COMPETITIVE BIDDING DEMONSTRATION PROJECTS.

SEC. 4319. COMPETITIVE BIDDING DEMONSTRATION PROJECTS. (a) General Rule.—Part B of title XVIII (42 U.S.C. 1395j et seq.) is amended by inserting after section 1846 the following new section: “SEC. 1847. 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). “(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, and111 STAT. 393 “(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) for each competitive acquisition area established under a demonstration project implemented under subsection (a). “(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 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). “(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 title, and “(B) does not reduce program access, diversity of product selection, and quality under this title, 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 1861(s)(1)) that the Secretary may specify. At least one demonstration project shall include oxygen and oxygen equipment.111 STAT. 394 “(e) Termination.—Notwithstanding any other provision of this section, all projects under this section shall terminate not later than December 31, 2002.”. (b) Items And Services to be Furnished Only Through Competitive Acquisition.—Section 1862(a) (42 U.S.C. 1395y(a)) is amended— (1) by striking “or” at the end of paragraph (15), (2) by striking the period at the end of paragraph (16) and inserting “; or”, and (3) by inserting after paragraph (16) the following new paragraph: “(17) where the expenses are for an item or service furnished in a competitive acquisition area (as established by the Secretary under section 1847(a)) by an entity other than an entity with which the Secretary has entered into a contract under section 1847(b) for the furnishing of such an item or service in that area, unless the Secretary finds that the expenses were incurred in a case of urgent need, or in other circumstances specified by the Secretary.”. (c) Study by GAO.—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, as added by this section.