[Congressional Record Volume 145, Number 9 (Wednesday, January 20, 1999)]
[Senate]
[Pages S759-S761]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY (for himself, Mr. Breaux, and Mr. Conrad):
  S. 256. A bill to amend title XVIII of the Social Security Act to 
promote the use of universal product numbers on claims forms submitted 
for reimbursement under the Medicare program; read twice.


             medicare universal product number act of 1999

  Mr. GRASSLEY. Mr. President, on behalf of Senator Breaux and myself, 
I am introducing legislation today to require the use of universal 
product numbers (UPNs) for all durable medical equipment (DME) Medicare 
purchases. A similar bipartisan bill was introduced in the House of 
Representatives by Representatives Amo Houghton and Louise Slaughter. 
The purpose of this legislation is to improve the Health Care Financing 
Administration's (HCFA) ability to track and to appropriately assess 
the value of the durable medical equipment it pays for under the 
Medicare program. Very simply, our bill will ensure Medicare gets what 
it pays for.
  According to a report by the General Accounting Office (GAO) and the 
Office of Inspector General's review of billing practices for specific 
medical supplies, the Medicare program is often paying greater than the 
market price for durable medical equipment and Medicare beneficiaries 
are not receiving the quality of care they should. HCFA currently does 
not require DME suppliers to identify specific products on their 
Medicare claims. Therefore it does not know for which products it is 
paying. HCFA's billing codes often cover a broad range of products of 
various types, qualities and market prices. For example, the GAO found 
that one Medicare billing code is used by the industry for more than 
200 different urological catheters, with many of these products varying 
significantly in price, use, and quality.
  Medicare's inability to accurately track and price medical equipment 
and supplies it purchases could be remedied with the use of product 
specific codes known as ``bar codes'' or ``universal product numbers'' 
(UPNs). These codes are similar to the codes you see on products you 
purchase at the grocery store. Use of such bar codes is already being 
required by the Department of Defense and several large private sector 
purchasing groups. The industry strongly supports such an initiative as 
well. I am submitting several letters of endorsement for the record on 
behalf of the National Association for Medical Equipment Services, the 
Health Industry Distributors Association, Premier Inc., and a joint 
letter from industry groups such as the Health Industry Business 
Communications Council, Healthcare EDI Coalition, Health Industry 
Purchasing Association, and Invacare Corporation.
  This bill represents a common sense approach. It will improve the way 
Medicare monitors and reimburses suppliers for medical equipment and 
supplies. Patients will receive better care. And the Federal Government 
will save money. I ask that my colleagues on both sides of the aisle 
support this legislation which I am introducing today with my friend 
and colleague, Senator Breaux.
  I ask unanimous consent that a copy of the bill and the letters of 
endorsement be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 256

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medicare Universal Product 
     Number Act of 1999''.

     SEC. 2. UNIVERSAL PRODUCT NUMBERS ON CLAIMS FORMS FOR 
                   REIMBURSEMENT UNDER THE MEDICARE PROGRAM.

       (a) Accommodation of UPNs on Medicare Claims Forms.--Not 
     later than February 1, 2001, all claims forms developed or 
     used by the Secretary of Health and Human Services for 
     reimbursement under the medicare program under title XVIII of 
     the Social Security Act (42 U.S.C. 1395 et seq.) shall 
     accommodate the use of universal product numbers for a UPN 
     covered item.
       (b) Requirement for Payment of Claims.--Title XVIII of the 
     Social Security Act (42 U.S.C. 1395 et seq.) is amended by 
     adding at the end the following:


