text: SECTION 1. REFERENCES TO SOCIAL SECURITY ACT.
  
      Except as otherwise specifically provided, whenever in this Act an 
  amendment is expressed in terms of an amendment to or repeal of a 
  section or other provision, the reference shall be considered to be 
  made to that section or other provision of the Social Security Act.
  
  SEC. 2. DURABLE MEDICAL EQUIPMENT.
  
      (a) Definition of Medical Equipment and Supplies.--
              (1) In general.--Section 1861 (42 U.S.C. 1395x) is amended 
          by adding at the end the following new subsection:
  
                      ``medical equipment and supplies
  
      ``(oo) The term `medical equipment and supplies'' means--
              ``(1) durable medical equipment (as defined in section 
          1861(n));
              ``(2) prosthetic devices (as described in section 
          1861(s)(8));
              ``(3) orthotics and prosthetics (as described in section 
          1861(s)(9));
              ``(4) home dialysis supplies and equipment (as described in 
          section 1861(s)(2)(F));
              ``(5) surgical dressings and other devices (as described in 
          section 1861(s)(5));
              ``(6) immunosuppressive drugs (as described in section 
          1861(s)(2)(J)); and
              ``(7) such other items as the Secretary may determine.''.
              (2) Effective date.--The amendment made by paragraph (1) 
          shall apply to items furnished on or after January 1, 1994.
      (b) Development and Application of National Standards for Suppliers 
  of Medical Equipment and Supplies.--Section 1834 (42 U.S.C. 1395m) is 
  amended by adding at the end the following new subsection:
      ``(i) Requirements for Issuance and Renewal of Supplier Numbers for 
  Suppliers of Medical Equipment and Supplies.--
              ``(1) Payment.--No payment may be made under this part 
          after July 1, 1994, for items furnished by a supplier of 
          medical equipment and supplies (as defined in section 1861(oo)) 
          unless such supplier meets the national standards specified by 
          the Secretary and possesses a valid supplier number.
              ``(2) Revised standards.--
                      ``(A) In general.--The Secretary shall, by no later 
                  than January 1, 1996, in consultation with 
                  representatives of suppliers of medical equipment and 
                  supplies, carriers, and consumers, revise the national 
                  standards for suppliers of medical equipment and 
                  supplies to include the requirements listed in 
                  subparagraph (B).
                      ``(B) Standards described.--The requirements listed 
                  in this subparagraph are that suppliers of medical 
                  equipment and supplies shall--
                              ``(i) comply with all applicable State and 
                          Federal licensure and regulatory requirements;
                              ``(ii) maintain a physical facility on an 
                          appropriate site;
                              ``(iii) have proof of appropriate liability 
                          insurance; and
                              ``(iv) meet such other requirements as the 
                          Secretary may specify.
                      ``(C) Applicability of revised standards.--
                  Beginning after December 31, 1995, each supplier of 
                  medical equipment and supplies applying for a supplier 
                  number or renewing such supplier's supplier number 
                  shall meet the revised standards described in this 
                  paragraph.''.
      (c) Certificates of Medical Necessity.--
              (1) In general.--Section 1834 (42 U.S.C. 1395m), as amended 
          by subsection (b), is amended--
                      (A) in subsection (a), by striking paragraph (16), 
                  and
                      (B) by adding at the end the following new 
                  subsection:
      ``(j) Certificates of Medical Necessity.--
              ``(1) Standardized certificates.--Not later than July 1, 
          1994, the Secretary shall, in consultation with carriers under 
          this part, develop one or more standardized certificates of 
          medical necessity (as defined in paragraph (3)) for medical 
          equipment and supplies (as defined in section 1861(oo) other 
          than paragraphs (4), (6), and (7)). If a certificate of medical 
          necessity is required by the Secretary, such standardized 
          certificates shall--
                      ``(A) be completed by each physician who prescribes 
                  such medical equipment and supplies for any beneficiary 
                  under this part, and
                      ``(B) be transmitted to the supplier and then to 
                  the carrier processing the claim for payment for such 
                  medical equipment and supplies under this part.
              ``(2) Prohibition against distribution by suppliers of 
          certificates of medical necessity.--
                      ``(A) In general.--Except as provided in 
                  subparagraph (B), a supplier of medical equipment and 
                  supplies described in paragraph (1) may not distribute 
                  to physicians or to individuals entitled to benefits 
                  under this part for commercial purposes any completed 
                  or partially completed certificates of medical 
                  necessity.
                      ``(B) Exception for certain billing information.--
                  Subparagraph (A) shall not apply with respect to a 
                  certificate of medical necessity to the extent that 
                  such certificate contains only information completed by 
                  the supplier of medical equipment and supplies 
                  identifying such supplier and the beneficiary to whom 
                  such medical equipment and supplies are furnished, a 
                  description of such medical equipment and supplies, any 
