SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Contracting Flexibility Act 
of 1998''.

SEC. 2. INCREASED FLEXIBILITY IN CONTRACTING FOR MEDICARE CLAIMS 
              PROCESSING.

    (a) Carriers To Include Entities That Are Not Insurance 
Companies.--Section 1842 of the Social Security Act (42 U.S.C. 1395u) 
is amended--
            (1) in subsection (a), in the matter preceding paragraph 
        (1) by striking ``with carriers'' and inserting ``with agencies 
        and organizations (referred to in this part as `carriers')''; 
        and
            (2) by striking subsection (f).
    (b) Choice of Fiscal Intermediaries by Providers of Services; 
Secretarial Flexibility in Assigning Functions to Intermediaries and 
Carriers.--(1) Section 1816(a) of such Act (42 U.S.C. 1395h(a)) is 
amended to read as follows:
    ``(a)(1) The Secretary may enter into contracts with agencies or 
organizations to perform any or all of the following functions, or 
parts of those functions (or, to the extent provided in a contract, to 
secure performance thereof by other organizations):
            ``(A) Determine (subject to the provisions of section 1878 
        and to such review by the Secretary as may be provided for by 
        the contracts) the amount of the payments required pursuant to 
        this part to be made to providers of services.
            ``(B) Make payments described in subparagraph (A).
            ``(C) Provide consultative services to institutions or 
        agencies to enable them to establish and maintain fiscal 
        records necessary for purposes of this part and otherwise to 
        qualify as providers of services.
            ``(D) Serve as a center for, and communicate to individuals 
        entitled to benefits under this part and to providers of 
        services, any information or instructions furnished to the 
        agency or organization by the Secretary, and serve as a channel 
        of communication from individuals entitled to benefits under 
        this part and from providers of services to the Secretary.
            ``(E) Make such audits of the records of providers of 
        services as may be necessary to insure that proper payments are 
        made under this part.
            ``(F) Perform the functions described by subsection (d).
            ``(G) Perform such other functions as are necessary to 
        carry out the purposes of this part.
    ``(2) As used in this title and title XI, the term `fiscal 
intermediary' means an agency or organization with a contract under 
this section.''.
    (2) Subsections (d) and (e) of section 1816 of such Act (42 U.S.C. 
1395h) are amended to read as follows:
    ``(d) Each provider of services shall have a fiscal intermediary 
that--
            ``(1) acts as a single point of contact for the provider of 
        services under this part;
            ``(2) makes its services sufficiently available to meet the 
        needs of the provider of services; and
            ``(3) is responsible and accountable for arranging the 
        resolution of issues raised under this part by the provider of 
        services.
    ``(e)(1)(A) The Secretary, at least every five years, shall permit 
each provider of services (other than a home health agency or a hospice 
program) to choose an agency or organization (from among those proposed 
by the Secretary, of which at least one has an office in the geographic 
area of the provider of services, except as provided by subparagraph 
(B)(ii)(II)) as the fiscal intermediary under subsection (d) for that 
provider of services. If a contract with that fiscal intermediary is 
discontinued, the Secretary shall permit the provider of services to 
choose under the same conditions from among other agencies or 
organizations.
    ``(B)(i) The Secretary, in carrying out subparagraph (A), shall 
permit a group of hospitals or a group of another class of providers 
(other than home health agencies or hospice programs) under common 
ownership by, or control of, a particular entity to choose one agency 
or organization (from among those proposed by the Secretary) as the 
fiscal intermediary under subsection (d) for all the providers in that 
group if the conditions specified in clause (ii) are met.
    ``(ii) The conditions specified in this clause for clause (i) to 
apply are that--
            ``(I) the group includes all the providers of services of 
        that class that are under common ownership by, or control of, 
        that particular entity, and
            ``(II) all of the providers of services in that group agree 
        that none of the agencies or organizations proposed by the 
        Secretary is required to have an office in any particular 
        geographic area.
    ``(2) The Secretary, in evaluating the performance of a fiscal 
intermediary, shall solicit comments from providers of services.''.
    (3)(A) Section 1816(b)(1)(A) of such Act (42 U.S.C. 1395h(b)(1)(A)) 
is amended by striking ``after applying the standards, criteria, and 
procedures'' and inserting ``after evaluating the ability of the agency 
or organization to fulfill the contract performance requirements''.
    (B) The first sentence of section 1816(f)(1) of such Act (42 U.S.C. 
1395h(f)(1)) is amended--
            (i) by striking ``develop standards, criteria, and 
        procedures'' and inserting ``, after public notice and 
        opportunity for comment, develop contract performance 
        requirements'', and
            (ii) by striking ``, and the Secretary shall establish 
        standards and criteria with respect to the efficient and 
        effective administration of this part''.
