Medicare DMEPOS Market Pricing Program Act of 2012 - Amends part B (Supplementary Medical Insurance) of title XVIII (Medicare) of the Social Security Act to direct the Secretary of Health and Human Services (HHS) to establish a market pricing program for durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS) as a replacement for the competitive acquisition program for DMEPOS, which is hereby terminated.
Directs the Secretary to: (1) conduct annual market-priced auctions from among entities supplying market priced items and services in an eligible market area selected in the auction design, (2) establish a lead product for each of specified product categories, and (3) award a contract to any entity in an eligible market area in which an auction is conducted whose bid is below a clearing price equal to the highest cost bid that will meet capacity targets in the market area.
Requires the Secretary to contract with an auction expert to assist in, and a market monitor to monitor, the design, development, and functioning of the auction.
Adjusts the covered DME item update for 2012 through 2014 and each subsequent year.
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6490 Introduced in House (IH)]
112th CONGRESS
2d Session
H. R. 6490
To amend title XVIII of the Social Security Act to establish a market
pricing program for durable medical equipment, prosthetics, orthotics,
and supplies (DMEPOS) under part B of the Medicare program.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 21, 2012
Mr. Price of Georgia (for himself, Mr. Altmire, Mrs. Blackburn, Mr.
Deutch, Mr. Wilson of South Carolina, Ms. Castor of Florida, Mr.
Tiberi, Mr. Braley of Iowa, Mr. Latham, Mr. Barrow, Mr. King of Iowa,
Mr. Kelly, Mr. LaTourette, and Mrs. Ellmers) introduced the following
bill; which was referred to the Committee on Energy and Commerce, and
in addition to the Committee on Ways and Means, for a period to be
subsequently determined by the Speaker, in each case for consideration
of such provisions as fall within the jurisdiction of the committee
concerned
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to establish a market
pricing program for durable medical equipment, prosthetics, orthotics,
and supplies (DMEPOS) under part B of the Medicare program.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Medicare DMEPOS Market Pricing
Program Act of 2012''.
SEC. 2. ESTABLISHMENT OF DMEPOS MARKET PRICING PROGRAM AS REPLACEMENT
FOR COMPETITIVE BIDDING PROGRAM.
(a) In General.--Part B of title XVIII of the Social Security Act
is amended by inserting after section 1847B the following new section:
``dmepos market pricing program
``Sec. 1847C. (a) Establishment.--
``(1) In general.--The Secretary shall establish and
implement a market pricing program (in this section referred to
as `market pricing program') under which auctions are conducted
in eligible market areas (as defined in paragraph (3))
throughout the United States for the furnishing under this part
of market priced items and services (as defined in subsection
(b)) for which payment is made under this part.
``(2) Roles of auction expert and market monitor.--The
elements of the market pricing program, including eligible
market areas and auction design, shall be established and
operated in consultation with, and after input and review by,
the auction expert and the market monitor under subsection (g).
In this section, the terms `auction expert' and `market
monitor' refer to the respective auction expert and market
monitor contracted with under paragraph (1) or (2),
respectively, of subsection (g).
``(3) Implementation.--The market pricing program shall be
implemented in eligible market areas consistent with the
following:
``(A) Market pricing is applied to payments under
this part in 20 percent of eligible market areas for
market priced items and services furnished in 2014.
``(B) Market pricing is applied to payments under
this part in an additional 10 percent of eligible
market areas for market priced items and services
furnished in 2015.
``(C) Market pricing is applied to payments under
this part in an additional 10 percent of eligible
market areas in each subsequent year until the market
pricing program is applying to items and services
furnished in 100 percent of eligible market areas
throughout the United States.
``(D) Once the market pricing program is applied
throughout the United States under subparagraph (C),
the Secretary shall conduct auctions for different
eligible market areas throughout the United States on
an ongoing and rotating basis covering 10 percent of
eligible market areas no later than March for each
subsequent year.
``(E) The requirements of this section shall apply
to each subsequent round of market-priced auctions in
the same manner that such requirements apply to the
initial market-priced auction.
``(4) Eligible market areas.--
``(A) In general.--In this section and section
1834, the term `eligible market areas' means areas of
the United States established by the Secretary.
``(B) Market areas must reflect economic
interdependency.--In determining and selecting eligible
market areas, the Secretary shall choose, from among
counties, aggregations of counties, or parts of
counties, market areas that form an economically
interdependent area reflecting standard econometric
market models. Nothing in this subparagraph shall
preclude the Secretary from subdividing a large county
(as determined by the Secretary, taking into account
population and geographic size) in establishing market
areas in order to comply with this subparagraph.
``(C) Selection of market areas.--In selecting
eligible market areas in which an auction will be
conducted under this section, the Secretary shall
ensure that several market areas of each econometric
model for a market area specified in subparagraph (B)
are chosen.
