[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 941 Introduced in House (IH)]
108th CONGRESS
1st Session
H. R. 941
To amend title XVIII of the Social Security Act to provide for the
expeditious coverage of new medical technology under the Medicare
Program, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 26, 2003
Mr. Ramstad (for himself, Ms. Eshoo, Mr. Pitts, Mr. Crane, Mr. Camp,
and Ms. Dunn) introduced the following bill; which was referred to the
Committee on Ways and Means, and in addition to the Committee on Energy
and Commerce, 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 provide for the
expeditious coverage of new medical technology under the Medicare
Program, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; REFERENCES; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Medicare
Innovation Responsiveness Act of 2003''.
(b) References.--Except as otherwise specified, whenever in this
Act an amendment or repeal is expressed in terms of an amendment to or
repeal of a section or other provision, the references shall be
considered to be made to that section or other provision of the Social
Security Act.-
(c) Table of contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; references; table of contents.
TITLE I--PROVISIONS RELATING TO COVERAGE
Sec. 101. Deadlines for implementing national coverage, coding, and
payment determinations.
Sec. 102. Council for Technology and Innovation.
Sec. 103. Improvements to the medicare coverage determination appeals
process.
Sec. 104. Medicare coverage of routine costs associated with certain
clinical trials.
TITLE II--PROVISIONS RELATING TO CODING
Sec. 201. Improvements to the HCPCS coding assignment, inpatient coding
assignment, and DRG assignment processes.
Sec. 202. Process for adoption of ICD-10-PCS as data standard.
TITLE III--PROVISIONS RELATING TO PAYMENT
Sec. 301. Use of internal and external data for annual adjustments to
hospital payment systems.
Sec. 302. Limitation on use of foreign payer data in determining
medicare payment amounts.
Sec. 303. Recognition of new medical technologies under inpatient
hospital PPS.
Sec. 304. Preservation of local medical review process under medicare
administrative contractor reforms.
Sec. 305. Inherent reasonableness.
TITLE I--PROVISIONS RELATING TO COVERAGE
SEC. 101. DEADLINES FOR IMPLEMENTING NATIONAL COVERAGE, CODING, AND
PAYMENT DETERMINATIONS.
(a) In General.--Section 1862 (42 U.S.C. 1395y) is amended by
inserting after subsection (c) the following new subsection:
``(d)(1)(A)(i) Subject to the succeeding provisions of this
paragraph, upon receipt of a request for a national coverage
determination from an interested party, the Secretary shall make and
implement (if applicable) the national coverage determination for that
new technology within the following time frames:
``(I) In the case of a national coverage determination that
does not require a technology assessment described in
subparagraph (D), not later than the end of the 6-month period
that begins on the date a request for the national coverage
determination has been received by the Secretary,
notwithstanding the receipt by the Secretary of new evidence
(if any) during such period.
``(II) In the case of a national coverage determination
that requires such a technology assessment, not later than the
end of the 12-month period that begins on the date a request
for the national coverage determination has been received by
the Secretary.
``(ii) In this subparagraph--
``(I) the term `implement' includes determining what code,
if any, is assigned to the particular item or service;
determining the amount of payment to be made under this title
for the item or service; assigning the item or service, and
codes for the item or service, to appropriate payment groups;
incorporating the coverage, coding, and payment determinations
into the information processing systems of the Secretary and
fiscal intermediaries and carriers; and taking such other steps
as are necessary to make payments for the item or service no
later than the end of the applicable period described in clause
(i); and
``(II) the term `interested party' means individuals
entitled to benefits under part A, or enrolled under part B, or
both, who are in need of the items or services that are the
subject of the coverage determination, providers of services,
physicians, practitioners, suppliers, and manufacturers of such
items or services.
``(B) In making a national coverage determination under this
subsection, the Secretary shall take one of the following actions:
``(i) Issue a national coverage determination, with or
without limitations.
``(ii) Issue a national noncoverage determination.
``(iii) Issue a determination that no national coverage or
noncoverage determination is appropriate as of the end of such
period with respect to national coverage of such items or
services.
