§1395w–3. Demonstration projects for competitive acquisition of items and services

(a) Establishment of demonstration project bidding areas

(1) In general

The Secretary shall implement not more than 5 demonstration projects under which competitive acquisition areas are established for contract award purposes for the furnishing under this part of the items and services described in subsection (d) of this section.

(2) Project requirements

Each demonstration project under paragraph (1)-

(A) shall include such group of items and services as the Secretary may prescribe,

(B) shall be conducted in not more than 3 competitive acquisition areas, and

(C) shall be operated over a 3-year period.

(3) Criteria for establishment of competitive acquisition areas

Each competitive acquisition area established under a demonstration project implemented under paragraph (1)-

(A) shall be, or shall be within, a metropolitan statistical area (as defined by the Secretary of Commerce), and

(B) shall be chosen based on the availability and accessibility of entities able to furnish items and services, and the probable savings to be realized by the use of competitive bidding in the furnishing of items and services in such area.

(b) Awarding of contracts in areas

(1) In general

The Secretary shall conduct a competition among individuals and entities supplying items and services described in subsection (c) of this section for each competitive acquisition area established under a demonstration project implemented under subsection (a) of this section.

(2) Conditions for awarding contract

The Secretary may not award a contract to any entity under the competition conducted pursuant to paragraph (1) to furnish an item or service unless the Secretary finds that the entity meets quality standards specified by the Secretary and that the total amounts to be paid under the contract are expected to be less than the total amounts that would otherwise be paid.

(3) Contents of contract

A contract entered into with an entity under the competition conducted pursuant to paragraph (1) is subject to terms and conditions that the Secretary may specify.

(4) Limit on number of contractors

The Secretary may limit the number of contractors in a competitive acquisition area to the number needed to meet projected demand for items and services covered under the contracts.

(c) Expansion of projects

(1) Evaluations

The Secretary shall evaluate the impact of the implementation of the demonstration projects on medicare program payments, access, diversity of product selection, and quality. The Secretary shall make annual reports to the Committees on Ways and Means and Commerce of the House of Representatives and the Committee on Finance of the Senate on the results of the evaluation described in the preceding sentence and a final report not later than 6 months after the termination date specified in subsection (e) of this section.

(2) Expansion

If the Secretary determines from the evaluations under paragraph (1) that there is clear evidence that any demonstration project-

(A) results in a decrease in Federal expenditures under this subchapter, and

(B) does not reduce program access, diversity of product selection, and quality under this subchapter,

the Secretary may expand the project to additional competitive acquisition areas.

(d) Services described

The items and services to which this section applies are all items and services covered under this part (except for physicians' services as defined in section 1395x(s)(1) of this title) that the Secretary may specify. At least one demonstration project shall include oxygen and oxygen equipment.

(e) Termination

Notwithstanding any other provision of this section, all projects under this section shall terminate not later than December 31, 2002.

(Aug. 14, 1935, ch. 531, title XVIII, §1847, as added Pub. L. 105–33, title IV, §4319(a), Aug. 5, 1997, 111 Stat. 392 ; amended Pub. L. 106–113, div. B, §1000(a)(6) [title III, §321(c)], Nov. 29, 1999, 113 Stat. 1536 , 1501A-366.)

Prior Provisions

A prior section 1395w–3, act Aug. 14, 1935, ch. 531, title XVIII, §1847, as added July 1, 1988, Pub. L. 100–360, title II, §202(j), 102 Stat. 719 ; amended Oct. 13, 1988, Pub. L. 100–485, title VI, §608(d)(5)(I), 102 Stat. 2414 , provided for appointment of Prescription Drug Payment Review Commission by Director of Congressional Office of Technology Assessment, prior to repeal by Pub. L. 101–234, title II, §201(a), (c), Dec. 13, 1989, 103 Stat. 1981 , effective Jan. 1, 1990.

Amendments

1999-Subsec. (b)(2). Pub. L. 106–113 inserted "and" after "specified by the Secretary".

Effective Date of 1999 Amendment

Amendment by Pub. L. 106–113 effective as if included in the enactment of the Balanced Budget Act of 1997, Pub. L. 105–33, except as otherwise provided, see section 1000(a)(6) [title III, §321(m)] of Pub. L. 106–113, set out as a note under section 1395d of this title.

Study by GAO

Section 4319(c) of Pub. L. 105–33 provided that: "The Comptroller of the United States shall study the effectiveness of the establishment of competitive acquisition areas under section 1847(a) of the Social Security Act [subsec. (a) of this section], as added by this section."

Section Referred to in Other Sections

This section is referred to in section 1395y of this title.