    (C) Section 1842(b)(2) of such Act (42 U.S.C. 1395u(b)(2)) is 
amended--
            (i) in subparagraph (A)--
                    (I) in the second sentence to read as follows: 
                ``The Secretary shall, after public notice and 
                opportunity for comment, develop contract performance 
                requirements for the efficient and effective 
                performance of contract obligations under this 
                section.'', and
                    (II) by striking the third sentence;
            (ii) in subparagraph (B), in the matter preceding clause 
        (i), by striking ``establish standards'' and inserting 
        ``develop contract performance requirements'', and
            (iii) in subparagraph (D), by striking ``standards and 
        criteria'' each place it appears and inserting ``contract 
        performance requirements''.
    (4)(A) The matter in section 1816(b) of such Act (42 U.S.C. 
1395h(b)) preceding paragraph (1) is amended by striking ``an 
agreement'' and inserting ``a contract''.
    (B) Paragraphs (1)(B) and (2)(A) of section 1816(b) of such Act (42 
U.S.C. 1395h(b)) are each amended by striking ``agreement'' and 
inserting ``contract''.
    (C) The first sentence of section 1816(c)(1) of such Act (42 U.S.C. 
1395h(c)(1)) is amended by striking ``An agreement'' and inserting ``A 
contract''.
    (D) The last sentence of section 1816(c)(1) of such Act (42 U.S.C. 
1395h(c)(1)) is amended by striking ``an agreement'' and inserting ``a 
contract''.
    (E) The matter in section 1816(c)(2)(A) of such Act (42 U.S.C. 
1395h(c)(2)(A)) preceding clause (i) is amended by striking 
``agreement'' and inserting ``contract''.
    (F) Section 1816(c)(3)(A) of such Act (42 U.S.C. 1395h(c)(3)(A)) is 
amended by striking ``agreement'' and inserting ``contract''.
    (G) The first sentence of section 1816(f)(1) of such Act (42 U.S.C. 
1395h(f)(1)) is amended by striking ``an agreement'' and inserting ``a 
contract''.
    (H) Section 1816(h) of such Act (42 U.S.C. 1395h(h)) is amended--
            (i) by striking ``An agreement'' and inserting ``A 
        contract''; and
            (ii) by striking ``the agreement'' each place it occurs and 
        inserting ``the contract''.
    (I) Section 1816(i)(1) of such Act (42 U.S.C. 1395h(i)(1)) is 
amended by striking ``an agreement'' and inserting ``a contract''.
    (J) Section 1816(j) of such Act (42 U.S.C. 1395h(j)) is amended by 
striking ``An agreement'' and inserting ``A contract''.
    (K) Section 1816(k) of such Act (42 U.S.C. 1395h(k)) is amended by 
striking ``An agreement'' and inserting ``A contract''.
    (L) Section 1816(l) of such Act (42 U.S.C. 1395h(l)) is amended by 
striking ``an agreement'' and inserting ``a contract''.
    (M) The matter in section 1842(a) of such Act (42 U.S.C. 1395u(a)) 
preceding paragraph (1) is amended by striking ``agreements'' and 
inserting ``contracts''.
    (N) Section 1842(h)(3)(A) of such Act (42 U.S.C. 1395u(h)(3)(A)) is 
amended by striking ``an agreement'' and inserting ``a contract''.
    (5) Section 1816(f)(1) of such Act (42 U.S.C. 1395h(f)(1)) is 
amended by striking the second sentence.
    (6)(A) The matter in section 1816(c)(2)(A) of such Act (42 U.S.C. 
1395h(c)(2)(A)) preceding clause (i) is amended by inserting ``that 
provides for making payments under this part'' after ``this section''.
    (B) Section 1816(c)(3)(A) of such Act (42 U.S.C. 1395h(c)(3)(A)) is 
amended by inserting ``that provides for making payments under this 
part'' after ``this section''.
    (C) Section 1816(k) of such Act (42 U.S.C. 1395h(k)) is amended by 
inserting ``(as appropriate)'' after ``submit''.
    (D) The matter in section 1842(a) of such Act (42 U.S.C. 1395u(a)) 
preceding paragraph (1) is amended by striking ``some or all of the 
following functions'' and inserting ``any or all of the following 
functions, or parts of those functions''.
    (E) The first sentence of section 1842(b)(2)(C) of such Act (42 
U.S.C. 1395u(b)(2)(C)) is amended by inserting ``(as appropriate)'' 
after ``carriers''.
