I 

108TH CONGRESS 

1ST SESSION H. R. 3584

To amend title XVIII of the Social Security Act to increase the amount 

of payment for physicians’ services under the Medicare Program and 

to provide regulatory relief and contracting flexibility under the Medicare 

Program. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 21, 2003

Ms. BERKLEY introduced the following bill; which was referred to the Committee on Energy and 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 increase 

the amount of payment for physicians’ services under 

the Medicare Program and to provide regulatory relief 

and contracting flexibility under the Medicare Program.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECU2 RITY ACT; REFERENCES TO BIPA AND SEC3 RETARY; TABLE OF CONTENTS. 

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

5 ‘‘Medicare Regulatory Fairness and Physician Fee Update 

6 Act’’. 

7 (b) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex8 cept as otherwise specifically provided, whenever in divi9 sion A of this Act an amendment is expressed in terms 

10 of an amendment to or repeal of a section or other provi11 sion, the reference shall be considered to be made to that 

12 section or other provision of the Social Security Act. 

13 (c) BIPA; SECRETARY.—In this Act: 

14 (1) BIPA.—The term ‘‘BIPA’’ means the 

15 Medicare, Medicaid, and SCHIP Benefits Improve16 ment and Protection Act of 2000, as enacted into 

17 law by section 1(a)(6) of Public Law 106–554. 

18 (2) SECRETARY.—The term ‘‘Secretary’’ means 

19 the Secretary of Health and Human Services.

20 (d) TABLE OF CONTENTS.—The table of contents of 

21 this Act is as follows:

Sec. 1. Short title; amendments to Social Security Act; references to BIPA and 

Secretary; table of contents. 

TITLE I—PROVISIONS RELATING TO PAYMENT FOR PHYSICIANS’ 

SERVICES 

Sec. 101. Revision of updates for physicians’ services. 

TITLE II—ADMINISTRATIVE IMPROVEMENTS, REGULATORY 

REDUCTION, AND CONTRACTING REFORM 
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Subtitle A—Regulatory Reform 

Sec. 201. Construction; definition of supplier. 

Sec. 202. Issuance of regulations. 

Sec. 203. Compliance with changes in regulations and policies. 

Sec. 204. Reports and studies relating to regulatory reform. 

Subtitle B—Contracting Reform 

Sec. 211. Increased flexibility in medicare administration. 

Sec. 212. Requirements for information security for medicare administrative 

contractors. 

Subtitle C—Education and Outreach 

Sec. 221. Provider education and technical assistance. 

Sec. 222. Small provider technical assistance demonstration program. 

Sec. 223. Medicare Beneficiary Ombudsman. 

Sec. 224. Beneficiary outreach demonstration program. 

Sec. 225. Inclusion of additional information in notices to beneficiaries about 

skilled nursing facility benefits. 

Sec. 226. Information on medicare-certified skilled nursing facilities in hospital 

discharge plans. 

Subtitle D—Appeals and Recovery 

Sec. 231. Transfer of responsibility for medicare appeals. 

Sec. 232. Process for expedited access to review. 

Sec. 233. Revisions to medicare appeals process. 

Sec. 234. Prepayment review. 

Sec. 235. Recovery of overpayments. 

Sec. 236. Provider enrollment process; right of appeal. 

Sec. 237. Process for correction of minor errors and omissions without pursuing appeals process. 

Sec. 238. Prior determination process for certain items and services; advance 

beneficiary notices. 

Sec. 239. Appeals by providers when there is no other party available. 

Sec. 240. Revisions to appeals timeframes and amounts. 

Sec. 241. Mediation process for local coverage determinations.

1 TITLE I—PROVISIONS RELATING 

2 TO PAYMENT FOR PHYSI3 CIANS’ SERVICES

4 SEC. 101. REVISION OF UPDATES FOR PHYSICIANS’ SERV5 ICES. 

6 (a) UPDATE FOR 2004 AND 2005.—Section 1848(d) 

7 of the Social Security Act (42 U.S.C. 1395w–4(d)) is 
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1 amended by adding at the end the following new para2 graph: 

3 ‘‘(5) UPDATE FOR 2004 AND 2005.—The update 

4 to the single conversion factor established in para5 graph (1)(C) for each of 2004 and 2005 shall be not 

6 less than 1.5 percent.’’. 

7 (b) CONFORMING AMENDMENT.—Paragraph (4)(B) 

8 of such section is amended, in the matter before clause 

9 (i), by inserting ‘‘and paragraph (5)’’ after ‘‘subparagraph 

10 (D)’’. 