``(C) If the Secretary fails to take an action under subparagraph
(B) within the applicable period under subparagraph (A)(i), the
Secretary shall issue a notice that includes the following information:
``(i) A statement that the Secretary cannot make and (if
applicable) implement (as defined in subparagraph (A)(ii)(I)) a
national coverage determination within the applicable time
period.
``(ii) The identification of substantive issues
outstanding.
``(iii) A statement of what is required, including the
process involved, to resolve those issues.
``(iv) The date by which the Secretary will make a national
coverage determination under subparagraph (B) and (if
applicable) implement the national coverage determination.
``(D)(i) A technology assessment referred to in subparagraph (A) is
a formal, written technology assessment, conducted by an entity or
organization other than the Centers for Medicare & Medicaid Services
(in this subparagraph referred to as the `CMS'), or review by an
advisory committee appointed to advise the Administrator of the CMS on
matters relating to the interpretation, application, or implementation
of subsection (a), that the Administrator reasonably finds, in a
written notice issued before the end of the 6-month period specified in
subparagraph (A)(i), that such an assessment or review is necessary for
the Administrator to make the national coverage determination.
``(ii) Such technology assessment or review shall only be
considered necessary if the CMS lacks adequate expertise to evaluate
the matter itself.
``(E) In making a national coverage determination under
subparagraph (B), the Secretary shall include all the information
described in subparagraphs (C) and (D) of paragraph (2), and in the
case of the implementation of the national coverage determination,
applicable codes and payment amounts for the new item or service.
``(2) In making a national coverage determination (as defined in
section 1869(f)(1)(B)) the Secretary shall ensure that--
``(A) the public is afforded notice and opportunity to
comment prior to implementation by the Secretary of the
determination;
``(B) meetings of advisory committees established under
section 1114(f) with respect to the determination are made on
the record;
``(C) in making the determination, the Secretary has
considered applicable information (including clinical
experience and medical, technical, and scientific evidence)
with respect to the subject matter of the determination;
``(D) in issuing the determination, provide a clear
statement of the basis for the determination (including
responses to comments received from the public) and the
assumptions underlying that basis; and
``(E) make available to the public the data (other than
proprietary data) considered in making the determination.''.
(b) Conforming amendment.--Subsection (a) of such section is
amended by striking the third sentence.
(c) Effective date.--The amendments made by this section shall take
effect on the date of the enactment of this Act, and apply to requests
for national coverage determinations made on or after the date that is
90 days after such effective date.
SEC. 102. COUNCIL FOR TECHNOLOGY AND INNOVATION.
Section 1868 (42 U.S.C. 1395ee) is amended--
(1) by adding at the end of the heading the following: ``;
COUNCIL FOR TECHNOLOGY AND INNOVATION'';
(2) by inserting ``Practicing physicians advisory
council.--(1)'' after ``(a)'';
(3) in paragraph (1), as so redesignated under paragraph
(2), by striking ``in this section'' and inserting ``in this
subsection'';
(4) by redesignating subsections (b) and (c) as paragraphs
(2) and (3), respectively; and
(5) by adding at the end the following new subsection:
``(c) Council for Technology and Innovation.--
``(1) Establishment.--The Secretary shall establish a
Council for Technology and Innovation within the Centers for
Medicare & Medicaid Services (in this section referred to as
`CMS').
``(2) Composition.--The Council shall be composed of senior
CMS staff and clinicians and shall be chaired by the Executive
Coordinator for Technology and Innovation (appointed or
designated under paragraph (4)).
``(3) Duties.--The Council shall coordinate the activities
of coverage, coding, and payment processes with respect to new
technologies and procedures, including new drug therapies,
under this title in order to expedite patient access to new
technologies and therapies.
``(4) Executive coordinator for technology and
innovation.--The Secretary shall appoint (or designate) a
noncareer appointee (as defined in section 3132(a)(7) of title
5, United States Code) who shall serve as the Executive
Coordinator for Technology and Innovation. Such executive
coordinator shall report to the Administrator of CMS, shall
chair the Council, shall oversee the execution of its duties,
shall serve as a single point of contact for outside groups and
entities regarding the coverage, coding, and payment processes
under this title, and shall prepare reports to Congress
required under section 1869(f)(7).''.