                   ``USE OF UNIVERSAL PRODUCT NUMBERS

       ``Sec. 1897. (a) In General.--No payment shall be made 
     under this title for any claim for reimbursement for any UPN 
     covered item unless the claim contains the universal product 
     number of the UPN covered item.
       ``(b) Definitions.--In this section:
       ``(1) UPN covered item.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `UPN covered item' means--
       ``(i) a covered item as that term is defined in section 
     1834(a)(13);
       ``(ii) an item described in paragraph (8) or (9) of section 
     1861(s);
       ``(iii) an item described in paragraph (5) of section 
     1861(s); and
       ``(iv) any other item for which payment is made under this 
     title that the Secretary determines to be appropriate.
       ``(B) Exclusion.--The term `UPN covered item' does not 
     include a customized item for which payment is made under 
     this title.
       ``(2) Universal product number.--The term `universal 
     product number' means a number that is--
       ``(A) affixed by the manufacturer to each individual UPN 
     covered item that uniquely identifies the item at each 
     packaging level; and
       ``(B) based on commercially acceptable identification 
     standards such as, but not limited to, standards established 
     by the Uniform Code Council-International Article Numbering 
     System or the Health Industry Business Communication 
     Council.''.
       (c) Development and Implementation of Procedures.--
       (1) Information included in upn.--The Secretary of Health 
     and Human Services, in consultation with manufacturers and 
     entities with appropriate expertise, shall determine the 
     relevant descriptive information appropriate for inclusion in 
     a universal product number for a UPN covered item.
       (2) Review of procedure.--From the information obtained by 
     the use of universal product numbers on claims for 
     reimbursement under the medicare program, the Secretary of 
     Health and Human Services, in consultation with interested 
     parties, shall periodically review the UPN covered items 
     billed under the Health Care Financing Administration Common 
     Procedure Coding System and adjust such coding system to 
     ensure that functionally equivalent UPN covered items are 
     billed and reimbursed under the same codes.
       (d) Effective Date.--The amendment made by subsection (b) 
     shall apply to claims for reimbursement submitted on and 
     after February 1, 2002.

     SEC. 3. STUDY AND REPORTS TO CONGRESS.

       (a) Study.--The Secretary of Health and Human Services 
     shall conduct a study on the results of the implementation of 
     the provisions in subsections (a) and (c) of section 2 and 
     the amendment to the Social Security Act in subsection (b) of 
     that section.
       (b) Reports.--
       (1) Progress report.--Not later than 6 months after the 
     date of enactment of this Act, the Secretary of Health and 
     Human Services shall submit a report to Congress that 
     contains a detailed description of the progress of the 
     matters studied pursuant to subsection (a).
       (2) Implementation.--Not later than 18 months after the 
     date of enactment of this Act, and annually thereafter for 3 
     years, the Secretary of Health and Human Services shall 
     submit a report to Congress that contains a detailed 
     description of the results of the study conducted pursuant to 
     subsection (a), together with the Secretary's recommendations 
     regarding the use of universal product numbers and the use of 
     data obtained from the use of such numbers.

     SEC. 4. DEFINITIONS.

     In this Act:
       (1) UPN covered item.--The term ``UPN covered item'' has 
     the meaning given such term in section 1897(b)(1) of the 
     Social Security Act (as added by section 2(b)).
       (2) Universal product number.--The term ``universal product 
     number'' has the meaning given such term in section 
     1897(b)(2) of the Social Security Act (as added by section 
     2(b)).

[[Page S760]]

     SEC. 5. AUTHORIZATION OF APPROPRIATIONS.

       The are authorized to be appropriated such sums as may be 
     necessary for the purpose of carrying out the provisions in 
     subsections (a) and (c) of section 2, section 3, and section 
     1897 of the Social Security Act (as added by section 2(b)).
                                  ____

                                                 January 19, 1999.
     Hon. Charles Grassley,
     Chairman, Special Committee on Aging,
     U.S. Senate, Washington, DC.

