REDUCTION IN PREVAILING CHARGE LEVEL FOR OVERPRICED PROCEDURES.

SEC. 4045. REDUCTION IN PREVAILING CHARGE LEVEL FOR OVERPRICED PROCEDURES. (a) In General.— Paragraph (10) of section 1842(b) of the Social Security Act (42 U.S.C. 1395u(b)) is amended to read as follows: “(10) (A) (i) In determining the reasonable charge under paragraph (3) for procedures described in subparagraph (C) and performed during the 9-month period beginning on April 1, 1988, the prevailing charge for such procedure for participating and nonparticipating physicians shall be the prevailing charge otherwise recognized for such procedure for 1987— “(I) subject to clause (iii), reduced by 2.0 percent, and “(II) further reduced by the applicable percentage specified in clause (ii). “(ii) For purposes of clause (i), the applicable percentage specified in this clause is— “(I) 15 percent, in the case of a prevailing charge otherwise recognized (without regard to this paragraph and determined without regard to physician specialty) that is at least 150 percent of the weighted national average (as determined by the Secretary) of such prevailing charges for such procedure for all localities in the United States for 1987; “(II) 0 percent, in the case of a prevailing charge that does not exceed 85 percent of such weighted national average; and 101 STAT. 1330–87 “(III) in the case of any other prevailing charge, a percent determined on the basis of a straight-line sliding scale, equal to 3/13 of a percentage point for each percent by which the prevailing charge exceeds 85 percent of such weighted national average. “(iii) In no case shall the reduction under clause (i) for a procedure result in a prevailing charge in a locality for 1988 which is less than 85 percent of the Secretary’s estimate of the weighted national average of such prevailing charges for such procedure for all localities in the United States for 1987 passed upon the best available data and determined without regard to physician specialty) after making the reduction described in clause (i)(II). “(B) The procedures described in this subparagraph are as follows: bronchoscopy, 29a29aCopy read “bronschoscopy,”. carpal tunnel repair, cataract surgery, coronary artery bypass surgery, diagnostic and/or therapeutic dilation and curettage, knee arthroscopy, knee arthroplasty, pacemaker implantation surgery, total hip replacement, suprapubic prostatectomy, transurethral resection of the prostate, and upper gastrointestinal endoscopy. “(C) In the case of a reduction in the reasonable charge for a physicians’ service under subparagraph (A), if a nonparticipating physician furnishes the service to an individual entitled to benefits under this part, after the effective date of such reduction, the physician’s actual charge is subject to a limit under subsection (j)(1)(D). “(D) There shall be no administrative or judicial review section 1869 or otherwise of any determination under subparagraph (A) or under29b29bCopy read “under under”. paragraph (11)(B)(ii).”. (b) Modification of Geographic Index.— Section 1845(e)(4)(A)(i) of such Act (42 U.S.C. 1395w–l(e)(4)(A)(i)) is amended by inserting “and costs of living” after “costs of practice”. (c) Consolidated Charge Limitation Provisions.— (1) Penalties for excess charges.— Section 1842 of such Act is further amended— (A) in subsection (b)(11)(C)— (i) in clause (i), by striking “(subject to clause (iv))” and all that follows through the end and inserting the following: “, the physician’s actual charge is subject to a limit under subsection (j)(1)(D).”; (ii) in clause (i), by striking “(i)” after “(C)”; and (iii) by striking clauses (ii) through (iv); and (B) in subsection (j)(1), by adding at the end the following new subparagraph: “(D) (i) If an action described in clause (ii) results in a reduction in a reasonable charge for a physicians’ service or item and a nonparticipating physician furnishes the service or item to an individual entitled to benefits under this part after the effective date of such action, the physician may not charge the individual more than 125 percent of the reduced payment allowance (as defined in clause (iii)) plus (for services or items furnished during the 12-month period (or 9-month period in the case of an action described in clause (ii)(II) beginning on the effective date of the action) ½ of the amount by which the physician’s maximum allowable actual charge for the service or item for the previous 12-month period exceeds such 125 percent level. “(ii) The first sentence of clause (i) shall apply to— 101 STAT. 1330–88 “(I) an adjustment under subsection (b)(8)(B) (relating to inherent reasonableness), “(II) a reduction under subsection (b)(10)(A) (relating to certain overpriced procedures), “(III) a reduction under subsection (b)(11)(B) (relating to certain cataract procedures), and “(IV) an adjustment under section 1833(1)(3)(B) (relating to physician supervision of certified registered nurse anesthetists), “(iii) In clause (i), the term ‘reduced payment allowance’ means, with respect to an action— “(I) under subsection (b)(8)(B), the inherently reasonable charge established under subsection (b)(8); or “(II) under subsection (b)(10)(A) or (b)(11)(B) or under section 1833(1)(3)(B), the prevailing charge for the service after the action, “(iv) If a physician knowingly and willfully imposes a charge in violation of clause (i) (whether or not such charge violates subparagraph (B)), the Secretary may apply sanctions against such physician in accordance with paragraph (2). “(v) Clause (i) shall not apply to items and services furnished after the earlier of (I) December 31, 1990, or (II) one-year after the date the Secretary reports to Congress, under section 1845(e)(3), on the development of the relative value scale under section 1845.”. (2) Conforming amendments.— (A) Section 1833(1)(6) of such Act (42 U.S.C. 13951(1)(6)) is amended— (i) in subparagraph (A), by striking “(subject to subparagraph (D))” and all that follows through the end and inserting the following: “after the effective date of the reduction, the physician’s actual charge is subject to a limit under section 1842(j)(1)(D).”; (ii) in subparagraph (A), by striking “(A)” after “(6)”; and (iii) by striking subparagraphs (B) through (D). (B) Section 1842(b)(11)(B)(i) of such Act (42 U.S.C. 1395u(b)(11)(B)(i)) is amended by striking “and shall be further reduced” and all that follows through “1988”. (C) Section 9334(b)(2) of the Omnibus Budget Reconciliation Act of 1986 is amended by striking “1842(b)(10)” and inserting “1842(j)(1)(D)”. (d) Effective Date.— The amendments made by this section shall apply to items and services furnished on or after April 1, 1988, except the amendment made by subsection (c)(2)(B) shall apply to services furnished on or after January 1, 1988.