11 (c) NOT TREATED AS CHANGE IN LAW AND REGULA12 TION IN SUSTAINABLE GROWTH RATE DETERMINA13 TION.—The amendments made by this subsection shall 

14 not be treated as a change in law for purposes of applying 

15 section 1848(f)(2)(D) of the Social Security Act (42 

16 U.S.C. 1395w–4(f)(2)(D)).

17 TITLE II—ADMINISTRATIVE IM18 PROVEMENTS, REGULATORY 

19 REDUCTION, AND CON20 TRACTING REFORM 

21 Subtitle A—Regulatory Reform 

22 SEC. 201. CONSTRUCTION; DEFINITION OF SUPPLIER. 

23 (a) CONSTRUCTION.—Nothing in this title shall be 

24 construed—
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1 (1) to compromise or affect existing legal rem2 edies for addressing fraud or abuse, whether it be 

3 criminal prosecution, civil enforcement, or adminis4 trative remedies, including under sections 3729 

5 through 3733 of title 31, United States Code (com6 monly known as the ‘‘False Claims Act’’); or 

7 (2) to prevent or impede the Department of 

8 Health and Human Services in any way from its on9 going efforts to eliminate waste, fraud, and abuse in 

10 the medicare program. 

11 Furthermore, the consolidation of medicare administrative 

12 contracting set forth in this division does not constitute 

13 consolidation of the Federal Hospital Insurance Trust 

14 Fund and the Federal Supplementary Medical Insurance 

15 Trust Fund or reflect any position on that issue. 

16 (b) DEFINITION OF SUPPLIER.—Section 1861 (42 

17 U.S.C. 1395x) is amended by inserting after subsection 

18 (c) the following new subsection: 

19 ‘‘Supplier 

20 ‘‘(d) The term ‘supplier’ means, unless the context 

21 otherwise requires, a physician or other practitioner, a fa22 cility, or other entity (other than a provider of services) 

23 that furnishes items or services under this title.’’. 
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1 SEC. 202. ISSUANCE OF REGULATIONS. 

2 (a) REGULAR TIMELINE FOR PUBLICATION OF

3 FINAL RULES.—

4 (1) IN GENERAL.—Section 1871(a) (42 U.S.C. 

5 1395hh(a)) is amended by adding at the end the fol6 lowing new paragraph: 

7 ‘‘(3)(A) The Secretary, in consultation with the Di8 rector of the Office of Management and Budget, shall es9 tablish and publish a regular timeline for the publication 

10 of final regulations based on the previous publication of 

11 a proposed regulation or an interim final regulation. 

12 ‘‘(B) Such timeline may vary among different regula13 tions based on differences in the complexity of the regula14 tion, the number and scope of comments received, and 

15 other relevant factors, but shall not be longer than 3 years 

16 except under exceptional circumstances. If the Secretary 

17 intends to vary such timeline with respect to the publica18 tion of a final regulation, the Secretary shall cause to have 

19 published in the Federal Register notice of the different 

20 timeline by not later than the timeline previously estab21 lished with respect to such regulation. Such notice shall 

22 include a brief explanation of the justification for such 

23 variation. 

24 ‘‘(C) In the case of interim final regulations, upon 

25 the expiration of the regular timeline established under 

26 this paragraph for the publication of a final regulation 
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1 after opportunity for public comment, the interim final 

2 regulation shall not continue in effect unless the Secretary 

3 publishes (at the end of the regular timeline and, if appli4 cable, at the end of each succeeding 1-year period) a notice 

5 of continuation of the regulation that includes an expla6 nation of why the regular timeline (and any subsequent 

7 1-year extension) was not complied with. If such a notice 

8 is published, the regular timeline (or such timeline as pre9 viously extended under this paragraph) for publication of 

10 the final regulation shall be treated as having been ex11 tended for 1 additional year. 

12 ‘‘(D) The Secretary shall annually submit to Con13 gress a report that describes the instances in which the 

14 Secretary failed to publish a final regulation within the 

15 applicable regular timeline under this paragraph and that 

16 provides an explanation for such failures.’’. 

17 (2) EFFECTIVE DATE.—The amendment made 

18 by paragraph (1) shall take effect on the date of the 

19 enactment of this Act. The Secretary shall provide 

20 for an appropriate transition to take into account 

21 the backlog of previously published interim final reg22 ulations. 

23 (b) LIMITATIONS ON NEW MATTER IN FINAL REGU24 LATIONS.—
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1 (1) IN GENERAL.—Section 1871(a) (42 U.S.C. 

2 1395hh(a)), as amended by subsection (a), is 

3 amended by adding at the end the following new 

4 paragraph: 

5 ‘‘(4) If the Secretary publishes a final regulation that 

6 includes a provision that is not a logical outgrowth of a 

7 previously published notice of proposed rulemaking or in8 terim final rule, such provision shall be treated as a pro9 posed regulation and shall not take effect until there is 

10 the further opportunity for public comment and a publica11 tion of the provision again as a final regulation.’’. 

12 (2) EFFECTIVE DATE.—The amendment made 

13 by paragraph (1) shall apply to final regulations 

14 published on or after the date of the enactment of 

15 this Act. 

16 SEC. 203. COMPLIANCE WITH CHANGES IN REGULATIONS 

17 AND POLICIES. 

18 (a) NO RETROACTIVE APPLICATION OF SUB19 STANTIVE CHANGES.—

20 (1) IN GENERAL.—Section 1871 (42 U.S.C. 

