rate established under
subsection (h)(6), the amount paid shall be
equal to 100 percent of such negotiated rate
for such tests;
(E) with respect to--
(i) outpatient hospital radiology
services (including diagnostic and
therapeutic radiology, nuclear medicine
and CAT scan procedures, magnetic
resonance imaging, and ultrasound and
other imaging services, but excluding
screening mammography and, for services
furnished on or after January 1, 2005,
diagnostic mammography), and
(ii) effective for procedures
performed on or after October 1, 1989,
diagnostic procedures (as defined by
the Secretary) described in section
1861(s)(3) (other than diagnostic x-ray
tests and diagnostic laboratory tests),
the amount determined under subsection (n) or,
for services or procedures performed on or
after January 1, 1999, subsection (t);
(F) with respect to a covered osteoporosis
drug (as defined in section 1861(kk)) furnished
by a home health agency, 80 percent of the
reasonable cost of such service, as determined
under section 1861(v);
(G) with respect to items and services
described in section 1861(s)(10)(A), the lesser
of--
(i) the reasonable cost of such
services, as determined under section
1861(v), or
(ii) the customary charges with
respect to such services; and
(H) with respect to personalized prevention
plan services (as defined in section
1861(hhh)(1)) furnished by an outpatient
department of a hospital, the amount determined
under paragraph (1)(X),
or, if such services are furnished by a public
provider of services, or by another provider
which demonstrates to the satisfaction of the
Secretary that a significant portion of its
patients are low-income (and requests that
payment be made under this provision), free of
charge or at nominal charges to the public, the
amount determined in accordance with section
1814(b)(2);
(3) in the case of services described in section
1832(a)(2)(D)--
(A) except as provided in subparagraph (B),
the costs which are reasonable and related to
the cost of furnishing such services or which
are based on such other tests of reasonableness
as the Secretary may prescribe in regulations,
including those authorized under section
1861(v)(1)(A), less the amount a provider may
charge as described in clause (ii) of section
1866(a)(2)(A), but in no case may the payment
for such services (other than for items and
services described in section 1861(s)(10)(A))
exceed 80 percent of such costs; or
(B) with respect to the services described in
clause (ii) of section 1832(a)(2)(D) that are
furnished to an individual enrolled with a MA
plan under part C pursuant to a written
agreement described in section 1853(a)(4), the
amount (if any) by which--
(i) the amount of payment that would
have otherwise been provided (I) under
subparagraph (A) (calculated as if
``100 percent'' were substituted for
``80 percent'' in such subparagraph)
for such services if the individual had
not been so enrolled, or (II) in the
case of such services furnished on or
after the implementation date of the
prospective payment system under
section 1834(o), under such section
(calculated as if ``100 percent'' were
substituted for ``80 percent'' in such
section) for such services if the
individual had not been so enrolled;
exceeds
(ii) the amount of the payments
received under such written agreement
for such services (not including any
financial incentives provided for in
such agreement such as risk pool
payments, bonuses, or withholds),
less the amount the federally qualified health
center may charge as described in section
1857(e)(3)(B);
(4) in the case of facility services described in
section 1832(a)(2)(F), and outpatient hospital facility
services furnished in connection with surgical
procedures specified by the Secretary pursuant to
section 1833(i)(1)(A), the applicable amount as
determined under paragraph (2) or (3) of subsection (i)
or subsection (t);
(5) in the case of covered items (described in
section 1834(a)(13)) the amounts described in section
1834(a)(1);
(6) in the case of outpatient critical access
hospital services, the amounts described in section
1834(g);
(7) in the case of prosthetic devices and orthotics
and prosthetics (as described in section 1834(h)(4)),
the amounts described in section 1834(h);
(8) in the case of--
(A) outpatient physical therapy services,
outpatient speech-language pathology services,
and outpatient occupational therapy services
furnished--
(i) by a rehabilitation agency,
public health agency, clinic,
comprehensive outpatient rehabilitation
facility, or skilled nursing facility,
(ii) by a home health agency to an
individual who is not homebound, or
(iii) by another entity under an
arrangement with an entity described in
clause (i) or (ii); and
(B) outpatient physical therapy services,
outpatient speech-language pathology services,
and outpatient occupational therapy services
furnished--
(i) by a hospital to an outpatient or
to a hospital inpatient who is entitled
to benefits under part A but has
exhausted benefits for inpatient
hospital services during a spell of
illness or is not so entitled to
benefits under part A, or
(ii) by another entity under an
arrangement with a hospital described
in clause (i),
the amounts described in section 1834(k); and
(9) in the case of services described in section
1832(a)(2)(E) that are not described in paragraph (8),
the amounts described in section 1834(k).
Paragraph (3)(A) shall not apply to Federally
qualified health center services furnished on or after
the implementation date of the prospective payment
system under section 1834(0).
For purposes of applying paragraph (1)(DD), subsections (i)(9)
and (t)(3)(H), and section 1834(x)(5), the Secretary shall make
such estimates and use such data as the Secretary determines
appropriate, and notwithstanding any other provision of law,
may do so by program instruction or otherwise.
(b) Before applying subsection (a) with respect to expenses
incurred by an individual during any calendar year, the total
amount of the expenses incurred by such individual during such
year (which would, except for this subsection, constitute
incurred expenses from which benefits payable under subsection
(a) are determinable) shall be reduced by a deductible of $75
for calendar years before 1991, $100 for 1991 through 2004,
$110 for 2005, and for a subsequent year the amount of such
deductible for the previous year increased by the annual
percentage increase in the monthly actuarial rate under section
1839(a)(1) ending with such subsequent year (rounded to the
nearest $1); except that (1) such total amount shall not
include expenses incurred for preventive services described in
subparagraph (A) of section 1861(ddd)(3) that are recommended
with a grade of A or B by the United States Preventive Services
Task Force for any indication or population and are appropriate
for the individual., (2) such deductible shall not apply with
respect to home health services (other than a covered
osteoporosis drug (as defined in section 1861(kk))), (3) such
deductible shall not apply with respect to clinical diagnostic
laboratory tests for which payment is made under this part (A)
under subsection (a)(1)(D)(i) or (a)(2)(D)(i) on an assignment-
related basis, or to a provider having an agreement under
section 1866, or (B) for tests furnished before January 1,
2017,on the basis of a negotiated rate determined under
subsection (h)(6), (4) such deductible shall not apply to
Federally qualified health center services, (5) such deductible
shall not apply with respect to screening mammography (as
described in section 1861(jj)), (6) such deductible shall not
apply with respect to screening pap smear and screening pelvic
exam (as described in section 1861(nn)), (7) such deductible
shall not apply with respect to ultrasound screening for
abdominal aortic aneurysm (as defined in section 1861(bbb)),
(8) such deductible shall not apply with respect to colorectal
cancer screening tests (as described in section 1861(pp)(1)),
(9) such deductible shall not apply with respect to an initial
preventive physical examination (as defined in section
1861(ww)), and (10) such deductible shall not apply with
respect to personalized prevention plan services (as defined in
section 1861(hhh)(1)). The total amount of the expenses
incurred by an individual as determined under the preceding
sentence shall, after the reduction specified in such sentence,
be further reduced by an amount equal to the expenses incurred
for the first three pints of whole blood (or equivalent
quantities of packed red blood cells, as defined under
regulations) furnished to the individual during the calendar
year, except that such deductible for such blood shall in
accordance with regulations be appropriately reduced to the
extent that there has been a replacement of such blood (or
equivalent quantities of packed red blood cells, as so
defined); and for such purposes blood (or equivalent quantities
of packed red blood cells, as so defined) furnished such
individual shall be deemed replaced when the institution or
other person furnishing such blood (or such equivalent
quantities of packed red blood cells, as so defined) is given
one pint of blood for each pint of blood (or equivalent
quantities of packed red blood cells, as so defined) furnished
such individual with respect to which a deduction is made under
this sentence. The deductible under the previous sentence for
blood or blood cells furnished an individual in a year shall be
reduced to the extent that a deductible has been imposed under
section 1813(a)(2) to blood or blood cells furnished the
individual in the year. Paragraph (1) of the first sentence of
this subsection shall apply with respect to a colorectal cancer
screening test regardless of the code that is billed for the
establishment of a diagnosis as a result of the test, or for
the removal of tissue or other matter or other procedure that
is furnished in connection with, as a result of, and in the
same clinical encounter as the screening test.
(c)(1) Notwithstanding any other provision of this part, with
respect to expenses incurred in a calendar year in connection
with the treatment of mental, psychoneurotic, and personality
disorders of an individual who is not an inpatient of a
hospital at the time such expenses are incurred, there shall be
considered as incurred expenses for purposes of subsections (a)
and (b)--
(A) for expenses incurred in years prior to 2010,
only 62\1/2\ percent of such expenses;
(B) for expenses incurred in 2010 or 2011, only 68\3/
4\ percent of such expenses;
(C) for expenses incurred in 2012, only 75 percent of
such expenses;
(D) for expenses incurred in 2013, only 81\1/4\
percent of such expenses; and
(E) for expenses incurred in 2014 or any subsequent
calendar year, 100 percent of such expenses.
(2) For purposes of subparagraphs (A) through (D) of
paragraph (1), the term ``treatment'' does not include brief
office visits (as defined by the Secretary) for the sole
purpose of monitoring or changing drug prescriptions used in
the treatment of such disorders or partial hospitalization
services that are not directly provided by a physician
(d) No payment may be made under this part with respect to
any services furnished an individual to the extent that such
individual is entitled (or would be entitled except for section
1813) to have payment made with respect to such services under
part A.
(e) No payment shall be made to any provider of services or
other person under this part unless there has been furnished
such information as may be necessary in order to determine the
amounts due such provider or other person under this part for
the period with respect to which the amounts are being paid or
for any prior period.
(f) In establishing limits under subsection (a) on payment
for rural health clinic services provided by rural health
clinics (other than such clinics in hospitals with less than 50
beds), the Secretary shall establish such limit, for services
provided--
(1) in 1988, after March 31, at $46 per visit, and
(2) in a subsequent year, at the limit established
under this subsection for the previous year increased
by the percentage increase in the MEI (as defined in
section 1842(i)(3)) applicable to primary care services
(as defined in section 1842(i)(4)) furnished as of the
first day of that year.
(g)(1)(A) Subject to paragraphs (4) and (5), in the case of
physical therapy services of the type described in section
1861(p) and speech-language pathology services of the type
described in such section through the application of section
1861(ll)(2), but (except as provided in paragraph (6)) not
described in subsection (a)(8)(B), and physical therapy
services and speech-language pathology services of such type
which are furnished by a physician or as incident to
physicians' services, with respect to expenses incurred in any
calendar year, no more than the amount specified in paragraph
(2) for the year shall be considered as incurred expenses for
purposes of subsections (a) and (b). The preceding sentence
shall not apply to expenses incurred with respect to services
furnished after December 31, 2017.
(B) With respect to services furnished during 2018 or a
subsequent year, in the case of physical therapy services of
the type described in section 1861(p), speech-language
pathology services of the type described in such section
through the application of section 1861(ll)(2), and physical
therapy services and speech-language pathology services of such
type which are furnished by a physician or as incident to
physicians' services, with respect to expenses incurred in any
calendar year, any amount that is more than the amount
specified in paragraph (2) for the year shall not be considered
as incurred expenses for purposes of subsections (a) and (b)
unless the applicable requirements of paragraph (7) are met.
(2) The amount specified in this paragraph--
(A) for 1999, 2000, and 2001, is $1,500, and
(B) for a subsequent year is the amount specified in
this paragraph for the preceding year increased by the
percentage increase in the MEI (as defined in section
1842(i)(3)) for such subsequent year;
except that if an increase under subparagraph (B) for a year is
not a multiple of $10, it shall be rounded to the nearest
multiple of $10.
(3)(A) Subject to paragraphs (4) and (5), in the case of
occupational therapy services (of the type that are described
in section 1861(p) (but (except as provided in paragraph (6))
not described in subsection (a)(8)(B)) through the operation of
section 1861(g) and of such type which are furnished by a
physician or as incident to physicians' services), with respect
to expenses incurred in any calendar year, no more than the
amount specified in paragraph (2) for the year shall be
considered as incurred expenses for purposes of subsections (a)
and (b). The preceding sentence shall not apply to expenses
incurred with respect to services furnished after December 31,
2017.
(B) With respect to services furnished during 2018 or a
subsequent year, in the case of occupational therapy services
(of the type that are described in section 1861(p) through the
operation of section 1861(g) and of such type which are
furnished by a physician or as incident to physicians'
services), with respect to expenses incurred in any calendar
year, any amount that is more than the amount specified in
paragraph (2) for the year shall not be considered as incurred
expenses for purposes of subsections (a) and (b) unless the
applicable requirements of paragraph (7) are met.
(4) This subsection shall not apply to expenses incurred with
respect to services furnished during 2000, 2001, 2002, 2004,
and 2005.
(5)(A) With respect to expenses incurred during the period
beginning on January 1, 2006, and ending on December 31, 2017,
for services, the Secretary shall implement a process under
which an individual enrolled under this part may, upon request
of the individual or a person on behalf of the individual,
obtain an exception from the uniform dollar limitation
specified in paragraph (2), for services described in
paragraphs (1) and (3) if the provision of such services is
determined to be medically necessary and if the requirement of
subparagraph (B) is met. Under such process, if the Secretary
does not make a decision on such a request for an exception
within 10 business days of the date of the Secretary's receipt
of the request made in accordance with such requirement, the
Secretary shall be deemed to have found the services to be
medically necessary.
(B) In the case of outpatient therapy services for which an
exception is requested under the first sentence of subparagraph
(A), the claim for such services shall contain an appropriate
modifier (such as the KX modifier used as of the date of the
enactment of this subparagraph) indicating that such services
are medically necessary as justified by appropriate
documentation in the medical record involved.
(C)(i) In applying this paragraph with respect to a request
for an exception with respect to expenses that would be
incurred for outpatient therapy services (including services
described in subsection (a)(8)(B)) that would exceed the
threshold described in clause (ii) for a year, the request for
such an exception, for services furnished on or after October
1, 2012, shall be subject to a manual medical review process
that, subject to subparagraph (E), is similar to the manual
medical review process used for certain exceptions under this
paragraph in 2006.
(ii) The threshold under this clause for a year is $3,700.
Such threshold shall be applied separately--
(I) for physical therapy services and speech-language
pathology services; and
(II) for occupational therapy services.
(E)(i) In place of the manual medical review process under
subparagraph (C)(i), the Secretary shall implement a process
for medical review under this subparagraph under which the
Secretary shall identify and conduct medical review for
services described in subparagraph (C)(i) furnished by a
provider of services or supplier (in this subparagraph referred
to as a ``therapy provider'') using such factors as the
Secretary determines to be appropriate.
(ii) Such factors may include the following:
(I) The therapy provider has had a high claims denial
percentage for therapy services under this part or is
less compliant with applicable requirements under this
title.
(II) The therapy provider has a pattern of billing
for therapy services under this part that is aberrant
compared to peers or otherwise has questionable billing
practices for such services, such as billing medically
unlikely units of services in a day.
(III) The therapy provider is newly enrolled under
this title or has not previously furnished therapy
services under this part.
(IV) The services are furnished to treat a type of
medical condition.
(V) The therapy provider is part of group that
includes another therapy provider identified using the
factors determined under this subparagraph.
(iii) For purposes of carrying out this subparagraph, the
Secretary shall provide for the transfer, from the Federal
Supplementary Medical Insurance Trust Fund under section 1841,
of $5,000,000 to the Centers for Medicare & Medicaid Services
Program Management Account for fiscal years 2015 and 2016, to
remain available until expended. Such funds may not be used by
a contractor under section 1893(h) for medical reviews under
this subparagraph.
(iv) The targeted review process under this subparagraph
shall not apply to services for which expenses are incurred
beyond the period for which the exceptions process under
subparagraph (A) is implemented, except as such process is
applied under paragraph (7)(B).
(6)(A) In applying paragraphs (1) and (3) to services
furnished during the period beginning not later than October 1,
2012, and ending on December 31, 2017, the exclusion of
services described in subsection (a)(8)(B) from the uniform
dollar limitation specified in paragraph (2) shall not apply to
such services furnished during 2012 through 2017.
(B)(i) With respect to outpatient therapy services furnished
beginning on or after January 1, 2013, and before January 1,
2014, for which payment is made under section 1834(g), the
Secretary shall count toward the uniform dollar limitations
described in paragraphs (1) and (3) and the threshold described
in paragraph (5)(C) the amount that would be payable under this
part if such services were paid under section 1834(k)(1)(B)
instead of being paid under section 1834(g).
(ii) Nothing in clause (i) shall be construed as changing the
method of payment for outpatient therapy services under section
1834(g).
(7) For purposes of paragraphs (1)(B) and (3)(B), with
respect to services described in such paragraphs, the
requirements described in this paragraph are as follows:
(A) Inclusion of appropriate modifier.--The claim for
such services contains an appropriate modifier (such as
the KX modifier described in paragraph (5)(B))
indicating that such services are medically necessary
as justified by appropriate documentation in the
medical record involved.
(B) Targeted medical review for certain services
above threshold.--
(i) In general.--In the case where expenses
that would be incurred for such services would
exceed the threshold described in clause (ii)
for the year, such services shall be subject to
the process for medical review implemented
under paragraph (5)(E).
(ii) Threshold.--The threshold under this
clause for--
(I) a year before 2028, is $3,000;
(II) 2028, is the amount specified in
subclause (I) increased by the
percentage increase in the MEI (as
defined in section 1842(i)(3)) for
2028; and
(III) a subsequent year, is the
amount specified in this clause for the
preceding year increased by the
percentage increase in the MEI (as
defined in section 1842(i)(3)) for such
subsequent year;
except that if an increase under subclause (II)
or (III) for a year is not a multiple of $10,
it shall be rounded to the nearest multiple of
$10.
(iii) Application.--The threshold under
clause (ii) shall be applied separately--
(I) for physical therapy services and
speech-language pathology services; and
(II) for occupational therapy
services.
(iv) Funding.--For purposes of carrying out
this subparagraph, the Secretary shall provide
for the transfer, from the Federal
Supplementary Medical Insurance Trust Fund
under section 1841 to the Centers for Medicare
& Medicaid Services Program Management Account,
of $5,000,000 for each fiscal year beginning
with fiscal year 2018, to remain available
until expended. Such funds may not be used by a
contractor under section 1893(h) for medical
reviews under this subparagraph.
(8) With respect to services furnished on or after January 1,
2013, where payment may not be made as a result of application
of paragraphs (1) and (3), section 1879 shall apply in the same
manner as such section applies to a denial that is made by
reason of section 1862(a)(1).
(h)(1)(A) Subject to section 1834(d)(1), the Secretary shall
establish fee schedules for clinical diagnostic laboratory
tests (including prostate cancer screening tests under section
1861(oo) consisting of prostate-specific antigen blood tests)
for which payment is made under this part, other than such
tests performed by a provider of services for an inpatient of
such provider.
(B) In the case of clinical diagnostic laboratory tests
performed by a physician or by a laboratory (other than tests
performed by a qualified hospital laboratory (as defined in
subparagraph (D)) for outpatients of such hospital), the fee
schedules established under subparagraph (A) shall be
established on a regional, statewide, or carrier service area
basis (as the Secretary may determine to be appropriate) for
tests furnished on or after July 1, 1984.
(C) In the case of clinical diagnostic laboratory tests
performed by a qualified hospital laboratory (as defined in
subparagraph (D)) for outpatients of such hospital, the fee
schedules established under subparagraph (A) shall be
established on a regional, statewide, or carrier service area
basis (as the Secretary may determine to be appropriate) for
tests furnished on or after July 1, 1984.
(D) In this subsection, the term ``qualified hospital
laboratory'' means a hospital laboratory, in a sole community
hospital (as defined in section 1886(d)(5)(D)(iii)), which
provides some clinical diagnostic laboratory tests 24 hours a
day in order to serve a hospital emergency room which is
available to provide services 24 hours a day and 7 days a week.
(2)(A)(i) Except as provided in clause (v), subparagraph (B),
and paragraph (4), the Secretary shall set the fee schedules at
60 percent (or, in the case of a test performed by a qualified
hospital laboratory (as defined in paragraph (1)(D)) for
outpatients of such hospital, 62 percent) of the prevailing
charge level determined pursuant to the third and fourth
sentences of section 1842(b)(3) for similar clinical diagnostic
laboratory tests for the applicable region, State, or area for
the 12-month period beginning July 1, 1984, adjusted annually
(to become effective on January 1 of each year) by, subject to
clause (iv), a percentage increase or decrease equal to the
percentage increase or decrease in the Consumer Price Index for
All Urban Consumers (United States city average) minus, for
each of the years 2009 and 2010, 0.5 percentage points, and,
for tests furnished before the dateof enactment of section
1834A, subject to such other adjustments as the Secretary
determines are justified by technological changes.
(ii) Notwithstanding clause (i)--
(I) any change in the fee schedules which would have
become effective under this subsection for tests
furnished on or after January 1, 1988, shall not be
effective for tests furnished during the 3-month period
beginning on January 1, 1988,
(II) the Secretary shall not adjust the fee schedules
under clause (i) to take into account any increase in
the consumer price index for 1988,
(III) the annual adjustment in the fee schedules
determined under clause (i) for each of the years 1991,
1992, and 1993 shall be 2 percent, and
(IV) the annual adjustment in the fee schedules
determined under clause (i) for each of the years 1994
and 1995, 1998 through 2002, and 2004 through 2008
shall be 0 percent.
(iii) In establishing fee schedules under clause (i) with
respect to automated tests and tests (other than cytopathology
tests) which before July 1, 1984, the Secretary made subject to
a limit based on lowest charge levels under the sixth sentence
of section 1842(b)(3) performed after March 31, 1988, the
Secretary shall reduce by 8.3 percent the fee schedules
otherwise established for 1988, and such reduced fee schedules
shall serve as the base for 1989 and subsequent years.
(iv) After determining the adjustment to the fee schedules
under clause (i), the Secretary shall reduce such adjustment--
(I) for 2011 and each subsequent year, by the
productivity adjustment described in section
1886(b)(3)(B)(xi)(II); and
(II) for each of 2011 through 2015, by 1.75
percentage points.
Subclause (I) shall not apply in a year where the adjustment to
the fee schedules determined under clause (i) is 0.0 or a
percentage decrease for a year. The application of the
productivity adjustment under subclause (I) shall not result in
an adjustment to the fee schedules under clause (i) being less
than 0.0 for a year. The application of subclause (II) may
result in an adjustment to the fee schedules under clause (i)
being less than 0.0 for a year, and may result in payment rates
for a year being less than such payment rates for the preceding
year.
(v) The Secretary shall reduce by 2 percent the fee schedules
otherwise determined under clause (i) for 2013, and such
reduced fee schedules shall serve as the base for 2014 and
subsequent years.
(B) The Secretary may make further adjustments or exceptions
to the fee schedules to assure adequate reimbursement of (i)
emergency laboratory tests needed for the provision of bona
fide emergency services, and (ii) certain low volume high-cost
tests where highly sophisticated equipment or extremely skilled
personnel are necessary to assure quality.
(3) In addition to the amounts provided under the fee
schedules (for tests furnished before January 1, 2017)or under
section 1834A (for tests furnished on or afterJanuary 1, 2017),
subject to subsection (b)(5) of such section, the Secretary
shall provide for and establish (A) a nominal fee to cover the
appropriate costs in collecting the sample on which a clinical
diagnostic laboratory test was performed and for which payment
is made under this part, except that not more than one such fee
may be provided under this paragraph with respect to samples
collected in the same encounter, and (B) a fee to cover the
transportation and personnel expenses for trained personnel to
travel to the location of an individual to collect the sample,
except that such a fee may be provided only with respect to an
individual who is homebound or an inpatient in an inpatient
facility (other than a hospital). In establishing a fee to
cover the transportation and personnel expenses for trained
personnel to travel to the location of an individual to collect
a sample, the Secretary shall provide a method for computing
the fee based on the number of miles traveled and the personnel
costs associated with the collection of each individual sample,
but the Secretary shall only be required to apply such method
in the case of tests furnished during the period beginning on
April 1, 1989, and ending on December 31, 1990, by a laboratory
that establishes to the satisfaction of the Secretary (based on
data for the 12-month period ending June 30, 1988) that (i) the
laboratory is dependent upon payments under this title for at
least 80 percent of its collected revenues for clinical
diagnostic laboratory tests, (ii) at least 85 percent of its
gross revenues for such tests are attributable to tests
performed with respect to individuals who are homebound or who
are residents in a nursing facility, and (iii) the laboratory
provided such tests for residents in nursing facilities
representing at least 20 percent of the number of such
facilities in the State in which the laboratory is located.
(4)(A) In establishing any fee schedule under this
subsection, the Secretary may provide for an adjustment to take
into account, with respect to the portion of the expenses of
clinical diagnostic laboratory tests attributable to wages, the
relative difference between a region's or local area's wage
rates and the wage rate presumed in the data on which the
schedule is based.
(B) For purposes of subsections (a)(1)(D)(i) and
(a)(2)(D)(i), the limitation amount for a clinical diagnostic
laboratory test performed--
(i) on or after July 1, 1986, and before April 1,
1988, is equal to 115 percent of the median of all the
fee schedules established for that test for that
laboratory setting under paragraph (1),
(ii) after March 31, 1988, and before January 1,
1990, is equal to the median of all the fee schedules
established for that test for that laboratory setting
under paragraph (1),
(iii) after December 31, 1989, and before January 1,
1991, is equal to 93 percent of the median of all the
fee schedules established for that test for that
laboratory setting under paragraph (1),
(iv) after December 31, 1990, and before January 1,
1994, is equal to 88 percent of such median,
(v) after December 31, 1993, and before January 1,
1995, is equal to 84 percent of such median,
(vi) after December 31, 1994, and before January 1,
1996, is equal to 80 percent of such median,
(vii) after December 31, 1995, and before January 1,
1998, is equal to 76 percent of such median, and
(viii) after December 31, 1997, is equal to 74
percent of such median (or 100 percent of such median
in the case of a clinical diagnostic laboratory test
performed on or after January 1, 2001, that the
Secretary determines is a new test for which no
limitation amount has previously been established under
this subparagraph).
(5)(A) In the case of a bill or request for payment for a
clinical diagnostic laboratory test for which payment may
otherwise be made under this part on an assignment-related
basis or under a provider agreement under section 1866, payment
may be made only to the person or entity which performed or
supervised the performance of such test; except that--
(i) if a physician performed or supervised the
performance of such test, payment may be made to
another physician with whom he shares his practice,
(ii) in the case of a test performed at the request
of a laboratory by another laboratory, payment may be
made to the referring laboratory but only if--
(I) the referring laboratory is located in,
or is part of, a rural hospital,
(II) the referring laboratory is wholly owned
by the entity performing such test, the
referring laboratory wholly owns the entity
performing such test, or both the referring
laboratory and the entity performing such test
are wholly-owned by a third entity, or
(III) not more than 30 percent of the
clinical diagnostic laboratory tests for which
such referring laboratory (but not including a
laboratory described in subclause (II)),
receives requests for testing during the year
in which the test is performed are performed by
another laboratory, and
(iii) in the case of a clinical diagnostic laboratory
test provided under an arrangement (as defined in
section 1861(w)(1)) made by a hospital, critical access
hospital, or skilled nursing facility, payment shall be
made to the hospital or skilled nursing facility.
(B) In the case of such a bill or request for payment for a
clinical diagnostic laboratory test for which payment may
otherwise be made under this part, and which is not described
in subparagraph (A), payment may be made to the beneficiary
only on the basis of the itemized bill of the person or entity
which performed or supervised the performance of the test.
(C) Payment for a clinical diagnostic laboratory test,
including a test performed in a physician's office but
excluding a test performed by a rural health clinic may only be
made on an assignment-related basis or to a provider of
services with an agreement in effect under section 1866.
(D) A person may not bill for a clinical diagnostic
laboratory test, including a test performed in a physician's
office but excluding a test performed by a rural health clinic,
other than on an assignment-related basis. If a person
knowingly and willfully and on a repeated basis bills for a
clinical diagnostic laboratory test in violation of the
previous sentence, the Secretary may apply sanctions against
the person in the same manner as the Secretary may apply
sanctions against a physician in accordance with paragraph (2)
of section 1842(j) in the same manner such paragraphs apply
with respect to a physician. Paragraph (4) of such section
shall apply in this subparagraph in the same manner as such
paragraph applies to such section.