``(D) Exclusion of certain areas.--The Secretary
shall not include as an eligible market area any area
described in clause (iii) of section 1847(a)(1)(D)
before the year specified in such clause.
``(5) Application of certain policies applicable to
competitive acquisition program.--The following provisions of
section 1847(a)(1) shall apply to the market pricing program in
the same manner as they apply to the competitive acquisition
program under such section except as otherwise provided:
``(A) Subparagraph (C) (relating to waiver of
certain provisions).
``(B) Subparagraph (E) (relating to verification by
OIG), except that the assessment shall be of market
pricing and subsequent pricing determinations that are
the basis for auction prices and single payment amounts
for items and services in eligible market areas and
shall be conducted in the first two years of the market
pricing program and may continue in subsequent years of
the program.
``(C) Subparagraph (F) (relating to feedback on
missing financial documentation), except that any
reference to a round of a program is deemed a reference
to a year of the market pricing program.
``(b) Market Priced Items and Services Defined.--
``(1) In general.--In this section, subject to paragraph
(2), the term `market priced items and services' means the
following:
``(A) Oxygen supplies and equipment.
``(B) Standard power wheelchairs, power scooters
and related accessories.
``(C) Manual wheelchairs.
``(D) Enteral nutrients, equipment, and supplies.
``(E) Continuous positive airway pressure devices,
respiratory assistive devices, and related supplies.
``(F) Hospital beds and related accessories.
``(G) Walkers and related accessories.
``(H) Support services (Group 2 mattresses and
overlays).
``(I) Negative pressure wound therapy pumps and
related supplies and accessories.
``(J) Diabetic supplies.
``(K) Off-the-shelf orthotics described in section
1847(a)(2)(C).
``(L) Other items and services (other than those
items and services specified in paragraph (2)) that
could have been subject to participation in the
competitive acquisition programs under section
1847(a)(1).
``(2) Excluded items.--Such term does not include the
following:
``(A) Adjustable skin protection cushions used in
connection with a wheelchair.
``(B) Complex rehabilitative power wheelchairs and
related accessories.
``(C) Manual wheelchairs billed using current HCPCS
Codes K0005 or E1161, and related accessories for such
wheelchairs.
``(c) Market Pricing Program Requirements.--
``(1) In general.--The Secretary shall establish an auction
design through the process described in paragraph (2), that
meets the requirements of paragraph (3), and shall ensure that
the first auction will be conducted for all eligible market
areas no later than March 1, 2013.
``(2) Auction process; input of stakeholders; design.--
``(A) Transparent process required.--
``(i) In general.--In establishing such
auction design, the Secretary shall utilize an
open and transparent process that involves all
relevant stakeholders (as defined in clause
(ii)) in the market.
``(ii) Relevant stakeholders.--For purposes
of clause (i), the term `relevant stakeholders'
means suppliers of market priced items and
services (and trade associations representing
such suppliers), physicians, and individuals
entitled to benefits under this title (or
representatives of such individuals).
``(B) Draft auction design.--
``(i) In general.--Not later than 2 months
after the date the auction expert first begins
service under subsection (g)(1), the auction
expert shall develop a draft auction design for
all eligible areas and all market priced items
and services.
``(ii) Standards.--In developing such
auction design, the auction expert shall
develop standards for eligible bidders,
including--
``(I) the financial qualifications
for an entity to participate in the
market pricing program; and
``(II) the quality of products and
related services.
``(iii) Design used in expedited rulemaking
process.--Such design shall serve as the basis
for an expedited rulemaking process for the
publication of the proposed auction design and
solicitation of public comments on such design.
Section 1871(b)(1) shall not apply to such
process.
``(C) Design conference.--
``(i) In general.--Not later than 4 months
after the date the auction expert first begins
service under subsection (g)(1), the auction
expert shall convene a design conference (in
this paragraph referred to as the `design
conference') for the auction process under this
section. The auction expert shall chair the
conference.
``(ii) Participants.--The participants at
the design conference shall include at least
the following:
``(I) Suppliers of dmepos.--
Representatives of market priced items
and services.
``(II) Beneficiaries.--
Representatives of individuals entitled
to benefits under this part.
``(III) CMS.--The Administrator of
the Centers for Medicare & Medicaid
Services and other appropriate Federal
personnel.
``(IV) Program advisory and
oversight committee.--The members of
the committee referred to in paragraph
(3).
``(iii) Purpose of conference.--The purpose
of the design conference shall be to establish
an efficient auction consistent with best
practices and actuarial science.
``(iv) Elements of conference.--
``(I) At the design conference the
auction expert shall provide a
demonstration of the preliminary
auction design.
``(II) Attendees at the conference
will participate in a mock auction
based upon the preliminary design.
``(III) The auction expert shall
establish working committees on major
issues.
