Lymphedema Treatment Act (House of Representatives, 117th Congress, July 22, 2022)
Summary
Part 1 of Report 117-430 of the 117th Congress, 2d Session, dated July 22, 2022, in which Mr. Pallone reports for the Committee on Energy and Commerce on H.R. 3630, the Lymphedema Treatment Act. The bill would amend title XVIII of the Social Security Act to provide coverage of certain lymphedema compression treatment items under the Medicare program, and the committee reports it favorably with an amendment. The contents run from purpose and summary through performance goals, and the closing text shown includes a ground ambulance data collection system study in which the Medicare Payment Advisory Commission assesses and reports to Congress on information submitted by providers and suppliers.
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“Lymphedema Treatment Act (House of Representatives, 117th Congress, July 22, 2022).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/crpt-crpt-117hrpt430-crpt-117hrpt430-pt1/
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117TH CONGRESS REPT. 117–430
" HOUSE OF REPRESENTATIVES !
2d Session Part 1
LYMPHEDEMA TREATMENT ACT
JULY 22, 2022.—Committed to the Committee of the Whole House on the State of
the Union and ordered to be printed
Mr. PALLONE, from the Committee on Energy and Commerce,
submitted the following
R E P O R T
[To accompany H.R. 3630]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 3630) to amend title XVIII of the Social Security Act
to provide for coverage of certain lymphedema compression treat-
ment items under the Medicare program, having considered the
same, reports favorably thereon with an amendment and rec-
ommends that the bill as amended do pass.
CONTENTS
Page
I. Purpose and Summary .................................................................................. 3
II. Background and Need for the Legislation ................................................... 3
III. Committee Hearings ...................................................................................... 4
IV. Committee Consideration .............................................................................. 4
V. Committee Votes ............................................................................................ 4
VI. Oversight Findings ........................................................................................ 5
VII. New Budget Authority, Entitlement Authority, and Tax Expenditures 5
VIII. Federal Mandates Statement ....................................................................... 5
IX. Statement of General Performance Goals and Objectives .......................... 5
X. Duplication of Federal Programs .................................................................. 5
XI. Committee Cost Estimate ............................................................................. 5
XII. Earmarks, Limited Tax Benefits, and Limited Tariff Benefits .................. 5
XIII. Advisory Committee Statement .................................................................... 6
XIV. Applicability to Legislative Branch .............................................................. 6
XV. Section-by-Section Analysis of the Legislation ............................................ 6
XVI. Changes in Existing Law Made by the Bill, as Reported ........................... 6
The amendment is as follows:
Strike all after the enacting clause and insert the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Lymphedema Treatment Act’’.
SEC. 2. MEDICARE COVERAGE OF CERTAIN LYMPHEDEMA COMPRESSION TREATMENT ITEMS.
(a) COVERAGE.—
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29–006
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(1) IN GENERAL.—Section 1861 of the Social Security Act (42 U.S.C. 1395x)
is amended—
(A) in subsection (s)(2)—
(i) in subparagraph (GG), by striking ‘‘and’’ after the semicolon at the
end;
(ii) in subparagraph (HH), by striking the period at the end and in-
serting ‘‘; and’’; and
(iii) by adding at the end the following new subparagraph:
‘‘(II) lymphedema compression treatment items (as defined in subsection
(lll));’’; and
(B) by adding at the end the following new subsection:
‘‘(lll) LYMPHEDEMA COMPRESSION TREATMENT ITEMS.—The term ‘lymphedema
compression treatment items’ means standard and custom fitted gradient compres-
sion garments and other items determined by the Secretary that are—
‘‘(1) furnished on or after January 1, 2024, to an individual with a diagnosis
of lymphedema for the treatment of such condition;
‘‘(2) primarily and customarily used to serve a medical purpose and for the
treatment of lymphedema, as determined by the Secretary; and
‘‘(3) prescribed by a physician (or a physician assistant, nurse practitioner, or
a clinical nurse specialist (as those terms are defined in section 1861(aa)(5)) to
the extent authorized under State law).’’.
(2) PAYMENT.—
(A) IN GENERAL.—Section 1833(a)(1) of the Social Security Act (42 U.S.C.
1395l(a)(1)) is amended—
(i) by striking ‘‘and’’ before ‘‘(DD)’’; and
(ii) by inserting before the semicolon at the end the following: ‘‘and
(EE) with respect to lymphedema compression treatment items (as de-
fined in section 1861(lll)), the amount paid shall be equal to 80 percent
of the lesser of the actual charge or the amount determined under the
payment basis determined under section 1834(z)’’.
(B) PAYMENT BASIS AND LIMITATIONS.—Section 1834 of the Social Security
Act (42 U.S.C. 1395m) is amended by adding at the end the following new
subsection:
‘‘(z) PAYMENT FOR LYMPHEDEMA COMPRESSION TREATMENT ITEMS.—
‘‘(1) IN GENERAL.—The Secretary shall determine an appropriate payment
basis for lymphedema compression treatment items (as defined in section
1861(lll)). In making such a determination, the Secretary may take into account
payment rates for such items under State plans (or waivers of such plans)
under title XIX, the Veterans Health Administration, and group health plans
and health insurance coverage (as such terms are defined in section 2791 of the
Public Health Service Act), and such other information as the Secretary deter-
mines appropriate.
‘‘(2) FREQUENCY LIMITATION.—No payment may be made under this part for
lymphedema compression treatment items furnished other than at such fre-
quency as the Secretary may establish.
‘‘(3) APPLICATION OF COMPETITIVE ACQUISITION.—In the case of lymphedema
compression treatment items that are included in a competitive acquisition pro-
gram in a competitive acquisition area under section 1847(a)—
‘‘(A) the payment basis under this subsection for such items furnished in
such area shall be the payment basis determined under such competitive
acquisition program; and
‘‘(B) the Secretary may use information on the payment determined
under such competitive acquisition programs to adjust the payment amount
otherwise determined under this subsection for an area that is not a com-
petitive acquisition area under section 1847, and in the case of such adjust-
ment, paragraphs (8) and (9) of section 1842(b) shall not be applied.’’.
(3) CONFORMING AMENDMENT.—Section 1847(a)(2) of the Social Security Act
(42 U.S.C. 1395w–3(a)(2)) is amended by adding at the end the following new
subparagraph:
‘‘(D) LYMPHEDEMA COMPRESSION TREATMENT ITEMS.—Lymphedema com-
pression treatment items (as defined in section 1861(lll)) for which payment
would otherwise be made under section 1834(z).’’.
(b) INCLUSION IN REQUIREMENTS FOR SUPPLIERS OF MEDICAL EQUIPMENT AND
SUPPLIES.—Section 1834 of the Social Security Act (42 U.S.C. 1395m) is amended—
(1) in subsection (a)(20)(D), by adding at the end the following new clause:
‘‘(iv) Lymphedema compression treatment items (as defined in section
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1861(lll)).’’.
(2) in subsection (j)(5)—
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(A) by redesignating subparagraphs (E) and (F) as subparagraphs (F) and
(G), respectively; and
(B) by inserting after subparagraph (D) the following new subparagraph:
‘‘(E) lymphedema compression treatment items (as defined in section
1861(lll));’’.
I. PURPOSE AND SUMMARY
H.R. 3630, the ‘‘Lymphedema Treatment Act,’’ would provide for
Medicare coverage of lymphedema compression treatment items
such as standard and custom fitted gradient compression garments
or other items determined necessary by the Secretary of the De-
partment of Health and Human Services (HHS). Lymphedema com-
pression treatment items would be covered under Medicare begin-
ning January 1, 2024, for beneficiaries with a diagnosis of
lymphedema. Such items must be primarily and customarily used
for the treatment of lymphedema and prescribed by a physician,
physician assistant, nurse practitioner, or clinical nurse specialist.
Lymphedema occurs when the body can not properly drain lymph
fluid. It is commonly caused by cancer treatments that remove or
damage the lymph nodes and can be effectively treated with com-
pression therapy.
II. BACKGROUND AND NEED FOR LEGISLATION
Lymphedema is a buildup of lymph fluid that leads to swelling
in various parts of the body, typically the arms or legs.1
Lymphedema can be a congenital condition caused by improper de-
velopment of the lymphatic system but is more likely a secondary
condition resulting from damage to the lymphatic system.2 For ex-
ample, lymphedema is commonly caused by cancer or cancer re-
lated treatments. It is estimated that secondary lymphedema im-
pacts 1 in 1,000 Americans and is most common in women who
have been treated for breast cancer.3 While damage to the lymph
system cannot be repaired, compression therapy is a recommended
treatment to manage lymphedema.4 Items such as compression
pumps and compression garments apply controlled amounts of
pressure to reduce swelling. Untreated lymphedema can lead to in-
creased risk of hospitalization and life-threatening complications
such as skin infections or sepsis.5
Medicare Part B covers pneumatic compression devices (i.e. com-
pression pumps) under the durable medical equipment (DME) ben-
efit category.6 However, compression garments are not covered
under the DME benefit category since they do not meet the criteria
to be considered DME.7 In some instances Medicare may cover
compression garments under the surgical dressings benefit cat-
1 Centers for Disease Control and Prevention, Lymphedema (www.cdc.gov/cancer/survivors/pa-
tients/lymphedema.htm) (accessed July 18, 2022).
2 Mayo Clinic, Lymphedema (Sept. 18, 2021) (www.mayoclinic.org/diseases-conditions/
lymphedema/symptoms-causes/syc-20374682).
3 Cleveland Clinic, Lymphedema (my.clevelandclinic.org/health/diseases/8353-lymphedema)
(accessed July 18, 2022).
4 National Cancer Institute, Lymphedema PDQ—Patient Version (www.cancer.gov/about-can-
cer/treatment/side-effects/lymphedema/lymphedema-pdq) (accessed July 18, 2022).
5 Mayo Clinic, Lymphedema: Symptoms and Causes (Sept. 18, 2021) (www.mayoclinic.org/dis-
eases-conditions/lymphedema/symptoms-causes/syc-20374682).
6 Medicare Coverage Database, National Coverage Determination: Pneumatic Compression De-
vices (Jan. 14, 2002) (www.cms.gov/medicare-coverage-database/view/ncd.aspx?NCDId=225).
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7 Medicare.gov, Durable Medical Equipment Coverage (www.medicare.gov/coverage/durable-
medical-equipment-dme-coverage) (accessed July 18, 2022).
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4
egory when the use of the garment is directly related to treatment
of a wound, such as in the case of a burn or venous ulcer. However,
compression garments for the treatment of lymphedema do not
meet the definition of any existing Medicare benefit category;
therefore, legislative action is necessary to cover them.
Comprehensive coverage of lymphedema compression treatment
items could both improve health outcomes and reduce Medicare
spending. A review of a mandate to cover compression items in Vir-
ginia found that improved coverage resulted in lower medical costs
and fewer hospitalizations.8 A third party analysis estimates ap-
proximately $127 million in potential annual savings to Medicare
resulting from a reduction in hospitalizations for beneficiaries who
manage their lymphedema with compression treatment items.9
H.R. 3630, the ‘‘Lymphedema Treatment Act,’’ would close the
gap in coverage for lymphedema treatment and provide Medicare
coverage of medically necessary, prescribed lymphedema compres-
sion treatment items such as standard and custom fitted gradient
compression garments or other items determined necessary by the
Secretary.
III. COMMITTEE HEARINGS
The Committee on Energy and Commerce did not hold a hearing
on H.R. 3630.
IV. COMMITTEE CONSIDERATION
H.R. 3630, the ‘‘Lymphedema Treatment Act,’’ introduced by
Representatives Janice D. Schakowsky (D–IL), Earl ‘‘Buddy’’ Carter
(R–GA), and 146 original bipartisan cosponsors, and was referred
to the Committee on Energy and Commerce. Subsequently, on May
31, 2021, the bill was referred to the Subcommittee on Health.
On July 12, 2022, the Subcommittee on Health discharged con-
sideration of the bill. On July 13, 2022, the full Committee met in
open markup session, pursuant to notice, to consider H.R. 3630 and
four other bills. During consideration of the bill, an amendment in
the nature of a substitute (AINS), offered by Representative Scha-
kowsky, was agreed to by a voice vote. Upon conclusion of consider-
ation of the bill, the full Committee agreed to a motion on final
passage offered by Representative Pallone, Chairman of the Com-
mittee, to order H.R. 3630 reported favorably to the House, amend-
ed, by a voice vote.
V. COMMITTEE VOTES
Clause 3(b) of rule XIII of the Rules of the House of Representa-
tives requires the Committee to list each record vote on the motion
to report legislation and amendments thereto. The Committee ad-
vises that there were no record votes taken on H.R. 3630, including
a motion by Mr. Pallone ordering H.R. 3630 favorably reported to
the House, amended.
8 Robert Weiss, Cost of a Lymphedema Treatment Mandate—10 Years of Experience in the
Commonwealth of Virginia, Health Economics Review (Sept. 2, 2016).
9 Avalere Health, One-Year Savings on Insurance Coverage of Lymphedema Compression
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Treatment Items (2021) (lymphedematreatmentact.org/wp-content/uploads/2021/07/Lymphedema-
Treatment-Act-Savings-Estimate.pdf).
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5
VI. OVERSIGHT FINDINGS
Pursuant to clause 3(c)(1) of rule XIII and clause 2(b)(1) of rule
X of the Rules of the House of Representatives, the oversight find-
ings and recommendations of the Committee are reflected in the
descriptive portion of the report.
VII. NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX
EXPENDITURES
Pursuant to 3(c)(2) of rule XIII of the Rules of the House of Rep-
resentatives, the Committee adopts as its own the estimate of new
budget authority, entitlement authority, or tax expenditures or rev-
enues contained in the cost estimate prepared by the Director of
the Congressional Budget Office pursuant to section 402 of the
Congressional Budget Act of 1974.
The Committee has requested but not received from the Director
of the Congressional Budget Office a statement as to whether this
bill contains any new budget authority, spending authority, credit
authority, or an increase or decrease in revenues or tax expendi-
tures.
VIII. FEDERAL MANDATES STATEMENT
The Committee adopts as its own the estimate of Federal man-
dates prepared by the Director of the Congressional Budget Office
pursuant to section 423 of the Unfunded Mandates Reform Act.
IX. STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES
Pursuant to clause 3(c)(4) of rule XIII, the general performance
goal or objective of this legislation is to increase Medicare bene-
ficiaries’ access to compression garments for the treatment of
lymphedema.
X. DUPLICATION OF FEDERAL PROGRAMS
Pursuant to clause 3(c)(5) of rule XIII, no provision of H.R. 3630
is known to be duplicative of another Federal program, including
any program that was included in a report to Congress pursuant
to section 21 of Public Law 111–139 or the most recent Catalog of
Federal Domestic Assistance.
XI. COMMITTEE COST ESTIMATE
Pursuant to clause 3(d)(1) of rule XIII, the Committee adopts as
its own the cost estimate prepared by the Director of the Congres-
sional Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
XII. EARMARKS, LIMITED TAX BENEFITS, AND LIMITED TARIFF
BENEFITS
Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the Committee
finds that H.R. 3630 contains no earmarks, limited tax benefits, or
limited tariff benefits.
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XIII. ADVISORY COMMITTEE STATEMENT
No advisory committee within the meaning of section 5(b) of the
Federal Advisory Committee Act was created by this legislation.
XIV. APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to the
terms and conditions of employment or access to public services or
accommodations within the meaning of section 102(b)(3) of the Con-
gressional Accountability Act.
XV. SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION
Section 1. Short title
Section 1 designates that the short title may be cited as the
‘‘Lymphedema Treatment Act.’’
Sec. 2. Medicare coverage of certain lymphedema compression treat-
ment items
Section 2 amends section 1861(s)(2) of the Social Security Act to
create a new Medicare benefit category for ‘‘lymphedema compres-
sion treatment items.’’ This section defines lymphedema compres-
sion treatment items as ‘‘standard and custom fitted gradient com-
pression garments and other items determined by the Secretary’’
that are (1) furnished on or after January 1, 2024, to an individual
with a diagnosis of lymphedema for the treatment of such condi-
tion; (2) primarily and customarily used to serve a medical purpose
and for the treatment of lymphedema, as determined by the Sec-
retary; and (3) prescribed by a physician (or a physician assistant,
nurse practitioner, or a clinical nurse specialist to the extent au-
thorized under state law). This section amends section 1834 of the
Social Security Act to require the Secretary to establish a payment
methodology for lymphedema compression treatment items taking
into account payment rates for such items under Medicaid, the Vet-
erans Health Administration, commercial insurance, and such
other information as the Secretary determines appropriate. This
section also provides the Secretary with the authority to include
such items in a competitive acquisition program.
XVI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In compliance with clause 3(e) of rule XIII of the Rules of the
House of Representatives, changes in existing law made by the bill,
as reported, are shown as follows (existing law proposed to be omit-
ted is enclosed in black brackets, new matter is printed in italics,
and existing law in which no change is proposed is shown in
roman):
SOCIAL SECURITY ACT
* * * * * * *
TITLE XVIII—HEALTH INSURANCE FOR THE AGED AND
DISABLED
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* * * * * * *
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PART B—SUPPLEMENTARY MEDICAL INSURANCE BENEFITS FOR THE
AGED AND DISABLED
* * * * * * *
PAYMENT OF BENEFITS
SEC. 1833. (a) Except as provided in section 1876, and subject to
the succeeding provisions of this section, there shall be paid from
the Federal Supplementary Medical Insurance Trust Fund, in the
case of each individual who is covered under the insurance pro-
gram established by this part and incurs expenses for services with
respect to which benefits are payable under this part, amounts
equal to—(1) in the case of services described in section
1832(a)(1)—80 percent of the reasonable charges for the services;
except that (A) an organization which provides medical and other
health services (or arranges for their availability) on a prepayment
basis (and either is sponsored by a union or employer, or does not
provide, or arrange for the provision of, any inpatient hospital serv-
ices) may elect to be paid 80 percent of the reasonable cost of serv-
ices for which payment may be made under this part on behalf of
individuals enrolled in such organization in lieu of 80 percent of
the reasonable charges for such services if the organization under-
takes to charge such individuals no more than 20 percent of such
reasonable cost plus any amounts payable by them as a result of
subsection (b), (B) with respect to items and services described in
section 1861(s)(10)(A), the amounts paid shall be 100 percent of the
reasonable charges for such items and services, (C) with respect to
expenses incurred for those physicians’ services for which payment
may be made under this part that are described in section
1862(a)(4), the amounts paid shall be subject to such limitations as
may be prescribed by regulations, (D) with respect to clinical diag-
nostic laboratory tests for which payment is made under this part
(i)(I) on the basis of a fee schedule under subsection (h)(1) (for tests
furnished before January 1, 2017) or section 1834(d)(1), the amount
paid shall be equal to 80 percent (or 100 percent, in the case of
such tests for which payment is made on an assignment-related
basis) of the lesser of the amount determined under such fee sched-
ule, the limitation amount for that test determined under sub-
section (h)(4)(B), or the amount of the charges billed for the tests,
or (II) under section 1834A (for tests furnished on or after
January1, 2017), the amount paid shall be equal to 80 percent(or
100 percent, in the case of such tests for which payment is made
on an assignment-related basis) of the lesser of the amount deter-
mined under such section or the amount of the charges billed for
the tests, or (ii) for tests furnished before January 1, 2017,on the
basis of a negotiated rate established under subsection (h)(6), the
amount paid shall be equal to 100 percent of such negotiated
rate,,(E) with respect to services furnished to individuals who have
been determined to have end stage renal disease, the amounts paid
shall be determined subject to the provisions of section 1881,(F)
with respect to clinical social worker services under section
1861(s)(2)(N), the amounts paid shall be 80 percent of the lesser of
(i) the actual charge for the services or (ii) 75 percent of the
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amount determined for payment of a psychologist under clause (L),
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(G) with respect to facility services furnished in connec-
tion with a surgical procedure specified pursuant to sub-
section (i)(1)(A) and furnished to an individual in an ambu-
latory surgical center described in such subsection, for
services furnished beginning with the implementation date
of a revised payment system for such services in such fa-
cilities specified in subsection (i)(2)(D), the amounts paid
shall be 80 percent of the lesser of the actual charge for
the services or the amount determined by the Secretary
under such revised payment system,
(H) with respect to services of a certified registered nurse an-
esthetist under section 1861(s)(11), the amounts paid shall be
80 percent of the least of the actual charge, the prevailing
charge that would be recognized (or, for services furnished on
or after January 1, 1992, the fee schedule amount provided
under section 1848) if the services had been performed by an
anesthesiologist, or the fee schedule for such services estab-
lished by the Secretary in accordance with subsection (l), (I)
with respect to covered items (described in section 1834(a)(13)),
the amounts paid shall be the amounts described in section
1834(a)(1), and(J) with respect to expenses incurred for radiolo-
gist services (as defined in section 1834(b)(6)), subject to sec-
tion 1848, the amounts paid shall be 80 percent of the lesser
of the actual charge for the services or the amount provided
under the fee schedule established under section 1834(b), (K)
with respect to certified nurse-midwife services under section
1861(s)(2)(L), the amounts paid shall be 80 percent of the less-
er of the actual charge for the services or the amount deter-
mined by a fee schedule established by the Secretary for the
purposes of this subparagraph (but in no event shall such fee
schedule exceed 65 percent of the prevailing charge that would
be allowed for the same service performed by a physician, or,
for services furnished on or after January 1, 1992, 65 percent
(or 100 percent for services furnished on or after January 1,
2011) of the fee schedule amount provided under section 1848
for the same service performed by a physician), (L) with re-
spect to qualified psychologist services under section
1861(s)(2)(M), the amounts paid shall be 80 percent of the less-
er of the actual charge for the services or the amount deter-
mined by a fee schedule established by the Secretary for the
purposes of this subparagraph, (M) with respect to prosthetic
devices and orthotics and prosthetics (as defined in section
1834(h)(4)), the amounts paid shall be the amounts described
in section 1834(h)(1), (N) with respect to expenses incurred for
physicians’ services (as defined in section 1848(j)(3)) other than
personalized prevention plan services (as defined in section
1861(hhh)(1)), the amounts paid shall be 80 percent of the pay-
ment basis determined under section 1848(a)(1), (O) with re-
spect to services described in section 1861(s)(2)(K) (relating to
services furnished by physician assistants, nurse practitioners,
or clinic nurse specialists), the amounts paid shall be equal to
80 percent of (i) the lesser of the actual charge or 85 percent
of the fee schedule amount provided under section 1848, or (ii)
in the case of services as an assistant at surgery, the lesser of
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the actual charge or 85 percent of the amount that would oth-
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erwise be recognized if performed by a physician who is serv-
ing as an assistant at surgery, (P) with respect to surgical
dressings, the amounts paid shall be the amounts determined
under section 1834(i), (Q) with respect to items or services for
which fee schedules are established pursuant to section
1842(s), the amounts paid shall be 80 percent of the lesser of
the actual charge or the fee schedule established in such sec-
tion, (R) with respect to ambulance services, (i) the amounts
paid shall be 80 percent of the lesser of the actual charge for
the services or the amount determined by a fee schedule estab-
lished by the Secretary under section 1834(l) and (ii) with re-
spect to ambulance services described in section 1834(l)(8), the
amounts paid shall be the amounts determined under section
1834(g) for outpatient critical access hospital services, (S) with
respect to drugs and biologicals (including intravenous immune
globulin (as defined in section 1861(zz))) not paid on a cost or
prospective payment basis as otherwise provided in this part
(other than items and services described in subparagraph (B)),
the amounts paid shall be 80 percent of the lesser of the actual
charge or the payment amount established in section 1842(o)
(or, if applicable, under section 1847, 1847A, or 1847B), (T)
with respect to medical nutrition therapy services (as defined
in section 1861(vv)), the amount paid shall be 80 percent (or
100 percent if such services are recommended with a grade of
A or B by the United States Preventive Services Task Force for
any indication or population and are appropriate for the indi-
vidual) of the lesser of the actual charge for the services or 85
percent of the amount determined under the fee schedule es-
tablished under section 1848(b) for the same services if fur-
nished by a physician, (U) with respect to facility fees de-
scribed in section 1834(m)(2)(B), the amounts paid shall be 80
percent of the lesser of the actual charge or the amounts speci-
fied in such section, (V) notwithstanding subparagraphs (I) (re-
lating to durable medical equipment), (M) (relating to pros-
thetic devices and orthotics and prosthetics), and (Q) (relating
to 1842(s) items), with respect to competitively priced items
and services (described in section 1847(a)(2)) that are fur-
nished in a competitive area, the amounts paid shall be the
amounts described in section 1847(b)(5), (W) with respect to
additional preventive services (as defined in section
1861(ddd)(1)), the amount paid shall be (i) in the case of such
services which are clinical diagnostic laboratory tests, the
amount determined under subparagraph (D) (if such subpara-
graph were applied, by substituting ‘‘100 percent’’ for ‘‘80 per-
cent’’), and (ii) in the case of all other such services, 100 per-
cent of the lesser of the actual charge for the service or the
amount determined under a fee schedule established by the
Secretary for purposes of this subparagraph, (X) with respect
to personalized prevention plan services (as defined in section
1861(hhh)(1)), the amount paid shall be 100 percent of the less-
er of the actual charge for the services or the amount deter-
mined under the payment basis determined under section
1848, (Y) subject to subsection (dd), with respect to preventive
services described in subparagraphs (A) and (B) of section
ctelli on DSK11ZRN23PROD with REPORTS
1861(ddd)(3) that are appropriate for the individual and, in the
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10
case of such services described in subparagraph (A), are rec-
ommended with a grade of A or B by the United States Preven-
tive Services Task Force for any indication or population, the
amount paid shall be 100 percent of (i) except as provided in
clause (ii), the lesser of the actual charge for the services or the
amount determined under the fee schedule that applies to such
services under this part, and (ii) in the case of such services
that are covered OPD services (as defined in subsection
(t)(1)(B)), the amount determined under subsection (t), (Z) with
respect to Federally qualified health center services for which
payment is made under section 1834(o), the amounts paid shall
be 80 percent of the lesser of the actual charge or the amount
determined under such section, (AA) with respect to an appli-
cable disposable device (as defined in paragraph (2) of section
1834(s)) furnished to an individual pursuant to paragraph (1)
of such section, the amount paid shall be equal to 80 percent
of the lesser of the actual charge or the amount determined
under paragraph (3) of such section, (BB) with respect to home
infusion therapy, the amount paid shall be an amount equal to
80 percent of the lesser of the actual charge for the services or
the amount determined under section 1834(u), (CC) with re-
spect to opioid use disorder treatment services furnished dur-
ing an episode of care, the amount paid shall be equal to the
amount payable under section 1834(w) less any copayment re-
quired as specified by the Secretary, øand¿ (DD) with respect
to a specified COVID–19 testing-related service described in
paragraph (1) of subsection (cc) for which payment may be
made under a specified outpatient payment provision described
in paragraph (2) of such subsection, the amounts paid shall be
100 percent of the payment amount otherwise recognized
under such respective specified outpatient payment provision
for such service, and (EE) with respect to lymphedema compres-
sion treatment items (as defined in section 1861(lll)), the
amount paid shall be equal to 80 percent of the lesser of the ac-
tual charge or the amount determined under the payment basis
determined under section 1834(z);
(2) in the case of services described in section 1832(a)(2) (ex-
cept those services described in subparagraphs (C), (D), (E),
(F), (G), (H), and (I) of such section and unless otherwise speci-
fied in section 1881)—
(A) with respect to home health services (other than a
covered osteoporosis drug) (as defined in section 1861(kk)),
the amount determined under the prospective payment
system under section 1895;
(B) with respect to other items and services (except those
described in subparagraph (C), (D), or (E) of this para-
graph and except as may be provided in section 1886 or
section 1888(e)(9))—
(i) furnished before January 1, 1999, the lesser of—
(I) the reasonable cost of such services, as deter-
mined under section 1861(v), or
(II) the customary charges with respect to such
services,—less the amount a provider may charge
as described in clause (ii) of section 1866(a)(2)(A),
ctelli on DSK11ZRN23PROD with REPORTS
but in no case may the payment for such other
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11
services exceed 80 percent of such reasonable cost,
or
(ii) if such services are furnished before January 1,
1999, by a public provider of services, or by another
provider which demonstrates to the satisfaction of the
Secretary that a significant portion of its patients are
low-income (and requests that payment be made
under this clause), free of charge or at nominal
charges to the public, 80 percent of the amount deter-
mined in accordance with section 1814(b)(2), or
(iii) if such services are furnished on or after Janu-
ary 1, 1999, the amount determined under subsection
(t), or
(iv) if (and for so long as) the conditions described
in section 1814(b)(3) are met, the amounts determined
under the reimbursement system described in such
section;
(C) with respect to services described in the second sen-
tence of section 1861(p), 80 percent of the reasonable
charges for such services;
(D) with respect to clinical diagnostic laboratory tests for
which payment is made under this part (i)(I)on the basis
of a fee schedule determined under subsection(h)(1) (for
tests furnished before January 1, 2017) or section
1834(d)(1), the amount paid shall be equal to 80 percent
(or 100 percent, in the case of such tests for which pay-
ment is made on an assignment-related basis or to a pro-
vider having an agreement under section 1866) of the less-
er of the amount determined under such fee schedule, the
limitation amount for that test determined under sub-
section (h)(4)(B), or the amount of the charges billed for
the tests, or (II) under section 1834A (for tests furnished
on or after January 1, 2017), the amount paid shall be
equal to 80 percent (or 100 percent, in the case of such
tests for which payment is made on an assignment-related
basis or to a provider having an agreement under section
1866) of the lesser of the amount determined under such
section or the amount of the charges billed for the tests,
or (ii) for tests furnished before January 1, 2017, on the
basis of a negotiated rate established under subsection
(h)(6), the amount paid shall be equal to 100 percent of
such negotiated rate for such tests;
(E) with respect to—
(i) outpatient hospital radiology services (including
diagnostic and therapeutic radiology, nuclear medicine
and CAT scan procedures, magnetic resonance imag-
ing, and ultrasound and other imaging services, but
excluding screening mammography and, for services
furnished on or after January 1, 2005, diagnostic
mammography), and
(ii) effective for procedures performed on or after Oc-
tober 1, 1989, diagnostic procedures (as defined by the
Secretary) described in section 1861(s)(3) (other than
ctelli on DSK11ZRN23PROD with REPORTS
diagnostic x-ray tests and diagnostic laboratory tests),
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12
the amount determined under subsection (n) or, for serv-
ices or procedures performed on or after January 1, 1999,
subsection (t);
(F) with respect to a covered osteoporosis drug (as de-
fined in section 1861(kk)) furnished by a home health
agency, 80 percent of the reasonable cost of such service,
as determined under section 1861(v);
(G) with respect to items and services described in sec-
tion 1861(s)(10)(A), the lesser of—
(i) the reasonable cost of such services, as deter-
mined under section 1861(v), or
(ii) the customary charges with respect to such serv-
ices; and
(H) with respect to personalized prevention plan services
(as defined in section 1861(hhh)(1)) furnished by an out-
patient department of a hospital, the amount determined
under paragraph (1)(X),
or, if such services are furnished by a public provider of
services, or by another provider which demonstrates to the
satisfaction of the Secretary that a significant portion of its
patients are low-income (and requests that payment be
made under this provision), free of charge or at nominal
charges to the public, the amount determined in accord-
ance with section 1814(b)(2);
(3) in the case of services described in section 1832(a)(2)(D)—
(A) except as provided in subparagraph (B), the costs
which are reasonable and related to the cost of furnishing
such services or which are based on such other tests of
reasonableness as the Secretary may prescribe in regula-
tions, including those authorized under section
1861(v)(1)(A), less the amount a provider may charge as
described in clause (ii) of section 1866(a)(2)(A), but in no
case may the payment for such services (other than for
items and services described in section 1861(s)(10)(A)) ex-
ceed 80 percent of such costs; or
(B) with respect to the services described in clause (ii) of
section 1832(a)(2)(D) that are furnished to an individual
enrolled with a MA plan under part C pursuant to a writ-
ten agreement described in section 1853(a)(4), the amount
(if any) by which—
(i) the amount of payment that would have other-
wise been provided (I) under subparagraph (A) (cal-
culated as if ‘‘100 percent’’ were substituted for ‘‘80
percent’’ in such subparagraph) for such services if the
individual had not been so enrolled, or (II) in the case
of such services furnished on or after the implementa-
tion date of the prospective payment system under
section 1834(o), under such section (calculated as if
‘‘100 percent’’ were substituted for ‘‘80 percent’’ in such
section) for such services if the individual had not
been so enrolled; exceeds
(ii) the amount of the payments received under such
written agreement for such services (not including any
financial incentives provided for in such agreement
ctelli on DSK11ZRN23PROD with REPORTS
such as risk pool payments, bonuses, or withholds),
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13
less the amount the federally qualified health center may
charge as described in section 1857(e)(3)(B);
(4) in the case of facility services described in section
1832(a)(2)(F), and outpatient hospital facility services fur-
nished in connection with surgical procedures specified by the
Secretary pursuant to section 1833(i)(1)(A), the applicable
amount as determined under paragraph (2) or (3) of subsection
(i) or subsection (t);
(5) in the case of covered items (described in section
1834(a)(13)) the amounts described in section 1834(a)(1);
(6) in the case of outpatient critical access hospital services,
the amounts described in section 1834(g);
(7) in the case of prosthetic devices and orthotics and pros-
thetics (as described in section 1834(h)(4)), the amounts de-
scribed in section 1834(h);
(8) in the case of—
(A) outpatient physical therapy services, outpatient
speech-language pathology services, and outpatient occupa-
tional therapy services furnished—
(i) by a rehabilitation agency, public health agency,
clinic, comprehensive outpatient rehabilitation facility,
or skilled nursing facility,
(ii) by a home health agency to an individual who is
not homebound, or
(iii) by another entity under an arrangement with
an entity described in clause (i) or (ii); and
(B) outpatient physical therapy services, outpatient
speech-language pathology services, and outpatient occupa-
tional therapy services furnished—
(i) by a hospital to an outpatient or to a hospital in-
patient who is entitled to benefits under part A but
has exhausted benefits for inpatient hospital services
during a spell of illness or is not so entitled to benefits
under part A, or
(ii) by another entity under an arrangement with a
hospital described in clause (i),
the amounts described in section 1834(k);
(9) in the case of services described in section 1832(a)(2)(E)
that are not described in paragraph (8), the amounts described
in section 1834(k); and
(10) with respect to rural emergency hospital services fur-
nished on or after January 1, 2023, the amounts determined
under section 1834(x).
Paragraph (3)(A) shall not apply to Federally qualified health cen-
ter services furnished on or after the implementation date of the
prospective payment system under section 1834(o). For services
furnished on or after January 1, 2022, paragraph (1)(Y) shall apply
with respect to a colorectal cancer screening test regardless of the
code that is billed for the establishment of a diagnosis as a result
of the test, or for the removal of tissue or other matter or other pro-
cedure that is furnished in connection with, as a result of, and in
the same clinical encounter as the screening test.
(b) Before applying subsection (a) with respect to expenses in-
curred by an individual during any calendar year, the total amount
ctelli on DSK11ZRN23PROD with REPORTS
of the expenses incurred by such individual during such year
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14
(which would, except for this subsection, constitute incurred ex-
penses from which benefits payable under subsection (a) are deter-
minable) shall be reduced by a deductible of $75 for calendar years
before 1991, $100 for 1991 through 2004, $110 for 2005, and for a
subsequent year the amount of such deductible for the previous
year increased by the annual percentage increase in the monthly
actuarial rate under section 1839(a)(1) ending with such subse-
quent year (rounded to the nearest $1); except that (1) such total
amount shall not include expenses incurred for preventive services
described in subparagraph (A) of section 1861(ddd)(3) that are rec-
ommended with a grade of A or B by the United States Preventive
Services Task Force for any indication or population and are appro-
priate for the individual., (2) such deductible shall not apply with
respect to home health services (other than a covered osteoporosis
drug (as defined in section 1861(kk))), (3) such deductible shall not
apply with respect to clinical diagnostic laboratory tests for which
payment is made under this part (A) under subsection (a)(1)(D)(i)
or (a)(2)(D)(i) on an assignment-related basis, or to a provider hav-
ing an agreement under section 1866, or (B) for tests furnished be-
fore January 1, 2017,on the basis of a negotiated rate determined
under subsection (h)(6), (4) such deductible shall not apply to Fed-
erally qualified health center services, (5) such deductible shall not
apply with respect to screening mammography (as described in sec-
tion 1861(jj)), (6) such deductible shall not apply with respect to
screening pap smear and screening pelvic exam (as described in
section 1861(nn)), (7) such deductible shall not apply with respect
to ultrasound screening for abdominal aortic aneurysm (as defined
in section 1861(bbb)), (8) such deductible shall not apply with re-
spect to colorectal cancer screening tests (as described in section
1861(pp)(1)), (9) such deductible shall not apply with respect to an
initial preventive physical examination (as defined in section
1861(ww)), (10) such deductible shall not apply with respect to per-
sonalized prevention plan services (as defined in section
1861(hhh)(1)), (11) such deductible shall not apply with respect to
any specified COVID–19 testing-related service described in para-
graph (1) of subsection (cc) for which payment may be made under
a specified outpatient payment provision described in paragraph (2)
of such subsection, and (12) such deductible shall not apply
withrespect a COVID–19 vaccine and its administration
describedin section 1861(s)(10)(A). The total amount of the ex-
penses incurred by an individual as determined under the pre-
ceding sentence shall, after the reduction specified in such sen-
tence, be further reduced by an amount equal to the expenses in-
curred for the first three pints of whole blood (or equivalent quan-
tities of packed red blood cells, as defined under regulations) fur-
nished to the individual during the calendar year, except that such
deductible for such blood shall in accordance with regulations be
appropriately reduced to the extent that there has been a replace-
ment of such blood (or equivalent quantities of packed red blood
cells, as so defined); and for such purposes blood (or equivalent
quantities of packed red blood cells, as so defined) furnished such
individual shall be deemed replaced when the institution or other
person furnishing such blood (or such equivalent quantities of
packed red blood cells, as so defined) is given one pint of blood for
ctelli on DSK11ZRN23PROD with REPORTS
each pint of blood (or equivalent quantities of packed red blood
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15
cells, as so defined) furnished such individual with respect to which
a deduction is made under this sentence. The deductible under the
previous sentence for blood or blood cells furnished an individual
in a year shall be reduced to the extent that a deductible has been
imposed under section 1813(a)(2) to blood or blood cells furnished
the individual in the year. Paragraph (1) of the first sentence of
this subsection shall apply with respect to a colorectal cancer
screening test regardless of the code that is billed for the establish-
ment of a diagnosis as a result of the test, or for the removal of
tissue or other matter or other procedure that is furnished in con-
nection with, as a result of, and in the same clinical encounter as
the screening test.
