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SEC. 5. TREATMENT OF NEW MEDICAL TECHNOLOGIES UNDER MEDICARE OPD PPS.

(a) TEMPORARY EXCLUSION OF CERTAIN MEDICAL TECHNOLOGIES-

(1) IN GENERAL- Section 1833(t)(1) of the Social Security Act (42 U.S.C. 1395l(t)(1)) is amended--

(A) in subparagraph (B)(iii)--

(i) by inserting `(I)' after `include';

(ii) by striking `or ambulance services' and inserting `, (II) ambulance services'; and

(iii) by striking `1834(l).' and inserting `1834(l), or (III) for the time period specified in clause (ii) of subparagraph (C), the medical technologies described in clause (i) of such subparagraph, except that this subclause shall not be construed to constitute the sole basis on which any such medical technologies may be excluded from the payment system established under this subsection.'; and

(B) by adding at the end the following:

`(C) MEDICAL TECHNOLOGIES SUBJECT TO TEMPORARY EXCLUSION-

`(i) MEDICAL TECHNOLOGIES DESCRIBED- Subject to clause (v), the medical technologies described in this clause are the following:

`(I) Any medical technology that was reimbursed as a hospital outpatient service under this part during 1996 for which sufficient, reliable, and verifiable data drawn from such year is not available.

`(II) Any medical technology that was not reimbursed as a hospital outpatient service under this part during 1996 but was reimbursed as such a service as of the day before the date on which the system established under this subsection first took effect.

`(III) Subject to clause (iv), any medical technology that was not reimbursed as a hospital outpatient service under this part as of the day before such system took effect but that is payable as such a service on or after the date on which such system first took effect.

`(IV) Drugs or biological products used as treatment or supportive care for patients with cancer, including chemotherapeutic agents, antiemetics, hematopoietic growth factors, colony stimulating factors, and biological response modifiers.

`(V) Drugs or biological products designated as a drug for a rare disease or condition under section 526 of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 360bb) and approved or licensed for introduction into interstate commerce by the Commissioner of Food and Drugs.

`(VI) Drugs or biological products used for the treatment of end-stage renal disease not included in the composite rate under section 1881 and for which a payment methodology is not specifically established by this Act, other than by section 1842(o).

`(VII) Radiopharmaceutical drugs or biological products used in diagnostic, monitoring, and therapeutic nuclear medicine procedures.

`(VIII)(aa) Blood components and blood products, including any such component or product derived from plasma fractionation or biotechnology analog of such component or product; and

`(bb) Any medical technology or service used in connection with blood transfusion, blood product exchange, or other blood-related therapy, including plasmapheresis, photopheresis, hematopoietic stem cell collection or replacement therapy.

`(IX) Drugs or biological products with respect to which the mean cost for a dose exceeds the otherwise applicable fee schedule amount under the system established under this subsection by 2 standard deviations from such mean.

`(ii) TIME PERIOD SPECIFIED- Subject to clause (iii), the time periods specified in this clause are not less than--

`(I) for a medical technology described in subclause (I) or (II) of clause (i), the period that begins with the date on which the system established under this subsection first takes effect and ends with (and includes) the last day of the fourth calendar

year to begin on or after such date; and

`(II) for a medical technology described in subclause (III) of clause (i), the period that begins with the date on which a claim is first submitted under this part with respect to such technology and ends with (and includes) the last day of the fourth calendar year to begin on or after such date.

`(iii) PROCESS FOR INCLUSION OF EXCLUDED MEDICAL TECHNOLOGIES- No medical technology excluded under clause (i) may be designated as a covered OPD service unless the Secretary completes the following steps:

`(I) The Secretary shall assign a unique code to the medical technology to be designated as a covered OPD service.

`(II) The Secretary shall issue instructions for using any code assigned under subclause (I) and document the usage of the medical technology to which the code is assigned in the hospital outpatient department.

`(III) The Secretary shall require hospitals to use the codes assigned under subclause (I) for not less than 2 years.

`(IV) The Secretary shall obtain sufficient, reliable, and verifiable cost and utilization data from a representative group of hospitals that use the medical technology, including hospitals of different sizes, geographic locations, degrees of specialization, case-mix, and the dependence of the hospitals on funds provided under the medicare program under this title and the medicaid program under title XIX.

`(V) The Secretary, based on the data obtained under subclause (IV), shall develop a proposed OPD service classification for the medical technology, paying particular attention to the potential of the proposed classification to create economic incentives that could reduce patient access to the medical technology.

`(VI) The Secretary shall publish in the Federal Register a proposed rule regarding the classification described under subclause (V) and supporting cost and utilization data.

`(VII) The Secretary shall provide for a comment period of not less than 90 days, beginning on the date on which the Secretary publishes the proposed rule and supporting data described in subclause (V).

`(iv) NEW TECHNOLOGIES DESCRIBED- As of the effective date of this clause, the technologies to which clause (i)(III) applies include--

`(I) existing technologies not previously reimbursed as hospital outpatient services;

`(II) newly developed technologies approved or licensed for introduction into interstate commerce by the Commissioner of Food and Drugs after December 31, 1995; and

`(III) new applications of existing technologies.