    (F) The matter preceding subparagraphs (A) in the first sentence of 
section 1842(b)(3) of such Act (42 U.S.C. 1395u(b)(3)) is amended by 
inserting ``(as appropriate)'' after ``contract''.
    (G) The matter in section 1842(b)(7)(A) of such Act (42 U.S.C. 
1395u(b)(7)(A)) preceding clause (i) is amended by striking ``the 
carrier'' and inserting ``a carrier''.
    (H) The matter in section 1842(b)(11)(A) of such Act (42 U.S.C. 
1395u(b)(11)(A)) preceding clause (i) is amended by inserting ``(as 
appropriate)'' after ``each carrier''.
    (I) The first sentence of section 1842(h)(2) of such Act (42 U.S.C. 
1395u(h)(2)) is amended by inserting ``(as appropriate)'' after 
``shall''.
    (J) Section 1842(h)(5)(A) of such Act (42 U.S.C. 1395u(h)(5)(A)) is 
amended by inserting ``(as appropriate)'' after ``carriers''.
    (7)(A) Section 1816(c)(2)(C) of such Act (42 U.S.C. 1395h(c)(2)(C)) 
is amended by striking ``hospital, rural primary care hospital, skilled 
nursing facility, home health agency, hospice program, comprehensive 
outpatient rehabilitation facility, or rehabilitation agency'' and 
inserting ``provider of services''.
    (B) The matter in section 1816(j) of such Act (42 U.S.C. 1395h(j)) 
preceding paragraph (1) is amended by striking ``for home health 
services, extended care services, or post-hospital extended care 
services''.
    (8) Section 1842(a)(3) of such Act (42 U.S.C. 1395u(a)(3)) is 
amended by inserting ``(to and from individuals enrolled under this 
part and to and from physicians and other entities that furnish items 
and services)'' after ``communication''.
    (9) The matter in section 1842(a) of such Act (42 U.S.C. 1395u(a)) 
preceding paragraph (1), as amended by subsection (b)(4)(M), is amended 
by striking ``carriers with which contracts'' and inserting ``single 
contracts under section 1816 and this section together, or separate 
contracts with eligible agencies and organizations with which 
contracts''.
    (c) Elimination of Special Provisions for Terminations of 
Contracts.--(1) Section 1816 of such Act (42 U.S.C. 1395h) is amended--
            (A) in subsection (b), in the matter preceding paragraph 
        (1), by striking ``or renew'';
            (B) in the last sentence of subsection (c)(1), by striking 
        ``or renewing'';
            (C) in subsection (f)(1) by striking ``, renew, or 
        terminate'' and ``, whether the Secretary should assign or 
        reassign a provider of services to an agency or 
        organization,''; and
            (D) by striking subsection (g).
    (2) The last sentence of section 1842(b)(2)(A) of such Act (42 
U.S.C. 1395u(b)(2)(A)) is amended by striking ``or renewing''.
    (3) Section 1842(b) of such Act (42 U.S.C. 1395u(b)) is amended by 
striking paragraph (5).
    (d) Repeal of Fiscal Intermediary Requirements That Are Not Cost-
Effective.--Section 1816(f)(2) of such Act (42 U.S.C. 1395h(f)(2)) is 
amended to read as follows:
    ``(2) The contract performance requirements developed under 
paragraph (1) shall include, with respect to claims for services 
furnished under this part by any provider of services other than a 
hospital, whether such agency or organization is able to process 75 
percent of reconsiderations within 60 days and 90 percent of 
reconsiderations within 90 days.''.
    (e) Repeal of Cost Reimbursement Requirements.--(1) The first 
sentence of section 1816(c)(1) of such Act (42 U.S.C. 1395h(c)(1)) is 
amended--
            (A) by striking the comma after ``appropriate'' and 
        inserting ``and'';
            (B) by striking all that follows ``subsection (a)'' up to 
        the period; and
            (C) by striking the second and third sentences.
    (2) The first sentence of section 1842(c)(1) of such Act (42 U.S.C. 
1395u(c)(1)) is amended--
            (A) by striking ``shall provide'' the first place it 
        appears and inserting ``may provide'';
            (B) by striking ``this part'' and all that follows up to 
        the period; and
            (C) by striking the second and third sentences.
    (3) Section 2326(a) of the Deficit Reduction Act of 1984 is 
repealed.
    (f) Competition Required for New Contracts and in Cases of Poor 
Performance.--(1) Section 1816(c) of such Act (42 U.S.C. 1395h(c)) is 
amended by adding at the end the following:
    ``(4)(A) A contract with a fiscal intermediary under this section 
may be renewed from term to term without regard to any provision of law 
requiring competition if the fiscal intermediary has met or exceeded 
the performance requirements established in the current contract.