(c)(1) Notwithstanding any other provision of this part, with re-
spect to expenses incurred in a calendar year in connection with
the treatment of mental, psychoneurotic, and personality disorders
of an individual who is not an inpatient of a hospital at the time
such expenses are incurred, there shall be considered as incurred
expenses for purposes of subsections (a) and (b)—
(A) for expenses incurred in years prior to 2010, only 621⁄2
percent of such expenses;
(B) for expenses incurred in 2010 or 2011, only 683⁄4 percent
of such expenses;
(C) for expenses incurred in 2012, only 75 percent of such ex-
penses;
(D) for expenses incurred in 2013, only 811⁄4 percent of such
expenses; and
(E) for expenses incurred in 2014 or any subsequent calendar
year, 100 percent of such expenses.
(2) For purposes of subparagraphs (A) through (D) of paragraph
(1), the term ‘‘treatment’’ does not include brief office visits (as de-
fined by the Secretary) for the sole purpose of monitoring or chang-
ing drug prescriptions used in the treatment of such disorders or
partial hospitalization services that are not directly provided by a
physician
(d) No payment may be made under this part with respect to any
services furnished an individual to the extent that such individual
is entitled (or would be entitled except for section 1813) to have
payment made with respect to such services under part A.
(e) No payment shall be made to any provider of services or other
person under this part unless there has been furnished such infor-
mation as may be necessary in order to determine the amounts due
such provider or other person under this part for the period with
respect to which the amounts are being paid or for any prior pe-
riod.
(f)(1) In establishing limits under subsection (a) on payment for
rural health clinic services provided by rural health clinics (other
than such clinics in hospitals with less than 50 beds), the Secretary
shall establish such limit, for services provided prior to April 1,
2021—
(A) in 1988, after March 31, at $46 per visit, and
(B) in a subsequent year (before April 1, 2021), at the limit
established under this paragraph for the previous year in-
creased by the percentage increase in the MEI (as defined in
ctelli on DSK11ZRN23PROD with REPORTS
section 1842(i)(3)) applicable to primary care services (as de-
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16
fined in section 1842(i)(4)) furnished as of the first day of that
year.
(2) In establishing limits under subsection (a) on payment for
rural health clinic services furnished on or after April 1, 2021, by
a rural health clinic (other than a rural health clinic described in
paragraph (3)(B)), the Secretary shall establish such limit, for serv-
ices provided—
(A) in 2021, after March 31, at $100 per visit;
(B) in 2022, at $113 per visit;
(C) in 2023, at $126 per visit;
(D) in 2024, at $139 per visit;
(E) in 2025, at $152 per visit;
(F) in 2026, at $165 per visit;
(G) in 2027, at $178 per visit;
(H) in 2028, at $190 per visit; and
(I) in a subsequent year, at the limit established under this
paragraph for the previous year increased by the percentage
increase in the MEI applicable to primary care services fur-
nished as of the first day of such subsequent year.
(3)(A) In establishing limits under subsection (a) on payment for
rural health clinic services furnished on or after April 1, 2021, by
a rural health clinic described in subparagraph (B), the Secretary
shall establish such limit, with respect to each such rural health
clinic, for services provided—
(i) in 2021, after March 31, at an amount equal to the great-
er of—
(I) with respect to a rural health clinic that had a
per visit payment amount established for services fur-
nished in 2020—
(aa) the per visit payment amount applicable to
such rural health clinic for rural health clinic
services furnished in 2020, increased by the per-
centage increase in the MEI applicable to primary
care services furnished as of the first day of 2021;
or
(bb) the limit described in paragraph (2)(A); and
(II) with respect to a rural health clinic that did not
have a per visit payment amount established for serv-
ices furnished in 2020—
(aa) the per visit payment amount applicable to
such rural health clinic for rural health clinic
services furnished in 2021; or
(bb) the limit described in paragraph (2)(A); and
(ii) in a subsequent year, at an amount equal to the greater
of—
(I) the amount established under subclause (I) or (II) of
clause (i), as applicable, or this subclause for the previous
year with respect to such rural health clinic, increased by
the percentage increase in the MEI applicable to primary
care services furnished as of the first day of such subse-
quent year; or
(II) the limit established under paragraph (2) for such
subsequent year.
(B) A rural health clinic described in this subparagraph is a rural
ctelli on DSK11ZRN23PROD with REPORTS
health clinic that—
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17
(i) as of December 31, 2020, was in a hospital with less than
50 beds and after such date such hospital continues to have
less than 50 beds (not taking into account any increase in the
number of beds pursuant to a waiver under subsection (b)(1)(A)
of section 1135 during the emergency period described in sub-
section (g)(1)(B) of such section); and
(ii)(I) as of December 31, 2020, was enrolled under section
1866(j) (including temporary enrollment during such emer-
gency period for such emergency period); or
(II) submitted an application for enrollment under section
1866(j) (or a request for such a temporary enrollment for such
emergency period) that was received not later than December
31, 2020.
(g)(1)(A) Subject to paragraphs (4) and (5), in the case of physical
therapy services of the type described in section 1861(p) and
speech-language pathology services of the type described in such
section through the application of section 1861(ll)(2), but (except as
provided in paragraph (6)) not described in subsection (a)(8)(B),
and physical therapy services and speech-language pathology serv-
ices of such type which are furnished by a physician or as incident
to physicians’ services, with respect to expenses incurred in any
calendar year, no more than the amount specified in paragraph (2)
for the year shall be considered as incurred expenses for purposes
of subsections (a) and (b). The preceding sentence shall not apply
to expenses incurred with respect to services furnished after De-
cember 31, 2017.
(B) With respect to services furnished during 2018 or a subse-
quent year, in the case of physical therapy services of the type de-
scribed in section 1861(p), speech-language pathology services of
the type described in such section through the application of sec-
tion 1861(ll)(2), and physical therapy services and speech-language
pathology services of such type which are furnished by a physician
or as incident to physicians’ services, with respect to expenses in-
curred in any calendar year, any amount that is more than the
amount specified in paragraph (2) for the year shall not be consid-
ered as incurred expenses for purposes of subsections (a) and (b)
unless the applicable requirements of paragraph (7) are met.
(2) The amount specified in this paragraph—
(A) for 1999, 2000, and 2001, is $1,500, and
(B) for a subsequent year is the amount specified in this
paragraph for the preceding year increased by the percentage
increase in the MEI (as defined in section 1842(i)(3)) for such
subsequent year;
except that if an increase under subparagraph (B) for a year is not
a multiple of $10, it shall be rounded to the nearest multiple of
$10.
(3)(A) Subject to paragraphs (4) and (5), in the case of occupa-
tional therapy services (of the type that are described in section
1861(p) (but (except as provided in paragraph (6)) not described in
subsection (a)(8)(B)) through the operation of section 1861(g) and of
such type which are furnished by a physician or as incident to phy-
sicians’ services), with respect to expenses incurred in any calendar
year, no more than the amount specified in paragraph (2) for the
year shall be considered as incurred expenses for purposes of sub-
ctelli on DSK11ZRN23PROD with REPORTS
sections (a) and (b). The preceding sentence shall not apply to ex-
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18
penses incurred with respect to services furnished after December
31, 2017.
(B) With respect to services furnished during 2018 or a subse-
quent year, in the case of occupational therapy services (of the type
that are described in section 1861(p) through the operation of sec-
tion 1861(g) and of such type which are furnished by a physician
or as incident to physicians’ services), with respect to expenses in-
curred in any calendar year, any amount that is more than the
amount specified in paragraph (2) for the year shall not be consid-
ered as incurred expenses for purposes of subsections (a) and (b)
unless the applicable requirements of paragraph (7) are met.
(4) This subsection shall not apply to expenses incurred with re-
spect to services furnished during 2000, 2001, 2002, 2004, and
2005.
(5)(A) With respect to expenses incurred during the period begin-
ning on January 1, 2006, and ending on December 31, 2017, for
services, the Secretary shall implement a process under which an
individual enrolled under this part may, upon request of the indi-
vidual or a person on behalf of the individual, obtain an exception
from the uniform dollar limitation specified in paragraph (2), for
services described in paragraphs (1) and (3) if the provision of such
services is determined to be medically necessary and if the require-
ment of subparagraph (B) is met. Under such process, if the Sec-
retary does not make a decision on such a request for an exception
within 10 business days of the date of the Secretary’s receipt of the
request made in accordance with such requirement, the Secretary
shall be deemed to have found the services to be medically nec-
essary.
(B) In the case of outpatient therapy services for which an excep-
tion is requested under the first sentence of subparagraph (A), the
claim for such services shall contain an appropriate modifier (such
as the KX modifier used as of the date of the enactment of this sub-
paragraph) indicating that such services are medically necessary as
justified by appropriate documentation in the medical record in-
volved.
(C)(i) In applying this paragraph with respect to a request for an
exception with respect to expenses that would be incurred for out-
patient therapy services (including services described in subsection
(a)(8)(B)) that would exceed the threshold described in clause (ii)
for a year, the request for such an exception, for services furnished
on or after October 1, 2012, shall be subject to a manual medical
review process that, subject to subparagraph (E), is similar to the
manual medical review process used for certain exceptions under
this paragraph in 2006.
(ii) The threshold under this clause for a year is $3,700. Such
threshold shall be applied separately—
(I) for physical therapy services and speech-language pathol-
ogy services; and
(II) for occupational therapy services.
(E)(i) In place of the manual medical review process under sub-
paragraph (C)(i), the Secretary shall implement a process for med-
ical review under this subparagraph under which the Secretary
shall identify and conduct medical review for services described in
ctelli on DSK11ZRN23PROD with REPORTS
subparagraph (C)(i) furnished by a provider of services or supplier
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19
(in this subparagraph referred to as a ‘‘therapy provider’’) using
such factors as the Secretary determines to be appropriate.
(ii) Such factors may include the following:
(I) The therapy provider has had a high claims denial per-
centage for therapy services under this part or is less compli-
ant with applicable requirements under this title.
(II) The therapy provider has a pattern of billing for therapy
services under this part that is aberrant compared to peers or
otherwise has questionable billing practices for such services,
such as billing medically unlikely units of services in a day.
(III) The therapy provider is newly enrolled under this title
or has not previously furnished therapy services under this
part.
(IV) The services are furnished to treat a type of medical
condition.
(V) The therapy provider is part of group that includes an-
other therapy provider identified using the factors determined
under this subparagraph.
(iii) For purposes of carrying out this subparagraph, the Sec-
retary shall provide for the transfer, from the Federal Supple-
mentary Medical Insurance Trust Fund under section 1841, of
$5,000,000 to the Centers for Medicare & Medicaid Services Pro-
gram Management Account for fiscal years 2015 and 2016, to re-
main available until expended. Such funds may not be used by a
contractor under section 1893(h) for medical reviews under this
subparagraph.
(iv) The targeted review process under this subparagraph shall
not apply to services for which expenses are incurred beyond the
period for which the exceptions process under subparagraph (A) is
implemented, except as such process is applied under paragraph
(7)(B).
(6)(A) In applying paragraphs (1) and (3) to services furnished
during the period beginning not later than October 1, 2012, and
ending on December 31, 2017, the exclusion of services described
in subsection (a)(8)(B) from the uniform dollar limitation specified
in paragraph (2) shall not apply to such services furnished during
2012 through 2017.
(B)(i) With respect to outpatient therapy services furnished be-
ginning on or after January 1, 2013, and before January 1, 2014,
for which payment is made under section 1834(g), the Secretary
shall count toward the uniform dollar limitations described in para-
graphs (1) and (3) and the threshold described in paragraph (5)(C)
the amount that would be payable under this part if such services
were paid under section 1834(k)(1)(B) instead of being paid under
section 1834(g).
(ii) Nothing in clause (i) shall be construed as changing the
method of payment for outpatient therapy services under section
1834(g).
(7) For purposes of paragraphs (1)(B) and (3)(B), with respect to
services described in such paragraphs, the requirements described
in this paragraph are as follows:
(A) INCLUSION OF APPROPRIATE MODIFIER.—The claim for
such services contains an appropriate modifier (such as the KX
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modifier described in paragraph (5)(B)) indicating that such
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20
services are medically necessary as justified by appropriate
documentation in the medical record involved.
(B) TARGETED MEDICAL REVIEW FOR CERTAIN SERVICES ABOVE
THRESHOLD.—
(i) IN GENERAL.—In the case where expenses that would
be incurred for such services would exceed the threshold
described in clause (ii) for the year, such services shall be
subject to the process for medical review implemented
under paragraph (5)(E).
(ii) THRESHOLD.—The threshold under this clause for—
(I) a year before 2028, is $3,000;
(II) 2028, is the amount specified in subclause (I) in-
creased by the percentage increase in the MEI (as de-
fined in section 1842(i)(3)) for 2028; and
(III) a subsequent year, is the amount specified in
this clause for the preceding year increased by the per-
centage increase in the MEI (as defined in section
1842(i)(3)) for such subsequent year;
except that if an increase under subclause (II) or (III) for
a year is not a multiple of $10, it shall be rounded to the
nearest multiple of $10.
(iii) APPLICATION.—The threshold under clause (ii) shall
be applied separately—
(I) for physical therapy services and speech-lan-
guage pathology services; and
(II) for occupational therapy services.
(iv) FUNDING.—For purposes of carrying out this sub-
paragraph, the Secretary shall provide for the transfer,
from the Federal Supplementary Medical Insurance Trust
Fund under section 1841 to the Centers for Medicare &
Medicaid Services Program Management Account, of
$5,000,000 for each fiscal year beginning with fiscal year
2018, to remain available until expended. Such funds may
not be used by a contractor under section 1893(h) for med-
ical reviews under this subparagraph.
(8) With respect to services furnished on or after January 1,
2013, where payment may not be made as a result of application
of paragraphs (1) and (3), section 1879 shall apply in the same
manner as such section applies to a denial that is made by reason
of section 1862(a)(1).
(h)(1)(A) Subject to section 1834(d)(1), the Secretary shall estab-
lish fee schedules for clinical diagnostic laboratory tests (including
prostate cancer screening tests under section 1861(oo) consisting of
prostate-specific antigen blood tests) for which payment is made
under this part, other than such tests performed by a provider of
services for an inpatient of such provider.
(B) In the case of clinical diagnostic laboratory tests performed
by a physician or by a laboratory (other than tests performed by
a qualified hospital laboratory (as defined in subparagraph (D)) for
outpatients of such hospital), the fee schedules established under
subparagraph (A) shall be established on a regional, statewide, or
carrier service area basis (as the Secretary may determine to be ap-
propriate) for tests furnished on or after July 1, 1984.
(C) In the case of clinical diagnostic laboratory tests performed
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by a qualified hospital laboratory (as defined in subparagraph (D))
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21
for outpatients of such hospital, the fee schedules established under
subparagraph (A) shall be established on a regional, statewide, or
carrier service area basis (as the Secretary may determine to be ap-
propriate) for tests furnished on or after July 1, 1984.
(D) In this subsection, the term ‘‘qualified hospital laboratory’’
means a hospital laboratory, in a sole community hospital (as de-
fined in section 1886(d)(5)(D)(iii)), which provides some clinical di-
agnostic laboratory tests 24 hours a day in order to serve a hospital
emergency room which is available to provide services 24 hours a
day and 7 days a week.
(2)(A)(i) Except as provided in clause (v), subparagraph (B), and
paragraph (4), the Secretary shall set the fee schedules at 60 per-
cent (or, in the case of a test performed by a qualified hospital lab-
oratory (as defined in paragraph (1)(D)) for outpatients of such hos-
pital, 62 percent) of the prevailing charge level determined pursu-
ant to the third and fourth sentences of section 1842(b)(3) for simi-
lar clinical diagnostic laboratory tests for the applicable region,
State, or area for the 12-month period beginning July 1, 1984, ad-
justed annually (to become effective on January 1 of each year) by,
subject to clause (iv), a percentage increase or decrease equal to the
percentage increase or decrease in the Consumer Price Index for
All Urban Consumers (United States city average) minus, for each
of the years 2009 and 2010, 0.5 percentage points, and, for tests
furnished before the dateof enactment of section 1834A, subject to
such other adjustments as the Secretary determines are justified
by technological changes.
(ii) Notwithstanding clause (i)—
(I) any change in the fee schedules which would have become
effective under this subsection for tests furnished on or after
January 1, 1988, shall not be effective for tests furnished dur-
ing the 3-month period beginning on January 1, 1988,
(II) the Secretary shall not adjust the fee schedules under
clause (i) to take into account any increase in the consumer
price index for 1988,
(III) the annual adjustment in the fee schedules determined
under clause (i) for each of the years 1991, 1992, and 1993
shall be 2 percent, and
(IV) the annual adjustment in the fee schedules determined
under clause (i) for each of the years 1994 and 1995, 1998
through 2002, and 2004 through 2008 shall be 0 percent.
(iii) In establishing fee schedules under clause (i) with respect to
automated tests and tests (other than cytopathology tests) which
before July 1, 1984, the Secretary made subject to a limit based on
lowest charge levels under the sixth sentence of section 1842(b)(3)
performed after March 31, 1988, the Secretary shall reduce by 8.3
percent the fee schedules otherwise established for 1988, and such
reduced fee schedules shall serve as the base for 1989 and subse-
quent years.
(iv) After determining the adjustment to the fee schedules under
clause (i), the Secretary shall reduce such adjustment—
(I) for 2011 and each subsequent year, by the productivity
adjustment described in section 1886(b)(3)(B)(xi)(II); and
(II) for each of 2011 through 2015, by 1.75 percentage points.
Subclause (I) shall not apply in a year where the adjustment to the
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fee schedules determined under clause (i) is 0.0 or a percentage de-
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22
crease for a year. The application of the productivity adjustment
under subclause (I) shall not result in an adjustment to the fee
schedules under clause (i) being less than 0.0 for a year. The appli-
cation of subclause (II) may result in an adjustment to the fee
schedules under clause (i) being less than 0.0 for a year, and may
result in payment rates for a year being less than such payment
rates for the preceding year.
(v) The Secretary shall reduce by 2 percent the fee schedules oth-
erwise determined under clause (i) for 2013, and such reduced fee
schedules shall serve as the base for 2014 and subsequent years.
(B) The Secretary may make further adjustments or exceptions
to the fee schedules to assure adequate reimbursement of (i) emer-
gency laboratory tests needed for the provision of bona fide emer-
gency services, and (ii) certain low volume high-cost tests where
highly sophisticated equipment or extremely skilled personnel are
necessary to assure quality.
(3) In addition to the amounts provided under the fee schedules
(for tests furnished before January 1, 2017)or under section 1834A
(for tests furnished on or afterJanuary 1, 2017), subject to sub-
section (b)(5) of such section, the Secretary shall provide for and es-
tablish (A) a nominal fee to cover the appropriate costs in collecting
the sample on which a clinical diagnostic laboratory test was per-
formed and for which payment is made under this part, except that
not more than one such fee may be provided under this paragraph
with respect to samples collected in the same encounter, and (B)
a fee to cover the transportation and personnel expenses for
trained personnel to travel to the location of an individual to collect
the sample, except that such a fee may be provided only with re-
spect to an individual who is homebound or an inpatient in an in-
patient facility (other than a hospital). In establishing a fee to
cover the transportation and personnel expenses for trained per-
sonnel to travel to the location of an individual to collect a sample,
the Secretary shall provide a method for computing the fee based
on the number of miles traveled and the personnel costs associated
with the collection of each individual sample, but the Secretary
shall only be required to apply such method in the case of tests fur-
nished during the period beginning on April 1, 1989, and ending
on December 31, 1990, by a laboratory that establishes to the satis-
faction of the Secretary (based on data for the 12-month period
ending June 30, 1988) that (i) the laboratory is dependent upon
payments under this title for at least 80 percent of its collected rev-
enues for clinical diagnostic laboratory tests, (ii) at least 85 percent
of its gross revenues for such tests are attributable to tests per-
formed with respect to individuals who are homebound or who are
residents in a nursing facility, and (iii) the laboratory provided
such tests for residents in nursing facilities representing at least
20 percent of the number of such facilities in the State in which
the laboratory is located.
(4)(A) In establishing any fee schedule under this subsection, the
Secretary may provide for an adjustment to take into account, with
respect to the portion of the expenses of clinical diagnostic labora-
tory tests attributable to wages, the relative difference between a
region’s or local area’s wage rates and the wage rate presumed in
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the data on which the schedule is based.
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(B) For purposes of subsections (a)(1)(D)(i) and (a)(2)(D)(i), the
limitation amount for a clinical diagnostic laboratory test per-
formed—
(i) on or after July 1, 1986, and before April 1, 1988, is equal
to 115 percent of the median of all the fee schedules estab-
lished for that test for that laboratory setting under paragraph
(1),
(ii) after March 31, 1988, and before January 1, 1990, is
equal to the median of all the fee schedules established for that
test for that laboratory setting under paragraph (1),
(iii) after December 31, 1989, and before January 1, 1991, is
equal to 93 percent of the median of all the fee schedules es-
tablished for that test for that laboratory setting under para-
graph (1),
(iv) after December 31, 1990, and before January 1, 1994, is
equal to 88 percent of such median,
(v) after December 31, 1993, and before January 1, 1995, is
equal to 84 percent of such median,
(vi) after December 31, 1994, and before January 1, 1996, is
equal to 80 percent of such median,
(vii) after December 31, 1995, and before January 1, 1998, is
equal to 76 percent of such median, and
(viii) after December 31, 1997, is equal to 74 percent of such
median (or 100 percent of such median in the case of a clinical
diagnostic laboratory test performed on or after January 1,
2001, that the Secretary determines is a new test for which no
limitation amount has previously been established under this
subparagraph).
(5)(A) In the case of a bill or request for payment for a clinical
diagnostic laboratory test for which payment may otherwise be
made under this part on an assignment-related basis or under a
provider agreement under section 1866, payment may be made
only to the person or entity which performed or supervised the per-
formance of such test; except that—
(i) if a physician performed or supervised the performance of
such test, payment may be made to another physician with
whom he shares his practice,
(ii) in the case of a test performed at the request of a labora-
tory by another laboratory, payment may be made to the refer-
ring laboratory but only if—
(I) the referring laboratory is located in, or is part of, a
rural hospital,
(II) the referring laboratory is wholly owned by the enti-
ty performing such test, the referring laboratory wholly
owns the entity performing such test, or both the referring
laboratory and the entity performing such test are wholly-
owned by a third entity, or
(III) not more than 30 percent of the clinical diagnostic
laboratory tests for which such referring laboratory (but
not including a laboratory described in subclause (II)), re-
ceives requests for testing during the year in which the
test is performed are performed by another laboratory, and
(iii) in the case of a clinical diagnostic laboratory test pro-
vided under an arrangement (as defined in section 1861(w)(1))
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made by a hospital, critical access hospital, or skilled nursing
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24
facility, payment shall be made to the hospital or skilled nurs-
ing facility.
(B) In the case of such a bill or request for payment for a clinical
diagnostic laboratory test for which payment may otherwise be
made under this part, and which is not described in subparagraph
(A), payment may be made to the beneficiary only on the basis of
the itemized bill of the person or entity which performed or super-
vised the performance of the test.
(C) Payment for a clinical diagnostic laboratory test, including a
test performed in a physician’s office but excluding a test per-
formed by a rural health clinic may only be made on an assign-
ment-related basis or to a provider of services with an agreement
in effect under section 1866.
(D) A person may not bill for a clinical diagnostic laboratory test,
including a test performed in a physician’s office but excluding a
test performed by a rural health clinic, other than on an assign-
ment-related basis. If a person knowingly and willfully and on a re-
peated basis bills for a clinical diagnostic laboratory test in viola-
tion of the previous sentence, the Secretary may apply sanctions
against the person in the same manner as the Secretary may apply
sanctions against a physician in accordance with paragraph (2) of
section 1842(j) in the same manner such paragraphs apply with re-
spect to a physician. Paragraph (4) of such section shall apply in
this subparagraph in the same manner as such paragraph applies
to such section.
(6) For tests furnished before January 1, 2017, inthe case of any
diagnostic laboratory test payment for which is not made on the
basis of a fee schedule under paragraph (1), the Secretary may es-
tablish a payment rate which is acceptable to the person or entity
performing the test and which would be considered the full charge
for such tests. Such negotiated rate shall be limited to an amount
not in excess of the total payment that would have been made for
the services in the absence of such rate.
(7) Notwithstanding paragraphs (1) and (4)and section 1834A,
the Secretary shall establish a national minimum payment amount
under this part for a diagnostic or screening pap smear laboratory
test (including all cervical cancer screening technologies that have
been approved by the Food and Drug Administration as a primary
screening method for detection of cervical cancer) equal to $14.60
for tests furnished in 2000. For such tests furnished in subsequent
years, such national minimum payment amount shall be adjusted
annually as provided in paragraph (2).
(8)(A) The Secretary shall establish by regulation procedures for
determining the basis for, and amount of, payment under this sub-
section for any clinical diagnostic laboratory test with respect to
which a new or substantially revised HCPCS code is assigned on
or after January 1, 2005 (in this paragraph referred to as ‘‘new
tests’’).
(B) Determinations under subparagraph (A) shall be made only
after the Secretary—
(i) makes available to the public (through an Internet
website and other appropriate mechanisms) a list that includes
any such test for which establishment of a payment amount
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under this subsection is being considered for a year;
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25
(ii) on the same day such list is made available, causes to
have published in the Federal Register notice of a meeting to
receive comments and recommendations (and data on which
recommendations are based) from the public on the appro-
priate basis under this subsection for establishing payment
amounts for the tests on such list;
(iii) not less than 30 days after publication of such notice
convenes a meeting, that includes representatives of officials of
the Centers for Medicare & Medicaid Services involved in de-
termining payment amounts, to receive such comments and
recommendations (and data on which the recommendations are
based);
(iv) taking into account the comments and recommendations
(and accompanying data) received at such meeting, develops
and makes available to the public (through an Internet website
and other appropriate mechanisms) a list of proposed deter-
minations with respect to the appropriate basis for establishing
a payment amount under this subsection for each such code,
together with an explanation of the reasons for each such de-
termination, the data on which the determinations are based,
and a request for public written comments on the proposed de-
termination; and
(v) taking into account the comments received during the
public comment period, develops and makes available to the
public (through an Internet website and other appropriate
mechanisms) a list of final determinations of the payment
amounts for such tests under this subsection, together with the
rationale for each such determination, the data on which the
determinations are based, and responses to comments and sug-
gestions received from the public.
(C) Under the procedures established pursuant to subparagraph
(A), the Secretary shall—
(i) set forth the criteria for making determinations under
subparagraph (A); and
(ii) make available to the public the data (other than propri-
etary data) considered in making such determinations.
(D) The Secretary may convene such further public meetings to
receive public comments on payment amounts for new tests under
this subsection as the Secretary deems appropriate.
(E) For purposes of this paragraph:
(i) The term ‘‘HCPCS’’ refers to the Health Care Procedure
Coding System.
(ii) A code shall be considered to be ‘‘substantially revised’’
if there is a substantive change to the definition of the test or
procedure to which the code applies (such as a new analyte or
a new methodology for measuring an existing analyte-specific
test).
(9) Notwithstanding any other provision in this part, in the case
of any diagnostic laboratory test for HbA1c that is labeled by the
Food and Drug Administration for home use and is furnished on
or after April 1, 2008, the payment rate for such test shall be the
payment rate established under this part for a glycated hemoglobin
test (identified as of October 1, 2007, by HCPCS code 83036 (and
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any succeeding codes)).
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(i)(1) The Secretary shall, in consultation with appropriate med-
ical organizations—
(A) specify those surgical procedures which are appropriately
(when considered in terms of the proper utilization of hospital
inpatient facilities) performed on an inpatient basis in a hos-
pital but which also can be performed safely on an ambulatory
basis in an ambulatory surgical center (meeting the standards
specified under section 1832(a)(2)(F)(i)), critical access hospital,
or hospital outpatient department, and
(B) specify those surgical procedures which are appropriately
(when considered in terms of the proper utilization of hospital
inpatient facilities) performed on an inpatient basis in a hos-
pital but which also can be performed safely on an ambulatory
basis in a physician’s office.
The lists of procedures established under subparagraphs (A) and
(B) shall be reviewed and updated not less often than every 2
years, in consultation with appropriate trade and professional orga-
nizations.
(2)(A) For services furnished prior to the implementation of the
system described in subparagraph (D), subject to subparagraph (E),
the amount of payment to be made for facility services furnished
in connection with a surgical procedure specified pursuant to para-
graph (1)(A) and furnished to an individual in an ambulatory sur-
gical center described in such paragraph shall be equal to 80 per-
cent of a standard overhead amount established by the Secretary
(with respect to each such procedure) on the basis of the Sec-
retary’s estimate of a fair fee which—
(i) takes into account the costs incurred by such centers, or
classes of centers, generally in providing services furnished in
connection with the performance of such procedure, as deter-
mined in accordance with a survey (based upon a representa-
tive sample of procedures and facilities) of the actual audited
costs incurred by such centers in providing such services,
(ii) takes such costs into account in such a manner as will
assure that the performance of the procedure in such a center
will result in substantially less amounts paid under this title
than would have been paid if the procedure had been per-
formed on an inpatient basis in a hospital, and
(iii) in the case of insertion of an intraocular lens during or
subsequent to cataract surgery includes payment which is rea-
sonable and related to the cost of acquiring the class of lens
involved.
Each amount so established shall be reviewed and updated not
later than July 1, 1987, and annually thereafter to take account of
varying conditions in different areas.
(B) The amount of payment to be made under this part for facil-
ity services furnished, in connection with a surgical procedure spec-
ified pursuant to paragraph (1)(B), in a physician’s office shall be
equal to 80 percent of a standard overhead amount established by
the Secretary (with respect to each such procedure) on the basis of
the Secretary’s estimate of a fair fee which—
(i) takes into account additional costs, not usually included
in the professional fee, incurred by physicians in securing,
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maintaining, and staffing the facilities and ancillary services
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appropriate for the performance of such procedure in the physi-
cian’s office, and
(ii) takes such items into account in such a manner which
will assure that the performance of such procedure in the phy-
sician’s office will result in substantially less amounts paid
under this title than would have been paid if the services had
been furnished on an inpatient basis in a hospital.
Each amount so established shall be reviewed and updated not
later than July 1, 1987, and annually thereafter to take account of
varying conditions in different areas.
(C)(i) Notwithstanding the second sentence of each of subpara-
graphs (A) and (B), except as otherwise specified in clauses (ii),
(iii), and (iv), if the Secretary has not updated amounts established
under such subparagraphs or under subparagraph (D), with respect
to facility services furnished during a fiscal year (beginning with
fiscal year 1986 or a calendar year (beginning with 2006)), such
amounts shall be increased by the percentage increase in the Con-
sumer Price Index for all urban consumers (U.S. city average) as
estimated by the Secretary for the 12-month period ending with the
midpoint of the year involved.
(ii) In each of the fiscal years 1998 through 2002, the increase
under this subparagraph shall be reduced (but not below zero) by
2.0 percentage points.
(iii) In fiscal year 2004, beginning with April 1, 2004, the in-
crease under this subparagraph shall be the Consumer Price Index
for all urban consumers (U.S. city average) as estimated by the
Secretary for the 12-month period ending with March 31, 2003,
minus 3.0 percentage points.
(iv) In fiscal year 2005, the last quarter of calendar year 2005,
and each of calendar years 2006 through 2009, the increase under
this subparagraph shall be 0 percent.
(D)(i) Taking into account the recommendations in the report
under section 626(d) of Medicare Prescription Drug, Improvement,
and Modernization Act of 2003, the Secretary shall implement a re-
vised payment system for payment of surgical services furnished in
ambulatory surgical centers.
(ii) In the year the system described in clause (i) is implemented,
such system shall be designed to result in the same aggregate
amount of expenditures for such services as would be made if this
subparagraph did not apply, as estimated by the Secretary and
taking into account reduced expenditures that would apply if sub-
paragraph (E) were to continue to apply, as estimated by the Sec-
retary.
(iii) The Secretary shall implement the system described in
clause (i) for periods in a manner so that it is first effective begin-
ning on or after January 1, 2006, and not later than January 1,
2008.
(iv) The Secretary may implement such system in a manner so
as to provide for a reduction in any annual update for failure to
report on quality measures in accordance with paragraph (7).
(v) In implementing the system described in clause (i) for
2011 and each subsequent year, any annual update under such
system for the year, after application of clause (iv), shall be re-
duced by the productivity adjustment described in section
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1886(b)(3)(B)(xi)(II). The application of the preceding sentence
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28
may result in such update being less than 0.0 for a year, and
may result in payment rates under the system described in
clause (i) for a year being less than such payment rates for the
preceding year.
(vi) There shall be no administrative or judicial review under sec-
tion 1869, 1878, or otherwise, of the classification system, the rel-
ative weights, payment amounts, and the geographic adjustment
factor, if any, under this subparagraph.
(E) With respect to surgical procedures furnished on or after Jan-
uary 1, 2007, and before the effective date of the implementation
of a revised payment system under subparagraph (D), if—
(i) the standard overhead amount under subparagraph (A)
for a facility service for such procedure, without the application
of any geographic adjustment, exceeds
(ii) the Medicare OPD fee schedule amount established
under the prospective payment system for hospital outpatient
department services under paragraph (3)(D) of section 1833(t)
for such service for such year, determined without regard to
geographic adjustment under paragraph (2)(D) of such section,
the Secretary shall substitute under subparagraph (A) the amount
described in clause (ii) for the standard overhead amount for such
service referred to in clause (i).
(3)(A) The aggregate amount of the payments to be made under
this part for outpatient hospital facility services or critical access
hospital services furnished before January 1, 1999, in connection
with surgical procedures specified under paragraph (1)(A) shall be
equal to the lesser of—
(i) the amount determined with respect to such services
under subsection (a)(2)(B); or
(ii) the blend amount (described in subparagraph (B)).
(B)(i) The blend amount for a cost reporting period is the sum
of—
(I) the cost proportion (as defined in clause (ii)(I)) of the
amount described in subparagraph (A)(i), and
(II) the ASC proportion (as defined in clause (ii)(II)) of the
standard overhead amount payable with respect to the same
surgical procedure as if it were provided in an ambulatory sur-
gical center in the same area, as determined under paragraph
(2)(A), less the amount a provider may charge as described in
clause (ii) of section 1866(a)(2)(A).
(ii) Subject to paragraph (4), in this paragraph:
(I) The term ‘‘cost proportion’’ means 75 percent for cost re-
porting periods beginning in fiscal year 1988, 50 percent for
portions of cost reporting periods beginning on or after October
1, 1988, and ending on or before December 31, 1990, and 42
percent for portions of cost reporting periods beginning on or
after January 1, 1991.
(II) The term ‘‘ASC proportion’’ means 25 percent for cost re-
porting periods beginning in fiscal year 1988, 50 percent for
portions of cost reporting periods beginning on or after October
1, 1988, and ending on or before December 31, 1990, and 58
percent for portions of cost reporting periods beginning on or
after January 1, 1991.
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(4)(A) In the case of a hospital that—
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29
(i) makes application to the Secretary and demonstrates that
it specializes in eye services or eye and ear services (as deter-
mined by the Secretary),
(ii) receives more than 30 percent of its total revenues from
outpatient services, and
(iii) on October 1, 1987—
(I) was an eye specialty hospital or an eye and ear spe-
cialty hospital, or
(II) was operated as an eye or eye and ear unit (as de-
fined in subparagraph (B)) of a general acute care hospital
which, on the date of the application described in clause
(i), operates less than 20 percent of the beds that the hos-
pital operated on October 1, 1987, and has sold or other-
wise disposed of a substantial portion of the hospital’s
other acute care operations,
the cost proportion and ASC proportion in effect under subclauses
(I) and (II) of paragraph (3)(B)(ii) for cost reporting periods begin-
ning in fiscal year 1988 shall remain in effect for cost reporting pe-
riods beginning on or after October 1, 1988, and before January 1,
1995.
(B) For purposes of this subparagraph (A)(iii)(II), the term ‘‘eye
or eye and ear unit’’ means a physically separate or distinct unit
containing separate surgical suites devoted solely to eye or eye and
ear services.
(5)(A) The Secretary is authorized to provide by regulations that
in the case of a surgical procedure, specified by the Secretary pur-
suant to paragraph (1)(A), performed in an ambulatory surgical
center described in such paragraph, there shall be paid (in lieu of
any amounts otherwise payable under this part) with respect to the
facility services furnished by such center and with respect to all re-
lated services (including physicians’ services, laboratory, X-ray, and
diagnostic services) a single all-inclusive fee established pursuant
to subparagraph (B), if all parties furnishing all such services agree
to accept such fee (to be divided among the parties involved in such
manner as they shall have previously agreed upon) as full payment
for the services furnished.