``(IV) The design conference shall
be recorded and made available over the
Internet either through simultaneous
Web cast or otherwise.
``(V) The Federal Advisory
Committee Act shall not apply with
respect to the working committee
established under subclause (III).
``(D) Recommendations.--
``(i) Working committees.--Not later than 2
months after the last day of the design
conference, each working committee established
under subparagraph (C)(iv)(III) shall submit to
the auction expert the committee's
recommendations on the final design for
auctions under this section.
``(ii) Final design recommendation.--Not
later than 3 months after the last day of the
design conference, the auction expert shall
submit to the Secretary final recommendations
on the auction design.
``(3) Requirements.--In establishing the auction design,
the Secretary shall ensure that rates of payment developed
through the auction process--
``(A) are market-based and based on binding bids
and clearing prices; and
``(B) do not result in a diminution of access to or
quality of items of market priced items and services in
the applicable market areas.
``(d) Conduct of Auction.--
``(1) Initial auction.--No later than March 1 of each year
(beginning with 2013), the Secretary shall conduct an auction
(in this section referred to as a `market-priced auction') from
among entities supplying market priced items and services in an
eligible market area that is selected in the auction design.
The first such auction shall conclude no later than March 30,
2013. Market-based auctions shall be conducted in accordance
with an auction design developed under subsection (c).
``(2) Items and services subject to auction.--
``(A) In general.--In each eligible market area in
which a market-priced auction is conducted, the
Secretary shall select 2 items and services from among
the market priced items and services.
``(B) All listed items and services to be subject
to auction.--The Secretary shall ensure in the market-
priced auction that each lead product that is
identified under paragraph (4) from among each market
priced item and service is subject to auction among all
eligible market areas. The Secretary shall ensure that
each product category is auctioned in at least a
sufficient number of eligible market areas to produce a
sample of bids based on the percentages set forth in
subsection (a)(3).
``(3) Requirements to submit bid in auction.--
``(A) Submission of bids.--Any supplier that
complies with the requirements of subparagraph (B) and
that is identified by the Secretary pursuant to
paragraph (5)(C) as a supplier of a market priced item
or service that is the subject of a market-priced
auction in an eligible market area may submit a bid at
such auction.
``(B) Financial assurances.--
``(i) In general.--In order to be eligible
to participate in a market-priced auction, a
supplier must submit a cash deposit in an
amount determined by the Secretary.
``(ii) Letter of credit in lieu of cash
deposit.--The Secretary may, in the Secretary's
sole discretion, accept a letter of credit from
a financial institution acceptable to the
Secretary instead of the cash deposit otherwise
required under clause (i).
``(C) Treatment of deposits submitted by
suppliers.--
``(i) Successful bidders.--The Secretary
shall retain as a performance guarantee the
deposit submitted under subparagraph (B)(i) of
a supplier that has submitted a bid that is
selected at a market-priced auction.
``(ii) Unsuccessful bids.--If a supplier
submits a bid that is not accepted at the
auction, any such deposit shall be returned to
the supplier.
``(iii) Deposit return requirements for
partially successful suppliers.--If a supplier
submits a bid that is accepted at the auction,
but the supplier is not awarded a contract for
the full amount of the bid, the Secretary shall
provide for a proportionate return of any such
deposit.
``(4) Lead product selection.--
``(A) In general.--For each item and service that
is the subject of a market-priced auction, the
Secretary shall establish a lead product for each
product category specified in subsection (b)(1). Such
lead product shall be selected based upon cost and
utilization of the product under this part.
``(B) Lead product clearing price establishes
clearing price for other products.--
``(i) Lead product as reference point for
other products.--The lead product selected
under subparagraph (A) shall be used as a
reference point for all other products
(categorized by healthcare common procedure
coding system code) in the same category as the
lead product. Such lead product shall be
assigned a weight of 100 percent.
``(ii) Additional products in each product
category.--Every other product in the same
product category as the lead product identified
under subparagraph (A) shall be assigned based
upon each auction a weight expressed as a
percentage of the lead product. The Secretary
shall establish a single capacity-weighted
average for each such other product in the same
product category based upon the relative price
value submitted from eligible bidders in
advance of the auction for such other product
relative to the price of the lead product. The
Secretary shall establish a price index that is
the single capacity-weighted average for each
product in a product category in a market area.
``(iii) Establishing clearing price.--The
Secretary shall establish the clearing price
for each market priced item and service that is
subject to the auction based upon the data
submitted under this subparagraph. Such
clearing price shall be equal to the highest
cost bid (or, in the case of a product
described in clause (ii), such price bid
weighted by the single capacity-weighted
average established under clause (ii)) that
will meet capacity targets in the eligible
market area for such item and service.