                  product code identifying such medical equipment and 
                  supplies, and any other administrative information 
                  identified by the Secretary. In the event a supplier 
                  provides a certificate of medical necessity containing 
                  information permitted under this subparagraph, such 
                  certificate shall also contain the supplier's charge 
                  and the fee schedule amount for the medical equipment 
                  or supplies being furnished prior to distribution of 
                  such certificate to the physician.
                      ``(C) Penalty.--Any supplier of medical equipment 
                  and supplies who knowingly and willfully distributes a 
                  certificate of medical necessity in violation of 
                  subparagraph (A) is subject to a civil money penalty in 
                  an 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 subparagraph in the same manner as they apply to a 
                  penalty or proceeding under section 1128A(a).
              ``(3) Definition.--For purposes of this subsection, the 
          term `certificate of medical necessity' means a form or other 
          document containing information required by the Secretary to be 
          submitted to show that a covered item is reasonable and 
          necessary for the diagnosis or treatment of illness or injury 
          or to improve the functioning of a malformed body member.''.
              (2) Effective date.--The amendments made by paragraph (1) 
          shall apply with respect to certificates of medical necessity 
          on or after January 1, 1994.
      (d) Coverage and Review Criteria for Certain Medical Equipment and 
  Supplies.--Section 1834 (42 U.S.C. 1395m), as amended by subsection 
  (c), is amended by adding at the end the following new subsection:
      ``(k) Coverage and Review Criteria.--
              ``(1) Development and establishment.--Not later than July 
          1, 1994, the Secretary, in consultation with representatives of 
          suppliers of medical equipment and supplies (as defined in 
          section 1861(oo) other than paragraphs (4), (6), and (7)), 
          individuals enrolled under this part, and appropriate medical 
          specialty societies, shall develop and establish uniform 
          national coverage and utilization review criteria for 200 items 
          of medical equipment and supplies (as so defined) selected in 
          accordance with the standards described in paragraph (2). The 
          Secretary shall publish the criteria as part of the 
          instructions provided to fiscal intermediaries and carriers 
          under this part and no further publication, including 
          publication in the Federal Register, shall be required.
              ``(2) Standards for selecting items subject to criteria.--
          The Secretary may select an item for coverage under the 
          criteria developed and established under paragraph (1) if the 
          Secretary finds that--
                      ``(A) the item is frequently purchased or rented by 
                  beneficiaries;
                      ``(B) the item is frequently subject to a 
                  determination that such item is not medically 
                  necessary; or
                      ``(C) the coverage or utilization criteria applied 
                  to the item (as of the date of the enactment of this 
                  subsection) is not consistent among carriers.
              ``(3) Annual review and expansion of items subject to 
          criteria.--The Secretary shall annually review the coverage and 
          utilization of items of medical equipment and supplies to 
          determine whether items not included among the items selected 
          under paragraph (1) should be made subject to uniform national 
          coverage and utilization review criteria, and, if appropriate, 
          shall develop and apply such criteria to such additional items.
              ``(4) Report on effect of uniform criteria on utilization 
          of items.--Not later than January 1, 1995, the Secretary shall 
          submit a report to the Committee on Ways and Means and the 
          Committee on Energy and Commerce of the House of 
          Representatives and the Committee on Finance of the Senate 
          analyzing the impact of the uniform criteria established under 
          paragraph (1) on the utilization of items of medical equipment 
          and supplies by individuals enrolled under this part.''.
      (e) Prohibition Against Multiple Supplier Numbers.--
              (1) In general.--Section 1834 (42 U.S.C. 1395m), as amended 
          by subsection (d), is amended by adding at the end the 
          following new subsection:
      ``(l) Prohibition Against Multiple Supplier Numbers for Suppliers 
  of Medical Equipment and Supplies.--The Secretary may not issue more 
  than one supplier number to any supplier of medical equipment and 
  supplies (as defined in section 1861(oo)) unless the issuance of more 
  than one number is appropriate to identify subsidiary or regional 
  entities under the supplier's ownership or control.''.
              (2) Effective date.--The amendment made by paragraph (1) 
          shall apply to items furnished on or after July 1, 1994.
      (f) Definition of Inducements as Kickbacks Clarified.--
              (1) In general.--Section 1128B(b)(3)(B) (42 U.S.C. 1320a-
          7b(b)(3)(B)) is amended by inserting before the semicolon 
          ``(except that in the case of a contract supply arrangement 
          between a skilled nursing facility and a supplier of medical 
          supplies and equipment (as defined in section 1861(oo) other 
          than paragraphs (4), (6), and (7)), such employment shall not 
          be considered bona fide to the extent that it includes tasks of 
          a clerical and cataloging nature in transmitting to suppliers 
          assignment rights of individuals eligible for benefits under 
          part B of title XVIII, or performance of warehousing or stock 
