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S.1788
Medicare, Medicaid, and SCHIP Adjustment Act of 1999 (Placed on the
Calendar in the Senate)
SEC. 203. OUTLIER ADJUSTMENT AND TRANSITIONAL PASS-THROUGH FOR CERTAIN MEDICAL DEVICES, DRUGS, AND
BIOLOGICALS.
(a) OUTLIER ADJUSTMENT- Section 1833(t) (42 U.S.C. 1395l(t)), as amended
by section 201, is amended--
(1) by redesignating paragraphs (5) through (11) as paragraphs (7)
through (13), respectively; and
(2) by inserting after paragraph (4) the following:
`(A) IN GENERAL- 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.'.
(b) TRANSITIONAL PASS-THROUGH FOR ADDITIONAL COSTS OF INNOVATIVE MEDICAL DEVICES, DRUGS, AND
BIOLOGICALS- Such section is further amended by inserting after paragraph (5)
the following:
`(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 a covered OPD service (or group of services) that
includes the provision of any of the following:
`(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- A drug or
biological that is used in cancer therapy, including a chemotherapeutic
agent, antiemetic, hematopoietic growth factor, colony stimulating
factor, and a biological response modifier, if payment for the drug or
biological as an outpatient hospital service under this part was being
made on such first date.
`(iii) RADIOPHARMACEUTICAL DRUGS AND BIOLOGICAL PRODUCTS-
Radiopharmaceutical drugs or biological products used in diagnostic,
monitoring, and therapeutic nuclear medicine procedures.
`(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 services under this part was not being made as of December
31, 1996; and
`(II) the cost of the device, drug, or biological 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) LIMITED PERIOD OF PAYMENT- The payment under this paragraph with
respect to a medical device,
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), (iii) of
subparagraph (A) and in the case of a device, drug, or biological
described in clause (iv) of such subparagraph for which payment under
this part is made as an outpatient hospital service before such first
date; or
`(ii) in the case of a device, drug, or biological described in
subparagraph (A)(iv) not described in clause (i), on the first date on
which payment is made under this part for the device, drug, or
biological as an outpatient hospital service.
`(C) AMOUNT OF ADDITIONAL PAYMENT- Subject to subparagraph (D)(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) in the case of a drug or biological, the amount by which the
amount determined under section 1842(o) 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 (described in clause (i)) associated with the
device.
`(D) 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.
`(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 projects or 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.'.
(c) APPLICATION OF NEW ADJUSTMENTS ON A BUDGET NEUTRAL BASIS- Section
1833(t)(2)(E) (42 U.S.C. 1395l(t)(2)(E)) is amended by striking `other
adjustments, in a budget neutral manner, as determined to be necessary to
ensure equitable payments, such outlier adjustments or' and inserting `, 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'.
(d) LIMITATION ON JUDICIAL REVIEW FOR NEW ADJUSTMENTS- Section 1833(t)(11)
(42 U.S.C. 1395l(t)(11)), as redesignated by subsection (a)(1), is
amended--
(1) by striking `and' at the end of subparagraph (C);
(2) by striking the period at the end of subparagraph (D) and inserting
`; and'; and
(3) by adding at the end the following:
`(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 period
and amount of the additional payments, 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).'.
(e) INCLUSION OF MEDICAL
DEVICES UNDER SYSTEM- Section 1833(t)(1)(B) (42 U.S.C. 1395l(t)(1)(B)) is
amended--
(1) in clause (ii), by striking `clause (iii)' and inserting `clause
(iv)' and by striking `but'; and
(2) by redesignating clause (iii) as clause (iv) and inserting after
clause (ii) the following:
`(iii) includes medical devices (such as
implantable medical
devices); but'.
(f) AUTHORIZING PAYMENT WEIGHTS BASED ON MEAN HOSPITAL COSTS- Section
1833(t)(2)(C) (42 U.S.C. 1395l(t)(2)(C)) is amended by inserting `(or, at the
election of the Secretary, mean)' after `median'.
