I

104TH CONGRESS

2D SESSION H. R. 3132

To amend title XVIII of the Social Security Act to provide for Medicare

contracting reforms, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 20, 1996

Mr. TOWNS introduced the following bill; which was referred to the Committee

on Commerce, and in addition to the Committee on Ways and Means,

for a period to be subsequently determined by the Speaker, in each case

for consideration of such provisions as fall within the jurisdiction of the

committee concerned

A BILL

To amend title XVIII of the Social Security Act to provide

for Medicare contracting reforms, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE AND REFERENCES IN ACT.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Medicare Contractor Reform Amendments of 1996’’.

6 (b) REFERENCES IN ACT.—Except as otherwise ex7 pressly provided, whenever in this Act an amendment or

8 repeal is expressed in terms of an amendment to, or repeal

9 of, a section or other provision, the reference shall be con-
2

HR 3132 IH

1 sidered to be made a section or other provision of the So2 cial Security Act.

3 SEC. 2. INCREASED FLEXIBILITY IN CONTRACTING FOR

4 MEDICARE CLAIMS PROCESSING.

5 (a) CARRIERS TO INCLUDE ENTITIES THAT ARE

6 NOT INSURANCE COMPANIES.—

7 (1) Section 1842(a) (42 U.S.C. 1395u(a)) is

8 amended in the matter preceding paragraph (1) by

9 striking ‘‘with carriers’’ and inserting ‘‘with agencies

10 and organizations (hereafter in this section referred

11 to as ‘carriers’)’’.

12 (2) Section 1842(f) (42 U.S.C. 1395u(f)) is re13 pealed.

14 (b) CHOICE OF FISCAL INTERMEDIARIES BY PROVID15 ERS OF SERVICES; SECRETARIAL FLEXIBILITY IN ASSIGN16 ING FUNCTIONS TO INTERMEDIARIES AND CARRIERS.—

17 (1) Section 1816(a) (42 U.S.C. 1395h(a)) to

18 read as follows:

19 ‘‘(a)(1) The Secretary may enter into contracts with

20 agencies or organizations to perform any or all of the fol21 lowing functions, or parts of those functions (or, to the

22 extent provided in a contract, to secure performance there23 of by other organizations):

24 ‘‘(A) Determination (subject to the provisions

25 of section 1878 and to such review by the Secretary
3

HR 3132 IH

1 as may be provided for by the contracts) the amount

2 of the payments required pursuant to this part to be

3 made to providers of services.

4 ‘‘(B) Making payments described in subpara5 graph (A).

6 ‘‘(C) Provision of consultative services to insti7 tutions or agencies to enable them to establish and

8 maintain fiscal records necessary for purposes of

9 this part and otherwise to qualify as providers of

10 services.

11 ‘‘(D) Serving as a center for, and communicate

12 to individuals entitled to benefits under this part

13 and to providers of services, any information or in14 structions furnished to the agency or organization by

15 the Secretary, and serve as a channel of communica16 tion from individuals entitled to benefits under this

17 part and from providers of services to the Secretary.

18 ‘‘(E) Making such audits of the records of pro19 viders of services as may be necessary to ensure that

20 proper payments are made under this part.

21 ‘‘(F) Performance of the functions described

22 under subsection (d).

23 ‘‘(G) Performance of such other functions as

24 are necessary to carry out the purposes of this part.
4

HR 3132 IH

1 ‘‘(2) As used in this title and title XI, the term ‘fiscal

2 intermediary’ means an agency or organization with a con3 tract under this section.’’.

4 (2) Subsections (d) and (e) of section 1816 (42

5 U.S.C. 1395h) are amended to read as follows:

6 ‘‘(d) Each provider of services shall have a fiscal

7 intermediary that—

8 ‘‘(1) acts as a single point of contact for the

9 provider of services under this part,

10 ‘‘(2) makes its services sufficiently available to

11 meet the needs of the provider of services, and

12 ‘‘(3) is responsible and accountable for arrang13 ing the resolution of issues raised under this part by

14 the provider of services.

15 ‘‘(e)(1)(A) The Secretary shall, at least every 5 years,

16 permit each provider of services (other than a home health

17 agency or a hospice program) to choose an agency or orga18 nization (from at least 3 proposed by the Secretary, of

19 which at least 1 shall have an office in the geographic area

20 of the provider of services, except as provided by subpara21 graph (B)(ii)(II)) as the fiscal intermediary under sub22 section (d) for that provider of services. If a contract with

23 that fiscal intermediary is discontinued, the Secretary

24 shall permit the provider of services to choose under the

25 same conditions from 3 other agencies or organizations.
5

HR 3132 IH

1 ‘‘(B)(i) The Secretary, in carrying out subparagraph

2 (A), shall permit a group of hospitals (or a group of an3 other class of providers other than home health agencies

4 or hospice programs) under common ownership by, or con5 trol of, a particular entity to choose one agency or organi6 zation (from at least 3 proposed by the Secretary) as the

7 fiscal intermediary under subsection (d) for all the provid8 ers in that group if the conditions specified in clause (ii)

9 are met.