(B) In implementing this paragraph, the Secretary shall establish
with respect to each surgical procedure specified pursuant to para-
graph (1)(A) the amount of the all-inclusive fee for such procedure,
taking into account such factors as may be appropriate. The
amount so established with respect to any surgical procedure shall
be reviewed periodically and may be adjusted by the Secretary,
when appropriate, to take account of varying conditions in different
areas.
(6) Any person, including a facility having an agreement under
section 1832(a)(2)(F)(i), who knowingly and willfully presents, or
causes to be presented, a bill or request for payment, for an intra-
ocular lens inserted during or subsequent to cataract surgery for
which payment may be made under paragraph (2)(A)(iii), is subject
to a civil money penalty of not to exceed $2,000. The provisions of
section 1128A (other than subsections (a) and (b)) shall apply to a
civil money penalty under the previous sentence in the same man-
ner as such provisions apply to a penalty or proceeding under sec-
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tion 1128A(a).
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30
(7)(A) For purposes of paragraph (2)(D)(iv), the Secretary may
provide, in the case of an ambulatory surgical center that does not
submit, to the Secretary in accordance with this paragraph, data
required to be submitted on measures selected under this para-
graph with respect to a year, any annual increase provided under
the system established under paragraph (2)(D) for such year shall
be reduced by 2.0 percentage points. A reduction under this sub-
paragraph shall apply only with respect to the year involved and
the Secretary shall not take into account such reduction in com-
puting any annual increase factor for a subsequent year.
(B) Except as the Secretary may otherwise provide, the provi-
sions of subparagraphs (B), (C), (D), and (E) of paragraph (17) of
section 1833(t) shall apply with respect to services of ambulatory
surgical centers under this paragraph in a similar manner to the
manner in which they apply under such paragraph and, for pur-
poses of this subparagraph, any reference to a hospital, outpatient
setting, or outpatient hospital services is deemed a reference to an
ambulatory surgical center, the setting of such a center, or services
of such a center, respectively.
(8) The Secretary shall conduct a similar type of review as re-
quired under paragraph (22) of section 1833(t)), including the sec-
ond sentence of subparagraph (C) of such paragraph, to payment
for services under this subsection, and make such revisions under
this paragraph, in an appropriate manner (as determined by the
Secretary).
(j) Whenever a final determination is made that the amount of
payment made under this part either to a provider of services or
to another person pursuant to an assignment under section
1842(b)(3)(B)(ii) was in excess of or less than the amount of pay-
ment that is due, and payment of such excess or deficit is not made
(or effected by offset) within 30 days of the date of the determina-
tion, interest shall accrue on the balance of such excess or deficit
not paid or offset (to the extent that the balance is owed by or
owing to the provider) at a rate determined in accordance with the
regulations of the Secretary of the Treasury applicable to charges
for late payments (or, in the case of such a determination made
with respect to a payment made on or after the date of the enact-
ment of the CARES Act and during the period at the end of the
emergency sentence described in section 1135(g)(1)(B) under the
program described in section 421.214 of title 42, Code of Federal
Regulations (or any successor regulation), at a rate of 4 percent).
(k) With respect to services described in section 1861(s)(10)(B),
the Secretary may provide, instead of the amount of payment oth-
erwise provided under this part, for payment of such an amount or
amounts as reasonably reflects the general cost of efficiently pro-
viding such services.
(l)(1)(A) The Secretary shall establish a fee schedule for services
of certified registered nurse anesthetists under section 1861(s)(11).
(B) In establishing the fee schedule under this paragraph the
Secretary may utilize a system of time units, a system of base and
time units, or any appropriate methodology.
(C) The provisions of this subsection shall not apply to certain
services furnished in certain hospitals in rural areas under the pro-
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visions of section 9320(k) of the Omnibus Budget Reconciliation Act
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31
of 1986, as amended by section 6132 of the Omnibus Budget Rec-
onciliation Act of 1989.
(2) Except as provided in paragraph (3), the fee schedule estab-
lished under paragraph (1) shall be initially based on audited data
from cost reporting periods ending in fiscal year 1985 and such
other data as the Secretary determines necessary.
(3)(A) In establishing the initial fee schedule for those services,
the Secretary shall adjust the fee schedule to the extent necessary
to ensure that the estimated total amount which will be paid under
this title for those services plus applicable coinsurance in 1989 will
equal the estimated total amount which would be paid under this
title for those services in 1989 if the services were included as in-
patient hospital services and payment for such services was made
under part A in the same manner as payment was made in fiscal
year 1987, adjusted to take into account changes in prices and
technology relating to the administration of anesthesia.
(B) The Secretary shall also reduce the prevailing charge of phy-
sicians for medical direction of a certified registered nurse anes-
thetist, or the fee schedule for services of certified registered nurse
anesthetists, or both, to the extent necessary to ensure that the es-
timated total amount which will be paid under this title plus appli-
cable coinsurance for such medical direction and such services in
1989 and 1990 will not exceed the estimated total amount which
would have been paid plus applicable coinsurance but for the enact-
ment of the amendments made by section 9320 of the Omnibus
Budget Reconciliation Act of 1986. A reduced prevailing charge
under this subparagraph shall become the prevailing charge but for
subsequent years for purposes of applying the economic index
under the fourth sentence of section 1842(b)(3).
(4)(A) Except as provided in subparagraphs (C) and (D), in deter-
mining the amount paid under the fee schedule under this sub-
section for services furnished on or after January 1, 1991, by a cer-
tified registered nurse anesthetist who is not medically directed—
(i) the conversion factor shall be—
(I) for services furnished in 1991, $15.50,
(II) for services furnished in 1992, $15.75,
(III) for services furnished in 1993, $16.00,
(IV) for services furnished in 1994, $16.25,
(V) for services furnished in 1995, $16.50,
(VI) for services furnished in 1996, $16.75, and
(VII) for services furnished in calendar years after 1996,
the previous year’s conversion factor increased by the up-
date determined under section 1848(d) for physician anes-
thesia services for that year;
(ii) the payment areas to be used shall be the fee schedule
areas used under section 1848 (or, in the case of services fur-
nished during 1991, the localities used under section 1842(b))
for purposes of computing payments for physicians’ services
that are anesthesia services;
(iii) the geographic adjustment factors to be applied to the
conversion factor under clause (i) for services in a fee schedule
area or locality is—
(I) in the case of services furnished in 1991, the geo-
graphic work index value and the geographic practice cost
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index value specified in section 1842(q)(1)(B) for physi-
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32
cians’ services that are anesthesia services furnished in
the area or locality, and
(II) in the case of services furnished after 1991, the geo-
graphic work index value, the geographic practice cost
index value, and the geographic malpractice index value
used for determining payments for physicians’ services
that are anesthesia services under section 1848,
with 70 percent of the conversion factor treated as attributable
to work and 30 percent as attributable to overhead for services
furnished in 1991 (and the portions attributable to work, prac-
tice expenses, and malpractice expenses in 1992 and thereafter
being the same as is applied under section 1848).
(B)(i) Except as provided in clause (ii) and subparagraph (D), in
determining the amount paid under the fee schedule under this
subsection for services furnished on or after January 1, 1991, and
before January 1, 1994, by a certified registered nurse anesthetist
who is medically directed, the Secretary shall apply the same
methodology specified in subparagraph (A).
(ii) The conversion factor used under clause (i) shall be—
(I) for services furnished in 1991, $10.50,
(II) for services furnished in 1992, $10.75, and
(III) for services furnished in 1993, $11.00.
(iii) In the case of services of a certified registered nurse anes-
thetist who is medically directed or medically supervised by a phy-
sician which are furnished on or after January 1, 1994, the fee
schedule amount shall be one-half of the amount described in sec-
tion 1848(a)(5)(B) with respect to the physician.
(C) Notwithstanding subclauses (I) through (V) of subparagraph
(A)(i)—
(i) in the case of a 1990 conversion factor that is greater than
$16.50, the conversion factor for a calendar year after 1990 and
before 1996 shall be the 1990 conversion factor reduced by the
product of the last digit of the calendar year and one-fifth of
the amount by which the 1990 conversion factor exceeds
$16.50; and
(ii) in the case of a 1990 conversion factor that is greater
than $15.49 but less than $16.51, the conversion factor for a
calendar year after 1990 and before 1996 shall be the greater
of—
(I) the 1990 conversion factor, or
(II) the conversion factor specified in subparagraph (A)(i)
for the year involved.
(D) Notwithstanding subparagraph (C), in no case may the con-
version factor used to determine payment for services in a fee
schedule area or locality under this subsection, as adjusted by the
adjustment factors specified in subparagraphs (A)(iii), exceed the
conversion factor used to determine the amount paid for physicians’
services that are anesthesia services in the area or locality.
(5)(A) Payment for the services of a certified registered nurse an-
esthetist (for which payment may otherwise be made under this
part) may be made on the basis of a claim or request for payment
presented by the certified registered nurse anesthetist furnishing
such services, or by a hospital, critical access hospital, physician,
group practice, or ambulatory surgical center with which the cer-
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tified registered nurse anesthetist furnishing such services has an
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33
employment or contractual relationship that provides for payment
to be made under this part for such services to such hospital, crit-
ical access hospital, physician, group practice, or ambulatory sur-
gical center.
(B) No hospital or critical access hospital that presents a claim
or request for payment for services of a certified nurse anesthetist
under this part may treat any uncollected coinsurance amount im-
posed under this part with respect to such services as a bad debt
of such hospital or critical access hospital for purposes of this title.
(6) If an adjustment under paragraph (3)(B) results in a reduc-
tion in the reasonable charge for a physicians’ service and a non-
participating physician furnishes the service to an individual enti-
tled to benefits under this part after the effective date of the reduc-
tion, the physician’s actual charge is subject to a limit under sec-
tion 1842(j)(1)(D).
(m)(1) In the case of physicians’ services furnished in a year to
an individual, who is covered under the insurance program estab-
lished by this part and who incurs expenses for such services, in
an area that is designated (under section 332(a)(1)(A) of the Public
Health Service Act) as a health professional shortage area as iden-
tified by the Secretary prior to the beginning of such year, in addi-
tion to the amount otherwise paid under this part, there also shall
be paid to the physician (or to an employer or facility in the cases
described in clause (A) of section 1842(b)(6)) (on a monthly or quar-
terly basis) from the Federal Supplementary Medical Insurance
Trust Fund an amount equal to 10 percent of the payment amount
for the service under this part.
(2) For each health professional shortage area identified in para-
graph (1) that consists of an entire county, the Secretary shall pro-
vide for the additional payment under paragraph (1) without any
requirement on the physician to identify the health professional
shortage area involved. The Secretary may implement the previous
sentence using the method specified in subsection (u)(4)(C).
(3) The Secretary shall post on the Internet website of the Cen-
ters for Medicare & Medicaid Services a list of the health profes-
sional shortage areas identified in paragraph (1) that consist of a
partial county to facilitate the additional payment under paragraph
(1) in such areas.
(4) There shall be no administrative or judicial review under sec-
tion 1869, section 1878, or otherwise, respecting—
(A) the identification of a county or area;
(B) the assignment of a specialty of any physician under this
paragraph;
(C) the assignment of a physician to a county under this sub-
section; or
(D) the assignment of a postal ZIP Code to a county or other
area under this subsection.
(n)(1)(A) The aggregate amount of the payments to be made for
all or part of a cost reporting period for services described in sub-
section (a)(2)(E)(i) furnished under this part on or after October 1,
1988, and before January 1, 1999, and for services described in
subsection (a)(2)(E)(ii) furnished under this part on or after October
1, 1989, and before January 1, 1999, shall be equal to the lesser
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of—
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34
(i) the amount determined with respect to such services
under subsection (a)(2)(B), or
(ii) the blend amount for radiology services and diagnostic
procedures determined in accordance with subparagraph (B).
(B)(i) The blend amount for radiology services and diagnostic pro-
cedures for a cost reporting period is the sum of—
(I) the cost proportion (as defined in clause (ii)) of the
amount described in subparagraph (A)(i); and
(II) the charge proportion (as defined in clause (ii)(II)) of 62
percent (for services described in subsection (a)(2)(E)(i)), or (for
procedures described in subsection (a)(2)(E)(ii)), 42 percent or
such other percent established by the Secretary (or carriers
acting pursuant to guidelines issued by the Secretary) based on
prevailing charges established with actual charge data, of the
prevailing charge or (for services described in subsection
(a)(2)(E)(i) furnished on or after January 1, 1989) the fee
schedule amount established for participating physicians for
the same services as if they were furnished in a physician’s of-
fice in the same locality as determined under section 1842(b),
less the amount a provider may charge as described in clause
(ii) of section 1866(a)(2)(A).
(ii) In this subparagraph:
(I) The term ‘‘cost proportion’’ means 50 percent, except that
such term means 65 percent in the case of outpatient radiology
services for portions of cost reporting periods which occur in
fiscal year 1989 and in the case of diagnostic procedures de-
scribed in subsection (a)(2)(E)(ii) for portions of cost reporting
periods which occur in fiscal year 1990, and such term means
42 percent in the case of outpatient radiology services for por-
tions of cost reporting periods beginning on or after January 1,
1991.
(II) The term ‘‘charge proportion’’ means 100 percent minus
the cost proportion.
(o)(1) In the case of shoes described in section 1861(s)(12)—
(A) no payment may be made under this part, with respect
to any individual for any year, for the furnishing of—
(i) more than one pair of custom molded shoes (including
inserts provided with such shoes) and 2 additional pairs of
inserts for such shoes, or
(ii) more than one pair of extra-depth shoes (not includ-
ing inserts provided with such shoes) and 3 pairs of inserts
for such shoes, and
(B) with respect to expenses incurred in any calendar year,
no more than the amount of payment applicable under para-
graph (2) shall be considered as incurred expenses for purposes
of subsections (a) and (b).
Payment for shoes (or inserts) under this part shall be considered
to include payment for any expenses for the fitting of such shoes
(or inserts).
(2)(A) Except as provided by the Secretary under subparagraphs
(B) and (C), the amount of payment under this paragraph for cus-
tom molded shoes, extra-depth shoes, and inserts shall be the
amount determined for such items by the Secretary under section
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1834(h).
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(B) The Secretary may establish payment amounts for shoes and
inserts that are lower than the amount established under section
1834(h) if the Secretary finds that shoes and inserts of an appro-
priate quality are readily available at or below the amount estab-
lished under such section.
(C) In accordance with procedures established by the Secretary,
an individual entitled to benefits with respect to shoes described in
section 1861(s)(12) may substitute modification of such shoes in-
stead of obtaining one (or more, as specified by the Secretary) pair
of inserts (other than the original pair of inserts with respect to
such shoes). In such case, the Secretary shall substitute, for the
payment amount established under section 1834(h), a payment
amount that the Secretary estimates will assure that there is no
net increase in expenditures under this subsection as a result of
this subparagraph.
(3) In this title, the term ‘‘shoes’’ includes, except for purposes of
subparagraphs (A)(ii) and (B) of paragraph (2), inserts for extra-
depth shoes.
(q)(1) Each request for payment, or bill submitted, for an item or
service furnished by an entity for which payment may be made
under this part and for which the entity knows or has reason to
believe there has been a referral by a referring physician (within
the meaning of section 1877) shall include the name and unique
physician identification number for the referring physician.
(2)(A) In the case of a request for payment for an item or service
furnished by an entity under this part on an assignment-related
basis and for which information is required to be provided under
paragraph (1) but not included, payment may be denied under this
part.
(B) In the case of a request for payment for an item or service
furnished by an entity under this part not submitted on an assign-
ment-related basis and for which information is required to be pro-
vided under paragraph (1) but not included—
(i) if the entity knowingly and willfully fails to provide such
information promptly upon request of the Secretary or a car-
rier, the entity may be subject to a civil money penalty in an
amount not to exceed $2,000, and
(ii) if the entity knowingly, willfully, and in repeated cases
fails, after being notified by the Secretary of the obligations
and requirements of this subsection to provide the information
required under paragraph (1), the entity may be subject to ex-
clusion from participation in the programs under this Act for
a period not to exceed 5 years, in accordance with the proce-
dures of subsections (c), (f), and (g) of section 1128.
The provisions of section 1128A (other than subsections (a) and (b))
shall apply to civil money penalties under clause (i) in the same
manner as they apply to a penalty or proceeding under section
1128A(a).
(r)(1) With respect to services described in section
1861(s)(2)(K)(ii) (relating to nurse practitioner or clinical nurse spe-
cialist services), payment may be made on the basis of a claim or
request for payment presented by the nurse practitioner or clinical
nurse specialist furnishing such services, or by a hospital, critical
access hospital, skilled nursing facility or nursing facility (as de-
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fined in section 1919(a)), physician, group practice, or ambulatory
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36
surgical center with which the nurse practitioner or clinical nurse
specialist has an employment or contractual relationship that pro-
vides for payment to be made under this part for such services to
such hospital, physician, group practice, or ambulatory surgical
center.
(2) No hospital or critical access hospital that presents a claim
or request for payment under this part for services described in
section 1861(s)(2)(K)(ii) may treat any uncollected coinsurance
amount imposed under this part with respect to such services as
a bad debt of such hospital for purposes of this title.
(s) The Secretary may not provide for payment under subsection
(a)(1)(A) with respect to an organization unless the organization
provides assurances satisfactory to the Secretary that the organiza-
tion meets the requirement of section 1866(f) (relating to maintain-
ing written policies and procedures respecting advance directives).
(t) PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT
DEPARTMENT SERVICES.—
(1) AMOUNT OF PAYMENT.—
(A) IN GENERAL.—With respect to covered OPD services
(as defined in subparagraph (B)) furnished during a year
beginning with 1999, the amount of payment under this
part shall be determined under a prospective payment sys-
tem established by the Secretary in accordance with this
subsection.
(B) DEFINITION OF COVERED OPD SERVICES.—For pur-
poses of this subsection, the term ‘‘covered OPD serv-
ices’’—
(i) means hospital outpatient services designated by
the Secretary;
(ii) subject to clause (iv), includes inpatient hospital
services designated by the Secretary that are covered
under this part and furnished to a hospital inpatient
who (I) is entitled to benefits under part A but has ex-
hausted benefits for inpatient hospital services during
a spell of illness, or (II) is not so entitled;
(iii) includes implantable items described in para-
graph (3), (6), or (8) of section 1861(s);
(iv) does not include any therapy services described
in subsection (a)(8) or ambulance services, for which
payment is made under a fee schedule described in
section 1834(k) or section 1834(l) and does not include
screening mammography (as defined in section
1861(jj)), diagnostic mammography, or personalized
prevention plan services (as defined in section
1861(hhh)(1)); and
(v) does not include applicable items and services (as
defined in subparagraph (A) of paragraph (21)) that
are furnished on or after January 1, 2017, by an off-
campus outpatient department of a provider (as de-
fined in subparagraph (B) of such paragraph).
(2) SYSTEM REQUIREMENTS.—Under the payment system—
(A) the Secretary shall develop a classification system
for covered OPD services;
(B) the Secretary may establish groups of covered OPD
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services, within the classification system described in sub-
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37
paragraph (A), so that services classified within each
group are comparable clinically and with respect to the use
of resources and so that an implantable item is classified
to the group that includes the service to which the item re-
lates;
(C) the Secretary shall, using data on claims from 1996
and using data from the most recent available cost reports,
establish relative payment weights for covered OPD serv-
ices (and any groups of such services described in subpara-
graph (B)) based on median (or, at the election of the Sec-
retary, mean) hospital costs and shall determine projec-
tions of the frequency of utilization of each such service (or
group of services) in 1999;
(D) subject to paragraph (19), the Secretary shall deter-
mine a wage adjustment factor to adjust the portion of
payment and coinsurance attributable to labor-related
costs for relative differences in labor and labor-related
costs across geographic regions in a budget neutral man-
ner;
(E) the Secretary shall establish, in a budget neutral
manner, outlier adjustments under paragraph (5) and
transitional pass-through payments under paragraph (6)
and other adjustments as determined to be necessary to
ensure equitable payments, such as adjustments for cer-
tain classes of hospitals;
(F) the Secretary shall develop a method for controlling
unnecessary increases in the volume of covered OPD serv-
ices;
(G) the Secretary shall create additional groups of cov-
ered OPD services that classify separately those proce-
dures that utilize contrast agents from those that do not;
and
(H) with respect to devices of brachytherapy consisting
of a seed or seeds (or radioactive source), the Secretary
shall create additional groups of covered OPD services that
classify such devices separately from the other services (or
group of services) paid for under this subsection in a man-
ner reflecting the number, isotope, and radioactive inten-
sity of such devices furnished, including separate groups
for palladium-103 and iodine-125 devices and for stranded
and non-stranded devices furnished on or after July 1,
2007.
For purposes of subparagraph (B), items and services within a
group shall not be treated as ‘‘comparable with respect to the
use of resources’’ if the highest median cost (or mean cost, if
elected by the Secretary under subparagraph (C)) for an item
or service within the group is more than 2 times greater than
the lowest median cost (or mean cost, if so elected) for an item
or service within the group; except that the Secretary may
make exceptions in unusual cases, such as low volume items
and services, but may not make such an exception in the case
of a drug or biological that has been designated as an orphan
drug under section 526 of the Federal Food, Drug and Cos-
metic Act.
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(3) CALCULATION OF BASE AMOUNTS.—
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(A) AGGREGATE AMOUNTS THAT WOULD BE PAYABLE IF
DEDUCTIBLES WERE DISREGARDED.—The Secretary shall es-
timate the sum of—
(i) the total amounts that would be payable from the
Trust Fund under this part for covered OPD services
in 1999, determined without regard to this subsection,
as though the deductible under section 1833(b) did not
apply, and
(ii) the total amounts of copayments estimated to be
paid under this subsection by beneficiaries to hospitals
for covered OPD services in 1999, as though the de-
ductible under section 1833(b) did not apply.
(B) UNADJUSTED COPAYMENT AMOUNT.—
(i) IN GENERAL.—For purposes of this subsection,
subject to clause (ii), the ‘‘unadjusted copayment
amount’’ applicable to a covered OPD service (or group
of such services) is 20 percent of the national median
of the charges for the service (or services within the
group) furnished during 1996, updated to 1999 using
the Secretary’s estimate of charge growth during the
period.
(ii) ADJUSTED TO BE 20 PERCENT WHEN FULLY
PHASED IN.—If the pre-deductible payment percentage
for a covered OPD service (or group of such services)
furnished in a year would be equal to or exceed 80
percent, then the unadjusted copayment amount shall
be 20 percent of amount determined under subpara-
graph (D).
(iii) RULES FOR NEW SERVICES.—The Secretary shall
establish rules for establishment of an unadjusted co-
payment amount for a covered OPD service not fur-
nished during 1996, based upon its classification with-
in a group of such services.
(C) CALCULATION OF CONVERSION FACTORS.—
(i) FOR 1999.—
(I) IN GENERAL.—The Secretary shall establish a
1999 conversion factor for determining the medi-
care OPD fee schedule amounts for each covered
OPD service (or group of such services) furnished
in 1999. Such conversion factor shall be estab-
lished on the basis of the weights and frequencies
described in paragraph (2)(C) and in such a man-
ner that the sum for all services and groups of the
products (described in subclause (II) for each such
service or group) equals the total projected
amount described in subparagraph (A).
(II) PRODUCT DESCRIBED.—The Secretary shall
determine for each service or group the product of
the medicare OPD fee schedule amounts (taking
into account appropriate adjustments described in
paragraphs (2)(D) and (2)(E)) and the estimated
frequencies for such service or group.
(ii) SUBSEQUENT YEARS.—Subject to paragraph
(8)(B), the Secretary shall establish a conversion factor
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for covered OPD services furnished in subsequent
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years in an amount equal to the conversion factor es-
tablished under this subparagraph and applicable to
such services furnished in the previous year increased
by the OPD fee schedule increase factor specified
under clause (iv) for the year involved.
(iii) ADJUSTMENT FOR SERVICE MIX CHANGES.—Inso-
far as the Secretary determines that the adjustments
for service mix under paragraph (2) for a previous
year (or estimates that such adjustments for a future
year) did (or are likely to) result in a change in aggre-
gate payments under this subsection during the year
that are a result of changes in the coding or classifica-
tion of covered OPD services that do not reflect real
changes in service mix, the Secretary may adjust the
conversion factor computed under this subparagraph
for subsequent years so as to eliminate the effect of
such coding or classification changes.
(iv) OPD FEE SCHEDULE INCREASE FACTOR.—For pur-
poses of this subparagraph, subject to paragraph (17)
and subparagraph (F) of this paragraph, the ‘‘OPD fee
schedule increase factor’’ for services furnished in a
year is equal to the market basket percentage increase
applicable under section 1886(b)(3)(B)(iii) to hospital
discharges occurring during the fiscal year ending in
such year, reduced by 1 percentage point for such fac-
tor for services furnished in each of 2000 and 2002. In
applying the previous sentence for years beginning
with 2000, the Secretary may substitute for the mar-
ket basket percentage increase an annual percentage
increase that is computed and applied with respect to
covered OPD services furnished in a year in the same
manner as the market basket percentage increase is
determined and applied to inpatient hospital services
for discharges occurring in a fiscal year.
(D) CALCULATION OF MEDICARE OPD FEE SCHEDULE
AMOUNTS.—The Secretary shall compute a medicare OPD
fee schedule amount for each covered OPD service (or
group of such services) furnished in a year, in an amount
equal to the product of—
(i) the conversion factor computed under subpara-
graph (C) for the year, and
(ii) the relative payment weight (determined under
paragraph (2)(C)) for the service or group.
(E) PRE-DEDUCTIBLE PAYMENT PERCENTAGE.—The pre-de-
ductible payment percentage for a covered OPD service (or
group of such services) furnished in a year is equal to the
ratio of—
(i) the medicare OPD fee schedule amount estab-
lished under subparagraph (D) for the year, minus the
unadjusted copayment amount determined under sub-
paragraph (B) for the service or group, to
(ii) the medicare OPD fee schedule amount deter-
mined under subparagraph (D) for the year for such
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service or group.
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(F) PRODUCTIVITY AND OTHER ADJUSTMENT.—After deter-
mining the OPD fee schedule increase factor under sub-
paragraph (C)(iv), the Secretary shall reduce such increase
factor—
(i) for 2012 and subsequent years, by the produc-
tivity adjustment described in section
1886(b)(3)(B)(xi)(II); and
(ii) for each of 2010 through 2019, by the adjustment
described in subparagraph (G).
The application of this subparagraph may result in the in-
crease factor under subparagraph (C)(iv) being less than
0.0 for a year, and may result in payment rates under the
payment system under this subsection for a year being less
than such payment rates for the preceding year.
(G) OTHER ADJUSTMENT.—For purposes of subparagraph
(F)(ii), the adjustment described in this subparagraph is—
(i) for each of 2010 and 2011, 0.25 percentage point;
(ii) for each of 2012 and 2013, 0.1 percentage point;
(iii) for 2014, 0.3 percentage point;
(iv) for each of 2015 and 2016, 0.2 percentage point;
and
(v) for each of 2017, 2018, and 2019, 0.75 percentage
point.
(4) MEDICARE PAYMENT AMOUNT.—The amount of payment
made from the Trust Fund under this part for a covered OPD
service (and such services classified within a group) furnished
in a year is determined, subject to paragraph (7), as follows:
(A) FEE SCHEDULE ADJUSTMENTS.—The medicare OPD
fee schedule amount (computed under paragraph (3)(D))
for the service or group and year is adjusted for relative
differences in the cost of labor and other factors deter-
mined by the Secretary, as computed under paragraphs
(2)(D) and (2)(E).
(B) SUBTRACT APPLICABLE DEDUCTIBLE.—Reduce the ad-
justed amount determined under subparagraph (A) by the
amount of the deductible under section 1833(b), to the ex-
tent applicable.
(C) APPLY PAYMENT PROPORTION TO REMAINDER.—The
amount of payment is the amount so determined under
subparagraph (B) multiplied by the pre-deductible pay-
ment percentage (as determined under paragraph (3)(E))
for the service or group and year involved, plus the
amount of any reduction in the copayment amount attrib-
utable to paragraph (8)(C).
(5) OUTLIER ADJUSTMENT.—
(A) IN GENERAL.—Subject to subparagraph (D), the Sec-
retary shall provide for an additional payment for each
covered OPD service (or group of services) for which a hos-
pital’s charges, adjusted to cost, exceed—
(i) a fixed multiple of the sum of—
(I) the applicable medicare OPD fee schedule
amount determined under paragraph (3)(D), as
adjusted under paragraph (4)(A) (other than for
adjustments under this paragraph or paragraph
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(6)); and
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(II) any transitional pass-through payment
under paragraph (6); and
(ii) at the option of the Secretary, such fixed dollar
amount as the Secretary may establish.
(B) AMOUNT OF ADJUSTMENT.—The amount of the addi-
tional payment under subparagraph (A) shall be deter-
mined by the Secretary and shall approximate the mar-
ginal cost of care beyond the applicable cutoff point under
such subparagraph.
(C) LIMIT ON AGGREGATE OUTLIER ADJUSTMENTS.—
(i) IN GENERAL.—The total of the additional pay-
ments made under this paragraph for covered OPD
services furnished in a year (as estimated by the Sec-
retary before the beginning of the year) may not ex-
ceed the applicable percentage (specified in clause (ii))
of the total program payments estimated to be made
under this subsection for all covered OPD services fur-
nished in that year. If this paragraph is first applied
to less than a full year, the previous sentence shall
apply only to the portion of such year.
(ii) APPLICABLE PERCENTAGE.—For purposes of
clause (i), the term ‘‘applicable percentage’’ means a
percentage specified by the Secretary up to (but not to
exceed)—
(I) for a year (or portion of a year) before 2004,
2.5 percent; and
(II) for 2004 and thereafter, 3.0 percent.
(D) TRANSITIONAL AUTHORITY.—In applying subpara-
graph (A) for covered OPD services furnished before Janu-
ary 1, 2002, the Secretary may—
(i) apply such subparagraph to a bill for such serv-
ices related to an outpatient encounter (rather than
for a specific service or group of services) using OPD
fee schedule amounts and transitional pass-through
payments covered under the bill; and
(ii) use an appropriate cost-to-charge ratio for the
hospital involved (as determined by the Secretary),
rather than for specific departments within the hos-
pital.
(E) EXCLUSION OF SEPARATE DRUG AND BIOLOGICAL APCS
FROM OUTLIER PAYMENTS.—No additional payment shall be
made under subparagraph (A) in the case of ambulatory
payment classification groups established separately for
drugs or biologicals.
(6) TRANSITIONAL PASS-THROUGH FOR ADDITIONAL COSTS OF
INNOVATIVE MEDICAL DEVICES, DRUGS, AND BIOLOGICALS.—
(A) IN GENERAL.—The Secretary shall provide for an ad-
ditional payment under this paragraph for any of the fol-
lowing that are provided as part of a covered OPD service
(or group of services):
(i) CURRENT ORPHAN DRUGS.—A drug or biological
that is used for a rare disease or condition with re-
spect to which the drug or biological has been des-
ignated as an orphan drug under section 526 of the
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Federal Food, Drug and Cosmetic Act if payment for
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42
the drug or biological as an outpatient hospital service
under this part was being made on the first date that
the system under this subsection is implemented.
(ii) CURRENT CANCER THERAPY DRUGS AND
BIOLOGICALS AND BRACHYTHERAPY.—A drug or biologi-
cal that is used in cancer therapy, including (but not
limited to) a chemotherapeutic agent, an antiemetic, a
hematopoietic growth factor, a colony stimulating fac-
tor, a biological response modifier, a bisphosphonate,
and a device of brachytherapy or temperature mon-
itored cryoablation, if payment for such drug, biologi-
cal, or device as an outpatient hospital service under
this part was being made on such first date.
(iii) CURRENT RADIOPHARMACEUTICAL DRUGS AND BI-
OLOGICAL PRODUCTS.—A radiopharmaceutical drug or
biological product used in diagnostic, monitoring, and
therapeutic nuclear medicine procedures if payment
for the drug or biological as an outpatient hospital
service under this part was being made on such first
date.
(iv) NEW MEDICAL DEVICES, DRUGS, AND
BIOLOGICALS.—A medical device, drug, or biological not
described in clause (i), (ii), or (iii) if—
(I) payment for the device, drug, or biological as
an outpatient hospital service under this part was
not being made as of December 31, 1996; and
(II) the cost of the drug or biological or the aver-
age cost of the category of devices is not insignifi-
cant in relation to the OPD fee schedule amount
(as calculated under paragraph (3)(D)) payable for
the service (or group of services) involved.
(B) USE OF CATEGORIES IN DETERMINING ELIGIBILITY OF
A DEVICE FOR PASS-THROUGH PAYMENTS.—The following
provisions apply for purposes of determining whether a
medical device qualifies for additional payments under
clause (ii) or (iv) of subparagraph (A):
(i) ESTABLISHMENT OF INITIAL CATEGORIES.—
(I) IN GENERAL.—The Secretary shall initially
establish under this clause categories of medical
devices based on type of device by April 1, 2001.
Such categories shall be established in a manner
such that each medical device that meets the re-
quirements of clause (ii) or (iv) of subparagraph
(A) as of January 1, 2001, is included in such a
category and no such device is included in more
than one category. For purposes of the preceding
sentence, whether a medical device meets such re-
quirements as of such date shall be determined on
the basis of the program memoranda issued before
such date.
(II) AUTHORIZATION OF IMPLEMENTATION OTHER
THAN THROUGH REGULATIONS.—The categories
may be established under this clause by program
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memorandum or otherwise, after consultation
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43
with groups representing hospitals, manufacturers
of medical devices, and other affected parties.
(ii) ESTABLISHING CRITERIA FOR ADDITIONAL CAT-
EGORIES.—
(I) IN GENERAL.—The Secretary shall establish
criteria that will be used for creation of additional
categories (other than those established under
clause (i)) through rulemaking (which may include
use of an interim final rule with comment period).
(II) STANDARD.—Such categories shall be estab-
lished under this clause in a manner such that no
medical device is described by more than one cat-
egory. Such criteria shall include a test of whether
the average cost of devices that would be included
in a category and are in use at the time the cat-
egory is established is not insignificant, as de-
scribed in subparagraph (A)(iv)(II).
(III) DEADLINE.—Criteria shall first be estab-
lished under this clause by July 1, 2001. The Sec-
retary may establish in compelling circumstances
categories under this clause before the date such
criteria are established.
(IV) ADDING CATEGORIES.—The Secretary shall
promptly establish a new category of medical de-
vices under this clause for any medical device that
meets the requirements of subparagraph (A)(iv)
and for which none of the categories in effect (or
that were previously in effect) is appropriate.
(iii) PERIOD FOR WHICH CATEGORY IS IN EFFECT.—A
category of medical devices established under clause
(i) or (ii) shall be in effect for a period of at least 2
years, but not more than 3 years, that begins—
(I) in the case of a category established under
clause (i), on the first date on which payment was
made under this paragraph for any device de-
scribed by such category (including payments
made during the period before April 1, 2001); and
(II) in the case of any other category, on the
first date on which payment is made under this
paragraph for any medical device that is described
by such category.
(iv) REQUIREMENTS TREATED AS MET.—A medical de-
vice shall be treated as meeting the requirements of
subparagraph (A)(iv), regardless of whether the device
meets the requirement of subclause (I) of such sub-
paragraph, if—
(I) the device is described by a category estab-
lished and in effect under clause (i); or
(II) the device is described by a category estab-
lished and in effect under clause (ii) and an appli-
cation under section 515 of the Federal Food,
Drug, and Cosmetic Act has been approved with
respect to the device, or the device has been
cleared for market under section 510(k) of such
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Act, or the device is exempt from the require-
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44
ments of section 510(k) of such Act pursuant to
subsection (l) or (m) of section 510 of such Act or
section 520(g) of such Act.
Nothing in this clause shall be construed as requiring
an application or prior approval (other than that de-
scribed in subclause (II)) in order for a covered device
described by a category to qualify for payment under
this paragraph.
(C) LIMITED PERIOD OF PAYMENT.—
(i) DRUGS AND BIOLOGICALS.—Subject to subpara-
graph (G), the payment under this paragraph with re-
spect to a drug or biological shall only apply during a
period of at least 2 years, but not more than 3 years,
that begins—
(I) on the first date this subsection is imple-
mented in the case of a drug or biological de-
scribed in clause (i), (ii), or (iii) of subparagraph
(A) and in the case of a drug or biological de-
scribed in subparagraph (A)(iv) and for which pay-
ment under this part is made as an outpatient
hospital service before such first date; or
(II) in the case of a drug or biological described
in subparagraph (A)(iv) not described in subclause
(I), on the first date on which payment is made
under this part for the drug or biological as an
outpatient hospital service.
(ii) MEDICAL DEVICES.—Payment shall be made
under this paragraph with respect to a medical device
only if such device—
(I) is described by a category of medical devices
established and in effect under subparagraph (B);
and
(II) is provided as part of a service (or group of
services) paid for under this subsection and pro-
vided during the period for which such category is
in effect under such subparagraph.
(D) AMOUNT OF ADDITIONAL PAYMENT.—Subject to sub-
paragraph (E)(iii), the amount of the payment under this
paragraph with respect to a device, drug, or biological pro-
vided as part of a covered OPD service is—
(i) subject to subparagraph (H), in the case of a drug
or biological, the amount by which the amount deter-
mined under section 1842(o) (or if the drug or biologi-
cal is covered under a competitive acquisition contract
under section 1847B, an amount determined by the
Secretary equal to the average price for the drug or bi-
ological for all competitive acquisition areas and year
established under such section as calculated and ad-
justed by the Secretary for purposes of this paragraph)
for the drug or biological exceeds the portion of the
otherwise applicable medicare OPD fee schedule that
the Secretary determines is associated with the drug
or biological; or
(ii) in the case of a medical device, the amount by
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which the hospital’s charges for the device, adjusted to
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45
cost, exceeds the portion of the otherwise applicable
medicare OPD fee schedule that the Secretary deter-
mines is associated with the device.
