Medicare Contractor Reform Amendments of 1996

SECTION 1. SHORT TITLE AND REFERENCES IN ACT.

    (a) Short Title.--This Act may be cited as the ``Medicare 
Contractor Reform Amendments of 1996''.
    (b) References in Act.--Except as otherwise expressly provided, 
whenever in this Act an amendment or repeal is expressed in terms of an 
amendment to, or repeal of, a section or other provision, the reference 
shall be considered to be made a section or other provision of the 
Social Security Act.

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

    (a) Carriers To Include Entities That Are Not Insurance 
Companies.--
            (1) Section 1842(a) (42 U.S.C. 1395u(a)) is amended in the 
        matter preceding paragraph (1) by striking ``with carriers'' 
        and inserting ``with agencies and organizations (hereafter in 
        this section referred to as `carriers')''.
            (2) Section 1842(f) (42 U.S.C. 1395u(f)) is repealed.
    (b) Choice of Fiscal Intermediaries by Providers of Services; 
Secretarial Flexibility in Assigning Functions to Intermediaries and 
Carriers.--
            (1) Section 1816(a) (42 U.S.C. 1395h(a)) 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) Determination (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) Making payments described in subparagraph (A).
            ``(C) Provision of 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) Serving 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) Making such audits of the records of providers of 
        services as may be necessary to ensure that proper payments are 
        made under this part.
            ``(F) Performance of the functions described under 
        subsection (d).
            ``(G) Performance of 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 (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 shall, at least every 5 years, permit 
each provider of services (other than a home health agency or a hospice 
program) to choose an agency or organization (from at least 3 proposed 
by the Secretary, of which at least 1 shall have 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 3 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 at least 3 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 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 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) (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) (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) The second sentence of section 1842(b)(2)(A) (42 U.S.C. 
        1395u(b)(2)(A)) is amended 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.''.
            (D) Section 1842(b)(2)(A) (42 U.S.C. 1395u(b)(2)(A)) is 
        amended by striking the third sentence.
            (E) Section 1842(b)(2)(B) (42 U.S.C. 1395u(b)(2)(B)) is 
        amended in the matter preceding clause (i) by striking 
        ``establish standards'' and inserting ``develop contract 
        performance requirements''.
            (F) Section 1842(b)(2)(D) (42 U.S.C. 1395u(b)(2)(D)) is 
        amended by striking ``standards and criteria'' each place is 
        appears and inserting ``contract performance requirements''.
            (4)(A) Section 1816(b) (42 U.S.C. 1395h(b)) is amended in 
        the matter preceding paragraph (1) by striking ``an agreement'' 
        and inserting ``a contract''.
            (B) Paragraphs (1)(B) and (2)(A) of section 1816(b) (42 
        U.S.C. 1395h(b)) are each amended by striking ``agreement'' and 
        inserting ``contract''.
            (C) The first sentence of section 1816(c)(1) (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) (42 U.S.C. 
        1395h(c)(1)) is amended by striking ``an agreement'' and 
        inserting ``a contract''.
            (E) Section 1816(c)(2)(A) (42 U.S.C. 1395h(c)(2)(A)) is 
        amended in the matter preceding clause (i) by striking 
        ``agreement'' and inserting ``contract''.
            (F) Section 1816(c)(3)(A) (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) (42 U.S.C. 
        1395h(f)(1)) is amended by striking ``an agreement'' and 
        inserting ``a contract''.
            (H) Section 1816(h) (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 
                appears and inserting ``the contract''.
            (I) Section 1816(i)(I) (42 U.S.C. 1395h(i)(1)) is amended 
        by striking ``an agreement'' and inserting ``a contract''.
            (J) Section 1816(j) (42 U.S.C. 1395h(j)) is amended by 
        striking ``An agreement'' and inserting ``A contract''.
            (K) Section 1816(k) (42 U.S.C. 1395h(k)) is amended by 
        striking ``An agreement'' and inserting ``A contract''.
            (L) Section 1842(a) (42 U.S.C. 1395u(a)) is amended in the 
        matter preceding paragraph (1) is amended by striking 
        ``agreements'' and inserting ``contracts''.
            (M) Section 1842(h)(3)(A) (42 U.S.C. 1395u(h)(3)(A)) is 
        amended by striking ``an agreement'' and inserting ``a 
        contract''.
            (5) Section 1816(f)(1) (42 U.S.C. 1395h(f)(1)) is amended 
        by striking the second sentence.
            (6)(A) Section 1816(c)(2)(A) (42 U.S.C. 1395h(c)(2)(A)) is 
        amended in the matter preceding clause (i) by inserting ``that 
        provides for making payments under this part'' after ``this 
        section''.
            (B) Section 1816(c)(3)(A) (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) (42 U.S.C. 1395h(k)) is amended by 
        inserting ``(as appropriate)'' after ``submit''.