``(5) Conduct of auction.--
``(A) In general.--The Secretary shall establish
timelines for the conduct of the market-priced auction
that are consistent with the provisions of this
paragraph.
``(B) Three months before auction date.--
Approximately three months before the scheduled auction
date, the Secretary shall detail auction rules that are
consistent with the auction plan developed under this
section. These rules shall include--
``(i) financial and other qualification
requirements for bidders;
``(ii) algorithms for determining winners
and prices as a function of bids;
``(iii) performance obligations of contract
suppliers, guarantees, and penalties for non-
conformance;
``(iv) the product categories to be
selected (and their related healthcare common
procedure coding system codes) from within the
market priced items and services;
``(v) the lead product for each product
category selected under paragraph (4)(A); and
``(vi) the eligible market areas in which a
market-priced auction will be conducted.
``(C) Two weeks before auction date.--Approximately
2 weeks before the scheduled auction date, the
Secretary shall identify the qualified suppliers
eligible to submit bids. In carrying out this
subparagraph, the Secretary shall specify--
``(i) bidder capacity;
``(ii) bidder eligibility by eligible
market area;
``(iii) for each market area, the lead
price for the lead product established under
paragraph (4)(A);
``(iv) the price index (described in
paragraph (4)(B)(ii)) in each market area; and
``(v) for each eligible bidder, its
historic capacity for each item and service
that will be subject to auction pursuant to
paragraph (1) in the eligible market area.
``(D) Pre-auction bidders outreach.--Before each
auction, the Secretary shall provide an open meeting or
other form of outreach at which prospective bidders in
eligible market areas in which the auction will be
conducted are provided information concerning the
auction and have the opportunity to have the auction
expert respond to questions concerning the conduct of
the auction.
``(E) During auction.--During the conduct of the
auction, the Secretary shall announce--
``(i) the time of the end of the round of
auctioning; and
``(ii) the history of prior rounds
including the aggregate supply at the end of
the round price for each product area by round.
``(F) Immediately after each auction round.--Not
later than 15 minutes after the end of each auction,
the Secretary shall announce--
``(i) the aggregate supply for each item
and service that is the subject of the auction
at the price established during the auction;
``(ii) for each supplier who has
participated in the auction, its own supply for
all prices (from the initial starting price to
the end of round price) for each item and
service that is the subject of the auction; and
``(iii) revised schedule of rounds for the
next bidding day.
``(G) At conclusion of final auction round.--Not
later than 15 minutes after the end of the final
auction round, the Secretary shall announce--
``(i) a list of winning suppliers;
``(ii) the market clearing price for each
item and service that is the subject of the
auction; and
``(iii) for each bidder and in each
eligible market area, the bidder's supply for
all prices (from the initial starting price to
the end of round price).
``(H) Final actions.--Not later than one week after
the end of the final auction round, the Secretary shall
enforce the performance guarantees received from each
winning bidder (including a list of bidders who failed
to provide performance guarantees in accordance with
paragraph (3)(B) within one week after the end of the
auction).
``(6) Conditions of awarding contract.--
``(A) In general.--The Secretary shall award a
contract to any entity in an eligible market area in
which an auction is conducted and whose bid submitted
pursuant to paragraph (3)(A) is below the clearing
price established pursuant to paragraph (4)(B)(iii).
``(B) Terms of contract.--
``(i) Mandatory acceptance of contract.--A
supplier that submits a bid below such clearing
price shall be treated as having agreed to and
accept the contract awarded pursuant to
subparagraph (A).
``(ii) Contract terms.--A contract awarded
pursuant to subparagraph (A) shall be valid for
2 years, with the first such contract for the
period beginning on July 1, 2013.
``(iii) No requirement to supply up to bid
amount.--Nothing in this subsection shall
require a supplier that is awarded a contract
pursuant to subparagraph (A) to supply a marked
priced item or service that is the subject of
an auction in the eligible market area beyond
the level of demand for such item or service in
the eligible market area, even if such level is
below the level that the supplier assumed in
its bid.
``(C) Ensuring adequate selection of contractors.--
The Secretary may not award a contract to any entity
under the auction to furnish such items or services
unless the Secretary finds that the conditions
described in section 1847(b)(2)(A) apply with respect
to an entity receiving a contract under this paragraph.
``(D) Sufficient capacity.--The Secretary shall
establish a process to ensure that a supplier has
sufficient capacity to supply and fulfill the patient
demand for the item or service involved in the market
area involved. Such process shall be based upon the
historic capacity of the supplier. For purposes of the
preceding sentence, the term `historic capacity' means
the capacity of the supplier in the market area in the
preceding year.
``(E) Limits on suppliers.--Each bidding supplier
who has no historic capacity in the market area subject
to an auction shall be assigned a base capacity for
each item and service made available under the auction
of 1 percent of the total dollar value of that item or
service made available in the eligible market area.
