Medicare DMEPOS Market Pricing Program Act of 2013 - Amends part B (Supplementary Medical Insurance) of title XVIII (Medicare) of the Social Security Act (SSA) to establish a market pricing program for durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS) as a replacement for the competitive acquisition program, which is terminated as of December 31, 2013. Terminates contracts awarded before enactment of this Act on July 1, 2013.
Prescribes requirements for transitional payments for items and services, including payments for diabetic supplies and off-the-shelf orthotics, in areas designated for rounds 1 and 2 of the erstwhile phase-in of the competitive acquistion program, as well as during the initial two-year period of the market pricing program.
Directs the Secretary to: (1) conduct market-priced auctions in eligible auction areas throughout the United States for the furnishing of market priced items and services, (2) establish an auction design through a specified process and meeting certain requirements, and (3) ensure that the first auction will be conducted for all eligible auction areas not later than 14 months after contracting with an auction expert.
Directs the Secretary to: (1) select a combination of two categories of items and services for each auction, (2) establish a lead product for each product category, (3) establish for each market priced item and service a clearing price equal to the highest cost bid that will meet capacity targets in the market area, (4) award a contract to any entity in an auction's eligible market area whose bid is at or below the clearing price, and (5) monitor the performance of suppliers that are awarded a contract to ensure their compliance with certain requirements.
Requires the Secretary, through the Office of the Assistant Secretary for Planning and Evaluation, to contract with an auction expert and a market monitor to assist in the design, development, implementation, and functioning of the auction. Requires the market monitor, on an ongoing basis, also to monitor suppliers and the effects of the market pricing program.
Rescinds unobligated balances of all discretionary appropriations for each fiscal year (except those for accounts, programs, projects and activities operated by the Department of Defense [DOD] or the Department of Veterans Affairs [VA]) in an amount necessary to make this Act budget neutral for such fiscal year.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1717 Introduced in House (IH)]
113th CONGRESS
1st Session
H. R. 1717
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
April 24, 2013
Mr. Price of Georgia (for himself, Mr. Larson of Connecticut, Mr.
Thompson of Pennsylvania, Mr. Braley of Iowa, Mr. Roe of Tennessee, Mr.
Ryan of Ohio, Mr. Tiberi, Mr. Loebsack, Mr. Joyce, Mr. McKinley, Mrs.
Capito, Mr. DesJarlais, Mrs. Blackburn, Mr. Barletta, Mr. Grimm, Mr.
Austin Scott of Georgia, Mr. Harper, Mr. Marino, Mr. Crenshaw, Mr. King
of New York, Mr. Johnson of Ohio, Mr. Fortenberry, Mr. Chabot, Mr.
Posey, Mr. Lankford, and Mr. Nunnelee) introduced the following bill;
which was referred to the Committee on Energy and Commerce, and in
addition to the Committees on Ways and Means and Appropriations, 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 2013''.
SEC. 2. 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'';
(2) in subparagraph (D), by striking clauses (ii) and
(iii); and
(3) 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 on
December 31, 2013, 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 July 1, 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.''.
SEC. 3. TRANSITIONAL PAYMENT AFTER TERMINATION OF DMEPOS COMPETITIVE
BIDDING PROGRAM.
(a) Transitional Payment Rules.--
(1) Payment for durable medical equipment.--
(A) In general.--Section 1834(a)(1) of the Social
Security Act (42 U.S.C. 1395m(a)(1)) is amended--
(i) in subparagraph (F)(i)--
(I) by inserting ``and before July
1, 2013,'' after ``January 1, 2011,'';
(II) by striking ``, subject to
subparagraphs (G) and (H),''; and
(III) by adding ``and'' at the end;
(ii) in subparagraph (F)(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;
(iii) by striking clause (iii) of
subparagraph (F);
(iv) by striking subparagraphs (G) and (H);
and
(v) by adding at the end the following new
subparagraph:
``(G) Payment rates in round 1 areas during
transition.--
``(i) In general.--In the case of covered
items and services that are furnished in an
area that had been designated by the Secretary
as a competitive acquisition program under
section 1847(a)(1)(B)(i)(I) on or after the
date on which contracts for the furnishing of
such covered items and services expire, the
payment basis under this subsection for such
items and services furnished in such area shall
be the amount described in clause (ii) or
(iii), as the case may be.