(6) For tests furnished before January 1, 2017, inthe case of
any diagnostic laboratory test payment for which is not made on
the basis of a fee schedule under paragraph (1), the Secretary
may establish a payment rate which is acceptable to the person
or entity performing the test and which would be considered the
full charge for such tests. Such negotiated rate shall be
limited to an amount not in excess of the total payment that
would have been made for the services in the absence of such
rate.
(7) Notwithstanding paragraphs (1) and (4)and section 1834A,
the Secretary shall establish a national minimum payment amount
under this part for a diagnostic or screening pap smear
laboratory test (including all cervical cancer screening
technologies that have been approved by the Food and Drug
Administration as a primary screening method for detection of
cervical cancer) equal to $14.60 for tests furnished in 2000.
For such tests furnished in subsequent years, such national
minimum payment amount shall be adjusted annually as provided
in paragraph (2).
(8)(A) The Secretary shall establish by regulation procedures
for determining the basis for, and amount of, payment under
this subsection for any clinical diagnostic laboratory test
with respect to which a new or substantially revised HCPCS code
is assigned on or after January 1, 2005 (in this paragraph
referred to as ``new tests'').
(B) Determinations under subparagraph (A) shall be made only
after the Secretary--
(i) makes available to the public (through an
Internet website and other appropriate mechanisms) a
list that includes any such test for which
establishment of a payment amount under this subsection
is being considered for a year;
(ii) on the same day such list is made available,
causes to have published in the Federal Register notice
of a meeting to receive comments and recommendations
(and data on which recommendations are based) from the
public on the appropriate basis under this subsection
for establishing payment amounts for the tests on such
list;
(iii) not less than 30 days after publication of such
notice convenes a meeting, that includes
representatives of officials of the Centers for
Medicare & Medicaid Services involved in determining
payment amounts, to receive such comments and
recommendations (and data on which the recommendations
are based);
(iv) taking into account the comments and
recommendations (and accompanying data) received at
such meeting, develops and makes available to the
public (through an Internet website and other
appropriate mechanisms) a list of proposed
determinations with respect to the appropriate basis
for establishing a payment amount under this subsection
for each such code, together with an explanation of the
reasons for each such determination, the data on which
the determinations are based, and a request for public
written comments on the proposed determination; and
(v) taking into account the comments received during
the public comment period, develops and makes available
to the public (through an Internet website and other
appropriate mechanisms) a list of final determinations
of the payment amounts for such tests under this
subsection, together with the rationale for each such
determination, the data on which the determinations are
based, and responses to comments and suggestions
received from the public.
(C) Under the procedures established pursuant to subparagraph
(A), the Secretary shall--
(i) set forth the criteria for making determinations
under subparagraph (A); and
(ii) make available to the public the data (other
than proprietary data) considered in making such
determinations.
(D) The Secretary may convene such further public meetings to
receive public comments on payment amounts for new tests under
this subsection as the Secretary deems appropriate.
(E) For purposes of this paragraph:
(i) The term ``HCPCS'' refers to the Health Care
Procedure Coding System.
(ii) A code shall be considered to be ``substantially
revised'' if there is a substantive change to the
definition of the test or procedure to which the code
applies (such as a new analyte or a new methodology for
measuring an existing analyte-specific test).
(9) Notwithstanding any other provision in this part, in the
case of any diagnostic laboratory test for HbA1c that is
labeled by the Food and Drug Administration for home use and is
furnished on or after April 1, 2008, the payment rate for such
test shall be the payment rate established under this part for
a glycated hemoglobin test (identified as of October 1, 2007,
by HCPCS code 83036 (and any succeeding codes)).
(i)(1) The Secretary shall, in consultation with appropriate
medical organizations--
(A) specify those surgical procedures which are
appropriately (when considered in terms of the proper
utilization of hospital inpatient facilities) performed
on an inpatient basis in a hospital but which also can
be performed safely on an ambulatory basis in an
ambulatory surgical center (meeting the standards
specified under section 1832(a)(2)(F)(i)), critical
access hospital, or hospital outpatient department, and
(B) specify those surgical procedures which are
appropriately (when considered in terms of the proper
utilization of hospital inpatient facilities) performed
on an inpatient basis in a hospital but which also can
be performed safely on an ambulatory basis in a
physician's office.
The lists of procedures established under subparagraphs (A) and
(B) shall be reviewed and updated not less often than every 2
years, in consultation with appropriate trade and professional
organizations.
(2)(A) For services furnished prior to the implementation of
the system described in subparagraph (D), subject to
subparagraph (E), the amount of payment to be made for facility
services furnished in connection with a surgical procedure
specified pursuant to paragraph (1)(A) and furnished to an
individual in an ambulatory surgical center described in such
paragraph shall be equal to 80 percent of a standard overhead
amount established by the Secretary (with respect to each such
procedure) on the basis of the Secretary's estimate of a fair
fee which--
(i) takes into account the costs incurred by such
centers, or classes of centers, generally in providing
services furnished in connection with the performance
of such procedure, as determined in accordance with a
survey (based upon a representative sample of
procedures and facilities) of the actual audited costs
incurred by such centers in providing such services,
(ii) takes such costs into account in such a manner
as will assure that the performance of the procedure in
such a center will result in substantially less amounts
paid under this title than would have been paid if the
procedure had been performed on an inpatient basis in a
hospital, and
(iii) in the case of insertion of an intraocular lens
during or subsequent to cataract surgery includes
payment which is reasonable and related to the cost of
acquiring the class of lens involved.
Each amount so established shall be reviewed and updated not
later than July 1, 1987, and annually thereafter to take
account of varying conditions in different areas.
(B) The amount of payment to be made under this part for
facility services furnished, in connection with a surgical
procedure specified pursuant to paragraph (1)(B), in a
physician's office shall be equal to 80 percent of a standard
overhead amount established by the Secretary (with respect to
each such procedure) on the basis of the Secretary's estimate
of a fair fee which--
(i) takes into account additional costs, not usually
included in the professional fee, incurred by
physicians in securing, maintaining, and staffing the
facilities and ancillary services appropriate for the
performance of such procedure in the physician's
office, and
(ii) takes such items into account in such a manner
which will assure that the performance of such
procedure in the physician's office will result in
substantially less amounts paid under this title than
would have been paid if the services had been furnished
on an inpatient basis in a hospital.
Each amount so established shall be reviewed and updated not
later than July 1, 1987, and annually thereafter to take
account of varying conditions in different areas.
(C)(i) Notwithstanding the second sentence of each of
subparagraphs (A) and (B), except as otherwise specified in
clauses (ii), (iii), and (iv), if the Secretary has not updated
amounts established under such subparagraphs or under
subparagraph (D), with respect to facility services furnished
during a fiscal year (beginning with fiscal year 1986 or a
calendar year (beginning with 2006)), such amounts shall be
increased by the percentage increase in the Consumer Price
Index for all urban consumers (U.S. city average) as estimated
by the Secretary for the 12-month period ending with the
midpoint of the year involved.
(ii) In each of the fiscal years 1998 through 2002, the
increase under this subparagraph shall be reduced (but not
below zero) by 2.0 percentage points.
(iii) In fiscal year 2004, beginning with April 1, 2004, the
increase under this subparagraph shall be the Consumer Price
Index for all urban consumers (U.S. city average) as estimated
by the Secretary for the 12-month period ending with March 31,
2003, minus 3.0 percentage points.
(iv) In fiscal year 2005, the last quarter of calendar year
2005, and each of calendar years 2006 through 2009, the
increase under this subparagraph shall be 0 percent.
(D)(i) Taking into account the recommendations in the report
under section 626(d) of Medicare Prescription Drug,
Improvement, and Modernization Act of 2003, the Secretary shall
implement a revised payment system for payment of surgical
services furnished in ambulatory surgical centers.
(ii) In the year the system described in clause (i) is
implemented, such system shall be designed to result in the
same aggregate amount of expenditures for such services as
would be made if this subparagraph did not apply, as estimated
by the Secretary and taking into account reduced expenditures
that would apply if subparagraph (E) were to continue to apply,
as estimated by the Secretary.
(iii) The Secretary shall implement the system described in
clause (i) for periods in a manner so that it is first
effective beginning on or after January 1, 2006, and not later
than January 1, 2008.
(iv) The Secretary may implement such system in a manner so
as to provide for a reduction in any annual update for failure
to report on quality measures in accordance with paragraph (7).
(v) In implementing the system described in clause
(i) for 2011 and each subsequent year, any annual
update under such system for the year, after
application of clause (iv), shall be reduced by the
productivity adjustment described in section
1886(b)(3)(B)(xi)(II). The application of the preceding
sentence may result in such update being less than 0.0
for a year, and may result in payment rates under the
system described in clause (i) for a year being less
than such payment rates for the preceding year.
(vi) There shall be no administrative or judicial review
under section 1869, 1878, or otherwise, of the classification
system, the relative weights, payment amounts, and the
geographic adjustment factor, if any, under this subparagraph.
(E) With respect to surgical procedures furnished on or after
January 1, 2007, and before the effective date of the
implementation of a revised payment system under subparagraph
(D), if--
(i) the standard overhead amount under subparagraph
(A) for a facility service for such procedure, without
the application of any geographic adjustment, exceeds
(ii) the Medicare OPD fee schedule amount established
under the prospective payment system for hospital
outpatient department services under paragraph (3)(D)
of section 1833(t) for such service for such year,
determined without regard to geographic adjustment
under paragraph (2)(D) of such section,
the Secretary shall substitute under subparagraph (A) the
amount described in clause (ii) for the standard overhead
amount for such service referred to in clause (i).
(3)(A) The aggregate amount of the payments to be made under
this part for outpatient hospital facility services or critical
access hospital services furnished before January 1, 1999, in
connection with surgical procedures specified under paragraph
(1)(A) shall be equal to the lesser of--
(i) the amount determined with respect to such
services under subsection (a)(2)(B); or
(ii) the blend amount (described in subparagraph
(B)).
(B)(i) The blend amount for a cost reporting period is the
sum of--
(I) the cost proportion (as defined in clause
(ii)(I)) of the amount described in subparagraph
(A)(i), and
(II) the ASC proportion (as defined in clause
(ii)(II)) of the standard overhead amount payable with
respect to the same surgical procedure as if it were
provided in an ambulatory surgical center in the same
area, as determined under paragraph (2)(A), less the
amount a provider may charge as described in clause
(ii) of section 1866(a)(2)(A).
(ii) Subject to paragraph (4), in this paragraph:
(I) The term ``cost proportion'' means 75 percent for
cost reporting periods beginning in fiscal year 1988,
50 percent for portions of cost reporting periods
beginning on or after October 1, 1988, and ending on or
before December 31, 1990, and 42 percent for portions
of cost reporting periods beginning on or after January
1, 1991.
(II) The term ``ASC proportion'' means 25 percent for
cost reporting periods beginning in fiscal year 1988,
50 percent for portions of cost reporting periods
beginning on or after October 1, 1988, and ending on or
before December 31, 1990, and 58 percent for portions
of cost reporting periods beginning on or after January
1, 1991.
(4)(A) In the case of a hospital that--
(i) makes application to the Secretary and
demonstrates that it specializes in eye services or eye
and ear services (as determined by the Secretary),
(ii) receives more than 30 percent of its total
revenues from outpatient services, and
(iii) on October 1, 1987--
(I) was an eye specialty hospital or an eye
and ear specialty hospital, or
(II) was operated as an eye or eye and ear
unit (as defined in subparagraph (B)) of a
general acute care hospital which, on the date
of the application described in clause (i),
operates less than 20 percent of the beds that
the hospital operated on October 1, 1987, and
has sold or otherwise disposed of a substantial
portion of the hospital's other acute care
operations,
the cost proportion and ASC proportion in effect under
subclauses (I) and (II) of paragraph (3)(B)(ii) for cost
reporting periods beginning in fiscal year 1988 shall remain in
effect for cost reporting periods beginning on or after October
1, 1988, and before January 1, 1995.
(B) For purposes of this subparagraph (A)(iii)(II), the term
``eye or eye and ear unit'' means a physically separate or
distinct unit containing separate surgical suites devoted
solely to eye or eye and ear services.
(5)(A) The Secretary is authorized to provide by regulations
that in the case of a surgical procedure, specified by the
Secretary pursuant to paragraph (1)(A), performed in an
ambulatory surgical center described in such paragraph, there
shall be paid (in lieu of any amounts otherwise payable under
this part) with respect to the facility services furnished by
such center and with respect to all related services (including
physicians' services, laboratory, X-ray, and diagnostic
services) a single all-inclusive fee established pursuant to
subparagraph (B), if all parties furnishing all such services
agree to accept such fee (to be divided among the parties
involved in such manner as they shall have previously agreed
upon) as full payment for the services furnished.
(B) In implementing this paragraph, the Secretary shall
establish with respect to each surgical procedure specified
pursuant to paragraph (1)(A) the amount of the all-inclusive
fee for such procedure, taking into account such factors as may
be appropriate. The amount so established with respect to any
surgical procedure shall be reviewed periodically and may be
adjusted by the Secretary, when appropriate, to take account of
varying conditions in different areas.
(6) Any person, including a facility having an agreement
under section 1832(a)(2)(F)(i), who knowingly and willfully
presents, or causes to be presented, a bill or request for
payment, for an intraocular lens inserted during or subsequent
to cataract surgery for which payment may be made under
paragraph (2)(A)(iii), is subject to a civil money penalty of
not to exceed $2,000. The provisions of section 1128A (other
than subsections (a) and (b)) shall apply to a civil money
penalty under the previous sentence in the same manner as such
provisions apply to a penalty or proceeding under section
1128A(a).
(7)(A) For purposes of paragraph (2)(D)(iv), the Secretary
may provide, in the case of an ambulatory surgical center that
does not submit, to the Secretary in accordance with this
paragraph, data required to be submitted on measures selected
under this paragraph with respect to a year, any annual
increase provided under the system established under paragraph
(2)(D) for such year shall be reduced by 2.0 percentage points.
A reduction under this subparagraph shall apply only with
respect to the year involved and the Secretary shall not take
into account such reduction in computing any annual increase
factor for a subsequent year.
(B) Except as the Secretary may otherwise provide, the
provisions of subparagraphs (B), (C), (D), and (E) of paragraph
(17) of section 1833(t) shall apply with respect to services of
ambulatory surgical centers under this paragraph in a similar
manner to the manner in which they apply under such paragraph
and, for purposes of this subparagraph, any reference to a
hospital, outpatient setting, or outpatient hospital services
is deemed a reference to an ambulatory surgical center, the
setting of such a center, or services of such a center,
respectively.
(8) The Secretary shall conduct a similar type of review as
required under paragraph (22) of section 1833(t)), including
the second sentence of subparagraph (C) of such paragraph, to
payment for services under this subsection, and make such
revisions under this paragraph, in an appropriate manner (as
determined by the Secretary).
(9) In the case of a part B rebatable drug (as defined in
paragraph (2) of section 1834(x)) furnished on or after July 1,
2021, under the system under this subsection, in lieu of
calculation of coinsurance and the amount of payment otherwise
applicable under this subsection, the provisions of section
1834(x)(5), paragraph (1)(DD) of subsection (a), and the flush
left matter following paragraph (9) of subsection (a), shall,
as determined appropriate by the Secretary, apply under this
subsection in the same manner as such provisions of section
1834(x)(5) and subsection (a) apply under such section and
subsection.
(j) Whenever a final determination is made that the amount of
payment made under this part either to a provider of services
or to another person pursuant to an assignment under section
1842(b)(3)(B)(ii) was in excess of or less than the amount of
payment that is due, and payment of such excess or deficit is
not made (or effected by offset) within 30 days of the date of
the determination, interest shall accrue on the balance of such
excess or deficit not paid or offset (to the extent that the
balance is owed by or owing to the provider) at a rate
determined in accordance with the regulations of the Secretary
of the Treasury applicable to charges for late payments.
(k) With respect to services described in section
1861(s)(10)(B), the Secretary may provide, instead of the
amount of payment otherwise provided under this part, for
payment of such an amount or amounts as reasonably reflects the
general cost of efficiently providing such services.
(l)(1)(A) The Secretary shall establish a fee schedule for
services of certified registered nurse anesthetists under
section 1861(s)(11).
(B) In establishing the fee schedule under this paragraph the
Secretary may utilize a system of time units, a system of base
and time units, or any appropriate methodology.
(C) The provisions of this subsection shall not apply to
certain services furnished in certain hospitals in rural areas
under the provisions of section 9320(k) of the Omnibus Budget
Reconciliation Act of 1986, as amended by section 6132 of the
Omnibus Budget Reconciliation Act of 1989.
(2) Except as provided in paragraph (3), the fee schedule
established under paragraph (1) shall be initially based on
audited data from cost reporting periods ending in fiscal year
1985 and such other data as the Secretary determines necessary.
(3)(A) In establishing the initial fee schedule for those
services, the Secretary shall adjust the fee schedule to the
extent necessary to ensure that the estimated total amount
which will be paid under this title for those services plus
applicable coinsurance in 1989 will equal the estimated total
amount which would be paid under this title for those services
in 1989 if the services were included as inpatient hospital
services and payment for such services was made under part A in
the same manner as payment was made in fiscal year 1987,
adjusted to take into account changes in prices and technology
relating to the administration of anesthesia.
(B) The Secretary shall also reduce the prevailing charge of
physicians for medical direction of a certified registered
nurse anesthetist, or the fee schedule for services of
certified registered nurse anesthetists, or both, to the extent
necessary to ensure that the estimated total amount which will
be paid under this title plus applicable coinsurance for such
medical direction and such services in 1989 and 1990 will not
exceed the estimated total amount which would have been paid
plus applicable coinsurance but for the enactment of the
amendments made by section 9320 of the Omnibus Budget
Reconciliation Act of 1986. A reduced prevailing charge under
this subparagraph shall become the prevailing charge but for
subsequent years for purposes of applying the economic index
under the fourth sentence of section 1842(b)(3).
(4)(A) Except as provided in subparagraphs (C) and (D), in
determining the amount paid under the fee schedule under this
subsection for services furnished on or after January 1, 1991,
by a certified registered nurse anesthetist who is not
medically directed--
(i) the conversion factor shall be--
(I) for services furnished in 1991, $15.50,
(II) for services furnished in 1992, $15.75,
(III) for services furnished in 1993, $16.00,
(IV) for services furnished in 1994, $16.25,
(V) for services furnished in 1995, $16.50,
(VI) for services furnished in 1996, $16.75,
and
(VII) for services furnished in calendar
years after 1996, the previous year's
conversion factor increased by the update
determined under section 1848(d) for physician
anesthesia services for that year;
(ii) the payment areas to be used shall be the fee
schedule areas used under section 1848 (or, in the case
of services furnished during 1991, the localities used
under section 1842(b)) for purposes of computing
payments for physicians' services that are anesthesia
services;
(iii) the geographic adjustment factors to be applied
to the conversion factor under clause (i) for services
in a fee schedule area or locality is--
(I) in the case of services furnished in
1991, the geographic work index value and the
geographic practice cost index value specified
in section 1842(q)(1)(B) for physicians'
services that are anesthesia services furnished
in the area or locality, and
(II) in the case of services furnished after
1991, the geographic work index value, the
geographic practice cost index value, and the
geographic malpractice index value used for
determining payments for physicians' services
that are anesthesia services under section
1848,
with 70 percent of the conversion factor treated as
attributable to work and 30 percent as attributable to
overhead for services furnished in 1991 (and the
portions attributable to work, practice expenses, and
malpractice expenses in 1992 and thereafter being the
same as is applied under section 1848).
(B)(i) Except as provided in clause (ii) and subparagraph
(D), in determining the amount paid under the fee schedule
under this subsection for services furnished on or after
January 1, 1991, and before January 1, 1994, by a certified
registered nurse anesthetist who is medically directed, the
Secretary shall apply the same methodology specified in
subparagraph (A).
(ii) The conversion factor used under clause (i) shall be--
(I) for services furnished in 1991, $10.50,
(II) for services furnished in 1992, $10.75, and
(III) for services furnished in 1993, $11.00.
(iii) In the case of services of a certified registered nurse
anesthetist who is medically directed or medically supervised
by a physician which are furnished on or after January 1, 1994,
the fee schedule amount shall be one-half of the amount
described in section 1848(a)(5)(B) with respect to the
physician.
(C) Notwithstanding subclauses (I) through (V) of
subparagraph (A)(i)--
(i) in the case of a 1990 conversion factor that is
greater than $16.50, the conversion factor for a
calendar year after 1990 and before 1996 shall be the
1990 conversion factor reduced by the product of the
last digit of the calendar year and one-fifth of the
amount by which the 1990 conversion factor exceeds
$16.50; and
(ii) in the case of a 1990 conversion factor that is
greater than $15.49 but less than $16.51, the
conversion factor for a calendar year after 1990 and
before 1996 shall be the greater of--
(I) the 1990 conversion factor, or
(II) the conversion factor specified in
subparagraph (A)(i) for the year involved.
(D) Notwithstanding subparagraph (C), in no case may the
conversion factor used to determine payment for services in a
fee schedule area or locality under this subsection, as
adjusted by the adjustment factors specified in subparagraphs
(A)(iii), exceed the conversion factor used to determine the
amount paid for physicians' services that are anesthesia
services in the area or locality.
(5)(A) Payment for the services of a certified registered
nurse anesthetist (for which payment may otherwise be made
under this part) may be made on the basis of a claim or request
for payment presented by the certified registered nurse
anesthetist furnishing such services, or by a hospital,
critical access hospital, physician, group practice, or
ambulatory surgical center with which the certified registered
nurse anesthetist furnishing such services has an employment or
contractual relationship that provides for payment to be made
under this part for such services to such hospital, critical
access hospital, physician, group practice, or ambulatory
surgical center.
(B) No hospital or critical access hospital that presents a
claim or request for payment for services of a certified nurse
anesthetist under this part may treat any uncollected
coinsurance amount imposed under this part with respect to such
services as a bad debt of such hospital or critical access
hospital for purposes of this title.
(6) If an adjustment under paragraph (3)(B) results in a
reduction in the reasonable charge for a physicians' service
and a nonparticipating physician furnishes the service to an
individual entitled to benefits under this part after the
effective date of the reduction, the physician's actual charge
is subject to a limit under section 1842(j)(1)(D).
(m)(1) In the case of physicians' services furnished in a
year to an individual, who is covered under the insurance
program established by this part and who incurs expenses for
such services, in an area that is designated (under section
332(a)(1)(A) of the Public Health Service Act) as a health
professional shortage area as identified by the Secretary prior
to the beginning of such year, in addition to the amount
otherwise paid under this part, there also shall be paid to the
physician (or to an employer or facility in the cases described
in clause (A) of section 1842(b)(6)) (on a monthly or quarterly
basis) from the Federal Supplementary Medical Insurance Trust
Fund an amount equal to 10 percent of the payment amount for
the service under this part.
(2) For each health professional shortage area identified in
paragraph (1) that consists of an entire county, the Secretary
shall provide for the additional payment under paragraph (1)
without any requirement on the physician to identify the health
professional shortage area involved. The Secretary may
implement the previous sentence using the method specified in
subsection (u)(4)(C).
(3) The Secretary shall post on the Internet website of the
Centers for Medicare & Medicaid Services a list of the health
professional shortage areas identified in paragraph (1) that
consist of a partial county to facilitate the additional
payment under paragraph (1) in such areas.
(4) There shall be no administrative or judicial review under
section 1869, section 1878, or otherwise, respecting--
(A) the identification of a county or area;
(B) the assignment of a specialty of any physician
under this paragraph;
(C) the assignment of a physician to a county under
this subsection; or
(D) the assignment of a postal ZIP Code to a county
or other area under this subsection.
(n)(1)(A) The aggregate amount of the payments to be made for
all or part of a cost reporting period for services described
in subsection (a)(2)(E)(i) furnished under this part on or
after October 1, 1988, and before January 1, 1999, and for
services described in subsection (a)(2)(E)(ii) furnished under
this part on or after October 1, 1989, and before January 1,
1999, shall be equal to the lesser of--
(i) the amount determined with respect to such
services under subsection (a)(2)(B), or
(ii) the blend amount for radiology services and
diagnostic procedures determined in accordance with
subparagraph (B).
(B)(i) The blend amount for radiology services and diagnostic
procedures for a cost reporting period is the sum of--
(I) the cost proportion (as defined in clause (ii))
of the amount described in subparagraph (A)(i); and
(II) the charge proportion (as defined in clause
(ii)(II)) of 62 percent (for services described in
subsection (a)(2)(E)(i)), or (for procedures described
in subsection (a)(2)(E)(ii)), 42 percent or such other
percent established by the Secretary (or carriers
acting pursuant to guidelines issued by the Secretary)
based on prevailing charges established with actual
charge data, of the prevailing charge or (for services
described in subsection (a)(2)(E)(i) furnished on or
after January 1, 1989) the fee schedule amount
established for participating physicians for the same
services as if they were furnished in a physician's
office in the same locality as determined under section
1842(b), less the amount a provider may charge as
described in clause (ii) of section 1866(a)(2)(A).
(ii) In this subparagraph:
(I) The term ``cost proportion'' means 50 percent,
except that such term means 65 percent in the case of
outpatient radiology services for portions of cost
reporting periods which occur in fiscal year 1989 and
in the case of diagnostic procedures described in
subsection (a)(2)(E)(ii) for portions of cost reporting
periods which occur in fiscal year 1990, and such term
means 42 percent in the case of outpatient radiology
services for portions of cost reporting periods
beginning on or after January 1, 1991.
(II) The term ``charge proportion'' means 100 percent
minus the cost proportion.
(o)(1) In the case of shoes described in section
1861(s)(12)--
(A) no payment may be made under this part, with
respect to any individual for any year, for the
furnishing of--
(i) more than one pair of custom molded shoes
(including inserts provided with such shoes)
and 2 additional pairs of inserts for such
shoes, or
(ii) more than one pair of extra-depth shoes
(not including inserts provided with such
shoes) and 3 pairs of inserts for such shoes,
and
(B) with respect to expenses incurred in any calendar
year, no more than the amount of payment applicable
under paragraph (2) shall be considered as incurred
expenses for purposes of subsections (a) and (b).
Payment for shoes (or inserts) under this part shall be
considered to include payment for any expenses for the fitting
of such shoes (or inserts).
(2)(A) Except as provided by the Secretary under
subparagraphs (B) and (C), the amount of payment under this
paragraph for custom molded shoes, extra-depth shoes, and
inserts shall be the amount determined for such items by the
Secretary under section 1834(h).
(B) The Secretary may establish payment amounts for shoes and
inserts that are lower than the amount established under
section 1834(h) if the Secretary finds that shoes and inserts
of an appropriate quality are readily available at or below the
amount established under such section.
(C) In accordance with procedures established by the
Secretary, an individual entitled to benefits with respect to
shoes described in section 1861(s)(12) may substitute
modification of such shoes instead of obtaining one (or more,
as specified by the Secretary) pair of inserts (other than the
original pair of inserts with respect to such shoes). In such
case, the Secretary shall substitute, for the payment amount
established under section 1834(h), a payment amount that the
Secretary estimates will assure that there is no net increase
in expenditures under this subsection as a result of this
subparagraph.
(3) In this title, the term ``shoes'' includes, except for
purposes of subparagraphs (A)(ii) and (B) of paragraph (2),
inserts for extra-depth shoes.
(q)(1) Each request for payment, or bill submitted, for an
item or service furnished by an entity for which payment may be
made under this part and for which the entity knows or has
reason to believe there has been a referral by a referring
physician (within the meaning of section 1877) shall include
the name and unique physician identification number for the
referring physician.
(2)(A) In the case of a request for payment for an item or
service furnished by an entity under this part on an
assignment-related basis and for which information is required
to be provided under paragraph (1) but not included, payment
may be denied under this part.
(B) In the case of a request for payment for an item or
service furnished by an entity under this part not submitted on
an assignment-related basis and for which information is
required to be provided under paragraph (1) but not included--
(i) if the entity knowingly and willfully fails to
provide such information promptly upon request of the
Secretary or a carrier, the entity may be subject to a
civil money penalty in an amount not to exceed $2,000,
and
(ii) if the entity knowingly, willfully, and in
repeated cases fails, after being notified by the
Secretary of the obligations and requirements of this
subsection to provide the information required under
paragraph (1), the entity may be subject to exclusion
from participation in the programs under this Act for a
period not to exceed 5 years, in accordance with the
procedures of subsections (c), (f), and (g) of section
1128.
The provisions of section 1128A (other than subsections (a) and
(b)) shall apply to civil money penalties under clause (i) in
the same manner as they apply to a penalty or proceeding under
section 1128A(a).