``(7) Payment amount shall equal auction clearing price.--
``(A) In general.--With respect to market priced
items or services that are provided in an eligible
market area in which--
``(i) a market-priced auction is conducted,
the auction price determined at such auction
for such item in such eligible market area; or
``(ii) such an auction is not conducted,
the auction price determined at an auction for
those items that is conducted in another
eligible market area, as adjusted by the factor
described in subparagraph (B)(iv),
shall constitute the payment amount under section
1834(a)(1)(H)(i)(I) or section 1842(s), as the case may
be.
``(B) Supplying items or services.--
``(i) In general.--No entity other than a
supplier of a market priced item or service
that is the subject of a market-priced auction
in an eligible market area and that has been
selected as the winning bidder in that eligible
market area shall be eligible to receive a
contract under paragraph (6)(A) in such market
area.
``(ii) Supplying items in economically
equivalent markets.--A supplier of a market
priced item or service that has not been
selected as the winning bidder in the eligible
market area described in clause (i) shall,
subject to clauses (iii) and (iv), be eligible
to supply any other market priced item or
service that was not the subject of an auction
in that eligible market area but that was the
subject of a market-priced auction in another
economically similar eligible market area (as
determined by the Secretary).
``(iii) Supplier must accept auction
price.--Clause (ii) shall only apply to a
supplier that agrees to accept the price
determined at an auction in another eligible
market area for a market priced item or
service.
``(iv) Appropriate adjustments.--The
Secretary shall develop an adjustment factor to
reflect economic differences between the market
area that was the subject of the market-priced
auction for the item or service and the market
area in which the supplier is located. The
Secretary shall use such adjustment factor to
adjust the payment amount made to a supplier
pursuant to clause (iii). The Secretary,
auction expert, and market monitor shall
consult with relevant stakeholders in
developing such factor.
``(8) Monitoring of access and quality.--
``(A) In general.--The Secretary shall work with
stakeholders to develop performance measures for
suppliers that are awarded a contract pursuant to
paragraph (6)(A) to ensure compliance with the
requirements of this subsection and the measures
developed by the auction expert under subsection
(c)(2)(B)(ii) and to monitor the performance of
suppliers.
``(B) Enforcement.--If the Secretary determines
that there has been a material failure of a supplier
that has been awarded a contract under paragraph (6)(A)
to comply with such requirements and measures, the
Secretary shall implement enforcement measures. Such
enforcement measures may include--
``(i) a formal warning letter;
``(ii) forfeiture of amounts submitted as a
performance deposit pursuant to paragraph
(3)(B)(i) or paragraph (8);
``(iii) termination of a contract awarded
pursuant to paragraph (6)(A); or
``(iv) termination of the supplier's
agreement to participate in the program
established under this title for a period not
to exceed 2 years.
``(C) Appeals mechanism.--The Secretary shall
ensure that, prior to the imposition of an enforcement
measure under subparagraph (B), a supplier subject to
such measure has an opportunity to appeal imposition of
the measure.
``(e) Application of Competitive Acquisition Program Provisions.--
In implementing the market pricing program under this section, the
provisions of section 1847(b) shall be applied as follows:
``(1) Paragraph (3) shall apply, except that, for purposes
of contracts awarded under the market pricing program,
subparagraph (B) of such paragraph shall be applied by
substituting `2 years' for `3 years'.
``(2) Subject to subsection (d)(7)(B), paragraph (4) shall
apply.
``(3) Paragraph (5) shall apply, except that--
``(A) the reference in subparagraph (A) of such
paragraph to subsection (a)(2) is deemed a reference to
subsection (b)(1) of this section; and
``(B) the reference in subparagraph (B)(i) of such
paragraph to subparagraph (A) is deemed a reference to
subsection (d)(4) of this section.
``(4) Paragraph (6) shall apply, except that in applying
subparagraph (D)--
``(A) the term `small suppliers' shall mean an
entity with a gross revenue that does not exceed
$3,500,000; and
``(B) the Secretary shall ensure that at least 30
percent of the number of contractors that are awarded
contracts pursuant to subsection (d)(6) of this section
for each product category in an eligible market area
are small suppliers (as defined in subparagraph (A)).
``(5) Paragraph (7) shall not apply.
``(6) Paragraph (8) shall apply.
``(7) Paragraph (9) shall apply, except that such paragraph
shall be applied as if a reference to a bidding program
includes a reference to the market pricing program.
``(8) Paragraph (10) shall apply, except that such
paragraph shall be applied as if a reference to a competitive
acquisition program includes a reference to the market pricing
program.
``(9) Paragraph (11) shall not apply, except that--
``(A) the pendency of any claim for review under
this section shall not delay any auction round
conducted pursuant to subsection (a)(3) or (d)(1); and
``(B) there shall be no administrative or judicial
review of any claim to enjoin the operation of a
market-priced auction conducted.