``(ii) Payment rates in round 2 for items
and services that are not diabetic testing
supplies.--
``(I) In general.--In the case of
covered items that were selected to be
furnished in the competitive
acquisition program (excluding diabetic
supplies) in a competitive acquisition
area selected pursuant to section
1847(a)(1)(B)(i)(II) on or after July
1, 2013, and before the date on which
the Secretary implements the market
pricing program under section 1847C,
subject to subclause (II), the payment
basis under this subsection for such
items and services furnished in such
areas shall be 95 percent of the amount
established under this subsection.
``(II) Further reductions in 2014
and 2015.--In the case of covered items
described in subclause (I) that are
furnished during 2014, the payment
basis under this subsection for such
items furnished in such areas shall be
reduced by 10 percent from the amount
described in such subclause. In the
case of such items and services that
are furnished in such areas on or after
January 1, 2015, and before the date on
which the Secretary implements the
market pricing program under section
1847C, the payment basis under this
subsection for such items and services
shall be further reduced by 10 percent
after taking into account the reduction
effected under the preceding sentence.
``(iii) Payment rates for diabetic
supplies.--
``(I) In general.--In the case of
all diabetic testing supplies, mail
order and non-mail order (HCPCS Codes
A4233, A4234, A4235, A4236, A4253,
A4256, A4258, and A4259, including the
KL modifier), effective July 1, 2013,
and before the date on which the
Secretary implements the market pricing
program under section 1847C and subject
to subclause (II), the payment basis
under this subsection for such supplies
shall be 90 percent of the amount
otherwise established under this
subsection.
``(II) Further reductions in 2014
and 2015.--In the case of supplies
described in subclause (I) that are
furnished during 2014, the payment
basis under this subsection for such
items furnished in such areas shall be
reduced by 15 percent from the amount
described in such subclause. In the
case of such supplies that are
furnished in such areas on or after
January 1, 2015, and before the date on
which the Secretary implements the
market pricing program under section
1847C, the payment basis under this
subsection for such supplies shall be
further reduced by 15 percent after
taking into account the reduction
effected under the preceding
sentence.''.
(B) Conforming amendments.--Section 1842(s) of the
Social Security Act (42 U.S.C. 1395u(s)) is amended--
(i) in paragraph (3), in the matter
preceding subparagraph (A), by inserting ``and
that are furnished in such an area on or before
July 1, 2013'' after ``section 1847(a)''; and
(ii) by adding at the end the following new
paragraph:
``(4)(A)(i) In the case of items and services described in
paragraph (2)(D) that are furnished in an area that had been designated
by the Secretary as a competitive acquisition area under section
1847(a)(1)(B)(i)(I) on or after the date on which contracts for the
furnishing of such covered items and services expire, the payment basis
under this subsection for such items and services furnished in such
area shall be the amounts described in clause (ii).
``(ii)(I) In the case of items and services described in paragraph
(2)(D) that were selected to be furnished in the competitive
acquisition program in a competitive acquisition area selected pursuant
to section 1847(a)(1)(B)(i)(II) on or after July 1, 2013, and before
the date on which the Secretary implements the market pricing program
under section 1847C, subject to subclause (II), the payment basis under
this subsection for such items and services furnished in such areas
shall be 95 percent of the amount otherwise established under this
subsection.
``(II) In the case of covered items and services described in
subclause (I) that are furnished during 2014, the payment basis under
this subsection for such items and services furnished in such areas
shall be reduced by 10 percent from the amount described in such
subclause. In the case of such items and services that are furnished in
such areas on or after January 1, 2015, and before the date on which
the Secretary implements the market pricing program under section
1847C, the payment basis under this subsection for such supplies shall
be further reduced by 10 percent after taking into account the
reduction effected under the preceding sentence.