(r)(1) With respect to services described in section
1861(s)(2)(K)(ii) (relating to nurse practitioner or clinical
nurse specialist services), payment may be made on the basis of
a claim or request for payment presented by the nurse
practitioner or clinical nurse specialist furnishing such
services, or by a hospital, critical access hospital, skilled
nursing facility or nursing facility (as defined in section
1919(a)), physician, group practice, or ambulatory surgical
center with which the nurse practitioner or clinical nurse
specialist has an employment or contractual relationship that
provides for payment to be made under this part for such
services to such hospital, physician, group practice, or
ambulatory surgical center.
(2) No hospital or critical access hospital that presents a
claim or request for payment under this part for services
described in section 1861(s)(2)(K)(ii) may treat any
uncollected coinsurance amount imposed under this part with
respect to such services as a bad debt of such hospital for
purposes of this title.
(s) The Secretary may not provide for payment under
subsection (a)(1)(A) with respect to an organization unless the
organization provides assurances satisfactory to the Secretary
that the organization meets the requirement of section 1866(f)
(relating to maintaining written policies and procedures
respecting advance directives).
(t) Prospective Payment System for Hospital Outpatient
Department Services.--
(1) Amount of payment.--
(A) In general.--With respect to covered OPD
services (as defined in subparagraph (B))
furnished during a year beginning with 1999,
the amount of payment under this part shall be
determined under a prospective payment system
established by the Secretary in accordance with
this subsection.
(B) Definition of covered opd services.--For
purposes of this subsection, the term ``covered
OPD services''--
(i) means hospital outpatient
services designated by the Secretary;
(ii) subject to clause (iv), includes
inpatient hospital services designated
by the Secretary that are covered under
this part and furnished to a hospital
inpatient who (I) is entitled to
benefits under part A but has exhausted
benefits for inpatient hospital
services during a spell of illness, or
(II) is not so entitled;
(iii) includes implantable items
described in paragraph (3), (6), or (8)
of section 1861(s);
(iv) does not include any therapy
services described in subsection (a)(8)
or ambulance services, for which
payment is made under a fee schedule
described in section 1834(k) or section
1834(l) and does not include screening
mammography (as defined in section
1861(jj)), diagnostic mammography, or
personalized prevention plan services
(as defined in section 1861(hhh)(1));
and
(v) does not include applicable items
and services (as defined in
subparagraph (A) of paragraph (21))
that are furnished on or after January
1, 2017, by an off-campus outpatient
department of a provider (as defined in
subparagraph (B) of such paragraph).
(2) System requirements.--Under the payment system--
(A) the Secretary shall develop a
classification system for covered OPD services;
(B) the Secretary may establish groups of
covered OPD services, within the classification
system described in subparagraph (A), so that
services classified within each group are
comparable clinically and with respect to the
use of resources and so that an implantable
item is classified to the group that includes
the service to which the item relates;
(C) the Secretary shall, using data on claims
from 1996 and using data from the most recent
available cost reports, establish relative
payment weights for covered OPD services (and
any groups of such services described in
subparagraph (B)) based on median (or, at the
election of the Secretary, mean) hospital costs
and shall determine projections of the
frequency of utilization of each such service
(or group of services) in 1999;
(D) subject to paragraph (19), the Secretary
shall determine a wage adjustment factor to
adjust the portion of payment and coinsurance
attributable to labor-related costs for
relative differences in labor and labor-related
costs across geographic regions in a budget
neutral manner;
(E) the Secretary shall establish, in a
budget neutral manner, outlier adjustments
under paragraph (5) and transitional pass-
through payments under paragraph (6) and other
adjustments as determined to be necessary to
ensure equitable payments, such as adjustments
for certain classes of hospitals;
(F) the Secretary shall develop a method for
controlling unnecessary increases in the volume
of covered OPD services;
(G) the Secretary shall create additional
groups of covered OPD services that classify
separately those procedures that utilize
contrast agents from those that do not; and
(H) with respect to devices of brachytherapy
consisting of a seed or seeds (or radioactive
source), the Secretary shall create additional
groups of covered OPD services that classify
such devices separately from the other services
(or group of services) paid for under this
subsection in a manner reflecting the number,
isotope, and radioactive intensity of such
devices furnished, including separate groups
for palladium-103 and iodine-125 devices and
for stranded and non-stranded devices furnished
on or after July 1, 2007.
For purposes of subparagraph (B), items and services
within a group shall not be treated as ``comparable
with respect to the use of resources'' if the highest
median cost (or mean cost, if elected by the Secretary
under subparagraph (C)) for an item or service within
the group is more than 2 times greater than the lowest
median cost (or mean cost, if so elected) for an item
or service within the group; except that the Secretary
may make exceptions in unusual cases, such as low
volume items and services, but may not make such an
exception in the case of a drug or biological that has
been designated as an orphan drug under section 526 of
the Federal Food, Drug and Cosmetic Act.
(3) Calculation of base amounts.--
(A) Aggregate amounts that would be payable
if deductibles were disregarded.--The Secretary
shall estimate the sum of--
(i) the total amounts that would be
payable from the Trust Fund under this
part for covered OPD services in 1999,
determined without regard to this
subsection, as though the deductible
under section 1833(b) did not apply,
and
(ii) the total amounts of copayments
estimated to be paid under this
subsection by beneficiaries to
hospitals for covered OPD services in
1999, as though the deductible under
section 1833(b) did not apply.
(B) Unadjusted copayment amount.--
(i) In general.--For purposes of this
subsection, subject to clause (ii), the
``unadjusted copayment amount''
applicable to a covered OPD service (or
group of such services) is 20 percent
of the national median of the charges
for the service (or services within the
group) furnished during 1996, updated
to 1999 using the Secretary's estimate
of charge growth during the period.
(ii) Adjusted to be 20 percent when
fully phased in.--If the pre-deductible
payment percentage for a covered OPD
service (or group of such services)
furnished in a year would be equal to
or exceed 80 percent, then the
unadjusted copayment amount shall be 20
percent of amount determined under
subparagraph (D).
(iii) Rules for new services.--The
Secretary shall establish rules for
establishment of an unadjusted
copayment amount for a covered OPD
service not furnished during 1996,
based upon its classification within a
group of such services.
(C) Calculation of conversion factors.--
(i) For 1999.--
(I) In general.--The
Secretary shall establish a
1999 conversion factor for
determining the medicare OPD
fee schedule amounts for each
covered OPD service (or group
of such services) furnished in
1999. Such conversion factor
shall be established on the
basis of the weights and
frequencies described in
paragraph (2)(C) and in such a
manner that the sum for all
services and groups of the
products (described in
subclause (II) for each such
service or group) equals the
total projected amount
described in subparagraph (A).
(II) Product described.--The
Secretary shall determine for
each service or group the
product of the medicare OPD fee
schedule amounts (taking into
account appropriate adjustments
described in paragraphs (2)(D)
and (2)(E)) and the estimated
frequencies for such service or
group.
(ii) Subsequent years.--Subject to
paragraph (8)(B), the Secretary shall
establish a conversion factor for
covered OPD services furnished in
subsequent years in an amount equal to
the conversion factor established under
this subparagraph and applicable to
such services furnished in the previous
year increased by the OPD fee schedule
increase factor specified under clause
(iv) for the year involved.
(iii) Adjustment for service mix
changes.--Insofar as the Secretary
determines that the adjustments for
service mix under paragraph (2) for a
previous year (or estimates that such
adjustments for a future year) did (or
are likely to) result in a change in
aggregate payments under this
subsection during the year that are a
result of changes in the coding or
classification of covered OPD services
that do not reflect real changes in
service mix, the Secretary may adjust
the conversion factor computed under
this subparagraph for subsequent years
so as to eliminate the effect of such
coding or classification changes.
(iv) OPD fee schedule increase
factor.--For purposes of this
subparagraph, subject to paragraph (17)
and subparagraph (F) of this paragraph,
the ``OPD fee schedule increase
factor'' for services furnished in a
year is equal to the market basket
percentage increase applicable under
section 1886(b)(3)(B)(iii) to hospital
discharges occurring during the fiscal
year ending in such year, reduced by 1
percentage point for such factor for
services furnished in each of 2000 and
2002. In applying the previous sentence
for years beginning with 2000, the
Secretary may substitute for the market
basket percentage increase an annual
percentage increase that is computed
and applied with respect to covered OPD
services furnished in a year in the
same manner as the market basket
percentage increase is determined and
applied to inpatient hospital services
for discharges occurring in a fiscal
year.
(D) Calculation of medicare opd fee schedule
amounts.--The Secretary shall compute a
medicare OPD fee schedule amount for each
covered OPD service (or group of such services)
furnished in a year, in an amount equal to the
product of--
(i) the conversion factor computed
under subparagraph (C) for the year,
and
(ii) the relative payment weight
(determined under paragraph (2)(C)) for
the service or group.
(E) Pre-deductible payment percentage.--The
pre-deductible payment percentage for a covered
OPD service (or group of such services)
furnished in a year is equal to the ratio of--
(i) the medicare OPD fee schedule
amount established under subparagraph
(D) for the year, minus the unadjusted
copayment amount determined under
subparagraph (B) for the service or
group, to
(ii) the medicare OPD fee schedule
amount determined under subparagraph
(D) for the year for such service or
group.
(F) Productivity and other adjustment.--After
determining the OPD fee schedule increase
factor under subparagraph (C)(iv), the
Secretary shall reduce such increase factor--
(i) for 2012 and subsequent years, by
the productivity adjustment described
in section 1886(b)(3)(B)(xi)(II); and
(ii) for each of 2010 through 2019,
by the adjustment described in
subparagraph (G).
The application of this subparagraph may result
in the increase factor under subparagraph
(C)(iv) being less than 0.0 for a year, and may
result in payment rates under the payment
system under this subsection for a year being
less than such payment rates for the preceding
year.
(G) Other adjustment.--For purposes of
subparagraph (F)(ii), the adjustment described
in this subparagraph is--
(i) for each of 2010 and 2011, 0.25
percentage point;
(ii) for each of 2012 and 2013, 0.1
percentage point;
(iii) for 2014, 0.3 percentage point;
(iv) for each of 2015 and 2016, 0.2
percentage point; and
(v) for each of 2017, 2018, and 2019,
0.75 percentage point.
(H) Part b rebatable drugs.--In the case of a
part B rebatable drug (as defined in paragraph
(2) of section 1834(x)) furnished on or after
July 1, 2021, under the system under this
subsection, in lieu of calculation of
coinsurance and the amount of payment otherwise
applicable under this subsection, the
provisions of section 1834(x)(5), paragraph
(1)(DD) of subsection (a), and the flush left
matter following paragraph (9) of subsection
(a), shall, as determined appropriate by the
Secretary, apply under this subsection in the
same manner as such provisions of section
1834(x)(5) and subsection (a) apply under such
section and subsection.
(4) Medicare payment amount.--The amount of payment
made from the Trust Fund under this part for a covered
OPD service (and such services classified within a
group) furnished in a year is determined, subject to
paragraph (7), as follows:
(A) Fee schedule adjustments.--The medicare
OPD fee schedule amount (computed under
paragraph (3)(D)) for the service or group and
year is adjusted for relative differences in
the cost of labor and other factors determined
by the Secretary, as computed under paragraphs
(2)(D) and (2)(E).
(B) Subtract applicable deductible.--Reduce
the adjusted amount determined under
subparagraph (A) by the amount of the
deductible under section 1833(b), to the extent
applicable.
(C) Apply payment proportion to remainder.--
The amount of payment is the amount so
determined under subparagraph (B) multiplied by
the pre-deductible payment percentage (as
determined under paragraph (3)(E)) for the
service or group and year involved, plus the
amount of any reduction in the copayment amount
attributable to paragraph (8)(C).
(5) Outlier adjustment.--
(A) In general.--Subject to subparagraph (D),
the Secretary shall provide for an additional
payment for each covered OPD service (or group
of services) for which a hospital's charges,
adjusted to cost, exceed--
(i) a fixed multiple of the sum of--
(I) the applicable medicare
OPD fee schedule amount
determined under paragraph
(3)(D), as adjusted under
paragraph (4)(A) (other than
for adjustments under this
paragraph or paragraph (6));
and
(II) any transitional pass-
through payment under paragraph
(6); and
(ii) at the option of the Secretary,
such fixed dollar amount as the
Secretary may establish.
(B) Amount of adjustment.--The amount of the
additional payment under subparagraph (A) shall
be determined by the Secretary and shall
approximate the marginal cost of care beyond
the applicable cutoff point under such
subparagraph.
(C) Limit on aggregate outlier adjustments.--
(i) In general.--The total of the
additional payments made under this
paragraph for covered OPD services
furnished in a year (as estimated by
the Secretary before the beginning of
the year) may not exceed the applicable
percentage (specified in clause (ii))
of the total program payments estimated
to be made under this subsection for
all covered OPD services furnished in
that year. If this paragraph is first
applied to less than a full year, the
previous sentence shall apply only to
the portion of such year.
(ii) Applicable percentage.--For
purposes of clause (i), the term
``applicable percentage'' means a
percentage specified by the Secretary
up to (but not to exceed)--
(I) for a year (or portion of
a year) before 2004, 2.5
percent; and
(II) for 2004 and thereafter,
3.0 percent.
(D) Transitional authority.--In applying
subparagraph (A) for covered OPD services
furnished before January 1, 2002, the Secretary
may--
(i) apply such subparagraph to a bill
for such services related to an
outpatient encounter (rather than for a
specific service or group of services)
using OPD fee schedule amounts and
transitional pass-through payments
covered under the bill; and
(ii) use an appropriate cost-to-
charge ratio for the hospital involved
(as determined by the Secretary),
rather than for specific departments
within the hospital.
(E) Exclusion of separate drug and biological
apcs from outlier payments.--No additional
payment shall be made under subparagraph (A) in
the case of ambulatory payment classification
groups established separately for drugs or
biologicals.
(6) Transitional pass-through for additional costs of
innovative medical devices, drugs, and biologicals.--
(A) In general.--The Secretary shall provide
for an additional payment under this paragraph
for any of the following that are provided as
part of a covered OPD service (or group of
services):
(i) Current orphan drugs.--A drug or
biological that is used for a rare
disease or condition with respect to
which the drug or biological has been
designated as an orphan drug under
section 526 of the Federal Food, Drug
and Cosmetic Act if payment for the
drug or biological as an outpatient
hospital service under this part was
being made on the first date that the
system under this subsection is
implemented.
(ii) Current cancer therapy drugs and
biologicals and brachytherapy.--A drug
or biological that is used in cancer
therapy, including (but not limited to)
a chemotherapeutic agent, an
antiemetic, a hematopoietic growth
factor, a colony stimulating factor, a
biological response modifier, a
bisphosphonate, and a device of
brachytherapy or temperature monitored
cryoablation, if payment for such drug,
biological, or device as an outpatient
hospital service under this part was
being made on such first date.
(iii) Current radiopharmaceutical
drugs and biological products.--A
radiopharmaceutical drug or biological
product used in diagnostic, monitoring,
and therapeutic nuclear medicine
procedures if payment for the drug or
biological as an outpatient hospital
service under this part was being made
on such first date.
(iv) New medical devices, drugs, and
biologicals.--A medical device, drug,
or biological not described in clause
(i), (ii), or (iii) if--
(I) payment for the device,
drug, or biological as an
outpatient hospital service
under this part was not being
made as of December 31, 1996;
and
(II) the cost of the drug or
biological or the average cost
of the category of devices is
not insignificant in relation
to the OPD fee schedule amount
(as calculated under paragraph
(3)(D)) payable for the service
(or group of services)
involved.
(B) Use of categories in determining
eligibility of a device for pass-through
payments.--The following provisions apply for
purposes of determining whether a medical
device qualifies for additional payments under
clause (ii) or (iv) of subparagraph (A):
(i) Establishment of initial
categories.--
(I) In general.--The
Secretary shall initially
establish under this clause
categories of medical devices
based on type of device by
April 1, 2001. Such categories
shall be established in a
manner such that each medical
device that meets the
requirements of clause (ii) or
(iv) of subparagraph (A) as of
January 1, 2001, is included in
such a category and no such
device is included in more than
one category. For purposes of
the preceding sentence, whether
a medical device meets such
requirements as of such date
shall be determined on the
basis of the program memoranda
issued before such date.
(II) Authorization of
implementation other than
through regulations.--The
categories may be established
under this clause by program
memorandum or otherwise, after
consultation with groups
representing hospitals,
manufacturers of medical
devices, and other affected
parties.
(ii) Establishing criteria for
additional categories.--
(I) In general.--The
Secretary shall establish
criteria that will be used for
creation of additional
categories (other than those
established under clause (i))
through rulemaking (which may
include use of an interim final
rule with comment period).
(II) Standard.--Such
categories shall be established
under this clause in a manner
such that no medical device is
described by more than one
category. Such criteria shall
include a test of whether the
average cost of devices that
would be included in a category
and are in use at the time the
category is established is not
insignificant, as described in
subparagraph (A)(iv)(II).
(III) Deadline.--Criteria
shall first be established
under this clause by July 1,
2001. The Secretary may
establish in compelling
circumstances categories under
this clause before the date
such criteria are established.
(IV) Adding categories.--The
Secretary shall promptly
establish a new category of
medical devices under this
clause for any medical device
that meets the requirements of
subparagraph (A)(iv) and for
which none of the categories in
effect (or that were previously
in effect) is appropriate.
(iii) Period for which category is in
effect.--A category of medical devices
established under clause (i) or (ii)
shall be in effect for a period of at
least 2 years, but not more than 3
years, that begins--
(I) in the case of a category
established under clause (i),
on the first date on which
payment was made under this
paragraph for any device
described by such category
(including payments made during
the period before April 1,
2001); and
(II) in the case of any other
category, on the first date on
which payment is made under
this paragraph for any medical
device that is described by
such category.
(iv) Requirements treated as met.--A
medical device shall be treated as
meeting the requirements of
subparagraph (A)(iv), regardless of
whether the device meets the
requirement of subclause (I) of such
subparagraph, if--
(I) the device is described
by a category established and
in effect under clause (i); or
(II) the device is described
by a category established and
in effect under clause (ii) and
an application under section
515 of the Federal Food, Drug,
and Cosmetic Act has been
approved with respect to the
device, or the device has been
cleared for market under
section 510(k) of such Act, or
the device is exempt from the
requirements of section 510(k)
of such Act pursuant to
subsection (l) or (m) of
section 510 of such Act or
section 520(g) of such Act.
Nothing in this clause shall be
construed as requiring an application
or prior approval (other than that
described in subclause (II)) in order
for a covered device described by a
category to qualify for payment under
this paragraph.
(C) Limited period of payment.--
(i) Drugs and biologicals.--Subject
to subparagraph (G), the payment under
this paragraph with respect to a drug
or biological shall only apply during a
period of at least 2 years, but not
more than 3 years, that begins--
(I) on the first date this
subsection is implemented in
the case of a drug or
biological described in clause
(i), (ii), or (iii) of
subparagraph (A) and in the
case of a drug or biological
described in subparagraph
(A)(iv) and for which payment
under this part is made as an
outpatient hospital service
before such first date; or
(II) in the case of a drug or
biological described in
subparagraph (A)(iv) not
described in subclause (I), on
the first date on which payment
is made under this part for the
drug or biological as an
outpatient hospital service.
(ii) Medical devices.--Payment shall
be made under this paragraph with
respect to a medical device only if
such device--
(I) is described by a
category of medical devices
established and in effect under
subparagraph (B); and
(II) is provided as part of a
service (or group of services)
paid for under this subsection
and provided during the period
for which such category is in
effect under such subparagraph.
(D) Amount of additional payment.--Subject to
subparagraph (E)(iii), the amount of the
payment under this paragraph with respect to a
device, drug, or biological provided as part of
a covered OPD service is--
(i) subject to subparagraph (H), in
the case of a drug or biological, the
amount by which the amount determined
under section 1842(o) (or if the drug
or biological is covered under a
competitive acquisition contract under
section 1847B, an amount determined by
the Secretary equal to the average
price for the drug or biological for
all competitive acquisition areas and
year established under such section as
calculated and adjusted by the
Secretary for purposes of this
paragraph) for the drug or biological
exceeds the portion of the otherwise
applicable medicare OPD fee schedule
that the Secretary determines is
associated with the drug or biological;
or
(ii) in the case of a medical device,
the amount by which the hospital's
charges for the device, adjusted to
cost, exceeds the portion of the
otherwise applicable medicare OPD fee
schedule that the Secretary determines
is associated with the device.
(E) Limit on aggregate annual adjustment.--
(i) In general.--The total of the
additional payments made under this
paragraph for covered OPD services
furnished in a year (as estimated by
the Secretary before the beginning of
the year) may not exceed the applicable
percentage (specified in clause (ii))
of the total program payments estimated
to be made under this subsection for
all covered OPD services furnished in
that year. If this paragraph is first
applied to less than a full year, the
previous sentence shall apply only to
the portion of such year. This clause
shall not apply for 2018.
(ii) Applicable percentage.--For
purposes of clause (i), the term
``applicable percentage'' means--
(I) for a year (or portion of
a year) before 2004, 2.5
percent; and
(II) for 2004 and thereafter,
a percentage specified by the
Secretary up to (but not to
exceed) 2.0 percent.
(iii) Uniform prospective reduction
if aggregate limit projected to be
exceeded.--If the Secretary estimates
before the beginning of a year that the
amount of the additional payments under
this paragraph for the year (or portion
thereof) as determined under clause (i)
without regard to this clause will
exceed the limit established under such
clause, the Secretary shall reduce pro
rata the amount of each of the
additional payments under this
paragraph for that year (or portion
thereof) in order to ensure that the
aggregate additional payments under
this paragraph (as so estimated) do not
exceed such limit.
(F) Limitation of application of functional
equivalence standard.--
(i) In general.--The Secretary may
not publish regulations that apply a
functional equivalence standard to a
drug or biological under this
paragraph.
(ii) Application.--Clause (i) shall
apply to the application of a
functional equivalence standard to a
drug or biological on or after the date
of enactment of the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003 unless--
(I) such application was
being made to such drug or
biological prior to such date
of enactment; and
(II) the Secretary applies
such standard to such drug or
biological only for the purpose
of determining eligibility of
such drug or biological for
additional payments under this
paragraph and not for the
purpose of any other payments
under this title.
(iii) Rule of construction.--Nothing
in this subparagraph shall be construed
to effect the Secretary's authority to
deem a particular drug to be identical
to another drug if the 2 products are
pharmaceutically equivalent and
bioequivalent, as determined by the
Commissioner of Food and Drugs.
(G) Pass-through extension for certain drugs
and biologicals.--In the case of a drug or
biological whose period of pass-through status
under this paragraph ended on December 31,
2017, and for which payment under this
subsection was packaged into a payment for a
covered OPD service (or group of services)
furnished beginning January 1, 2018, such pass-
through status shall be extended for a 2-year
period beginning on October 1, 2018.
(H) Temporary payment rule for certain drugs
and biologicals.--In the case of a drug or
biological whose period of pass-through status
under this paragraph ended on December 31,
2017, and for which payment under this
subsection was packaged into a payment for a
covered OPD service (or group of services)
furnished beginning January 1, 2018, the
payment amount for such drug or biological
under this subsection that is furnished during
the period beginning on October 1, 2018, and
ending on March 31, 2019, shall be the greater
of--
(i) the payment amount that would
otherwise apply under subparagraph
(D)(i) for such drug or biological
during such period; or
(ii) the payment amount that applied
under such subparagraph (D)(i) for such
drug or biological on December 31,
2017.
(I) Special payment adjustment rules for last
quarter of 2018.--In the case of a drug or
biological whose period of pass-through status
under this paragraph ended on December 31,
2017, and for which payment under this
subsection was packaged into a payment amount
for a covered OPD service (or group of
services) beginning January 1, 2018, the
following rules shall apply with respect to
payment amounts under this subsection for
covered a OPD service (or group of services)
furnished during the period beginning on
October 1, 2018, and ending on December 31,
2018:
(i) The Secretary shall remove the
packaged costs of such drug or
biological (as determined by the
Secretary) from the payment amount
under this subsection for the covered
OPD service (or group of services) with
which it is packaged.
(ii) The Secretary shall not make any
adjustments to payment amounts under
this subsection for a covered OPD
service (or group of services) for
which no costs were removed under
clause (i).
(7) Transitional adjustment to limit decline in
payment.--
(A) Before 2002.--Subject to subparagraph
(D), for covered OPD services furnished before
January 1, 2002, for which the PPS amount (as
defined in subparagraph (E)) is--
(i) at least 90 percent, but less
than 100 percent, of the pre-BBA amount
(as defined in subparagraph (F)), the
amount of payment under this subsection
shall be increased by 80 percent of the
amount of such difference;
(ii) at least 80 percent, but less
than 90 percent, of the pre-BBA amount,
the amount of payment under this
subsection shall be increased by the
amount by which (I) the product of 0.71
and the pre-BBA amount, exceeds (II)
the product of 0.70 and the PPS amount;
(iii) at least 70 percent, but less
than 80 percent, of the pre-BBA amount,
the amount of payment under this
subsection shall be increased by the
amount by which (I) the product of 0.63
and the pre-BBA amount, exceeds (II)
the product of 0.60 and the PPS amount;
or
(iv) less than 70 percent of the pre-
BBA amount, the amount of payment under
this subsection shall be increased by
21 percent of the pre-BBA amount.
(B) 2002.--Subject to subparagraph (D), for
covered OPD services furnished during 2002, for
which the PPS amount is--
(i) at least 90 percent, but less
than 100 percent, of the pre-BBA
amount, the amount of payment under
this subsection shall be increased by
70 percent of the amount of such
difference;
(ii) at least 80 percent, but less
than 90 percent, of the pre-BBA amount,
the amount of payment under this
subsection shall be increased by the
amount by which (I) the product of 0.61
and the pre-BBA amount, exceeds (II)
the product of 0.60 and the PPS amount;
or
(iii) less than 80 percent of the
pre-BBA amount, the amount of payment
under this subsection shall be
increased by 13 percent of the pre-BBA
amount.
(C) 2003.--Subject to subparagraph (D), for
covered OPD services furnished during 2003, for
which the PPS amount is--
(i) at least 90 percent, but less
than 100 percent, of the pre-BBA
amount, the amount of payment under
this subsection shall be increased by
60 percent of the amount of such
difference; or
(ii) less than 90 percent of the pre-
BBA amount, the amount of payment under
this subsection shall be increased by 6
percent of the pre-BBA amount.
(D) Hold harmless provisions.--
(i) Temporary treatment for certain
rural hospitals.--(I) In the case of a
hospital located in a rural area and
that has not more than 100 beds or a
sole community hospital (as defined in
section 1886(d)(5)(D)(iii)) located in
a rural area, for covered OPD services
furnished before January 1, 2006, for
which the PPS amount is less than the
pre-BBA amount, the amount of payment
under this subsection shall be
increased by the amount of such
difference.
(II) In the case of a hospital
located in a rural area and that has
not more than 100 beds and that is not
a sole community hospital (as defined
in section 1886(d)(5)(D)(iii)), for
covered OPD services furnished on or
after January 1, 2006, and before
January 1, 2013, for which the PPS
amount is less than the pre-BBA amount,
the amount of payment under this
subsection shall be increased by the
applicable percentage of the amount of
such difference. For purposes of the
preceding sentence, the applicable
percentage shall be 95 percent with
respect to covered OPD services
furnished in 2006, 90 percent with
respect to such services furnished in
2007, and 85 percent with respect to
such services furnished in 2008, 2009,
2010, 2011, or 2012.
(III) In the case of a sole community
hospital (as defined in section
1886(d)(5)(D)(iii)) that has not more
than 100 beds, for covered OPD services
furnished on or after January 1, 2009,
and before January 1, 2013, for which
the PPS amount is less than the pre-BBA
amount, the amount of payment under
this subsection shall be increased by
85 percent of the amount of such
difference. In the case of covered OPD
services furnished on or after January
1, 2010, and before March 1, 2012, the
preceding sentence shall be applied
without regard to the 100-bed
limitation.
(ii) Permanent treatment for cancer
hospitals and children's hospitals.--In
the case of a hospital described in
clause (iii) or (v) of section
1886(d)(1)(B), for covered OPD services
for which the PPS amount is less than
the pre-BBA amount, the amount of
payment under this subsection shall be
increased by the amount of such
difference.