`(v) LOW-COST MEDICAL TECHNOLOGIES- The medical technologies described in clause (i) do not include any medical technology if the cost of such technology is insignificant in relation to the OPD fee schedule amount (as calculated under paragraph (3)(D)) payable for the service (or group of services).

`(vi) MEDICAL TECHNOLOGY DEFINED- For purposes of this subsection, the term `medical technology' means any discrete and identifiable regimen or modality used to diagnose or treat illness, prevent disease, maintain patient well-being, or facilitate the provision of health care services.

`(D) TREATMENT OF IMPLANTABLE DEVICES-

`(i) PAYMENT BASIS DURING AND AFTER EXCLUSION PERIOD- If a medical technology that is an implantable device is excluded from the payment system established under this subsection pursuant to subparagraph (B)(iii)(III), such device--

`(I) shall be paid on the basis described in subsection (a)(2)(B)(i) during the period of such exclusion; and

`(II) shall be paid for under the system established under this subsection during the period following such exclusion (and not under a fee schedule established under subsection (a) or (h) of section 1834).

`(ii) PAYMENT BASIS FOR DEVICES WITH NO EXCLUSION PERIOD- If a medical technology that is an implantable device was not excluded from the payment system established under this subsection pursuant to subparagraph (B)(iii)(III)--

`(I) such device shall be included in such system (and not a fee schedule established under subsection (a) or (h) of section 1834); and

`(II) in determining the relative payment weights (described in paragraph (2)(C)) for the service or group of services within which such device is classified under such system, the Secretary shall meet the requirements of clause (iii).

`(iii) DETERMINATION OF RELATIVE PAYMENT WEIGHTS- Subject to paragraph (11), in determining the relative payment weights described in clause (ii)(II) for an implantable device, the Secretary--

`(I) may not substitute data on the amount that would be paid for such device under a fee schedule established under subsection (a) or (h) of section 1843 for data on the amounts paid for such device under subsection (a)(2)(B)(i); and

`(II) shall rely solely on data on the amounts paid for such item or service under such subsection (a)(2)(B)(i).'.

(2) ADMINISTRATIVE AND JUDICIAL REVIEW- Section 1833(t)(9) of the Social Security Act (42 U.S.C. 1395l(t)(9)) is amended--

(A) by striking `LIMITATION ON REVIEW- There' and inserting `LIMITATION ON REVIEW-

`(A) IN GENERAL- Subject to subparagraph (B), there'; and

(B) by adding at the end the following:

`(B) RULE OF CONSTRUCTION- This paragraph shall not be construed as limiting administrative or judicial review of determinations of whether a medical technology is required to be excluded from the payment system established under this subsection pursuant to paragraph (1)(B)(iii)(III).'.

(b) LIMITING VARIATION IN THE COSTS OF SERVICES CLASSIFIED WITHIN THE SAME GROUP- Section 1833(t)(2) of the Social Security Act (42 U.S.C. 1395l(t)(2)) is amended by adding at the end the following:

`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 mean cost for an item or service within the group is more than 2 times greater than the lowest mean cost for an item or service within the group.'.

(c) ANNUAL REVIEW OF OPD PPS COMPONENTS- Section 1833(t)(6)(A) of the Social Security Act (42 U.S.C. 1395l(t)(6)(A)) (as amended by section 4(b)(2)) is amended by striking `may periodically review' and inserting `shall review not less than annually'.

(d) SPECIAL RULES FOR EXCLUDED SERVICES-

(1) UNADJUSTED CO-PAYMENT AMOUNT- Section 1833(t)(3)(B) of the Social Security Act (42 U.S.C 13951(t)(3)(B)) is amended--

(A) in clause (i), by inserting `or to a service excluded under paragraph (1)(C)' after `(or group of such services)';

(B) in clause (ii), by inserting `or excluded service under paragraph (1)(C)' after `furnished in a year'; and

(C) by adding at the end the following:

`(iv) RULES FOR EXCLUDED SERVICES- The Secretary shall establish rules for the establishment of an unadjusted copayment amount for medical technologies excluded under paragraph (1)(C)(i) for which no national median of charges is available based on the unadjusted copayment amount for medical technologies with similar average wholesale prices.'.

(2) BENEFICIARY COST SHARING- Section 1833(t) of the Social Security Act (42 U.S.C. 13951(t)) is amended-

(A) by redesignating paragraphs (6) through (9) (as amended by subsections (a)(2) and (c) and section 4(b)(2)) as paragraphs (7) through (10), respectively; and

(B) by inserting after paragraph (5) the following:

`(6) Payment amounts for excluded services--

`(B) Copayment amount for excluded services--

`(i) IN GENERAL- Except as provided in clause (ii), the copayment amount for services excluded under subparagraph (1)(C) shall be the unadjusted copayment amount for such services as determined under paragraph (3)(B).