    ``(B) Functions may be transferred among fiscal intermediaries 
without regard to any provision of law requiring competition.''.
    (2) Section 1842(b) of such Act (42 U.S.C. 1395u(b)) is amended by 
striking everything before paragraph (2) and inserting the following:
    ``(b)(1)(A) A contract with a carrier under subsection (a) may be 
renewed from term to term without regard to any provision of law 
requiring competition if the carrier has met or exceeded the 
performance requirements established in the current contract.
    ``(B) Functions may be transferred among carriers without regard to 
any provision of law requiring competition.''.
    (g) Waiver of Competitive Requirements for Initial Contracts.--(1) 
Contracts whose periods begin during the 1-year period that begins on 
the first day of the fourth calendar month that begins after the date 
of the enactment of this Act may be entered into under section 1816(a) 
of the Social Security Act without regard to any provision of law 
requiring competition.
    (2) The amendments made by subsection (f) apply to contracts whose 
periods begin after the end of the 1-year period specified in paragraph 
(1) of this subsection.
    (h) Year 2000 Compliance.--
            (1) For fiscal intermediaries.--Paragraph (2) of section 
        1816(f) of such Act (42 U.S.C. 1395h(f)), as amended by 
        subsection (d), is amended--
                    (A) by striking ``shall include,'' and inserting 
                ``shall include--'';
                    (B) by designating the remainder of such paragraph 
                as subparagraph (A) and indenting it accordingly;
                    (C) by striking the period at the end and inserting 
                ``; and''; and
                    (D) by adding at the end the following new 
                subparagraph:
                    ``(B) a requirement that, by such time as the 
                Secretary considers reasonable, the information 
                technology that is used or acquired by the agency or 
                organization to carry out its responsibilities under 
                this title (to the extent that the Secretary finds such 
                information technology is under the control of such 
                agency or organization)--
                            ``(i) meets the definition of `Year 2000 
                        compliant' under the Federal Acquisition 
                        Regulation (concerning accurate processing of 
                        date/time data (including calculating, 
                        comparing, and sequencing) from, into, and 
                        between the twentieth and twenty-first 
                        centuries, and the years 1999 and 2000 and leap 
                        year calculations) but without regard to 
                        whether the information technology is being 
                        acquired; and
                            ``(ii) meets such other criteria for year 
                        2000 compliance as the Secretary considers 
                        appropriate.''.
            (2) Carriers.--Section 1842(b)(2)(A) of such Act (42 U.S.C. 
        1395u(b)(2)(A)) is amended in the first sentence by inserting 
        after ``and other matters as he finds pertinent'' the 
        following: ``(including a requirement that the carrier will 
        meet the requirement of section 1816(f)(2)(B) (relating to year 
        2000 compliance) in the same manner as such requirement applies 
        to a fiscal intermediary)''.
    (i) Effective Dates.--(1) The amendments made by subsection (c) 
apply to contracts whose periods end at, or after, the end of the third 
calendar month that begins after the date of the enactment of this Act.
    (2) The amendments made by subsections (a), (b), (d), and (e) apply 
to contracts whose periods begin after the third calendar month that 
begins after the date of the enactment of this Act.
    (3) The amendments made by subsection (h) apply to contracts whose 
periods begin after the date of the enactment of this Act.
    (j) Secretary's Authority To Issue Interim Final Regulations.--The 
Secretary of Health and Human Services is authorized to issue any 
regulations needed to implement the amendments made by this section as 
interim final regulations.
Medicare Contracting Flexibility Act of 1998 - Amends title XVIII (Medicare) of the Social Security Act with respect to flexibility in contracting for Medicare claims processing.  Allows the Secretary of Health and Human Services, through the Health Care Financing Administration, to contract for claims processing with carriers that are not insurance companies. 
Requires the Secretary, at least every five years, to permit each service provider, including a group of hospitals or a group of another class of providers under common ownership by or control of a particular entity, to choose a fiscal intermediary from among those the Secretary proposes. 
Revises and reduces the number of contract performance requirements the Secretary must develop for fiscal intermediaries. 
Permits the non-competitive term renewal of a contract with any fiscal intermediary that has met or exceeded performance requirements. 
Waives competitive requirements for fiscal intermediary contracts entered within into within a certain period after enactment of this Act. 
Requires year 2000 compliance by fiscal intermediaries and carriers.
Medicare Contracting Flexibility Act of 1998