21 1395hh), as amended by section 202(a), is amended 

22 by adding at the end the following new subsection: 

23 ‘‘(e)(1)(A) A substantive change in regulations, man24 ual instructions, interpretative rules, statements of policy, 

25 or guidelines of general applicability under this title shall 
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1 not be applied (by extrapolation or otherwise) retroactively 

2 to items and services furnished before the effective date 

3 of the change, unless the Secretary determines that—

4 ‘‘(i) such retroactive application is necessary to 

5 comply with statutory requirements; or 

6 ‘‘(ii) failure to apply the change retroactively 

7 would be contrary to the public interest.’’. 

8 (2) EFFECTIVE DATE.—The amendment made 

9 by paragraph (1) shall apply to substantive changes 

10 issued on or after the date of the enactment of this 

11 Act. 

12 (b) TIMELINE FOR COMPLIANCE WITH SUBSTANTIVE

13 CHANGES AFTER NOTICE.—

14 (1) IN GENERAL.—Section 1871(e)(1), as 

15 added by subsection (a), is amended by adding at 

16 the end the following:

17 ‘‘(B)(i) Except as provided in clause (ii), a sub18 stantive change referred to in subparagraph (A) shall not 

19 become effective before the end of the 30-day period that 

20 begins on the date that the Secretary has issued or pub21 lished, as the case may be, the substantive change. 

22 ‘‘(ii) The Secretary may provide for such a sub23 stantive change to take effect on a date that precedes the 

24 end of the 30-day period under clause (i) if the Secretary 

25 finds that waiver of such 30-day period is necessary to 
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1 comply with statutory requirements or that the application 

2 of such 30-day period is contrary to the public interest. 

3 If the Secretary provides for an earlier effective date pur4 suant to this clause, the Secretary shall include in the 

5 issuance or publication of the substantive change a finding 

6 described in the first sentence, and a brief statement of 

7 the reasons for such finding. 

8 ‘‘(C) No action shall be taken against a provider of 

9 services or supplier with respect to noncompliance with 

10 such a substantive change for items and services furnished 

11 before the effective date of such a change.’’. 

12 (2) EFFECTIVE DATE.—The amendment made 

13 by paragraph (1) shall apply to compliance actions 

14 undertaken on or after the date of the enactment of 

15 this Act. 

16 (c) RELIANCE ON GUIDANCE.—

17 (1) IN GENERAL.—Section 1871(e), as added 

18 by subsection (a), is further amended by adding at 

19 the end the following new paragraph: 

20 ‘‘(2)(A) If—

21 ‘‘(i) a provider of services or supplier follows 

22 the written guidance (which may be transmitted 

23 electronically) provided by the Secretary or by a 

24 medicare contractor (as defined in section 1889(g)) 

25 acting within the scope of the contractor’s contract 
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1 authority, with respect to the furnishing of items or 

2 services and submission of a claim for benefits for 

3 such items or services with respect to such provider 

4 or supplier; 

5 ‘‘(ii) the Secretary determines that the provider 

6 of services or supplier has accurately presented the 

7 circumstances relating to such items, services, and 

8 claim to the contractor in writing; and 

9 ‘‘(iii) the guidance was in error; 

10 the provider of services or supplier shall not be subject 

11 to any penalty or interest under this title or the provisions 

12 of title XI insofar as they relate to this title (including 

13 interest under a repayment plan under section 1893 or 

14 otherwise) relating to the provision of such items or serv15 ice or such claim if the provider of services or supplier 

16 reasonably relied on such guidance. 

17 ‘‘(B) Subparagraph (A) shall not be construed as pre18 venting the recoupment or repayment (without any addi19 tional penalty) relating to an overpayment insofar as the 

20 overpayment was solely the result of a clerical or technical 

21 operational error.’’. 

22 (2) EFFECTIVE DATE.—The amendment made 

23 by paragraph (1) shall take effect on the date of the 

24 enactment of this Act and shall only apply to a pen-
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1 alty or interest imposed with respect to guidance 

2 provided on or after July 24, 2003. 

3 SEC. 204. REPORTS AND STUDIES RELATING TO REGU4 LATORY REFORM. 

5 (a) GAO STUDY ON ADVISORY OPINION AUTHOR6 ITY.—

7 (1) STUDY.—The Comptroller General of the 

8 United States shall conduct a study to determine the 

9 feasibility and appropriateness of establishing in the 

10 Secretary authority to provide legally binding advi11 sory opinions on appropriate interpretation and ap12 plication of regulations to carry out the medicare 

13 program under title XVIII of the Social Security 

14 Act. Such study shall examine the appropriate time15 frame for issuing such advisory opinions, as well as 

16 the need for additional staff and funding to provide 

17 such opinions. 

18 (2) REPORT.—The Comptroller General shall 

19 submit to Congress a report on the study conducted 

20 under paragraph (1) by not later than 1 year after 

21 the date of the enactment of this Act. 