     Hon. John Breaux,
     Ranking Minority Member, Special Committee on Aging, U.S. 
         Senate, Washington, DC.
       Dear Senators Grassley and Breaux: We applaud you for 
     introducing the Medicare Universal Product Number Act, which 
     will require the inclusion of universal product numbers 
     (UPNs) on Medicare Part B billings for medical equipment and 
     supplies that are not customized. UPNs are codes that 
     uniquely identify an individual medical product; they are 
     often associated with the bar codes that allow scanners to 
     process them. These codes are a major enabling factor in our 
     efforts to minimize fraudulent billings and to automate the 
     distribution process.
       The Department of Defense (DoD) and the Veterans 
     Administration have already taken a leadership position in 
     promoting the implementation of the industry standard of 
     UPNs. As a part of the decision to use commercial medical 
     product distributors, the DoD has mandated the use of UPNs 
     for all medical/surgical products delivered to DoD 
     facilities. The VA is prepared to implement a similar 
     requirement this year. Most private sector group purchasing 
     organizations also require the use of UPNs.
       We believe that the Medicare Program would also benefit 
     greatly from the use of UPNs. By cross-referencing each UPN 
     with the current HCFA Common Procedure Coding System (HCPCS) 
     and requiring the inclusion of the UPN on each Medicare Part 
     B claim for medical equipment and supplies, Medicare's 
     ability to track utilization and combat fraud and abuse would 
     be greatly enhanced. As UPNs provide a unique, unambiguous 
     means of identifying medical products, Medicare would have an 
     exact record of the specific product used by the beneficiary. 
     For the first time, the Medicare Program could identify 
     precisely what items are being billed. Unusual trends in 
     product utilization and claims for ``suspicious'' items would 
     be easily identifiable. HCPCS alone cannot provide this 
     information, as many products of varying quality and cost are 
     included in a single code.
       In addition, problems with ``upcoding'' and miscoding could 
     be greatly reduced through the implementation of UPNs. 
     Upcoding occurs when Medicare is intentionally billed under a 
     code that provides a higher reimbursement than the code 
     corresponding to the item that was furnished to the 
     beneficiary. Currently, upcoding is difficult to detect 
     because HCPCS are so inexact. UPNs would correctly identify 
     the specific medical product, thereby making it harder to 
     misrepresent the cost and quality of the product. In 
     addition, by cross-referencing each UPN to the appropriate 
     HCPCS, legitimate confusion about HCFA's current coding 
     system would be alleviated. As the General Accounting Office 
     has reported (GAO/HEHS-98-102), the HCPCS system is 
     needlessly ambiguous.
       We believe that the Medicare Program and medical products 
     industry would benefit greatly from the use of UPNs. This 
     standard would not only increase Medicare's understanding of 
     what it pays for, but also assist in the effective 
     administration of the Program.
       Again, thank you for introducing the Medicare Universal 
     Product Number Act.
           Sincerely,
       Health Industry Business Communications Council.
       Healthcare EDI Coalition.
       Health Industry Distributors Association.
       Health Industry Group Purchasing Association.
       National Association for Medical Equipment Services.
       Invacare Corp.
       Premier Inc.
                                  ____

                                          National Association for


                                   Medical Equipment Services,

                                 Alexandria, VA, January 12, 1999.
     Hon. Charles Grassley,
     Hon. John Breaux,
     U.S. Senate,
     Special Committee on Aging.
       Dear Senators Grassley and Breaux: As you know, the 
     National Association for Medical Equipment Services (NAMES) 
     was pleased to endorse your bill, The Medicare Universal 
     Product Number Act of 1997, S. 1362 in the 105th Congress. We 
     understand you will re-introduce this bill in substantially 
     the same form in the 106th Congress, and so, in concept, 
     support that legislation.
       Requiring universal product numbers on home medical 
     equipment for product labeling and billing purposes would 
     accomplish two key objectives. First, it would improve home 
     medical equipment inventory control by creating a unique 
     numbering system that easily permits computerized optical 
     scanning of product information. Second, it would provide 
     third-party payers with more information on equipment 
     characteristics than does the current HCPCS coding system, 
     thus allowing reimbursement rates to be set more 
     appropriately.
       While equipment manufacturers and retailers would need time 
     to comply with the bill, we note that S. 1362 provided more 
     than two years for compliance to be attained. We look forward 
     to working with you as this bill proceeds through the 
     legislative process.
           Sincerely,

                                     William D. Coughlan, CAE,

                                                     President and
     Chief Executive Officer.
                                  ____

                                                   Health Industry


                                     Distributors Association,

                                 Alexandria, VA, January 11, 1999.
     Hon. Charles Grassley,
     Chairman, Special Committee on Aging,
     U.S. Senate, Washington, DC.