(E) LIMIT ON AGGREGATE ANNUAL ADJUSTMENT.—
(i) IN GENERAL.—The total of the additional pay-
ments made under this paragraph for covered OPD
services furnished in a year (as estimated by the Sec-
retary before the beginning of the year) may not ex-
ceed the applicable percentage (specified in clause (ii))
of the total program payments estimated to be made
under this subsection for all covered OPD services fur-
nished in that year. If this paragraph is first applied
to less than a full year, the previous sentence shall
apply only to the portion of such year. This clause
shall not apply for 2018 or 2020.
(ii) APPLICABLE PERCENTAGE.—For purposes of
clause (i), the term ‘‘applicable percentage’’ means—
(I) for a year (or portion of a year) before 2004,
2.5 percent; and
(II) for 2004 and thereafter, a percentage speci-
fied by the Secretary up to (but not to exceed) 2.0
percent.
(iii) UNIFORM PROSPECTIVE REDUCTION IF AGGREGATE
LIMIT PROJECTED TO BE EXCEEDED.—If the Secretary
estimates before the beginning of a year that the
amount of the additional payments under this para-
graph for the year (or portion thereof) as determined
under clause (i) without regard to this clause will ex-
ceed the limit established under such clause, the Sec-
retary shall reduce pro rata the amount of each of the
additional payments under this paragraph for that
year (or portion thereof) in order to ensure that the
aggregate additional payments under this paragraph
(as so estimated) do not exceed such limit.
(F) LIMITATION OF APPLICATION OF FUNCTIONAL EQUIVA-
LENCE STANDARD.—
(i) IN GENERAL.—The Secretary may not publish reg-
ulations that apply a functional equivalence standard
to a drug or biological under this paragraph.
(ii) APPLICATION.—Clause (i) shall apply to the ap-
plication of a functional equivalence standard to a
drug or biological on or after the date of enactment of
the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 unless—
(I) such application was being made to such
drug or biological prior to such date of enactment;
and
(II) the Secretary applies such standard to such
drug or biological only for the purpose of deter-
mining eligibility of such drug or biological for ad-
ditional payments under this paragraph and not
for the purpose of any other payments under this
title.
(iii) RULE OF CONSTRUCTION.—Nothing in this sub-
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paragraph shall be construed to effect the Secretary’s
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46
authority to deem a particular drug to be identical to
another drug if the 2 products are pharmaceutically
equivalent and bioequivalent, as determined by the
Commissioner of Food and Drugs.
(G) PASS-THROUGH EXTENSION FOR CERTAIN DRUGS AND
BIOLOGICALS.—In the case of a drug or biological whose pe-
riod of pass-through status under this paragraph ended on
December 31, 2017, and for which payment under this sub-
section was packaged into a payment for a covered OPD
service (or group of services) furnished beginning January
1, 2018, such pass-through status shall be extended for a
2-year period beginning on October 1, 2018.
(H) TEMPORARY PAYMENT RULE FOR CERTAIN DRUGS AND
BIOLOGICALS.—In the case of a drug or biological whose pe-
riod of pass-through status under this paragraph ended on
December 31, 2017, and for which payment under this sub-
section was packaged into a payment for a covered OPD
service (or group of services) furnished beginning January
1, 2018, the payment amount for such drug or biological
under this subsection that is furnished during the period
beginning on October 1, 2018, and ending on March 31,
2019, shall be the greater of—
(i) the payment amount that would otherwise apply
under subparagraph (D)(i) for such drug or biological
during such period; or
(ii) the payment amount that applied under such
subparagraph (D)(i) for such drug or biological on De-
cember 31, 2017.
(I) SPECIAL PAYMENT ADJUSTMENT RULES FOR LAST QUAR-
TER OF 2018.—In the case of a drug or biological whose pe-
riod of pass-through status under this paragraph ended on
December 31, 2017, and for which payment under this sub-
section was packaged into a payment amount for a covered
OPD service (or group of services) beginning January 1,
2018, the following rules shall apply with respect to pay-
ment amounts under this subsection for covered a OPD
service (or group of services) furnished during the period
beginning on October 1, 2018, and ending on December 31,
2018:
(i) The Secretary shall remove the packaged costs of
such drug or biological (as determined by the Sec-
retary) from the payment amount under this sub-
section for the covered OPD service (or group of serv-
ices) with which it is packaged.
(ii) The Secretary shall not make any adjustments to
payment amounts under this subsection for a covered
OPD service (or group of services) for which no costs
were removed under clause (i).
(J) ADDITIONAL PASS-THROUGH EXTENSION AND SPECIAL
PAYMENT ADJUSTMENT RULE FOR CERTAIN DIAGNOSTIC
RADIOPHARMACEUTICALS.—In the case of a drug or biologi-
cal furnished in the context of a clinical study on diag-
nostic imaging tests approved under a coverage with evi-
dence development determination whose period of pass-
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through status under this paragraph concluded on Decem-
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47
ber 31, 2018, and for which payment under this subsection
was packaged into a payment for a covered OPD service
(or group of services) furnished beginning January 1, 2019,
the Secretary shall—
(i) extend such pass-through status for such drug or
biological for the 9-month period beginning on Janu-
ary 1, 2020;
(ii) remove, during such period, the packaged costs
of such drug or biological (as determined by the Sec-
retary) from the payment amount under this sub-
section for the covered OPD service (or group of serv-
ices) with which it is packaged; and
(iii) not make any adjustments to payment amounts
under this subsection for a covered OPD service (or
group of services) for which no costs were removed
under clause (ii).
(7) TRANSITIONAL ADJUSTMENT TO LIMIT DECLINE IN PAY-
MENT.—
(A) BEFORE 2002.—Subject to subparagraph (D), for cov-
ered OPD services furnished before January 1, 2002, for
which the PPS amount (as defined in subparagraph (E))
is—
(i) at least 90 percent, but less than 100 percent, of
the pre-BBA amount (as defined in subparagraph (F)),
the amount of payment under this subsection shall be
increased by 80 percent of the amount of such dif-
ference;
(ii) at least 80 percent, but less than 90 percent, of
the pre-BBA amount, the amount of payment under
this subsection shall be increased by the amount by
which (I) the product of 0.71 and the pre-BBA amount,
exceeds (II) the product of 0.70 and the PPS amount;
(iii) at least 70 percent, but less than 80 percent, of
the pre-BBA amount, the amount of payment under
this subsection shall be increased by the amount by
which (I) the product of 0.63 and the pre-BBA amount,
exceeds (II) the product of 0.60 and the PPS amount;
or
(iv) less than 70 percent of the pre-BBA amount, the
amount of payment under this subsection shall be in-
creased by 21 percent of the pre-BBA amount.
(B) 2002.—Subject to subparagraph (D), for covered OPD
services furnished during 2002, for which the PPS amount
is—
(i) at least 90 percent, but less than 100 percent, of
the pre-BBA amount, the amount of payment under
this subsection shall be increased by 70 percent of the
amount of such difference;
(ii) at least 80 percent, but less than 90 percent, of
the pre-BBA amount, the amount of payment under
this subsection shall be increased by the amount by
which (I) the product of 0.61 and the pre-BBA amount,
exceeds (II) the product of 0.60 and the PPS amount;
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or
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(iii) less than 80 percent of the pre-BBA amount, the
amount of payment under this subsection shall be in-
creased by 13 percent of the pre-BBA amount.
(C) 2003.—Subject to subparagraph (D), for covered OPD
services furnished during 2003, for which the PPS amount
is—
(i) at least 90 percent, but less than 100 percent, of
the pre-BBA amount, the amount of payment under
this subsection shall be increased by 60 percent of the
amount of such difference; or
(ii) less than 90 percent of the pre-BBA amount, the
amount of payment under this subsection shall be in-
creased by 6 percent of the pre-BBA amount.
(D) HOLD HARMLESS PROVISIONS.—
(i) TEMPORARY TREATMENT FOR CERTAIN RURAL HOS-
PITALS.—(I) In the case of a hospital located in a rural
area and that has not more than 100 beds or a sole
community hospital (as defined in section
1886(d)(5)(D)(iii)) located in a rural area, for covered
OPD services furnished before January 1, 2006, for
which the PPS amount is less than the pre-BBA
amount, the amount of payment under this subsection
shall be increased by the amount of such difference.
(II) In the case of a hospital located in a rural area
and that has not more than 100 beds and that is not
a sole community hospital (as defined in section
1886(d)(5)(D)(iii)), for covered OPD services furnished
on or after January 1, 2006, and before January 1,
2013, for which the PPS amount is less than the pre-
BBA amount, the amount of payment under this sub-
section shall be increased by the applicable percentage
of the amount of such difference. For purposes of the
preceding sentence, the applicable percentage shall be
95 percent with respect to covered OPD services fur-
nished in 2006, 90 percent with respect to such serv-
ices furnished in 2007, and 85 percent with respect to
such services furnished in 2008, 2009, 2010, 2011, or
2012.
(III) In the case of a sole community hospital (as de-
fined in section 1886(d)(5)(D)(iii)) that has not more
than 100 beds, for covered OPD services furnished on
or after January 1, 2009, and before January 1, 2013,
for which the PPS amount is less than the pre-BBA
amount, the amount of payment under this subsection
shall be increased by 85 percent of the amount of such
difference. In the case of covered OPD services fur-
nished on or after January 1, 2010, and before March
1, 2012, the preceding sentence shall be applied with-
out regard to the 100-bed limitation.
(ii) PERMANENT TREATMENT FOR CANCER HOSPITALS
AND CHILDREN’S HOSPITALS.—In the case of a hospital
described in clause (iii) or (v) of section 1886(d)(1)(B),
for covered OPD services for which the PPS amount is
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less than the pre-BBA amount, the amount of pay-
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49
ment under this subsection shall be increased by the
amount of such difference.
(E) PPS AMOUNT DEFINED.—In this paragraph, the term
‘‘PPS amount’’ means, with respect to covered OPD serv-
ices, the amount payable under this title for such services
(determined without regard to this paragraph), including
amounts payable as copayment under paragraph (8), coin-
surance under section 1866(a)(2)(A)(ii), and the deductible
under section 1833(b).
(F) PRE-BBA AMOUNT DEFINED.—
(i) IN GENERAL.—In this paragraph, the ‘‘pre-BBA
amount’’ means, with respect to covered OPD services
furnished by a hospital in a year, an amount equal to
the product of the reasonable cost of the hospital for
such services for the portions of the hospital’s cost re-
porting period (or periods) occurring in the year and
the base OPD payment-to-cost ratio for the hospital
(as defined in clause (ii)).
(ii) BASE PAYMENT-TO-COST-RATIO DEFINED.—For
purposes of this subparagraph, the ‘‘base payment-to-
cost ratio’’ for a hospital means the ratio of—
(I) the hospital’s reimbursement under this part
for covered OPD services furnished during the
cost reporting period ending in 1996 (or in the
case of a hospital that did not submit a cost report
for such period, during the first subsequent cost
reporting period ending before 2001 for which the
hospital submitted a cost report), including any
reimbursement for such services through cost-
sharing described in subparagraph (E), to
(II) the reasonable cost of such services for such
period.
The Secretary shall determine such ratios as if the
amendments made by section 4521 of the Balanced
Budget Act of 1997 were in effect in 1996.
(G) INTERIM PAYMENTS.—The Secretary shall make pay-
ments under this paragraph to hospitals on an interim
basis, subject to retrospective adjustments based on settled
cost reports.
(H) NO EFFECT ON COPAYMENTS.—Nothing in this para-
graph shall be construed to affect the unadjusted copay-
ment amount described in paragraph (3)(B) or the copay-
ment amount under paragraph (8).
(I) APPLICATION WITHOUT REGARD TO BUDGET NEU-
TRALITY.—The additional payments made under this para-
graph—
(i) shall not be considered an adjustment under
paragraph (2)(E); and
(ii) shall not be implemented in a budget neutral
manner.
(8) COPAYMENT AMOUNT.—
(A) IN GENERAL.—Except as provided in subparagraphs
(B) and (C), the copayment amount under this subsection
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is the amount by which the amount described in para-
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50
graph (4)(B) exceeds the amount of payment determined
under paragraph (4)(C).
(B) ELECTION TO OFFER REDUCED COPAYMENT AMOUNT.—
The Secretary shall establish a procedure under which a
hospital, before the beginning of a year (beginning with
1999), may elect to reduce the copayment amount other-
wise established under subparagraph (A) for some or all
covered OPD services to an amount that is not less than
20 percent of the medicare OPD fee schedule amount (com-
puted under paragraph (3)(D)) for the service involved.
Under such procedures, such reduced copayment amount
may not be further reduced or increased during the year
involved and the hospital may disseminate information on
the reduction of copayment amount effected under this
subparagraph.
(C) LIMITATION ON COPAYMENT AMOUNT.—
(i) TO INPATIENT HOSPITAL DEDUCTIBLE AMOUNT.—In
no case shall the copayment amount for a procedure
performed in a year exceed the amount of the inpa-
tient hospital deductible established under section
1813(b) for that year.
(ii) TO SPECIFIED PERCENTAGE.—The Secretary shall
reduce the national unadjusted copayment amount for
a covered OPD service (or group of such services) fur-
nished in a year in a manner so that the effective co-
payment rate (determined on a national unadjusted
basis) for that service in the year does not exceed the
following percentage:
(I) For procedures performed in 2001, on or
after April 1, 2001, 57 percent.
(II) For procedures performed in 2002 or 2003,
55 percent.
(III) For procedures performed in 2004, 50 per-
cent.
(IV) For procedures performed in 2005, 45 per-
cent.
(V) For procedures performed in 2006 and there-
after, 40 percent.
(D) NO IMPACT ON DEDUCTIBLES.—Nothing in this para-
graph shall be construed as affecting a hospital’s authority
to waive the charging of a deductible under section
1833(b).
(E) COMPUTATION IGNORING OUTLIER AND PASS-THROUGH
ADJUSTMENTS.—The copayment amount shall be computed
under subparagraph (A) as if the adjustments under para-
graphs (5) and (6) (and any adjustment made under para-
graph (2)(E) in relation to such adjustments) had not oc-
curred.
(9) PERIODIC REVIEW AND ADJUSTMENTS COMPONENTS OF PRO-
SPECTIVE PAYMENT SYSTEM.—
(A) PERIODIC REVIEW.—The Secretary shall review not
less often than annually and revise the groups, the relative
payment weights, and the wage and other adjustments de-
scribed in paragraph (2) to take into account changes in
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medical practice, changes in technology, the addition of
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new services, new cost data, and other relevant informa-
tion and factors. The Secretary shall consult with an ex-
pert outside advisory panel composed of an appropriate se-
lection of representatives of providers to review (and ad-
vise the Secretary concerning) the clinical integrity of the
groups and weights. Such panel may use data collected or
developed by entities and organizations (other than the
Department of Health and Human Services) in conducting
such review.
(B) BUDGET NEUTRALITY ADJUSTMENT.—If the Secretary
makes adjustments under subparagraph (A), then the ad-
justments for a year may not cause the estimated amount
of expenditures under this part for the year to increase or
decrease from the estimated amount of expenditures under
this part that would have been made if the adjustments
had not been made. In determining adjustments under the
preceding sentence for 2004 and 2005, the Secretary shall
not take into account under this subparagraph or para-
graph (2)(E) any expenditures that would not have been
made but for the application of paragraph (14).
(C) UPDATE FACTOR.—If the Secretary determines under
methodologies described in paragraph (2)(F) that the vol-
ume of services paid for under this subsection increased
beyond amounts established through those methodologies,
the Secretary may appropriately adjust the update to the
conversion factor otherwise applicable in a subsequent
year.
(10) SPECIAL RULE FOR AMBULANCE SERVICES.—The Secretary
shall pay for hospital outpatient services that are ambulance
services on the basis described in section 1861(v)(1)(U), or, if
applicable, the fee schedule established under section 1834(l).
(11) SPECIAL RULES FOR CERTAIN HOSPITALS.—In the case of
hospitals described in clause (iii) or (v) of section
1886(d)(1)(B)—
(A) the system under this subsection shall not apply to
covered OPD services furnished before January 1, 2000;
and
(B) the Secretary may establish a separate conversion
factor for such services in a manner that specifically takes
into account the unique costs incurred by such hospitals by
virtue of their patient population and service intensity.
(12) LIMITATION ON REVIEW.—There shall be no administra-
tive or judicial review under section 1869, 1878, or otherwise
of—
(A) the development of the classification system under
paragraph (2), including the establishment of groups and
relative payment weights for covered OPD services, of
wage adjustment factors, other adjustments, and methods
described in paragraph (2)(F);
(B) the calculation of base amounts under paragraph (3);
(C) periodic adjustments made under paragraph (6);
(D) the establishment of a separate conversion factor
under paragraph (8)(B); and
(E) the determination of the fixed multiple, or a fixed
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dollar cutoff amount, the marginal cost of care, or applica-
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52
ble percentage under paragraph (5) or the determination of
insignificance of cost, the duration of the additional pay-
ments, the determination and deletion of initial and new
categories (consistent with subparagraphs (B) and (C) of
paragraph (6)), the portion of the medicare OPD fee sched-
ule amount associated with particular devices, drugs, or
biologicals, and the application of any pro rata reduction
under paragraph (6).
(13) AUTHORIZATION OF ADJUSTMENT FOR RURAL HOS-
PITALS.—
(A) STUDY.—The Secretary shall conduct a study to de-
termine if, under the system under this subsection, costs
incurred by hospitals located in rural areas by ambulatory
payment classification groups (APCs) exceed those costs in-
curred by hospitals located in urban areas.
(B) AUTHORIZATION OF ADJUSTMENT.—Insofar as the Sec-
retary determines under subparagraph (A) that costs in-
curred by hospitals located in rural areas exceed those
costs incurred by hospitals located in urban areas, the Sec-
retary shall provide for an appropriate adjustment under
paragraph (2)(E) to reflect those higher costs by January
1, 2006.
(14) DRUG APC PAYMENT RATES.—
(A) IN GENERAL.—The amount of payment under this
subsection for a specified covered outpatient drug (defined
in subparagraph (B)) that is furnished as part of a covered
OPD service (or group of services)—
(i) in 2004, in the case of—
(I) a sole source drug shall in no case be less
than 88 percent, or exceed 95 percent, of the ref-
erence average wholesale price for the drug;
(II) an innovator multiple source drug shall in
no case exceed 68 percent of the reference average
wholesale price for the drug; or
(III) a noninnovator multiple source drug shall
in no case exceed 46 percent of the reference aver-
age wholesale price for the drug;
(ii) in 2005, in the case of—
(I) a sole source drug shall in no case be less
than 83 percent, or exceed 95 percent, of the ref-
erence average wholesale price for the drug;
(II) an innovator multiple source drug shall in
no case exceed 68 percent of the reference average
wholesale price for the drug; or
(III) a noninnovator multiple source drug shall
in no case exceed 46 percent of the reference aver-
age wholesale price for the drug; or
(iii) in a subsequent year, shall be equal, subject to
subparagraph (E)—
(I) to the average acquisition cost for the drug
for that year (which, at the option of the Sec-
retary, may vary by hospital group (as defined by
the Secretary based on volume of covered OPD
services or other relevant characteristics)), as de-
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termined by the Secretary taking into account the
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hospital acquisition cost survey data under sub-
paragraph (D); or
(II) if hospital acquisition cost data are not
available, the average price for the drug in the
year established under section 1842(o), section
1847A, or section 1847B, as the case may be, as
calculated and adjusted by the Secretary as nec-
essary for purposes of this paragraph.
(B) SPECIFIED COVERED OUTPATIENT DRUG DEFINED.—
(i) IN GENERAL.—In this paragraph, the term ‘‘speci-
fied covered outpatient drug’’ means, subject to clause
(ii), a covered outpatient drug (as defined in section
1927(k)(2)) for which a separate ambulatory payment
classification group (APC) has been established and
that is—
(I) a radiopharmaceutical; or
(II) a drug or biological for which payment was
made under paragraph (6) (relating to pass-
through payments) on or before December 31,
2002.
(ii) EXCEPTION.—Such term does not include—
(I) a drug or biological for which payment is
first made on or after January 1, 2003, under
paragraph (6);
(II) a drug or biological for which a temporary
HCPCS code has not been assigned; or
(III) during 2004 and 2005, an orphan drug (as
designated by the Secretary).
(C) PAYMENT FOR DESIGNATED ORPHAN DRUGS DURING
2004 AND 2005.—The amount of payment under this sub-
section for an orphan drug designated by the Secretary
under subparagraph (B)(ii)(III) that is furnished as part of
a covered OPD service (or group of services) during 2004
and 2005 shall equal such amount as the Secretary may
specify.
(D) ACQUISITION COST SURVEY FOR HOSPITAL OUTPATIENT
DRUGS.—
(i) ANNUAL GAO SURVEYS IN 2004 AND 2005.—
(I) IN GENERAL.—The Comptroller General of
the United States shall conduct a survey in each
of 2004 and 2005 to determine the hospital acqui-
sition cost for each specified covered outpatient
drug. Not later than April 1, 2005, the Comp-
troller General shall furnish data from such sur-
veys to the Secretary for use in setting the pay-
ment rates under subparagraph (A) for 2006.
(II) RECOMMENDATIONS.—Upon the completion
of such surveys, the Comptroller General shall
recommend to the Secretary the frequency and
methodology of subsequent surveys to be con-
ducted by the Secretary under clause (ii).
(ii) SUBSEQUENT SECRETARIAL SURVEYS.—The Sec-
retary, taking into account such recommendations,
shall conduct periodic subsequent surveys to deter-
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mine the hospital acquisition cost for each specified
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covered outpatient drug for use in setting the payment
rates under subparagraph (A).
(iii) SURVEY REQUIREMENTS.—The surveys conducted
under clauses (i) and (ii) shall have a large sample of
hospitals that is sufficient to generate a statistically
significant estimate of the average hospital acquisition
cost for each specified covered outpatient drug. With
respect to the surveys conducted under clause (i), the
Comptroller General shall report to Congress on the
justification for the size of the sample used in order to
assure the validity of such estimates.
(iv) DIFFERENTIATION IN COST.—In conducting sur-
veys under clause (i), the Comptroller General shall
determine and report to Congress if there is (and the
extent of any) variation in hospital acquisition costs
for drugs among hospitals based on the volume of cov-
ered OPD services performed by such hospitals or
other relevant characteristics of such hospitals (as de-
fined by the Comptroller General).
(v) COMMENT ON PROPOSED RATES.—Not later than
30 days after the date the Secretary promulgated pro-
posed rules setting forth the payment rates under sub-
paragraph (A) for 2006, the Comptroller General shall
evaluate such proposed rates and submit to Congress
a report regarding the appropriateness of such rates
based on the surveys the Comptroller General has con-
ducted under clause (i).
(E) ADJUSTMENT IN PAYMENT RATES FOR OVERHEAD
COSTS.—
(i) MEDPAC REPORT ON DRUG APC DESIGN.—The
Medicare Payment Advisory Commission shall submit
to the Secretary, not later than July 1, 2005, a report
on adjustment of payment for ambulatory payment
classifications for specified covered outpatient drugs to
take into account overhead and related expenses, such
as pharmacy services and handling costs. Such report
shall include—
(I) a description and analysis of the data avail-
able with regard to such expenses;
(II) a recommendation as to whether such a
payment adjustment should be made; and
(III) if such adjustment should be made, a rec-
ommendation regarding the methodology for mak-
ing such an adjustment.
(ii) ADJUSTMENT AUTHORIZED.—The Secretary may
adjust the weights for ambulatory payment classifica-
tions for specified covered outpatient drugs to take
into account the recommendations contained in the re-
port submitted under clause (i).
(F) CLASSES OF DRUGS.—For purposes of this paragraph:
(i) SOLE SOURCE DRUGS.—The term ‘‘sole source
drug’’ means—
(I) a biological product (as defined under section
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1861(t)(1)); or
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(II) a single source drug (as defined in section
1927(k)(7)(A)(iv)).
(ii) INNOVATOR MULTIPLE SOURCE DRUGS.—The term
‘‘innovator multiple source drug’’ has the meaning
given such term in section 1927(k)(7)(A)(ii).
(iii) NONINNOVATOR MULTIPLE SOURCE DRUGS.—The
term ‘‘noninnovator multiple source drug’’ has the
meaning given such term in section 1927(k)(7)(A)(iii).
(G) REFERENCE AVERAGE WHOLESALE PRICE.—The term
‘‘reference average wholesale price’’ means, with respect to
a specified covered outpatient drug, the average wholesale
price for the drug as determined under section 1842(o) as
of May 1, 2003.
(H) INAPPLICABILITY OF EXPENDITURES IN DETERMINING
CONVERSION, WEIGHTING, AND OTHER ADJUSTMENT FAC-
TORS.—Additional expenditures resulting from this para-
graph shall not be taken into account in establishing the
conversion, weighting, and other adjustment factors for
2004 and 2005 under paragraph (9), but shall be taken
into account for subsequent years.
(15) PAYMENT FOR NEW DRUGS AND BIOLOGICALS UNTIL HCPCS
CODE ASSIGNED.—With respect to payment under this part for
an outpatient drug or biological that is covered under this part
and is furnished as part of covered OPD services for which a
HCPCS code has not been assigned, the amount provided for
payment for such drug or biological under this part shall be
equal to 95 percent of the average wholesale price for the drug
or biological.
(16) MISCELLANEOUS PROVISIONS.—
(A) APPLICATION OF RECLASSIFICATION OF CERTAIN HOS-
PITALS.—If a hospital is being treated as being located in
a rural area under section 1886(d)(8)(E), that hospital
shall be treated under this subsection as being located in
that rural area.
(B) THRESHOLD FOR ESTABLISHMENT OF SEPARATE APCS
FOR DRUGS.—The Secretary shall reduce the threshold for
the establishment of separate ambulatory payment classi-
fication groups (APCs) with respect to drugs or biologicals
to $50 per administration for drugs and biologicals fur-
nished in 2005 and 2006.
(C) PAYMENT FOR DEVICES OF BRACHYTHERAPY AND
THERAPEUTIC RADIOPHARMACEUTICALS AT CHARGES AD-
JUSTED TO COST.—Notwithstanding the preceding provi-
sions of this subsection, for a device of brachytherapy con-
sisting of a seed or seeds (or radioactive source) furnished
on or after January 1, 2004, and before January 1, 2010,
and for therapeutic radiopharmaceuticals furnished on or
after January 1, 2008, and before January 1, 2010, the
payment basis for the device or therapeutic radiopharma-
ceutical under this subsection shall be equal to the hos-
pital’s charges for each device or therapeutic radiopharma-
ceutical furnished, adjusted to cost. Charges for such de-
vices or therapeutic radiopharmaceuticals shall not be in-
cluded in determining any outlier payment under this sub-
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section.
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(D) SPECIAL PAYMENT RULE.—
(i) IN GENERAL.—In the case of covered OPD services
furnished on or after April 1, 2013, in a hospital de-
scribed in clause (ii), if—
(I) the payment rate that would otherwise apply
under this subsection for stereotactic
radiosurgery, complete course of treatment of cra-
nial lesion(s) consisting of 1 session that is multi-
source Cobalt 60 based (identified as of January 1,
2013, by HCPCS code 77371 (and any succeeding
code) and reimbursed as of such date under APC
0127 (and any succeeding classification group));
exceeds
(II) the payment rate that would otherwise
apply under this subsection for linear accelerator
based stereotactic radiosurgery, complete course of
therapy in one session (identified as of January 1,
2013, by HCPCS code G0173 (and any succeeding
code) and reimbursed as of such date under APC
0067 (and any succeeding classification group)),
the payment rate for the service described in sub-
clause (I) shall be reduced to an amount equal to the
payment rate for the service described in subclause
(II).
(ii) HOSPITAL DESCRIBED.—A hospital described in
this clause is a hospital that is not—
(I) located in a rural area (as defined in section
1886(d)(2)(D));
(II) classified as a rural referral center under
section 1886(d)(5)(C); or
(III) a sole community hospital (as defined in
section 1886(d)(5)(D)(iii)).
(iii) NOT BUDGET NEUTRAL.—In making any budget
neutrality adjustments under this subsection for 2013
(with respect to covered OPD services furnished on or
after April 1, 2013, and before January 1, 2014) or a
subsequent year, the Secretary shall not take into ac-
count the reduced expenditures that result from the
application of this subparagraph.
(E) APPLICATION OF APPROPRIATE USE CRITERIA FOR CER-
TAIN IMAGING SERVICES.—For provisions relating to the ap-
plication of appropriate use criteria for certain imaging
services, see section 1834(q).
(F) PAYMENT INCENTIVE FOR THE TRANSITION FROM TRA-
DITIONAL X-RAY IMAGING TO DIGITAL RADIOGRAPHY.—Not-
withstanding the previous provisions of this subsection:
(i) LIMITATION ON PAYMENT FOR FILM X-RAY IMAGING
SERVICES.—In the case of an imaging service that is an
X-ray taken using film and that is furnished during
2017 or a subsequent year, the payment amount for
such service (including the X-ray component of a pack-
aged service) that would otherwise be determined
under this section (without application of this para-
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graph and before application of any other adjustment
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under this subsection) for such year shall be reduced
by 20 percent.
(ii) PHASED-IN LIMITATION ON PAYMENT FOR COM-
PUTED RADIOGRAPHY IMAGING SERVICES.—In the case
of an imaging service that is an X-ray taken using
computed radiography technology (as defined in sec-
tion 1848(b)(9)(C))—
(I) in the case of such a service furnished during
2018, 2019, 2020, 2021, or 2022, the payment
amount for such service (including the X-ray com-
ponent of a packaged service) that would other-
wise be determined under this section (without
application of this paragraph and before applica-
tion of any other adjustment under this sub-
section) for such year shall be reduced by 7 per-
cent; and
(II) in the case of such a service furnished dur-
ing 2023 or a subsequent year, the payment
amount for such service (including the X-ray com-
ponent of a packaged service) that would other-
wise be determined under this section (without
application of this paragraph and before applica-
tion of any other adjustment under this sub-
section) for such year shall be reduced by 10 per-
cent.
(iii) APPLICATION WITHOUT REGARD TO BUDGET NEU-
TRALITY.—The reductions made under this subpara-
graph—
(I) shall not be considered an adjustment under
paragraph (2)(E); and
(II) shall not be implemented in a budget neu-
tral manner.
(iv) IMPLEMENTATION.—In order to implement this
subparagraph, the Secretary shall adopt appropriate
mechanisms which may include use of modifiers.
(17) QUALITY REPORTING.—
(A) REDUCTION IN UPDATE FOR FAILURE TO REPORT.—
(i) IN GENERAL.—For purposes of paragraph
(3)(C)(iv) for 2009 and each subsequent year, in the
case of a subsection (d) hospital (as defined in section
1886(d)(1)(B)) that does not submit, to the Secretary in
accordance with this paragraph, data required to be
submitted on measures selected under this paragraph
with respect to such a year, the OPD fee schedule in-
crease factor under paragraph (3)(C)(iv) for such year
shall be reduced by 2.0 percentage points.
(ii) NON-CUMULATIVE APPLICATION.—A reduction
under this subparagraph shall apply only with respect
to the year involved and the Secretary shall not take
into account such reduction in computing the OPD fee
schedule increase factor for a subsequent year.
(B) FORM AND MANNER OF SUBMISSION.—Each subsection
(d) hospital shall submit data on measures selected under
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this paragraph to the Secretary in a form and manner, and
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at a time, specified by the Secretary for purposes of this
paragraph.
(C) DEVELOPMENT OF OUTPATIENT MEASURES.—
(i) IN GENERAL.—The Secretary shall develop meas-
ures that the Secretary determines to be appropriate
for the measurement of the quality of care (including
medication errors) furnished by hospitals in outpatient
settings and that reflect consensus among affected
parties and, to the extent feasible and practicable,
shall include measures set forth by one or more na-
tional consensus building entities.
(ii) CONSTRUCTION.—Nothing in this paragraph shall
be construed as preventing the Secretary from select-
ing measures that are the same as (or a subset of) the
measures for which data are required to be submitted
under section 1886(b)(3)(B)(viii).
(D) REPLACEMENT OF MEASURES.—For purposes of this
paragraph, the Secretary may replace any measures or in-
dicators in appropriate cases, such as where all hospitals
are effectively in compliance or the measures or indicators
have been subsequently shown not to represent the best
clinical practice.
(E) AVAILABILITY OF DATA.—The Secretary shall estab-
lish procedures for making data submitted under this
paragraph available to the public. Such procedures shall
ensure that a hospital has the opportunity to review the
data that are to be made public with respect to the hos-
pital prior to such data being made public. The Secretary
shall report quality measures of process, structure, out-
come, patients’ perspectives on care, efficiency, and costs of
care that relate to services furnished in outpatient settings
in hospitals on the Internet website of the Centers for
Medicare & Medicaid Services.
(18) AUTHORIZATION OF ADJUSTMENT FOR CANCER HOS-
PITALS.—
(A) STUDY.—The Secretary shall conduct a study to de-
termine if, under the system under this subsection, costs
incurred by hospitals described in section 1886(d)(1)(B)(v)
with respect to ambulatory payment classification groups
exceed those costs incurred by other hospitals furnishing
services under this subsection (as determined appropriate
by the Secretary). In conducting the study under this sub-
paragraph, the Secretary shall take into consideration the
cost of drugs and biologicals incurred by such hospitals.
(B) AUTHORIZATION OF ADJUSTMENT.—Insofar as the Sec-
retary determines under subparagraph (A) that costs in-
curred by hospitals described in section 1886(d)(1)(B)(v) ex-
ceed those costs incurred by other hospitals furnishing
services under this subsection, the Secretary shall, subject
to subparagraph (C), provide for an appropriate adjust-
ment under paragraph (2)(E) to reflect those higher costs
effective for services furnished on or after January 1, 2011.
(C) TARGET PCR ADJUSTMENT.—In applying section
419.43(i) of title 42 of the Code of Federal Regulations to
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implement the appropriate adjustment under this para-
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graph for services furnished on or after January 1, 2018,
the Secretary shall use a target PCR that is 1.0 percentage
points less than the target PCR that would otherwise
apply. In addition to the percentage point reduction under
the previous sentence, the Secretary may consider making
an additional percentage point reduction to such target
PCR that takes into account payment rates for applicable
items and services described in paragraph (21)(C) other
than for services furnished by hospitals described in sec-
tion 1886(d)(1)(B)(v). In making any budget neutrality ad-
justments under this subsection for 2018 or a subsequent
year, the Secretary shall not take into account the reduced
expenditures that result from the application of this sub-
paragraph.
(19) FLOOR ON AREA WAGE ADJUSTMENT FACTOR FOR HOS-
PITAL OUTPATIENT DEPARTMENT SERVICES IN FRONTIER
STATES.—
(A) IN GENERAL.—Subject to subparagraph (B), with re-
spect to covered OPD services furnished on or after Janu-
ary 1, 2011, the area wage adjustment factor applicable
under the payment system established under this sub-
section to any hospital outpatient department which is lo-
cated in a frontier State (as defined in section
1886(d)(3)(E)(iii)(II)) may not be less than 1.00. The pre-
ceding sentence shall not be applied in a budget neutral
manner.
(B) LIMITATION.—This paragraph shall not apply to any
hospital outpatient department located in a State that re-
ceives a non-labor related share adjustment under section
1886(d)(5)(H).
(20) NOT BUDGET NEUTRAL APPLICATION OF REDUCED EXPEND-
ITURES RESULTING FROM QUALITY INCENTIVES FOR COMPUTED
TOMOGRAPHY.—The Secretary shall not take into account the
reduced expenditures that result from the application of sec-
tion 1834(p) in making any budget neutrality adjustments this
subsection.
(21) SERVICES FURNISHED BY AN OFF-CAMPUS OUTPATIENT DE-
PARTMENT OF A PROVIDER.—
(A) APPLICABLE ITEMS AND SERVICES.—For purposes of
paragraph (1)(B)(v) and this paragraph, the term ‘‘applica-
ble items and services’’ means items and services other
than items and services furnished by a dedicated emer-
gency department (as defined in section 489.24(b) of title
42 of the Code of Federal Regulations).
(B) OFF-CAMPUS OUTPATIENT DEPARTMENT OF A PRO-
VIDER.—
(i) IN GENERAL.—For purposes of paragraph (1)(B)(v)
and this paragraph, subject to the subsequent provi-
sions of this subparagraph, the term ‘‘off-campus out-
patient department of a provider’’ means a department
of a provider (as defined in section 413.65(a)(2) of title
42 of the Code of Federal Regulations, as in effect as
of the date of the enactment of this paragraph) that is
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not located—
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60
(I) on the campus (as defined in such section
413.65(a)(2)) of such provider; or
(II) within the distance (described in such defi-
nition of campus) from a remote location of a hos-
pital facility (as defined in such section
413.65(a)(2)).
(ii) EXCEPTION.—For purposes of paragraph (1)(B)(v)
and this paragraph, the term ‘‘off-campus outpatient
department of a provider’’ shall not include a depart-
ment of a provider (as so defined) that was billing
under this subsection with respect to covered OPD
services furnished prior to the date of the enactment
of this paragraph.
(iii) DEEMED TREATMENT FOR 2017.—For purposes of
applying clause (ii) with respect to applicable items
and services furnished during 2017, a department of a
provider (as so defined) not described in such clause is
deemed to be billing under this subsection with re-
spect to covered OPD services furnished prior to No-
vember 2, 2015, if the Secretary received from the pro-
vider prior to December 2, 2015, an attestation (pursu-
ant to section 413.65(b)(3) of title 42 of the Code of
Federal Regulations) that such department was a de-
partment of a provider (as so defined).