SEC. 103. IMPROVEMENTS TO THE MEDICARE COVERAGE DETERMINATION APPEALS
PROCESS.
(a) In General.--Section 1869(f) (42 U.S.C. 1395ff(f)) is amended--
(1) in paragraph (1)(A)(iii)--
(A) in subclause (I)--
(i) by inserting ``(in all forms, including
written and oral depositions, interrogatories,
and requests for admission)'' after
``discovery''; and
(ii) by inserting ``and shall determine
when any new evidence not previously considered
by the Centers for Medicare and Medicaid
Services (hereafter in this subsection referred
to as `CMS') is material and should first be
considered by CMS'' after ``determination'' the
second place it appears; and
(B) by redesignating subclauses (II) and (III) as
subclauses (III) and (IV), respectively, and inserting
after subclause (I) the following:
``(II) shall determine when a
complaint has become moot;'';
(2) in paragraph (1)(A)(v), by adding at the end the
following: ``Such a decision shall be implemented not later
than 30 days after receipt of the decision, and any request for
a stay of such implementation pending further appeal or
reconsideration shall be supported by evidence demonstrating a
material risk of irreparable harm.'';
(3) in paragraph (2)(A)(i)--
(A) in subclause (I)--
(i) by inserting ``(in all forms, including
but not limited to, written and oral
depositions, interrogatories, and requests for
admission)'' after ``discovery''; and
(ii) by inserting ``and shall determine
when any new evidence not previously considered
by CMS material and should first be considered
by CMS'' after ``determination'' the second
place it appears; and
(B) by redesignating subclauses (II) and (III) as
subclauses (III) and (IV), respectively, and inserting
after subclause (I) the following:
``(II) shall determine when a
complaint has become moot;'';
(4) by adding at the end of paragraph (2)(A) the following:
``(v) Any request for a stay of a decision
pending further appeal or reconsideration shall
be supported by evidence demonstrating a
material risk of irreparable harm.'';
(5) in paragraph (5)--
(A) by inserting ``(or the heirs or assignees of
such individuals)'' after ``individuals''; and
(B) by adding at the end the following: ``For
purposes of the preceding sentence, individuals `in
need of an item or service' include individuals for
whom a claim for the item or service is denied prior to
appeal, without regard to whether or not such
individual obtains such item or service after such
denial).''; and
(6) by adding at the end the following:
``(9) Promulgation of regulations.--The Departmental
Appeals Board (and any successor entity) shall have the
exclusive authority to promulgate regulations interpreting this
subsection. Such regulations shall not be subject to review by
the Secretary or the Office of Management and Budget, but are
instead deemed to be subject to the review process established
by sections 801 through 808 of title 5, United States Code. No
regulations shall be issued to interpret this subsection unless
such regulations are issued by the Departmental Appeals
Board.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to any local or national coverage determination made on or after
January 1, 2004.
SEC. 104. MEDICARE COVERAGE OF ROUTINE COSTS ASSOCIATED WITH CERTAIN
CLINICAL TRIALS.
(a) In General.--With respect to the coverage of routine costs of
care for beneficiaries participating in a qualifying clinical trial, as
set forth on the date of the enactment of this Act in National Coverage
Determination 30-1 of the Medicare Coverage Issues Manual, the
Secretary shall deem clinical trials conducted in accordance with an
investigational device exemption approved under section 520(g) of the
Federal Food, Drug, and Cosmetic Act (42 U.S.C. 360j(g)) to be
automatically qualified for such coverage.
(b) Rule of Construction.--Nothing in this section shall be
construed as authorizing or requiring the Secretary to modify the
regulations set forth on the date of the enactment of this Act at
subpart B of part 405 of title 42, Code of Federal Regulations, or
subpart A of part 411 of such title, relating to coverage of, and
payment for, a medical device that is the subject of an investigational
device exemption by the Food and Drug Administration (except as may be
necessary to implement subsection (a)).