22 (b) REPORT ON LEGAL AND REGULATORY INCON23 SISTENCIES.—Section 1871 (42 U.S.C. 1395hh), as 

24 amended by section 203(a)(1), is amended by adding at 

25 the end the following new subsection: 
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1 ‘‘(f)(1) Not later than 2 years after the date of the 

2 enactment of this subsection, and every 3 years thereafter, 

3 the Secretary shall submit to Congress a report with re4 spect to the administration of this title and areas of incon5 sistency or conflict among the various provisions under 

6 law and regulation. 

7 ‘‘(2) In preparing a report under paragraph (1), the 

8 Secretary shall collect—

9 ‘‘(A) information from individuals entitled to 

10 benefits under part A or enrolled under part B, or 

11 both, providers of services, and suppliers and from 

12 the Medicare Beneficiary Ombudsman with respect 

13 to such areas of inconsistency and conflict; and 

14 ‘‘(B) information from medicare contractors 

15 that tracks the nature of written and telephone in16 quiries. 

17 ‘‘(3) A report under paragraph (1) shall include a de18 scription of efforts by the Secretary to reduce such incon19 sistency or conflicts, and recommendations for legislation 

20 or administrative action that the Secretary determines ap21 propriate to further reduce such inconsistency or con22 flicts.’’. 
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1 Subtitle B—Contracting Reform 

2 SEC. 211. INCREASED FLEXIBILITY IN MEDICARE ADMINIS3 TRATION. 

4 (a) CONSOLIDATION AND FLEXIBILITY IN MEDICARE

5 ADMINISTRATION.—

6 (1) IN GENERAL.—Title XVIII is amended by 

7 inserting after section 1874 the following new sec8 tion: 

9 ‘‘CONTRACTS WITH MEDICARE ADMINISTRATIVE

10 CONTRACTORS

11 ‘‘SEC. 1874A. (a) AUTHORITY.—

12 ‘‘(1) AUTHORITY TO ENTER INTO CON13 TRACTS.—The Secretary may enter into contracts 

14 with any eligible entity to serve as a medicare ad15 ministrative contractor with respect to the perform16 ance of any or all of the functions described in para17 graph (4) or parts of those functions (or, to the ex18 tent provided in a contract, to secure performance 

19 thereof by other entities). 

20 ‘‘(2) ELIGIBILITY OF ENTITIES.—An entity is 

21 eligible to enter into a contract with respect to the 

22 performance of a particular function described in 

23 paragraph (4) only if—

24 ‘‘(A) the entity has demonstrated capa25 bility to carry out such function; 
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1 ‘‘(B) the entity complies with such conflict 

2 of interest standards as are generally applicable 

3 to Federal acquisition and procurement; 

4 ‘‘(C) the entity has sufficient assets to fi5 nancially support the performance of such func6 tion; and 

7 ‘‘(D) the entity meets such other require8 ments as the Secretary may impose. 

9 ‘‘(3) MEDICARE ADMINISTRATIVE CONTRACTOR

10 DEFINED.—For purposes of this title and title XI—

11 ‘‘(A) IN GENERAL.—The term ‘medicare 

12 administrative contractor’ means an agency, or13 ganization, or other person with a contract 

14 under this section. 

15 ‘‘(B) APPROPRIATE MEDICARE ADMINIS16 TRATIVE CONTRACTOR.—With respect to the 

17 performance of a particular function in relation 

18 to an individual entitled to benefits under part 

19 A or enrolled under part B, or both, a specific 

20 provider of services or supplier (or class of such 

21 providers of services or suppliers), the ‘appro22 priate’ medicare administrative contractor is the 

23 medicare administrative contractor that has a 

24 contract under this section with respect to the 

25 performance of that function in relation to that 
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1 individual, provider of services or supplier or 

2 class of provider of services or supplier. 

3 ‘‘(4) FUNCTIONS DESCRIBED.—The functions 

4 referred to in paragraphs (1) and (2) are payment 

5 functions (including the function of developing local 

6 coverage determinations, as defined in section 

7 1869(f)(2)(B)), provider services functions, and 

8 functions relating to services furnished to individuals 

9 entitled to benefits under part A or enrolled under 

10 part B, or both, as follows: 

11 ‘‘(A) DETERMINATION OF PAYMENT

12 AMOUNTS.—Determining (subject to the provi13 sions of section 1878 and to such review by the 

14 Secretary as may be provided for by the con15 tracts) the amount of the payments required 

16 pursuant to this title to be made to providers 

17 of services, suppliers and individuals. 

18 ‘‘(B) MAKING PAYMENTS.—Making pay19 ments described in subparagraph (A) (including 

20 receipt, disbursement, and accounting for funds 

21 in making such payments). 

22 ‘‘(C) BENEFICIARY EDUCATION AND AS23 SISTANCE.—Providing education and outreach 

24 to individuals entitled to benefits under part A 

25 or enrolled under part B, or both, and pro-
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1 viding assistance to those individuals with spe2 cific issues, concerns, or problems. 