10 ‘‘(ii) The conditions specified in this clause are that—

11 ‘‘(I) the group includes all the providers of serv12 ices of that class that are under common ownership

13 by, or control of, that particular entity, and

14 ‘‘(II) all the providers of services in that group

15 agree that none of the agencies or organizations pro16 posed by the Secretary is required to have an office

17 in any particular geographic area.

18 ‘‘(2) The Secretary, in evaluating the performance of

19 a fiscal intermediary, shall solicit comments from provid20 ers of services.’’.

21 (3)(A) Section 1816(b)(1)(A) (42 U.S.C.

22 1395h(b)(1)(A)) is amended by striking ‘‘after ap23 plying the standards, criteria, and procedures’’ and

24 inserting ‘‘after evaluating the ability of the agency
6

HR 3132 IH

1 or organization to fulfill the contract performance

2 requirements’’.

3 (B) The first sentence of section 1816(f)(1) (42

4 U.S.C. 1395h(f)(1)) is amended—

5 (i) by striking ‘‘develop standards, criteria,

6 and procedures’’ and inserting ‘‘, after public

7 notice and opportunity for comment, develop

8 contract performance requirements’’, and

9 (ii) by striking ‘‘, and the Secretary shall

10 establish standards and criteria with respect to

11 the efficient and effective administration of this

12 part’’.

13 (C) The second sentence of section

14 1842(b)(2)(A) (42 U.S.C. 1395u(b)(2)(A)) is

15 amended to read as follows: ‘‘The Secretary shall,

16 after public notice and opportunity for comment, de17 velop contract performance requirements for the effi18 cient and effective performance of contract obliga19 tions under this section.’’.

20 (D) Section 1842(b)(2)(A) (42 U.S.C.

21 1395u(b)(2)(A)) is amended by striking the third

22 sentence.

23 (E) Section 1842(b)(2)(B) (42 U.S.C.

24 1395u(b)(2)(B)) is amended in the matter preceding

25 clause (i) by striking ‘‘establish standards’’ and in-
7

HR 3132 IH

1 serting ‘‘develop contract performance require2 ments’’.

3 (F) Section 1842(b)(2)(D) (42 U.S.C.

4 1395u(b)(2)(D)) is amended by striking ‘‘standards

5 and criteria’’ each place is appears and inserting

6 ‘‘contract performance requirements’’.

7 (4)(A) Section 1816(b) (42 U.S.C. 1395h(b)) is

8 amended in the matter preceding paragraph (1) by

9 striking ‘‘an agreement’’ and inserting ‘‘a contract’’.

10 (B) Paragraphs (1)(B) and (2)(A) of section

11 1816(b) (42 U.S.C. 1395h(b)) are each amended by

12 striking ‘‘agreement’’ and inserting ‘‘contract’’.

13 (C) The first sentence of section 1816(c)(1) (42

14 U.S.C. 1395h(c)(1)) is amended by striking ‘‘An

15 agreement’’ and inserting ‘‘A contract’’.

16 (D) The last sentence of section 1816(c)(1) (42

17 U.S.C. 1395h(c)(1)) is amended by striking ‘‘an

18 agreement’’ and inserting ‘‘a contract’’.

19 (E) Section 1816(c)(2)(A) (42 U.S.C.

20 1395h(c)(2)(A)) is amended in the matter preceding

21 clause (i) by striking ‘‘agreement’’ and inserting

22 ‘‘contract’’.

23 (F) Section 1816(c)(3)(A) (42 U.S.C.

24 1395h(c)(3)(A)) is amended by striking ‘‘agree25 ment’’ and inserting ‘‘contract’’.
8

HR 3132 IH

1 (G) The first sentence of section 1816(f)(1) (42

2 U.S.C. 1395h(f)(1)) is amended by striking ‘‘an

3 agreement’’ and inserting ‘‘a contract’’.

4 (H) Section 1816(h) (42 U.S.C. 1395h(h)) is

5 amended—

6 (i) by striking ‘‘An agreement’’ and insert7 ing ‘‘A contract’’, and

8 (ii) by striking ‘‘the agreement’’ each place

9 it appears and inserting ‘‘the contract’’.

10 (I) Section 1816(i)(I) (42 U.S.C. 1395h(i)(1))

11 is amended by striking ‘‘an agreement’’ and insert12 ing ‘‘a contract’’.