(c) Effective Date.--This section shall apply to clinical trials
begun before, on, or after the date of the enactment of this Act and to
items and services furnished on or after such date.-
TITLE II--PROVISIONS RELATING TO CODING
SEC. 201. IMPROVEMENTS TO THE HCPCS CODING ASSIGNMENT, INPATIENT CODING
ASSIGNMENT, AND DRG ASSIGNMENT PROCESSES.
(a) Inpatient PPS.--Section 1886(d)(5)(K) (42 U.S.C.
1395ww(d)(5)(K)) is amended by adding at the end the following new
clause:
``(vii)(I) The Secretary shall by
regulation establish a process that provides
for the assignment of inpatient hospital codes
(as defined in clause (iii)) for new medical
services and related technologies as of April 1
of each year (beginning with 2003).
``(II) Such process shall provide for the
opportunity to apply for the assignment of an
inpatient hospital code to items that are the
subject of an application submitted for
investigation under section 520(g) of the
Federal Food, Drug and Cosmetic Act (21 U.S.C. 360j(g)).
``(III) The assignment of codes as of the
date specified in subclause (I) shall not
require the Secretary to adjust the payment (or
diagnosis-related group classification) under
this subsection until the first fiscal year
that begins after such date.''.
(b) HCPCS Level II Codes.--
(1) Process for assignment of codes for new technologies.--
The Secretary of Health and Human Services (in this section
referred to as the ``Secretary'') shall by regulation establish
a process that provides for the assignment of HCPCS Level II
codes each calendar quarter for new medical services and
technologies. Such process shall ensure that codes are assigned
and implemented no later than 180 days after a formal
application for such a code is received.
(2) Elimination of minimum period of marketing experience
requirement.--The Secretary may not condition consideration or
approval of an application for a HCPCS Level II code on having
a minimum period of marketing experience with the item or
product that is the subject of the application.
(3) Definition.--In this subsection, the term ``HCPCS Level
II codes'' means the level II alphanumeric codes under the
Healthcare Common Procedure Coding System (HCPCS).
(c) Procedures for Issuance of Temporary National HCPCS Codes.--Not
later than December 31, 2003, the Secretary shall implement revised
procedures for the issuance of temporary national HCPCS codes for use
in the submission of claims for items and services under Part B of
title XVIII of the Social Security Act. Such procedures shall provide
for--
(1) the issuance of a determination with respect to a
temporary national HCPCS coding request within 90 days of
receipt of a request from any interested party;
(2) the implementation of any codes subject to a positive
determination under paragraph (1) not later than 180 days after
receipt of the submission of the original coding request;
(3) upon the receipt of a request from a fiscal
intermediary with an agreement under section 1816 of the Social
Security Act (42 U.S.C. 1395h) or a carrier with a contract
under section 1842 of such Act (42 U.S.C. 1395u), the automatic
issuance of temporary national HCPCS codes for any item or
service that is the subject of a local medical review policy
issued by such intermediary or carrier with respect to whether
such item or service is covered under title XVIII of such Act
in a geographic area served by such intermediary or carrier;
and
(4) the public posting of, and opportunity for public
comment on, pending coding requests.
SEC. 202. PROCESS FOR ADOPTION OF ICD-10-PCS AS DATA STANDARD.
Section 1172(f) (42 U.S.C. 1320d-1(f)) is amended by inserting
after the first sentence the following: ``Notwithstanding the preceding
sentence, if the National Committee on Vital and Health Statistics has
not made a recommendation to the Secretary before April 1, 2003, with
respect to the adoption of the International Classification of
Diseases, 10th Revision, Procedure Coding System (`ICD-10-PCS') as a
standard under this part for the reporting of inpatient hospital
services, the Secretary may adopt ICD-10-PCS as such a standard on or
after such date without receiving such a recommendation.''.
TITLE III--PROVISIONS RELATING TO PAYMENT
SEC. 301. USE OF INTERNAL AND EXTERNAL DATA FOR ANNUAL ADJUSTMENTS TO
HOSPITAL PAYMENT SYSTEMS.
(a) Inpatient Hospital PPS.--Section 1886(d)(4) (42 U.S.C.