(g) LIMITING VARIATION OF COSTS OF SERVICES CLASSIFIED WITH A GROUP-
Section 1833(t)(2) (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 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.'.
(h) ANNUAL REVIEW OF OPD PPS COMPONENTS-
(1) IN GENERAL- Section 1833(t)(8)(A) (42 U.S.C. 1395l(t)(8)(A)) (as
redesignated by subsection (a)(1)) is amended by striking `may periodically
review' and inserting `shall review not less often than annually'.
(2) EFFECTIVE DATE- The amendment made by paragraph (1) applies
beginning with 2002.
(i) EFFECTIVE DATE- Except as provided in this section, the amendments
made by this section shall be effective as if included in the amendments made
by section 4523 of the Balanced Budget Act of 1997 (Public Law 105-33; 111
Stat. 445).
Subtitle B--Physicians' Services
SEC. 221. MODIFICATIONS OF UPDATE ADJUSTMENT FACTOR PROVISIONS TO REDUCE
OSCILLATIONS AND ALLOW FOR ESTIMATE REVISIONS.
(a) UPDATE ADJUSTMENT FACTOR-
(1) IN GENERAL- Section 1848(d) (42 U.S.C. 1395w-4(d)) is
amended--
(i) in the heading, by inserting `FOR 1999 AND 2000' after
`UPDATE';
(ii) in subparagraph (A), by striking `a year beginning with 1999'
and inserting `1999 and 2000'; and
(iii) in subparagraph (C), by inserting `and paragraph (4)' after
`For purposes of this paragraph'; and
(B) by adding at the end the following:
`(4) UPDATE FOR YEARS BEGINNING WITH 2001-
`(A) IN GENERAL- Unless otherwise provided by law, subject to the
budget-neutrality factor determined by the Secretary under subsection
(c)(2)(B)(ii) and subject to adjustment under subparagraph (F), the update
to the single conversion factor established in paragraph (1)(C) for a year
beginning with 2001 is equal to the product of--
`(i) 1 plus the Secretary's estimate of the percentage increase in
the MEI (as defined in section 1842(i)(3)) for the year (divided by
100); and
`(ii) 1 plus the Secretary's estimate of the update adjustment
factor under subparagraph (B) for the year.
`(B) UPDATE ADJUSTMENT FACTOR- For purposes of subparagraph (A)(ii),
subject to subparagraph (D), the `update adjustment factor' for a year is
equal (as estimated by the Secretary) to the sum of the
following:
`(i) PRIOR YEAR ADJUSTMENT COMPONENT- An amount determined
by--
`(I) computing the difference (which may be positive or negative)
between the amount of the allowed expenditures for physicians'
services for the prior year (as determined under subparagraph (C)) and
the amount of the actual expenditures for such services for that
year;
`(II) dividing that difference by the amount of the actual
expenditures for such services for that year; and
`(III) multiplying that quotient by 0.75.
`(ii) CUMULATIVE ADJUSTMENT COMPONENT- An amount determined
by--
`(I) computing the difference (which may be positive or negative)
between the amount of the allowed expenditures for physicians'
services (as determined under subparagraph (C)) from April 1, 1996,
through the end of the prior year and the amount of the actual
expenditures for such services during that period;
`(II) dividing that difference by actual expenditures for such
services for the prior year as increased by the sustainable growth
rate under subsection (f) for the year for which the update adjustment
factor is to be determined; and
`(III) multiplying that quotient by 0.33.
`(C) DETERMINATION OF ALLOWED EXPENDITURES- For purposes of this
paragraph:
`(i) PERIOD UP TO APRIL 1, 1999- The allowed expenditures for
physicians' services for a period before April 1, 1999, shall be the
amount of the allowed expenditures for such period as determined under
paragraph (3)(C).