(E) PPS amount defined.--In this paragraph,
the term ``PPS amount'' means, with respect to
covered OPD services, the amount payable under
this title for such services (determined
without regard to this paragraph), including
amounts payable as copayment under paragraph
(8), coinsurance under section
1866(a)(2)(A)(ii), and the deductible under
section 1833(b).
(F) Pre-BBA amount defined.--
(i) In general.--In this paragraph,
the ``pre-BBA amount'' means, with
respect to covered OPD services
furnished by a hospital in a year, an
amount equal to the product of the
reasonable cost of the hospital for
such services for the portions of the
hospital's cost reporting period (or
periods) occurring in the year and the
base OPD payment-to-cost ratio for the
hospital (as defined in clause (ii)).
(ii) Base payment-to-cost-ratio
defined.--For purposes of this
subparagraph, the ``base payment-to-
cost ratio'' for a hospital means the
ratio of--
(I) the hospital's
reimbursement under this part
for covered OPD services
furnished during the cost
reporting period ending in 1996
(or in the case of a hospital
that did not submit a cost
report for such period, during
the first subsequent cost
reporting period ending before
2001 for which the hospital
submitted a cost report),
including any reimbursement for
such services through cost-
sharing described in
subparagraph (E), to
(II) the reasonable cost of
such services for such period.
The Secretary shall determine such
ratios as if the amendments made by
section 4521 of the Balanced Budget Act
of 1997 were in effect in 1996.
(G) Interim payments.--The Secretary shall
make payments under this paragraph to hospitals
on an interim basis, subject to retrospective
adjustments based on settled cost reports.
(H) No effect on copayments.--Nothing in this
paragraph shall be construed to affect the
unadjusted copayment amount described in
paragraph (3)(B) or the copayment amount under
paragraph (8).
(I) Application without regard to budget
neutrality.--The additional payments made under
this paragraph--
(i) shall not be considered an
adjustment under paragraph (2)(E); and
(ii) shall not be implemented in a
budget neutral manner.
(8) Copayment amount.--
(A) In general.--Except as provided in
subparagraphs (B) and (C), the copayment amount
under this subsection is the amount by which
the amount described in paragraph (4)(B)
exceeds the amount of payment determined under
paragraph (4)(C).
(B) Election to offer reduced copayment
amount.--The Secretary shall establish a
procedure under which a hospital, before the
beginning of a year (beginning with 1999), may
elect to reduce the copayment amount otherwise
established under subparagraph (A) for some or
all covered OPD services to an amount that is
not less than 20 percent of the medicare OPD
fee schedule amount (computed under paragraph
(3)(D)) for the service involved. Under such
procedures, such reduced copayment amount may
not be further reduced or increased during the
year involved and the hospital may disseminate
information on the reduction of copayment
amount effected under this subparagraph.
(C) Limitation on copayment amount.--
(i) To inpatient hospital deductible
amount.--In no case shall the copayment
amount for a procedure performed in a
year exceed the amount of the inpatient
hospital deductible established under
section 1813(b) for that year.
(ii) To specified percentage.--The
Secretary shall reduce the national
unadjusted copayment amount for a
covered OPD service (or group of such
services) furnished in a year in a
manner so that the effective copayment
rate (determined on a national
unadjusted basis) for that service in
the year does not exceed the following
percentage:
(I) For procedures performed
in 2001, on or after April 1,
2001, 57 percent.
(II) For procedures performed
in 2002 or 2003, 55 percent.
(III) For procedures
performed in 2004, 50 percent.
(IV) For procedures performed
in 2005, 45 percent.
(V) For procedures performed
in 2006 and thereafter, 40
percent.
(D) No impact on deductibles.--Nothing in
this paragraph shall be construed as affecting
a hospital's authority to waive the charging of
a deductible under section 1833(b).
(E) Computation ignoring outlier and pass-
through adjustments.--The copayment amount
shall be computed under subparagraph (A) as if
the adjustments under paragraphs (5) and (6)
(and any adjustment made under paragraph (2)(E)
in relation to such adjustments) had not
occurred.
(9) Periodic review and adjustments components of
prospective payment system.--
(A) Periodic review.--The Secretary shall
review not less often than annually and revise
the groups, the relative payment weights, and
the wage and other adjustments described in
paragraph (2) to take into account changes in
medical practice, changes in technology, the
addition of new services, new cost data, and
other relevant information and factors. The
Secretary shall consult with an expert outside
advisory panel composed of an appropriate
selection of representatives of providers to
review (and advise the Secretary concerning)
the clinical integrity of the groups and
weights. Such panel may use data collected or
developed by entities and organizations (other
than the Department of Health and Human
Services) in conducting such review.
(B) Budget neutrality adjustment.--If the
Secretary makes adjustments under subparagraph
(A), then the adjustments for a year may not
cause the estimated amount of expenditures
under this part for the year to increase or
decrease from the estimated amount of
expenditures under this part that would have
been made if the adjustments had not been made.
In determining adjustments under the preceding
sentence for 2004 and 2005, the Secretary shall
not take into account under this subparagraph
or paragraph (2)(E) any expenditures that would
not have been made but for the application of
paragraph (14).
(C) Update factor.--If the Secretary
determines under methodologies described in
paragraph (2)(F) that the volume of services
paid for under this subsection increased beyond
amounts established through those
methodologies, the Secretary may appropriately
adjust the update to the conversion factor
otherwise applicable in a subsequent year.
(10) Special rule for ambulance services.--The
Secretary shall pay for hospital outpatient services
that are ambulance services on the basis described in
section 1861(v)(1)(U), or, if applicable, the fee
schedule established under section 1834(l).
(11) Special rules for certain hospitals.--In the
case of hospitals described in clause (iii) or (v) of
section 1886(d)(1)(B)--
(A) the system under this subsection shall
not apply to covered OPD services furnished
before January 1, 2000; and
(B) the Secretary may establish a separate
conversion factor for such services in a manner
that specifically takes into account the unique
costs incurred by such hospitals by virtue of
their patient population and service intensity.
(12) Limitation on review.--There shall be no
administrative or judicial review under section 1869,
1878, or otherwise of--
(A) the development of the classification
system under paragraph (2), including the
establishment of groups and relative payment
weights for covered OPD services, of wage
adjustment factors, other adjustments, and
methods described in paragraph (2)(F);
(B) the calculation of base amounts under
paragraph (3);
(C) periodic adjustments made under paragraph
(6);
(D) the establishment of a separate
conversion factor under paragraph (8)(B); and
(E) the determination of the fixed multiple,
or a fixed dollar cutoff amount, the marginal
cost of care, or applicable percentage under
paragraph (5) or the determination of
insignificance of cost, the duration of the
additional payments, the determination and
deletion of initial and new categories
(consistent with subparagraphs (B) and (C) of
paragraph (6)), the portion of the medicare OPD
fee schedule amount associated with particular
devices, drugs, or biologicals, and the
application of any pro rata reduction under
paragraph (6).
(13) Authorization of adjustment for rural
hospitals.--
(A) Study.--The Secretary shall conduct a
study to determine if, under the system under
this subsection, costs incurred by hospitals
located in rural areas by ambulatory payment
classification groups (APCs) exceed those costs
incurred by hospitals located in urban areas.
(B) Authorization of adjustment.--Insofar as
the Secretary determines under subparagraph (A)
that costs incurred by hospitals located in
rural areas exceed those costs incurred by
hospitals located in urban areas, the Secretary
shall provide for an appropriate adjustment
under paragraph (2)(E) to reflect those higher
costs by January 1, 2006.
(14) Drug apc payment rates.--
(A) In general.--The amount of payment under
this subsection for a specified covered
outpatient drug (defined in subparagraph (B))
that is furnished as part of a covered OPD
service (or group of services)--
(i) in 2004, in the case of--
(I) a sole source drug shall
in no case be less than 88
percent, or exceed 95 percent,
of the reference average
wholesale price for the drug;
(II) an innovator multiple
source drug shall in no case
exceed 68 percent of the
reference average wholesale
price for the drug; or
(III) a noninnovator multiple
source drug shall in no case
exceed 46 percent of the
reference average wholesale
price for the drug;
(ii) in 2005, in the case of--
(I) a sole source drug shall
in no case be less than 83
percent, or exceed 95 percent,
of the reference average
wholesale price for the drug;
(II) an innovator multiple
source drug shall in no case
exceed 68 percent of the
reference average wholesale
price for the drug; or
(III) a noninnovator multiple
source drug shall in no case
exceed 46 percent of the
reference average wholesale
price for the drug; or
(iii) in a subsequent year, shall be
equal, subject to subparagraph (E)--
(I) to the average
acquisition cost for the drug
for that year (which, at the
option of the Secretary, may
vary by hospital group (as
defined by the Secretary based
on volume of covered OPD
services or other relevant
characteristics)), as
determined by the Secretary
taking into account the
hospital acquisition cost
survey data under subparagraph
(D); or
(II) if hospital acquisition
cost data are not available,
the average price for the drug
in the year established under
section 1842(o), section 1847A,
or section 1847B, as the case
may be, as calculated and
adjusted by the Secretary as
necessary for purposes of this
paragraph.
(B) Specified covered outpatient drug
defined.--
(i) In general.--In this paragraph,
the term ``specified covered outpatient
drug'' means, subject to clause (ii), a
covered outpatient drug (as defined in
section 1927(k)(2)) for which a
separate ambulatory payment
classification group (APC) has been
established and that is--
(I) a radiopharmaceutical; or
(II) a drug or biological for
which payment was made under
paragraph (6) (relating to
pass-through payments) on or
before December 31, 2002.
(ii) Exception.--Such term does not
include--
(I) a drug or biological for
which payment is first made on
or after January 1, 2003, under
paragraph (6);
(II) a drug or biological for
which a temporary HCPCS code
has not been assigned; or
(III) during 2004 and 2005,
an orphan drug (as designated
by the Secretary).
(C) Payment for designated orphan drugs
during 2004 and 2005.--The amount of payment
under this subsection for an orphan drug
designated by the Secretary under subparagraph
(B)(ii)(III) that is furnished as part of a
covered OPD service (or group of services)
during 2004 and 2005 shall equal such amount as
the Secretary may specify.
(D) Acquisition cost survey for hospital
outpatient drugs.--
(i) Annual gao surveys in 2004 and
2005.--
(I) In general.--The
Comptroller General of the
United States shall conduct a
survey in each of 2004 and 2005
to determine the hospital
acquisition cost for each
specified covered outpatient
drug. Not later than April 1,
2005, the Comptroller General
shall furnish data from such
surveys to the Secretary for
use in setting the payment
rates under subparagraph (A)
for 2006.
(II) Recommendations.--Upon
the completion of such surveys,
the Comptroller General shall
recommend to the Secretary the
frequency and methodology of
subsequent surveys to be
conducted by the Secretary
under clause (ii).
(ii) Subsequent secretarial
surveys.--The Secretary, taking into
account such recommendations, shall
conduct periodic subsequent surveys to
determine the hospital acquisition cost
for each specified covered outpatient
drug for use in setting the payment
rates under subparagraph (A).
(iii) Survey requirements.--The
surveys conducted under clauses (i) and
(ii) shall have a large sample of
hospitals that is sufficient to
generate a statistically significant
estimate of the average hospital
acquisition cost for each specified
covered outpatient drug. With respect
to the surveys conducted under clause
(i), the Comptroller General shall
report to Congress on the justification
for the size of the sample used in
order to assure the validity of such
estimates.
(iv) Differentiation in cost.--In
conducting surveys under clause (i),
the Comptroller General shall determine
and report to Congress if there is (and
the extent of any) variation in
hospital acquisition costs for drugs
among hospitals based on the volume of
covered OPD services performed by such
hospitals or other relevant
characteristics of such hospitals (as
defined by the Comptroller General).
(v) Comment on proposed rates.--Not
later than 30 days after the date the
Secretary promulgated proposed rules
setting forth the payment rates under
subparagraph (A) for 2006, the
Comptroller General shall evaluate such
proposed rates and submit to Congress a
report regarding the appropriateness of
such rates based on the surveys the
Comptroller General has conducted under
clause (i).
(E) Adjustment in payment rates for overhead
costs.--
(i) Medpac report on drug apc
design.--The Medicare Payment Advisory
Commission shall submit to the
Secretary, not later than July 1, 2005,
a report on adjustment of payment for
ambulatory payment classifications for
specified covered outpatient drugs to
take into account overhead and related
expenses, such as pharmacy services and
handling costs. Such report shall
include--
(I) a description and
analysis of the data available
with regard to such expenses;
(II) a recommendation as to
whether such a payment
adjustment should be made; and
(III) if such adjustment
should be made, a
recommendation regarding the
methodology for making such an
adjustment.
(ii) Adjustment authorized.--The
Secretary may adjust the weights for
ambulatory payment classifications for
specified covered outpatient drugs to
take into account the recommendations
contained in the report submitted under
clause (i).
(F) Classes of drugs.--For purposes of this
paragraph:
(i) Sole source drugs.--The term
``sole source drug'' means--
(I) a biological product (as
defined under section
1861(t)(1)); or
(II) a single source drug (as
defined in section
1927(k)(7)(A)(iv)).
(ii) Innovator multiple source
drugs.--The term ``innovator multiple
source drug'' has the meaning given
such term in section 1927(k)(7)(A)(ii).
(iii) Noninnovator multiple source
drugs.--The term ``noninnovator
multiple source drug'' has the meaning
given such term in section
1927(k)(7)(A)(iii).
(G) Reference average wholesale price.--The
term ``reference average wholesale price''
means, with respect to a specified covered
outpatient drug, the average wholesale price
for the drug as determined under section
1842(o) as of May 1, 2003.
(H) Inapplicability of expenditures in
determining conversion, weighting, and other
adjustment factors.--Additional expenditures
resulting from this paragraph shall not be
taken into account in establishing the
conversion, weighting, and other adjustment
factors for 2004 and 2005 under paragraph (9),
but shall be taken into account for subsequent
years.
(15) Payment for new drugs and biologicals until
hcpcs code assigned.--With respect to payment under
this part for an outpatient drug or biological that is
covered under this part and is furnished as part of
covered OPD services for which a HCPCS code has not
been assigned, the amount provided for payment for such
drug or biological under this part shall be equal to 95
percent of the average wholesale price for the drug or
biological.
(16) Miscellaneous provisions.--
(A) Application of reclassification of
certain hospitals.--If a hospital is being
treated as being located in a rural area under
section 1886(d)(8)(E), that hospital shall be
treated under this subsection as being located
in that rural area.
(B) Threshold for establishment of separate
apcs for drugs.--The Secretary shall reduce the
threshold for the establishment of separate
ambulatory payment classification groups (APCs)
with respect to drugs or biologicals to $50 per
administration for drugs and biologicals
furnished in 2005 and 2006.
(C) Payment for devices of brachytherapy and
therapeutic radiopharmaceuticals at charges
adjusted to cost.--Notwithstanding the
preceding provisions of this subsection, for a
device of brachytherapy consisting of a seed or
seeds (or radioactive source) furnished on or
after January 1, 2004, and before January 1,
2010, and for therapeutic radiopharmaceuticals
furnished on or after January 1, 2008, and
before January 1, 2010, the payment basis for
the device or therapeutic radiopharmaceutical
under this subsection shall be equal to the
hospital's charges for each device or
therapeutic radiopharmaceutical furnished,
adjusted to cost. Charges for such devices or
therapeutic radiopharmaceuticals shall not be
included in determining any outlier payment
under this subsection.
(D) Special payment rule.--
(i) In general.--In the case of
covered OPD services furnished on or
after April 1, 2013, in a hospital
described in clause (ii), if--
(I) the payment rate that
would otherwise apply under
this subsection for
stereotactic radiosurgery,
complete course of treatment of
cranial lesion(s) consisting of
1 session that is multi-source
Cobalt 60 based (identified as
of January 1, 2013, by HCPCS
code 77371 (and any succeeding
code) and reimbursed as of such
date under APC 0127 (and any
succeeding classification
group)); exceeds
(II) the payment rate that
would otherwise apply under
this subsection for linear
accelerator based stereotactic
radiosurgery, complete course
of therapy in one session
(identified as of January 1,
2013, by HCPCS code G0173 (and
any succeeding code) and
reimbursed as of such date
under APC 0067 (and any
succeeding classification
group)),
the payment rate for the service
described in subclause (I) shall be
reduced to an amount equal to the
payment rate for the service described
in subclause (II).
(ii) Hospital described.--A hospital
described in this clause is a hospital
that is not--
(I) located in a rural area
(as defined in section
1886(d)(2)(D));
(II) classified as a rural
referral center under section
1886(d)(5)(C); or
(III) a sole community
hospital (as defined in section
1886(d)(5)(D)(iii)).
(iii) Not budget neutral.--In making
any budget neutrality adjustments under
this subsection for 2013 (with respect
to covered OPD services furnished on or
after April 1, 2013, and before January
1, 2014) or a subsequent year, the
Secretary shall not take into account
the reduced expenditures that result
from the application of this
subparagraph.
(E) Application of appropriate use criteria
for certain imaging services.--For provisions
relating to the application of appropriate use
criteria for certain imaging services, see
section 1834(q).
(F) Payment incentive for the transition from
traditional x-ray imaging to digital
radiography.--Notwithstanding the previous
provisions of this subsection:
(i) Limitation on payment for film x-
ray imaging services.--In the case of
an imaging service that is an X-ray
taken using film and that is furnished
during 2017 or a subsequent year, the
payment amount for such service
(including the X-ray component of a
packaged service) that would otherwise
be determined under this section
(without application of this paragraph
and before application of any other
adjustment under this subsection) for
such year shall be reduced by 20
percent.
(ii) Phased-in limitation on payment
for computed radiography imaging
services.--In the case of an imaging
service that is an X-ray taken using
computed radiography technology (as
defined in section 1848(b)(9)(C))--
(I) in the case of such a
service furnished during 2018,
2019, 2020, 2021, or 2022, the
payment amount for such service
(including the X-ray component
of a packaged service) that
would otherwise be determined
under this section (without
application of this paragraph
and before application of any
other adjustment under this
subsection) for such year shall
be reduced by 7 percent; and
(II) in the case of such a
service furnished during 2023
or a subsequent year, the
payment amount for such service
(including the X-ray component
of a packaged service) that
would otherwise be determined
under this section (without
application of this paragraph
and before application of any
other adjustment under this
subsection) for such year shall
be reduced by 10 percent.
(iii) Application without regard to
budget neutrality.--The reductions made
under this subparagraph--
(I) shall not be considered
an adjustment under paragraph
(2)(E); and
(II) shall not be implemented
in a budget neutral manner.
(iv) Implementation.--In order to
implement this subparagraph, the
Secretary shall adopt appropriate
mechanisms which may include use of
modifiers.
(17) Quality reporting.--
(A) Reduction in update for failure to
report.--
(i) In general.--For purposes of
paragraph (3)(C)(iv) for 2009 and each
subsequent year, in the case of a
subsection (d) hospital (as defined in
section 1886(d)(1)(B)) that does not
submit, to the Secretary in accordance
with this paragraph, data required to
be submitted on measures selected under
this paragraph with respect to such a
year, the OPD fee schedule increase
factor under paragraph (3)(C)(iv) for
such year shall be reduced by 2.0
percentage points.
(ii) Non-cumulative application.--A
reduction under this subparagraph shall
apply only with respect to the year
involved and the Secretary shall not
take into account such reduction in
computing the OPD fee schedule increase
factor for a subsequent year.
(B) Form and manner of submission.--Each
subsection (d) hospital shall submit data on
measures selected under this paragraph to the
Secretary in a form and manner, and at a time,
specified by the Secretary for purposes of this
paragraph.
(C) Development of outpatient measures.--
(i) In general.--The Secretary shall
develop measures that the Secretary
determines to be appropriate for the
measurement of the quality of care
(including medication errors) furnished
by hospitals in outpatient settings and
that reflect consensus among affected
parties and, to the extent feasible and
practicable, shall include measures set
forth by one or more national consensus
building entities.
(ii) Construction.--Nothing in this
paragraph shall be construed as
preventing the Secretary from selecting
measures that are the same as (or a
subset of) the measures for which data
are required to be submitted under
section 1886(b)(3)(B)(viii).
(D) Replacement of measures.--For purposes of
this paragraph, the Secretary may replace any
measures or indicators in appropriate cases,
such as where all hospitals are effectively in
compliance or the measures or indicators have
been subsequently shown not to represent the
best clinical practice.
(E) Availability of data.--The Secretary
shall establish procedures for making data
submitted under this paragraph available to the
public. Such procedures shall ensure that a
hospital has the opportunity to review the data
that are to be made public with respect to the
hospital prior to such data being made public.
The Secretary shall report quality measures of
process, structure, outcome, patients'
perspectives on care, efficiency, and costs of
care that relate to services furnished in
outpatient settings in hospitals on the
Internet website of the Centers for Medicare &
Medicaid Services.
(18) Authorization of adjustment for cancer
hospitals.--
(A) Study.--The Secretary shall conduct a
study to determine if, under the system under
this subsection, costs incurred by hospitals
described in section 1886(d)(1)(B)(v) with
respect to ambulatory payment classification
groups exceed those costs incurred by other
hospitals furnishing services under this
subsection (as determined appropriate by the
Secretary). In conducting the study under this
subparagraph, the Secretary shall take into
consideration the cost of drugs and biologicals
incurred by such hospitals.
(B) Authorization of adjustment.--Insofar as
the Secretary determines under subparagraph (A)
that costs incurred by hospitals described in
section 1886(d)(1)(B)(v) exceed those costs
incurred by other hospitals furnishing services
under this subsection, the Secretary shall,
subject to subparagraph (C), provide for an
appropriate adjustment under paragraph (2)(E)
to reflect those higher costs effective for
services furnished on or after January 1, 2011.
(C) Target pcr adjustment.--In applying
section 419.43(i) of title 42 of the Code of
Federal Regulations to implement the
appropriate adjustment under this paragraph for
services furnished on or after January 1, 2018,
the Secretary shall use a target PCR that is
1.0 percentage points less than the target PCR
that would otherwise apply. In addition to the
percentage point reduction under the previous
sentence, the Secretary may consider making an
additional percentage point reduction to such
target PCR that takes into account payment
rates for applicable items and services
described in paragraph (21)(C) other than for
services furnished by hospitals described in
section 1886(d)(1)(B)(v). In making any budget
neutrality adjustments under this subsection
for 2018 or a subsequent year, the Secretary
shall not take into account the reduced
expenditures that result from the application
of this subparagraph.
(19) Floor on area wage adjustment factor for
hospital outpatient department services in frontier
states.--
(A) In general.--Subject to subparagraph (B),
with respect to covered OPD services furnished
on or after January 1, 2011, the area wage
adjustment factor applicable under the payment
system established under this subsection to any
hospital outpatient department which is located
in a frontier State (as defined in section
1886(d)(3)(E)(iii)(II)) may not be less than
1.00. The preceding sentence shall not be
applied in a budget neutral manner.
(B) Limitation.--This paragraph shall not
apply to any hospital outpatient department
located in a State that receives a non-labor
related share adjustment under section
1886(d)(5)(H).
(20) Not budget neutral application of reduced
expenditures resulting from quality incentives for
computed tomography.--The Secretary shall not take into
account the reduced expenditures that result from the
application of section 1834(p) in making any budget
neutrality adjustments this subsection.
(21) Services furnished by an off-campus outpatient
department of a provider.--
(A) Applicable items and services.--For
purposes of paragraph (1)(B)(v) and this
paragraph, the term ``applicable items and
services'' means items and services other than
items and services furnished by a dedicated
emergency department (as defined in section
489.24(b) of title 42 of the Code of Federal
Regulations).
(B) Off-campus outpatient department of a
provider.--
(i) In general.--For purposes of
paragraph (1)(B)(v) and this paragraph,
subject to the subsequent provisions of
this subparagraph, the term ``off-
campus outpatient department of a
provider'' means a department of a
provider (as defined in section
413.65(a)(2) of title 42 of the Code of
Federal Regulations, as in effect as of
the date of the enactment of this
paragraph) that is not located--
(I) on the campus (as defined
in such section 413.65(a)(2))
of such provider; or
(II) within the distance
(described in such definition
of campus) from a remote
location of a hospital facility
(as defined in such section
413.65(a)(2)).
(ii) Exception.--For purposes of
paragraph (1)(B)(v) and this paragraph,
the term ``off-campus outpatient
department of a provider'' shall not
include a department of a provider (as
so defined) that was billing under this
subsection with respect to covered OPD
services furnished prior to the date of
the enactment of this paragraph.
(iii) Deemed treatment for 2017.--For
purposes of applying clause (ii) with
respect to applicable items and
services furnished during 2017, a
department of a provider (as so
defined) not described in such clause
is deemed to be billing under this
subsection with respect to covered OPD
services furnished prior to November 2,
2015, if the Secretary received from
the provider prior to December 2, 2015,
an attestation (pursuant to section
413.65(b)(3) of title 42 of the Code of
Federal Regulations) that such
department was a department of a
provider (as so defined).
(iv) Alternative exception beginning
with 2018.--For purposes of paragraph
(1)(B)(v) and this paragraph with
respect to applicable items and
services furnished during 2018 or a
subsequent year, the term ``off-campus
outpatient department of a provider''
also shall not include a department of
a provider (as so defined) that is not
described in clause (ii) if--
(I) the Secretary receives
from the provider an
attestation (pursuant to such
section 413.65(b)(3)) not later
than December 31, 2016 (or, if
later, 60 days after the date
of the enactment of this
clause), that such department
met the requirements of a
department of a provider
specified in section 413.65 of
title 42 of the Code of Federal
Regulations;
(II) the provider includes
such department as part of the
provider on its enrollment form
in accordance with the
enrollment process under
section 1866(j); and
(III) the department met the
mid-build requirement of clause
(v) and the Secretary receives,
not later than 60 days after
the date of the enactment of
this clause, from the chief
executive officer or chief
operating officer of the
provider a written
certification that the
department met such
requirement.
(v) Mid-build requirement
described.--The mid-build requirement
of this clause is, with respect to a
department of a provider, that before
November 2, 2015, the provider had a
binding written agreement with an
outside unrelated party for the actual
construction of such department.
(vi) Exclusion for certain cancer
hospitals.--For purposes of paragraph
(1)(B)(v) and this paragraph with
respect to applicable items and
services furnished during 2017 or a
subsequent year, the term ``off-campus
outpatient department of a provider''
also shall not include a department of
a provider (as so defined) that is not
described in clause (ii) if the
provider is a hospital described in
section 1886(d)(1)(B)(v) and--
(I) in the case of a
department that met the
requirements of section 413.65
of title 42 of the Code of
Federal Regulations after
November 1, 2015, and before
the date of the enactment of
this clause, the Secretary
receives from the provider an
attestation that such
department met such
requirements not later than 60
days after such date of
enactment; or
(II) in the case of a
department that meets such
requirements after such date of
enactment, the Secretary
receives from the provider an
attestation that such
department meets such
requirements not later than 60
days after the date such
requirements are first met with
respect to such department.
(vii) Audit.--Not later than December
31, 2018, the Secretary shall audit the
compliance with requirements of clause
(iv) with respect to each department of
a provider to which such clause
applies. Not later than 2 years after
the date the Secretary receives an
attestation under clause (vi) relating
to compliance of a department of a
provider with requirements referred to
in such clause, the Secretary shall
audit the compliance with such
requirements with respect to the
department. If the Secretary finds as a
result of an audit under this clause
that the applicable requirements were
not met with respect to such
department, the department shall not be
excluded from the term ``off-campus
outpatient department of a provider''
under such clause.
(viii) Implementation.--For purposes
of implementing clauses (iii) through
(vii):
(I) Notwithstanding any other
provision of law, the Secretary
may implement such clauses by
program instruction or
otherwise.
(II) Subchapter I of chapter
35 of title 44, United States
Code, shall not apply.
(III) For purposes of
carrying out this subparagraph
with respect to clauses (iii)
and (iv) (and clause (vii)
insofar as it relates to clause
(iv)), $10,000,000 shall be
available from the Federal
Supplementary Medical Insurance
Trust Fund under section 1841,
to remain available until
December 31, 2018. For purposes
of carrying out this
subparagraph with respect to
clause (vi) (and clause (vii)
insofar as it relates to such
clause), $2,000,000 shall be
available from the Federal
Supplementary Medical Insurance
Trust Fund under section 1841,
to remain available until
expended.
(C) Availability of payment under other
payment systems.--Payments for applicable items
and services furnished by an off-campus
outpatient department of a provider that are
described in paragraph (1)(B)(v) shall be made
under the applicable payment system under this
part (other than under this subsection) if the
requirements for such payment are otherwise
met.