          inventory functions)''.
              (2) Effective date.--The amendment made by paragraph (1) 
          shall apply with respect to services furnished on or after 
          January 1, 1994.
      (g) Limitation on Beneficiary Liability.--
              (1) In general.--Section 1879 (42 U.S.C. 1395pp) is amended 
          by adding at the end the following new subsection:
      ``(h) If a supplier of medical equipment and supplies (as defined 
  in section 1861(oo))--
              ``(1) furnishes an item or service to a beneficiary for 
          which no payment may be made by reason of section 1834(i);
              ``(2) furnishes an item or service to a beneficiary for 
          which payment is denied in advance under section 1834(a)(15);
              ``(3) is excluded from participation under this title; or
              ``(4) 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 on an unassigned 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 individual for such items or services, unless the 
  supplier informs the individual in advance that payment under this part 
  will not be made for the item or services and the individual agrees to 
  pay for the item or service.''.
              (2) Effective date.--The amendment made by paragraph (1) 
          shall apply to items or services furnished on or after July 1, 
          1994.
      (h) Treatment of Nebulizers and Aspirators as Miscellaneous Items 
  of Durable Medical Equipment.--
              (1) In general.--Section 1834(a)(3)(A) (42 U.S.C. 
          1395m(a)(3)(A)) is amended by striking ``ventilators, 
          aspirators, IPPB machines, and nebulizers'' and inserting 
          ``ventilators and IPPB machines''.
              (2) Payment for supplies relating to nebulizers and 
          aspirators.--Section 1834(a)(7)(A) (42 U.S.C. 1395m(a)(7)(A)) 
          is amended by striking ``and'' at the end of clause (v), by 
          striking the period at the end of clause (vi) and inserting ``; 
          and'', and by inserting after clause (vi) the following new 
          clause:
                              ``(vii) In the case of supplies to be used 
                          in conjunction with a nebulizer or aspirator 
                          for which payment is made under this paragraph, 
                          payment shall be in accordance with paragraph 
                          (2) of this subsection.''.
              (3) Effective date.--The amendments made by this subsection 
          shall apply to items furnished on or after January 1, 1994.
      (i) Payment for Ostomy Supplies, Tracheostomy Supplies, 
  Urologicals, Surgical Dressings, and Other Medical Supplies.--
              (1) In general.--Section 1834(h)(1) (42 U.S.C. 1395m(h)(1)) 
          is amended by adding at the end the following new subparagraph:
                      ``(E) Exception for certain items.--Payment for 
                  ostomy supplies, tracheostomy supplies, urologicals, 
                  surgical dressings, and other medical supplies shall be 
                  made in accordance with subparagraphs (B) and (C) of 
                  section 1834(a)(2) (except that in the case of surgical 
                  dressings, the national limited payment amount shall be 
                  computed based on local payment amounts using average 
                  reasonable charges for the six-month period ending June 
                  30, 1993, increased by the covered item update for 
                  1994).''.
              (2) Effective dates.--
                      (A) In general.--Except as provided in subparagraph 
                  (B), the amendment made by paragraph (1) shall apply 
                  with respect to items furnished on or after January 1, 
                  1994.
                      (B) Surgical dressings and other medical 
                  supplies.--The amendment made by paragraph (1) with 
                  respect to surgical dressings and other medical 
                  supplies shall apply to items supplied on or after July 
                  1, 1994.
      (j) Freeze in Reasonable Charges for Parenteral and Enteral 
  Nutrients, Supplies, and Equipment During 1994.--In determining the 
  amount of payment under part B of title XVIII of the Social Security 
  Act during 1994, the charges determined to be reasonable with respect 
  to parenteral and enteral nutrients, supplies, and equipment may not 
  exceed the charges determined to be reasonable with respect to such 
  nutrients, supplies, and equipment during 1993.
      (k) Studies.--
              (1) Supplies and services in nursing facilities.--The 
          Comptroller General of the United States shall conduct a study 
          and report to the Congress no later than January 1, 1995, on 
          the types, volume, and utilization of services and supplies 
          furnished under contract or under arrangement with suppliers to 
          individuals eligible for benefits under title XVIII of the 
          Social Security Act residing in skilled nursing facilities and 
          nursing facilities.
              (2) Descriptions relating to certain codes.--The 
          Comptroller General of the United States shall conduct a study 
          beginning no earlier than July 1, 1994, and report to the 
          Congress no later than January 1, 1995, on--
                      (A) whether changes made by the Department of 
                  Health and Human Services to the descriptions relating 
                  to the codes for medical equipment and supplies (as 
                  defined in section 1861(oo) of the Social Security Act 
                  other than paragraphs (4), (6), and (7))--
                              (i) accurately reflect the items being 
                          furnished under such codes, and
                              (ii) are sufficiently explicit to 
                          distinguish between items of varying quality 
                          and price, and
                      (B) recommendations for additional changes that 
                  would improve the descriptions relating to the codes 
                  for such items.
  