`(ii) EXCEPTION- If the copayment amount determined under clause (i) is less than 20 percent of the reasonable cost as determined under subparagraph (A), the copayment amount shall be 20 percent of the reasonable cost as so determined.'.

(3) CONFORMING AMENDMENT- Section 1833(a)(2)(B)(i) is amended by striking `furnished before January 1, 1999,'.

(e) PAYMENT- Section 1833(t) of the Social Security Act (42 U.S.C. 1395l(t)) is amended--

(1) by redesignating paragraph (10) (as redesignated by subsection (d)(2)(A)) as paragraph (12); and

(2) by inserting after paragraph (9) the following:

`(10) PAYMENT DURING AND AFTER EXCLUSION PERIOD-

`(A) IN GENERAL- Notwithstanding any other provision of this title, items and services excluded from the system established under this subsection pursuant to paragraph (1)(B)(iii)(III) (other than any implantable devices to which paragraph (1)(D) applies)--

`(i) shall be paid on the basis described in subsection (a)(2)(B)(i) during the period of such exclusion; and

`(ii) shall be paid for under the system established under this subsection during the period following such exclusion.

`(B) DETERMINING RELATIVE PAYMENT WEIGHTS- Subject to paragraph (11), in determining the relative payment weights (described in paragraph (2)(C)) for the service or group of services within which an item or service is classified pursuant to the payment system established under this subsection, the Secretary--

`(i) may not substitute data on the amount that would be paid for such item or service under a fee schedule established under subsection (a) or (h) of section 1843 for data on the amounts paid for such device under subsection (a)(2)(B)(i); and

`(ii) shall rely solely on data on the amounts paid for such item or service under such subsection (a)(2)(B)(i).

`(11) EXCLUSION OF DATA FOR CERTAIN MEDICAL TECHNOLOGIES- The Secretary may not utilize data with respect to a device for which an exemption granted under section 520(g) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360j(g)) is in effect--

`(A) in determining whether there is adequate data with respect to the device for purposes of clauses (i)(I) and (iii) of paragraph (1)(C); or

`(B) in determining the relative payment weights for the device pursuant to paragraph (1)(D)(iii) or (10)(B).'.

(f) REQUIRED CONSULTATION BEFORE LIMITING COVERAGE BY SITE OF SERVICE-

(1) IN GENERAL- Notwithstanding any other provision of law, the Secretary may not implement on or after September 8, 1998, any regulatory guidance of the type described in paragraph (2) until the Secretary has consulted with groups representing hospitals, physicians, beneficiaries under the medicare program under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.), and manufacturers of medical technologies.

(2) REGULATORY GUIDANCE- The types of regulatory guidance described in this paragraph are proposed, interim final, and final regulations, manual instructions, statements of policy, and other forms of regulatory guidance that would--

(A) deny coverage or payment for an item or service under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) unless the

item or service is furnished on an inpatient basis; or

(B) deny coverage or payment for an item or service under such title unless the item or service is furnished on an outpatient basis.

(g) BASIS FOR DETERMINING WEIGHTING FACTORS- Section 1833(t)(2)(C) of the Social Security Act (42 U.S.C. 1395l(t)(2)(C)) is amended by striking `median' and inserting `mean'.

(h) BUDGET NEUTRALITY ADJUSTMENT- The Secretary of Health and Human Services shall make such adjustments to the amounts payable under section 1833(t) of the Social Security Act (42 U.S.C. 1395l(t)) as may be necessary to ensure that there is no increase or decrease in the expenditures under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) as a result of the amendments made by this section.

(i) MONITORING ACCESS TO MEDICAL TECHNOLOGY-

(1) MONITORING AND ANNUAL REPORTS OF THE SECRETARY-

(A) MONITORING ACCESS- The Secretary of Health and Human Services shall monitor the utilization of medical technology in hospital outpatient departments.

(B) ANNUAL REPORTS- The Secretary of Health and Human Services shall annually submit to Congress a report on the utilization of the medical technology monitored under subparagraph (A) together with an analysis of the extent to which access by beneficiaries under the medicare program under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) to new medical technologies is affected by the inclusion or exclusion of such technologies in the payment system established under section 1833(t) of such Act (42 U.S.C. 1395l(t)).

(2) COMMENTS AND REPORTS OF MEDPAC-

(A) COMMENTS- The Medicare Payment Advisory Commission established under section 1805 of the Social Security Act (42 U.S.C. 1395b-6) (in this paragraph referred to as `MedPAC') shall submit to the Secretary of Health and Human Services comments on any proposed rule regarding the classification of medical technologies excluded from the prospective payment system established under section 1833 of the Social Security Act (42 U.S.C. 1395l(t)).

(B) ANNUAL REPORTS-

(i) IN GENERAL- MedPAC shall annually submit to the appropriate committees of Congress a report on the changes in utilization of and access to medical technologies furnished under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) together with its recommendations for such legislation and administrative actions as it considers appropriate to improve access of beneficiaries under the medicare program under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) to appropriate medical technologies.

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