1395ww(d)(4)) is amended by adding at the end the following new
subparagraphs:
``(D)(i) In determining annual adjustments under subparagraph (C),
the Secretary may not--
``(I) decline to use internal data if the data reflect a
representative sample of cases; or
``(II) establish a minimum period of time (such as one
year) from which such data must be drawn.
``(ii) The Secretary shall establish a reasonable deadline for the
submission of a request for adjustment based on internal data to be
used in making the adjustments required by subparagraph (C). In no
event may the deadline established under this clause be more than 8
months before the first day of the payment update period for which the
adjustment or adjustments to which the data relate would be effective.
``(E)(i) Subject to the succeeding provisions of this subparagraph,
in determining the adjustments under subparagraph (C), the Secretary
shall utilize external data if such data are based on a representative
sample of cases.
``(ii) In determining the adjustments under subparagraph (C), the
Secretary may not--
``(I) decline to use external data submitted for
consideration under the process established under clause (iv)
if such data enable the Secretary to identify or refine
internal data for use in making such an adjustment and such
data are based on a representative sample of cases; or
``(II) establish a minimum period of time (such as one
year) from which such data must be drawn.
``(iii) Nothing in this clause shall be construed as requiring the
Secretary to identify all claims submitted under the payment system
established under this subsection involving the use of a medical
technology before the Secretary may make the adjustments under
subparagraph (C) with respect to such technology; or as authorizing the
Secretary to defer action on such an adjustment until all such claims
are identifiable.
``(iv) The Secretary shall establish a process for the submission
of external data by interested parties. Such process shall include
reasonable deadline for the submission of external data to be used in
making the adjustments required by subparagraph (C). In no event may
the deadline established under this subclause be more than 10 months
before the first day of the payment update period for which the
adjustment or adjustments to which the data relate would be effective.
``(F) For purposes of subparagraphs (D) and (E)--
``(i) the term `external data' means data from sources
other than data collected by the Secretary in the
administration of the program established under this title;
``(ii) the term `interested party' means individuals
entitled to benefits under part A, or enrolled under part B, or
both, who are in need of the items or services that are the
subject of the coverage determination, providers of services,
physicians, practitioners, suppliers, and manufacturers of such
items or services; and
``(iii) the term `internal data' means data that is
collected by the Secretary in the administration of the program
established under this title.''.
(b) Outpatient Hospital PPS.--Section 1833(t)(9) (42 U.S.C.
1395l(t)(9)) is amended by adding at the end the following new
subparagraphs:
``(D) Use of internal data collected by the
secretary.--
``(i) In general.--In determining annual
adjustments under subparagraph (A), the
Secretary may not use internal data that does
not--
``(I) reflect a representative
sample of cases that include the
specific procedure that is subject to
such adjustment; and
``(II) accurately reflect the costs
of providing the item or service, based
on all forms of information that is
available to the Secretary.
``(ii) Deadline for supplying internal
data.--The Secretary shall establish a
reasonable deadline for the submission of a
request for adjustment based on internal data
to be used in making the adjustments required
by subparagraph (A). In no event may the
deadline established under this paragraph be
more than 8 months before the first day of the
payment update period for which the adjustment
or adjustments to which the data relate would
be effective.
``(E) External data.--
``(i) In general.--Subject to the
succeeding provisions of this subparagraph, in
determining the adjustments under subparagraph
(A), the Secretary shall utilize external data
submitted for consideration under the process
established under clause (iv) if such data are
based on a representative sample of cases.
``(ii) External data facilitating the use
of internal data.--In determining the
adjustments under subparagraph (A), the
Secretary may not--
``(I) decline to use external data
if such data enable the Secretary to
identify or refine data so collected
for use in making such an adjustment
and such data are based on a
representative sample of cases; or
``(II) establish a minimum period
of time (such as one year) from which
such data must be drawn.
``(iii) Clarification.--Nothing in this
subparagraph shall be construed as requiring
the Secretary to identify all claims submitted
under the payment system established under this
subsection involving the use of a medical
technology before the Secretary may make the
adjustments under this subparagraph with
respect to such technology; or as authorizing
the Secretary to defer action on such an
adjustment until all such claims are
identifiable.