(iv) ALTERNATIVE EXCEPTION BEGINNING WITH 2018.—
For purposes of paragraph (1)(B)(v) and this para-
graph with respect to applicable items and services
furnished during 2018 or a subsequent year, the term
‘‘off-campus outpatient department of a provider’’ also
shall not include a department of a provider (as so de-
fined) that is not described in clause (ii) if—
(I) the Secretary receives from the provider an
attestation (pursuant to such section 413.65(b)(3))
not later than December 31, 2016 (or, if later, 60
days after the date of the enactment of this
clause), that such department met the require-
ments of a department of a provider specified in
section 413.65 of title 42 of the Code of Federal
Regulations;
(II) the provider includes such department as
part of the provider on its enrollment form in ac-
cordance with the enrollment process under sec-
tion 1866(j); and
(III) the department met the mid-build require-
ment of clause (v) and the Secretary receives, not
later than 60 days after the date of the enactment
of this clause, from the chief executive officer or
chief operating officer of the provider a written
certification that the department met such re-
quirement.
(v) MID-BUILD REQUIREMENT DESCRIBED.—The mid-
build requirement of this clause is, with respect to a
department of a provider, that before November 2,
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2015, the provider had a binding written agreement
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61
with an outside unrelated party for the actual con-
struction of such department.
(vi) EXCLUSION FOR CERTAIN CANCER HOSPITALS.—
For purposes of paragraph (1)(B)(v) and this para-
graph with respect to applicable items and services
furnished during 2017 or a subsequent year, the term
‘‘off-campus outpatient department of a provider’’ also
shall not include a department of a provider (as so de-
fined) that is not described in clause (ii) if the provider
is a hospital described in section 1886(d)(1)(B)(v)
and—
(I) in the case of a department that met the re-
quirements of section 413.65 of title 42 of the
Code of Federal Regulations after November 1,
2015, and before the date of the enactment of this
clause, the Secretary receives from the provider
an attestation that such department met such re-
quirements not later than 60 days after such date
of enactment; or
(II) in the case of a department that meets such
requirements after such date of enactment, the
Secretary receives from the provider an attesta-
tion that such department meets such require-
ments not later than 60 days after the date such
requirements are first met with respect to such
department.
(vii) AUDIT.—Not later than December 31, 2018, the
Secretary shall audit the compliance with require-
ments of clause (iv) with respect to each department
of a provider to which such clause applies. Not later
than 2 years after the date the Secretary receives an
attestation under clause (vi) relating to compliance of
a department of a provider with requirements referred
to in such clause, the Secretary shall audit the compli-
ance with such requirements with respect to the de-
partment. If the Secretary finds as a result of an audit
under this clause that the applicable requirements
were not met with respect to such department, the de-
partment shall not be excluded from the term ‘‘off-
campus outpatient department of a provider’’ under
such clause.
(viii) IMPLEMENTATION.—For purposes of imple-
menting clauses (iii) through (vii):
(I) Notwithstanding any other provision of law,
the Secretary may implement such clauses by pro-
gram instruction or otherwise.
(II) Subchapter I of chapter 35 of title 44,
United States Code, shall not apply.
(III) For purposes of carrying out this subpara-
graph with respect to clauses (iii) and (iv) (and
clause (vii) insofar as it relates to clause (iv)),
$10,000,000 shall be available from the Federal
Supplementary Medical Insurance Trust Fund
under section 1841, to remain available until De-
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cember 31, 2018. For purposes of carrying out this
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62
subparagraph with respect to clause (vi) (and
clause (vii) insofar as it relates to such clause),
$2,000,000 shall be available from the Federal
Supplementary Medical Insurance Trust Fund
under section 1841, to remain available until ex-
pended.
(C) AVAILABILITY OF PAYMENT UNDER OTHER PAYMENT
SYSTEMS.—Payments for applicable items and services fur-
nished by an off-campus outpatient department of a pro-
vider that are described in paragraph (1)(B)(v) shall be
made under the applicable payment system under this
part (other than under this subsection) if the requirements
for such payment are otherwise met.
(D) INFORMATION NEEDED FOR IMPLEMENTATION.—Each
hospital shall provide to the Secretary such information as
the Secretary determines appropriate to implement this
paragraph and paragraph (1)(B)(v) (which may include re-
porting of information on a hospital claim using a code or
modifier and reporting information about off-campus out-
patient departments of a provider on the enrollment form
described in section 1866(j)).
(E) LIMITATIONS.—There shall be no administrative or
judicial review under section 1869, section 1878, or other-
wise of the following:
(i) The determination of the applicable items and
services under subparagraph (A) and applicable pay-
ment systems under subparagraph (C).
(ii) The determination of whether a department of a
provider meets the term described in subparagraph
(B).
(iii) Any information that hospitals are required to
report pursuant to subparagraph (D).
(iv) The determination of an audit under subpara-
graph (B)(vii).
(22) REVIEW AND REVISIONS OF PAYMENTS FOR NON-OPIOID
ALTERNATIVE TREATMENTS.—
(A) IN GENERAL.—With respect to payments made under
this subsection for covered OPD services (or groups of serv-
ices), including covered OPD services assigned to a com-
prehensive ambulatory payment classification, the Sec-
retary—
(i) shall, as soon as practicable, conduct a review
(part of which may include a request for information)
of payments for opioids and evidence-based non-opioid
alternatives for pain management (including drugs
and devices, nerve blocks, surgical injections, and
neuromodulation) with a goal of ensuring that there
are not financial incentives to use opioids instead of
non-opioid alternatives;
(ii) may, as the Secretary determines appropriate,
conduct subsequent reviews of such payments; and
(iii) shall consider the extent to which revisions
under this subsection to such payments (such as the
creation of additional groups of covered OPD services
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to classify separately those procedures that utilize
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63
opioids and non-opioid alternatives for pain manage-
ment) would reduce payment incentives to use opioids
instead of non-opioid alternatives for pain manage-
ment.
(B) PRIORITY.—In conducting the review under clause (i)
of subparagraph (A) and considering revisions under
clause (iii) of such subparagraph, the Secretary shall focus
on covered OPD services (or groups of services) assigned to
a comprehensive ambulatory payment classification, ambu-
latory payment classifications that primarily include sur-
gical services, and other services determined by the Sec-
retary which generally involve treatment for pain manage-
ment.
(C) REVISIONS.—If the Secretary identifies revisions to
payments pursuant to subparagraph (A)(iii), the Secretary
shall, as determined appropriate, begin making such revi-
sions for services furnished on or after January 1, 2020.
Revisions under the previous sentence shall be treated as
adjustments for purposes of application of paragraph
(9)(B).
(D) RULES OF CONSTRUCTION.—Nothing in this para-
graph shall be construed to preclude the Secretary—
(i) from conducting a demonstration before making
the revisions described in subparagraph (C); or
(ii) prior to implementation of this paragraph, from
changing payments under this subsection for covered
OPD services (or groups of services) which include
opioids or non-opioid alternatives for pain manage-
ment.
(u) INCENTIVE PAYMENTS FOR PHYSICIAN SCARCITY AREAS.—
(1) IN GENERAL.—In the case of physicians’ services fur-
nished on or after January 1, 2005, and before July 1, 2008—
(A) by a primary care physician in a primary care scar-
city county (identified under paragraph (4)); or
(B) by a physician who is not a primary care physician
in a specialist care scarcity county (as so identified),
in addition to the amount of payment that would otherwise be
made for such services under this part, there also shall be paid
an amount equal to 5 percent of the payment amount for the
service under this part.
(2) DETERMINATION OF RATIOS OF PHYSICIANS TO MEDICARE
BENEFICIARIES IN AREA.—Based upon available data, the Sec-
retary shall establish for each county or equivalent area in the
United States, the following:
(A) NUMBER OF PHYSICIANS PRACTICING IN THE AREA.—
The number of physicians who furnish physicians’ services
in the active practice of medicine or osteopathy in that
county or area, other than physicians whose practice is ex-
clusively for the Federal Government, physicians who are
retired, or physicians who only provide administrative
services. Of such number, the number of such physicians
who are—
(i) primary care physicians; or
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(ii) physicians who are not primary care physicians.
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(B) NUMBER OF MEDICARE BENEFICIARIES RESIDING IN
THE AREA.—The number of individuals who are residing in
the county and are entitled to benefits under part A or en-
rolled under this part, or both (in this subsection referred
to as ‘‘individuals’’).
(C) DETERMINATION OF RATIOS.—
(i) PRIMARY CARE RATIO.—The ratio (in this para-
graph referred to as the ‘‘primary care ratio’’) of the
number of primary care physicians (determined under
subparagraph (A)(i)), to the number of individuals de-
termined under subparagraph (B).
(ii) SPECIALIST CARE RATIO.—The ratio (in this para-
graph referred to as the ‘‘specialist care ratio’’) of the
number of other physicians (determined under sub-
paragraph (A)(ii)), to the number of individuals deter-
mined under subparagraph (B).
(3) RANKING OF COUNTIES.—The Secretary shall rank each
such county or area based separately on its primary care ratio
and its specialist care ratio.
(4) IDENTIFICATION OF COUNTIES.—
(A) IN GENERAL.—The Secretary shall identify—
(i) those counties and areas (in this paragraph re-
ferred to as ‘‘primary care scarcity counties’’) with the
lowest primary care ratios that represent, if each such
county or area were weighted by the number of indi-
viduals determined under paragraph (2)(B), an aggre-
gate total of 20 percent of the total of the individuals
determined under such paragraph; and
(ii) those counties and areas (in this subsection re-
ferred to as ‘‘specialist care scarcity counties’’) with the
lowest specialist care ratios that represent, if each
such county or area were weighted by the number of
individuals determined under paragraph (2)(B), an ag-
gregate total of 20 percent of the total of the individ-
uals determined under such paragraph.
(B) PERIODIC REVISIONS.—The Secretary shall periodi-
cally revise the counties or areas identified in subpara-
graph (A) (but not less often than once every three years)
unless the Secretary determines that there is no new data
available on the number of physicians practicing in the
county or area or the number of individuals residing in the
county or area, as identified in paragraph (2).
(C) IDENTIFICATION OF COUNTIES WHERE SERVICE IS FUR-
NISHED.—For purposes of paying the additional amount
specified in paragraph (1), if the Secretary uses the 5-digit
postal ZIP Code where the service is furnished, the domi-
nant county of the postal ZIP Code (as determined by the
United States Postal Service, or otherwise) shall be used
to determine whether the postal ZIP Code is in a scarcity
county identified in subparagraph (A) or revised in sub-
paragraph (B).
(D) SPECIAL RULE.—With respect to physicians’ services
furnished on or after January 1, 2008, and before July 1,
2008, for purposes of this subsection, the Secretary shall
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use the primary care scarcity counties and the specialty
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65
care scarcity counties (as identified under the preceding
provisions of this paragraph) that the Secretary was using
under this subsection with respect to physicians’ services
furnished on December 31, 2007.
(E) JUDICIAL REVIEW.—There shall be no administrative
or judicial review under section 1869, 1878, or otherwise,
respecting—
116.(i) the identification of a county or area;
(ii) the assignment of a specialty of any physician
under this paragraph;
(iii) the assignment of a physician to a county under
paragraph (2); or
(iv) the assignment of a postal ZIP Code to a county
or other area under this subsection.
(5) RURAL CENSUS TRACTS.—To the extent feasible, the Sec-
retary shall treat a rural census tract of a metropolitan statis-
tical area (as determined under the most recent modification of
the Goldsmith Modification, originally published in the Federal
Register on February 27, 1992 (57 Fed. Reg. 6725)), as an
equivalent area for purposes of qualifying as a primary care
scarcity county or specialist care scarcity county under this
subsection.
(6) PHYSICIAN DEFINED.—For purposes of this paragraph, the
term ‘‘physician’’ means a physician described in section
1861(r)(1) and the term ‘‘primary care physician’’ means a phy-
sician who is identified in the available data as a general prac-
titioner, family practice practitioner, general internist, or ob-
stetrician or gynecologist.
(7) PUBLICATION OF LIST OF COUNTIES; POSTING ON
WEBSITE.—With respect to a year for which a county or area
is identified or revised under paragraph (4), the Secretary shall
identify such counties or areas as part of the proposed and
final rule to implement the physician fee schedule under sec-
tion 1848 for the applicable year. The Secretary shall post the
list of counties identified or revised under paragraph (4) on the
Internet website of the Centers for Medicare & Medicaid Serv-
ices.
(v) INCREASE OF FQHC PAYMENT LIMITS.—In the case of services
furnished by Federally qualified health centers (as defined in sec-
tion 1861(aa)(4)), the Secretary shall establish payment limits with
respect to such services under this part for services furnished—
(1) in 2010, at the limits otherwise established under this
part for such year increased by $5; and
(2) in a subsequent year, at the limits established under this
subsection for the previous year increased by the percentage
increase in the MEI (as defined in section 1842(i)(3)) for such
subsequent year.
(w) METHODS OF PAYMENT.—The Secretary may develop alter-
native methods of payment for items and services provided under
clinical trials and comparative effectiveness studies sponsored or
supported by an agency of the Department of Health and Human
Services, as determined by the Secretary, to those that would oth-
erwise apply under this section, to the extent such alternative
methods are necessary to preserve the scientific validity of such
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trials or studies, such as in the case where masking the identity
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66
of interventions from patients and investigators is necessary to
comply with the particular trial or study design.
(x) INCENTIVE PAYMENTS FOR PRIMARY CARE SERVICES.—
(1) IN GENERAL.—In the case of primary care services fur-
nished on or after January 1, 2011, and before January 1,
2016, by a primary care practitioner, in addition to the amount
of payment that would otherwise be made for such services
under this part, there also shall be paid (on a monthly or quar-
terly basis) an amount equal to 10 percent of the payment
amount for the service under this part.
(2) DEFINITIONS.—In this subsection:
(A) PRIMARY CARE PRACTITIONER.—The term ‘‘primary
care practitioner’’ means an individual—
(i) who—
(I) is a physician (as described in section
1861(r)(1)) who has a primary specialty designa-
tion of family medicine, internal medicine, geri-
atric medicine, or pediatric medicine; or
(II) is a nurse practitioner, clinical nurse spe-
cialist, or physician assistant (as those terms are
defined in section 1861(aa)(5)); and
(ii) for whom primary care services accounted for at
least 60 percent of the allowed charges under this part
for such physician or practitioner in a prior period as
determined appropriate by the Secretary.
(B) PRIMARY CARE SERVICES.—The term ‘‘primary care
services’’ means services identified, as of January 1, 2009,
by the following HCPCS codes (and as subsequently modi-
fied by the Secretary):
(i) 99201 through 99215.
(ii) 99304 through 99340.
(iii) 99341 through 99350.
(3) COORDINATION WITH OTHER PAYMENTS.—The amount of
the additional payment for a service under this subsection and
subsection (m) shall be determined without regard to any addi-
tional payment for the service under subsection (m) and this
subsection, respectively. The amount of the additional payment
for a service under this subsection and subsection (z) shall be
determined without regard to any additional payment for the
service under subsection (z) and this subsection, respectively.
(4) LIMITATION ON REVIEW.—There shall be no administra-
tive or judicial review under section 1869, 1878, or otherwise,
respecting the identification of primary care practitioners
under this subsection.
(y) INCENTIVE PAYMENTS FOR MAJOR SURGICAL PROCEDURES
FURNISHED IN HEALTH PROFESSIONAL SHORTAGE AREAS.—
(1) IN GENERAL.—In the case of major surgical procedures
furnished on or after January 1, 2011, and before January 1,
2016, by a general surgeon in an area that is designated
(under section 332(a)(1)(A) of the Public Health Service Act) as
a health professional shortage area as identified by the Sec-
retary prior to the beginning of the year involved, in addition
to the amount of payment that would otherwise be made for
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such services under this part, there also shall be paid (on a
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67
monthly or quarterly basis) an amount equal to 10 percent of
the payment amount for the service under this part.
(2) DEFINITIONS.—In this subsection:
(A) GENERAL SURGEON.—In this subsection, the term
‘‘general surgeon’’ means a physician (as described in sec-
tion 1861(r)(1)) who has designated CMS specialty code
02–General Surgery as their primary specialty code in the
physician’s enrollment under section 1866(j).
(B) MAJOR SURGICAL PROCEDURES.—The term ‘‘major
surgical procedures’’ means physicians’ services which are
surgical procedures for which a 10-day or 90-day global pe-
riod is used for payment under the fee schedule under sec-
tion 1848(b).
(3) COORDINATION WITH OTHER PAYMENTS.—The amount of
the additional payment for a service under this subsection and
subsection (m) shall be determined without regard to any addi-
tional payment for the service under subsection (m) and this
subsection, respectively. The amount of the additional payment
for a service under this subsection and subsection (z) shall be
determined without regard to any additional payment for the
service under subsection (z) and this subsection, respectively.
(4) APPLICATION.—The provisions of paragraph (2) and (4) of
subsection (m) shall apply to the determination of additional
payments under this subsection in the same manner as such
provisions apply to the determination of additional payments
under subsection (m).
(z) INCENTIVE PAYMENTS FOR PARTICIPATION IN ELIGIBLE ALTER-
NATIVE PAYMENT MODELS.—
(1) PAYMENT INCENTIVE.—
(A) IN GENERAL.—In the case of covered professional
services furnished by an eligible professional during a year
that is in the period beginning with 2019 and ending with
2024 and for which the professional is a qualifying APM
participant with respect to such year, in addition to the
amount of payment that would otherwise be made for such
covered professional services under this part for such year,
there also shall be paid to such professional an amount
equal to 5 percent of the estimated aggregate payment
amounts for such covered professional services under this
part for the preceding year. For purposes of the previous
sentence, the payment amount for the preceding year may
be an estimation for the full preceding year based on a pe-
riod of such preceding year that is less than the full year.
The Secretary shall establish policies to implement this
subparagraph in cases in which payment for covered pro-
fessional services furnished by a qualifying APM partici-
pant in an alternative payment model—
(i) is made to an eligible alternative payment entity
rather than directly to the qualifying APM participant;
or
(ii) is made on a basis other than a fee-for-service
basis (such as payment on a capitated basis).
(B) FORM OF PAYMENT.—Payments under this subsection
shall be made in a lump sum, on an annual basis, as soon
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as practicable.
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(C) TREATMENT OF PAYMENT INCENTIVE.—Payments
under this subsection shall not be taken into account for
purposes of determining actual expenditures under an al-
ternative payment model and for purposes of determining
or rebasing any benchmarks used under the alternative
payment model.
(D) COORDINATION.—The amount of the additional pay-
ment under this subsection or subsection (m) shall be de-
termined without regard to any additional payment under
subsection (m) and this subsection, respectively. The
amount of the additional payment under this subsection or
subsection (x) shall be determined without regard to any
additional payment under subsection (x) and this sub-
section, respectively. The amount of the additional pay-
ment under this subsection or subsection (y) shall be deter-
mined without regard to any additional payment under
subsection (y) and this subsection, respectively.
(2) QUALIFYING APM PARTICIPANT.—For purposes of this sub-
section, the term ‘‘qualifying APM participant’’ means the fol-
lowing:
(A) 2019 AND 2020.—With respect to 2019 and 2020, an
eligible professional for whom the Secretary determines
that at least 25 percent of payments under this part for
covered professional services furnished by such profes-
sional during the most recent period for which data are
available (which may be less than a year) were attrib-
utable to such services furnished under this part through
an eligible alternative payment entity.
(B) 2021 THROUGH 2024.—With respect to each of 2021
through 2024, an eligible professional described in either
of the following clauses:
(i) MEDICARE PAYMENT THRESHOLD OPTION.—An eli-
gible professional for whom the Secretary determines
that at least 50 percent of payments under this part
for covered professional services furnished by such
professional during the most recent period for which
data are available (which may be less than a year)
were attributable to such services furnished under this
part through an eligible alternative payment entity.
(ii) COMBINATION ALL-PAYER AND MEDICARE PAYMENT
THRESHOLD OPTION.—An eligible professional—
(I) for whom the Secretary determines, with re-
spect to items and services furnished by such pro-
fessional during the most recent period for which
data are available (which may be less than a
year), that at least 50 percent of the sum of—
(aa) payments described in clause (i); and
(bb) all other payments, regardless of payer
(other than payments made by the Secretary
of Defense or the Secretary of Veterans Af-
fairs and other than payments made under
title XIX in a State in which no medical home
or alternative payment model is available
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under the State program under that title),
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meet the requirement described in clause (iii)(I)
with respect to payments described in item (aa)
and meet the requirement described in clause
(iii)(II) with respect to payments described in item
(bb);
(II) for whom the Secretary determines at least
25 percent of payments under this part for cov-
ered professional services furnished by such pro-
fessional during the most recent period for which
data are available (which may be less than a year)
were attributable to such services furnished under
this part through an eligible alternative payment
entity; and
(III) who provides to the Secretary such infor-
mation as is necessary for the Secretary to make
a determination under subclause (I), with respect
to such professional.
(iii) REQUIREMENT.—For purposes of clause (ii)(I)—
(I) the requirement described in this subclause,
with respect to payments described in item (aa) of
such clause, is that such payments are made to an
eligible alternative payment entity; and
(II) the requirement described in this subclause,
with respect to payments described in item (bb) of
such clause, is that such payments are made
under arrangements in which—
(aa) quality measures comparable to meas-
ures under the performance category de-
scribed in section 1848(q)(2)(B)(i) apply;
(bb) certified EHR technology is used; and
(cc) the eligible professional participates in
an entity that—
(AA) bears more than nominal financial
risk if actual aggregate expenditures ex-
ceeds expected aggregate expenditures; or
(BB) with respect to beneficiaries under
title XIX, is a medical home that meets
criteria comparable to medical homes ex-
panded under section 1115A(c).
(C) BEGINNING IN 2025.—With respect to 2025 and each
subsequent year, an eligible professional described in ei-
ther of the following clauses:
(i) MEDICARE PAYMENT THRESHOLD OPTION.—An eli-
gible professional for whom the Secretary determines
that at least 75 percent of payments under this part
for covered professional services furnished by such
professional during the most recent period for which
data are available (which may be less than a year)
were attributable to such services furnished under this
part through an eligible alternative payment entity.
(ii) COMBINATION ALL-PAYER AND MEDICARE PAYMENT
THRESHOLD OPTION.—An eligible professional—
(I) for whom the Secretary determines, with re-
spect to items and services furnished by such pro-
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fessional during the most recent period for which
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data are available (which may be less than a
year), that at least 75 percent of the sum of—
(aa) payments described in clause (i); and
(bb) all other payments, regardless of payer
(other than payments made by the Secretary
of Defense or the Secretary of Veterans Af-
fairs and other than payments made under
title XIX in a State in which no medical home
or alternative payment model is available
under the State program under that title),
meet the requirement described in clause (iii)(I)
with respect to payments described in item (aa)
and meet the requirement described in clause
(iii)(II) with respect to payments described in item
(bb);
(II) for whom the Secretary determines at least
25 percent of payments under this part for cov-
ered professional services furnished by such pro-
fessional during the most recent period for which
data are available (which may be less than a year)
were attributable to such services furnished under
this part through an eligible alternative payment
entity; and
(III) who provides to the Secretary such infor-
mation as is necessary for the Secretary to make
a determination under subclause (I), with respect
to such professional.
(iii) REQUIREMENT.—For purposes of clause (ii)(I)—
(I) the requirement described in this subclause,
with respect to payments described in item (aa) of
such clause, is that such payments are made to an
eligible alternative payment entity; and
(II) the requirement described in this subclause,
with respect to payments described in item (bb) of
such clause, is that such payments are made
under arrangements in which—
(aa) quality measures comparable to meas-
ures under the performance category de-
scribed in section 1848(q)(2)(B)(i) apply;
(bb) certified EHR technology is used; and
(cc) the eligible professional participates in
an entity that—
(AA) bears more than nominal financial
risk if actual aggregate expenditures ex-
ceeds expected aggregate expenditures; or
(BB) with respect to beneficiaries under
title XIX, is a medical home that meets
criteria comparable to medical homes ex-
panded under section 1115A(c).
(D) USE OF PATIENT APPROACH.—The Secretary may base
the determination of whether an eligible professional is a
qualifying APM participant under this subsection and the
determination of whether an eligible professional is a par-
tial qualifying APM participant under section
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1848(q)(1)(C)(iii) by using counts of patients in lieu of
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71
using payments and using the same or similar percentage
criteria (as specified in this subsection and such section,
respectively), as the Secretary determines appropriate.
With respect to 2023 and 2024, the Secretary shall use the
same percentage criteria for counts of patients that are
used in 2022.
(3) ADDITIONAL DEFINITIONS.—In this subsection:
(A) COVERED PROFESSIONAL SERVICES.—The term ‘‘cov-
ered professional services’’ has the meaning given that
term in section 1848(k)(3)(A).
(B) ELIGIBLE PROFESSIONAL.—The term ‘‘eligible profes-
sional’’ has the meaning given that term in section
1848(k)(3)(B) and includes a group that includes such pro-
fessionals.
(C) ALTERNATIVE PAYMENT MODEL (APM).—The term ‘‘al-
ternative payment model’’ means, other than for purposes
of subparagraphs (B)(ii)(I)(bb) and (C)(ii)(I)(bb) of para-
graph (2), any of the following:
(i) A model under section 1115A (other than a
health care innovation award).
(ii) The shared savings program under section 1899.
(iii) A demonstration under section 1866C.
(iv) A demonstration required by Federal law.
(D) ELIGIBLE ALTERNATIVE PAYMENT ENTITY.—The term
‘‘eligible alternative payment entity’’ means, with respect
to a year, an entity that—
(i) participates in an alternative payment model
that—
(I) requires participants in such model to use
certified EHR technology (as defined in subsection
(o)(4)); and
(II) provides for payment for covered profes-
sional services based on quality measures com-
parable to measures under the performance cat-
egory described in section 1848(q)(2)(B)(i); and
(ii)(I) bears financial risk for monetary losses under
such alternative payment model that are in excess of
a nominal amount; or
(II) is a medical home expanded under section
1115A(c).
(4) LIMITATION.—There shall be no administrative or judicial
review under section 1869, 1878, or otherwise, of the following:
(A) The determination that an eligible professional is a
qualifying APM participant under paragraph (2) and the
determination that an entity is an eligible alternative pay-
ment entity under paragraph (3)(D).
(B) The determination of the amount of the 5 percent
payment incentive under paragraph (1)(A), including any
estimation as part of such determination.
(aa) MEDICAL REVIEW OF SPINAL SUBLUXATION SERVICES.—
(1) IN GENERAL.—The Secretary shall implement a process
for the medical review (as described in paragraph (2)) of treat-
ment by a chiropractor described in section 1861(r)(5) by
means of manual manipulation of the spine to correct a sub-
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luxation (as described in such section) of an individual who is
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72
enrolled under this part and apply such process to such serv-
ices furnished on or after January 1, 2017, focusing on services
such as—
(A) services furnished by a such a chiropractor whose
pattern of billing is aberrant compared to peers; and
(B) services furnished by such a chiropractor who, in a
prior period, has a services denial percentage in the 85th
percentile or greater, taking into consideration the extent
that service denials are overturned on appeal.
(2) MEDICAL REVIEW.—
(A) PRIOR AUTHORIZATION MEDICAL REVIEW.—
(i) IN GENERAL.—Subject to clause (ii), the Secretary
shall use prior authorization medical review for serv-
ices described in paragraph (1) that are furnished to
an individual by a chiropractor described in section
1861(r)(5) that are part of an episode of treatment that
includes more than 12 services. For purposes of the
preceding sentence, an episode of treatment shall be
determined by the underlying cause that justifies the
need for services, such as a diagnosis code.
(ii) ENDING APPLICATION OF PRIOR AUTHORIZATION
MEDICAL REVIEW.—The Secretary shall end the appli-
cation of prior authorization medical review under
clause (i) to services described in paragraph (1) by
such a chiropractor if the Secretary determines that
the chiropractor has a low denial rate under such
prior authorization medical review. The Secretary may
subsequently reapply prior authorization medical re-
view to such chiropractor if the Secretary determines
it to be appropriate and the chiropractor has, in the
time period subsequent to the determination by the
Secretary of a low denial rate with respect to the chi-
ropractor, furnished such services described in para-
graph (1).
(iii) EARLY REQUEST FOR PRIOR AUTHORIZATION RE-
VIEW PERMITTED.—Nothing in this subsection shall be
construed to prevent such a chiropractor from request-
ing prior authorization for services described in para-
graph (1) that are to be furnished to an individual be-
fore the chiropractor furnishes the twelfth such service
to such individual for an episode of treatment.
(B) TYPE OF REVIEW.—The Secretary may use pre-pay-
ment review or post-payment review of services described
in section 1861(r)(5) that are not subject to prior author-
ization medical review under subparagraph (A).
(C) RELATIONSHIP TO LAW ENFORCEMENT ACTIVITIES.—
The Secretary may determine that medical review under
this subsection does not apply in the case where potential
fraud may be involved.
(3) NO PAYMENT WITHOUT PRIOR AUTHORIZATION.—With re-
spect to a service described in paragraph (1) for which prior
authorization medical review under this subsection applies, the
following shall apply:
(A) PRIOR AUTHORIZATION DETERMINATION.—The Sec-
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retary shall make a determination, prior to the service
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73
being furnished, of whether the service would or would not
meet the applicable requirements of section 1862(a)(1)(A).
(B) DENIAL OF PAYMENT.—Subject to paragraph (5), no
payment may be made under this part for the service un-
less the Secretary determines pursuant to subparagraph
(A) that the service would meet the applicable require-
ments of such section 1862(a)(1)(A).
(4) SUBMISSION OF INFORMATION.—A chiropractor described
in section 1861(r)(5) may submit the information necessary for
medical review by fax, by mail, or by electronic means. The
Secretary shall make available the electronic means described
in the preceding sentence as soon as practicable.
(5) TIMELINESS.—If the Secretary does not make a prior au-
thorization determination under paragraph (3)(A) within 14
business days of the date of the receipt of medical documenta-
tion needed to make such determination, paragraph (3)(B)
shall not apply.
(6) APPLICATION OF LIMITATION ON BENEFICIARY LIABILITY.—
Where payment may not be made as a result of the application
of paragraph (2)(B), section 1879 shall apply in the same man-
ner as such section applies to a denial that is made by reason
of section 1862(a)(1).
(7) REVIEW BY CONTRACTORS.—The medical review described
in paragraph (2) may be conducted by medicare administrative
contractors pursuant to section 1874A(a)(4)(G) or by any other
contractor determined appropriate by the Secretary that is not
a recovery audit contractor.
(8) MULTIPLE SERVICES.—The Secretary shall, where prac-
ticable, apply the medical review under this subsection in a
manner so as to allow an individual described in paragraph (1)
to obtain, at a single time rather than on a service-by-service
basis, an authorization in accordance with paragraph (3)(A) for
multiple services.
(9) CONSTRUCTION.—With respect to a service described in
paragraph (1) that has been affirmed by medical review under
this subsection, nothing in this subsection shall be construed
to preclude the subsequent denial of a claim for such service
that does not meet other applicable requirements under this
Act.
(10) IMPLEMENTATION.—
(A) AUTHORITY.—The Secretary may implement the pro-
visions of this subsection by interim final rule with com-
ment period.
(B) ADMINISTRATION.—Chapter 35 of title 44, United
States Code, shall not apply to medical review under this
subsection.
(bb) ADDITIONAL PAYMENTS FOR CERTAIN RURAL HEALTH CLINICS
WITH PHYSICIANS OR PRACTITIONERS RECEIVING DATA 2000 WAIV-
ERS.—
(1) IN GENERAL.—In the case of a rural health clinic with re-
spect to which, beginning on or after January 1, 2019, rural
health clinic services (as defined in section 1861(aa)(1)) are fur-
nished for the treatment of opioid use disorder by a physician
or practitioner who meets the requirements described in para-
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graph (3), the Secretary shall, subject to availability of funds
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74
under paragraph (4), make a payment (at such time and in
such manner as specified by the Secretary) to such rural
health clinic after receiving and approving an application de-
scribed in paragraph (2). Such payment shall be in an amount
determined by the Secretary, based on an estimate of the aver-
age costs of training for purposes of receiving a waiver de-
scribed in paragraph (3)(B). Such payment may be made only
one time with respect to each such physician or practitioner.
(2) APPLICATION.—In order to receive a payment described in
paragraph (1), a rural health clinic shall submit to the Sec-
retary an application for such a payment at such time, in such
manner, and containing such information as specified by the
Secretary. A rural health clinic may apply for such a payment
for each physician or practitioner described in paragraph (1)
furnishing services described in such paragraph at such clinic.
(3) REQUIREMENTS.—For purposes of paragraph (1), the re-
quirements described in this paragraph, with respect to a phy-
sician or practitioner, are the following:
(A) The physician or practitioner is employed by or
working under contract with a rural health clinic described
in paragraph (1) that submits an application under para-
graph (2).
(B) The physician or practitioner first receives a waiver
under section 303(g) of the Controlled Substances Act on
or after January 1, 2019.
(4) FUNDING.—For purposes of making payments under this
subsection, there are appropriated, out of amounts in the
Treasury not otherwise appropriated, $2,000,000, which shall
remain available until expended.
(cc) SPECIFIED COVID–19 TESTING-RELATED SERVICES.—For pur-
poses of subsection (a)(1)(DD):
(1) DESCRIPTION.—
(A) IN GENERAL.—A specified COVID–19 testing-related
service described in this paragraph is a medical visit
that—
(i) is in any of the categories of HCPCS evaluation
and management service codes described in subpara-
graph (B);
(ii) is furnished during any portion of the emergency
period (as defined in section 1135(g)(1)(B)) (beginning
on or after the date of enactment of this subsection);
(iii) results in an order for or administration of a
clinical diagnostic laboratory test described in section
1852(a)(1)(B)(iv)(IV); and
(iv) relates to the furnishing or administration of
such test or to the evaluation of such individual for
purposes of determining the need of such individual
for such test.
(B) CATEGORIES OF HCPCS CODES.—For purposes of sub-
paragraph (A), the categories of HCPCS evaluation and
management services codes are the following:
(i) Office and other outpatient services.
(ii) Hospital observation services.
(iii) Emergency department services.
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(iv) Nursing facility services.
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(v) Domiciliary, rest home, or custodial care services.
(vi) Home services.
(vii) Online digital evaluation and management
services.
(2) SPECIFIED OUTPATIENT PAYMENT PROVISION.—A specified
outpatient payment provision described in this paragraph is
any of the following:
(A) The hospital outpatient prospective payment system
under subsection (t).
(B) The physician fee schedule under section 1848.
(C) The prospective payment system developed under
section 1834(o).
(D) Section 1834(g), with respect to an outpatient critical
access hospital service.
(E) The payment basis determined in regulations pursu-
ant to section 1833(a)(3) for rural health clinic services.
(dd) SPECIAL COINSURANCE RULE FOR CERTAIN COLORECTAL CAN-
CER SCREENING TESTS.—
(1) IN GENERAL.—In the case of a colorectal cancer screening
test to which paragraph (1)(Y) of subsection (a) would not
apply but for the third sentence of such subsection that is fur-
nished during a year beginning on or after January 1, 2022,
and before January 1, 2030, the amount paid shall be equal to
the specified percent (as defined in paragraph (2)) for such
year of the lesser of the actual charge for the service or the
amount determined under the fee schedule that applies to such
test under this part (or, in the case such test is a covered OPD
service (as defined in subsection (t)(1)(B)), the amount deter-
mined under subsection (t)).
(2) SPECIFIED PERCENT DEFINED.—For purposes of paragraph
(1), the term ‘‘specified percent’’ means—
(A) for 2022, 80 percent;
(B) for 2023 through 2026, 85 percent; and
(C) for 2027 through 2029, 90 percent.
SPECIAL PAYMENT RULES FOR PARTICULAR ITEMS AND SERVICES
SEC. 1834. (a) PAYMENT FOR DURABLE MEDICAL EQUIPMENT.—
(1) GENERAL RULE FOR PAYMENT.—
(A) IN GENERAL.—With respect to a covered item (as de-
fined in paragraph (13)) for which payment is determined
under this subsection, payment shall be made in the fre-
quency specified in paragraphs (2) through (7) and in an
amount equal to 80 percent of the payment basis described
in subparagraph (B).
(B) PAYMENT BASIS.—Subject to subparagraph (F)(i), the
payment basis described in this subparagraph is the lesser
of—
(i) the actual charge for the item, or
(ii) the payment amount recognized under para-
graphs (2) through (7) of this subsection for the item;
except that clause (i) shall not apply if the covered item is
furnished by a public home health agency (or by another
home health agency which demonstrates to the satisfaction
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of the Secretary that a significant portion of its patients
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are low income) free of charge or at nominal charges to the
public.
(C) EXCLUSIVE PAYMENT RULE.—Subject to subparagraph
(F)(ii), this subsection shall constitute the exclusive provi-
sion of this title for payment for covered items under this
part or under part A to a home health agency.
(D) REDUCTION IN FEE SCHEDULES FOR CERTAIN ITEMS.—
With respect to a seat-lift chair or transcutaneous elec-
trical nerve stimulator furnished on or after April 1, 1990,
the Secretary shall reduce the payment amount applied
under subparagraph (B)(ii) for such an item by 15 percent,
and, in the case of a transcutaneous electrical nerve stimu-
lator furnished on or after January 1, 1991, the Secretary
shall further reduce such payment amount (as previously
reduced) by 45 percent.