3 ‘‘(D) PROVIDER CONSULTATIVE SERV4 ICES.—Providing consultative services to insti5 tutions, agencies, and other persons to enable 

6 them to establish and maintain fiscal records 

7 necessary for purposes of this title and other8 wise to qualify as providers of services or sup9 pliers. 

10 ‘‘(E) COMMUNICATION WITH PRO11 VIDERS.—Communicating to providers of serv12 ices and suppliers any information or instruc13 tions furnished to the medicare administrative 

14 contractor by the Secretary, and facilitating 

15 communication between such providers and sup16 pliers and the Secretary. 

17 ‘‘(F) PROVIDER EDUCATION AND TECH18 NICAL ASSISTANCE.—Performing the functions 

19 relating to provider education, training, and 

20 technical assistance. 

21 ‘‘(G) ADDITIONAL FUNCTIONS.—Per22 forming such other functions, including (subject 

23 to paragraph (5)) functions under the Medicare 

24 Integrity Program under section 1893, as are 

25 necessary to carry out the purposes of this title.
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1 ‘‘(5) RELATIONSHIP TO MIP CONTRACTS.—

2 ‘‘(A) NONDUPLICATION OF DUTIES.—In 

3 entering into contracts under this section, the 

4 Secretary shall assure that functions of medi5 care administrative contractors in carrying out 

6 activities under parts A and B do not duplicate 

7 activities carried out under a contract entered 

8 into under the Medicare Integrity Program 

9 under section 1893. The previous sentence shall 

10 not apply with respect to the activity described 

11 in section 1893(b)(5) (relating to prior author12 ization of certain items of durable medical 

13 equipment under section 1834(a)(15)). 

14 ‘‘(B) CONSTRUCTION.—An entity shall not 

15 be treated as a medicare administrative con16 tractor merely by reason of having entered into 

17 a contract with the Secretary under section 

18 1893. 

19 ‘‘(6) APPLICATION OF FEDERAL ACQUISITION

20 REGULATION.—Except to the extent inconsistent 

21 with a specific requirement of this section, the Fed22 eral Acquisition Regulation applies to contracts 

23 under this section.

24 ‘‘(b) CONTRACTING REQUIREMENTS.—

25 ‘‘(1) USE OF COMPETITIVE PROCEDURES.—
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1 ‘‘(A) IN GENERAL.—Except as provided in 

2 laws with general applicability to Federal acqui3 sition and procurement or in subparagraph (B), 

4 the Secretary shall use competitive procedures 

5 when entering into contracts with medicare ad6 ministrative contractors under this section, tak7 ing into account performance quality as well as 

8 price and other factors. 

9 ‘‘(B) RENEWAL OF CONTRACTS.—The Sec10 retary may renew a contract with a medicare 

11 administrative contractor under this section 

12 from term to term without regard to section 5 

13 of title 41, United States Code, or any other 

14 provision of law requiring competition, if the 

15 medicare administrative contractor has met or 

16 exceeded the performance requirements applica17 ble with respect to the contract and contractor, 

18 except that the Secretary shall provide for the

19 application of competitive procedures under 

20 such a contract not less frequently than once 

21 every 5 years. 

22 ‘‘(C) TRANSFER OF FUNCTIONS.—The 

23 Secretary may transfer functions among medi24 care administrative contractors consistent with 

25 the provisions of this paragraph. The Secretary 
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1 shall ensure that performance quality is consid2 ered in such transfers. The Secretary shall pro3 vide public notice (whether in the Federal Reg4 ister or otherwise) of any such transfer (includ5 ing a description of the functions so trans6 ferred, a description of the providers of services 

7 and suppliers affected by such transfer, and 

8 contact information for the contractors in9 volved). 

10 ‘‘(D) INCENTIVES FOR QUALITY.—The 

11 Secretary shall provide incentives for medicare 

12 administrative contractors to provide quality 

13 service and to promote efficiency. 

14 ‘‘(2) COMPLIANCE WITH REQUIREMENTS.—No 

15 contract under this section shall be entered into with 

16 any medicare administrative contractor unless the 

17 Secretary finds that such medicare administrative 

18 contractor will perform its obligations under the con19 tract efficiently and effectively and will meet such 

20 requirements as to financial responsibility, legal au21 thority, quality of services provided, and other mat22 ters as the Secretary finds pertinent. 

23 ‘‘(3) PERFORMANCE REQUIREMENTS.—

24 ‘‘(A) DEVELOPMENT OF SPECIFIC PER25 FORMANCE REQUIREMENTS.—
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1 ‘‘(i) IN GENERAL.—The Secretary 

2 shall develop contract performance require3 ments to carry out the specific require4 ments applicable under this title to a func5 tion described in subsection (a)(4) and 

6 shall develop standards for measuring the 

7 extent to which a contractor has met such 

8 requirements. 

9 ‘‘(ii) CONSULTATION.—In developing 

10 such performance requirements and stand11 ards for measurement, the Secretary shall 

12 consult with providers of services, organi13 zations representative of beneficiaries 

14 under this title, and organizations and 

15 agencies performing functions necessary to 

16 carry out the purposes of this section with 

17 respect to such performance requirements. 