``(B)(i) In the case of items and services described in paragraph
(2)(D) that are included in the market pricing program under section
1847C, 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 use information on the payment determined
under such market pricing program to adjust the payment amount
otherwise applicable under clause (i) for an area that is not a market
pricing area under section 1847C, and in the case of such adjustment,
paragraphs (8) and (9) of subsection (b) shall not be applied.''.
(2) Treatment of suppliers in competitive acquisition
program areas.--Section 1847(b)(4) of the Social Security Act
(42 U.S.C. 1395w-3(b)(4)) is amended--
(A) in subparagraph (A)--
(i) in the first sentence, by striking
``The Secretary may limit'' and inserting
``Until December 31, 2013, the Secretary may
limit''; and
(ii) by inserting after the first sentence
the following: ``The preceding sentence shall
not apply to items and services furnished in an
eligible auction area (within the meaning of
subsection (a)(4) of section 1847C) on or after
the date of the implementation of the market
pricing program under such section.''; and
(B) by adding at the end the following new
subparagraph:
``(C) Non-contracted suppliers in market pricing
program.--The Secretary also shall award contracts to
any supplier that meets eligibility requirements under
this title for the furnishing of such items and
services so long as the supplier accepts the price
established under such program as payment in full for
such items and services.''.
(3) Payment for off-the-shelf orthotics.--Section
1834(h)(1) of the Social Security Act (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 January 1, 2014,
in an eligible auction 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) the Secretary may 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 that is not an eligible auction
area under section 1847C, and in the case of
such adjustment, paragraphs (8) and (9) of
section 1842(b) shall not be applied.''.
(b) Policy After Implementation of the Market Pricing Program.--
(1) In general.--Section 1834(a)(1) of the Social Security
Act (42 U.S.C. 1395m(a)(1)), as amended by subsection
(a)(1)(B), 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 market
priced items and services described in section
1847C(b)(1) furnished on or after the date of
implementation of a market pricing program for
which a price has been established under the
program conducted in an eligible auction area
under section 1847C, the payment basis under
this subsection--
``(I) in the eligible auction area
shall be the amount determined under
the auction conducted in such eligible
auction area for such items and
services; or
``(II) in another eligible auction
area shall be the amount determined
under subclause (I) adjusted by the
appropriate factor described in section
1847C(d)(7)(B)(iv).
``(ii) No adjustment in payment amount
during initial two-year period of pricing
program.--During the term of any contract
awarded pursuant to section 1847C(d)(6) for an
item and service described in clause (i), the
Secretary may not adjust the payment basis
established under such clause to take into
account the effects of a later-conducted
auction during that two-year contract period.
The Secretary may, at the termination of a
contract awarded under section 1847C(d)(6) for
such an item or service, adjust such payment
basis to take into account the effects of a
later-conducted auction.
``(iii) Market pricing in rural and non-
competitive areas.--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).
``(iv) 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 the
Social Security Act (42 U.S.C. 1395w-3(a)(1)(G)) is amended--
(A) in the subparagraph heading, by inserting ``or
market pricing'' before ``rates'';
(B) by striking ``subparagraph (F)(ii)'' and
inserting ``subparagraph (F)(ii), subparagraph
(H)(iii),''; and
(C) by inserting ``or eligible auction areas in
which an auction has been conducted, after June 30,
2013,'' after ``competitive acquisition areas''.
SEC. 4. ESTABLISHMENT OF DMEPOS MARKET PRICING PROGRAM.
(a) In General.--Part B of title XVIII of the Social Security Act
is amended by inserting after section 1847B (42 U.S.C. 1395w-3b) 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 auction areas (as defined in paragraph (4))
throughout the United States for the furnishing 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
auction areas, auction design, establishing of clearing prices,
and conduct of auctions, 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 subsection (g)(1).