     Hon. John Breaux,
     Ranking Minority Member, Special Committee on Aging, U.S. 
         Senate, Washington, DC.
       Dear Senators Grassley and Breaux: On behalf of the Health 
     Industry Distributors Association (HIDA), I applaud you for 
     introducing the Medicare Universal Product Number Act. HIDA 
     is the national trade association of home care companies and 
     medical products distribution firms. Created in 1902, HIDA 
     represents over 700 companies with approximately 2500 
     locations nationwide. HIDA Members provide value-added 
     distribution services to virtually every hospital, 
     physician's office, nursing facility, clinic, and other 
     health care sites across the country, as well as to a growing 
     number of home care patients.
       HIDA has long supported the use of UPNs for medical 
     equipment and supplies. By providing a standard, unique 
     identifier for each product, UPNs supply the information 
     needed to minimize fraudulent billings and streamline the 
     health care product distribution process. The Department of 
     Defense (DoD) has already recognized the many benefits 
     resulting from the implementation of the industry standard of 
     UPNs. As a part of their decisions to use commercial medical 
     product distributors, DoD has mandated the use of UPNs for 
     all medical/surgical products delivered to DoD facilities.
       The Medicare Program could also benefit greatly from the 
     use of UPNs. By using UPNs, the Medicare system would be able 
     to correctly identify the specific items they are paying for, 
     a crucial piece of information that the agency is now 
     missing. As UPNs provide a unique, unambiguous means of 
     identifying each product on the market, Medicare would have 
     an exact record of the specific product used by each 
     beneficiary. Unusual trends in product utilization and claims 
     for ``suspicious'' items would be easily identifiable. The 
     HCFA Common Procedure Coding System (HCPCS) can not provide 
     this information, because many products of varying quality 
     and cost are included in a single code.
       In addition, problems with ``upcoding'' and miscoding could 
     be greatly reduced through the implementation of UPNs. 
     Upcoding occurs when Medicare is intentionally billed under a 
     code that provides a higher reimbursement than the code 
     corresponding to the item that was actually furnished to the 
     beneficiary. Currently, upcoding is difficult to detect 
     because HCPCS are so inexact. UPNs would correctly identify 
     the specific medical product, thereby making it harder to 
     misrepresent the cost and quality of the product. In 
     addition, by cross-referencing each UPN to the appropriate 
     HCPCS, legitimate confusion about HCFA's current coding 
     system would be alleviated. As the General Accounting Office 
     has reported (GAO/HEHS-98-102), the HCPCS system is 
     needlessly ambiguous.
       HIDA firmly believes that the Medicare Program and the 
     medical equipment industry would benefit greatly from the use 
     of UPNs. This standard would not only increase Medicare's 
     understanding of what it pays for, but also assist in the 
     effective administration of the Program.
       Again, thank you for introducing the Medical Universal 
     Product Number Act.
           Sincerely,
     S. Wayne Kay.
                                  ____