18 ‘‘(iii) PUBLICATION OF STANDARDS.—

19 The Secretary shall make such perform20 ance requirements and measurement 

21 standards available to the public. 

22 ‘‘(B) CONSIDERATIONS.—The Secretary 

23 shall include, as one of the standards developed 

24 under subparagraph (A), provider and bene25 ficiary satisfaction levels.
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1 ‘‘(C) INCLUSION IN CONTRACTS.—All con2 tractor performance requirements shall be set 

3 forth in the contract between the Secretary and 

4 the appropriate medicare administrative con5 tractor. Such performance requirements—

6 ‘‘(i) shall reflect the performance re7 quirements published under subparagraph 

8 (A), but may include additional perform9 ance requirements; 

10 ‘‘(ii) shall be used for evaluating con11 tractor performance under the contract; 

12 and 

13 ‘‘(iii) shall be consistent with the writ14 ten statement of work provided under the 

15 contract. 

16 ‘‘(4) INFORMATION REQUIREMENTS.—The Sec17 retary shall not enter into a contract with a medi18 care administrative contractor under this section un19 less the contractor agrees—

20 ‘‘(A) to furnish to the Secretary such time21 ly information and reports as the Secretary may 

22 find necessary in performing his functions 

23 under this title; and 

24 ‘‘(B) to maintain such records and afford 

25 such access thereto as the Secretary finds nec-
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1 essary to assure the correctness and verification 

2 of the information and reports under subpara3 graph (A) and otherwise to carry out the pur4 poses of this title. 

5 ‘‘(5) SURETY BOND.—A contract with a medi6 care administrative contractor under this section 

7 may require the medicare administrative contractor, 

8 and any of its officers or employees certifying pay9 ments or disbursing funds pursuant to the contract, 

10 or otherwise participating in carrying out the con11 tract, to give surety bond to the United States in 

12 such amount as the Secretary may deem appro13 priate.

14 ‘‘(c) TERMS AND CONDITIONS.—

15 ‘‘(1) IN GENERAL.—A contract with any medi16 care administrative contractor under this section 

17 may contain such terms and conditions as the Sec18 retary finds necessary or appropriate and may pro19 vide for advances of funds to the medicare adminis20 trative contractor for the making of payments by it 

21 under subsection (a)(4)(B). 

22 ‘‘(2) PROHIBITION ON MANDATES FOR CERTAIN

23 DATA COLLECTION.—The Secretary may not require, 

24 as a condition of entering into, or renewing, a con25 tract under this section, that the medicare adminis-
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1 trative contractor match data obtained other than in 

2 its activities under this title with data used in the 

3 administration of this title for purposes of identi4 fying situations in which the provisions of section 

5 1862(b) may apply. 

6 ‘‘(d) LIMITATION ON LIABILITY OF MEDICARE AD7 MINISTRATIVE CONTRACTORS AND CERTAIN OFFICERS.—

8 ‘‘(1) CERTIFYING OFFICER.—No individual des9 ignated pursuant to a contract under this section as 

10 a certifying officer shall, in the absence of the reck11 less disregard of the individual’s obligations or the 

12 intent by that individual to defraud the United 

13 States, be liable with respect to any payments cer14 tified by the individual under this section. 

15 ‘‘(2) DISBURSING OFFICER.—No disbursing of16 ficer shall, in the absence of the reckless disregard 

17 of the officer’s obligations or the intent by that offi18 cer to defraud the United States, be liable with re19 spect to any payment by such officer under this sec20 tion if it was based upon an authorization (which 

21 meets the applicable requirements for such internal 

22 controls established by the Comptroller General of 

23 the United States) of a certifying officer designated 

24 as provided in paragraph (1) of this subsection. 
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1 ‘‘(3) LIABILITY OF MEDICARE ADMINISTRATIVE

2 CONTRACTOR.—

3 ‘‘(A) IN GENERAL.—No medicare adminis4 trative contractor shall be liable to the United 

5 States for a payment by a certifying or dis6 bursing officer unless, in connection with such 

7 payment, the medicare administrative con8 tractor acted with reckless disregard of its obli9 gations under its medicare administrative con10 tract or with intent to defraud the United 

11 States. 

12 ‘‘(B) RELATIONSHIP TO FALSE CLAIMS

13 ACT.—Nothing in this subsection shall be con14 strued to limit liability for conduct that would 

15 constitute a violation of sections 3729 through 

16 3731 of title 31, United States Code. 

17 ‘‘(4) INDEMNIFICATION BY SECRETARY.—

18 ‘‘(A) IN GENERAL.—Subject to subpara19 graphs (B) and (D), in the case of a medicare 

20 administrative contractor (or a person who is a 

21 director, officer, or employee of such a con22 tractor or who is engaged by the contractor to 

23 participate directly in the claims administration 

24 process) who is made a party to any judicial or 

25 administrative proceeding arising from or relat-
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1 ing directly to the claims administration process 

2 under this title, the Secretary may, to the ex3 tent the Secretary determines to be appropriate 

4 and as specified in the contract with the con5 tractor, indemnify the contractor and such per6 sons. 