13 (J) Section 1816(j) (42 U.S.C. 1395h(j)) is

14 amended by striking ‘‘An agreement’’ and inserting

15 ‘‘A contract’’.

16 (K) Section 1816(k) (42 U.S.C. 1395h(k)) is

17 amended by striking ‘‘An agreement’’ and inserting

18 ‘‘A contract’’.

19 (L) Section 1842(a) (42 U.S.C. 1395u(a)) is

20 amended in the matter preceding paragraph (1) is

21 amended by striking ‘‘agreements’’ and inserting

22 ‘‘contracts’’.

23 (M) Section 1842(h)(3)(A) (42 U.S.C.

24 1395u(h)(3)(A)) is amended by striking ‘‘an agree25 ment’’ and inserting ‘‘a contract’’.
9

HR 3132 IH

1 (5) Section 1816(f)(1) (42 U.S.C. 1395h(f)(1))

2 is amended by striking the second sentence.

3 (6)(A) Section 1816(c)(2)(A) (42 U.S.C.

4 1395h(c)(2)(A)) is amended in the matter preceding

5 clause (i) by inserting ‘‘that provides for making

6 payments under this part’’ after ‘‘this section’’.

7 (B) Section 1816(c)(3)(A) (42 U.S.C.

8 1395h(c)(3)(A)) is amended by inserting ‘‘that pro9 vides for making payments under this part’’ after

10 ‘‘this section’’.

11 (C) Section 1816(k) (42 U.S.C. 1395h(k)) is

12 amended by inserting ‘‘(as appropriate)’’ after ‘‘sub13 mit’’.

14 (D) Section 1842(a) (42 U.S.C. 1395u(a)) is

15 amended in the matter preceding paragraph (1) by

16 striking ‘‘some or all of the following functions’’ and

17 inserting ‘‘any or all of the following functions, or

18 parts of those functions’’.

19 (E) The first sentence of section 1842(b)(2)(C)

20 (42 U.S.C. 1395u(b)((2)(C)) is amended by insert21 ing ‘‘(as appropriate)’’ after ‘‘carriers’’.

22 (F) Section 1842(b)(3) (42 U.S.C.

23 1395u(b)(3)) is amended in the matter preceding

24 subparagraph (A) by inserting ‘‘(as appropriate)’’

25 after ‘‘contract’’.
10

HR 3132 IH

1 (G) Section 1842(b)(7)(A) (42 U.S.C.

2 1395u(b)(7)(A)) is amended in the matter preceding

3 clause (i) by striking ‘‘the carrier’’ and inserting ‘‘a

4 carrier’’.

5 (H) Section 1842(b)(11)(A) (42 U.S.C.

6 1395u(b)(11)(A)) is amended in the matter preced7 ing clause (i) by inserting ‘‘(as appropriate)’’ after

8 ‘‘each carrier’’.

9 (I) Section 1842(h)(2) (42 U.S.C. 1395u(h)(2))

10 is amended in the first sentence by inserting ‘‘(as

11 appropriate)’’ after ‘‘shall’’.

12 (J) Section 1842(h)(5)(A) (42 U.S.C.

13 1395u(h)(5)(A)) is amended by inserting ‘‘(as ap14 propriate)’’ after ‘‘carriers’’.

15 (7)(A) Section 1816(c)(2)(C) (42 U.S.C.

16 1395h(c)(2)(C)) is amended by striking ‘‘hospital,

17 rural primary care hospital, skilled nursing facility,

18 home health agency, hospice program, comprehen19 sive outpatient rehabilitation facility, or rehabilita20 tion agency’’ and inserting ‘‘provider of services’’.

21 (B) Section 1816(j) (42 U.S.C. 1395h)(j)) is

22 amended in the matter preceding paragraph (1) by

23 striking ‘‘for home health services, extended care

24 services, or post-hospital extended care services’’.
11

HR 3132 IH

1 (8) Section 1842(a)(3) (42 U.S.C. 1395u(a)(3))

2 is amended by inserting ‘‘(to and from individuals

3 enrolled under this part and to and from physicians

4 and other entities that furnish items and services)’’

5 after ‘‘communication’’.

6 (c) ELIMINATION OF SPECIAL PROVISIONS FOR TER7 MINATIONS OF CONTRACTS.—

8 (1) Section 1816(b) (42 U.S.C. 1395h(b)) is

9 amended in the matter preceding paragraph (1) is

10 amended by striking ‘‘or renew’’.