(E) CLINICAL CONDITIONS FOR COVERAGE.—
(i) IN GENERAL.—The Secretary shall establish
standards for clinical conditions for payment for cov-
ered items under this subsection.
(ii) REQUIREMENTS.—The standards established
under clause (i) shall include the specification of types
or classes of covered items that require, as a condition
of payment under this subsection, a face-to-face exam-
ination of the individual by a physician (as defined in
section 1861(r)), a physician assistant, nurse practi-
tioner, or a clinical nurse specialist (as those terms are
defined in section 1861(aa)(5)) and a prescription for
the item.
(iii) PRIORITY OF ESTABLISHMENT OF STANDARDS.—In
establishing the standards under this subparagraph,
the Secretary shall first establish standards for those
covered items for which the Secretary determines
there has been a proliferation of use, consistent find-
ings of charges for covered items that are not deliv-
ered, or consistent findings of falsification of docu-
mentation to provide for payment of such covered
items under this part.
(iv) STANDARDS FOR POWER WHEELCHAIRS.—Effective
on the date of the enactment of this subparagraph, in
the case of a covered item consisting of a motorized or
power wheelchair for an individual, payment may not
be made for such covered item unless a physician (as
defined in section 1861(r)(1)), a physician assistant,
nurse practitioner, or a clinical nurse specialist (as
those terms are defined in section 1861(aa)(5)) has
conducted a face-to-face examination of the individual
and written a prescription for the item.
(v) LIMITATION ON PAYMENT FOR COVERED ITEMS.—
Payment may not be made for a covered item under
this subsection unless the item meets any standards
established under this subparagraph for clinical condi-
tion of coverage.
(F) APPLICATION OF COMPETITIVE ACQUISITION; LIMITA-
TION OF INHERENT REASONABLENESS AUTHORITY.—In the
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case of covered items furnished on or after January 1,
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2011, subject to subparagraphs (G) and (H), that are in-
cluded in a competitive acquisition program in a competi-
tive acquisition area under section 1847(a)—
(i) the payment basis under this subsection for such
items and services furnished in such area shall be the
payment basis determined under such competitive ac-
quisition program;
(ii) the Secretary may (and, in the case of covered
items furnished on or after January 1, 2016, subject to
clause (iii), shall) use information on the payment de-
termined under such competitive acquisition programs
to adjust the payment amount otherwise recognized
under subparagraph (B)(ii) for an area that is not a
competitive acquisition area under section 1847 and in
the case of such adjustment, paragraph (10)(B) shall
not be applied; and
(iii) 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 competitive acquisition programs, addi-
tional covered items are phased in or information is
updated as contracts under section 1847 are recom-
peted in accordance with section 1847(b)(3)(B).
(G) USE OF INFORMATION ON COMPETITIVE BID RATES.—
The Secretary shall specify by regulation the methodology
to be used in applying the provisions of subparagraph
(F)(ii) and subsection (h)(1)(H)(ii). In promulgating such
regulation, the Secretary shall consider the costs of items
and services in areas in which such provisions would be
applied compared to the payment rates for such items and
services in competitive acquisition areas.In the case of
items and services furnished on or after January 1, 2019,
in making any adjustments under clause (ii) or (iii) of sub-
paragraph (F), under subsection (h)(1)(H)(ii), or under sec-
tion 1842(s)(3)(B), the Secretary shall—
(i) solicit and take into account stakeholder input;
and
(ii) take into account the highest amount bid by a
winning supplier in a competitive acquisition area and
a comparison of each of the following with respect to
non-competitive acquisition areas and competitive ac-
quisition areas:
(I) The average travel distance and cost associ-
ated with furnishing items and services in the
area.
(II) The average volume of items and services
furnished by suppliers in the area.
(III) The number of suppliers in the area.
(H) DIABETIC SUPPLIES.—
(i) IN GENERAL.—On or after the date described in
clause (ii), the payment amount under this part for di-
abetic supplies, including testing strips, that are non-
mail order items (as defined by the Secretary) shall be
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equal to the single payment amounts established
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under the national mail order competition for diabetic
supplies under section 1847.
(ii) DATE DESCRIBED.—The date described in this
clause is the date of the implementation of the single
payment amounts under the national mail order com-
petition for diabetic supplies under section 1847.
(I) TREATMENT OF VACUUM ERECTION SYSTEMS.—Effec-
tive for items and services furnished on and after July 1,
2015, vacuum erection systems described as prosthetic de-
vices described in section 1861(s)(8) shall be treated in the
same manner as erectile dysfunction drugs are treated for
purposes of section 1860D-2(e)(2)(A).
(2) PAYMENT FOR INEXPENSIVE AND OTHER ROUTINELY PUR-
CHASED DURABLE MEDICAL EQUIPMENT.—
(A) IN GENERAL.—Payment for an item of durable med-
ical equipment (as defined in paragraph (13))—
(i) the purchase price of which does not exceed $150,
(ii) which the Secretary determines is acquired at
least 75 percent of the time by purchase,
(iii) which is an accessory used in conjunction with
a nebulizer, aspirator, or a ventilator excluded under
paragraph (3)(A), or
(iv) in the case of devices furnished on or after Octo-
ber 1, 2015, which serves as a speech generating de-
vice or which is an accessory that is needed for the in-
dividual to effectively utilize such a device,
shall be made on a rental basis or in a lump-sum amount
for the purchase of the item. The payment amount recog-
nized for purchase or rental of such equipment is the
amount specified in subparagraph (B) for purchase or rent-
al, except that the total amount of payments with respect
to an item may not exceed the payment amount specified
in subparagraph (B) with respect to the purchase of the
item.
(B) PAYMENT AMOUNT.—For purposes of subparagraph
(A), the amount specified in this subparagraph, with re-
spect to the purchase or rental of an item furnished in a
carrier service area—
(i) in 1989 and in 1990 is the average reasonable
charge in the area for the purchase or rental, respec-
tively, of the item for the 12-month period ending on
June 30, 1987, increased by the percentage increase in
the consumer price index for all urban consumers
(U.S. city average) for the 6-month period ending with
December 1987;
(ii) in 1991 is the sum of (I) 67 percent of the local
payment amount for the item or device computed
under subparagraph (C)(i)(I) for 1991, and (II) 33 per-
cent of the national limited payment amount for the
item or device computed under subparagraph (C)(ii)
for 1991;
(iii) in 1992 is the sum of (I) 33 percent of the local
payment amount for the item or device computed
under subparagraph (C)(i)(II) for 1992, and (II) 67 per-
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cent of the national limited payment amount for the
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item or device computed under subparagraph (C)(ii)
for 1992; and
(iv) in 1993 and each subsequent year is the na-
tional limited payment amount for the item or device
computed under subparagraph (C)(ii) for that year (re-
duced by 10 percent, in the case of a blood glucose
testing strip furnished after 1997 for an individual
with diabetes).
(C) COMPUTATION OF LOCAL PAYMENT AMOUNT AND NA-
TIONAL LIMITED PAYMENT AMOUNT.—For purposes of sub-
paragraph (B)—
(i) the local payment amount for an item or device
for a year is equal to—
(I) for 1991, the amount specified in subpara-
graph (B)(i) for 1990 increased by the covered
item update for 1991, and
(II) for 1992, 1993, and 1994 the amount deter-
mined under this clause for the preceding year in-
creased by the covered item update for the year;
and
(ii) the national limited payment amount for an item
or device for a year is equal to—
(I) for 1991, the local payment amount deter-
mined under clause (i) for such item or device for
that year, except that the national limited pay-
ment amount may not exceed 100 percent of the
weighted average of all local payment amounts de-
termined under such clause for such item for that
year and may not be less than 85 percent of the
weighted average of all local payment amounts de-
termined under such clause for such item,
(II) for 1992 and 1993, the amount determined
under this clause for the preceding year increased
by the covered item update for such subsequent
year,
(III) for 1994, the local payment amount deter-
mined under clause (i) for such item or device for
that year, except that the national limited pay-
ment amount may not exceed 100 percent of the
median of all local payment amounts determined
under such clause for such item for that year and
may not be less than 85 percent of the median of
all local payment amounts determined under such
clause for such item or device for that year, and
(IV) for each subsequent year, the amount de-
termined under this clause for the preceding year
increased by the covered item update for such sub-
sequent year.
(3) PAYMENT FOR ITEMS REQUIRING FREQUENT AND SUBSTAN-
TIAL SERVICING.—
(A) IN GENERAL.—Payment for a covered item (such as
IPPB machines and ventilators, excluding ventilators that
are either continuous airway pressure devices or intermit-
tent assist devices with continuous airway pressure de-
ctelli on DSK11ZRN23PROD with REPORTS
vices) for which there must be frequent and substantial
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80
servicing in order to avoid risk to the patient’s health shall
be made on a monthly basis for the rental of the item and
the amount recognized is the amount specified in subpara-
graph (B).
(B) PAYMENT AMOUNT.—For purposes of subparagraph
(A), the amount specified in this subparagraph, with re-
spect to an item or device furnished in a carrier service
area—
(i) in 1989 and in 1990 is the average reasonable
charge in the area for the rental of the item or device
for the 12-month period ending with June 1987, in-
creased by the percentage increase in the consumer
price index for all urban consumers (U.S. city average)
for the 6-month period ending with December 1987;
(ii) in 1991 is the sum of (I) 67 percent of the local
payment amount for the item or device computed
under subparagraph (C)(i)(I) for 1991, and (II) 33 per-
cent of the national limited payment amount for the
item or device computed under subparagraph (C)(ii)
for 1991;
(iii) in 1992 is the sum of (I) 33 percent of the local
payment amount for the item or device computed
under subparagraph (C)(i)(II) for 1992, and (II) 67 per-
cent of the national limited payment amount for the
item or device computed under subparagraph (C)(ii)
for 1992; and
(iv) in 1993 and each subsequent year is the na-
tional limited payment amount for the item or device
computed under subparagraph (C)(ii) for that year.
(C) COMPUTATION OF LOCAL PAYMENT AMOUNT AND NA-
TIONAL LIMITED PAYMENT AMOUNT.—For purposes of sub-
paragraph (B)—
(i) the local payment amount for an item or device
for a year is equal to—
(I) for 1991, the amount specified in subpara-
graph (B)(i) for 1990 increased by the covered
item update for 1991, and
(II) for 1992, 1993, and 1994 the amount deter-
mined under this clause for the preceding year in-
creased by the covered item update for the year;
and
(ii) the national limited payment amount for an item
or device for a year is equal to—
(I) for 1991, the local payment amount deter-
mined under clause (i) for such item or device for
that year, except that the national limited pay-
ment amount may not exceed 100 percent of the
weighted average of all local payment amounts de-
termined under such clause for such item for that
year and may not be less than 85 percent of the
weighted average of all local payment amounts de-
termined under such clause for such item,
(II) for 1992 and 1993, the amount determined
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under this clause for the preceding year increased
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by the covered item update for such subsequent
year,
(III) for 1994, the local payment amount deter-
mined under clause (i) for such item or device for
that year, except that the national limited pay-
ment amount may not exceed 100 percent of the
median of all local payment amounts determined
under such clause for such item for that year and
may not be less than 85 percent of the median of
all local payment amounts determined under such
clause for such item or device for that year, and
(IV) for each subsequent year, the amount de-
termined under this clause for the preceding year
increased by the covered item update for such sub-
sequent year.
(4) PAYMENT FOR CERTAIN CUSTOMIZED ITEMS.—Payment
with respect to a covered item that is uniquely constructed or
substantially modified to meet the specific needs of an indi-
vidual patient, and for that reason cannot be grouped with
similar items for purposes of payment under this title, shall be
made in a lump-sum amount (A) for the purchase of the item
in a payment amount based upon the carrier’s individual con-
sideration for that item, and (B) for the reasonable and nec-
essary maintenance and servicing for parts and labor not cov-
ered by the supplier’s or manufacturer’s warranty, when nec-
essary during the period of medical need, and the amount rec-
ognized for such maintenance and servicing shall be paid on a
lump-sum, as needed basis based upon the carrier’s individual
consideration for that item. In the case of a wheelchair fur-
nished on or after January 1, 1992, the wheelchair shall be
treated as a customized item for purposes of this paragraph if
the wheelchair has been measured, fitted, or adapted in consid-
eration of the patient’s body size, disability, period of need, or
intended use, and has been assembled by a supplier or ordered
from a manufacturer who makes available customized features,
modifications, or components for wheelchairs that are intended
for an individual patient’s use in accordance with instructions
from the patient’s physician.
(5) PAYMENT FOR OXYGEN AND OXYGEN EQUIPMENT.—
(A) IN GENERAL.—Payment for oxygen and oxygen equip-
ment shall be made on a monthly basis in the monthly
payment amount recognized under paragraph (9) for oxy-
gen and oxygen equipment (other than portable oxygen
equipment), subject to subparagraphs (B), (C), (E), and (F).
(B) ADD-ON FOR PORTABLE OXYGEN EQUIPMENT.—When
portable oxygen equipment is used, but subject to subpara-
graph (D), the payment amount recognized under subpara-
graph (A) shall be increased by the monthly payment
amount recognized under paragraph (9) for portable oxy-
gen equipment.
(C) VOLUME ADJUSTMENT.—When the attending physi-
cian prescribes an oxygen flow rate—
(i) exceeding 4 liters per minute, the payment
amount recognized under subparagraph (A), subject to
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subparagraph (D), shall be increased by 50 percent, or
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(ii) of less than 1 liter per minute, the payment
amount recognized under subparagraph (A) shall be
decreased by 50 percent.
(D) LIMIT ON ADJUSTMENT.—When portable oxygen
equipment is used and the attending physician prescribes
an oxygen flow rate exceeding 4 liters per minute, there
shall only be an increase under either subparagraph (B) or
(C), whichever increase is larger, and not under both such
subparagraphs.
(E) RECERTIFICATION FOR PATIENTS RECEIVING HOME OX-
YGEN THERAPY.—In the case of a patient receiving home
oxygen therapy services who, at the time such services are
initiated, has an initial arterial blood gas value at or above
a partial pressure of 56 or an arterial oxygen saturation at
or above 89 percent (or such other values, pressures, or cri-
teria as the Secretary may specify) no payment may be
made under this part for such services after the expiration
of the 90-day period that begins on the date the patient
first receives such services unless the patient’s attending
physician certifies that, on the basis of a follow-up test of
the patient’s arterial blood gas value or arterial oxygen
saturation conducted during the final 30 days of such 90-
day period, there is a medical need for the patient to con-
tinue to receive such services.
(F) RENTAL CAP.—
(i) IN GENERAL.—Payment for oxygen equipment (in-
cluding portable oxygen equipment) under this para-
graph may not extend over a period of continuous use
(as determined by the Secretary) of longer than 36
months.
(ii) PAYMENTS AND RULES AFTER RENTAL CAP.—After
the 36th continuous month during which payment is
made for the equipment under this paragraph—
(I) the supplier furnishing such equipment
under this subsection shall continue to furnish the
equipment during any period of medical need for
the remainder of the reasonable useful lifetime of
the equipment, as determined by the Secretary;
(II) payments for oxygen shall continue to be
made in the amount recognized for oxygen under
paragraph (9) for the period of medical need; and
(III) maintenance and servicing payments shall,
if the Secretary determines such payments are
reasonable and necessary, be made (for parts and
labor not covered by the supplier’s or manufactur-
er’s warranty, as determined by the Secretary to
be appropriate for the equipment), and such pay-
ments shall be in an amount determined to be ap-
propriate by the Secretary.
(6) PAYMENT FOR OTHER COVERED ITEMS (OTHER THAN DURA-
BLE MEDICAL EQUIPMENT).—Payment for other covered items
(other than durable medical equipment and other covered
items described in paragraph (3), (4), or (5)) shall be made in
a lump-sum amount for the purchase of the item in the
ctelli on DSK11ZRN23PROD with REPORTS
amount of the purchase price recognized under paragraph (8).
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(7) PAYMENT FOR OTHER ITEMS OF DURABLE MEDICAL EQUIP-
MENT.—
(A) PAYMENT.—In the case of an item of durable medical
equipment not described in paragraphs (2) through (6), the
following rules shall apply:
(i) RENTAL.—
(I) IN GENERAL.—Except as provided in clause
(iii), payment for the item shall be made on a
monthly basis for the rental of the item during the
period of medical need (but payments under this
clause may not extend over a period of continuous
use (as determined by the Secretary) of longer
than 13 months).
(II) PAYMENT AMOUNT.—Subject to subclause
(III) and subparagraph (B), the amount recognized
for the item, for each of the first 3 months of such
period, is 10 percent of the purchase price recog-
nized under paragraph (8) with respect to the
item, and, for each of the remaining months of
such period, is 7.5 percent of such purchase price.
(III) SPECIAL RULE FOR POWER-DRIVEN WHEEL-
CHAIRS.—For purposes of payment for power-driv-
en wheelchairs, subclause (II) shall be applied by
substituting ‘‘15 percent’’ and ‘‘6 percent’’ for ‘‘10
percent’’ and ‘‘7.5 percent’’, respectively.
(ii) OWNERSHIP AFTER RENTAL.—On the first day
that begins after the 13th continuous month during
which payment is made for the rental of an item
under clause (i), the supplier of the item shall transfer
title to the item to the individual.
(iii) PURCHASE AGREEMENT OPTION FOR COMPLEX, RE-
HABILITATIVE POWER-DRIVEN WHEELCHAIRS.—In the
case of a complex, rehabilitative power-driven wheel-
chair, at the time the supplier furnishes the item, the
supplier shall offer the individual the option to pur-
chase the item, and payment for such item shall be
made on a lump-sum basis if the individual exercises
such option.
(iv) MAINTENANCE AND SERVICING.—After the sup-
plier transfers title to the item under clause (ii) or in
the case of a power-driven wheelchair for which a pur-
chase agreement has been entered into under clause
(iii), maintenance and servicing payments shall, if the
Secretary determines such payments are reasonable
and necessary, be made (for parts and labor not cov-
ered by the supplier’s or manufacturer’s warranty, as
determined by the Secretary to be appropriate for the
particular type of durable medical equipment), and
such payments shall be in an amount determined to
be appropriate by the Secretary.
(B) RANGE FOR RENTAL AMOUNTS.—
(i) FOR 1989.—For items furnished during 1989, the
payment amount recognized under subparagraph (A)(i)
shall not be more than 115 percent, and shall not be
ctelli on DSK11ZRN23PROD with REPORTS
less than 85 percent, of the prevailing charge estab-
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84
lished for rental of the item in January 1987, in-
creased by the percentage increase in the consumer
price index for all urban consumers (U.S. city average)
for the 6-month period ending with December 1987.
(ii) FOR 1990.—For items furnished during 1990,
clause (i) shall apply in the same manner as it applies
to items furnished during 1989.
(C) REPLACEMENT OF ITEMS.—
(i) ESTABLISHMENT OF REASONABLE USEFUL LIFE-
TIME.—In accordance with clause (iii), the Secretary
shall determine and establish a reasonable useful life-
time for items of durable medical equipment for which
payment may be made under this paragraph.
(ii) PAYMENT FOR REPLACEMENT ITEMS.—If the rea-
sonable lifetime of such an item, as so established, has
been reached during a continuous period of medical
need, or the carrier determines that the item is lost or
irreparably damaged, the patient may elect to have
payment for an item serving as a replacement for such
item made—
(I) on a monthly basis for the rental of the re-
placement item in accordance with subparagraph
(A); or
(II) in the case of an item for which a purchase
agreement has been entered into under subpara-
graph (A)(iii), in a lump-sum amount for the pur-
chase of the item.
(iii) LENGTH OF REASONABLE USEFUL LIFETIME.—The
reasonable useful lifetime of an item of durable med-
ical equipment under this subparagraph shall be equal
to 5 years, except that, if the Secretary determines
that, on the basis of prior experience in making pay-
ments for such an item under this title, a reasonable
useful lifetime of 5 years is not appropriate with re-
spect to a particular item, the Secretary shall estab-
lish an alternative reasonable lifetime for such item.
(8) PURCHASE PRICE RECOGNIZED FOR MISCELLANEOUS DE-
VICES AND ITEMS.—For purposes of paragraphs (6) and (7), the
amount that is recognized under this paragraph as the pur-
chase price for a covered item is the amount described in sub-
paragraph (C) of this paragraph, determined as follows:
(A) COMPUTATION OF LOCAL PURCHASE PRICE.—Each car-
rier under section 1842 shall compute a base local pur-
chase price for the item as follows:
(i) The carrier shall compute a base local purchase
price, for each item described—
(I) in paragraph (6) equal to the average reason-
able charge in the locality for the purchase of the
item for the 12-month period ending with June
1987, or
(II) in paragraph (7) equal to the average of the
purchase prices on the claims submitted on an as-
signment-related basis for the unused item sup-
plied during the 6-month period ending with De-
ctelli on DSK11ZRN23PROD with REPORTS
cember 1986.
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(ii) The carrier shall compute a local purchase price,
with respect to the furnishing of each particular
item—
(I) in 1989 and 1990, equal to the base local
purchase price computed under clause (i) in-
creased by the percentage increase in the con-
sumer price index for all urban consumers (U.S.
city average) for the 6-month period ending with
December 1987,
(II) in 1991, equal to the local purchase price
computed under this clause for the previous year,
increased by the covered item update for 1991,
and decreased by the percentage by which the av-
erage of the reasonable charges for claims paid for
all items described in paragraph (7) is lower than
the average of the purchase prices submitted for
such items during the final 9 months of 1988; or
(III) in 1992, 1993, and 1994 equal to the local
purchase price computed under this clause for the
previous year increased by the covered item up-
date for the year.
(B) COMPUTATION OF NATIONAL LIMITED PURCHASE
PRICE.—With respect to the furnishing of a particular item
in a year, the Secretary shall compute a national limited
purchase price—
(i) for 1991, equal to the local purchase price com-
puted under subparagraph (A)(ii) for the item for the
year, except that such national limited purchase price
may not exceed 100 percent of the weighted average of
all local purchase prices for the item computed under
such subparagraph for the year, and may not be less
than 85 percent of the weighted average of all local
purchase prices for the item computed under such sub-
paragraph for the year;
(ii) for 1992 and 1993, the amount determined under
this subparagraph for the preceding year increased by
the covered item update for such subsequent year;
(iii) for 1994, the local purchase price computed
under subparagraph (A)(ii) for the item for the year,
except that such national limited purchase price may
not exceed 100 percent of the median of all local pur-
chase prices computed for the item under such sub-
paragraph for the year and may not be less than 85
percent of the median of all local purchase prices com-
puted under such subparagraph for the item for the
year; and
(iv) for each subsequent year, equal to the amount
determined under this subparagraph for the preceding
year increased by the covered item update for such
subsequent year.
(C) PURCHASE PRICE RECOGNIZED.—For purposes of para-
graphs (6) and (7), the amount that is recognized under
this paragraph as the purchase price for each item fur-
ctelli on DSK11ZRN23PROD with REPORTS
nished—
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86
(i) in 1989 or 1990, is 100 percent of the local pur-
chase price computed under subparagraph (A)(ii)(I);
(ii) in 1991, is the sum of (I) 67 percent of the local
purchase price computed under subparagraph
(A)(ii)(II) for 1991, and (II) 33 percent of the national
limited purchase price computed under subparagraph
(B) for 1991;
(iii) in 1992, is the sum of (I) 33 percent of the local
purchase price computed under subparagraph
(A)(ii)(III) for 1992, and (II) 67 percent of the national
limited purchase price computed under subparagraph
(B) for 1992; and
(iv) in 1993 or a subsequent year, is the national
limited purchase price computed under subparagraph
(B) for that year.
(9) MONTHLY PAYMENT AMOUNT RECOGNIZED WITH RESPECT
TO OXYGEN AND OXYGEN EQUIPMENT.—For purposes of para-
graph (5), the amount that is recognized under this paragraph
for payment for oxygen and oxygen equipment is the monthly
payment amount described in subparagraph (C) of this para-
graph. Such amount shall be computed separately (i) for all
items of oxygen and oxygen equipment (other than portable ox-
ygen equipment) and (ii) for portable oxygen equipment (each
such group referred to in this paragraph as an ‘‘item’’).
(A) COMPUTATION OF LOCAL MONTHLY PAYMENT RATE.—
Each carrier under this section shall compute a base local
payment rate for each item as follows:
(i) The carrier shall compute a base local average
monthly payment rate per beneficiary as an amount
equal to (I) the total reasonable charges for the item
during the 12-month period ending with December
1986, divided by (II) the total number of months for all
beneficiaries receiving the item in the area during the
12-month period for which the carrier made payment
for the item under this title.
(ii) The carrier shall compute a local average month-
ly payment rate for the item applicable—
(I) to 1989 and 1990, equal to 95 percent of the
base local average monthly payment rate com-
puted under clause (i) for the item increased by
the percentage increase in the consumer price
index for all urban consumers (U.S. city average)
for the 6-month period ending with December
1987, or
(II) to 1991, 1992, 1993, and 1994 equal to the
local average monthly payment rate computed
under this clause for the item for the previous
year increased by the covered item increase for
the year.
(B) COMPUTATION OF NATIONAL LIMITED MONTHLY PAY-
MENT RATE.—With respect to the furnishing of an item in
a year, the Secretary shall compute a national limited
monthly payment rate equal to—
(i) for 1991, the local monthly payment rate com-
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puted under subparagraph (A)(ii)(II) for the item for
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87
the year, except that such national limited monthly
payment rate may not exceed 100 percent of the
weighted average of all local monthly payment rates
computed for the item under such subparagraph for
the year, and may not be less than 85 percent of the
weighted average of all local monthly payment rates
computed for the item under such subparagraph for
the year;
(ii) for 1992 and 1993, the amount determined under
this subparagraph for the preceding year increased by
the covered item update for such subsequent year;
(iii) for 1994, the local monthly payment rate com-
puted under subparagraph (A)(ii) for the item for the
year, except that such national limited monthly pay-
ment rate may not exceed 100 percent of the median
of all local monthly payment rates computed for the
item under such subparagraph for the year and may
not be less than 85 percent of the median of all local
monthly payment rates computed for the item under
such subparagraph for the year;
(iv) for 1995, 1996, and 1997, equal to the amount
determined under this subparagraph for the preceding
year increased by the covered item update for such
subsequent year;
(v) for 1998, 75 percent of the amount determined
under this subparagraph for 1997; and
(vi) for 1999 and each subsequent year, 70 percent
of the amount determined under this subparagraph for
1997.
(C) MONTHLY PAYMENT AMOUNT RECOGNIZED.—For pur-
poses of paragraph (5), the amount that is recognized
under this paragraph as the base monthly payment
amount for each item furnished—
(i) in 1989 and in 1990, is 100 percent of the local
average monthly payment rate computed under sub-
paragraph (A)(ii) for the item;
(ii) in 1991, is the sum of (I) 67 percent of the local
average monthly payment rate computed under sub-
paragraph (A)(ii)(II) for the item for 1991, and (II) 33
percent of the national limited monthly payment rate
computed under subparagraph (B)(i) for the item for
1991;
(iii) in 1992, is the sum of (I) 33 percent of the local
average monthly payment rate computed under sub-
paragraph (A)(ii)(II) for the item for 1992, and (II) 67
percent of the national limited monthly payment rate
computed under subparagraph (B)(ii) for the item for
1992; and
(iv) in a subsequent year, is the national limited
monthly payment rate computed under subparagraph
(B) for the item for that year.
(D) AUTHORITY TO CREATE CLASSES.—
(i) IN GENERAL.—Subject to clause (ii), the Secretary
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may establish separate classes for any item of oxygen
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88
and oxygen equipment and separate national limited
monthly payment rates for each of such classes.
(ii) BUDGET NEUTRALITY.—The Secretary may take
actions under clause (i) only to the extent such actions
do not result in expenditures for any year to be more
or less than the expenditures which would have been
made if such actions had not been taken. The require-
ment of the preceding sentence shall not apply begin-
ning with the second calendar quarter beginning on or
after the date of the enactment of this sentence.
(10) EXCEPTIONS AND ADJUSTMENTS.—
(A) AREAS OUTSIDE CONTINENTAL UNITED STATES.—Ex-
ceptions to the amounts recognized under the previous pro-
visions of this subsection shall be made to take into ac-
count the unique circumstances of covered items furnished
in Alaska, Hawaii, or Puerto Rico.
(B) ADJUSTMENT FOR INHERENT REASONABLENESS.—The
Secretary is authorized to apply the provisions of para-
graphs (8) and (9) of section 1842(b) to covered items and
suppliers of such items and payments under this sub-
section in an area and with respect to covered items and
services for which the Secretary does not make a payment
amount adjustment under paragraph (1)(F).
(C) TRANSCUTANEOUS ELECTRICAL NERVE STIMULATOR
(TENS).—In order to permit an attending physician time to
determine whether the purchase of a transcutaneous elec-
trical nerve stimulator is medically appropriate for a par-
ticular patient, the Secretary may determine an appro-
priate payment amount for the initial rental of such item
for a period of not more than 2 months. If such item is
subsequently purchased, the payment amount with respect
to such purchase is the payment amount determined under
paragraph (2).
(11) IMPROPER BILLING AND REQUIREMENT OF PHYSICIAN
ORDER.—
(A) IMPROPER BILLING FOR CERTAIN RENTAL ITEMS.—Not-
withstanding any other provision of this title, a supplier of
a covered item for which payment is made under this sub-
section and which is furnished on a rental basis shall con-
tinue to supply the item without charge (other than a
charge provided under this subsection for the maintenance
and servicing of the item) after rental payments may no
longer be made under this subsection. If a supplier know-
ingly and willfully violates the previous sentence, the Sec-
retary may apply sanctions against the supplier under sec-
tion 1842(j)(2) in the same manner such sanctions may
apply with respect to a physician.
(B) REQUIREMENT OF PHYSICIAN ORDER.—
(i) IN GENERAL.—The Secretary is authorized to re-
quire, for specified covered items, that payment may
be made under this subsection with respect to the item
only if a physician enrolled under section 1866(j) or an
eligible professional under section 1848(k)(3)(B) that is
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enrolled under section 1866(j) has communicated to
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89
the supplier, before delivery of the item, a written
order for the item.
(ii) REQUIREMENT FOR FACE TO FACE ENCOUNTER.—
The Secretary shall require that such an order be
written pursuant to a physician, a physician assistant,
a nurse practitioner, or a clinical nurse specialist (as
those terms are defined in section 1861(aa)(5)) docu-
menting such physician, physician assistant, practi-
tioner, or specialist has had a face-to-face encounter
(including through use of telehealth under subsection
(m) and other than with respect to encounters that are
incident to services involved) with the individual in-
volved during the 6-month period preceding such writ-
ten order, or other reasonable timeframe as deter-
mined by the Secretary.
(12) REGIONAL CARRIERS.—The Secretary may designate, by
regulation under section 1842, one carrier for one or more en-
tire regions to process all claims within the region for covered
items under this section.
(13) COVERED ITEM.—In this subsection, the term ‘‘covered
item’’ means durable medical equipment (as defined in section
1861(n)), including such equipment described in section
1861(m)(5), but not including implantable items for which pay-
ment may be made under section 1833(t).
(14) COVERED ITEM UPDATE.—In this subsection, the term
‘‘covered item update’’ means, with respect to a year—
(A) for 1991 and 1992, the percentage increase in the
consumer price index for all urban consumers (U.S. city
average) for the 12-month period ending with June of the
previous year reduced by 1 percentage point;
(B) for 1993, 1994, 1995, 1996, and 1997, the percentage
increase in the consumer price index for all urban con-
sumers (U.S. city average) for the 12-month period ending
with June of the previous year;
(C) for each of the years 1998 through 2000, 0 percent-
age points;
(D) for 2001, the percentage increase in the consumer
price index for all urban consumers (U.S. city average) for
the 12-month period ending with June 2000;
(E) for 2002, 0 percentage points;
(F) for 2003, the percentage increase in the consumer
price index for all urban consumers (U.S. urban average)
for the 12-month period ending with June of 2002;
(G) for 2004 through 2006—
(i) subject to clause (ii), in the case of class III med-
ical devices described in section 513(a)(1)(C) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C.
360(c)(1)(C)), the percentage increase described in sub-
paragraph (B) for the year involved; and
(ii) in the case of covered items not described in
clause (i), 0 percentage points;
(H) for 2007—
(i) subject to clause (ii), in the case of class III med-
ical devices described in section 513(a)(1)(C) of the
ctelli on DSK11ZRN23PROD with REPORTS
Federal Food, Drug, and Cosmetic Act (21 U.S.C.
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90
360(c)(1)(C)), the percentage change determined by the
Secretary to be appropriate taking into account rec-
ommendations contained in the report of the Comp-
troller General of the United States under section
302(c)(1)(B) of the Medicare Prescription Drug, Im-
provement, and Modernization Act of 2003; and
(ii) in the case of covered items not described in
clause (i), 0 percentage points;
(I) for 2008—
(i) subject to clause (ii), in the case of class III med-
ical devices described in section 513(a)(1)(C) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C.
360(c)(1)(C)), the percentage increase described in sub-
paragraph (B) (as applied to the payment amount for
2007 determined after the application of the percent-
age change under subparagraph (H)(i)); and
(ii) in the case of covered items not described in
clause (i), 0 percentage points;
(J) for 2009—
(i) in the case of items and services furnished in any
geographic area, if such items or services were se-
lected for competitive acquisition in any area under
the competitive acquisition program under section
1847(a)(1)(B)(i)(I) before July 1, 2008, including re-
lated accessories but only if furnished with such items
and services selected for such competition and diabetic
supplies but only if furnished through mail order, - 9.5
percent; or
(ii) in the case of other items and services, the per-
centage increase in the consumer price index for all
urban consumers (U.S. urban average) for the 12-
month period ending with June 2008;
(K) for 2010, the percentage increase in the consumer
price index for all urban consumers (U.S. urban average)
for the 12-month period ending with June of the previous
year; and
(L) for 2011 and each subsequent year—
(i) the percentage increase in the consumer price
index for all urban consumers (United States city av-
erage) 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).
The application of subparagraph (L)(ii) may result in the cov-
ered item update under this paragraph being less than 0.0 for
a year, and may result in payment rates under this subsection
for a year being less than such payment rates for the preceding
year.
(15) ADVANCE DETERMINATIONS OF COVERAGE FOR CERTAIN
ITEMS.—
(A) DEVELOPMENT OF LISTS OF ITEMS BY SECRETARY.—
The Secretary may develop and periodically update a list
of items for which payment may be made under this sub-
section that the Secretary determines, on the basis of prior
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payment experience, are frequently subject to unnecessary
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utilization throughout a carrier’s entire service area or a
portion of such area.
(B) DEVELOPMENT OF LISTS OF SUPPLIERS BY SEC-
RETARY.—The Secretary may develop and periodically up-
date a list of suppliers of items for which payment may be
made under this subsection with respect to whom—
(i) the Secretary has found that a substantial num-
ber of claims for payment under this part for items
furnished by the supplier have been denied on the
basis of the application of section 1862(a)(1); or
(ii) the Secretary has identified a pattern of over-
utilization resulting from the business practice of the
supplier.
(C) DETERMINATIONS OF COVERAGE IN ADVANCE.—A car-
rier shall determine in advance of delivery of an item
whether payment for the item may not be made because
the item is not covered or because of the application of sec-
tion 1862(a)(1) if—
(i) the item is included on the list developed by the
Secretary under subparagraph (A);
(ii) the item is furnished by a supplier included on
the list developed by the Secretary under subpara-
graph (B); or
(iii) the item is a customized item (other than inex-
pensive items specified by the Secretary) and the pa-
tient to whom the item is to be furnished or the sup-
plier requests that such advance determination be
made.
(16) DISCLOSURE OF INFORMATION AND SURETY BOND.—The
Secretary shall not provide for the issuance (or renewal) of a
provider number for a supplier of durable medical equipment,
for purposes of payment under this part for durable medical
equipment furnished by the supplier, unless the supplier pro-
vides the Secretary on a continuing basis—
(A) with—
(i) full and complete information as to the identity
of each person with an ownership or control interest
(as defined in section 1124(a)(3)) in the supplier or in
any subcontractor (as defined by the Secretary in reg-
ulations) in which the supplier directly or indirectly
has a 5 percent or more ownership interest; and
(ii) to the extent determined to be feasible under
regulations of the Secretary, the name of any dis-
closing entity (as defined in section 1124(a)(2)) with
respect to which a person with such an ownership or
control interest in the supplier is a person with such
an ownership or control interest in the disclosing enti-
ty; and
(B) with a surety bond in a form specified by the Sec-
retary and in an amount that is not less than $50,000 that
the Secretary determines is commensurate with the vol-
ume of the billing of the supplier.
The Secretary may waive the requirement of a bond under sub-
paragraph (B) in the case of a supplier that provides a com-
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parable surety bond under State law. The Secretary, at the
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Secretary’s discretion, may impose the requirements of the
first sentence with respect to some or all providers of items or
services under part A or some or all suppliers or other persons
(other than physicians or other practitioners, as defined in sec-
tion 1842(b)(18)(C)) who furnish items or services under this
part.
(17) PROHIBITION AGAINST UNSOLICITED TELEPHONE CON-
TACTS BY SUPPLIERS.—
(A) IN GENERAL.—A supplier of a covered item under
this subsection may not contact an individual enrolled
under this part by telephone regarding the furnishing of a
covered item to the individual unless 1 of the following ap-
plies:
(i) The individual has given written permission to
the supplier to make contact by telephone regarding
the furnishing of a covered item.
(ii) The supplier has furnished a covered item to the
individual and the supplier is contacting the indi-
vidual only regarding the furnishing of such covered
item.
(iii) If the contact is regarding the furnishing of a
covered item other than a covered item already fur-
nished to the individual, the supplier has furnished at
least 1 covered item to the individual during the 15-
month period preceding the date on which the supplier
makes such contact.