7 ‘‘(B) CONDITIONS.—The Secretary may 

8 not provide indemnification under subparagraph 

9 (A) insofar as the liability for such costs arises 

10 directly from conduct that is determined by the 

11 judicial proceeding or by the Secretary to be 

12 criminal in nature, fraudulent, or grossly neg13 ligent. If indemnification is provided by the Sec14 retary with respect to a contractor before a de15 termination that such costs arose directly from 

16 such conduct, the contractor shall reimburse the 

17 Secretary for costs of indemnification. 

18 ‘‘(C) SCOPE OF INDEMNIFICATION.—In19 demnification by the Secretary under subpara20 graph (A) may include payment of judgments, 

21 settlements (subject to subparagraph (D)), 

22 awards, and costs (including reasonable legal 

23 expenses). 

24 ‘‘(D) WRITTEN APPROVAL FOR SETTLE25 MENTS OR COMPROMISES.—A contractor or 
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•HR 3584 IH 

1 other person described in subparagraph (A) 

2 may not propose to negotiate a settlement or 

3 compromise of a proceeding described in such 

4 subparagraph without the prior written ap5 proval of the Secretary to negotiate such settle6 ment or compromise. Any indemnification under 

7 subparagraph (A) with respect to amounts paid 

8 under a settlement or compromise of a pro9 ceeding described in such subparagraph are 

10 conditioned upon prior written approval by the 

11 Secretary of the final settlement or compromise. 

12 ‘‘(E) CONSTRUCTION.—Nothing in this 

13 paragraph shall be construed—

14 ‘‘(i) to change any common law immu15 nity that may be available to a medicare 

16 administrative contractor or person de17 scribed in subparagraph (A); or 

18 ‘‘(ii) to permit the payment of costs 

19 not otherwise allowable, reasonable, or allo20 cable under the Federal Acquisition Regu21 lation.’’. 

22 (2) CONSIDERATION OF INCORPORATION OF

23 CURRENT LAW STANDARDS.—In developing contract 

24 performance requirements under section 1874A(b) 

25 of the Social Security Act, as inserted by paragraph 
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•HR 3584 IH 

1 (1), the Secretary shall consider inclusion of the per2 formance standards described in sections 1816(f)(2) 

3 of such Act (relating to timely processing of recon4 siderations and applications for exemptions) and sec5 tion 1842(b)(2)(B) of such Act (relating to timely 

6 review of determinations and fair hearing requests), 

7 as such sections were in effect before the date of the 

8 enactment of this Act. 

9 (b) CONFORMING AMENDMENTS TO SECTION 1816 

10 (RELATING TO FISCAL INTERMEDIARIES).—Section 1816 

11 (42 U.S.C. 1395h) is amended as follows: 

12 (1) The heading is amended to read as follows: 

13 ‘‘PROVISIONS RELATING TO THE ADMINISTRATION OF

14 PART A’’. 

15 (2) Subsection (a) is amended to read as fol16 lows: 

17 ‘‘(a) The administration of this part shall be con18 ducted through contracts with medicare administrative 

19 contractors under section 1874A.’’. 

20 (3) Subsection (b) is repealed. 

21 (4) Subsection (c) is amended—

22 (A) by striking paragraph (1); and 

23 (B) in each of paragraphs (2)(A) and 

24 (3)(A), by striking ‘‘agreement under this sec25 tion’’ and inserting ‘‘contract under section 
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•HR 3584 IH 

1 1874A that provides for making payments 

2 under this part’’. 

3 (5) Subsections (d) through (i) are repealed. 

4 (6) Subsections (j) and (k) are each amended—

5 (A) by striking ‘‘An agreement with an 

6 agency or organization under this section’’ and 

7 inserting ‘‘A contract with a medicare adminis8 trative contractor under section 1874A with re9 spect to the administration of this part’’; and 

10 (B) by striking ‘‘such agency or organiza11 tion’’ and inserting ‘‘such medicare administra12 tive contractor’’ each place it appears. 

13 (7) Subsection (l) is repealed. 

14 (c) CONFORMING AMENDMENTS TO SECTION 1842 

15 (RELATING TO CARRIERS).—Section 1842 (42 U.S.C. 

16 1395u) is amended as follows: 

17 (1) The heading is amended to read as follows: 

18 ‘‘PROVISIONS RELATING TO THE ADMINISTRATION OF

19 PART B’’. 

20 (2) Subsection (a) is amended to read as fol21 lows: 

22 ‘‘(a) The administration of this part shall be con23 ducted through contracts with medicare administrative 

24 contractors under section 1874A.’’. 