``(iv) Deadline for supplying external
data.--The Secretary shall establish a process
for the submission of external data by
interested parties. Such process shall include
a reasonable deadline for the submission of
external data to be used in making the
adjustments required by subparagraph (A). In no
event may the deadline established under this
subclause be more than 10 months before the
first day of the payment update period for
which the adjustment or adjustments to which
the data relate would be effective.
``(F) Definitions.--For purposes of subparagraphs
(D) and (E)--
``(i) the term `external data' means data
from sources other than data collected by the
Secretary in the administration of the program
established under this title;
``(ii) the term `interested party' means
individuals entitled to benefits under part A,
or enrolled under part B, or both, who are in
need of the items or services that are the
subject of the coverage determination,
providers of services, physicians,
practitioners, suppliers, and manufacturers of
such items or services; and
``(iii) the term `internal data' means data
that is collected by the Secretary in the
administration of the program established under
this title.''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to items and services furnished on or after October
1, 2003.
SEC. 302. LIMITATION ON USE OF FOREIGN PAYER DATA IN DETERMINING
MEDICARE PAYMENT AMOUNTS.
(a) In General.--Notwithstanding any other provision of law, the
Secretary of Health and Human Services may not, in determining the
amount to be paid for any item or service for which payment is made
under title XVIII of the Social Security Act (42 U.S.C. 1395b et seq.)
that is furnished in the United States, take into account or utilize
(or authorize an administrative contractor to take into account or
utilize) any data or information on the amount that is paid by any
payer for the same (or a similar) item or service provided outside the
United States.
(b) Definitions.--For purposes of this section--
(1) the term ``administrative contractor'' means an entity
with an contract under section 1816 of the Social Security Act
(42 U.S.C. 1395h), section 1842 of such Act (42 U.S.C. 1395u),
or any other provision of such title to determine the amount to
be paid for any item or service provided under such title or to
make payments for such services; and
(2) the term ``United States'' has the meaning given to
such term in section 1862(a)(4) of the Social Security Act (42
U.S.C. 1395y(a)(4)).
SEC. 303. RECOGNITION OF NEW MEDICAL TECHNOLOGIES UNDER INPATIENT
HOSPITAL PPS.
(a) Eligibility Standard.--
(1) Minimum period for recognition of new technologies.--
Section 1886(d)(5)(K)(vi) (42 U.S.C. 1395ww(d)(5)(K)(vi)) is
amended--
(A) by inserting ``(I)'' after ``(vi)''; and
(B) by adding at the end the following new
subclause:
``(II) Under such criteria, a service or technology may not be
denied treatment as a new service or technology on the basis that the
service or technology has been on the market or available for a period
of not less than 2 years and not more than 3 years unless during the
entire period--
``(aa) the service or technology is available for use as a
service or technology cleared for marketing under section
510(k) of the Federal Food, Drug, and Cosmetic Act or approved
for market under section 515 of such Act; and
``(bb) a code facilitating data collection is in effect
with respect to the service or technology.
For purposes of the preceding sentence, a `code facilitating data
collection' means, with respect to a service or technology, a code
under the ICD-9-CM coding system (or a successor coding system) that
enables the collection of data on the costs of the service or
technology in a significant sample of specific discharges in which the
service or technology is used.''.
(2) Adjustment of threshold.--Section 1886(d)(5)(K)(ii)(I)
(42 U.S.C. 1395ww(d)(5)(K)(ii)(I)) is amended by inserting
``(applying a threshold computed by the Secretary that is the lesser of
50 percent of the national average standardized amount for operating
costs of inpatient hospital services for all hospitals and all
diagnosis-related groups or one standard deviation for the diagnosis-
related group involved)'' after ``is inadequate''.
(3) Criteria for substantial improvement.--Section
1886(d)(5)(K)(vi) (42 U.S.C. 1395ww(d)(5)(K)(vi)), as amended
by paragraph (1), is further amended by adding at the end the
following subclause:
``(III) The Secretary shall by regulation provide for further
clarification of the criteria applied to determine whether a new
service or technology represents an advance in medical technology that
substantially improves the diagnosis or treatment of beneficiaries.