                                   
  
  S 516 IS----2
target: Amends title XVIII (Medicare) of the Social Security Act (SSA) to revise procedures under Medicare part B (Supplementary Medical Insurance) with regard to durable medical equipment, including requirements for:  (1) national standards and supplier numbers for suppliers of medical equipment and supplies; (2) standardized certificates of medical necessity and uniform national coverage and utilization review criteria for certain medical equipment and supplies; (3) limited Medicare beneficiary liability for items and services for which payment is prohibited by reason of a supplier's failure to meet such national standards or lack of a valid supplier number; (4) the treatment of nebulizers and aspirators as miscellaneous items of durable medical equipment; and (5) payment of ostomy supplies, tracheostomy supplies, urologicals, surgical dressings, and other medical supplies. 
  Amends SSA title XI to modify anti-kickback provisions. 
  Provides for a freeze under Medicare part B in reasonable charges for parenteral and enteral nutrients, supplies, and equipment during 1994. 
  Requires the Comptroller General to study and report to the Congress on:  (1) services and supplies furnished to Medicare-eligible nursing facility residents; and (2) changes made to descriptions relating to codes for medical equipment and supplies.
feat_title: A bill to amend title XVIII of the Social Security Act to improve procedures under part B of the medicare program relating to durable medical equipment, and for other purposes.