``(3) Implementation.--The market pricing program shall be
implemented in all eligible auction areas so that market
pricing occurs nationwide in the first year of implementation
consistent with the following:
``(A) First year of implementation.--In the first
year of implementation--
``(i) auctions under the program shall be
held in at least 20 percent of eligible auction
areas;
``(ii) prices in these areas will be set by
such auctions;
``(iii) in each eligible auction area 2
categories of items shall be selected for
auction;
``(iv) prices for categories not selected
for auction in the area shall be set by
reference to auctions held for those categories
in econometrically similar areas; and
``(v) in those areas in which no auctions
are held, prices for all categories will be set
by reference to auctions held for those
categories in econometrically similar areas.
``(B) Second year of implementation.--In the second
year of implementation--
``(i) auctions shall be held in other
eligible auction areas that include 10 percent
of eligible auction areas; and
``(ii) prices in those areas in which no
auctions are held or for categories in which an
auction is not held, shall be set in the same
manner as under subparagraph (A).
``(C) Subsequent years.--In each subsequent year of
implementation--
``(i) auctions shall be held in an
additional 10 percent of eligible auction
areas, selected by the Secretary annually on an
ongoing and rotating basis, until all eligible
auction areas have been covered; and
``(ii) prices in those areas in which no
auctions are held or for categories in which an
auction is not held, shall be set in the same
manner as under subparagraph (A).
``(D) Once the market pricing program is applied
throughout the United States under subparagraph (C),
the Secretary shall conduct auctions for different
eligible auction areas throughout the United States on
an ongoing and rotating basis covering 10 percent of
eligible auction 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 auction areas.--
``(A) In general.--In this section and section
1834, the term `eligible auction areas' means counties,
aggregations of counties, or parts of counties, not
excluded under subparagraph (D), as established by the
Secretary.
``(B) Market areas must reflect economic
interdependency.--In determining and selecting eligible
auction areas, the Secretary shall choose, from among
counties, aggregations of counties, or parts of
counties, auction 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
to take into account population and geographic size in
establishing auction areas in order to comply with this
subparagraph.
``(C) Selection of auction areas.--In selecting
auction areas in which an auction will be conducted
under this section, the Secretary shall ensure that
several auction areas of each econometric model are
chosen.
``(D) Exclusion of certain auction areas.--The
Secretary shall not subject areas described in clause
(iii) of section 1847(a)(1)(D) to market program
reimbursement rates before the year specified in such
clause.
``(5) Application of certain policies applicable to
competitive acquisition programs.--The following provisions of
subsection (a)(1) of section 1847 shall apply to the market
pricing program in the same manner as they apply to competitive
acquisition programs 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 auction 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) furnished on or after July 1, 2013.
``(L) External infusion pumps and supplies.
``(M) Other items and services (other than those
items and services specified in paragraph (2)) that
could have been subject to participation in competitive
acquisition programs under section 1847(a)(1).
``(2) Excluded items.--Such term does not include the
following:
``(A) An adjustable skin protection cushion used in
connection with a wheelchair.
``(B) A complex rehabilitative power wheelchair and
related accessories.
``(C) A manual wheelchair billed using current
HCPCS Codes K0005 or E1161, and related accessories for
such a wheelchair.
``(D) A medical device classified in class III
under the Federal Food, Drug, and Cosmetic Act.
``(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 auction
areas no later than 14 months after the date of entering into
the contract with the auction expert under subsection (g)(1).
``(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, including through the
auction plan conference and other outreach
efforts.
``(ii) Relevant stakeholders.--For purposes
of clause (i), the term `relevant stakeholders'
means suppliers and manufacturers of market
priced items and services (and trade
associations representing such suppliers and
manufacturers), physicians, and individuals
entitled to benefits under this title (and
representatives of such individuals).
``(B) Draft auction design.--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 that shall propose
auction areas nationwide, lead products for each
product category, and the price index associated with
each lead product, and proposed rules for the conduct
of auctions.
``(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 Secretary
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) Manufacturers and 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 review the
auction design developed by the auction expert
under subparagraph (B) for the establishment of
an efficient auction consistent with best
practices and actuarial science.