Under such criteria, in determining whether a new service or technology
represents an advance in medical technology that substantially improves
the diagnosis or treatment of beneficiaries, the Secretary shall deem a
service or technology as meeting such requirement if the service or
technology is a drug or biological that is designated under section 506
or 526 of the Federal Food, Drug, and Cosmetic Act, approved under
section 314.510 or 601.41 of title 21, Code of Federal Regulations, or
designated for priority review when the marketing application for such
drug or biological was filed or is a medical device for which an
exemption has been granted under section 520(m) of such Act, or for
which priority review has been provided under section 515(d)(5) of such
Act. Nothing in the preceding sentence shall be construed as limiting
the application of section 1862(a)(1) to a new service or technology
described in such sentence or as limiting the authority of the
Secretary to make determinations under such section with respect to
such a service or technology.''.
(b) Preference For Use of DRG Adjustment.--Section 1886(d)(5)(K)
(42 U.S.C. 1395ww(d)(5)(K)), as amended by section 201, is further
amended by adding at the end the following new clause:
``(viii) Before establishing any additional payment under this
subparagraph with respect to a new technology, the Secretary shall seek
to identify one or more diagnosis-related groups associated with such
technology, based on similar clinical or anatomical characteristics and
the cost of the technology. Within such groups the Secretary shall
assign an eligible new technology into a diagnosis-related group where
the average costs of care most closely approximate the costs of care of
using the new technology. In such case, whether the DRG prospective
payment rate that would otherwise be made under this subsection is
inadequate for purposes of clause (ii)(I) shall be determined with
respect to the diagnosis-related group to which it is assigned under
this clause, and any additional expenditures resulting from such
assignment shall be taken into account in making the determination
required by paragraph (4)(C)(iii) (and not in the application of any
annual limit on aggregate payments under this subparagraph).''.
(c) Improvement in Payment For New Technology.--Section
1886(d)(5)(K)(ii)(III) (42 U.S.C. 1395ww(d)(5)(K)(ii)(III)) is amended
by inserting after ``the estimated average cost of such service or
technology'' the following: ``(based on the marginal rate applied to
costs under subparagraph (A))''.
(d) Required Modifications to Mechanism.--The last sentence of
section 1886(d)(5)(K)(i) (42 U.S.C. 1395ww(d)(5)(K)(i)) is amended to
read as follows: ``The mechanism established pursuant to this clause
(as it became effective on October 9, 2001) shall be modified to meet
the requirements of subclauses (II) and (III) of clause (vi), clauses
(vii) and (viii), and the parenthetical expressions in subclauses (I)
and (III) of clause (iii) that were added after such date.''.
(e) Effective Date.--
(1) In general.--The Secretary shall implement the
amendments made by this section by regulations issued on an
interim, final basis if the Secretary determines that the
issuance of regulations on such basis is necessary to ensure
that such amendments will apply to classifications for (and
payments for discharges occurring in) fiscal years beginning
with fiscal year 2004.
(2) Reconsiderations of applications for fiscal years 2003
and 2004 that are denied.--In the case of an application for a
classification of a medical service or technology as a new
medical service or technology under section 1886(d)(5)(K) of
the Social Security Act (42 U.S.C. 1395ww(d)(5)(K)) that was
filed for fiscal year 2003 or fiscal year 2004 and that is
denied--
(A) the Secretary shall automatically reconsider
the application as an application for fiscal year 2005
under the amendments made by this section; and
(B) the maximum time period otherwise permitted for
such classification of the service or technology shall
be extended by 12 months.
SEC. 304. PRESERVATION OF LOCAL MEDICAL REVIEW PROCESS UNDER MEDICARE
ADMINISTRATIVE CONTRACTOR REFORMS.