(B) PROHIBITING PAYMENT FOR ITEMS FURNISHED SUBSE-
QUENT TO UNSOLICITED CONTACTS.—If a supplier know-
ingly contacts an individual in violation of subparagraph
(A), no payment may be made under this part for any item
subsequently furnished to the individual by the supplier.
(C) EXCLUSION FROM PROGRAM FOR SUPPLIERS ENGAGING
IN PATTERN OF UNSOLICITED CONTACTS.—If a supplier
knowingly contacts individuals in violation of subpara-
graph (A) to such an extent that the supplier’s conduct es-
tablishes a pattern of contacts in violation of such subpara-
graph, the Secretary shall exclude the supplier from par-
ticipation in the programs under this Act, in accordance
with the procedures set forth in subsections (c), (f), and (g)
of section 1128.
(18) REFUND OF AMOUNTS COLLECTED FOR CERTAIN DIS-
ALLOWED ITEMS.—
(A) IN GENERAL.—If a nonparticipating supplier fur-
nishes to an individual enrolled under this part a covered
item for which no payment may be made under this part
by reason of paragraph (17)(B), the supplier shall refund
on a timely basis to the patient (and shall be liable to the
patient for) any amounts collected from the patient for the
item, unless—
(i) the supplier establishes that the supplier did not
know and could not reasonably have been expected to
know that payment may not be made for the item by
reason of paragraph (17)(B), or
(ii) before the item was furnished, the patient was
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informed that payment under this part may not be
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made for that item and the patient has agreed to pay
for that item.
(B) SANCTIONS.—If a supplier knowingly and willfully
fails to make refunds in violation of subparagraph (A), the
Secretary may apply sanctions against the supplier in ac-
cordance with section 1842(j)(2).
(C) NOTICE.—Each carrier with a contract in effect
under this part with respect to suppliers of covered items
shall send any notice of denial of payment for covered
items by reason of paragraph (17)(B) and for which pay-
ment is not requested on an assignment-related basis to
the supplier and the patient involved.
(D) TIMELY BASIS DEFINED.—A refund under subpara-
graph (A) is considered to be on a timely basis only if—
(i) in the case of a supplier who does not request re-
consideration or seek appeal on a timely basis, the re-
fund is made within 30 days after the date the sup-
plier receives a denial notice under subparagraph (C),
or
(ii) in the case in which such a reconsideration or
appeal is taken, the refund is made within 15 days
after the date the supplier receives notice of an ad-
verse determination on reconsideration or appeal.
(19) CERTAIN UPGRADED ITEMS.—
(A) INDIVIDUAL’S RIGHT TO CHOOSE UPGRADED ITEM.—
Notwithstanding any other provision of this title, the Sec-
retary may issue regulations under which an individual
may purchase or rent from a supplier an item of upgraded
durable medical equipment for which payment would be
made under this subsection if the item were a standard
item.
(B) PAYMENTS TO SUPPLIER.—In the case of the purchase
or rental of an upgraded item under subparagraph (A)—
(i) the supplier shall receive payment under this
subsection with respect to such item as if such item
were a standard item; and
(ii) the individual purchasing or renting the item
shall pay the supplier an amount equal to the dif-
ference between the supplier’s charge and the amount
under clause (i).
In no event may the supplier’s charge for an upgraded
item exceed the applicable fee schedule amount (if any) for
such item.
(C) CONSUMER PROTECTION SAFEGUARDS.—Any regula-
tions under subparagraph (A) shall provide for consumer
protection standards with respect to the furnishing of up-
graded equipment under subparagraph (A). Such regula-
tions shall provide for—
(i) determination of fair market prices with respect
to an upgraded item;
(ii) full disclosure of the availability and price of
standard items and proof of receipt of such disclosure
information by the beneficiary before the furnishing of
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the upgraded item;
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(iii) conditions of participation for suppliers in the
billing arrangement;
(iv) sanctions of suppliers who are determined to en-
gage in coercive or abusive practices, including exclu-
sion; and
(v) such other safeguards as the Secretary deter-
mines are necessary.
(20) IDENTIFICATION OF QUALITY STANDARDS.—
(A) IN GENERAL.—Subject to subparagraph (C), the Sec-
retary shall establish and implement quality standards for
suppliers of items and services described in subparagraph
(D) to be applied by recognized independent accreditation
organizations (as designated under subparagraph (B)) and
with which such suppliers shall be required to comply in
order to—
(i) furnish any such item or service for which pay-
ment is made under this part; and
(ii) receive or retain a provider or supplier number
used to submit claims for reimbursement for any such
item or service for which payment may be made under
this title.
(B) DESIGNATION OF INDEPENDENT ACCREDITATION ORGA-
NIZATIONS.—Not later than the date that is 1 year after
the date on which the Secretary implements the quality
standards under subparagraph (A), notwithstanding sec-
tion 1865(a), the Secretary shall designate and approve
one or more independent accreditation organizations for
purposes of such subparagraph.
(C) QUALITY STANDARDS.—The quality standards de-
scribed in subparagraph (A) may not be less stringent than
the quality standards that would otherwise apply if this
paragraph did not apply and shall include consumer serv-
ices standards.
(D) ITEMS AND SERVICES DESCRIBED.—The items and
services described in this subparagraph are the following
items and services, as the Secretary determines appro-
priate:
(i) Covered items (as defined in paragraph (13)) for
which payment may otherwise be made under this
subsection.
(ii) Prosthetic devices and orthotics and prosthetics
described in section 1834(h)(4).
(iii) Items and services described in section
1842(s)(2).
(iv) Lymphedema compression treatment items (as
defined in section 1861(lll)).
(E) IMPLEMENTATION.—The Secretary may establish by
program instruction or otherwise the quality standards
under this paragraph, including subparagraph (F), after
consultation with representatives of relevant parties. Such
standards shall be applied prospectively and shall be pub-
lished on the Internet website of the Centers for Medicare
& Medicaid Services.
(F) APPLICATION OF ACCREDITATION REQUIREMENT.—In
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implementing quality standards under this paragraph—
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95
(i) subject to clause (ii) and subparagraph (G), the
Secretary shall require suppliers furnishing items and
services described in subparagraph (D) on or after Oc-
tober 1, 2009, directly or as a subcontractor for an-
other entity, to have submitted to the Secretary evi-
dence of accreditation by an accreditation organization
designated under subparagraph (B) as meeting appli-
cable quality standards, except that the Secretary
shall not require under this clause pharmacies to ob-
tain such accreditation before January 1, 2010, except
that the Secretary shall not require a pharmacy to
have submitted to the Secretary such evidence of ac-
creditation prior to January 1, 2011; and
(ii) in applying such standards and the accreditation
requirement of clause (i) with respect to eligible pro-
fessionals (as defined in section 1848(k)(3)(B)), and in-
cluding such other persons, such as orthotists and
prosthetists, as specified by the Secretary, furnishing
such items and services—
(I) such standards and accreditation require-
ment shall not apply to such professionals and
persons unless the Secretary determines that the
standards being applied are designed specifically
to be applied to such professionals and persons;
and
(II) the Secretary may exempt such profes-
sionals and persons from such standards and re-
quirement if the Secretary determines that licens-
ing, accreditation, or other mandatory quality re-
quirements apply to such professionals and per-
sons with respect to the furnishing of such items
and services.
(G) APPLICATION OF ACCREDITATION REQUIREMENT TO
CERTAIN PHARMACIES.—
(i) IN GENERAL.—With respect to items and services
furnished on or after January 1, 2011, in imple-
menting quality standards under this paragraph—
(I) subject to subclause (II), in applying such
standards and the accreditation requirement of
subparagraph (F)(i) with respect to pharmacies
described in clause (ii) furnishing such items and
services, such standards and accreditation re-
quirement shall not apply to such pharmacies;
and
(II) the Secretary may apply to such pharmacies
an alternative accreditation requirement estab-
lished by the Secretary if the Secretary deter-
mines such alternative accreditation requirement
is more appropriate for such pharmacies.
(ii) PHARMACIES DESCRIBED.—A pharmacy described
in this clause is a pharmacy that meets each of the fol-
lowing criteria:
(I) The total billings by the pharmacy for such
items and services under this title are less than 5
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percent of total pharmacy sales, as determined
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based on the average total pharmacy sales for the
previous 3 calendar years, 3 fiscal years, or other
yearly period specified by the Secretary.
(II) The pharmacy has been enrolled under sec-
tion 1866(j) as a supplier of durable medical
equipment, prosthetics, orthotics, and supplies,
has been issued (which may include the renewal
of) a provider number for at least 5 years, and for
which a final adverse action (as defined in section
424.57(a) of title 42, Code of Federal Regulations)
has not been imposed in the past 5 years.
(III) The pharmacy submits to the Secretary an
attestation, in a form and manner, and at a time,
specified by the Secretary, that the pharmacy
meets the criteria described in subclauses (I) and
(II). Such attestation shall be subject to section
1001 of title 18, United States Code.
(IV) The pharmacy agrees to submit materials
as requested by the Secretary, or during the
course of an audit conducted on a random sample
of pharmacies selected annually, to verify that the
pharmacy meets the criteria described in sub-
clauses (I) and (II). Materials submitted under the
preceding sentence shall include a certification by
an accountant on behalf of the pharmacy or the
submission of tax returns filed by the pharmacy
during the relevant periods, as requested by the
Secretary.
(21) SPECIAL PAYMENT RULE FOR SPECIFIED ITEMS AND SUP-
PLIES.—
(A) IN GENERAL.—Notwithstanding the preceding provi-
sions of this subsection, for specified items and supplies
(described in subparagraph (B)) furnished during 2005, the
payment amount otherwise determined under this sub-
section for such specified items and supplies shall be re-
duced by the percentage difference between—
(i) the amount of payment otherwise determined for
the specified item or supply under this subsection for
2002, and
(ii) the amount of payment for the specified item or
supply under chapter 89 of title 5, United States Code,
as identified in the column entitled ‘‘Median FEHP
Price’’ in the table entitled ‘‘SUMMARY OF MEDI-
CARE PRICES COMPARED TO VA, MEDICAID, RE-
TAIL, AND FEHP PRICES FOR 16 ITEMS’’ included
in the Testimony of the Inspector General before the
Senate Committee on Appropriations, June 12, 2002,
or any subsequent report by the Inspector General.
(B) SPECIFIED ITEM OR SUPPLY DESCRIBED.—For purposes
of subparagraph (A), a specified item or supply means oxy-
gen and oxygen equipment, standard wheelchairs (includ-
ing standard power wheelchairs), nebulizers, diabetic sup-
plies consisting of lancets and testing strips, hospital beds,
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and air mattresses, but only if the HCPCS code for the
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item or supply is identified in a table referred to in sub-
paragraph (A)(ii).
(C) APPLICATION OF UPDATE TO SPECIAL PAYMENT
AMOUNT.—The covered item update under paragraph (14)
for specified items and supplies for 2006 and each subse-
quent year shall be applied to the payment amount under
subparagraph (A) unless payment is made for such items
and supplies under section 1847.
(22) SPECIAL PAYMENT RULE FOR DIABETIC SUPPLIES.—Not-
withstanding the preceding provisions of this subsection, for
purposes of determining the payment amount under this sub-
section for diabetic supplies furnished on or after the first day
of the calendar quarter during 2013 that is at least 30 days
after the date of the enactment of this paragraph and before
the date described in paragraph (1)(H)(ii), the Secretary shall
recalculate and apply the covered item update under para-
graph (14) as if subparagraph (J)(i) of such paragraph was
amended by striking ‘‘but only if furnished through mail
order’’.
(b) FEE SCHEDULES FOR RADIOLOGIST SERVICES.—
(1) DEVELOPMENT.—The Secretary shall develop—
(A) a relative value scale to serve as the basis for the
payment for radiologist services under this part, and
(B) using such scale and appropriate conversion factors
and subject to subsection (c)(1)(A), fee schedules (on a re-
gional, statewide, locality, or carrier service area basis) for
payment for radiologist services under this part, to be im-
plemented for such services furnished during 1989.
(2) CONSULTATION.—In carrying out paragraph (1), the Sec-
retary shall regularly consult closely with the Physician Pay-
ment Review Commission, the American College of Radiology,
and other organizations representing physicians or suppliers
who furnish radiologist services and shall share with them the
data and data analysis being used to make the determinations
under paragraph (1), including data on variations in current
medicare payments by geographic area, and by service and
physician specialty.
(3) CONSIDERATIONS.—In developing the relative value scale
and fee schedules under paragraph (1), the Secretary—
(A) shall take into consideration variations in the cost of
furnishing such services among geographic areas and
among different sites where services are furnished, and
(B) may also take into consideration such other factors
respecting the manner in which physicians in different
specialties furnish such services as may be appropriate to
assure that payment amounts are equitable and designed
to promote effective and efficient provision of radiologist
services by physicians in the different specialties.
(4) SAVINGS.—
(A) BUDGET NEUTRAL FEE SCHEDULES.—The Secretary
shall develop preliminary fee schedules for 1989, which are
designed to result in the same amount of aggregate pay-
ments (net of any coinsurance and deductibles under sec-
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tions 1833(a)(1)(J) and 1833(b)) for radiologist services fur-
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98
nished in 1989 as would have been made if this subsection
had not been enacted.
(B) INITIAL SAVINGS.—The fee schedules established for
payment purposes under this subsection for services fur-
nished in 1989 shall be 97 percent of the amounts per-
mitted under these preliminary fee schedules developed
under subparagraph (A).
(C) 1990 FEE SCHEDULES.—For radiologist services (other
than portable X-ray services) furnished under this part
during 1990, after March 31 of such year, the conversion
factors used under this subsection shall be 96 percent of
the conversion factors that applied under this subsection
as of December 31, 1989.
(D) 1991 FEE SCHEDULES.—For radiologist services (other
than portable X-ray services) furnished under this part
during 1991, the conversion factors used in a locality
under this subsection shall, subject to clause (vii), be re-
duced to the adjusted conversion factor for the locality de-
termined as follows:
(i) NATIONAL WEIGHTED AVERAGE CONVERSION FAC-
TOR.—The Secretary shall estimate the national
weighted average of the conversion factors used under
this subsection for services furnished during 1990 be-
ginning on April 1, using the best available data.
(ii) REDUCED NATIONAL WEIGHTED AVERAGE.—The
national weighted average estimated under clause (i)
shall be reduced by 13 percent.
(iii) COMPUTATION OF 1990 LOCALITY INDEX RELATIVE
TO NATIONAL AVERAGE.—The Secretary shall establish
an index which reflects, for each locality, the ratio of
the conversion factor used in the locality under this
subsection to the national weighted average estimated
under clause (i).
(iv) ADJUSTED CONVERSION FACTOR.—The adjusted
conversion factor for the professional or technical com-
ponent of a service in a locality is the sum of 1⁄2 of the
locally-adjusted amount determined under clause (v)
and 1⁄2 of the GPCI-adjusted amount determined
under clause (vi).
(v) LOCALLY-ADJUSTED AMOUNT.—For purposes of
clause (iv), the locally adjusted amount determined
under this clause is the product of (I) the national
weighted average conversion factor computed under
clause (ii), and (II) the index value established under
clause (iii) for the locality.
(vi) GPCI-ADJUSTED AMOUNT.—For purposes of
clause (iv), the GPCI-adjusted amount determined
under this clause is the sum of—
(I) the product of (a) the portion of the reduced
national weighted average conversion factor com-
puted under clause (ii) which is attributable to
physician work and (b) the geographic work index
value for the locality (specified in Addendum C to
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the Model Fee Schedule for Physician Services
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(published on September 4, 1990, 55 Federal Reg-
ister pp. 36238–36243)); and
(II) the product of (a) the remaining portion of
the reduced national weighted average conversion
factor computed under clause (ii), and (b) the geo-
graphic practice cost index value specified in sec-
tion 1842(b)(14)(C)(iv) for the locality.
In applying this clause with respect to the professional
component of a service, 80 percent of the conversion
factor shall be considered to be attributable to physi-
cian work and with respect to the technical component
of the service, 0 percent shall be considered to be at-
tributable to physician work.
(vii) LIMITS ON CONVERSION FACTOR.—The conver-
sion factor to be applied to a locality to the profes-
sional or technical component of a service shall not be
reduced under this subparagraph by more than 9.5
percent below the conversion factor applied in the lo-
cality under subparagraph (C) to such component, but
in no case shall the conversion factor be less than 60
percent of the national weighted average of the con-
version factors (computed under clause (i)).
(E) RULE FOR CERTAIN SCANNING SERVICES.—In the case
of the technical components of magnetic resonance imaging
(MRI) services and computer assisted tomography (CAT)
services furnished after December 31, 1990, the amount
otherwise payable shall be reduced by 10 percent.
(F) SUBSEQUENT UPDATING.—For radiologist services fur-
nished in subsequent years, the fee schedules shall be the
schedules for the previous year updated by the percentage
increase in the MEI (as defined in section 1842(i)(3)) for
the year.
(G) NONPARTICIPATING PHYSICIANS AND SUPPLIERS.—
Each fee schedule so established shall provide that the
payment rate recognized for nonparticipating physicians
and suppliers is equal to the appropriate percent (as de-
fined in section 1842(b)(4)(A)(iv)) of the payment rate rec-
ognized for participating physicians and suppliers.
(5) LIMITING CHARGES OF NONPARTICIPATING PHYSICIANS AND
SUPPLIERS.—
(A) IN GENERAL.—In the case of radiologist services fur-
nished after January 1, 1989, for which payment is made
under a fee schedule under this subsection, if a nonpartici-
pating physician or supplier furnishes the service to an in-
dividual entitled to benefits under this part, the physician
or supplier may not charge the individual more than the
limiting charge (as defined in subparagraph (B)).
(B) LIMITING CHARGE DEFINED.—In subparagraph (A),
the term ‘‘limiting charge’’ means, with respect to a service
furnished—
(i) in 1989, 125 percent of the amount specified for
the service in the appropriate fee schedule established
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under paragraph (1),
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(ii) in 1990, 120 percent of the amount specified for
the service in the appropriate fee schedule established
under paragraph (1), and
(iii) after 1990, 115 percent of the amount specified
for the service in the appropriate fee schedule estab-
lished under paragraph (1).
(C) ENFORCEMENT.—If a physician or supplier knowingly
and willfully bills in violation of subparagraph (A), the
Secretary may apply sanctions against such physician or
supplier in accordance with section 1842(j)(2) in the same
manner as such sanctions may apply to a physician.
(6) RADIOLOGIST SERVICES DEFINED.—For the purposes of
this subsection and section 1833(a)(1)(J), the term ‘‘radiologist
services’’ only includes radiology services performed by, or
under the direction or supervision of, a physician—
(A) who is certified, or eligible to be certified, by the
American Board of Radiology, or
(B) for whom radiology services account for at least 50
percent of the total amount of charges made under this
part.
(c) PAYMENT AND STANDARDS FOR SCREENING MAMMOGRAPHY.—
(1) IN GENERAL.—With respect to expenses incurred for
screening mammography (as defined in section 1861(jj)), pay-
ment may be made only—
(A) for screening mammography conducted consistent
with the frequency permitted under paragraph (2); and
(B) if the screening mammography is conducted by a fa-
cility that has a certificate (or provisional certificate)
issued under section 354 of the Public Health Service Act.
(2) FREQUENCY COVERED.—
(A) IN GENERAL.—Subject to revision by the Secretary
under subparagraph (B)—
(i) no payment may be made under this part for
screening mammography performed on a woman
under 35 years of age;
(ii) payment may be made under this part for only
one screening mammography performed on a woman
over 34 years of age, but under 40 years of age; and
(iii) in the case of a woman over 39 years of age,
payment may not be made under this part for screen-
ing mammography performed within 11 months fol-
lowing the month in which a previous screening mam-
mography was performed.
(B) REVISION OF FREQUENCY.—
(i) REVIEW.—The Secretary, in consultation with the
Director of the National Cancer Institute, shall review
periodically the appropriate frequency for performing
screening mammography, based on age and such other
factors as the Secretary believes to be pertinent.
(ii) REVISION OF FREQUENCY.—The Secretary, taking
into consideration the review made under clause (i),
may revise from time to time the frequency with
which screening mammography may be paid for under
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this subsection.
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(d) FREQUENCY LIMITS AND PAYMENT FOR COLORECTAL CANCER
SCREENING TESTS.—
(1) SCREENING FECAL-OCCULT BLOOD TESTS.—
(A) PAYMENT AMOUNT.—The payment amount for
colorectal cancer screening tests consisting of screening
fecal-occult blood tests is equal to the payment amount es-
tablished for diagnostic fecal-occult blood tests under sec-
tion 1833(h).
(B) FREQUENCY LIMIT.—No payment may be made under
this part for a colorectal cancer screening test consisting of
a screening fecal-occult blood test—
(i) if the individual is under 50 years of age; or
(ii) if the test is performed within the 11 months
after a previous screening fecal-occult blood test.
(2) SCREENING FLEXIBLE SIGMOIDOSCOPIES.—
(A) FEE SCHEDULE.—With respect to colorectal cancer
screening tests consisting of screening flexible
sigmoidoscopies, payment under section 1848 shall be con-
sistent with payment under such section for similar or re-
lated services.
(B) PAYMENT LIMIT.—In the case of screening flexible
sigmoidoscopy services, payment under this part shall not
exceed such amount as the Secretary specifies, based upon
the rates recognized for diagnostic flexible sigmoidoscopy
services.
(C) FACILITY PAYMENT LIMIT.—
(i) IN GENERAL.—Notwithstanding subsections
(i)(2)(A) and (t) of section 1833, in the case of screen-
ing flexible sigmoidoscopy services furnished on or
after January 1, 1999, that—
(I) in accordance with regulations, may be per-
formed in an ambulatory surgical center and for
which the Secretary permits ambulatory surgical
center payments under this part, and
(II) are performed in an ambulatory surgical
center or hospital outpatient department,
payment under this part shall be based on the lesser
of the amount under the fee schedule that would apply
to such services if they were performed in a hospital
outpatient department in an area or the amount under
the fee schedule that would apply to such services if
they were performed in an ambulatory surgical center
in the same area.
(ii) LIMITATION ON COINSURANCE.—Subject to section
1833(a)(1)(Y), but notwithstanding any other provision
of this title, in the case of a beneficiary who receives
the services described in clause (i)—
(I) in computing the amount of any applicable
copayment, the computation of such coinsurance
shall be based upon the fee schedule under which
payment is made for the services, and
(II) the amount of such coinsurance is equal to
25 percent of the payment amount under the fee
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schedule described in subclause (I).
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(D) SPECIAL RULE FOR DETECTED LESIONS.—Subject to
section 1833(a)(1)(Y), if during the course of such screening
flexible sigmoidoscopy, a lesion or growth is detected which
results in a biopsy or removal of the lesion or growth, pay-
ment under this part shall not be made for the screening
flexible sigmoidoscopy but shall be made for the procedure
classified as a flexible sigmoidoscopy with such biopsy or
removal.
(E) FREQUENCY LIMIT.—No payment may be made under
this part for a colorectal cancer screening test consisting of
a screening flexible sigmoidoscopy—
(i) if the individual is under 50 years of age; or
(ii) if the procedure is performed within the 47
months after a previous screening flexible
sigmoidoscopy or, in the case of an individual who is
not at high risk for colorectal cancer, if the procedure
is performed within the 119 months after a previous
screening colonoscopy.
(3) SCREENING COLONOSCOPY.—
(A) FEE SCHEDULE.—With respect to colorectal cancer
screening test consisting of a screening colonoscopy, pay-
ment under section 1848 shall be consistent with payment
amounts under such section for similar or related services.
(B) PAYMENT LIMIT.—In the case of screening
colonoscopy services, payment under this part shall not ex-
ceed such amount as the Secretary specifies, based upon
the rates recognized for diagnostic colonoscopy services.
(C) FACILITY PAYMENT LIMIT.—
(i) IN GENERAL.—Notwithstanding subsections
(i)(2)(A) and (t) of section 1833, in the case of screen-
ing colonoscopy services furnished on or after January
1, 1999, that are performed in an ambulatory surgical
center or a hospital outpatient department, payment
under this part shall be based on the lesser of the
amount under the fee schedule that would apply to
such services if they were performed in a hospital out-
patient department in an area or the amount under
the fee schedule that would apply to such services if
they were performed in an ambulatory surgical center
in the same area.
(ii) LIMITATION ON COINSURANCE.—Subject to section
1833(a)(1)(Y), but notwithstanding any other provision
of this title, in the case of a beneficiary who receives
the services described in clause (i)—
(I) in computing the amount of any applicable
coinsurance, the computation of such coinsurance
shall be based upon the fee schedule under which
payment is made for the services, and
(II) the amount of such coinsurance is equal to
25 percent of the payment amount under the fee
schedule described in subclause (I).
(D) SPECIAL RULE FOR DETECTED LESIONS.—Subject to
section 1833(a)(1)(Y), if during the course of such screening
colonoscopy, a lesion or growth is detected which results in
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a biopsy or removal of the lesion or growth, payment under
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103
this part shall not be made for the screening colonoscopy
but shall be made for the procedure classified as a
colonoscopy with such biopsy or removal.
(E) FREQUENCY LIMIT.—No payment may be made under
this part for a colorectal cancer screening test consisting of
a screening colonoscopy for individuals at high risk for
colorectal cancer if the procedure is performed within the
23 months after a previous screening colonoscopy or for
other individuals if the procedure is performed within the
119 months after a previous screening colonoscopy or with-
in 47 months after a previous screening flexible
sigmoidoscopy.
(e) ACCREDITATION REQUIREMENT FOR ADVANCED DIAGNOSTIC IM-
AGING SERVICES.—
(1) IN GENERAL.—
(A) IN GENERAL.—Beginning with January 1, 2012, with
respect to the technical component of advanced diagnostic
imaging services for which payment is made under the fee
schedule established under section 1848(b) and that are
furnished by a supplier, payment may only be made if
such supplier is accredited by an accreditation organiza-
tion designated by the Secretary under paragraph (2)(B)(i).
(B) ADVANCED DIAGNOSTIC IMAGING SERVICES DEFINED.—
In this subsection, the term ‘‘advanced diagnostic imaging
services’’ includes—
(i) diagnostic magnetic resonance imaging, computed
tomography, and nuclear medicine (including positron
emission tomography); and
(ii) such other diagnostic imaging services, including
services described in section 1848(b)(4)(B) (excluding
X-ray, ultrasound, and fluoroscopy), as specified by the
Secretary in consultation with physician specialty or-
ganizations and other stakeholders.
(C) SUPPLIER DEFINED.—In this subsection, the term
‘‘supplier’’ has the meaning given such term in section
1861(d).
(2) ACCREDITATION ORGANIZATIONS.—
(A) FACTORS FOR DESIGNATION OF ACCREDITATION ORGA-
NIZATIONS.—The Secretary shall consider the following fac-
tors in designating accreditation organizations under sub-
paragraph (B)(i) and in reviewing and modifying the list of
accreditation organizations designated pursuant to sub-
paragraph (C):
(i) The ability of the organization to conduct timely
reviews of accreditation applications.
(ii) Whether the organization has established a proc-
ess for the timely integration of new advanced diag-
nostic imaging services into the organization’s accredi-
tation program.
(iii) Whether the organization uses random site vis-
its, site audits, or other strategies for ensuring accred-
ited suppliers maintain adherence to the criteria de-
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scribed in paragraph (3).
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(iv) The ability of the organization to take into ac-
count the capacities of suppliers located in a rural
area (as defined in section 1886(d)(2)(D)).
(v) Whether the organization has established rea-
sonable fees to be charged to suppliers applying for ac-
creditation.
(vi) Such other factors as the Secretary determines
appropriate.
(B) DESIGNATION.—Not later than January 1, 2010, the
Secretary shall designate organizations to accredit sup-
pliers furnishing the technical component of advanced di-
agnostic imaging services. The list of accreditation organi-
zations so designated may be modified pursuant to sub-
paragraph (C).
(C) REVIEW AND MODIFICATION OF LIST OF ACCREDITA-
TION ORGANIZATIONS.—
(i) IN GENERAL.—The Secretary shall review the list
of accreditation organizations designated under sub-
paragraph (B) taking into account the factors under
subparagraph (A). Taking into account the results of
such review, the Secretary may, by regulation, modify
the list of accreditation organizations designated
under subparagraph (B).
(ii) SPECIAL RULE FOR ACCREDITATIONS DONE PRIOR
TO REMOVAL FROM LIST OF DESIGNATED ACCREDITATION
ORGANIZATIONS.—In the case where the Secretary re-
moves an organization from the list of accreditation or-
ganizations designated under subparagraph (B), any
supplier that is accredited by the organization during
the period beginning on the date on which the organi-
zation is designated as an accreditation organization
under subparagraph (B) and ending on the date on
which the organization is removed from such list shall
be considered to have been accredited by an organiza-
tion designated by the Secretary under subparagraph
(B) for the remaining period such accreditation is in
effect.
(3) CRITERIA FOR ACCREDITATION.—The Secretary shall estab-
lish procedures to ensure that the criteria used by an accredi-
tation organization designated under paragraph (2)(B) to
evaluate a supplier that furnishes the technical component of
advanced diagnostic imaging services for the purpose of accred-
itation of such supplier is specific to each imaging modality.
Such criteria shall include—
(A) standards for qualifications of medical personnel who
are not physicians and who furnish the technical compo-
nent of advanced diagnostic imaging services;
(B) standards for qualifications and responsibilities of
medical directors and supervising physicians, including
standards that recognize the considerations described in
paragraph (4);
(C) procedures to ensure that equipment used in fur-
nishing the technical component of advanced diagnostic
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imaging services meets performance specifications;
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105
(D) standards that require the supplier have procedures
in place to ensure the safety of persons who furnish the
technical component of advanced diagnostic imaging serv-
ices and individuals to whom such services are furnished;
(E) standards that require the establishment and main-
tenance of a quality assurance and quality control program
by the supplier that is adequate and appropriate to ensure
the reliability, clarity, and accuracy of the technical qual-
ity of diagnostic images produced by such supplier; and
(F) any other standards or procedures the Secretary de-
termines appropriate.
(4) RECOGNITION IN STANDARDS FOR THE EVALUATION OF
MEDICAL DIRECTORS AND SUPERVISING PHYSICIANS.—The stand-
ards described in paragraph (3)(B) shall recognize whether a
medical director or supervising physician—
(A) in a particular specialty receives training in ad-
vanced diagnostic imaging services in a residency program;
(B) has attained, through experience, the necessary ex-
pertise to be a medical director or a supervising physician;
(C) has completed any continuing medical education
courses relating to such services; or
(D) has met such other standards as the Secretary deter-
mines appropriate.
(5) RULE FOR ACCREDITATIONS MADE PRIOR TO DESIGNA-
TION.—In the case of a supplier that is accredited before Janu-
ary 1, 2010, by an accreditation organization designated by the
Secretary under paragraph (2)(B) as of January 1, 2010, such
supplier shall be considered to have been accredited by an or-
ganization designated by the Secretary under such paragraph
as of January 1, 2012, for the remaining period such accredita-
tion is in effect.
(f) REDUCTION IN PAYMENTS FOR PHYSICIAN PATHOLOGY SERVICES
DURING 1991.—
(1) IN GENERAL.—For physician pathology services furnished
under this part during 1991, the prevailing charges used in a
locality under this part shall be 7 percent below the prevailing
charges used in the locality under this part in 1990 after
March 31.
(2) LIMITATION.—The prevailing charge for the technical and
professional components of an physician pathology service fur-
nished by a physician through an independent laboratory shall
not be reduced pursuant to paragraph (1) to the extent that
such reduction would reduce such prevailing charge below 115
percent of the prevailing charge for the professional component
of such service when furnished by a hospital-based physician
in the same locality. For purposes of the preceding sentence,
an independent laboratory is a laboratory that is independent
of a hospital and separate from the attending or consulting
physicians’ office.
(g) PAYMENT FOR OUTPATIENT CRITICAL ACCESS HOSPITAL SERV-
ICES.—
(1) IN GENERAL.—The amount of payment for outpatient crit-
ical access hospital services of a critical access hospital is equal
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to 101 percent of the reasonable costs of the hospital in pro-
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viding such services, unless the hospital makes the election
under paragraph (2).
(2) ELECTION OF COST-BASED HOSPITAL OUTPATIENT SERVICE
PAYMENT PLUS FEE SCHEDULE FOR PROFESSIONAL SERVICES.—A
critical access hospital may elect to be paid for outpatient crit-
ical access hospital services amounts equal to the sum of the
following, less the amount that such hospital may charge as
described in section 1866(a)(2)(A):
(A) FACILITY FEE.—With respect to facility services, not
including any services for which payment may be made
under subparagraph (B), 101 percent of the reasonable
costs of the critical access hospital in providing such serv-
ices.
(B) FEE SCHEDULE FOR PROFESSIONAL SERVICES.—With
respect to professional services otherwise included within
outpatient critical access hospital services, 115 percent of
such amounts as would otherwise be paid under this part
if such services were not included in outpatient critical ac-
cess hospital services. Subsections (x) and (y) of section
1833 shall not be taken into account in determining the
amounts that would otherwise be paid pursuant to the pre-
ceding sentence.
The Secretary may not require, as a condition for applying sub-
paragraph (B) with respect to a critical access hospital, that
each physician or other practitioner providing professional
services in the hospital must assign billing rights with respect
to such services, except that such subparagraph shall not apply
to those physicians and practitioners who have not assigned
such billing rights.
(3) DISREGARDING CHARGES.—The payment amounts under
this subsection shall be determined without regard to the
amount of the customary or other charge.
(4) TREATMENT OF CLINICAL DIAGNOSTIC LABORATORY SERV-
ICES.—No coinsurance, deductible, copayment, or other cost-
sharing otherwise applicable under this part shall apply with
respect to clinical diagnostic laboratory services furnished as
an outpatient critical access hospital service. Nothing in this
title shall be construed as providing for payment for clinical di-
agnostic laboratory services furnished as part of outpatient
critical access hospital services, other than on the basis de-
scribed in this subsection. For purposes of the preceding sen-
tence and section 1861(mm)(3), clinical diagnostic laboratory
services furnished by a critical access hospital shall be treated
as being furnished as part of outpatient critical access services
without regard to whether the individual with respect to whom
such services are furnished is physically present in the critical
access hospital, or in a skilled nursing facility or a clinic (in-
cluding a rural health clinic) that is operated by a critical ac-
cess hospital, at the time the specimen is collected.
(5) COVERAGE OF COSTS FOR CERTAIN EMERGENCY ROOM ON-
CALL PROVIDERS.—In determining the reasonable costs of out-
patient critical access hospital services under paragraphs (1)
and (2)(A), the Secretary shall recognize as allowable costs,
amounts (as defined by the Secretary) for reasonable com-
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pensation and related costs for physicians, physician assist-
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ants, nurse practitioners, and clinical nurse specialists who are
on-call (as defined by the Secretary) to provide emergency serv-
ices but who are not present on the premises of the critical ac-
cess hospital involved, and are not otherwise furnishing serv-
ices covered under this title and are not on-call at any other
provider or facility.
(h) PAYMENT FOR PROSTHETIC DEVICES AND ORTHOTICS AND
PROSTHETICS.—
(1) GENERAL RULE FOR PAYMENT.—
(A) IN GENERAL.—Payment under this subsection for
prosthetic devices and orthotics and prosthetics shall be
made in a lump-sum amount for the purchase of the item
in an amount equal to 80 percent of the payment basis de-
scribed in subparagraph (B).
(B) PAYMENT BASIS.—Except as provided in subpara-
graphs (C), (E), and (H)(i), the payment basis described in
this subparagraph is the lesser of—
(i) the actual charge for the item; or
(ii) the amount recognized under paragraph (2) as
the purchase price for the item.
(C) EXCEPTION FOR CERTAIN PUBLIC HOME HEALTH AGEN-
CIES.—Subparagraph (B)(i) shall not apply to an item fur-
nished by a public home health agency (or by another
home health agency which demonstrates to the satisfaction
of the Secretary that a significant portion of its patients
are low income) free of charge or at nominal charges to the
public.
(D) EXCLUSIVE PAYMENT RULE.—Subject to subparagraph
(H)(ii), this subsection shall constitute the exclusive provi-
sion of this title for payment for prosthetic devices,
orthotics, and prosthetics under this part or under part A
to a home health agency.
(E) EXCEPTION FOR CERTAIN ITEMS.—Payment for ostomy
supplies, tracheostomy supplies, and urologicals shall be
made in accordance with subparagraphs (B) and (C) of sec-
tion 1834(a)(2).
(F) SPECIAL PAYMENT RULES FOR CERTAIN PROSTHETICS
AND CUSTOM-FABRICATED ORTHOTICS.—
(i) IN GENERAL.—No payment shall be made under
this subsection for an item of custom-fabricated
orthotics described in clause (ii) or for an item of pros-
thetics unless such item is—
(I) furnished by a qualified practitioner; and
(II) fabricated by a qualified practitioner or a
qualified supplier at a facility that meets such cri-
teria as the Secretary determines appropriate.
(ii) DESCRIPTION OF CUSTOM-FABRICATED ITEM.—
(I) IN GENERAL.—An item described in this
clause is an item of custom-fabricated orthotics
that requires education, training, and experience
to custom-fabricate and that is included in a list
established by the Secretary in subclause (II).
Such an item does not include shoes and shoe in-
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serts.
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(II) LIST OF ITEMS.—The Secretary, in consulta-
tion with appropriate experts in orthotics (includ-
ing national organizations representing manufac-
turers of orthotics), shall establish and update as
appropriate a list of items to which this subpara-
graph applies. No item may be included in such
list unless the item is individually fabricated for
the patient over a positive model of the patient.