`(ii) TRANSITION TO CALENDAR YEAR ALLOWED EXPENDITURES- Subject to
subparagraph (E), the allowed expenditures for--
`(I) the 9-month period beginning April 1, 1999, shall be the
Secretary's estimate of the amount of the allowed expenditures that
would be permitted under paragraph (3)(C) for such period;
and
`(II) the year of 1999, shall be the Secretary's estimate of the
amount of the allowed expenditures that would be permitted under
paragraph (3)(C) for such year.
`(iii) YEARS BEGINNING WITH 2000- The allowed expenditures for a
year (beginning with 2000) is equal to the allowed expenditures for
physicians' services for the previous year, increased by the sustainable
growth rate under subsection (f) for the year involved.
`(D) RESTRICTION ON UPDATE ADJUSTMENT FACTOR- The update adjustment
factor determined under subparagraph (B) for a year may not be less than
-0.07 or greater than 0.03.
`(E) RECALCULATION OF ALLOWED EXPENDITURES FOR UPDATES BEGINNING WITH
2001- For purposes of determining the update adjustment factor for a year
beginning with 2001, the Secretary shall recompute the allowed
expenditures for previous periods beginning on or after April 1, 1999,
consistent with subsection (f)(3).
`(F) TRANSITIONAL ADJUSTMENT DESIGNED TO PROVIDE FOR BUDGET
NEUTRALITY- Under this subparagraph the Secretary shall provide for an
adjustment to the update under subparagraph (A)--
`(i) for each of 2001, 2002, 2003, and 2004, of -0.2 percent;
and
`(ii) for 2005 of +0.8 percent.'.
(A) IN GENERAL- Section 1848(d)(1)(E) (42 U.S.C. 1395w-4(d)(1)(E)) is
amended to read as follows:
`(E) PUBLICATION AND DISSEMINATION OF INFORMATION- The Secretary
shall--
`(i) cause to have published in the Federal Register not later than
November 1 of each year (beginning with 2000) the conversion factor
which will apply to physicians' services for the succeeding year, the
update determined under paragraph (4) for such succeeding year, and the
allowed expenditures under such paragraph for such succeeding year;
and
`(ii) make available to the Medicare Payment Advisory
Commission and the public by March 1 of each year (beginning with 2000)
an estimate of the conversion factor which will apply to physicians'
services for the succeeding year and data used in making such
estimate.'.
(B) MEDPAC REVIEW OF CONVERSION FACTOR ESTIMATES- Section
1805(b)(1)(D) (42 U.S.C. 1395b-6(b)(1)(D)) is amended by inserting `and
including a review of the estimate of the conversion factor submitted
under section 1848(d)(1)(E)(ii)' before the period at the end.
(C) 1-TIME PUBLICATION OF INFORMATION ON TRANSITION- The Secretary of
Health and Human Services shall cause to have published in the Federal
Register, not later than 90 days after the date of the enactment of this
section, the Secretary's determination, based upon the best available
data, of--
(i) the allowed expenditures under subclauses (I) and (II) of
section 1848(d)(4)(C)(ii) of the Social Security Act, as added by
subsection (a)(1)(B), for
the 9-month period beginning on April 1, 1999, and for 1999;
(ii) the estimated actual expenditures described in section 1848(d)
of such Act for 1999; and
(iii) the sustainable growth rate under section 1848(f) of such Act
(42 U.S.C. 1395w-4(f)) for 2000.
(3) CONFORMING AMENDMENTS-
(A) Section 1848 (42 U.S.C. 1395w-4) is amended--
(i) in subsection (d)(1)(A), by inserting `(for years before 2001)
and, for years beginning with 2001, multiplied by the update
(established under paragraph (4)) for the year involved' after `for the
year involved'; and
(ii) in subsection (f)(2)(D), by inserting `or (d)(4)(B), as the
case may be' after `(d)(3)(B)'.
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