            (D) Section 1842(a) (42 U.S.C. 1395u(a)) is amended in the 
        matter preceding paragraph (1) 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) (42 U.S.C. 
        1395u(b)((2)(C)) is amended by inserting ``(as appropriate)'' 
        after ``carriers''.
            (F) Section 1842(b)(3) (42 U.S.C. 1395u(b)(3)) is amended 
        in the matter preceding subparagraph (A) by inserting ``(as 
        appropriate)'' after ``contract''.
            (G) Section 1842(b)(7)(A) (42 U.S.C. 1395u(b)(7)(A)) is 
        amended in the matter preceding clause (i) by striking ``the 
        carrier'' and inserting ``a carrier''.
            (H) Section 1842(b)(11)(A) (42 U.S.C. 1395u(b)(11)(A)) is 
        amended in the matter preceding clause (i) by inserting ``(as 
        appropriate)'' after ``each carrier''.
            (I) Section 1842(h)(2) (42 U.S.C. 1395u(h)(2)) is amended 
        in the first sentence by inserting ``(as appropriate)'' after 
        ``shall''.
            (J) Section 1842(h)(5)(A) (42 U.S.C. 1395u(h)(5)(A)) is 
        amended by inserting ``(as appropriate)'' after ``carriers''.
            (7)(A) Section 1816(c)(2)(C) (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) Section 1816(j) (42 U.S.C. 1395h)(j)) is amended in the 
        matter preceding paragraph (1) by striking ``for home health 
        services, extended care services, or post-hospital extended 
        care services''.
            (8) Section 1842(a)(3) (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''.
    (c) Elimination of Special Provisions for Terminations of 
Contracts.--
            (1) Section 1816(b) (42 U.S.C. 1395h(b)) is amended in the 
        matter preceding paragraph (1) is amended by striking ``or 
        renew''.
            (2) The last sentence of section 1816(c)(1) (42 U.S.C. 
        1395h(c)(1)) is amended by striking ``or renewing''.
            (3) Section 1816(f)(1) (42 U.S.C. 1395h(f)(1)) is amended--
                    (A) by striking ``, renew, or terminate'', and
                    (B) by striking ``, whether the Secretary should 
                assign or reassign a provider of services to an agency 
                or organization,''.
            (4) Section 1816(g) (42 U.S.C. 1395h(g)) is repealed.
            (5) The last sentence of section 1842(b)(2)(A) (42 U.S.C. 
        1395u(b)(2)(A)) is amended by striking ``or renewing''.
            (6) Section 1842(b) (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) (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) (42 U.S.C. 
        1395h(c)(1)) is amended--
                    (A) by striking the comma after ``appropriate'' and 
                inserting ``and'', and
                    (B) by striking ``subsection (a)'' and all that 
                follows through the period and inserting ``subsection 
                (a).''.
            (2) Section 1816(c)(1) (42 U.S.C. 1395h(c)(1)) is further 
        amended by striking the second and third sentences.
            (3) The first sentence of section 1842(c)(1) (42 U.S.C. 
        1395u(c)(1)) is amended--
                    (A) by striking ``shall provide'' the first place 
                it appears and inserting ``may provide'', and
                    (B) by striking ``this part'' and all that follows 
                through the period and inserting ``this part.''.
            (4) Section 1842(c)(1) (42 U.S.C. 1395u(c)(1)) is further 
        amended by striking the second and third sentences.
            (5) 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) (42 U.S.C. 1395h(c)) is amended by 
        adding at the end the following new paragraph:
            ``(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)(1) (42 U.S.C. 1395u(b)(1)) is amended 
        to read as follows:
    ``(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 that have periods that begin during the 1-
        year period that begins on the first day of the fourth calendar 
        month that begins after the date of enactment of this Act may 
        be entered into under section 1816(a) of the Social Security 
        Act (42 U.S.C. 1395h(a)) without regard to any provision of law 
        requiring competition.
            (2) The amendments made by subsection (f) apply to 
        contracts that have periods beginning after the end of the 1-
        year period specified in paragraph (1).
    (h) Effective Dates.--
            (1) The amendments made by subsection (c) apply to 
        contracts that have periods ending on, or after, the end of the 
        third calendar month that begins after the date of enactment of 
        this Act.
            (2) The amendments made by subsections (a), (b), (d), and 
        (e) apply to contracts that have periods beginning after the 
        third calendar month that begins after the date of enactment of 
        this Act.

Summary: Medicare Contractor Reform Amendments of 1996 (sic) - Amends title XVIII (Medicare) of the Social Security Act to make specified changes in the way Medicare administers its contracts for administrative operations. Provides chiefly among such changes for: (1) augmenting the types of entities eligible to serve as carriers under the program, (2) allowing service providers their periodic choice of fiscal intermediaries. (3) repealing certain contract termination, cost reimbursement, and non-cost-effective fiscal intermediary requirements. And (4) requiring competition in cases of certain new contracts and in cases involving poor contract performance. Waives competition requirements in specified circumstances.