(iii) QUALIFIED PRACTITIONER DEFINED.—In this sub-
paragraph, the term ‘‘qualified practitioner’’ means a
physician or other individual who—
(I) is a qualified physical therapist or a qualified
occupational therapist;
(II) in the case of a State that provides for the
licensing of orthotics and prosthetics, is licensed
in orthotics or prosthetics by the State in which
the item is supplied; or
(III) in the case of a State that does not provide
for the licensing of orthotics and prosthetics, is
specifically trained and educated to provide or
manage the provision of prosthetics and custom-
designed or -fabricated orthotics, and is certified
by the American Board for Certification in
Orthotics and Prosthetics, Inc. or by the Board for
Orthotist/Prosthetist Certification, or is
credentialed and approved by a program that the
Secretary determines, in consultation with appro-
priate experts in orthotics and prosthetics, has
training and education standards that are nec-
essary to provide such prosthetics and orthotics.
(iv) QUALIFIED SUPPLIER DEFINED.—In this subpara-
graph, the term ‘‘qualified supplier’’ means any entity
that is accredited by the American Board for Certifi-
cation in Orthotics and Prosthetics, Inc. or by the
Board for Orthotist/Prosthetist Certification, or accred-
ited and approved by a program that the Secretary de-
termines has accreditation and approval standards
that are essentially equivalent to those of such Board.
(G) REPLACEMENT OF PROSTHETIC DEVICES AND PARTS.—
(i) IN GENERAL.—Payment shall be made for the re-
placement of prosthetic devices which are artificial
limbs, or for the replacement of any part of such de-
vices, without regard to continuous use or useful life-
time restrictions if an ordering physician determines
that the provision of a replacement device, or a re-
placement part of such a device, is necessary because
of any of the following:
(I) A change in the physiological condition of the
patient.
(II) An irreparable change in the condition of
the device, or in a part of the device.
(III) The condition of the device, or the part of
the device, requires repairs and the cost of such
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repairs would be more than 60 percent of the cost
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of a replacement device, or, as the case may be, of
the part being replaced.
(ii) CONFIRMATION MAY BE REQUIRED IF DEVICE OR
PART BEING REPLACED IS LESS THAN 3 YEARS OLD.—If
a physician determines that a replacement device, or
a replacement part, is necessary pursuant to clause
(i)—
(I) such determination shall be controlling; and
(II) such replacement device or part shall be
deemed to be reasonable and necessary for pur-
poses of section 1862(a)(1)(A);
except that if the device, or part, being replaced is less
than 3 years old (calculated from the date on which
the beneficiary began to use the device or part), the
Secretary may also require confirmation of necessity of
the replacement device or replacement part, as the
case may be.
(H) APPLICATION OF COMPETITIVE ACQUISITION TO
ORTHOTICS; LIMITATION OF INHERENT REASONABLENESS AU-
THORITY.—In the case of orthotics described in paragraph
(2)(C) of section 1847(a) furnished on or after January 1,
2011, subject to subsection (a)(1)(G), that are included in
a competitive acquisition program in a competitive acquisi-
tion area 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 competitive acquisition
program; and
(ii) subject to subsection (a)(1)(G), the Secretary may
use information on the payment determined under
such competitive acquisition programs to adjust the
payment amount otherwise recognized under subpara-
graph (B)(ii) for an area that is not a competitive ac-
quisition area under section 1847, and in the case of
such adjustment, paragraphs (8) and (9) of section
1842(b) shall not be applied.
(2) PURCHASE PRICE RECOGNIZED.—For purposes of para-
graph (1), the amount that is recognized under this paragraph
as the purchase price for prosthetic devices, orthotics, and
prosthetics is the amount described in subparagraph (C) of this
paragraph, determined as follows:
(A) COMPUTATION OF LOCAL PURCHASE PRICE.—Each car-
rier under section 1842 shall compute a base local pur-
chase price for the item as follows:
(i) The carrier shall compute a base local purchase
price for each item equal to the average reasonable
charge in the locality for the purchase of the item for
the 12-month period ending with June 1987.
(ii) The carrier shall compute a local purchase price,
with respect to the furnishing of each particular
item—
(I) in 1989 and 1990, equal to the base local
purchase price computed under clause (i) in-
creased by the percentage increase in the con-
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sumer price index for all urban consumers (United
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States city average) for the 6-month period ending
with December 1987, or
(II) in 1991, 1992 or 1993, equal to the local
purchase price computed under this clause for the
previous year increased by the applicable percent-
age increase for the year.
(B) COMPUTATION OF REGIONAL PURCHASE PRICE.—With
respect to the furnishing of a particular item in each re-
gion (as defined by the Secretary), the Secretary shall com-
pute a regional purchase price—
(i) for 1992, equal to the average (weighted by rel-
ative volume of all claims among carriers) of the local
purchase prices for the carriers in the region computed
under subparagraph (A)(ii)(II) for the year, and
(ii) for each subsequent year, equal to the regional
purchase price computed under this subparagraph for
the previous year increased by the applicable percent-
age increase for the year.
(C) PURCHASE PRICE RECOGNIZED.—For purposes of para-
graph (1) and subject to subparagraph (D), the amount
that is recognized under this paragraph as the purchase
price for each item furnished—
(i) in 1989, 1990, or 1991, is 100 percent of the local
purchase price computed under subparagraph (A)(ii);
(ii) in 1992, is the sum of (I) 75 percent of the local
purchase price computed under subparagraph
(A)(ii)(II) for 1992, and (II) 25 percent of the regional
purchase price computed under subparagraph (B) for
1992;
(iii) in 1993, is the sum of (I) 50 percent of the local
purchase price computed under subparagraph
(A)(ii)(II) for 1993, and (II) 50 percent of the regional
purchase price computed under subparagraph (B) for
1993; and
(iv) in 1994 or a subsequent year, is the regional
purchase price computed under subparagraph (B) for
that year.
(D) RANGE ON AMOUNT RECOGNIZED.—The amount that
is recognized under subparagraph (C) as the purchase
price for an item furnished—
(i) in 1992, may not exceed 125 percent, and may
not be lower than 85 percent, of the average of the
purchase prices recognized under such subparagraph
for all the carrier service areas in the United States
in that year; and
(ii) in a subsequent year, may not exceed 120 per-
cent, and may not be lower than 90 percent, of the av-
erage of the purchase prices recognized under such
subparagraph for all the carrier service areas in the
United States in that year.
(3) APPLICABILITY OF CERTAIN PROVISIONS RELATING TO DURA-
BLE MEDICAL EQUIPMENT.—Paragraphs (12) and (17) and sub-
paragraphs (A) and (B) of paragraph (10) and paragraph (11)
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of subsection (a) shall apply to prosthetic devices, orthotics,
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and prosthetics in the same manner as such provisions apply
to covered items under such subsection.
(4) DEFINITIONS.—In this subsection—
(A) the term ‘‘applicable percentage increase’’ means—
(i) for 1991, 0 percent;
(ii) for 1992 and 1993, 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;
(iii) for 1994 and 1995, 0 percent;
(iv) for 1996 and 1997, 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;
(v) for each of the years 1998 through 2000, 1 per-
cent;
(vi) for 2001, the percentage increase in the con-
sumer price index for all urban consumers (U.S. city
average) for the 12-month period ending with June
2000;
(vii) for 2002, 1 percent;
(viii) for 2003, the percentage increase in the con-
sumer price index for all urban consumers (United
States city average) for the 12-month period ending
with June of the previous year;
(ix) for 2004, 2005, and 2006, 0 percent;
(x) for for each of 2007 through 2010, the percentage
increase in the consumer price index for all urban con-
sumers (United States city average) for the 12-month
period ending with June of the previous year; and
(xi) for 2011 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).
(B) the term ‘‘prosthetic devices’’ has the meaning given
such term in section 1861(s)(8), except that such term does
not include parenteral and enteral nutrition nutrients,
supplies, and equipment and does not include an
implantable item for which payment may be made under
section 1833(t); and
(C) the term ‘‘orthotics and prosthetics’’ has the meaning
given such term in section 1861(s)(9) (and includes shoes
described in section 1861(s)(12)), but does not include
intraocular lenses or medical supplies (including catheters,
catheter supplies, ostomy bags, and supplies related to
ostomy care) furnished by a home health agency under sec-
tion 1861(m)(5).
The application of subparagraph (A)(xi)(II) may result in the
applicable percentage increase under subparagraph (A) being
less than 0.0 for a year, and may result in payment rates
under this subsection for a year being less than such payment
ctelli on DSK11ZRN23PROD with REPORTS
rates for the preceding year.
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112
(5) DOCUMENTATION CREATED BY ORTHOTISTS AND
PROSTHETISTS.—For purposes of determining the reasonable-
ness and medical necessity of orthotics and prosthetics, docu-
mentation created by an orthotist or prosthetist shall be con-
sidered part of the individual’s medical record to support docu-
mentation created by eligible professionals described in section
1848(k)(3)(B).
(i) PAYMENT FOR SURGICAL DRESSINGS.—
(1) IN GENERAL.—Payment under this subsection for surgical
dressings (described in section 1861(s)(5)) shall be made in a
lump sum amount for the purchase of the item in an amount
equal to 80 percent of the lesser of—
(A) the actual charge for the item; or
(B) a payment amount determined in accordance with
the methodology described in subparagraphs (B) and (C) of
subsection (a)(2) (except that in applying such method-
ology, the national limited payment amount referred to in
such subparagraphs shall be initially computed based on
local payment amounts using average reasonable charges
for the 12-month period ending December 31, 1992, in-
creased by the covered item updates described in such sub-
section for 1993 and 1994).
(2) EXCEPTIONS.—Paragraph (1) shall not apply to surgical
dressings that are—
(A) furnished as an incident to a physician’s professional
service; or
(B) furnished by a home health agency.
(j) REQUIREMENTS FOR SUPPLIERS OF MEDICAL EQUIPMENT AND
SUPPLIES.—
(1) ISSUANCE AND RENEWAL OF SUPPLIER NUMBER.—
(A) PAYMENT.—Except as provided in subparagraph (C),
no payment may be made under this part after the date
of the enactment of the Social Security Act Amendments
of 1994 for items furnished by a supplier of medical equip-
ment and supplies unless such supplier obtains (and re-
news at such intervals as the Secretary may require) a
supplier number.
(B) STANDARDS FOR POSSESSING A SUPPLIER NUMBER.—A
supplier may not obtain a supplier number unless—
(i) for medical equipment and supplies furnished on
or after the date of the enactment of the Social Secu-
rity Act Amendments of 1994 and before January 1,
1996, the supplier meets standards prescribed by the
Secretary in regulations issued on June 18, 1992; and
(ii) for medical equipment and supplies furnished on
or after January 1, 1996, the supplier meets revised
standards prescribed by the Secretary (in consultation
with representatives of suppliers of medical equipment
and supplies, carriers, and consumers) that shall in-
clude requirements that the supplier—
(I) comply with all applicable State and Federal
licensure and regulatory requirements;
(II) maintain a physical facility on an appro-
ctelli on DSK11ZRN23PROD with REPORTS
priate site;
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(III) have proof of appropriate liability insur-
ance; and
(IV) meet such other requirements as the Sec-
retary may specify.
(C) EXCEPTION FOR ITEMS FURNISHED AS INCIDENT TO A
PHYSICIAN’S SERVICE.—Subparagraph (A) shall not apply
with respect to medical equipment and supplies furnished
incident to a physician’s service.
(D) PROHIBITION AGAINST MULTIPLE SUPPLIER NUM-
BERS.—The Secretary may not issue more than one sup-
plier number to any supplier of medical equipment and
supplies unless the issuance of more than one number is
appropriate to identify subsidiary or regional entities
under the supplier’s ownership or control.
(E) PROHIBITION AGAINST DELEGATION OF SUPPLIER DE-
TERMINATIONS.—The Secretary may not delegate (other
than by contract under section 1842) the responsibility to
determine whether suppliers meet the standards necessary
to obtain a supplier number.
(2) CERTIFICATES OF MEDICAL NECESSITY.—
(A) LIMITATION ON INFORMATION PROVIDED BY SUPPLIERS
ON CERTIFICATES OF MEDICAL NECESSITY.—
(i) IN GENERAL.—Effective 60 days after the date of
the enactment of the Social Security Act Amendments
of 1994, a supplier of medical equipment and supplies
may distribute to physicians, or to individuals entitled
to benefits under this part, a certificate of medical ne-
cessity for commercial purposes which contains no
more than the following information completed by the
supplier:
(I) An identification of the supplier and the ben-
eficiary to whom such medical equipment and
supplies are furnished.
(II) A description of such medical equipment
and supplies.
(III) Any product code identifying such medical
equipment and supplies.
(IV) Any other administrative information
(other than information relating to the bene-
ficiary’s medical condition) identified by the Sec-
retary.
(ii) INFORMATION ON PAYMENT AMOUNT AND
CHARGES.—If a supplier distributes a certificate of
medical necessity containing any of the information
permitted to be supplied under clause (i), the supplier
shall also list on the certificate of medical necessity
the fee schedule amount and the supplier’s charge for
the medical equipment or supplies being furnished
prior to distribution of such certificate to the physi-
cian.
(iii) PENALTY.—Any supplier of medical equipment
and supplies who knowingly and willfully distributes a
certificate of medical necessity in violation of clause (i)
or fails to provide the information required under
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clause (ii) is subject to a civil money penalty in an
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114
amount not to exceed $1,000 for each such certificate
of medical necessity so distributed. The provisions of
section 1128A (other than subsections (a) and (b))
shall apply to civil money penalties under this sub-
paragraph in the same manner as they apply to a pen-
alty or proceeding under section 1128A(a).
(B) DEFINITION.—For purposes of this paragraph, the
term ‘‘certificate of medical necessity’’ means a form or
other document containing information required by the
carrier to be submitted to show that an item is reasonable
and necessary for the diagnosis or treatment of illness or
injury or to improve the functioning of a malformed body
member.
(3) COVERAGE AND REVIEW CRITERIA.—The Secretary shall
annually review the coverage and utilization of items of med-
ical equipment and supplies to determine whether such items
should be made subject to coverage and utilization review cri-
teria, and if appropriate, shall develop and apply such criteria
to such items.
(4) LIMITATION ON PATIENT LIABILITY.—If a supplier of med-
ical equipment and supplies (as defined in paragraph (5))—
(A) furnishes an item or service to a beneficiary for
which no payment may be made by reason of paragraph
(1);
(B) furnishes an item or service to a beneficiary for
which payment is denied in advance under subsection
(a)(15); or
(C) furnishes an item or service to a beneficiary for
which payment is denied under section 1862(a)(1);
any expenses incurred for items and services furnished to an
individual by such a supplier not on an assigned basis shall be
the responsibility of such supplier. The individual shall have
no financial responsibility for such expenses and the supplier
shall refund on a timely basis to the individual (and shall be
liable to the individual for) any amounts collected from the in-
dividual for such items or services. The provisions of subsection
(a)(18) shall apply to refunds required under the previous sen-
tence in the same manner as such provisions apply to refunds
under such subsection.
(5) DEFINITION.—The term ‘‘medical equipment and supplies’’
means—
(A) durable medical equipment (as defined in section
1861(n));
(B) prosthetic devices (as described in section 1861(s)(8));
(C) orthotics and prosthetics (as described in section
1861(s)(9));
(D) surgical dressings (as described in section
1861(s)(5));
(E) lymphedema compression treatment items (as defined
in section 1861(lll));
ø(E)¿ (F) such other items as the Secretary may deter-
mine; and
ø(F)¿ (G) for purposes of paragraphs (1) and (3)—
(i) home dialysis supplies and equipment (as de-
ctelli on DSK11ZRN23PROD with REPORTS
scribed in section 1861(s)(2)(F)),
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115
(ii) immunosuppressive drugs (as described in sec-
tion 1861(s)(2)(J)),
(iii) therapeutic shoes for diabetics (as described in
section 1861(s)(12)),
(iv) oral drugs prescribed for use as an anticancer
therapeutic agent (as described in section
1861(s)(2)(Q)), and
(v) self-administered erythropoetin (as described in
section 1861(s)(2)(P)).
(k) PAYMENT FOR OUTPATIENT THERAPY SERVICES AND COM-
PREHENSIVE OUTPATIENT REHABILITATION SERVICES.—
(1) IN GENERAL.—With respect to services described in sec-
tion 1833(a)(8) or 1833(a)(9) for which payment is determined
under this subsection, the payment basis shall be—
(A) for services furnished during 1998, the amount de-
termined under paragraph (2); or
(B) for services furnished during a subsequent year, 80
percent of the lesser of—
(i) the actual charge for the services, or
(ii) the applicable fee schedule amount (as defined in
paragraph (3)) for the services.
(2) PAYMENT IN 1998 BASED UPON ADJUSTED REASONABLE
COSTS.—The amount under this paragraph for services is the
lesser of—
(A) the charges imposed for the services, or
(B) the adjusted reasonable costs (as defined in para-
graph (4)) for the services,
less 20 percent of the amount of the charges imposed for such
services.
(3) APPLICABLE FEE SCHEDULE AMOUNT.—In this subsection,
the term ‘‘applicable fee schedule amount’’ means, with respect
to services furnished in a year, the amount determined under
the fee schedule established under section 1848 for such serv-
ices furnished during the year or, if there is no such fee sched-
ule established for such services, the amount determined under
the fee schedule established for such comparable services as
the Secretary specifies.
(4) ADJUSTED REASONABLE COSTS.—In paragraph (2), the
term ‘‘adjusted reasonable costs’’ means, with respect to any
services, reasonable costs determined for such services, re-
duced by 10 percent. The 10-percent reduction shall not apply
to services described in section 1833(a)(8)(B) (relating to serv-
ices provided by hospitals).
(5) UNIFORM CODING.—For claims for services submitted on
or after April 1, 1998, for which the amount of payment is de-
termined under this subsection, the claim shall include a code
(or codes) under a uniform coding system specified by the Sec-
retary that identifies the services furnished.
(6) RESTRAINT ON BILLING.—The provisions of subparagraphs
(A) and (B) of section 1842(b)(18) shall apply to therapy serv-
ices for which payment is made under this subsection in the
same manner as they apply to services provided by a practi-
tioner described in section 1842(b)(18)(C).
(7) ADJUSTMENT IN DISCOUNT FOR CERTAIN MULTIPLE THER-
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APY SERVICES.—In the case of therapy services furnished on or
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116
after April 1, 2013, and for which payment is made under this
subsection pursuant to the applicable fee schedule amount (as
defined in paragraph (3)), instead of the 25 percent multiple
procedure payment reduction specified in the final rule pub-
lished by the Secretary in the Federal Register on November
29, 2010, the reduction percentage shall be 50 percent.
(l) ESTABLISHMENT OF FEE SCHEDULE FOR AMBULANCE SERV-
ICES.—
(1) IN GENERAL.—The Secretary shall establish a fee sched-
ule for payment for ambulance services whether provided di-
rectly by a supplier or provider or under arrangement with a
provider under this part through a negotiated rulemaking proc-
ess described in title 5, United States Code, and in accordance
with the requirements of this subsection.
(2) CONSIDERATIONS.—In establishing such fee schedule, the
Secretary shall—
(A) establish mechanisms to control increases in expend-
itures for ambulance services under this part;
(B) establish definitions for ambulance services which
link payments to the type of services provided;
(C) consider appropriate regional and operational dif-
ferences;
(D) consider adjustments to payment rates to account for
inflation and other relevant factors; and
(E) phase in the application of the payment rates under
the fee schedule in an efficient and fair manner consistent
with paragraph (11), except that such phase-in shall pro-
vide for full payment of any national mileage rate for am-
bulance services provided by suppliers that are paid by
carriers in any of the 50 States where payment by a car-
rier for such services for all such suppliers in such State
did not, prior to the implementation of the fee schedule, in-
clude a separate amount for all mileage within the county
from which the beneficiary is transported.
(3) SAVINGS.—In establishing such fee schedule, the Sec-
retary shall—
(A) ensure that the aggregate amount of payments made
for ambulance services under this part during 2000 does
not exceed the aggregate amount of payments which would
have been made for such services under this part during
such year if the amendments made by section 4531(a) of
the Balanced Budget Act of 1997 continued in effect, ex-
cept that in making such determination the Secretary
shall assume an update in such payments for 2002 equal
to percentage increase in the consumer price index for all
urban consumers (U.S. city average) for the 12-month pe-
riod ending with June of the previous year reduced in the
case of 2002 by 1.0 percentage points;
(B) set the payment amounts provided under the fee
schedule for services furnished in 2001 and each subse-
quent year at amounts equal to the payment amounts
under the fee schedule for services furnished during the
previous year, increased, subject to subparagraph (C) and
the succeeding sentence of this paragraph, by the percent-
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age increase in the consumer price index for all urban con-
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sumers (U.S. city average) for the 12-month period ending
with June of the previous year reduced in the case of 2002
by 1.0 percentage points; and
(C) for 2011 and each subsequent year, after deter-
mining the percentage increase under subparagraph (B)
for the year, reduce such percentage increase by the pro-
ductivity adjustment described in section
1886(b)(3)(B)(xi)(II).
The application of subparagraph (C) may result in the percent-
age increase under subparagraph (B) being less than 0.0 for a
year, and may result in payment rates under the fee schedule
under this subsection for a year being less than such payment
rates for the preceding year.
(4) CONSULTATION.—In establishing the fee schedule for am-
bulance services under this subsection, the Secretary shall con-
sult with various national organizations representing individ-
uals and entities who furnish and regulate ambulance services
and share with such organizations relevant data in estab-
lishing such schedule.
(5) LIMITATION ON REVIEW.—There shall be no administra-
tive or judicial review under section 1869 or otherwise of the
amounts established under the fee schedule for ambulance
services under this subsection, including matters described in
paragraph (2).
(6) RESTRAINT ON BILLING.—The provisions of subparagraphs
(A) and (B) of section 1842(b)(18) shall apply to ambulance
services for which payment is made under this subsection in
the same manner as they apply to services provided by a prac-
titioner described in section 1842(b)(18)(C).
(7) CODING SYSTEM.—The Secretary may require the claim
for any services for which the amount of payment is deter-
mined under this subsection to include a code (or codes) under
a uniform coding system specified by the Secretary that identi-
fies the services furnished.
(8) SERVICES FURNISHED BY CRITICAL ACCESS HOSPITALS.—
Notwithstanding any other provision of this subsection, the
Secretary shall pay 101 percent of the reasonable costs in-
curred in furnishing ambulance services if such services are
furnished—
(A) by a critical access hospital (as defined in section
1861(mm)(1)), or
(B) by an entity that is owned and operated by a critical
access hospital,
but only if the critical access hospital or entity is the only pro-
vider or supplier of ambulance services that is located within
a 35-mile drive of such critical access hospital.
(9) TRANSITIONAL ASSISTANCE FOR RURAL PROVIDERS.—In the
case of ground ambulance services furnished on or after July
1, 2001, and before January 1, 2004, for which the transpor-
tation originates in a rural area (as defined in section
1886(d)(2)(D)) or in a rural census tract of a metropolitan sta-
tistical area (as determined under the most recent modification
of the Goldsmith Modification, originally published in the Fed-
eral Register on February 27, 1992 (57 Fed. Reg. 6725)), the
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fee schedule established under this subsection shall provide
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that, with respect to the payment rate for mileage for a trip
above 17 miles, and up to 50 miles, the rate otherwise estab-
lished shall be increased by not less than 1⁄2 of the additional
payment per mile established for the first 17 miles of such a
trip originating in a rural area.
(10) PHASE-IN PROVIDING FLOOR USING BLEND OF FEE SCHED-
ULE AND REGIONAL FEE SCHEDULES.—In carrying out the
phase-in under paragraph (2)(E) for each level of ground serv-
ice furnished in a year, the portion of the payment amount
that is based on the fee schedule shall be the greater of the
amount determined under such fee schedule (without regard to
this paragraph) or the following blended rate of the fee sched-
ule under paragraph (1) and of a regional fee schedule for the
region involved:
(A) For 2004 (for services furnished on or after July 1,
2004), the blended rate shall be based 20 percent on the
fee schedule under paragraph (1) and 80 percent on the re-
gional fee schedule.
(B) For 2005, the blended rate shall be based 40 percent
on the fee schedule under paragraph (1) and 60 percent on
the regional fee schedule.
(C) For 2006, the blended rate shall be based 60 percent
on the fee schedule under paragraph (1) and 40 percent on
the regional fee schedule.
(D) For 2007, 2008, and 2009, the blended rate shall be
based 80 percent on the fee schedule under paragraph (1)
and 20 percent on the regional fee schedule.
(E) For 2010 and each succeeding year, the blended rate
shall be based 100 percent on the fee schedule under para-
graph (1).
For purposes of this paragraph, the Secretary shall establish
a regional fee schedule for each of the nine census divisions
(referred to in section 1886(d)(2)) using the methodology (used
in establishing the fee schedule under paragraph (1)) to cal-
culate a regional conversion factor and a regional mileage pay-
ment rate and using the same payment adjustments and the
same relative value units as used in the fee schedule under
such paragraph.
(11) ADJUSTMENT IN PAYMENT FOR CERTAIN LONG TRIPS.—In
the case of ground ambulance services furnished on or after
July 1, 2004, and before January 1, 2009, regardless of where
the transportation originates, the fee schedule established
under this subsection shall provide that, with respect to the
payment rate for mileage for a trip above 50 miles the per mile
rate otherwise established shall be increased by 1⁄4 of the pay-
ment per mile otherwise applicable to miles in excess of 50
miles in such trip.
(12) ASSISTANCE FOR RURAL PROVIDERS FURNISHING SERVICES
IN LOW POPULATION DENSITY AREAS.—
(A) IN GENERAL.—In the case of ground ambulance serv-
ices furnished on or after July 1, 2004, and before January
1, 2023, for which the transportation originates in a quali-
fied rural area (identified under subparagraph (B)(iii)), the
Secretary shall provide for a percent increase in the base
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rate of the fee schedule for a trip established under this
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subsection. In establishing such percent increase, the Sec-
retary shall estimate the average cost per trip for such
services (not taking into account mileage) in the lowest
quartile as compared to the average cost per trip for such
services (not taking into account mileage) in the highest
quartile of all rural county populations.
(B) IDENTIFICATION OF QUALIFIED RURAL AREAS.—
(i) DETERMINATION OF POPULATION DENSITY IN
AREA.—Based upon data from the United States de-
cennial census for the year 2000, the Secretary shall
determine, for each rural area, the population density
for that area.
(ii) RANKING OF AREAS.—The Secretary shall rank
each such area based on such population density.
(iii) IDENTIFICATION OF QUALIFIED RURAL AREAS.—
The Secretary shall identify those areas (in subpara-
graph (A) referred to as ‘‘qualified rural areas’’) with
the lowest population densities that represent, if each
such area were weighted by the population of such
area (as used in computing such population densities),
an aggregate total of 25 percent of the total of the pop-
ulation of all such areas.
(iv) RURAL AREA.—For purposes of this paragraph,
the term ‘‘rural area’’ has the meaning given such
term in section 1886(d)(2)(D). If feasible, the Secretary
shall treat a rural census tract of a metropolitan sta-
tistical area (as determined under the most recent
modification of the Goldsmith Modification, originally
published in the Federal Register on February 27,
1992 (57 Fed. Reg. 6725) as a rural area for purposes
of this paragraph.
(v) JUDICIAL REVIEW.—There shall be no administra-
tive or judicial review under section 1869, 1878, or
otherwise, respecting the identification of an area
under this subparagraph.
(13) TEMPORARY INCREASE FOR GROUND AMBULANCE SERV-
ICES.—
(A) IN GENERAL.—After computing the rates with respect
to ground ambulance services under the other applicable
provisions of this subsection, in the case of such services
furnished on or after July 1, 2004, and before January 1,
2007, and for such services furnished on or after July 1,
2008, and before January 1, 2023, for which the transpor-
tation originates in—
(i) a rural area described in paragraph (9) or in a
rural census tract described in such paragraph, the fee
schedule established under this section shall provide
that the rate for the service otherwise established,
after the application of any increase under paragraphs
(11) and (12), shall be increased by 2 percent (or 3 per-
cent if such service is furnished on or after July 1,
2008, and before January 1, 2023); and
(ii) an area not described in clause (i), the fee sched-
ule established under this subsection shall provide
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that the rate for the service otherwise established,
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after the application of any increase under paragraph
(11), shall be increased by 1 percent (or 2 percent if
such service is furnished on or after July 1, 2008, and
before January 1, 2023).
(B) APPLICATION OF INCREASED PAYMENTS AFTER APPLI-
CABLE PERIOD.—The increased payments under subpara-
graph (A) shall not be taken into account in calculating
payments for services furnished after the applicable period
specified in such subparagraph.
(14) PROVIDING APPROPRIATE COVERAGE OF RURAL AIR AMBU-
LANCE SERVICES.—
(A) IN GENERAL.—The regulations described in section
1861(s)(7) shall provide, to the extent that any ambulance
services (whether ground or air) may be covered under
such section, that a rural air ambulance service (as defined
in subparagraph (C)) is reimbursed under this subsection
at the air ambulance rate if the air ambulance service—
(i) is reasonable and necessary based on the health
condition of the individual being transported at or im-
mediately prior to the time of the transport; and
(ii) complies with equipment and crew requirements
established by the Secretary.
(B) SATISFACTION OF REQUIREMENT OF MEDICALLY NEC-
ESSARY.—The requirement of subparagraph (A)(i) is
deemed to be met for a rural air ambulance service if—
(i) subject to subparagraph (D), such service is re-
quested by a physician or other qualified medical per-
sonnel (as specified by the Secretary) who certifies or
reasonably determines that the individual’s condition
is such that the time needed to transport the indi-
vidual by land or the instability of transportation by
land poses a threat to the individual’s survival or seri-
ously endangers the individual’s health; or
(ii) such service is furnished pursuant to a protocol
that is established by a State or regional emergency
medical service (EMS) agency and recognized or ap-
proved by the Secretary under which the use of an air
ambulance is recommended, if such agency does not
have an ownership interest in the entity furnishing
such service.
(C) RURAL AIR AMBULANCE SERVICE DEFINED.—For pur-
poses of this paragraph, the term ‘‘rural air ambulance
service’’ means fixed wing and rotary wing air ambulance
service in which the point of pick up of the individual oc-
curs in a rural area (as defined in section 1886(d)(2)(D)) or
in a rural census tract of a metropolitan statistical area
(as determined under the most recent modification of the
Goldsmith Modification, originally published in the Fed-
eral Register on February 27, 1992 (57 Fed. Reg. 6725)).
(D) LIMITATION.—
(i) IN GENERAL.—Subparagraph (B)(i) shall not apply
if there is a financial or employment relationship be-
tween the person requesting the rural air ambulance
service and the entity furnishing the ambulance serv-
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ice, or an entity under common ownership with the en-
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121
tity furnishing the air ambulance service, or a finan-
cial relationship between an immediate family mem-
ber of such requester and such an entity.
(ii) EXCEPTION.—Where a hospital and the entity
furnishing rural air ambulance services are under
common ownership, clause (i) shall not apply to remu-
neration (through employment or other relationship)
by the hospital of the requester or immediate family
member if the remuneration is for provider-based phy-
sician services furnished in a hospital (as described in
section 1887) which are reimbursed under part A and
the amount of the remuneration is unrelated directly
or indirectly to the provision of rural air ambulance
services.
(15) PAYMENT ADJUSTMENT FOR NON-EMERGENCY AMBULANCE
TRANSPORTS FOR ESRD BENEFICIARIES.—The fee schedule
amount otherwise applicable under the preceding provisions of
this subsection shall be reduced by 10 percent for ambulance
services furnished during the period beginning on October 1,
2013, and ending on September 30, 2018, and by 23 percent for
such services furnished on or after October 1, 2018, consisting
of non-emergency basic life support services involving trans-
port of an individual with end-stage renal disease for renal di-
alysis services (as described in section 1881(b)(14)(B)) fur-
nished other than on an emergency basis by a provider of serv-
ices or a renal dialysis facility.
(16) PRIOR AUTHORIZATION FOR REPETITIVE SCHEDULED NON-
EMERGENT AMBULANCE TRANSPORTS.—
(A) IN GENERAL.—Beginning January 1, 2017, if the ex-
pansion to all States of the model of prior authorization
described in paragraph (2) of section 515(a) of the Medi-
care Access and CHIP Reauthorization Act of 2015 meets
the requirements described in paragraphs (1) through (3)
of section 1115A(c), then the Secretary shall expand such
model to all States.
(B) FUNDING.—The Secretary shall use funds made
available under section 1893(h)(10) to carry out this para-
graph.
(C) CLARIFICATION REGARDING BUDGET NEUTRALITY.—
Nothing in this paragraph may be construed to limit or
modify the application of section 1115A(b)(3)(B) to models
described in such section, including with respect to the
model described in subparagraph (A) and expanded begin-
ning on January 1, 2017, under such subparagraph.
(17) SUBMISSION OF COST AND OTHER INFORMATION.—
(A) DEVELOPMENT OF DATA COLLECTION SYSTEM.—The
Secretary shall develop a data collection system (which
may include use of a cost survey) to collect cost, revenue,
utilization, and other information determined appropriate
by the Secretary with respect to providers of services (in
this paragraph referred to as ‘‘providers’’) and suppliers of
ground ambulance services. Such system shall be designed
to collect information—
(i) needed to evaluate the extent to which reported
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costs relate to payment rates under this subsection;
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(ii) on the utilization of capital equipment and am-
bulance capacity, including information consistent
with the type of information described in section
1121(a); and
(iii) on different types of ground ambulance services
furnished in different geographic locations, including
rural areas and low population density areas described
in paragraph (12).
(B) SPECIFICATION OF DATA COLLECTION SYSTEM.—
(i) IN GENERAL.—The Secretary shall—
(I) not later than December 31, 2019, specify the
data collection system under subparagraph (A);
and
(II) identify the providers and suppliers of
ground ambulance services that would be required
to submit information under such data collection
system, including the representative sample de-
scribed in clause (ii).
(ii) DETERMINATION OF REPRESENTATIVE SAMPLE.—
(I) IN GENERAL.—Not later than December 31,
2019, with respect to the data collection for the
first year under such system, and for each subse-
quent year through 2024, the Secretary shall de-
termine a representative sample to submit infor-
mation under the data collection system.
(II) REQUIREMENTS.—The sample under sub-
clause (I) shall be representative of the different
types of providers and suppliers of ground ambu-
lance services (such as those providers and sup-
pliers that are part of an emergency service or
part of a government organization) and the geo-
graphic locations in which ground ambulance
services are furnished (such as urban, rural, and
low population density areas).
(III) LIMITATION.—The Secretary shall not in-
clude an individual provider or supplier of ground
ambulance services in the sample under subclause
(I) in 2 consecutive years, to the extent prac-
ticable.
(C) REPORTING OF COST INFORMATION.—For each year, a
provider or supplier of ground ambulance services identi-
fied by the Secretary under subparagraph (B)(i)(II) as
being required to submit information under the data col-
lection system with respect to a period for the year shall
submit to the Secretary information specified under the
system. Such information shall be submitted in a form and
manner, and at a time, specified by the Secretary for pur-
poses of this subparagraph.
(D) PAYMENT REDUCTION FOR FAILURE TO REPORT.—
(i) IN GENERAL.—Beginning January 1, 2022, subject
to clause (ii), a 10 percent reduction to payments
under this subsection shall be made for the applicable
period (as defined in clause (ii)) to a provider or sup-
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plier of ground ambulance services that—
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(I) is required to submit information under the
data collection system with respect to a period
under subparagraph (C); and
(II) does not sufficiently submit such informa-
tion, as determined by the Secretary.
(ii) APPLICABLE PERIOD DEFINED.—For purposes of
clause (i), the term ‘‘applicable period’’ means, with re-
spect to a provider or supplier of ground ambulance
services, a year specified by the Secretary not more
than 2 years after the end of the period with respect
to which the Secretary has made a determination
under clause (i)(II) that the provider or supplier of
ground ambulance services failed to sufficiently sub-
mit information under the data collection system.
(iii) HARDSHIP EXEMPTION.—The Secretary may ex-
empt a provider or supplier from the payment reduc-
tion under clause (i) with respect to an applicable pe-
riod in the event of significant hardship, such as a
natural disaster, bankruptcy, or other similar situa-
tion that the Secretary determines interfered with the
ability of the provider or supplier of ground ambulance
services to submit such information in a timely man-
ner for the specified period.
(iv) INFORMAL REVIEW.—The Secretary shall estab-
lish a process under which a provider or supplier of
ground ambulance services may seek an informal re-
view of a determination that the provider or supplier
is subject to the payment reduction under clause (i).
(E) ONGOING DATA COLLECTION.—
(i) REVISION OF DATA COLLECTION SYSTEM.—The Sec-
retary may, as the Secretary determines appropriate
and, if available, taking into consideration the report
(or reports) under subparagraph (F), revise the data
collection system under subparagraph (A).
(ii) SUBSEQUENT DATA COLLECTION.—In order to con-
tinue to evaluate the extent to which reported costs re-
late to payment rates under this subsection and for
other purposes the Secretary deems appropriate, the
Secretary shall require providers and suppliers of
ground ambulance services to submit information for
years after 2024 as the Secretary determines appro-
priate, but in no case less often than once every 3
years.
(F) GROUND AMBULANCE DATA COLLECTION SYSTEM
STUDY.—
(i) IN GENERAL.—Not later than the second June
15th following the date on which the Secretary trans-
mits data for the first representative sample of pro-
viders and suppliers of ground ambulance services to
the Medicare Payment Advisory Commission, and as
determined necessary by such Commission thereafter,,
such Commission shall assess, and submit to Congress
a report on, information submitted by providers and
suppliers of ground ambulance services through the
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data collection system under subparagraph (A), the
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