``(f) Transparency Requirements for Market Pricing Program.--
``(1) In general.--In implementing the market pricing
program, the Secretary shall provide for publication, on an
Internet Web site operated by the Secretary, of the following
information:
``(A) The qualifications necessary to submit a bid
pursuant to subsection (d)(3).
``(B) The financial requirements and ratios of such
requirements necessary for an entity described in
subparagraph (A) that are applicable for purposes of
subsection (d)(3)(B)(i).
``(C) The quality standards and the performance
standards developed by the auction expert pursuant to
subsection (c)(2)(B)(ii).
``(D) The calculation of the total market capacity
of an eligible market area for purposes of subsection
(d)(5)(C)(i).
``(E) The methodology developed for an adjustment
factor applied pursuant to subsection (d)(7)(B)(iv).
``(F) The process for soliciting and accepting bids
for purposes of paragraphs (3) and (5) of subsection
(d).
``(G) For purposes of subsection (d)(5)--
``(i) the number of bidders at the auction;
``(ii) the number of bids accepted and
rejected at the auction; and
``(iii) with respect to rejected bidders,
the specific reasons for rejections of any bid,
and, with respect to any such rejection, a
means of ensuring the availability of the
process described in paragraph (2) to a
rejected bidder.
``(H) The calculation of and compliance with the
requirement of section 1847(b)(6)(D), as made
applicable to the market pricing program by subsection
(e)(4).
``(2) Transparent appeals process.--
``(A) In general.--For purposes of complying with
paragraph (1)(G)(iii), the Secretary shall develop an
appeals process under which an entity that submits a
bid under subsection (d)(3)(A) that is rejected for
participation in an auction may challenge such
rejection.
``(B) Timely response to appeal.--The process
established pursuant to subparagraph (A) shall include
a requirement that the Secretary respond to the
rejected entity within 45 days of submission of an
appeal by the entity.
``(g) Reliance on Auction Expert and Market Monitor in Establishing
and Operating Market Pricing Program; Advisory Committee Report and
Monitoring.--
``(1) Auction expert.--
``(A) In general.--The Secretary shall, not later
than 3 months after the date of the enactment of this
section, through the Office of the Assistant Secretary
for Planning and Evaluation, enter into a contract with
an individual to serve as the auction expert to assist
in the design, development, implementation and
functioning of the auction to be conducted pursuant to
subsection (b). The auction expert shall report and be
accountable to the Secretary.
``(B) Selection of auction expert; term; access to
information.--
``(i) Competitive process.--The selection
of the individual to serve as the auction
expert under subparagraph (A) shall be
undertaken through a competitive process.
``(ii) Qualifications.--An individual may
not be selected as the auction expert unless
the individual--
``(I) has appropriate educational
credentials; and
``(II) has experience in
implementing auctions of similar
complexity in government programs.
``(iii) Disqualifications.--An individual
may not be selected as the auction expert if
such individual--
``(I) is a current government
employee;
``(II) is a former employee of the
Centers for Medicare & Medicaid
Services who had any responsibilities
with respect to the program under
section 1847; or
``(III) is a current or former
contractor for the Centers for Medicare
& Medicaid Services that participated
in the implementation of the
competitive acquisition program under
section 1847(a).
``(iv) Term of contract.--The contract for
the initial auction expert under this paragraph
shall be for a period of 4 years and thereafter
such contract may be renewed for additional
periods of 4 years or another auction expert
selected.
``(v) Access to information.--The Secretary
shall make available to the auction expert all
applicable information (including confidential
information) on the relevant markets.
``(2) Market monitor.--
``(A) In general.--The Secretary shall, not later
than 3 months after the date of the enactment of this
section, through the Office of the Assistant Secretary
for Planning and Evaluation, enter into a contract with
an individual to serve as the market monitor to monitor
the design, development, and functioning of the auction
to be conducted under subsection (b). The market
monitor shall report and be accountable to the
Secretary.
``(B) Selection of market monitor; term of
contract; access to information.--The provisions of
subparagraph (B) of paragraph (1) shall apply with
respect to the market monitor in the same manner as
they apply with respect to the auction expert.
``(C) Functions of market monitor.--
``(i) Public comments on auction design.--
The market monitor shall provide public
comments on the auction design developed under
subsection (c) within one month of the date of
its publication.
``(ii) Participate in design conference.--
The market monitor shall participate in the
design conference and, at the conference,
provide a presentation on the auction design.
``(iii) Review of final design.--The market
monitor shall review the final auction design
recommendations submitted under subsection
(c)(2)(D) and, within one month of the release
of such recommendations, provide public comment
on them.