(a) Part A.--Section 1816(c) (42 U.S.C. 1395h(c)) is amended by
adding at the end the following:
``(4) An agreement with any agency or organization under this
section to perform the function of making local coverage determinations
(as defined in section 1869(f)(2)(B)), making determinations of payment
amounts, or making both such types of determinations, shall provide
that such contractor or entity shall--
``(A) designate at least one different individual to serve
as medical director for every two States (or portions thereof)
for which such agency or organization performs such function or
functions;
``(B) utilize such medical director in the performance of
such function or functions; and
``(C) appoint an advisory committee with respect to each
such State (or portion thereof) to provide a formal mechanism
for physicians in the State to be informed of, and participate
in, the development of local coverage determinations in an
advisory capacity.''.
(b) Part B.--Section 1842(c) (42 U.S.C. 1395u(c)) is amended by
adding at the end the following:
``(7) Any contract with a carrier under this section to perform the
function of making local coverage determinations (as defined in section
1869(f)(2)(B)), making determinations of payment amounts, or making
both such types of determinations, shall provide that such carrier
shall--
``(A) designate at least one different individual to serve
as medical director for every two States (or portions thereof)
for which such carrier performs such function or functions;
``(B) utilize such medical director in the performance of
such function or functions; and
``(C) appoint an advisory committee with respect to each
such State (or portion thereof) to provide a formal mechanism
for physicians in the State to be informed of, and participate
in, the development of local coverage determinations in an
advisory capacity.''.
(c) Effective Date.--The amendments made by this section shall
apply to agreements and contracts entered into or renewed on or after
the date of the enactment of this Act.
SEC. 305. INHERENT REASONABLENESS.
(a) In general.--Section 1842(b)(8)(A) (42 U.S.C. 1395u(b)(8)(A))
is amended by adding at the end the following:
``(iii) The Secretary shall ensure adequate notice to the public
with respect to any determination under this paragraph, including--
``(I) before conducting any survey to evaluate the factors
in subclause (I) or (II) of clause (i), publication of a notice
explaining, and soliciting public comment on, the proposed
methodology and design of such survey,
``(II) publication of any proposed determination, together
with an explanation of the results of any survey and any other
relevant factors taken into account in making the
determination, information on how the public may obtain survey
data, and an opportunity for public comment on the proposed
determination, and
``(III) publication of a notice of a final determination
under this paragraph.
``(iv) The requirements of clause (iii) shall apply to any
determination that is made by--
``(I) two or more carriers, acting concurrently, or in
concert, with respect to the same particular item or service,
or
``(II) any regional carrier designated by the Secretary
under section 1834(a)(12) of this part or under section
4554(a)(1)(B) of the Balanced Budget Act of 1997.''.
(b) Appeals.--Section 1869(f) (42 U.S.C. 1395ff(f)) is amended--
(1) in the matter preceding paragraph (1), by inserting
``and Inherent Reasonableness Determinations'' after ``Review
of Coverage Determinations'';
(2) in paragraph (1)--
(A) in the heading, by inserting ``; national
inherent reasonableness determinations'' after
``National coverage determinations'';
(B) in the matter preceding clause (i) of
subparagraph (A) by inserting ``or national inherent
reasonableness determination'' after ``any national
coverage determination''; and
(C) by adding at the end the following:
``(C) Definition of national inherent
reasonableness determination.--For purposes of this
section, the term `national inherent reasonableness
determination' means a determination by the Secretary
in accordance with section 1842(b)(8).'';
(3) in paragraph (2)--
(A) in the heading, by inserting ``; local inherent
reasonableness determinations'' after ``Local coverage
determinations'';
(B) in the matter preceding clause (i) of
subparagraph (A), by inserting ``or local inherent
reasonableness determination'' after ``any local
coverage determination''; and
(C) by adding at the end the following:
``(C) Definition of local inherent reasonableness
determination.--For purposes of this section, the term
`local inherent reasonableness determination' means a
determination by a carrier in accordance with section
1842(b)(8).''; and
(4) in paragraph (5)--
(A) by striking ``coverage determination'' the
first place it appears;
(B) by inserting ``and any national or local
inherent reasonableness determination'' after ``local
coverage determination''; and
(C) striking ``of the coverage determination'' and
inserting ``of the determination''.
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