11 (2) The last sentence of section 1816(c)(1) (42

12 U.S.C. 1395h(c)(1)) is amended by striking ‘‘or re13 newing’’.

14 (3) Section 1816(f)(1) (42 U.S.C. 1395h(f)(1))

15 is amended—

16 (A) by striking ‘‘, renew, or terminate’’,

17 and

18 (B) by striking ‘‘, whether the Secretary

19 should assign or reassign a provider of services

20 to an agency or organization,’’.

21 (4) Section 1816(g) (42 U.S.C. 1395h(g)) is re22 pealed.

23 (5) The last sentence of section 1842(b)(2)(A)

24 (42 U.S.C. 1395u(b)(2)(A)) is amended by striking

25 ‘‘or renewing’’.
12

HR 3132 IH

1 (6) Section 1842(b) (42 U.S.C. 1395u(b)) is

2 amended by striking paragraph (5).

3 (d) REPEAL OF FISCAL INTERMEDIARY REQUIRE4 MENTS THAT ARE NOT COST-EFFECTIVE.—Section

5 1816(f)(2) (42 U.S.C. 1395h(f)(2)) is amended to read

6 as follows:

7 ‘‘(2) The contract performance requirements

8 developed under paragraph (1) shall include, with

9 respect to claims for services furnished under this

10 part by any provider of services other than a hos11 pital, whether such agency or organization is able to

12 process 75 percent of reconsiderations within 60

13 days and 90 percent of reconsiderations within 90

14 days.’’.

15 (e) REPEAL OF COST REIMBURSEMENT REQUIRE16 MENTS.—

17 (1) The first sentence of section 1816(c)(1) (42

18 U.S.C. 1395h(c)(1)) is amended—

19 (A) by striking the comma after ‘‘appro20 priate’’ and inserting ‘‘and’’, and

21 (B) by striking ‘‘subsection (a)’’ and all

22 that follows through the period and inserting

23 ‘‘subsection (a).’’.
13

HR 3132 IH

1 (2) Section 1816(c)(1) (42 U.S.C. 1395h(c)(1))

2 is further amended by striking the second and third

3 sentences.

4 (3) The first sentence of section 1842(c)(1) (42

5 U.S.C. 1395u(c)(1)) is amended—

6 (A) by striking ‘‘shall provide’’ the first

7 place it appears and inserting ‘‘may provide’’,

8 and

9 (B) by striking ‘‘this part’’ and all that fol10 lows through the period and inserting ‘‘this

11 part.’’.

12 (4) Section 1842(c)(1) (42 U.S.C. 1395u(c)(1))

13 is further amended by striking the second and third

14 sentences.

15 (5) Section 2326(a) of the Deficit Reduction

16 Act of 1984 is repealed.

17 (f) COMPETITION REQUIRED FOR NEW CONTRACTS

18 AND IN CASES OF POOR PERFORMANCE.—

19 (1) Section 1816(c) (42 U.S.C. 1395h(c)) is

20 amended by adding at the end the following new

21 paragraph:

22 ‘‘(4)(A) A contract with a fiscal intermediary

23 under this section may be renewed from term to

24 term without regard to any provision of law requir25 ing competition if the fiscal intermediary has met or
14

HR 3132 IH

1 exceeded the performance requirements established

2 in the current contract.

3 ‘‘(B) Functions may be transferred among fis4 cal intermediaries without regard to any provision of

5 law requiring competition.’’.

6 (2) Section 1842(b)(1) (42 U.S.C. 1395u(b)(1))

7 is amended to read as follows:

8 ‘‘(b)(1)(A) A contract with a carrier under subsection

9 (a) may be renewed from term to term without regard to

10 any provision of law requiring competition if the carrier

11 has met or exceeded the performance requirements estab12 lished in the current contract.

13 ‘‘(B) Functions may be transferred among carriers

14 without regard to any provision of law requiring competi15 tion.’’.

16 (g) WAIVER OF COMPETITIVE REQUIREMENTS FOR

17 INITIAL CONTRACTS.—

18 (1) Contracts that have periods that begin dur19 ing the 1-year period that begins on the first day of

20 the fourth calendar month that begins after the date

21 of enactment of this Act may be entered into under

22 section 1816(a) of the Social Security Act (42

23 U.S.C. 1395h(a)) without regard to any provision of

24 law requiring competition.
15

HR 3132 IH

1 (2) The amendments made by subsection (f)

2 apply to contracts that have periods beginning after

3 the end of the 1-year period specified in paragraph

4 (1).

5 (h) EFFECTIVE DATES.—

6 (1) The amendments made by subsection (c)

7 apply to contracts that have periods ending on, or

8 after, the end of the third calendar month that be9 gins after the date of enactment of this Act.

10 (2) The amendments made by subsections (a),

11 (b), (d), and (e) apply to contracts that have periods

12 beginning after the third calendar month that begins

13 after the date of enactment of this Act.

Æ