TITLE VI--PROVISIONS RELATING TO PART B
Subtitle C--Other Provisions
SEC. 621. HOSPITAL OUTPATIENT DEPARTMENT (HOPD) PAYMENT
REFORM.
(1) SPECIAL RULES FOR CERTAIN DRUGS
AND BIOLOGICALS- Section 1833(t) (42 U.S.C. 1395l(t)), as amended by section
411(b), is amended by inserting after paragraph (13) the following new paragraphs:
`(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 reference 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 average 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 reference 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 average 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 Secretary, may vary by hospital group (as
defined by the Secretary based on volume of covered OPD services or
other relevant characteristics)), as determined by the Secretary
taking into account the hospital acquisition cost survey data under
subparagraph (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 necessary for purposes of
this paragraph.
`(B) SPECIFIED COVERED OUTPATIENT DRUG DEFINED-
`(i) IN GENERAL- In this paragraph, the term `specified 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 subsection 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 acquisition cost for each specified covered outpatient drug.
Not later than April 1, 2005, the Comptroller General shall furnish
data from such surveys to the Secretary for use in setting the payment
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 conducted by the Secretary
under clause (ii).
`(ii) SUBSEQUENT SECRETARIAL SURVEYS- The Secretary, taking into
account such recommendations, shall conduct periodic subsequent surveys
to determine the hospital acquisition cost for each specified 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 surveys 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 covered OPD services
performed by such hospitals or other relevant characteristics of such
hospitals (as defined by the Comptroller General).
`(v) COMMENT ON PROPOSED RATES- Not later than 30 days after the
date the Secretary promulgated proposed rules setting forth the payment
rates under subparagraph (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 conducted 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 available 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 recommendation
regarding the methodology for making such an
adjustment.
`(ii) ADJUSTMENT AUTHORIZED- The Secretary may adjust the weights
for ambulatory payment classifications for specified covered outpatient
drugs to take into account the recommendations contained in the report
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 1861(t)(1));
or
`(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 FACTORS- Additional expenditures resulting
from this paragraph 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.'.
(2) REDUCTION IN THRESHOLD FOR SEPARATE
APCS FOR DRUGS- Section 1833(t)(16), as redesignated section 411(b), is amended
by adding at the end the following new subparagraph:
`(B) THRESHOLD FOR ESTABLISHMENT OF SEPARATE APCS FOR DRUGS- The
Secretary shall reduce the threshold for the establishment of separate
ambulatory payment classification groups (APCs) with respect to drugs or
biologicals to $50 per administration for drugs and biologicals furnished
in 2005 and 2006.'.
(3) EXCLUSION OF SEPARATE DRUG APCS
FROM OUTLIER PAYMENTS- Section 1833(t)(5) is amended by adding at the end
the following new subparagraph:
`(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.'.
(4) PAYMENT FOR PASS THROUGH DRUGS-
Section 1833(t)(6)(D)(i) (42 U.S.C. 1395l(t)(6)(D)(i)) is amended by inserting
after `under section 1842(o)' the following: `(or if the drug or biological
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 biological for all competitive acquisition areas and year established under
such section as calculated and adjusted by the Secretary for purposes of this
paragraph)'.
(5) CONFORMING AMENDMENT TO BUDGET
NEUTRALITY REQUIREMENT- Section 1833(t)(9)(B) (42 U.S.C. 1395l(t)(9)(B)) is
amended by adding at the end the following: `In determining adjustments under
the preceding sentence for 2004 and 2005, the Secretary shall not take into
account under this subparagraph or paragraph (2)(E) any expenditures that
would not have been made but for the application of paragraph (14).'.
(6) EFFECTIVE DATE- The amendments
made by this subsection shall apply to items and services furnished on or
after January 1, 2004.
(b) SPECIAL PAYMENT FOR BRACHYTHERAPY-
(1) IN GENERAL- Section 1833(t)(16),
as redesignated by section 411(b) and as amended by subsection (a)(2), is
amended by adding at the end the following new subparagraph:
`(C) PAYMENT FOR DEVICES OF BRACHYTHERAPY AT CHARGES ADJUSTED TO COST-
Notwithstanding the preceding provisions of this subsection, for a device
of brachytherapy consisting of a seed or seeds (or radioactive source)
furnished on or after January 1, 2004, and before January 1, 2007, the
payment basis for the device under this subsection shall be equal to the
hospital's charges for each device furnished, adjusted to cost. Charges
for such devices shall not be included in determining any outlier payment
under this subsection.'.
(2) SPECIFICATION OF GROUPS FOR BRACHYTHERAPY
DEVICES- Section 1833(t)(2) (42 U.S.C. 1395l(t)(2)) is amended--
(A) in subparagraph (F), by
striking `and' at the end;
(B) in subparagraph (G), by
striking the period at the end and inserting `; and'; and
(C) by adding at the end the
following new subparagraph:
`(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 manner reflecting the number, isotope, and radioactive intensity of
such devices furnished, including separate groups for palladium-103 and
iodine-125 devices.'.
(3) GAO REPORT- The Comptroller General
of the United States shall conduct a study to determine appropriate payment
amounts under section 1833(t)(16)(C) of the Social Security Act, as added
by paragraph (1), for devices of brachytherapy. Not later than January 1,
2005, the Comptroller General shall submit to Congress and the Secretary a
report on the study conducted under this paragraph, and shall include specific
recommendations for appropriate payments for such devices.