``(iv) Elements of conference.--With
respect to the design conference--
``(I) the auction expert shall
provide a demonstration of the
preliminary auction design;
``(II) the auction expert shall
lead a mock auction based upon such
design in which the attendees will
participate and offer comments and
suggestions for improvement;
``(III) the auction expert may
establish working committees on major
issues; and
``(IV) the design conference shall
be recorded and made available over the
Internet through simultaneous Web cast
or otherwise.
``(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 for approval for
expedited rulemaking. In this clause, the term
`expedited rulemaking process' means a process
of publication of the proposed auction design
and solicitation of public comments on such
design. The provisions of section 1871(b)(1)
shall not apply to such process.
``(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 14 months after the
date a contract is first entered into with an auction expert
under subsection (g), the Secretary shall conduct auctions
(each in this section referred to as a `market-priced auction')
among entities supplying market priced items and services in
eligible auction areas that are selected in the auction design
and consistent with subsection (a)(3). Each auction shall
conclude no later than 2 months after its commencement. 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 auction area in
which a market-priced auction is conducted, the
Secretary shall select to be subject to auction a
combination of 2 categories of 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 auction areas. The Secretary shall ensure that
each product category is auctioned in at least a
sufficient number of eligible auction 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 auction 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 winning bid 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 for establishing clearing
prices.--
``(A) In general.--For each product category of
items and services specified in subsection (b)(1) that
is the subject of a market-priced auction, the
Secretary shall establish a lead product. Such lead
product shall be selected based upon the price 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 the 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, which
percentage of the clearing price, established
by the auction expert in the plan design and
adjusted after input from providers at the
design plan conference, establishes the price
of each item and service in the category.
``(iii) Establishing clearing price for
items and services.--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 that will meet
capacity targets in the eligible auction area
for such item and service.
``(5) Conduct of auction.--
``(A) In general.--The Secretary shall conduct the
market-priced auctions consistent with the provisions
of this paragraph.
``(B) 3 months before auction date.--Approximately
3 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 the following:
``(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
the price grid for such category.
``(vi) The eligible auction areas
nationwide (and areas identified as having the
same econometric model) and those eligible
auction areas in which a market-priced auction
will be conducted each year.
``(C) 30 days before auction date.--Thirty days
before a scheduled auction date, the Secretary shall
review all applicants and identify the qualified
suppliers eligible to submit bids. In carrying out this
subparagraph, the Secretary shall specify the
following:
``(i) The historic capacity for each
eligible bidder for each category that will be
subject to the auction.
``(ii) Bidder eligibility by eligible
auction area.
``(iii) For each auction area, the lead
product established under paragraph (4)(A).
``(iv) The price index (described in
subsection (c)(2)(B)) in each auction area.
``(D) Bidders conference.--Prior to conducting each
such auction, the auction expert shall conduct a
conference of prospective bidders in eligible auction
areas in which an auction will be conducted.
``(E) During auction.--During the conduct of the
auction, the Secretary shall announce the following:
``(i) The time of the end of the round of
auctioning.
``(ii) The history of prior rounds
including the aggregate supply at the end of
the round price for each product category by
round.
``(F) Immediately after each auction round.--Not
later than 15 minutes after the end of each auction,
the Secretary shall announce the following:
``(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 that 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.
``(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 the
following:
``(i) A list of winning suppliers.
``(ii) The market clearing price for each
item and service that is the subject of the
auction.
``(H) Final actions.--Not later than 30 days after
the end of the final auction round, the Secretary shall
adjust the performance guarantees received from each
bidder to reflect the outcome of the auction in
accordance with paragraph (3)(B).
``(6) Conditions of awarding contract.--
``(A) In general.--The Secretary shall award a
contract to any entity in an eligible auction area in
which an auction is conducted and whose bid submitted
pursuant to paragraph (3)(A) is at or below the
clearing price established pursuant to paragraph
(4)(G)(ii).
``(B) Terms of contract.--
``(i) Mandatory acceptance of contract.--A
supplier that submits a bid at or 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.
``(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 auction area beyond
the level of demand for such item or service in
the eligible auction 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.--
``(i) In general.--The Secretary shall
identify the capacity of each supplier that
applies to participate in an auction under this
section. A supplier's capacity shall be based
upon the capacity of the supplier in the
preceding year in the auction area.