``(iv) Annual report.--The market monitor
shall provide an annual report to Congress on
the operation and functioning of the market
pricing program. Each such report shall include
information on--
``(I) potential problems with the
program;
``(II) recommended solutions to
problems identified pursuant to
subclause (I);
``(III) the appropriateness of
HCPCS codes selected for auctions;
``(IV) an evaluation on the ability
of individuals eligible for benefits
under this part to obtain items and
services subject to the market pricing
program;
``(V) any adverse health effects
resulting from implementation of the
program;
``(VI) any material deterioration
in the quality of items and services
provided under the program;
``(VII) the costs of any
preventable hospitalizations for market
priced items and services;
``(VIII) any negative business
consequences to the supplier of any
market priced items and services
occurring as a result of errors made in
the conduct of the program; and
``(IX) any other effects identified
by the market monitor.
``(3) Reconstitution of and report by program advisory
committee.--
``(A) In general.--With respect to the Program
Advisory and Oversight Committee established under
section 1847(c), notwithstanding paragraphs (4) and (5)
of such section and for the purposes of preparing the
report under subparagraph (B) of this paragraph, the
Secretary shall reconstitute the Committee and extend
the terms of its members (and its termination date)
through December 31, 2014, and the provisions of the
Federal Advisory Committee Act (5 U.S.C. App.) shall
apply to the reconstituted Committee.
``(B) Report.--Not later than December 31, 2014,
such Committee shall submit to the Congress a report on
the market pricing program. The report shall include
information on the design of the market pricing program
and access to and quality of market priced items and
services.
``(4) Ongoing monitoring by secretary.--The Secretary shall
monitor the effects of the market pricing program to guard
against the occurrence of any negative effects specified in
paragraph (2)(C)(iv). Such monitoring shall include public
availability of the number of suppliers providing market priced
items and services in an eligible market area during each year
of the operation of the market pricing program.''.
SEC. 3. TERMINATION AND TRANSITION FROM DMEPOS COMPETITIVE BIDDING
PROGRAM.
(a) Termination of Competitive Acquisition Program.--Section
1847(a)(1) of the Social Security Act (42 U.S.C. 1395w-3(a)(1)) is
amended--
(1) in subparagraph (B), by striking ``The programs'' and
inserting ``Subject to subparagraph (G), the programs''; and
(2) by adding at the end the following new subparagraph:
``(G) Termination of program; transition.--
``(i) No additional competition rounds.--
Notwithstanding subparagraph (B), the
competition under this section shall end with
round 1. The Secretary shall take no further
action to implement round 2 of the competitive
acquisition program, the national mail order
competitive acquisition program, or any
subsequent round of the competitive acquisition
program under this section.
``(ii) Contract termination.--The contracts
awarded under this section before the date of
the enactment of this subparagraph shall
terminate on June 30, 2013, and no payment
shall be made under this title after such date
based on such a contract. To the extent that
any damages may be applicable as a result of
the termination of such contracts, such damages
shall be payable from the Federal Supplementary
Medical Insurance Trust Fund under section
1841. Nothing in this clause shall be construed
to provide an independent cause of action or
right to administrative or judicial review with
regard to the termination provided under this
clause.''.
(b) Transitional Payment Rules.--
(1) Payment for durable medical equipment.--Section
1834(a)(1)(F) of the Social Security Act (42 U.S.C.
1395m(a)(1)(F)) is amended--
(A) in clause (i)--
(i) by inserting ``and before July 1,
2013,'' after ``January 1, 2011,''; and
(ii) by adding ``and'' at the end;
(B) in clause (ii)--
(i) by striking ``(and, in the case of
covered items'' and all that follows through
``subject to clause (iii) shall)''; and
(ii) by striking ``; and'' at the end and
inserting a period; and
(C) by striking clause (iii).
(2) Awards to qualified suppliers not selected in
competitive acquisition program.--Section 1847(b)(4) of such
Act (42 U.S.C. 1395w-3(b)(4)) is amended--
(A) by striking ``The Secretary may limit'' and
inserting ``Subject to subparagraph (C), the Secretary
may limit''; and
(B) by adding at the end thereof the following new
subparagraph:
``(C) Non-contracted suppliers in competitive
acquisition program.--Beginning on the date of the
enactment of this subparagraph and until the date of
implementation of the market pricing program under
section 1847C, the limit under subparagraph (A) shall
not apply and the Secretary shall award a contract to
any entity that--
``(i) submitted a bid in the competitive
acquisition program;
``(ii) meets financial and quality
standards and is otherwise qualified but was
not awarded a contract under such program
because the entity's bid was above the pricing
threshold to provide such items and services in
a competitive acquisition area; and
``(iii) accepts the price established under
such program as payment in full.''.