(D) Information needed for implementation.--
Each hospital shall provide to the Secretary
such information as the Secretary determines
appropriate to implement this paragraph and
paragraph (1)(B)(v) (which may include
reporting of information on a hospital claim
using a code or modifier and reporting
information about off-campus outpatient
departments of a provider on the enrollment
form described in section 1866(j)).
(E) Limitations.--There shall be no
administrative or judicial review under section
1869, section 1878, or otherwise of the
following:
(i) The determination of the
applicable items and services under
subparagraph (A) and applicable payment
systems under subparagraph (C).
(ii) The determination of whether a
department of a provider meets the term
described in subparagraph (B).
(iii) Any information that hospitals
are required to report pursuant to
subparagraph (D).
(iv) The determination of an audit
under subparagraph (B)(vii).
(22) Review and revisions of payments for non-opioid
alternative treatments.--
(A) In general.--With respect to payments
made under this subsection for covered OPD
services (or groups of services), including
covered OPD services assigned to a
comprehensive ambulatory payment
classification, the Secretary--
(i) shall, as soon as practicable,
conduct a review (part of which may
include a request for information) of
payments for opioids and evidence-based
non-opioid alternatives for pain
management (including drugs and
devices, nerve blocks, surgical
injections, and neuromodulation) with a
goal of ensuring that there are not
financial incentives to use opioids
instead of non-opioid alternatives;
(ii) may, as the Secretary determines
appropriate, conduct subsequent reviews
of such payments; and
(iii) shall consider the extent to
which revisions under this subsection
to such payments (such as the creation
of additional groups of covered OPD
services to classify separately those
procedures that utilize opioids and
non-opioid alternatives for pain
management) would reduce payment
incentives to use opioids instead of
non-opioid alternatives for pain
management.
(B) Priority.--In conducting the review under
clause (i) of subparagraph (A) and considering
revisions under clause (iii) of such
subparagraph, the Secretary shall focus on
covered OPD services (or groups of services)
assigned to a comprehensive ambulatory payment
classification, ambulatory payment
classifications that primarily include surgical
services, and other services determined by the
Secretary which generally involve treatment for
pain management.
(C) Revisions.--If the Secretary identifies
revisions to payments pursuant to subparagraph
(A)(iii), the Secretary shall, as determined
appropriate, begin making such revisions for
services furnished on or after January 1, 2020.
Revisions under the previous sentence shall be
treated as adjustments for purposes of
application of paragraph (9)(B).
(D) Rules of construction.--Nothing in this
paragraph shall be construed to preclude the
Secretary--
(i) from conducting a demonstration
before making the revisions described
in subparagraph (C); or
(ii) prior to implementation of this
paragraph, from changing payments under
this subsection for covered OPD
services (or groups of services) which
include opioids or non-opioid
alternatives for pain management.
(u) Incentive Payments for Physician Scarcity Areas.--
(1) In general.--In the case of physicians' services
furnished on or after January 1, 2005, and before July
1, 2008--
(A) by a primary care physician in a primary
care scarcity county (identified under
paragraph (4)); or
(B) by a physician who is not a primary care
physician in a specialist care scarcity county
(as so identified),
in addition to the amount of payment that would
otherwise be made for such services under this part,
there also shall be paid an amount equal to 5 percent
of the payment amount for the service under this part.
(2) Determination of ratios of physicians to medicare
beneficiaries in area.--Based upon available data, the
Secretary shall establish for each county or equivalent
area in the United States, the following:
(A) Number of physicians practicing in the
area.--The number of physicians who furnish
physicians' services in the active practice of
medicine or osteopathy in that county or area,
other than physicians whose practice is
exclusively for the Federal Government,
physicians who are retired, or physicians who
only provide administrative services. Of such
number, the number of such physicians who are--
(i) primary care physicians; or
(ii) physicians who are not primary
care physicians.
(B) Number of medicare beneficiaries residing
in the area.--The number of individuals who are
residing in the county and are entitled to
benefits under part A or enrolled under this
part, or both (in this subsection referred to
as ``individuals'').
(C) Determination of ratios.--
(i) Primary care ratio.--The ratio
(in this paragraph referred to as the
``primary care ratio'') of the number
of primary care physicians (determined
under subparagraph (A)(i)), to the
number of individuals determined under
subparagraph (B).
(ii) Specialist care ratio.--The
ratio (in this paragraph referred to as
the ``specialist care ratio'') of the
number of other physicians (determined
under subparagraph (A)(ii)), to the
number of individuals determined under
subparagraph (B).
(3) Ranking of counties.--The Secretary shall rank
each such county or area based separately on its
primary care ratio and its specialist care ratio.
(4) Identification of counties.--
(A) In general.--The Secretary shall
identify--
(i) those counties and areas (in this
paragraph referred to as ``primary care
scarcity counties'') with the lowest
primary care ratios that represent, if
each such county or area were weighted
by the number of individuals determined
under paragraph (2)(B), an aggregate
total of 20 percent of the total of the
individuals determined under such
paragraph; and
(ii) those counties and areas (in
this subsection referred to as
``specialist care scarcity counties'')
with the lowest specialist care ratios
that represent, if each such county or
area were weighted by the number of
individuals determined under paragraph
(2)(B), an aggregate total of 20
percent of the total of the individuals
determined under such paragraph.
(B) Periodic revisions.--The Secretary shall
periodically revise the counties or areas
identified in subparagraph (A) (but not less
often than once every three years) unless the
Secretary determines that there is no new data
available on the number of physicians
practicing in the county or area or the number
of individuals residing in the county or area,
as identified in paragraph (2).
(C) Identification of counties where service
is furnished.--For purposes of paying the
additional amount specified in paragraph (1),
if the Secretary uses the 5-digit postal ZIP
Code where the service is furnished, the
dominant county of the postal ZIP Code (as
determined by the United States Postal Service,
or otherwise) shall be used to determine
whether the postal ZIP Code is in a scarcity
county identified in subparagraph (A) or
revised in subparagraph (B).
(D) Special rule.--With respect to
physicians' services furnished on or after
January 1, 2008, and before July 1, 2008, for
purposes of this subsection, the Secretary
shall use the primary care scarcity counties
and the specialty care scarcity counties (as
identified under the preceding provisions of
this paragraph) that the Secretary was using
under this subsection with respect to
physicians' services furnished on December 31,
2007.
(E) Judicial review.--There shall be no
administrative or judicial review under section
1869, 1878, or otherwise, respecting--
116.(i) the identification of a
county or area;
(ii) the assignment of a specialty of
any physician under this paragraph;
(iii) the assignment of a physician
to a county under paragraph (2); or
(iv) the assignment of a postal ZIP
Code to a county or other area under
this subsection.
(5) Rural census tracts.--To the extent feasible, the
Secretary shall treat a rural census tract of a
metropolitan statistical area (as determined under the
most recent modification of the Goldsmith Modification,
originally published in the Federal Register on
February 27, 1992 (57 Fed. Reg. 6725)), as an
equivalent area for purposes of qualifying as a primary
care scarcity county or specialist care scarcity county
under this subsection.
(6) Physician Defined.--For purposes of this
paragraph, the term ``physician'' means a physician
described in section 1861(r)(1) and the term ``primary
care physician'' means a physician who is identified in
the available data as a general practitioner, family
practice practitioner, general internist, or
obstetrician or gynecologist.
(7) Publication of list of counties; posting on
website.--With respect to a year for which a county or
area is identified or revised under paragraph (4), the
Secretary shall identify such counties or areas as part
of the proposed and final rule to implement the
physician fee schedule under section 1848 for the
applicable year. The Secretary shall post the list of
counties identified or revised under paragraph (4) on
the Internet website of the Centers for Medicare &
Medicaid Services.
(v) Increase of FQHC Payment Limits.--In the case of services
furnished by Federally qualified health centers (as defined in
section 1861(aa)(4)), the Secretary shall establish payment
limits with respect to such services under this part for
services furnished--
(1) in 2010, at the limits otherwise established
under this part for such year increased by $5; and
(2) in a subsequent year, at the limits established
under this subsection for the previous year increased
by the percentage increase in the MEI (as defined in
section 1842(i)(3)) for such subsequent year.
(w) Methods of Payment.--The Secretary may develop
alternative methods of payment for items and services provided
under clinical trials and comparative effectiveness studies
sponsored or supported by an agency of the Department of Health
and Human Services, as determined by the Secretary, to those
that would otherwise apply under this section, to the extent
such alternative methods are necessary to preserve the
scientific validity of such trials or studies, such as in the
case where masking the identity of interventions from patients
and investigators is necessary to comply with the particular
trial or study design.
(x) Incentive Payments for Primary Care Services.--
(1) In general.--In the case of primary care services
furnished on or after January 1, 2011, and before
January 1, 2016, by a primary care practitioner, in
addition to the amount of payment that would otherwise
be made for such services under this part, there also
shall be paid (on a monthly or quarterly basis) an
amount equal to 10 percent of the payment amount for
the service under this part.
(2) Definitions.--In this subsection:
(A) Primary care practitioner.--The term
``primary care practitioner'' means an
individual--
(i) who--
(I) is a physician (as
described in section
1861(r)(1)) who has a primary
specialty designation of family
medicine, internal medicine,
geriatric medicine, or
pediatric medicine; or
(II) is a nurse practitioner,
clinical nurse specialist, or
physician assistant (as those
terms are defined in section
1861(aa)(5)); and
(ii) for whom primary care services
accounted for at least 60 percent of
the allowed charges under this part for
such physician or practitioner in a
prior period as determined appropriate
by the Secretary.
(B) Primary care services.--The term
``primary care services'' means services
identified, as of January 1, 2009, by the
following HCPCS codes (and as subsequently
modified by the Secretary):
(i) 99201 through 99215.
(ii) 99304 through 99340.
(iii) 99341 through 99350.
(3) Coordination with other payments.--The amount of
the additional payment for a service under this
subsection and subsection (m) shall be determined
without regard to any additional payment for the
service under subsection (m) and this subsection,
respectively. The amount of the additional payment for
a service under this subsection and subsection (z)
shall be determined without regard to any additional
payment for the service under subsection (z) and this
subsection, respectively.
(4) Limitation on review.--There shall be no
administrative or judicial review under section 1869,
1878, or otherwise, respecting the identification of
primary care practitioners under this subsection.
(y) Incentive Payments for Major Surgical Procedures
Furnished in Health Professional Shortage Areas.--
(1) In general.--In the case of major surgical
procedures furnished on or after January 1, 2011, and
before January 1, 2016, by a general surgeon in an area
that is designated (under section 332(a)(1)(A) of the
Public Health Service Act) as a health professional
shortage area as identified by the Secretary prior to
the beginning of the year involved, in addition to the
amount of payment that would otherwise be made for such
services under this part, there also shall be paid (on
a monthly or quarterly basis) an amount equal to 10
percent of the payment amount for the service under
this part.
(2) Definitions.--In this subsection:
(A) General surgeon.--In this subsection, the
term ``general surgeon'' means a physician (as
described in section 1861(r)(1)) who has
designated CMS specialty code 02-General
Surgery as their primary specialty code in the
physician's enrollment under section 1866(j).
(B) Major surgical procedures.--The term
``major surgical procedures'' means physicians'
services which are surgical procedures for
which a 10-day or 90-day global period is used
for payment under the fee schedule under
section 1848(b).
(3) Coordination with other payments.--The amount of
the additional payment for a service under this
subsection and subsection (m) shall be determined
without regard to any additional payment for the
service under subsection (m) and this subsection,
respectively. The amount of the additional payment for
a service under this subsection and subsection (z)
shall be determined without regard to any additional
payment for the service under subsection (z) and this
subsection, respectively.
(4) Application.--The provisions of paragraph (2) and
(4) of subsection (m) shall apply to the determination
of additional payments under this subsection in the
same manner as such provisions apply to the
determination of additional payments under subsection
(m).
(z) Incentive Payments for Participation in Eligible
Alternative Payment Models.--
(1) Payment incentive.--
(A) In general.--In the case of covered
professional services furnished by an eligible
professional during a year that is in the
period beginning with 2019 and ending with 2024
and for which the professional is a qualifying
APM participant with respect to such year, in
addition to the amount of payment that would
otherwise be made for such covered professional
services under this part for such year, there
also shall be paid to such professional an
amount equal to 5 percent of the estimated
aggregate payment amounts for such covered
professional services under this part for the
preceding year. For purposes of the previous
sentence, the payment amount for the preceding
year may be an estimation for the full
preceding year based on a period of such
preceding year that is less than the full year.
The Secretary shall establish policies to
implement this subparagraph in cases in which
payment for covered professional services
furnished by a qualifying APM participant in an
alternative payment model--
(i) is made to an eligible
alternative payment entity rather than
directly to the qualifying APM
participant; or
(ii) is made on a basis other than a
fee-for-service basis (such as payment
on a capitated basis).
(B) Form of payment.--Payments under this
subsection shall be made in a lump sum, on an
annual basis, as soon as practicable.
(C) Treatment of payment incentive.--Payments
under this subsection shall not be taken into
account for purposes of determining actual
expenditures under an alternative payment model
and for purposes of determining or rebasing any
benchmarks used under the alternative payment
model.
(D) Coordination.--The amount of the
additional payment under this subsection or
subsection (m) shall be determined without
regard to any additional payment under
subsection (m) and this subsection,
respectively. The amount of the additional
payment under this subsection or subsection (x)
shall be determined without regard to any
additional payment under subsection (x) and
this subsection, respectively. The amount of
the additional payment under this subsection or
subsection (y) shall be determined without
regard to any additional payment under
subsection (y) and this subsection,
respectively.
(2) Qualifying apm participant.--For purposes of this
subsection, the term ``qualifying APM participant''
means the following:
(A) 2019 and 2020.--With respect to 2019 and
2020, an eligible professional for whom the
Secretary determines that at least 25 percent
of payments under this part for covered
professional services furnished by such
professional during the most recent period for
which data are available (which may be less
than a year) were attributable to such services
furnished under this part through an eligible
alternative payment entity.
(B) 2021 and 2022.--With respect to 2021 and
2022, an eligible professional described in
either of the following clauses:
(i) Medicare payment threshold
option.--An eligible professional for
whom the Secretary determines that at
least 50 percent of payments under this
part for covered professional services
furnished by such professional during
the most recent period for which data
are available (which may be less than a
year) were attributable to such
services furnished under this part
through an eligible alternative payment
entity.
(ii) Combination all-payer and
medicare payment threshold option.--An
eligible professional--
(I) for whom the Secretary
determines, with respect to
items and services furnished by
such professional during the
most recent period for which
data are available (which may
be less than a year), that at
least 50 percent of the sum
of--
(aa) payments
described in clause
(i); and
(bb) all other
payments, regardless of
payer (other than
payments made by the
Secretary of Defense or
the Secretary of
Veterans Affairs and
other than payments
made under title XIX in
a State in which no
medical home or
alternative payment
model is available
under the State program
under that title),
meet the requirement described
in clause (iii)(I) with respect
to payments described in item
(aa) and meet the requirement
described in clause (iii)(II)
with respect to payments
described in item (bb);
(II) for whom the Secretary
determines at least 25 percent
of payments under this part for
covered professional services
furnished by such professional
during the most recent period
for which data are available
(which may be less than a year)
were attributable to such
services furnished under this
part through an eligible
alternative payment entity; and
(III) who provides to the
Secretary such information as
is necessary for the Secretary
to make a determination under
subclause (I), with respect to
such professional.
(iii) Requirement.--For purposes of
clause (ii)(I)--
(I) the requirement described
in this subclause, with respect
to payments described in item
(aa) of such clause, is that
such payments are made to an
eligible alternative payment
entity; and
(II) the requirement
described in this subclause,
with respect to payments
described in item (bb) of such
clause, is that such payments
are made under arrangements in
which--
(aa) quality measures
comparable to measures
under the performance
category described in
section
1848(q)(2)(B)(i) apply;
(bb) certified EHR
technology is used; and
(cc) the eligible
professional
participates in an
entity that--
(AA) bears
more than
nominal
financial risk
if actual
aggregate
expenditures
exceeds
expected
aggregate
expenditures;
or
(BB) with
respect to
beneficiaries
under title
XIX, is a
medical home
that meets
criteria
comparable to
medical homes
expanded under
section
1115A(c).
(C) Beginning in 2023.--With respect to 2023
and each subsequent year, an eligible
professional described in either of the
following clauses:
(i) Medicare payment threshold
option.--An eligible professional for
whom the Secretary determines that at
least 75 percent of payments under this
part for covered professional services
furnished by such professional during
the most recent period for which data
are available (which may be less than a
year) were attributable to such
services furnished under this part
through an eligible alternative payment
entity.
(ii) Combination all-payer and
medicare payment threshold option.--An
eligible professional--
(I) for whom the Secretary
determines, with respect to
items and services furnished by
such professional during the
most recent period for which
data are available (which may
be less than a year), that at
least 75 percent of the sum
of--
(aa) payments
described in clause
(i); and
(bb) all other
payments, regardless of
payer (other than
payments made by the
Secretary of Defense or
the Secretary of
Veterans Affairs and
other than payments
made under title XIX in
a State in which no
medical home or
alternative payment
model is available
under the State program
under that title),
meet the requirement described
in clause (iii)(I) with respect
to payments described in item
(aa) and meet the requirement
described in clause (iii)(II)
with respect to payments
described in item (bb);
(II) for whom the Secretary
determines at least 25 percent
of payments under this part for
covered professional services
furnished by such professional
during the most recent period
for which data are available
(which may be less than a year)
were attributable to such
services furnished under this
part through an eligible
alternative payment entity; and
(III) who provides to the
Secretary such information as
is necessary for the Secretary
to make a determination under
subclause (I), with respect to
such professional.
(iii) Requirement.--For purposes of
clause (ii)(I)--
(I) the requirement described
in this subclause, with respect
to payments described in item
(aa) of such clause, is that
such payments are made to an
eligible alternative payment
entity; and
(II) the requirement
described in this subclause,
with respect to payments
described in item (bb) of such
clause, is that such payments
are made under arrangements in
which--
(aa) quality measures
comparable to measures
under the performance
category described in
section
1848(q)(2)(B)(i) apply;
(bb) certified EHR
technology is used; and
(cc) the eligible
professional
participates in an
entity that--
(AA) bears
more than
nominal
financial risk
if actual
aggregate
expenditures
exceeds
expected
aggregate
expenditures;
or
(BB) with
respect to
beneficiaries
under title
XIX, is a
medical home
that meets
criteria
comparable to
medical homes
expanded under
section
1115A(c).
(D) Use of patient approach.--The Secretary
may base the determination of whether an
eligible professional is a qualifying APM
participant under this subsection and the
determination of whether an eligible
professional is a partial qualifying APM
participant under section 1848(q)(1)(C)(iii) by
using counts of patients in lieu of using
payments and using the same or similar
percentage criteria (as specified in this
subsection and such section, respectively), as
the Secretary determines appropriate.
(3) Additional definitions.--In this subsection:
(A) Covered professional services.--The term
``covered professional services'' has the
meaning given that term in section
1848(k)(3)(A).
(B) Eligible professional.--The term
``eligible professional'' has the meaning given
that term in section 1848(k)(3)(B) and includes
a group that includes such professionals.
(C) Alternative payment model (apm).--The
term ``alternative payment model'' means, other
than for purposes of subparagraphs
(B)(ii)(I)(bb) and (C)(ii)(I)(bb) of paragraph
(2), any of the following:
(i) A model under section 1115A
(other than a health care innovation
award).
(ii) The shared savings program under
section 1899.
(iii) A demonstration under section
1866C.
(iv) A demonstration required by
Federal law.
(D) Eligible alternative payment entity.--The
term ``eligible alternative payment entity''
means, with respect to a year, an entity that--
(i) participates in an alternative
payment model that--
(I) requires participants in
such model to use certified EHR
technology (as defined in
subsection (o)(4)); and
(II) provides for payment for
covered professional services
based on quality measures
comparable to measures under
the performance category
described in section
1848(q)(2)(B)(i); and
(ii)(I) bears financial risk for
monetary losses under such alternative
payment model that are in excess of a
nominal amount; or
(II) is a medical home expanded under
section 1115A(c).
(4) Limitation.--There shall be no administrative or
judicial review under section 1869, 1878, or otherwise,
of the following:
(A) The determination that an eligible
professional is a qualifying APM participant
under paragraph (2) and the determination that
an entity is an eligible alternative payment
entity under paragraph (3)(D).
(B) The determination of the amount of the 5
percent payment incentive under paragraph
(1)(A), including any estimation as part of
such determination.
(aa) Medical Review of Spinal Subluxation Services.--
(1) In general.--The Secretary shall implement a
process for the medical review (as described in
paragraph (2)) of treatment by a chiropractor described
in section 1861(r)(5) by means of manual manipulation
of the spine to correct a subluxation (as described in
such section) of an individual who is enrolled under
this part and apply such process to such services
furnished on or after January 1, 2017, focusing on
services such as--
(A) services furnished by a such a
chiropractor whose pattern of billing is
aberrant compared to peers; and
(B) services furnished by such a chiropractor
who, in a prior period, has a services denial
percentage in the 85th percentile or greater,
taking into consideration the extent that
service denials are overturned on appeal.
(2) Medical review.--
(A) Prior authorization medical review.--
(i) In general.--Subject to clause
(ii), the Secretary shall use prior
authorization medical review for
services described in paragraph (1)
that are furnished to an individual by
a chiropractor described in section
1861(r)(5) that are part of an episode
of treatment that includes more than 12
services. For purposes of the preceding
sentence, an episode of treatment shall
be determined by the underlying cause
that justifies the need for services,
such as a diagnosis code.
(ii) Ending application of prior
authorization medical review.--The
Secretary shall end the application of
prior authorization medical review
under clause (i) to services described
in paragraph (1) by such a chiropractor
if the Secretary determines that the
chiropractor has a low denial rate
under such prior authorization medical
review. The Secretary may subsequently
reapply prior authorization medical
review to such chiropractor if the
Secretary determines it to be
appropriate and the chiropractor has,
in the time period subsequent to the
determination by the Secretary of a low
denial rate with respect to the
chiropractor, furnished such services
described in paragraph (1).
(iii) Early request for prior
authorization review permitted.--
Nothing in this subsection shall be
construed to prevent such a
chiropractor from requesting prior
authorization for services described in
paragraph (1) that are to be furnished
to an individual before the
chiropractor furnishes the twelfth such
service to such individual for an
episode of treatment.
(B) Type of review.--The Secretary may use
pre-payment review or post-payment review of
services described in section 1861(r)(5) that
are not subject to prior authorization medical
review under subparagraph (A).
(C) Relationship to law enforcement
activities.--The Secretary may determine that
medical review under this subsection does not
apply in the case where potential fraud may be
involved.
(3) No payment without prior authorization.--With
respect to a service described in paragraph (1) for
which prior authorization medical review under this
subsection applies, the following shall apply:
(A) Prior authorization determination.--The
Secretary shall make a determination, prior to
the service being furnished, of whether the
service would or would not meet the applicable
requirements of section 1862(a)(1)(A).
(B) Denial of payment.--Subject to paragraph
(5), no payment may be made under this part for
the service unless the Secretary determines
pursuant to subparagraph (A) that the service
would meet the applicable requirements of such
section 1862(a)(1)(A).
(4) Submission of information.--A chiropractor
described in section 1861(r)(5) may submit the
information necessary for medical review by fax, by
mail, or by electronic means. The Secretary shall make
available the electronic means described in the
preceding sentence as soon as practicable.
(5) Timeliness.--If the Secretary does not make a
prior authorization determination under paragraph
(3)(A) within 14 business days of the date of the
receipt of medical documentation needed to make such
determination, paragraph (3)(B) shall not apply.
(6) Application of limitation on beneficiary
liability.--Where payment may not be made as a result
of the application of paragraph (2)(B), section 1879
shall apply in the same manner as such section applies
to a denial that is made by reason of section
1862(a)(1).
(7) Review by contractors.--The medical review
described in paragraph (2) may be conducted by medicare
administrative contractors pursuant to section
1874A(a)(4)(G) or by any other contractor determined
appropriate by the Secretary that is not a recovery
audit contractor.
(8) Multiple services.--The Secretary shall, where
practicable, apply the medical review under this
subsection in a manner so as to allow an individual
described in paragraph (1) to obtain, at a single time
rather than on a service-by-service basis, an
authorization in accordance with paragraph (3)(A) for
multiple services.
(9) Construction.--With respect to a service
described in paragraph (1) that has been affirmed by
medical review under this subsection, nothing in this
subsection shall be construed to preclude the
subsequent denial of a claim for such service that does
not meet other applicable requirements under this Act.
(10) Implementation.--
(A) Authority.--The Secretary may implement
the provisions of this subsection by interim
final rule with comment period.
(B) Administration.--Chapter 35 of title 44,
United States Code, shall not apply to medical
review under this subsection.
(bb) Additional Payments for Certain Rural Health Clinics
With Physicians or Practitioners Receiving DATA 2000 Waivers.--
(1) In general.--In the case of a rural health clinic
with respect to which, beginning on or after January 1,
2019, rural health clinic services (as defined in
section 1861(aa)(1)) are furnished for the treatment of
opioid use disorder by a physician or practitioner who
meets the requirements described in paragraph (3), the
Secretary shall, subject to availability of funds under
paragraph (4), make a payment (at such time and in such
manner as specified by the Secretary) to such rural
health clinic after receiving and approving an
application described in paragraph (2). Such payment
shall be in an amount determined by the Secretary,
based on an estimate of the average costs of training
for purposes of receiving a waiver described in
paragraph (3)(B). Such payment may be made only one
time with respect to each such physician or
practitioner.
(2) Application.--In order to receive a payment
described in paragraph (1), a rural health clinic shall
submit to the Secretary an application for such a
payment at such time, in such manner, and containing
such information as specified by the Secretary. A rural
health clinic may apply for such a payment for each
physician or practitioner described in paragraph (1)
furnishing services described in such paragraph at such
clinic.
(3) Requirements.--For purposes of paragraph (1), the
requirements described in this paragraph, with respect
to a physician or practitioner, are the following:
(A) The physician or practitioner is employed
by or working under contract with a rural
health clinic described in paragraph (1) that
submits an application under paragraph (2).
(B) The physician or practitioner first
receives a waiver under section 303(g) of the
Controlled Substances Act on or after January
1, 2019.
(4) Funding.--For purposes of making payments under
this subsection, there are appropriated, out of amounts
in the Treasury not otherwise appropriated, $2,000,000,
which shall remain available until expended.
SPECIAL PAYMENT RULES FOR PARTICULAR ITEMS AND SERVICES
Sec. 1834. (a) Payment for Durable Medical Equipment.--
(1) General rule for payment.--
(A) In general.--With respect to a covered
item (as defined in paragraph (13)) for which
payment is determined under this subsection,
payment shall be made in the frequency
specified in paragraphs (2) through (7) and in
an amount equal to 80 percent of the payment
basis described in subparagraph (B).
(B) Payment basis.--Subject to subparagraph
(F)(i), the payment basis described in this
subparagraph is the lesser of--
(i) the actual charge for the item,
or
(ii) the payment amount recognized
under paragraphs (2) through (7) of
this subsection for the item;
except that clause (i) shall not apply if the
covered item is furnished by a public home
health agency (or by another home health agency
which demonstrates to the satisfaction of the
Secretary that a significant portion of its
patients are low income) free of charge or at
nominal charges to the public.
(C) Exclusive payment rule.--Subject to
subparagraph (F)(ii), this subsection shall
constitute the exclusive provision of this
title for payment for covered items under this
part or under part A to a home health agency.
(D) Reduction in fee schedules for certain
items.--With respect to a seat-lift chair or
transcutaneous electrical nerve stimulator
furnished on or after April 1, 1990, the
Secretary shall reduce the payment amount
applied under subparagraph (B)(ii) for such an
item by 15 percent, and, in the case of a
transcutaneous electrical nerve stimulator
furnished on or after January 1, 1991, the
Secretary shall further reduce such payment
amount (as previously reduced) by 45 percent.
(E) Clinical conditions for coverage.--
(i) In general.--The Secretary shall
establish standards for clinical
conditions for payment for covered
items under this subsection.
(ii) Requirements.--The standards
established under clause (i) shall
include the specification of types or
classes of covered items that require,
as a condition of payment under this
subsection, a face-to-face examination
of the individual by a physician (as
defined in section 1861(r)), a
physician assistant, nurse
practitioner, or a clinical nurse
specialist (as those terms are defined
in section 1861(aa)(5)) and a
prescription for the item.