``(ii) New suppliers.--Each bidding
supplier that has no historic capacity in the
auction area shall be assigned a base capacity
for each produce category made available under
the auction of 1 percent of the total dollar
value of that item or service made available in
the eligible auction 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
auction area in which--
``(i) a market-priced auction is conducted,
the auction price determined at such auction
for such item in such eligible auction 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 auction area, as adjusted by the
factor described in subparagraph (B)(iv), if
appropriate,
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 auction area and that is a
winning bidder in that eligible auction area
shall be eligible to receive a contract under
paragraph (6)(A) in such auction area.
``(ii) Supplying items in economically
equivalent markets.--A supplier of a market
priced item or service that is not a winning
bidder in the eligible auction 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 auction
area but that was the subject of a market-
priced auction in another econometrically
similar eligible auction 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
auction area for a market priced item or
service.
``(iv) Appropriate adjustments.--The
Secretary shall develop an adjustment factor to
reflect economic differences between the
auction area that was the subject of the
market-priced auction for the item or service
and the auction 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 factors.
``(8) Monitor access and quality.--
``(A) In general.--The Secretary shall monitor the
performance of suppliers that are awarded a contract
pursuant to paragraph (6) to ensure compliance with the
requirements of this subsection, including the
requirements and obligations established by the auction
expert under paragraph (5)(B).
``(B) Enforcement.--If the Secretary, after
consultation with the market monitor, determines that
there has been a material failure of a supplier that
has been awarded a contract pursuant to paragraph (6)
to comply with such requirements, the Secretary, after
consultation with the market monitor, shall implement
enforcement measures. Such enforcement measures may
include the following:
``(i) A formal warning letter.
``(ii) Forfeiture of amounts submitted as a
performance deposit pursuant to subsection
(d)(3)(B).
``(iii) Termination of a contract awarded
under paragraph (6).
``(iv) Termination of the supplier's
agreement to participate in the program under
this title for up to 2 years.
``(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 (7) shall not apply.
``(5) Paragraph (8) shall apply.
``(6) 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.
``(7) 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.
``(8) 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.--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:
``(1) The qualifications necessary to submit a bid pursuant
to subsection (d)(3).
``(2) The financial requirements that are applicable for
purposes of subsection (d)(3)(B).
``(3) The quality standards and the performance standards
developed pursuant to subsection (c)(3)(B).
``(4) The calculation of the total market capacity of an
eligible auction area for purposes of subsection (d)(5)(C)(i).
``(5) The methodology developed for an adjustment factor
applied pursuant to subsection (d)(7)(B)(iv).
``(6) The process for soliciting and accepting bids for
purposes of paragraphs (3) and (5) of subsection (d).
``(7) For purposes of subsection (d)(5)--
``(A) the number of bidders at the auction;
``(B) the number of winning and losing bidders at
the auction; and
``(C) 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 of review or appeal to a
rejected bidder.
``(8) 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).
``(g) Reliance on Auction Expert and Market Monitor in Establishing
and Operating Market Pricing Program; Advisory Committee Report and
Monitoring.--
``(1) Auction expert and 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 auction expert and such a
contract to serve as a market monitor to assist in the
design, development, implementation and functioning of
the auction to be conducted pursuant to subsection (b).
The auction expert and market monitor shall report and
be accountable to the Secretary.
``(B) Selection of auction expert and market
monitor; term; access to information.--
``(i) Competitive process.--The selection
of the individual to serve as the auction
expert and as a market monitor under
subparagraph (A) shall be undertaken through a
competitive process.
``(ii) Disqualifications.--An individual
may not be selected as the auction expert if
such individual--
``(I) is a current or former
employee of the Centers for Medicare &
Medicaid Services;
``(II) 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);
``(III) does not have significant
experience in implementing auctions of
similar complexity in government
programs; and
``(IV) does not have appropriate
educational credentials.