(3) Payment for off-the-shelf orthotics.--Section
1834(h)(1) (42 U.S.C. 1395m(h)(1)) is amended by adding at the
end the following new subparagraph:
``(I) Application of market pricing program;
limitation of inherent reasonableness authority.--In
the case of orthotics described in subsection (b)(1)(K)
of section 1847C furnished on or after July 1, 2013, in
an eligible market area, that are included in a market
pricing program 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 market pricing program; and
``(ii) paragraphs (8) and (9) of section
1842(b) shall not be applied.''.
(c) Conforming Amendments to Market Pricing Policy.--
(1) In general.--Section 1834(a)(1) of the Social Security
Act (42 U.S.C. 1395m(a)(1)) is amended by adding at the end the
following new subparagraph:
``(H) Application of market pricing program;
limitation of inherent reasonableness authority.--
``(i) In general.--In the case of covered
items or off-the-shelf orthotics furnished on
or after January 1, 2014, subject to
subparagraph (G), that are included in a market
pricing program in an eligible market area
under section 1847C--
``(I) the payment basis under this
subsection in an eligible market area
for the 2 items and services described
in section 1847C(b)(1) that are
selected for auction in such area
pursuant to section 1847C(d)(2) shall
be the amount determined under the
auction conducted in such eligible
market area;
``(II) the payment basis under this
subsection in an eligible market area
for the items and services described in
section 1847C(b)(1) that are not
selected for auction in such area
pursuant to section 1847C(d)(2) shall
be the amount determined pursuant to an
auction for those items that is
conducted in another eligible market
area, and adjusted by the factor
described in section
1847C(d)(7)(B)(iv);
``(III) during the term of any
contract awarded pursuant to section
1847C(d)(6) for an item and service
described in subclause (I), the
Secretary may not adjust the payment
rate determined in section
1847(b)(13)(G) to take into account the
effects of a later-conducted auction
during that two-year contract period;
``(IV) at the termination of a
contract awarded under section
1847C(d)(6) for an item or service
described in subclause (I), the
Secretary shall adjust the payment rate
applicable under such contract to take
into account the effects of a later-
conducted auction; and
``(V) with respect to payment
amounts applicable pursuant to
subclause (II), the Secretary shall
adjust the payment rate annually.
``(ii) Use of additional information.--The
Secretary, after consultation with the auction
expert under section 1847C, may (and, in the
case of covered items furnished on or after
January 1, 2016, shall) use information on the
payment determined under such market pricing
program to adjust the payment amount otherwise
recognized under subparagraph (B)(ii) for an
area in which an auction has not been conducted
pursuant to section 1847C(a) and in the case of
such adjustment, paragraph (10)(B) shall not be
applied.
``(iii) Continued use of additional
information.--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 market pricing program, additional covered
items are phased in or information is updated
as contracts are renewed under such program.''.
(2) Regulatory authority.--Section 1834(a)(1)(G) of such
Act (42 U.S.C. 1395w-3(a)(1)(G)) is amended--
(A) by inserting ``or market pricing'' before
``rates'' in the subparagraph heading;
(B) by striking ``subparagraph (F)(ii)'' and
inserting ``subparagraph (F)(ii), subparagraph
(H)(iii),''; and
(C) by inserting ``or eligible market areas in
which an auction has been conducted, on or after the
first day of the year specified in section
1847C(a)(3)(A)'' after ``competitive acquisition
areas''.
(d) Negative Pressure Wound Therapy Standards.--The Secretary of
Health and Human Services, in consultation with relevant stakeholders
(as defined in section 1847C(c)(2)(A)(ii) of the Social Security Act,
as added by section 1) shall develop standards for coverage and quality
of negative pressure wound therapy items and services (within the
meaning of section 1847(a)(1)(D)(i)(IV) of such Act).
SEC. 4. OFFSET THROUGH REDUCTIONS IN PROGRAM SPENDING.
Section 1834(a)(14) of the Social Security Act (42 U.S.C.
1395m(a)(14)) is amended--
(1) in subparagraph (K), by striking ``and'' at the end;
(2) in subparagraph (L)--
(A) by striking ``and each subsequent year''; and
(B) by striking the period at the end of clause
(ii) and inserting ``; and'';
(3) by inserting after subparagraph (L) the following new
subparagraphs:
``(M) for 2012--
``(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 2011, reduced by--
``(ii) the productivity adjustment
described in section 1886(b)(3)(B)(xi)(II);
``(N) in 2013--
``(i) in the case of items and services
described in section 1847C(b) furnished in any
geographic area (including related accessories,
but only if such accessories are furnished with
such items and services), -4.8 percent; and
``(ii) in the case of items and services
not described clause (i), the amount specified
in subparagraph (M); and
``(O) in 2014 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).'';
and
(4) in the matter following subparagraph (O) (as added by
paragraph (3)), by striking ``subparagraph (L)(ii)'' and
inserting in lieu thereof ``clause (ii) of subparagraphs (L),
(M), and (O)''.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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