(iii) Priority of establishment of
standards.--In establishing the
standards under this subparagraph, the
Secretary shall first establish
standards for those covered items for
which the Secretary determines there
has been a proliferation of use,
consistent findings of charges for
covered items that are not delivered,
or consistent findings of falsification
of documentation to provide for payment
of such covered items under this part.
(iv) Standards for power
wheelchairs.--Effective on the date of
the enactment of this subparagraph, in
the case of a covered item consisting
of a motorized or power wheelchair for
an individual, payment may not be made
for such covered item unless a
physician (as defined in section
1861(r)(1)), a physician assistant,
nurse practitioner, or a clinical nurse
specialist (as those terms are defined
in section 1861(aa)(5)) has conducted a
face-to-face examination of the
individual and written a prescription
for the item.
(v) Limitation on payment for covered
items.--Payment may not be made for a
covered item under this subsection
unless the item meets any standards
established under this subparagraph for
clinical condition of coverage.
(F) Application of competitive acquisition;
limitation of inherent reasonableness
authority.--In the case of covered items
furnished on or after January 1, 2011, subject
to subparagraphs (G) and (H), that are included
in a competitive acquisition program in a
competitive acquisition area under section
1847(a)--
(i) the payment basis under this
subsection for such items and services
furnished in such area shall be the
payment basis determined under such
competitive acquisition program;
(ii) the Secretary may (and, in the
case of covered items furnished on or
after January 1, 2016, subject to
clause (iii), shall) use information on
the payment determined under such
competitive acquisition programs to
adjust the payment amount otherwise
recognized under subparagraph (B)(ii)
for an area that is not a competitive
acquisition area under section 1847 and
in the case of such adjustment,
paragraph (10)(B) shall not be applied;
and
(iii) in the case of covered items
furnished on or after January 1, 2016,
the Secretary shall continue to make
such adjustments described in clause
(ii) as, under such competitive
acquisition programs, additional
covered items are phased in or
information is updated as contracts
under section 1847 are recompeted in
accordance with section 1847(b)(3)(B).
(G) Use of information on competitive bid
rates.--The Secretary shall specify by
regulation the methodology to be used in
applying the provisions of subparagraph (F)(ii)
and subsection (h)(1)(H)(ii). In promulgating
such regulation, the Secretary shall consider
the costs of items and services in areas in
which such provisions would be applied compared
to the payment rates for such items and
services in competitive acquisition areas.In
the case of items and services furnished on or
after January 1, 2019, in making any
adjustments under clause (ii) or (iii) of
subparagraph (F), under subsection
(h)(1)(H)(ii), or under section 1842(s)(3)(B),
the Secretary shall--
(i) solicit and take into account
stakeholder input; and
(ii) take into account the highest
amount bid by a winning supplier in a
competitive acquisition area and a
comparison of each of the following
with respect to non-competitive
acquisition areas and competitive
acquisition areas:
(I) The average travel
distance and cost associated
with furnishing items and
services in the area.
(II) The average volume of
items and services furnished by
suppliers in the area.
(III) The number of suppliers
in the area.
(H) Diabetic supplies.--
(i) In general.--On or after the date
described in clause (ii), the payment
amount under this part for diabetic
supplies, including testing strips,
that are non-mail order items (as
defined by the Secretary) shall be
equal to the single payment amounts
established under the national mail
order competition for diabetic supplies
under section 1847.
(ii) Date described.--The date
described in this clause is the date of
the implementation of the single
payment amounts under the national mail
order competition for diabetic supplies
under section 1847.
(I) Treatment of vacuum erection systems.--
Effective for items and services furnished on
and after July 1, 2015, vacuum erection systems
described as prosthetic devices described in
section 1861(s)(8) shall be treated in the same
manner as erectile dysfunction drugs are
treated for purposes of section 1860D-
2(e)(2)(A).
(2) Payment for inexpensive and other routinely
purchased durable medical equipment.--
(A) In general.--Payment for an item of
durable medical equipment (as defined in
paragraph (13))--
(i) the purchase price of which does
not exceed $150,
(ii) which the Secretary determines
is acquired at least 75 percent of the
time by purchase,
(iii) which is an accessory used in
conjunction with a nebulizer,
aspirator, or a ventilator excluded
under paragraph (3)(A), or
(iv) in the case of devices furnished
on or after October 1, 2015, which
serves as a speech generating device or
which is an accessory that is needed
for the individual to effectively
utilize such a device,
shall be made on a rental basis or in a lump-
sum amount for the purchase of the item. The
payment amount recognized for purchase or
rental of such equipment is the amount
specified in subparagraph (B) for purchase or
rental, except that the total amount of
payments with respect to an item may not exceed
the payment amount specified in subparagraph
(B) with respect to the purchase of the item.
(B) Payment amount.--For purposes of
subparagraph (A), the amount specified in this
subparagraph, with respect to the purchase or
rental of an item furnished in a carrier
service area--
(i) in 1989 and in 1990 is the
average reasonable charge in the area
for the purchase or rental,
respectively, of the item for the 12-
month period ending on June 30, 1987,
increased by the percentage increase in
the consumer price index for all urban
consumers (U.S. city average) for the
6-month period ending with December
1987;
(ii) in 1991 is the sum of (I) 67
percent of the local payment amount for
the item or device computed under
subparagraph (C)(i)(I) for 1991, and
(II) 33 percent of the national limited
payment amount for the item or device
computed under subparagraph (C)(ii) for
1991;
(iii) in 1992 is the sum of (I) 33
percent of the local payment amount for
the item or device computed under
subparagraph (C)(i)(II) for 1992, and
(II) 67 percent of the national limited
payment amount for the item or device
computed under subparagraph (C)(ii) for
1992; and
(iv) in 1993 and each subsequent year
is the national limited payment amount
for the item or device computed under
subparagraph (C)(ii) for that year
(reduced by 10 percent, in the case of
a blood glucose testing strip furnished
after 1997 for an individual with
diabetes).
(C) Computation of local payment amount and
national limited payment amount.--For purposes
of subparagraph (B)--
(i) the local payment amount for an
item or device for a year is equal to--
(I) for 1991, the amount
specified in subparagraph
(B)(i) for 1990 increased by
the covered item update for
1991, and
(II) for 1992, 1993, and 1994
the amount determined under
this clause for the preceding
year increased by the covered
item update for the year; and
(ii) the national limited payment
amount for an item or device for a year
is equal to--
(I) for 1991, the local
payment amount determined under
clause (i) for such item or
device for that year, except
that the national limited
payment amount may not exceed
100 percent of the weighted
average of all local payment
amounts determined under such
clause for such item for that
year and may not be less than
85 percent of the weighted
average of all local payment
amounts determined under such
clause for such item,
(II) for 1992 and 1993, the
amount determined under this
clause for the preceding year
increased by the covered item
update for such subsequent
year,
(III) for 1994, the local
payment amount determined under
clause (i) for such item or
device for that year, except
that the national limited
payment amount may not exceed
100 percent of the median of
all local payment amounts
determined under such clause
for such item for that year and
may not be less than 85 percent
of the median of all local
payment amounts determined
under such clause for such item
or device for that year, and
(IV) for each subsequent
year, the amount determined
under this clause for the
preceding year increased by the
covered item update for such
subsequent year.
(3) Payment for items requiring frequent and
substantial servicing.--
(A) In general.--Payment for a covered item
(such as IPPB machines and ventilators,
excluding ventilators that are either
continuous airway pressure devices or
intermittent assist devices with continuous
airway pressure devices) for which there must
be frequent and substantial servicing in order
to avoid risk to the patient's health shall be
made on a monthly basis for the rental of the
item and the amount recognized is the amount
specified in subparagraph (B).
(B) Payment amount.--For purposes of
subparagraph (A), the amount specified in this
subparagraph, with respect to an item or device
furnished in a carrier service area--
(i) in 1989 and in 1990 is the
average reasonable charge in the area
for the rental of the item or device
for the 12-month period ending with
June 1987, increased by the percentage
increase in the consumer price index
for all urban consumers (U.S. city
average) for the 6-month period ending
with December 1987;
(ii) in 1991 is the sum of (I) 67
percent of the local payment amount for
the item or device computed under
subparagraph (C)(i)(I) for 1991, and
(II) 33 percent of the national limited
payment amount for the item or device
computed under subparagraph (C)(ii) for
1991;
(iii) in 1992 is the sum of (I) 33
percent of the local payment amount for
the item or device computed under
subparagraph (C)(i)(II) for 1992, and
(II) 67 percent of the national limited
payment amount for the item or device
computed under subparagraph (C)(ii) for
1992; and
(iv) in 1993 and each subsequent year
is the national limited payment amount
for the item or device computed under
subparagraph (C)(ii) for that year.
(C) Computation of local payment amount and
national limited payment amount.--For purposes
of subparagraph (B)--
(i) the local payment amount for an
item or device for a year is equal to--
(I) for 1991, the amount
specified in subparagraph
(B)(i) for 1990 increased by
the covered item update for
1991, and
(II) for 1992, 1993, and 1994
the amount determined under
this clause for the preceding
year increased by the covered
item update for the year; and
(ii) the national limited payment
amount for an item or device for a year
is equal to--
(I) for 1991, the local
payment amount determined under
clause (i) for such item or
device for that year, except
that the national limited
payment amount may not exceed
100 percent of the weighted
average of all local payment
amounts determined under such
clause for such item for that
year and may not be less than
85 percent of the weighted
average of all local payment
amounts determined under such
clause for such item,
(II) for 1992 and 1993, the
amount determined under this
clause for the preceding year
increased by the covered item
update for such subsequent
year,
(III) for 1994, the local
payment amount determined under
clause (i) for such item or
device for that year, except
that the national limited
payment amount may not exceed
100 percent of the median of
all local payment amounts
determined under such clause
for such item for that year and
may not be less than 85 percent
of the median of all local
payment amounts determined
under such clause for such item
or device for that year, and
(IV) for each subsequent
year, the amount determined
under this clause for the
preceding year increased by the
covered item update for such
subsequent year.
(4) Payment for certain customized items.--Payment
with respect to a covered item that is uniquely
constructed or substantially modified to meet the
specific needs of an individual patient, and for that
reason cannot be grouped with similar items for
purposes of payment under this title, shall be made in
a lump-sum amount (A) for the purchase of the item in a
payment amount based upon the carrier's individual
consideration for that item, and (B) for the reasonable
and necessary maintenance and servicing for parts and
labor not covered by the supplier's or manufacturer's
warranty, when necessary during the period of medical
need, and the amount recognized for such maintenance
and servicing shall be paid on a lump-sum, as needed
basis based upon the carrier's individual consideration
for that item. In the case of a wheelchair furnished on
or after January 1, 1992, the wheelchair shall be
treated as a customized item for purposes of this
paragraph if the wheelchair has been measured, fitted,
or adapted in consideration of the patient's body size,
disability, period of need, or intended use, and has
been assembled by a supplier or ordered from a
manufacturer who makes available customized features,
modifications, or components for wheelchairs that are
intended for an individual patient's use in accordance
with instructions from the patient's physician.
(5) Payment for oxygen and oxygen equipment.--
(A) In general.--Payment for oxygen and
oxygen equipment shall be made on a monthly
basis in the monthly payment amount recognized
under paragraph (9) for oxygen and oxygen
equipment (other than portable oxygen
equipment), subject to subparagraphs (B), (C),
(E), and (F).
(B) Add-on for portable oxygen equipment.--
When portable oxygen equipment is used, but
subject to subparagraph (D), the payment amount
recognized under subparagraph (A) shall be
increased by the monthly payment amount
recognized under paragraph (9) for portable
oxygen equipment.
(C) Volume adjustment.--When the attending
physician prescribes an oxygen flow rate--
(i) exceeding 4 liters per minute,
the payment amount recognized under
subparagraph (A), subject to
subparagraph (D), shall be increased by
50 percent, or
(ii) of less than 1 liter per minute,
the payment amount recognized under
subparagraph (A) shall be decreased by
50 percent.
(D) Limit on adjustment.--When portable
oxygen equipment is used and the attending
physician prescribes an oxygen flow rate
exceeding 4 liters per minute, there shall only
be an increase under either subparagraph (B) or
(C), whichever increase is larger, and not
under both such subparagraphs.
(E) Recertification for patients receiving
home oxygen therapy.--In the case of a patient
receiving home oxygen therapy services who, at
the time such services are initiated, has an
initial arterial blood gas value at or above a
partial pressure of 56 or an arterial oxygen
saturation at or above 89 percent (or such
other values, pressures, or criteria as the
Secretary may specify) no payment may be made
under this part for such services after the
expiration of the 90-day period that begins on
the date the patient first receives such
services unless the patient's attending
physician certifies that, on the basis of a
follow-up test of the patient's arterial blood
gas value or arterial oxygen saturation
conducted during the final 30 days of such 90-
day period, there is a medical need for the
patient to continue to receive such services.
(F) Rental Cap.--
(i) In general.--Payment for oxygen
equipment (including portable oxygen
equipment) under this paragraph may not
extend over a period of continuous use
(as determined by the Secretary) of
longer than 36 months.
(ii) Payments and rules after rental
cap.--After the 36th continuous month
during which payment is made for the
equipment under this paragraph--
(I) the supplier furnishing
such equipment under this
subsection shall continue to
furnish the equipment during
any period of medical need for
the remainder of the reasonable
useful lifetime of the
equipment, as determined by the
Secretary;
(II) payments for oxygen
shall continue to be made in
the amount recognized for
oxygen under paragraph (9) for
the period of medical need; and
(III) maintenance and
servicing payments shall, if
the Secretary determines such
payments are reasonable and
necessary, be made (for parts
and labor not covered by the
supplier's or manufacturer's
warranty, as determined by the
Secretary to be appropriate for
the equipment), and such
payments shall be in an amount
determined to be appropriate by
the Secretary.
(6) Payment for other covered items (other than
durable medical equipment).--Payment for other covered
items (other than durable medical equipment and other
covered items described in paragraph (3), (4), or (5))
shall be made in a lump-sum amount for the purchase of
the item in the amount of the purchase price recognized
under paragraph (8).
(7) Payment for other items of durable medical
equipment.--
(A) Payment.--In the case of an item of
durable medical equipment not described in
paragraphs (2) through (6), the following rules
shall apply:
(i) Rental.--
(I) In general.--Except as
provided in clause (iii),
payment for the item shall be
made on a monthly basis for the
rental of the item during the
period of medical need (but
payments under this clause may
not extend over a period of
continuous use (as determined
by the Secretary) of longer
than 13 months).
(II) Payment amount.--Subject
to subclause (III) and
subparagraph (B), the amount
recognized for the item, for
each of the first 3 months of
such period, is 10 percent of
the purchase price recognized
under paragraph (8) with
respect to the item, and, for
each of the remaining months of
such period, is 7.5 percent of
such purchase price.
(III) Special rule for power-
driven wheelchairs.--For
purposes of payment for power-
driven wheelchairs, subclause
(II) shall be applied by
substituting ``15 percent'' and
``6 percent'' for ``10
percent'' and ``7.5 percent'',
respectively.
(ii) Ownership after rental.--On the
first day that begins after the 13th
continuous month during which payment
is made for the rental of an item under
clause (i), the supplier of the item
shall transfer title to the item to the
individual.
(iii) Purchase agreement option for
complex, rehabilitative power-driven
wheelchairs.--In the case of a complex,
rehabilitative power-driven wheelchair,
at the time the supplier furnishes the
item, the supplier shall offer the
individual the option to purchase the
item, and payment for such item shall
be made on a lump-sum basis if the
individual exercises such option.
(iv) Maintenance and servicing.--
After the supplier transfers title to
the item under clause (ii) or in the
case of a power-driven wheelchair for
which a purchase agreement has been
entered into under clause (iii),
maintenance and servicing payments
shall, if the Secretary determines such
payments are reasonable and necessary,
be made (for parts and labor not
covered by the supplier's or
manufacturer's warranty, as determined
by the Secretary to be appropriate for
the particular type of durable medical
equipment), and such payments shall be
in an amount determined to be
appropriate by the Secretary.
(B) Range for rental amounts.--
(i) For 1989.--For items furnished
during 1989, the payment amount
recognized under subparagraph (A)(i)
shall not be more than 115 percent, and
shall not be less than 85 percent, of
the prevailing charge established for
rental of the item in January 1987,
increased by the percentage increase in
the consumer price index for all urban
consumers (U.S. city average) for the
6-month period ending with December
1987.
(ii) For 1990.--For items furnished
during 1990, clause (i) shall apply in
the same manner as it applies to items
furnished during 1989.
(C) Replacement of items.--
(i) Establishment of reasonable
useful lifetime.--In accordance with
clause (iii), the Secretary shall
determine and establish a reasonable
useful lifetime for items of durable
medical equipment for which payment may
be made under this paragraph.
(ii) Payment for replacement items.--
If the reasonable lifetime of such an
item, as so established, has been
reached during a continuous period of
medical need, or the carrier determines
that the item is lost or irreparably
damaged, the patient may elect to have
payment for an item serving as a
replacement for such item made--
(I) on a monthly basis for
the rental of the replacement
item in accordance with
subparagraph (A); or
(II) in the case of an item
for which a purchase agreement
has been entered into under
subparagraph (A)(iii), in a
lump-sum amount for the
purchase of the item.
(iii) Length of reasonable useful
lifetime.--The reasonable useful
lifetime of an item of durable medical
equipment under this subparagraph shall
be equal to 5 years, except that, if
the Secretary determines that, on the
basis of prior experience in making
payments for such an item under this
title, a reasonable useful lifetime of
5 years is not appropriate with respect
to a particular item, the Secretary
shall establish an alternative
reasonable lifetime for such item.
(8) Purchase price recognized for miscellaneous
devices and items.--For purposes of paragraphs (6) and
(7), the amount that is recognized under this paragraph
as the purchase price for a covered item is the amount
described in subparagraph (C) of this paragraph,
determined as follows:
(A) Computation of local purchase price.--
Each carrier under section 1842 shall compute a
base local purchase price for the item as
follows:
(i) The carrier shall compute a base
local purchase price, for each item
described--
(I) in paragraph (6) equal to
the average reasonable charge
in the locality for the
purchase of the item for the
12-month period ending with
June 1987, or
(II) in paragraph (7) equal
to the average of the purchase
prices on the claims submitted
on an assignment-related basis
for the unused item supplied
during the 6-month period
ending with December 1986.
(ii) The carrier shall compute a
local purchase price, with respect to
the furnishing of each particular
item--
(I) in 1989 and 1990, equal
to the base local purchase
price computed under clause (i)
increased by the percentage
increase in the consumer price
index for all urban consumers
(U.S. city average) for the 6-
month period ending with
December 1987,
(II) in 1991, equal to the
local purchase price computed
under this clause for the
previous year, increased by the
covered item update for 1991,
and decreased by the percentage
by which the average of the
reasonable charges for claims
paid for all items described in
paragraph (7) is lower than the
average of the purchase prices
submitted for such items during
the final 9 months of 1988; or
(III) in 1992, 1993, and 1994
equal to the local purchase
price computed under this
clause for the previous year
increased by the covered item
update for the year.
(B) Computation of national limited purchase
price.--With respect to the furnishing of a
particular item in a year, the Secretary shall
compute a national limited purchase price--
(i) for 1991, equal to the local
purchase price computed under
subparagraph (A)(ii) for the item for
the year, except that such national
limited purchase price may not exceed
100 percent of the weighted average of
all local purchase prices for the item
computed under such subparagraph for
the year, and may not be less than 85
percent of the weighted average of all
local purchase prices for the item
computed under such subparagraph for
the year;
(ii) for 1992 and 1993, the amount
determined under this subparagraph for
the preceding year increased by the
covered item update for such subsequent
year;
(iii) for 1994, the local purchase
price computed under subparagraph
(A)(ii) for the item for the year,
except that such national limited
purchase price may not exceed 100
percent of the median of all local
purchase prices computed for the item
under such subparagraph for the year
and may not be less than 85 percent of
the median of all local purchase prices
computed under such subparagraph for
the item for the year; and
(iv) for each subsequent year, equal
to the amount determined under this
subparagraph for the preceding year
increased by the covered item update
for such subsequent year.
(C) Purchase price recognized.--For purposes
of paragraphs (6) and (7), the amount that is
recognized under this paragraph as the purchase
price for each item furnished--
(i) in 1989 or 1990, is 100 percent
of the local purchase price computed
under subparagraph (A)(ii)(I);
(ii) in 1991, is the sum of (I) 67
percent of the local purchase price
computed under subparagraph (A)(ii)(II)
for 1991, and (II) 33 percent of the
national limited purchase price
computed under subparagraph (B) for
1991;
(iii) in 1992, is the sum of (I) 33
percent of the local purchase price
computed under subparagraph
(A)(ii)(III) for 1992, and (II) 67
percent of the national limited
purchase price computed under
subparagraph (B) for 1992; and
(iv) in 1993 or a subsequent year, is
the national limited purchase price
computed under subparagraph (B) for
that year.
(9) Monthly payment amount recognized with respect to
oxygen and oxygen equipment.--For purposes of paragraph
(5), the amount that is recognized under this paragraph
for payment for oxygen and oxygen equipment is the
monthly payment amount described in subparagraph (C) of
this paragraph. Such amount shall be computed
separately (i) for all items of oxygen and oxygen
equipment (other than portable oxygen equipment) and
(ii) for portable oxygen equipment (each such group
referred to in this paragraph as an ``item'').
(A) Computation of local monthly payment
rate.--Each carrier under this section shall
compute a base local payment rate for each item
as follows:
(i) The carrier shall compute a base
local average monthly payment rate per
beneficiary as an amount equal to (I)
the total reasonable charges for the
item during the 12-month period ending
with December 1986, divided by (II) the
total number of months for all
beneficiaries receiving the item in the
area during the 12-month period for
which the carrier made payment for the
item under this title.
(ii) The carrier shall compute a
local average monthly payment rate for
the item applicable--
(I) to 1989 and 1990, equal
to 95 percent of the base local
average monthly payment rate
computed under clause (i) for
the item increased by the
percentage increase in the
consumer price index for all
urban consumers (U.S. city
average) for the 6-month period
ending with December 1987, or
(II) to 1991, 1992, 1993, and
1994 equal to the local average
monthly payment rate computed
under this clause for the item
for the previous year increased
by the covered item increase
for the year.
(B) Computation of national limited monthly
payment rate.--With respect to the furnishing
of an item in a year, the Secretary shall
compute a national limited monthly payment rate
equal to--
(i) for 1991, the local monthly
payment rate computed under
subparagraph (A)(ii)(II) for the item
for the year, except that such national
limited monthly payment rate may not
exceed 100 percent of the weighted
average of all local monthly payment
rates computed for the item under such
subparagraph for the year, and may not
be less than 85 percent of the weighted
average of all local monthly payment
rates computed for the item under such
subparagraph for the year;
(ii) for 1992 and 1993, the amount
determined under this subparagraph for
the preceding year increased by the
covered item update for such subsequent
year;
(iii) for 1994, the local monthly
payment rate computed under
subparagraph (A)(ii) for the item for
the year, except that such national
limited monthly payment rate may not
exceed 100 percent of the median of all
local monthly payment rates computed
for the item under such subparagraph
for the year and may not be less than
85 percent of the median of all local
monthly payment rates computed for the
item under such subparagraph for the
year;
(iv) for 1995, 1996, and 1997, equal
to the amount determined under this
subparagraph for the preceding year
increased by the covered item update
for such subsequent year;
(v) for 1998, 75 percent of the
amount determined under this
subparagraph for 1997; and
(vi) for 1999 and each subsequent
year, 70 percent of the amount
determined under this subparagraph for
1997.
(C) Monthly payment amount recognized.--For
purposes of paragraph (5), the amount that is
recognized under this paragraph as the base
monthly payment amount for each item
furnished--
(i) in 1989 and in 1990, is 100
percent of the local average monthly
payment rate computed under
subparagraph (A)(ii) for the item;
(ii) in 1991, is the sum of (I) 67
percent of the local average monthly
payment rate computed under
subparagraph (A)(ii)(II) for the item
for 1991, and (II) 33 percent of the
national limited monthly payment rate
computed under subparagraph (B)(i) for
the item for 1991;
(iii) in 1992, is the sum of (I) 33
percent of the local average monthly
payment rate computed under
subparagraph (A)(ii)(II) for the item
for 1992, and (II) 67 percent of the
national limited monthly payment rate
computed under subparagraph (B)(ii) for
the item for 1992; and
(iv) in a subsequent year, is the
national limited monthly payment rate
computed under subparagraph (B) for the
item for that year.
(10) Exceptions and adjustments.--
(A) Areas outside continental united
states.--Exceptions to the amounts recognized
under the previous provisions of this
subsection shall be made to take into account
the unique circumstances of covered items
furnished in Alaska, Hawaii, or Puerto Rico.
(B) Adjustment for inherent reasonableness.--
The Secretary is authorized to apply the
provisions of paragraphs (8) and (9) of section
1842(b) to covered items and suppliers of such
items and payments under this subsection in an
area and with respect to covered items and
services for which the Secretary does not make
a payment amount adjustment under paragraph
(1)(F).
(C) Transcutaneous electrical nerve
stimulator (tens).--In order to permit an
attending physician time to determine whether
the purchase of a transcutaneous electrical
nerve stimulator is medically appropriate for a
particular patient, the Secretary may determine
an appropriate payment amount for the initial
rental of such item for a period of not more
than 2 months. If such item is subsequently
purchased, the payment amount with respect to
such purchase is the payment amount determined
under paragraph (2).
(11) Improper billing and requirement of physician
order.--
(A) Improper billing for certain rental
items.--Notwithstanding any other provision of
this title, a supplier of a covered item for
which payment is made under this subsection and
which is furnished on a rental basis shall
continue to supply the item without charge
(other than a charge provided under this
subsection for the maintenance and servicing of
the item) after rental payments may no longer
be made under this subsection. If a supplier
knowingly and willfully violates the previous
sentence, the Secretary may apply sanctions
against the supplier under section 1842(j)(2)
in the same manner such sanctions may apply
with respect to a physician.
(B) Requirement of physician order.--
(i) In general.--The Secretary is
authorized to require, for specified
covered items, that payment may be made
under this subsection with respect to
the item only if a physician enrolled
under section 1866(j) or an eligible
professional under section
1848(k)(3)(B) that is enrolled under
section 1866(j) has communicated to the
supplier, before delivery of the item,
a written order for the item.
(ii) Requirement for face to face
encounter.--The Secretary shall require
that such an order be written pursuant
to a physician, a physician assistant,
a nurse practitioner, or a clinical
nurse specialist (as those terms are
defined in section 1861(aa)(5))
documenting such physician, physician
assistant, practitioner, or specialist
has had a face-to-face encounter
(including through use of telehealth
under subsection (m) and other than
with respect to encounters that are
incident to services involved) with the
individual involved during the 6-month
period preceding such written order, or
other reasonable timeframe as
determined by the Secretary.
(12) Regional carriers.--The Secretary may designate,
by regulation under section 1842, one carrier for one
or more entire regions to process all claims within the
region for covered items under this section.
(13) Covered item.--In this subsection, the term
``covered item'' means durable medical equipment (as
defined in section 1861(n)), including such equipment
described in section 1861(m)(5), but not including
implantable items for which payment may be made under
section 1833(t).