                                                      Premier,

                                 Washington, DC, January 20, 1999.
     Hon. Charles Grassley,
     Hon. John Breaux,
     U.S. Senate, Special Committee on Aging,
     Washington, DC.
       Dear Senators Grassley and Breaux: On behalf of Premier, 
     Inc., the nation's largest healthcare alliance, I am pleased 
     to support the ``Medicare Universal Product Number Act.'' The 
     bill requires the use of universal product numbers (UPNs) for 
     all durable medical equipment Medicare purchases by 2002.
       Premier represents more than 200 owner hospitals and 
     hospital systems that own or operate 800 healthcare 
     institutions and have purchasing affiliations with another 
     1,100. Premier owners operate hospitals, HMOs and PPOs, 
     skilled nursing facilities, rehabilitation facilities, home 
     health agencies, and physician practices. Through 
     participation in Premier, healthcare leaders can access cost 
     reduction avenues, delivery system development and 
     enhancement strategies, technology management, decision 
     support tools, and a variety of opportunities for networking 
     and knowledge transfer.
       Premier welcomes federal government leadership in requiring 
     manufacturers to label their products at each unit of 
     inventory with a universal product number by the year 2002. 
     The U.S. General Accounting Office (GAO) recommended in a May 
     1998 report to Congress that HCFA require suppliers include 
     UPNs on their Medicare claims. This

[[Page S761]]

     requirement will not only aid the Medicare program, but also 
     will help the private sector reduce healthcare costs. A 
     recent study conducted by Efficient Healthcare Consumer 
     Response on improving the efficiency of the healthcare supply 
     chain concluded that $11.6 billion could be saved through 
     automation and integration of the product information stream 
     from point of manufacture to point of use across the 
     industry. UPN is a major component within that potential 
     remarkable savings stream. Therefore, we believe that UPN 
     will become as important to the medical industry as other bar 
     code standards have become to grocery and other retail 
     industries for many years.
       This bill represents a common sense approach to reducing 
     healhcare costs in the United States. Thank you Senators 
     Grassley and Breaux for your leadership on this issue and we 
     look forward to assisting you with your efforts to enact this 
     legislation into law.
           Sincerely,
                                                   James L. Scott,
     President.
                                  ____

  Mr. BREAUX. Mr. President, I rise to commend Senator Grassley for his 
leadership on the important issue of cutting waste, fraud and abuse in 
the Medicare program. As chairman of the National Bipartisan Commission 
on the Future of Medicare, I strongly support our legislation that will 
save federal dollars by modernizing an outdated and confusing billing 
system. The Medicare Universal Product Number Act of 1999 is a 
practical solution which will ensure that the Health Care Financing 
Administration (HCFA) knows what it is paying for when reimbursing for 
durable medical equipment (DME) under the Medicare program.
  Currently, HCFA's billing system uses overly broad and sometimes 
outdated codes. These codes can cover a wide range of products which 
vary in price and quality, making it difficult for HCFA to track and 
price medical equipment accurately. By using Universal Product Numbers 
(UPNs), which provide a unique, unambiguous means of identifying each 
product on the market, HCFA will be able to track utilization more 
efficiently.
  Because UPNs are unique identifiers, HCFA will be better equipped in 
combating fraud against the Medicare program. Currently the system is 
vulnerable to a type of fraud called ``upcoding.'' This occurs when 
Medicare is billed for a product under an improper code. Perpetrators 
of fraud can use improper codes to receive higher reimbursement rates 
then those given for the products which they actually provide. By 
tracking utilization, made possible by UPNs, HCFA will know what 
product is provided to the beneficiary and how much that product costs.
  There is widespread support for the use of UPNs in the Medicare 
program. A recent GAO report addresses the need to reform Medicare's 
billing system. The report found that HCFA ``does not know specifically 
what Medicare is paying for when its contractors process claims for'' 
medical equipment and supplies. The Department of Defense and the 
Veterans' Administration have already begun to require UPNs, as do many 
private sector purchasing groups. Moreover, the medical products 
industry recognizes the value of UPNs and strongly supports this 
legislation.
  Medicare's current billing system is vulnerable to abuse. This 
legislation is a practical approach to help ensure that taxpayer 
dollars are protected and spent wisely. I thank Senator Grassley for 
his leadership, and I encourage my colleagues to support this important 
legislation.
                                 ______