``(iii) Access to information.--The
Secretary shall make available to the auction
expert and the market monitor all applicable
information (including confidential
information) on the relevant markets throughout
the duration of the market pricing program.
``(iv) Term of contract.--The contract for
the auction expert and for the market monitor
under this paragraph shall be for a period of 4
years.
``(2) Functions of auction expert.--The auction expert
shall conduct the activities as described in this section,
including--
``(A) development of a draft auction design and
design conference under subparagraphs (B) and (C) of
subsection (c)(2);
``(B) conducting bidders conferences under
subsection (d)(5)(D); and
``(C) lead the auction, contracting, and other
aspects of implementing the market pricing program with
the advice of the market monitor.
``(3) Functions of market monitor.--
``(A) Participate in design conference.--The market
monitor shall participate in the design conference
under subsection (c)(2)(C) and, at the conference,
provide a presentation on the responsibilities of the
market monitor throughout the year and common on key
aspects of the design and their purpose.
``(B) 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.
``(C) Monitoring.--
``(i) In general.--The market monitor shall
provide ongoing monitoring of the performance
of suppliers and the effects of the market
pricing program to guard against the occurrence
of any negative effects specified in subsection
(d)(8).
``(ii) Provide transparency of
information.--The monitoring under clause (i)
shall include public availability of the number
of suppliers providing market priced items and
services in an eligible auction area during
each year of the operation of the market
pricing program.
``(D) Biannual reports to secretary.--The market
monitor shall provide biannual reports to the Secretary
in the initial two years and annually thereafter on the
development and operations of the market pricing
program. In each report, the monitor shall--
``(i) identify potential problems with the
program; and
``(ii) recommend solutions to problems so
identified.
``(E) 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 or
prolonged hospitalizations due to lack of
timely access to market priced items and
services; and
``(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.''.
SEC. 5. APPLICATION OF EXISTING PROVISIONS.
(a) Revisions to Program Advisory and Oversight Committee.--Section
1847(c) of the Social Security Act (42 U.S.C. 1395w-3(c)) is amended--
(1) in paragraph (1), by adding at the end the following:
``The Secretary shall reconstitute the Committee and extend the
terms of its members.'';
(2) in paragraph (3), by adding at the end the following
new subparagraph:
``(C) Additional report to congress.--Not later
than 1 year after the date of the appointment of the
auction expert under section 1847C(g)(1), the Committee
shall submit to the Congress a report on the market
pricing program established under section 1847C. The
report shall include information on the design of the
market pricing program, access to and quality of market
priced items and services by beneficiaries under the
program.'';
(3) by striking paragraph (4) (relating to FACA); and
(4) in paragraph (5), by inserting before the period at the
end the following: ``, except that the reconstituted Committee
shall terminate 2 years after the date of the appointment of
the auction expert and the market monitor under section
1847C(g)(1)''.
(b) 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 4), 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, 42 U.S.C.
1395w-3(a)(1)(D)(i)(IV)).
SEC. 6. ADDITIONAL BUDGETARY OFFSET.
(a) In General.--In addition to the payment reductions specified in
the amendments made by section 3(a)(1), unobligated balances of all
discretionary appropriations for each fiscal year (beginning with
fiscal year 2013) are hereby rescinded in an amount equal to the amount
necessary to make this Act budget neutral for such fiscal year.
(b) Implementation.--The Director of the Office of Management and
Budget shall determine and identify each account, program, project, and
activity to which the rescission under subsection (a) shall apply and
the amount of such rescission that shall apply to each such account,
program, project and activity. Not later than 60 days after the date of
the enactment of this Act, the Director of the Office of Management and
Budget shall submit a report to the Secretary of the Treasury and to
Congress of the accounts, programs, projects, activities, and amounts
determined and identified for rescission under the preceding sentence.
(c) Exception.--This section shall not apply to accounts, programs,
projects and activities operated by the Department of Defense or the
Department of Veteran's Affairs.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, and Appropriations, 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 Committees on Ways and Means, and Appropriations, 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 Committees on Ways and Means, and Appropriations, 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 Subcommittee on Health.
Referred to the Subcommittee on Health.
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