(14) Covered item update.--In this subsection, the
term ``covered item update'' means, with respect to a
year--
(A) for 1991 and 1992, the percentage
increase in the consumer price index for all
urban consumers (U.S. city average) for the 12-
month period ending with June of the previous
year reduced by 1 percentage point;
(B) for 1993, 1994, 1995, 1996, and 1997, the
percentage increase in the consumer price index
for all urban consumers (U.S. city average) for
the 12-month period ending with June of the
previous year;
(C) for each of the years 1998 through 2000,
0 percentage points;
(D) for 2001, the percentage increase in the
consumer price index for all urban consumers
(U.S. city average) for the 12-month period
ending with June 2000;
(E) for 2002, 0 percentage points;
(F) for 2003, the percentage increase in the
consumer price index for all urban consumers
(U.S. urban average) for the 12-month period
ending with June of 2002;
(G) for 2004 through 2006--
(i) subject to clause (ii), in the
case of class III medical devices
described in section 513(a)(1)(C) of
the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 360(c)(1)(C)), the
percentage increase described in
subparagraph (B) for the year involved;
and
(ii) in the case of covered items not
described in clause (i), 0 percentage
points;
(H) for 2007--
(i) subject to clause (ii), in the
case of class III medical devices
described in section 513(a)(1)(C) of
the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 360(c)(1)(C)), the
percentage change determined by the
Secretary to be appropriate taking into
account recommendations contained in
the report of the Comptroller General
of the United States under section
302(c)(1)(B) of the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003; and
(ii) in the case of covered items not
described in clause (i), 0 percentage
points;
(I) for 2008--
(i) subject to clause (ii), in the
case of class III medical devices
described in section 513(a)(1)(C) of
the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 360(c)(1)(C)), the
percentage increase described in
subparagraph (B) (as applied to the
payment amount for 2007 determined
after the application of the percentage
change under subparagraph (H)(i)); and
(ii) in the case of covered items not
described in clause (i), 0 percentage
points;
(J) for 2009--
(i) in the case of items and services
furnished in any geographic area, if
such items or services were selected
for competitive acquisition in any area
under the competitive acquisition
program under section
1847(a)(1)(B)(i)(I) before July 1,
2008, including related accessories but
only if furnished with such items and
services selected for such competition
and diabetic supplies but only if
furnished through mail order, - 9.5
percent; or
(ii) in the case of other items and
services, the percentage increase in
the consumer price index for all urban
consumers (U.S. urban average) for the
12-month period ending with June 2008;
(K) for 2010, the percentage increase in the
consumer price index for all urban consumers
(U.S. urban average) for the 12-month period
ending with June of the previous year; and
(L) for 2011 and each subsequent year--
(i) the percentage increase in the
consumer price index for all urban
consumers (United States city average)
for the 12-month period ending with
June of the previous year, reduced by--
(ii) the productivity adjustment
described in section
1886(b)(3)(B)(xi)(II).
The application of subparagraph (L)(ii) may result in
the covered item update under this paragraph being less
than 0.0 for a year, and may result in payment rates
under this subsection for a year being less than such
payment rates for the preceding year.
(15) Advance determinations of coverage for certain
items.--
(A) Development of lists of items by
secretary.--The Secretary may develop and
periodically update a list of items for which
payment may be made under this subsection that
the Secretary determines, on the basis of prior
payment experience, are frequently subject to
unnecessary utilization throughout a carrier's
entire service area or a portion of such area.
(B) Development of lists of suppliers by
secretary.--The Secretary may develop and
periodically update a list of suppliers of
items for which payment may be made under this
subsection with respect to whom--
(i) the Secretary has found that a
substantial number of claims for
payment under this part for items
furnished by the supplier have been
denied on the basis of the application
of section 1862(a)(1); or
(ii) the Secretary has identified a
pattern of overutilization resulting
from the business practice of the
supplier.
(C) Determinations of coverage in advance.--A
carrier shall determine in advance of delivery
of an item whether payment for the item may not
be made because the item is not covered or
because of the application of section
1862(a)(1) if--
(i) the item is included on the list
developed by the Secretary under
subparagraph (A);
(ii) the item is furnished by a
supplier included on the list developed
by the Secretary under subparagraph
(B); or
(iii) the item is a customized item
(other than inexpensive items specified
by the Secretary) and the patient to
whom the item is to be furnished or the
supplier requests that such advance
determination be made.
(16) Disclosure of information and surety bond.--The
Secretary shall not provide for the issuance (or
renewal) of a provider number for a supplier of durable
medical equipment, for purposes of payment under this
part for durable medical equipment furnished by the
supplier, unless the supplier provides the Secretary on
a continuing basis--
(A) with--
(i) full and complete information as
to the identity of each person with an
ownership or control interest (as
defined in section 1124(a)(3)) in the
supplier or in any subcontractor (as
defined by the Secretary in
regulations) in which the supplier
directly or indirectly has a 5 percent
or more ownership interest; and
(ii) to the extent determined to be
feasible under regulations of the
Secretary, the name of any disclosing
entity (as defined in section
1124(a)(2)) with respect to which a
person with such an ownership or
control interest in the supplier is a
person with such an ownership or
control interest in the disclosing
entity; and
(B) with a surety bond in a form specified by
the Secretary and in an amount that is not less
than $50,000 that the Secretary determines is
commensurate with the volume of the billing of
the supplier.
The Secretary may waive the requirement of a bond under
subparagraph (B) in the case of a supplier that
provides a comparable surety bond under State law. The
Secretary, at the Secretary's discretion, may impose
the requirements of the first sentence with respect to
some or all providers of items or services under part A
or some or all suppliers or other persons (other than
physicians or other practitioners, as defined in
section 1842(b)(18)(C)) who furnish items or services
under this part.
(17) Prohibition against unsolicited telephone
contacts by suppliers.--
(A) In general.--A supplier of a covered item
under this subsection may not contact an
individual enrolled under this part by
telephone regarding the furnishing of a covered
item to the individual unless 1 of the
following applies:
(i) The individual has given written
permission to the supplier to make
contact by telephone regarding the
furnishing of a covered item.
(ii) The supplier has furnished a
covered item to the individual and the
supplier is contacting the individual
only regarding the furnishing of such
covered item.
(iii) If the contact is regarding the
furnishing of a covered item other than
a covered item already furnished to the
individual, the supplier has furnished
at least 1 covered item to the
individual during the 15-month period
preceding the date on which the
supplier makes such contact.
(B) Prohibiting payment for items furnished
subsequent to unsolicited contacts.--If a
supplier knowingly contacts an individual in
violation of subparagraph (A), no payment may
be made under this part for any item
subsequently furnished to the individual by the
supplier.
(C) Exclusion from program for suppliers
engaging in pattern of unsolicited contacts.--
If a supplier knowingly contacts individuals in
violation of subparagraph (A) to such an extent
that the supplier's conduct establishes a
pattern of contacts in violation of such
subparagraph, the Secretary shall exclude the
supplier from participation in the programs
under this Act, in accordance with the
procedures set forth in subsections (c), (f),
and (g) of section 1128.
(18) Refund of amounts collected for certain
disallowed items.--
(A) In general.--If a nonparticipating
supplier furnishes to an individual enrolled
under this part a covered item for which no
payment may be made under this part by reason
of paragraph (17)(B), the supplier shall refund
on a timely basis to the patient (and shall be
liable to the patient for) any amounts
collected from the patient for the item,
unless--
(i) the supplier establishes that the
supplier did not know and could not
reasonably have been expected to know
that payment may not be made for the
item by reason of paragraph (17)(B), or
(ii) before the item was furnished,
the patient was informed that payment
under this part may not be made for
that item and the patient has agreed to
pay for that item.
(B) Sanctions.--If a supplier knowingly and
willfully fails to make refunds in violation of
subparagraph (A), the Secretary may apply
sanctions against the supplier in accordance
with section 1842(j)(2).
(C) Notice.--Each carrier with a contract in
effect under this part with respect to
suppliers of covered items shall send any
notice of denial of payment for covered items
by reason of paragraph (17)(B) and for which
payment is not requested on an assignment-
related basis to the supplier and the patient
involved.
(D) Timely basis defined.--A refund under
subparagraph (A) is considered to be on a
timely basis only if--
(i) in the case of a supplier who
does not request reconsideration or
seek appeal on a timely basis, the
refund is made within 30 days after the
date the supplier receives a denial
notice under subparagraph (C), or
(ii) in the case in which such a
reconsideration or appeal is taken, the
refund is made within 15 days after the
date the supplier receives notice of an
adverse determination on
reconsideration or appeal.
(19) Certain upgraded items.--
(A) Individual's right to choose upgraded
item.--Notwithstanding any other provision of
this title, the Secretary may issue regulations
under which an individual may purchase or rent
from a supplier an item of upgraded durable
medical equipment for which payment would be
made under this subsection if the item were a
standard item.
(B) Payments to supplier.--In the case of the
purchase or rental of an upgraded item under
subparagraph (A)--
(i) the supplier shall receive
payment under this subsection with
respect to such item as if such item
were a standard item; and
(ii) the individual purchasing or
renting the item shall pay the supplier
an amount equal to the difference
between the supplier's charge and the
amount under clause (i).
In no event may the supplier's charge for an
upgraded item exceed the applicable fee
schedule amount (if any) for such item.
(C) Consumer protection safeguards.--Any
regulations under subparagraph (A) shall
provide for consumer protection standards with
respect to the furnishing of upgraded equipment
under subparagraph (A). Such regulations shall
provide for--
(i) determination of fair market
prices with respect to an upgraded
item;
(ii) full disclosure of the
availability and price of standard
items and proof of receipt of such
disclosure information by the
beneficiary before the furnishing of
the upgraded item;
(iii) conditions of participation for
suppliers in the billing arrangement;
(iv) sanctions of suppliers who are
determined to engage in coercive or
abusive practices, including exclusion;
and
(v) such other safeguards as the
Secretary determines are necessary.
(20) Identification of quality standards.--
(A) In general.--Subject to subparagraph (C),
the Secretary shall establish and implement
quality standards for suppliers of items and
services described in subparagraph (D) to be
applied by recognized independent accreditation
organizations (as designated under subparagraph
(B)) and with which such suppliers shall be
required to comply in order to--
(i) furnish any such item or service
for which payment is made under this
part; and
(ii) receive or retain a provider or
supplier number used to submit claims
for reimbursement for any such item or
service for which payment may be made
under this title.
(B) Designation of independent accreditation
organizations.--Not later than the date that is
1 year after the date on which the Secretary
implements the quality standards under
subparagraph (A), notwithstanding section
1865(a), the Secretary shall designate and
approve one or more independent accreditation
organizations for purposes of such
subparagraph.
(C) Quality standards.--The quality standards
described in subparagraph (A) may not be less
stringent than the quality standards that would
otherwise apply if this paragraph did not apply
and shall include consumer services standards.
(D) Items and services described.--The items
and services described in this subparagraph are
the following items and services, as the
Secretary determines appropriate:
(i) Covered items (as defined in
paragraph (13)) for which payment may
otherwise be made under this
subsection.
(ii) Prosthetic devices and orthotics
and prosthetics described in section
1834(h)(4).
(iii) Items and services described in
section 1842(s)(2).
(E) Implementation.--The Secretary may
establish by program instruction or otherwise
the quality standards under this paragraph,
including subparagraph (F), after consultation
with representatives of relevant parties. Such
standards shall be applied prospectively and
shall be published on the Internet website of
the Centers for Medicare & Medicaid Services.
(F) Application of accreditation
requirement.--In implementing quality standards
under this paragraph--
(i) subject to clause (ii) and
subparagraph (G), the Secretary shall
require suppliers furnishing items and
services described in subparagraph (D)
on or after October 1, 2009, directly
or as a subcontractor for another
entity, to have submitted to the
Secretary evidence of accreditation by
an accreditation organization
designated under subparagraph (B) as
meeting applicable quality standards,
except that the Secretary shall not
require under this clause pharmacies to
obtain such accreditation before
January 1, 2010, except that the
Secretary shall not require a pharmacy
to have submitted to the Secretary such
evidence of accreditation prior to
January 1, 2011; and
(ii) in applying such standards and
the accreditation requirement of clause
(i) with respect to eligible
professionals (as defined in section
1848(k)(3)(B)), and including such
other persons, such as orthotists and
prosthetists, as specified by the
Secretary, furnishing such items and
services--
(I) such standards and
accreditation requirement shall
not apply to such professionals
and persons unless the
Secretary determines that the
standards being applied are
designed specifically to be
applied to such professionals
and persons; and
(II) the Secretary may exempt
such professionals and persons
from such standards and
requirement if the Secretary
determines that licensing,
accreditation, or other
mandatory quality requirements
apply to such professionals and
persons with respect to the
furnishing of such items and
services.
(G) Application of accreditation requirement
to certain pharmacies.--
(i) In general.--With respect to
items and services furnished on or
after January 1, 2011, in implementing
quality standards under this
paragraph--
(I) subject to subclause
(II), in applying such
standards and the accreditation
requirement of subparagraph
(F)(i) with respect to
pharmacies described in clause
(ii) furnishing such items and
services, such standards and
accreditation requirement shall
not apply to such pharmacies;
and
(II) the Secretary may apply
to such pharmacies an
alternative accreditation
requirement established by the
Secretary if the Secretary
determines such alternative
accreditation requirement is
more appropriate for such
pharmacies.
(ii) Pharmacies described.--A
pharmacy described in this clause is a
pharmacy that meets each of the
following criteria:
(I) The total billings by the
pharmacy for such items and
services under this title are
less than 5 percent of total
pharmacy sales, as determined
based on the average total
pharmacy sales for the previous
3 calendar years, 3 fiscal
years, or other yearly period
specified by the Secretary.
(II) The pharmacy has been
enrolled under section 1866(j)
as a supplier of durable
medical equipment, prosthetics,
orthotics, and supplies, has
been issued (which may include
the renewal of) a provider
number for at least 5 years,
and for which a final adverse
action (as defined in section
424.57(a) of title 42, Code of
Federal Regulations) has not
been imposed in the past 5
years.
(III) The pharmacy submits to
the Secretary an attestation,
in a form and manner, and at a
time, specified by the
Secretary, that the pharmacy
meets the criteria described in
subclauses (I) and (II). Such
attestation shall be subject to
section 1001 of title 18,
United States Code.
(IV) The pharmacy agrees to
submit materials as requested
by the Secretary, or during the
course of an audit conducted on
a random sample of pharmacies
selected annually, to verify
that the pharmacy meets the
criteria described in
subclauses (I) and (II).
Materials submitted under the
preceding sentence shall
include a certification by an
accountant on behalf of the
pharmacy or the submission of
tax returns filed by the
pharmacy during the relevant
periods, as requested by the
Secretary.
(21) Special payment rule for specified items and
supplies.--
(A) In general.--Notwithstanding the
preceding provisions of this subsection, for
specified items and supplies (described in
subparagraph (B)) furnished during 2005, the
payment amount otherwise determined under this
subsection for such specified items and
supplies shall be reduced by the percentage
difference between--
(i) the amount of payment otherwise
determined for the specified item or
supply under this subsection for 2002,
and
(ii) the amount of payment for the
specified item or supply under chapter
89 of title 5, United States Code, as
identified in the column entitled
``Median FEHP Price'' in the table
entitled ``SUMMARY OF MEDICARE PRICES
COMPARED TO VA, MEDICAID, RETAIL, AND
FEHP PRICES FOR 16 ITEMS'' included in
the Testimony of the Inspector General
before the Senate Committee on
Appropriations, June 12, 2002, or any
subsequent report by the Inspector
General.
(B) Specified item or supply described.--For
purposes of subparagraph (A), a specified item
or supply means oxygen and oxygen equipment,
standard wheelchairs (including standard power
wheelchairs), nebulizers, diabetic supplies
consisting of lancets and testing strips,
hospital beds, and air mattresses, but only if
the HCPCS code for the item or supply is
identified in a table referred to in
subparagraph (A)(ii).
(C) Application of update to special payment
amount.--The covered item update under
paragraph (14) for specified items and supplies
for 2006 and each subsequent year shall be
applied to the payment amount under
subparagraph (A) unless payment is made for
such items and supplies under section 1847.
(22) Special payment rule for diabetic supplies.--
Notwithstanding the preceding provisions of this
subsection, for purposes of determining the payment
amount under this subsection for diabetic supplies
furnished on or after the first day of the calendar
quarter during 2013 that is at least 30 days after the
date of the enactment of this paragraph and before the
date described in paragraph (1)(H)(ii), the Secretary
shall recalculate and apply the covered item update
under paragraph (14) as if subparagraph (J)(i) of such
paragraph was amended by striking ``but only if
furnished through mail order''.
(b) Fee Schedules for Radiologist Services.--
(1) Development.--The Secretary shall develop--
(A) a relative value scale to serve as the
basis for the payment for radiologist services
under this part, and
(B) using such scale and appropriate
conversion factors and subject to subsection
(c)(1)(A), fee schedules (on a regional,
statewide, locality, or carrier service area
basis) for payment for radiologist services
under this part, to be implemented for such
services furnished during 1989.
(2) Consultation.--In carrying out paragraph (1), the
Secretary shall regularly consult closely with the
Physician Payment Review Commission, the American
College of Radiology, and other organizations
representing physicians or suppliers who furnish
radiologist services and shall share with them the data
and data analysis being used to make the determinations
under paragraph (1), including data on variations in
current medicare payments by geographic area, and by
service and physician specialty.
(3) Considerations.--In developing the relative value
scale and fee schedules under paragraph (1), the
Secretary--
(A) shall take into consideration variations
in the cost of furnishing such services among
geographic areas and among different sites
where services are furnished, and
(B) may also take into consideration such
other factors respecting the manner in which
physicians in different specialties furnish
such services as may be appropriate to assure
that payment amounts are equitable and designed
to promote effective and efficient provision of
radiologist services by physicians in the
different specialties.
(4) Savings.--
(A) Budget neutral fee schedules.--The
Secretary shall develop preliminary fee
schedules for 1989, which are designed to
result in the same amount of aggregate payments
(net of any coinsurance and deductibles under
sections 1833(a)(1)(J) and 1833(b)) for
radiologist services furnished in 1989 as would
have been made if this subsection had not been
enacted.
(B) Initial savings.--The fee schedules
established for payment purposes under this
subsection for services furnished in 1989 shall
be 97 percent of the amounts permitted under
these preliminary fee schedules developed under
subparagraph (A).
(C) 1990 fee schedules.--For radiologist
services (other than portable X-ray services)
furnished under this part during 1990, after
March 31 of such year, the conversion factors
used under this subsection shall be 96 percent
of the conversion factors that applied under
this subsection as of December 31, 1989.
(D) 1991 fee schedules.--For radiologist
services (other than portable X-ray services)
furnished under this part during 1991, the
conversion factors used in a locality under
this subsection shall, subject to clause (vii),
be reduced to the adjusted conversion factor
for the locality determined as follows:
(i) National weighted average
conversion factor.--The Secretary shall
estimate the national weighted average
of the conversion factors used under
this subsection for services furnished
during 1990 beginning on April 1, using
the best available data.
(ii) Reduced national weighted
average.--The national weighted average
estimated under clause (i) shall be
reduced by 13 percent.
(iii) Computation of 1990 locality
index relative to national average.--
The Secretary shall establish an index
which reflects, for each locality, the
ratio of the conversion factor used in
the locality under this subsection to
the national weighted average estimated
under clause (i).
(iv) Adjusted conversion factor.--The
adjusted conversion factor for the
professional or technical component of
a service in a locality is the sum of
\1/2\ of the locally-adjusted amount
determined under clause (v) and \1/2\
of the GPCI-adjusted amount determined
under clause (vi).
(v) Locally-adjusted amount.--For
purposes of clause (iv), the locally
adjusted amount determined under this
clause is the product of (I) the
national weighted average conversion
factor computed under clause (ii), and
(II) the index value established under
clause (iii) for the locality.
(vi) GPCI-adjusted amount.--For
purposes of clause (iv), the GPCI-
adjusted amount determined under this
clause is the sum of--
(I) the product of (a) the
portion of the reduced national
weighted average conversion
factor computed under clause
(ii) which is attributable to
physician work and (b) the
geographic work index value for
the locality (specified in
Addendum C to the Model Fee
Schedule for Physician Services
(published on September 4,
1990, 55 Federal Register pp.
36238-36243)); and
(II) the product of (a) the
remaining portion of the
reduced national weighted
average conversion factor
computed under clause (ii), and
(b) the geographic practice
cost index value specified in
section 1842(b)(14)(C)(iv) for
the locality.
In applying this clause with respect to
the professional component of a
service, 80 percent of the conversion
factor shall be considered to be
attributable to physician work and with
respect to the technical component of
the service, 0 percent shall be
considered to be attributable to
physician work.
(vii) Limits on conversion factor.--
The conversion factor to be applied to
a locality to the professional or
technical component of a service shall
not be reduced under this subparagraph
by more than 9.5 percent below the
conversion factor applied in the
locality under subparagraph (C) to such
component, but in no case shall the
conversion factor be less than 60
percent of the national weighted
average of the conversion factors
(computed under clause (i)).
(E) Rule for certain scanning services.--In
the case of the technical components of
magnetic resonance imaging (MRI) services and
computer assisted tomography (CAT) services
furnished after December 31, 1990, the amount
otherwise payable shall be reduced by 10
percent.
(F) Subsequent updating.--For radiologist
services furnished in subsequent years, the fee
schedules shall be the schedules for the
previous year updated by the percentage
increase in the MEI (as defined in section
1842(i)(3)) for the year.
(G) Nonparticipating physicians and
suppliers.--Each fee schedule so established
shall provide that the payment rate recognized
for nonparticipating physicians and suppliers
is equal to the appropriate percent (as defined
in section 1842(b)(4)(A)(iv)) of the payment
rate recognized for participating physicians
and suppliers.
(5) Limiting charges of nonparticipating physicians
and suppliers.--
(A) In general.--In the case of radiologist
services furnished after January 1, 1989, for
which payment is made under a fee schedule
under this subsection, if a nonparticipating
physician or supplier furnishes the service to
an individual entitled to benefits under this
part, the physician or supplier may not charge
the individual more than the limiting charge
(as defined in subparagraph (B)).
(B) Limiting charge defined.--In subparagraph
(A), the term ``limiting charge'' means, with
respect to a service furnished--
(i) in 1989, 125 percent of the
amount specified for the service in the
appropriate fee schedule established
under paragraph (1),
(ii) in 1990, 120 percent of the
amount specified for the service in the
appropriate fee schedule established
under paragraph (1), and
(iii) after 1990, 115 percent of the
amount specified for the service in the
appropriate fee schedule established
under paragraph (1).
(C) Enforcement.--If a physician or supplier
knowingly and willfully bills in violation of
subparagraph (A), the Secretary may apply
sanctions against such physician or supplier in
accordance with section 1842(j)(2) in the same
manner as such sanctions may apply to a
physician.
(6) Radiologist services defined.--For the purposes
of this subsection and section 1833(a)(1)(J), the term
``radiologist services'' only includes radiology
services performed by, or under the direction or
supervision of, a physician--
(A) who is certified, or eligible to be
certified, by the American Board of Radiology,
or
(B) for whom radiology services account for
at least 50 percent of the total amount of
charges made under this part.
(c) Payment and Standards for Screening Mammography.--
(1) In general.--With respect to expenses incurred
for screening mammography (as defined in section
1861(jj)), payment may be made only--
(A) for screening mammography conducted
consistent with the frequency permitted under
paragraph (2); and
(B) if the screening mammography is conducted
by a facility that has a certificate (or
provisional certificate) issued under section
354 of the Public Health Service Act.
(2) Frequency covered.--
(A) In general.--Subject to revision by the
Secretary under subparagraph (B)--
(i) no payment may be made under this
part for screening mammography
performed on a woman under 35 years of
age;
(ii) payment may be made under this
part for only one screening mammography
performed on a woman over 34 years of
age, but under 40 years of age; and
(iii) in the case of a woman over 39
years of age, payment may not be made
under this part for screening
mammography performed within 11 months
following the month in which a previous
screening mammography was performed.
(B) Revision of frequency.--
(i) Review.--The Secretary, in
consultation with the Director of the
National Cancer Institute, shall review
periodically the appropriate frequency
for performing screening mammography,
based on age and such other factors as
the Secretary believes to be pertinent.
(ii) Revision of frequency.--The
Secretary, taking into consideration
the review made under clause (i), may
revise from time to time the frequency
with which screening mammography may be
paid for under this subsection.
(d) Frequency Limits and Payment for Colorectal Cancer
Screening Tests.--
(1) Screening fecal-occult blood tests.--
(A) Payment amount.--The payment amount for
colorectal cancer screening tests consisting of
screening fecal-occult blood tests is equal to
the payment amount established for diagnostic
fecal-occult blood tests under section 1833(h).
(B) Frequency limit.--No payment may be made
under this part for a colorectal cancer
screening test consisting of a screening fecal-
occult blood test--
(i) if the individual is under 50
years of age; or
(ii) if the test is performed within
the 11 months after a previous
screening fecal-occult blood test.
(2) Screening flexible sigmoidoscopies.--
(A) Fee schedule.--With respect to colorectal
cancer screening tests consisting of screening
flexible sigmoidoscopies, payment under section
1848 shall be consistent with payment under
such section for similar or related services.
(B) Payment limit.--In the case of screening
flexible sigmoidoscopy services, payment under
this part shall not exceed such amount as the
Secretary specifies, based upon the rates
recognized for diagnostic flexible
sigmoidoscopy services.
(C) Facility payment limit.--
(i) In general.--Notwithstanding
subsections (i)(2)(A) and (t) of
section 1833, in the case of screening
flexible sigmoidoscopy services
furnished on or after January 1, 1999,
that--
(I) in accordance with
regulations, may be performed
in an ambulatory surgical
center and for which the
Secretary permits ambulatory
surgical center payments under
this part, and
(II) are performed in an
ambulatory surgical center or
hospital outpatient department,
payment under this part shall be based
on the lesser of the amount under the
fee schedule that would apply to such
services if they were performed in a
hospital outpatient department in an
area or the amount under the fee
schedule that would apply to such
services if they were performed in an
ambulatory surgical center in the same
area.
(ii) Limitation on coinsurance.--
Notwithstanding any other provision of
this title, in the case of a
beneficiary who receives the services
described in clause (i)--
(I) in computing the amount
of any applicable copayment,
the computation of such
coinsurance shall be based upon
the fee schedule under which
payment is made for the
services, and
(II) the amount of such
coinsurance is equal to 25
percent of the payment amount
under the fee schedule
described in subclause (I).
(D) Special rule for detected lesions.--If
during the course of such screening flexible
sigmoidoscopy, a lesion or growth is detected
which results in a biopsy or removal of the
lesion or growth, payment under this part shall
not be made for the screening flexible
sigmoidoscopy but shall be made for the
procedure classified as a flexible
sigmoidoscopy with such biopsy or removal.
(E) Frequency limit.--No payment may be made
under this part for a colorectal cancer
screening test consisting of a screening
flexible sigmoidoscopy--
(i) if the individual is under 50
years of age; or
(ii) if the procedure is performed
within the 47 months after a previous
screening flexible sigmoidoscopy or, in
the case of an individual who is not at
high risk for colorectal cancer, if the
procedure is performed within the 119
months after a previous screening
colonoscopy.
(3) Screening colonoscopy.--
(A) Fee schedule.--With respect to colorectal
cancer screening test consisting of a screening
colonoscopy, payment under section 1848 shall
be consistent with payment amounts under such
section for similar or related services.
(B) Payment limit.--In the case of screening
colonoscopy services, payment under this part
shall not exceed such amount as the Secretary
specifies, based upon the rates recognized for
diagnostic colonoscopy services.
(C) Facility payment limit.--
(i) In general.--Notwithstanding
subsections (i)(2)(A) and (t) of
section 1833, in the case of screening
colonoscopy services furnished on or
after January 1, 1999, that are
performed in an ambulatory surgical
center or a hospital outpatient
department, payment under this part
shall be based on the lesser of the
amount under the fee schedule that
would apply to such services if they
were performed in a hospital outpatient
department in an area or the amount
under the fee schedule that would apply
to such services if they were performed
in an ambulatory surgical center in the
same area.
(ii) Limitation on coinsurance.--
Notwithstanding any other provision of
this title, in the case of a
beneficiary who receives the services
described in clause (i)--
(I) in computing the amount
of any applicable coinsurance,
the computation of such
coinsurance shall be based upon
the fee schedule under which
payment is made for the
services, and
(II) the amount of such
coinsurance is equal to 25
percent of the payment amount
under the fee schedule
described in subclause (I).
(D) Special rule for detected lesions.--If
during the course of such screening
colonoscopy, a lesion or growth is detected
which results in a biopsy or removal of the
lesion or growth, payment under this part shall
not be made for the screening colonoscopy but
shall be made for the procedure classified as a
colonoscopy with such biopsy or removal.
(E) Frequency limit.--No payment may be made
under this part for a colorectal cancer
screening test consisting of a screening
colonoscopy for individuals at high risk for
colorectal cancer if the procedure is performed
within the 23 months after a previous screening
colonoscopy or for other individuals if the
procedure is performed within the 119 months
after a previous screening colonoscopy or
within 47 months after a previous screening
flexible sigmoidoscopy.
(e) Accreditation Requirement for Advanced Diagnostic Imaging
Services.--
(1) In general.--
(A) In general.--Beginning with January 1,
2012, with respect to the technical component
of advanced diagnostic imaging services for
which payment is made under the fee schedule
established under section 1848(b) and that are
furnished by a supplier, payment may only be
made if such supplier is accredited by an
accreditation organization designated by the
Secretary under paragraph (2)(B)(i).
(B) Advanced diagnostic imaging services
defined.--In this subsection, the term
``advanced diagnostic imaging services''
includes--
(i) diagnostic magnetic resonance
imaging, computed tomography, and
nuclear medicine (including positron
emission tomography); and
(ii) such other diagnostic imaging
services, including services described
in section 1848(b)(4)(B) (excluding X-
ray, ultrasound, and fluoroscopy), as
specified by the Secretary in
consultation with physician specialty
organizations and other stakeholders.
(C) Supplier defined.--In this subsection,
the term ``supplier'' has the meaning given
such term in section 1861(d).
(2) Accreditation organizations.--
(A) Factors for designation of accreditation
organizations.--The Secretary shall consider
the following factors in designating
accreditation organizations under subparagraph
(B)(i) and in reviewing and modifying the list
of accreditation organizations designated
pursuant to subparagraph (C):
(i) The ability of the organization
to conduct timely reviews of
accreditation applications.
(ii) Whether the organization has
established a process for the timely
integration of new advanced diagnostic
imaging services into the
organization's accreditation program.
(iii) Whether the organization uses
random site visits, site audits, or
other strategies for ensuring
accredited suppliers maintain adherence
to the criteria described in paragraph
(3).
(iv) The ability of the organization
to take into account the capacities of
suppliers located in a rural area (as
defined in section 1886(d)(2)(D)).
(v) Whether the organization has
established reasonable fees to be
charged to suppliers applying for
accreditation.
(vi) Such other factors as the
Secretary determines appropriate.
(B) Designation.--Not later than January 1,
2010, the Secretary shall designate
organizations to accredit suppliers furnishing
the technical component of advanced diagnostic
imaging services. The list of accreditation
organizations so designated may be modified
pursuant to subparagraph (C).
(C) Review and modification of list of
accreditation organizations.--
(i) In general.--The Secretary shall
review the list of accreditation
organizations designated under
subparagraph (B) taking into account
the factors under subparagraph (A).
Taking into account the results of such
review, the Secretary may, by
regulation, modify the list of
accreditation organizations designated
under subparagraph (B).
(ii) Special rule for accreditations
done prior to removal from list of
designated accreditation
organizations.--In the case where the
Secretary removes an organization from
the list of accreditation organizations
designated under subparagraph (B), any
supplier that is accredited by the
organization during the period
beginning on the date on which the
organization is designated as an
accreditation organization under
subparagraph (B) and ending on the date
on which the organization is removed
from such list shall be considered to
have been accredited by an organization
designated by the Secretary under
subparagraph (B) for the remaining
period such accreditation is in effect.
(3) Criteria for accreditation.--The Secretary shall
establish procedures to ensure that the criteria used
by an accreditation organization designated under
paragraph (2)(B) to evaluate a supplier that furnishes
the technical component of advanced diagnostic imaging
services for the purpose of accreditation of such
supplier is specific to each imaging modality. Such
criteria shall include--
(A) standards for qualifications of medical
personnel who are not physicians and who
furnish the technical component of advanced
diagnostic imaging services;
(B) standards for qualifications and
responsibilities of medical directors and
supervising physicians, including standards
that recognize the considerations described in
paragraph (4);
(C) procedures to ensure that equipment used
in furnishing the technical component of
advanced diagnostic imaging services meets
performance specifications;
(D) standards that require the supplier have
procedures in place to ensure the safety of
persons who furnish the technical component of
advanced diagnostic imaging services and
individuals to whom such services are
furnished;
(E) standards that require the establishment
and maintenance of a quality assurance and
quality control program by the supplier that is
adequate and appropriate to ensure the
reliability, clarity, and accuracy of the
technical quality of diagnostic images produced
by such supplier; and
(F) any other standards or procedures the
Secretary determines appropriate.
(4) Recognition in standards for the evaluation of
medical directors and supervising physicians.--The
standards described in paragraph (3)(B) shall recognize
whether a medical director or supervising physician--
(A) in a particular specialty receives
training in advanced diagnostic imaging
services in a residency program;
(B) has attained, through experience, the
necessary expertise to be a medical director or
a supervising physician;
(C) has completed any continuing medical
education courses relating to such services; or
(D) has met such other standards as the
Secretary determines appropriate.
(5) Rule for accreditations made prior to
designation.--In the case of a supplier that is
accredited before January 1, 2010, by an accreditation
organization designated by the Secretary under
paragraph (2)(B) as of January 1, 2010, such supplier
shall be considered to have been accredited by an
organization designated by the Secretary under such
paragraph as of January 1, 2012, for the remaining
period such accreditation is in effect.
(f) Reduction in Payments for Physician Pathology Services
During 1991.--
(1) In general.--For physician pathology services
furnished under this part during 1991, the prevailing
charges used in a locality under this part shall be 7
percent below the prevailing charges used in the
locality under this part in 1990 after March 31.
(2) Limitation.--The prevailing charge for the
technical and professional components of an physician
pathology service furnished by a physician through an
independent laboratory shall not be reduced pursuant to
paragraph (1) to the extent that such reduction would
reduce such prevailing charge below 115 percent of the
prevailing charge for the professional component of
such service when furnished by a hospital-based
physician in the same locality. For purposes of the
preceding sentence, an independent laboratory is a
laboratory that is independent of a hospital and
separate from the attending or consulting physicians'
office.
(g) Payment for Outpatient Critical Access Hospital
Services.--
(1) In general.--The amount of payment for outpatient
critical access hospital services of a critical access
hospital is equal to 101 percent of the reasonable
costs of the hospital in providing such services,
unless the hospital makes the election under paragraph
(2).
(2) Election of cost-based hospital outpatient
service payment plus fee schedule for professional
services.--A critical access hospital may elect to be
paid for outpatient critical access hospital services
amounts equal to the sum of the following, less the
amount that such hospital may charge as described in
section 1866(a)(2)(A):
(A) Facility fee.--With respect to facility
services, not including any services for which
payment may be made under subparagraph (B), 101
percent of the reasonable costs of the critical
access hospital in providing such services.
(B) Fee schedule for professional services.--
With respect to professional services otherwise
included within outpatient critical access
hospital services, 115 percent of such amounts
as would otherwise be paid under this part if
such services were not included in outpatient
critical access hospital services. Subsections
(x) and (y) of section 1833 shall not be taken
into account in determining the amounts that
would otherwise be paid pursuant to the
preceding sentence.
The Secretary may not require, as a condition for
applying subparagraph (B) with respect to a critical
access hospital, that each physician or other
practitioner providing professional services in the
hospital must assign billing rights with respect to
such services, except that such subparagraph shall not
apply to those physicians and practitioners who have
not assigned such billing rights.
(3) Disregarding charges.--The payment amounts under
this subsection shall be determined without regard to
the amount of the customary or other charge.
(4) Treatment of clinical diagnostic laboratory
services.--No coinsurance, deductible, copayment, or
other cost-sharing otherwise applicable under this part
shall apply with respect to clinical diagnostic
laboratory services furnished as an outpatient critical
access hospital service. Nothing in this title shall be
construed as providing for payment for clinical
diagnostic laboratory services furnished as part of
outpatient critical access hospital services, other
than on the basis described in this subsection. For
purposes of the preceding sentence and section
1861(mm)(3), clinical diagnostic laboratory services
furnished by a critical access hospital shall be
treated as being furnished as part of outpatient
critical access services without regard to whether the
individual with respect to whom such services are
furnished is physically present in the critical access
hospital, or in a skilled nursing facility or a clinic
(including a rural health clinic) that is operated by a
critical access hospital, at the time the specimen is
collected.
(5) Coverage of costs for certain emergency room on-
call providers.--In determining the reasonable costs of
outpatient critical access hospital services under
paragraphs (1) and (2)(A), the Secretary shall
recognize as allowable costs, amounts (as defined by
the Secretary) for reasonable compensation and related
costs for physicians, physician assistants, nurse
practitioners, and clinical nurse specialists who are
on-call (as defined by the Secretary) to provide
emergency services but who are not present on the
premises of the critical access hospital involved, and
are not otherwise furnishing services covered under
this title and are not on-call at any other provider or
facility.
(h) Payment for Prosthetic Devices and Orthotics and
Prosthetics.--
(1) General rule for payment.--
(A) In general.--Payment under this
subsection for prosthetic devices and orthotics
and prosthetics shall be made in a lump-sum
amount for the purchase of the item in an
amount equal to 80 percent of the payment basis
described in subparagraph (B).
(B) Payment basis.--Except as provided in
subparagraphs (C), (E), and (H)(i), the payment
basis described in this subparagraph is the
lesser of--
(i) the actual charge for the item;
or
(ii) the amount recognized under
paragraph (2) as the purchase price for
the item.
(C) Exception for certain public home health
agencies.--Subparagraph (B)(i) shall not apply
to an item furnished by a public home health
agency (or by another home health agency which
demonstrates to the satisfaction of the
Secretary that a significant portion of its
patients are low income) free of charge or at
nominal charges to the public.
(D) Exclusive payment rule.--Subject to
subparagraph (H)(ii), this subsection shall
constitute the exclusive provision of this
title for payment for prosthetic devices,
orthotics, and prosthetics under this part or
under part A to a home health agency.
(E) Exception for certain items.--Payment for
ostomy supplies, tracheostomy supplies, and
urologicals shall be made in accordance with
subparagraphs (B) and (C) of section
1834(a)(2).
(F) Special payment rules for certain
prosthetics and custom-fabricated orthotics.--
(i) In general.--No payment shall be
made under this subsection for an item
of custom-fabricated orthotics
described in clause (ii) or for an item
of prosthetics unless such item is--
(I) furnished by a qualified
practitioner; and
(II) fabricated by a
qualified practitioner or a
qualified supplier at a
facility that meets such
criteria as the Secretary
determines appropriate.
(ii) Description of custom-fabricated
item.--
(I) In general.--An item
described in this clause is an
item of custom-fabricated
orthotics that requires
education, training, and
experience to custom-fabricate
and that is included in a list
established by the Secretary in
subclause (II). Such an item
does not include shoes and shoe
inserts.
(II) List of items.--The
Secretary, in consultation with
appropriate experts in
orthotics (including national
organizations representing
manufacturers of orthotics),
shall establish and update as
appropriate a list of items to
which this subparagraph
applies. No item may be
included in such list unless
the item is individually
fabricated for the patient over
a positive model of the
patient.
(iii) Qualified practitioner
defined.--In this subparagraph, the
term ``qualified practitioner'' means a
physician or other individual who--
(I) is a qualified physical
therapist or a qualified
occupational therapist;
(II) in the case of a State
that provides for the licensing
of orthotics and prosthetics,
is licensed in orthotics or
prosthetics by the State in
which the item is supplied; or
(III) in the case of a State
that does not provide for the
licensing of orthotics and
prosthetics, is specifically
trained and educated to provide
or manage the provision of
prosthetics and custom-designed
or -fabricated orthotics, and
is certified by the American
Board for Certification in
Orthotics and Prosthetics, Inc.
or by the Board for Orthotist/
Prosthetist Certification, or
is credentialed and approved by
a program that the Secretary
determines, in consultation
with appropriate experts in
orthotics and prosthetics, has
training and education
standards that are necessary to
provide such prosthetics and
orthotics.
(iv) Qualified supplier defined.--In
this subparagraph, the term ``qualified
supplier'' means any entity that is
accredited by the American Board for
Certification in Orthotics and
Prosthetics, Inc. or by the Board for
Orthotist/Prosthetist Certification, or
accredited and approved by a program
that the Secretary determines has
accreditation and approval standards
that are essentially equivalent to
those of such Board.
(G) Replacement of prosthetic devices and
parts.--
(i) In general.--Payment shall be
made for the replacement of prosthetic
devices which are artificial limbs, or
for the replacement of any part of such
devices, without regard to continuous
use or useful lifetime restrictions if
an ordering physician determines that
the provision of a replacement device,
or a replacement part of such a device,
is necessary because of any of the
following:
(I) A change in the
physiological condition of the
patient.
(II) An irreparable change in
the condition of the device, or
in a part of the device.
(III) The condition of the
device, or the part of the
device, requires repairs and
the cost of such repairs would
be more than 60 percent of the
cost of a replacement device,
or, as the case may be, of the
part being replaced.
(ii) Confirmation may be required if
device or part being replaced is less
than 3 years old.--If a physician
determines that a replacement device,
or a replacement part, is necessary
pursuant to clause (i)--
(I) such determination shall
be controlling; and
(II) such replacement device
or part shall be deemed to be
reasonable and necessary for
purposes of section
1862(a)(1)(A);
except that if the device, or part,
being replaced is less than 3 years old
(calculated from the date on which the
beneficiary began to use the device or
part), the Secretary may also require
confirmation of necessity of the
replacement device or replacement part,
as the case may be.
(H) Application of competitive acquisition to
orthotics; limitation of inherent
reasonableness authority.--In the case of
orthotics described in paragraph (2)(C) of
section 1847(a) furnished on or after January
1, 2009, subject to subsection (a)(1)(G), that
are included in a competitive acquisition
program in a competitive acquisition area under
such section--
(i) the payment basis under this
subsection for such orthotics furnished
in such area shall be the payment basis
determined under such competitive
acquisition program; and
(ii) subject to subsection (a)(1)(G),
the Secretary may use information on
the payment determined under such
competitive acquisition programs to
adjust the payment amount otherwise
recognized under subparagraph (B)(ii)
for an area that is not a competitive
acquisition area under section 1847,
and in the case of such adjustment,
paragraphs (8) and (9) of section
1842(b) shall not be applied.
(2) Purchase price recognized.--For purposes of
paragraph (1), the amount that is recognized under this
paragraph as the purchase price for prosthetic devices,
orthotics, and prosthetics is the amount described in
subparagraph (C) of this paragraph, determined as
follows:
(A) Computation of local purchase price.--
Each carrier under section 1842 shall compute a
base local purchase price for the item as
follows:
(i) The carrier shall compute a base
local purchase price for each item
equal to the average reasonable charge
in the locality for the purchase of the
item for the 12-month period ending
with June 1987.
(ii) The carrier shall compute a
local purchase price, with respect to
the furnishing of each particular
item--
(I) in 1989 and 1990, equal
to the base local purchase
price computed under clause (i)
increased by the percentage
increase in the consumer price
index for all urban consumers
(United States city average)
for the 6-month period ending
with December 1987, or
(II) in 1991, 1992 or 1993,
equal to the local purchase
price computed under this
clause for the previous year
increased by the applicable
percentage increase for the
year.
(B) Computation of regional purchase price.--
With respect to the furnishing of a particular
item in each region (as defined by the
Secretary), the Secretary shall compute a
regional purchase price--
(i) for 1992, equal to the average
(weighted by relative volume of all
claims among carriers) of the local
purchase prices for the carriers in the
region computed under subparagraph
(A)(ii)(II) for the year, and
(ii) for each subsequent year, equal
to the regional purchase price computed
under this subparagraph for the
previous year increased by the
applicable percentage increase for the
year.
(C) Purchase price recognized.--For purposes
of paragraph (1) and subject to subparagraph
(D), the amount that is recognized under this
paragraph as the purchase price for each item
furnished--
(i) in 1989, 1990, or 1991, is 100
percent of the local purchase price
computed under subparagraph (A)(ii);
(ii) in 1992, is the sum of (I) 75
percent of the local purchase price
computed under subparagraph (A)(ii)(II)
for 1992, and (II) 25 percent of the
regional purchase price computed under
subparagraph (B) for 1992;
(iii) in 1993, is the sum of (I) 50
percent of the local purchase price
computed under subparagraph (A)(ii)(II)
for 1993, and (II) 50 percent of the
regional purchase price computed under
subparagraph (B) for 1993; and
(iv) in 1994 or a subsequent year, is
the regional purchase price computed
under subparagraph (B) for that year.
(D) Range on amount recognized.--The amount
that is recognized under subparagraph (C) as
the purchase price for an item furnished--
(i) in 1992, may not exceed 125
percent, and may not be lower than 85
percent, of the average of the purchase
prices recognized under such
subparagraph for all the carrier
service areas in the United States in
that year; and
(ii) in a subsequent year, may not
exceed 120 percent, and may not be
lower than 90 percent, of the average
of the purchase prices recognized under
such subparagraph for all the carrier
service areas in the United States in
that year.
(3) Applicability of certain provisions relating to
durable medical equipment.--Paragraphs (12) and (17)
and subparagraphs (A) and (B) of paragraph (10) and
paragraph (11) of subsection (a) shall apply to
prosthetic devices, orthotics, and prosthetics in the
same manner as such provisions apply to covered items
under such subsection.
(4) Definitions.--In this subsection--
(A) the term ``applicable percentage
increase'' means--
(i) for 1991, 0 percent;
(ii) for 1992 and 1993, the
percentage increase in the consumer
price index for all urban consumers
(United States city average) for the
12-month period ending with June of the
previous year;
(iii) for 1994 and 1995, 0 percent;
(iv) for 1996 and 1997, the
percentage increase in the consumer
price index for all urban consumers
(United States city average) for the
12-month period ending with June of the
previous year;
(v) for each of the years 1998
through 2000, 1 percent;
(vi) for 2001, the percentage
increase in the consumer price index
for all urban consumers (U.S. city
average) for the 12-month period ending
with June 2000;
(vii) for 2002, 1 percent;
(viii) for 2003, the percentage
increase in the consumer price index
for all urban consumers (United States
city average) for the 12-month period
ending with June of the previous year;
(ix) for 2004, 2005, and 2006, 0
percent;
(x) for for each of 2007 through
2010, the percentage increase in the
consumer price index for all urban
consumers (United States city average)
for the 12-month period ending with
June of the previous year; and
(xi) for 2011 and each subsequent
year--
(I) the percentage increase
in the consumer price index for
all urban consumers (United
States city average) for the
12-month period ending with
June of the previous year,
reduced by--
(II) the productivity
adjustment described in section
1886(b)(3)(B)(xi)(II).
(B) the term ``prosthetic devices'' has the
meaning given such term in section 1861(s)(8),
except that such term does not include
parenteral and enteral nutrition nutrients,
supplies, and equipment and does not include an
implantable item for which payment may be made
under section 1833(t); and
(C) the term ``orthotics and prosthetics''
has the meaning given such term in section
1861(s)(9) (and includes shoes described in
section 1861(s)(12)), but does not include
intraocular lenses or medical supplies
(including catheters, catheter supplies, ostomy
bags, and supplies related to ostomy care)
furnished by a home health agency under section
1861(m)(5).
The application of subparagraph (A)(xi)(II) may result
in the applicable percentage increase under
subparagraph (A) being less than 0.0 for a year, and
may result in payment rates under this subsection for a
year being less than such payment rates for the
preceding year.
(5) Documentation created by orthotists and
prosthetists.--For purposes of determining the
reasonableness and medical necessity of orthotics and
prosthetics, documentation created by an orthotist or
prosthetist shall be considered part of the
individual's medical record to support documentation
created by eligible professionals described in section
1848(k)(3)(B).
(i) Payment for Surgical Dressings.--
(1) In general.--Payment under this subsection for
surgical dressings (described in section 1861(s)(5))
shall be made in a lump sum amount for the purchase of
the item in an amount equal to 80 percent of the lesser
of--
(A) the actual charge for the item; or
(B) a payment amount determined in accordance
with the methodology described in subparagraphs
(B) and (C) of subsection (a)(2) (except that
in applying such methodology, the national
limited payment amount referred to in such
subparagraphs shall be initially computed based
on local payment amounts using average
reasonable charges for the 12-month period
ending December 31, 1992, increased by the
covered item updates described in such
subsection for 1993 and 1994).
(2) Exceptions.--Paragraph (1) shall not apply to
surgical dressings that are--
(A) furnished as an incident to a physician's
professional service; or
(B) furnished by a home health agency.
(j) Requirements for Suppliers of Medical Equipment and
Supplies.--
(1) Issuance and renewal of supplier number.--
(A) Payment.--Except as provided in
subparagraph (C), no payment may be made under
this part after the date of the enactment of
the Social Security Act Amendments of 1994 for
items furnished by a supplier of medical
equipment and supplies unless such supplier
obtains (and renews at such intervals as the
Secretary may require) a supplier number.
(B) Standards for possessing a supplier
number.--A supplier may not obtain a supplier
number unless--
(i) for medical equipment and
supplies furnished on or after the date
of the enactment of the Social Security
Act Amendments of 1994 and before
January 1, 1996, the supplier meets
standards prescribed by the Secretary
in regulations issued on June 18, 1992;
and
(ii) for medical equipment and
supplies furnished on or after January
1, 1996, the supplier meets revised
standards prescribed by the Secretary
(in consultation with representatives
of suppliers of medical equipment and
supplies, carriers, and consumers) that
shall include requirements that the
supplier--
(I) comply with all
applicable State and Federal
licensure and regulatory
requirements;
(II) maintain a physical
facility on an appropriate
site;
(III) have proof of
appropriate liability
insurance; and
(IV) meet such other
requirements as the Secretary
may specify.
(C) Exception for items furnished as incident
to a physician's service.--Subparagraph (A)
shall not apply with respect to medical
equipment and supplies furnished incident to a
physician's service.
(D) Prohibition against multiple supplier
numbers.--The Secretary may not issue more than
one supplier number to any supplier of medical
equipment and supplies unless the issuance of
more than one number is appropriate to identify
subsidiary or regional entities under the
supplier's ownership or control.
(E) Prohibition against delegation of
supplier determinations.--The Secretary may not
delegate (other than by contract under section
1842) the responsibility to determine whether
suppliers meet the standards necessary to
obtain a supplier number.
(2) Certificates of medical necessity.--
(A) Limitation on information provided by
suppliers on certificates of medical
necessity.--
(i) In general.--Effective 60 days
after the date of the enactment of the
Social Security Act Amendments of 1994,
a supplier of medical equipment and
supplies may distribute to physicians,
or to individuals entitled to benefits
under this part, a certificate of
medical necessity for commercial
purposes which contains no more than
the following information completed by
the supplier:
(I) An identification of the
supplier and the beneficiary to
whom such medical equipment and
supplies are furnished.
(II) A description of such
medical equipment and supplies.
(III) Any product code
identifying such medical
equipment and supplies.
(IV) Any other administrative
information (other than
information relating to the
beneficiary's medical
condition) identified by the
Secretary.
(ii) Information on payment amount
and charges.--If a supplier distributes
a certificate of medical necessity
containing any of the information
permitted to be supplied under clause
(i), the supplier shall also list on
the certificate of medical necessity
the fee schedule amount and the
supplier's charge for the medical
equipment or supplies being furnished
prior to distribution of such
certificate to the physician.
(iii) Penalty.--Any supplier of
medical equipment and supplies who
knowingly and willfully distributes a
certificate of medical necessity in
violation of clause (i) or fails to
provide the information required under
clause (ii) is subject to a civil money
penalty in an amount not to exceed
$1,000 for each such certificate of
medical necessity so distributed. The
provisions of section 1128A (other than
subsections (a) and (b)) shall apply to
civil money penalties under this
subparagraph in the same manner as they
apply to a penalty or proceeding under
section 1128A(a).
(B) Definition.--For purposes of this
paragraph, the term ``certificate of medical
necessity'' means a form or other document
containing information required by the carrier
to be submitted to show that an item is
reasonable and necessary for the diagnosis or
treatment of illness or injury or to improve
the functioning of a malformed body member.
(3) Coverage and review criteria.--The Secretary
shall annually review the coverage and utilization of
items of medical equipment and supplies to determine
whether such items should be made subject to coverage
and utilization review criteria, and if appropriate,
shall develop and apply such criteria to such items.
(4) Limitation on patient liability.--If a supplier
of medical equipment and supplies (as defined in
paragraph (5))--
(A) furnishes an item or service to a
beneficiary for which no payment may be made by
reason of paragraph (1);
(B) furnishes an item or service to a
beneficiary for which payment is denied in
advance under subsection (a)(15); or
(C) furnishes an item or service to a
beneficiary for which payment is denied under
section 1862(a)(1);
any expenses incurred for items and services furnished
to an individual by such a supplier not on an assigned
basis shall be the responsibility of such supplier. The
individual shall have no financial responsibility for
such expenses and the supplier shall refund on a timely
basis to the individual (and shall be liable to the
individual for) any amounts collected from the
individual for such items or services. The provisions
of subsection (a)(18) shall apply to refunds required
under the previous sentence in the same manner as such
provisions apply to refunds under such subsection.
(5) Definition.--The term ``medical equipment and
supplies'' means--
(A) durable medical equipment (as defined in
section 1861(n));
(B) prosthetic devices (as described in
section 1861(s)(8));
(C) orthotics and prosthetics (as described
in section 1861(s)(9));
(D) surgical dressings (as described in
section 1861(s)(5));
(E) such other items as the Secretary may
determine; and
(F) for purposes of paragraphs (1) and (3)--
(i) home dialysis supplies and
equipment (as described in section
1861(s)(2)(F)),
(ii) immunosuppressive drugs (as
described in section 1861(s)(2)(J)),
(iii) therapeutic shoes for diabetics
(as described in section 1861(s)(12)),
(iv) oral drugs prescribed for use as
an anticancer therapeutic agent (as
described in section 1861(s)(2)(Q)),
and
(v) self-administered erythropoetin
(as described in section
1861(s)(2)(P)).
(k) Payment for Outpatient Therapy Services and Comprehensive
Outpatient Rehabilitation Services.--
(1) In general.--With respect to services described
in section 1833(a)(8) or 1833(a)(9) for which payment
is determined under this subsection, the payment basis
shall be--
(A) for services furnished during 1998, the
amount determined under paragraph (2); or
(B) for services furnished during a
subsequent year, 80 percent of the lesser of--
(i) the actual charge for the
services, or
(ii) the applicable fee schedule
amount (as defined in paragraph (3))
for the services.
(2) Payment in 1998 based upon adjusted reasonable
costs.--The amount under this paragraph for services is
the lesser of--
(A) the charges imposed for the services, or
(B) the adjusted reasonable costs (as defined
in paragraph (4)) for the services,
less 20 percent of the amount of the charges imposed
for such services.
(3) Applicable fee schedule amount.--In this
subsection, the term ``applicable fee schedule amount''
means, with respect to services furnished in a year,
the amount determined under the fee schedule
established under section 1848 for such services
furnished during the year or, if there is no such fee
schedule established for such services, the amount
determined under the fee schedule established for such
comparable services as the Secretary specifies.
(4) Adjusted reasonable costs.--In paragraph (2), the
term ``adjusted reasonable costs'' means, with respect
to any services, reasonable costs determined for such
services, reduced by 10 percent. The 10-percent
reduction shall not apply to services described in
section 1833(a)(8)(B) (relating to services provided by
hospitals).
(5) Uniform coding.--For claims for services
submitted on or after April 1, 1998, for which the
amount of payment is determined under this subsection,
the claim shall include a code (or codes) under a
uniform coding system specified by the Secretary that
identifies the services furnished.
(6) Restraint on billing.--The provisions of
subparagraphs (A) and (B) of section 1842(b)(18) shall
apply to therapy services for which payment is made
under this subsection in the same manner as they apply
to services provided by a practitioner described in
section 1842(b)(18)(C).
(7) Adjustment in discount for certain multiple
therapy services.--In the case of therapy services
furnished on or after April 1, 2013, and for which
payment is made under this subsection pursuant to the
applicable fee schedule amount (as defined in paragraph
(3)), instead of the 25 percent multiple procedure
payment reduction specified in the final rule published
by the Secretary in the Federal Register on November
29, 2010, the reduction percentage shall be 50 percent.
(l) Establishment of Fee Schedule for Ambulance Services.--
(1) In general.--The Secretary shall establish a fee
schedule for payment for ambulance services whether
provided directly by a supplier or provider or under
arrangement with a provider under this part through a
negotiated rulemaking process described in title 5,
United States Code, and in accordance with the
requirements of this subsection.
(2) Considerations.--In establishing such fee
schedule, the Secretary shall--
(A) establish mechanisms to control increases
in expenditures for ambulance services under
this part;
(B) establish definitions for ambulance
services which link payments to the type of
services provided;
(C) consider appropriate regional and
operational differences;
(D) consider adjustments to payment rates to
account for inflation and other relevant
factors; and
(E) phase in the application of the payment
rates under the fee schedule in an efficient
and fair manner consistent with paragraph (11),
except that such phase-in shall provide for
full payment of any national mileage rate for
ambulance services provided by suppliers that
are paid by carriers in any of the 50 States
where payment by a carrier for such services
for all such suppliers in such State did not,
prior to the implementation of the fee
schedule, include a separate amount for all
mileage within the