25 (3) Subsection (b) is amended—

26 (A) by striking paragraph (1); 
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•HR 3584 IH 

1 (B) in paragraph (2)—

2 (i) by striking subparagraphs (A) and 

3 (B); 

4 (ii) in subparagraph (C), by striking 

5 ‘‘carriers’’ and inserting ‘‘medicare admin6 istrative contractors’’; and 

7 (iii) by striking subparagraphs (D) 

8 and (E); 

9 (C) in paragraph (3)—

10 (i) in the matter before subparagraph 

11 (A), by striking ‘‘Each such contract shall 

12 provide that the carrier’’ and inserting 

13 ‘‘The Secretary’’; 

14 (ii) by striking ‘‘will’’ the first place it 

15 appears in each of subparagraphs (A), (B), 

16 (F), (G), (H), and (L) and inserting 

17 ‘‘shall’’; 

18 (iii) in subparagraph (B), in the mat19 ter before clause (i), by striking ‘‘to the 

20 policyholders and subscribers of the car21 rier’’ and inserting ‘‘to the policyholders 

22 and subscribers of the medicare adminis23 trative contractor’’; 

24 (iv) by striking subparagraphs (C), 

25 (D), and (E); 
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•HR 3584 IH 

1 (v) in subparagraph (H)—

2 (I) by striking ‘‘if it makes deter3 minations or payments with respect to 

4 physicians’ services,’’ in the matter 

5 preceding clause (i); and 

6 (II) by striking ‘‘carrier’’ and in7 serting ‘‘medicare administrative con8 tractor’’ in clause (i); 

9 (vi) by striking subparagraph (I); 

10 (vii) in subparagraph (L), by striking 

11 the semicolon and inserting a period; 

12 (viii) in the first sentence, after sub13 paragraph (L), by striking ‘‘and shall con14 tain’’ and all that follows through the pe15 riod; and

16 (ix) in the seventh sentence, by insert17 ing ‘‘medicare administrative contractor,’’ 

18 after ‘‘carrier,’’; 

19 (D) by striking paragraph (5); 

20 (E) in paragraph (6)(D)(iv), by striking 

21 ‘‘carrier’’ and inserting ‘‘medicare administra22 tive contractor’’; and 

23 (F) in paragraph (7), by striking ‘‘the car24 rier’’ and inserting ‘‘the Secretary’’ each place 

25 it appears. 
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•HR 3584 IH 

1 (4) Subsection (c) is amended—

2 (A) by striking paragraph (1); 

3 (B) in paragraph (2)(A), by striking ‘‘con4 tract under this section which provides for the 

5 disbursement of funds, as described in sub6 section (a)(1)(B),’’ and inserting ‘‘contract 

7 under section 1874A that provides for making 

8 payments under this part’’; 

9 (C) in paragraph (3)(A), by striking ‘‘sub10 section (a)(1)(B)’’ and inserting ‘‘section 

11 1874A(a)(3)(B)’’; 

12 (D) in paragraph (4), in the matter pre13 ceding subparagraph (A), by striking ‘‘carrier’’ 

14 and inserting ‘‘medicare administrative con15 tractor’’; and 

16 (E) by striking paragraphs (5) and (6). 

17 (5) Subsections (d), (e), and (f) are repealed. 

18 (6) Subsection (g) is amended by striking ‘‘car19 rier or carriers’’ and inserting ‘‘medicare administra20 tive contractor or contractors’’. 

21 (7) Subsection (h) is amended—

22 (A) in paragraph (2)—

23 (i) by striking ‘‘Each carrier having 

24 an agreement with the Secretary under 
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•HR 3584 IH 

1 subsection (a)’’ and inserting ‘‘The Sec2 retary’’; and 

3 (ii) by striking ‘‘Each such carrier’’ 

4 and inserting ‘‘The Secretary’’; 

5 (B) in paragraph (3)(A)—

6 (i) by striking ‘‘a carrier having an 

7 agreement with the Secretary under sub8 section (a)’’ and inserting ‘‘medicare ad9 ministrative contractor having a contract 

10 under section 1874A that provides for 

11 making payments under this part’’; and 

12 (ii) by striking ‘‘such carrier’’ and in13 serting ‘‘such contractor’’; 

14 (C) in paragraph (3)(B)—

15 (i) by striking ‘‘a carrier’’ and insert16 ing ‘‘a medicare administrative contractor’’ 

17 each place it appears; and 

18 (ii) by striking ‘‘the carrier’’ and in19 serting ‘‘the contractor’’ each place it ap20 pears; and 

21 (D) in paragraphs (5)(A) and (5)(B)(iii), 

22 by striking ‘‘carriers’’ and inserting ‘‘medicare 

23 administrative contractors’’ each place it ap24 pears. 

25 (8) Subsection (l) is amended—
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•HR 3584 IH 

1 (A) in paragraph (1)(A)(iii), by striking 

2 ‘‘carrier’’ and inserting ‘‘medicare administra3 tive contractor’’; and 

4 (B) in paragraph (2), by striking ‘‘carrier’’ 

5 and inserting ‘‘medicare administrative con6 tractor’’. 

7 (9) Subsection (p)(3)(A) is amended by striking 

8 ‘‘carrier’’ and inserting ‘‘medicare administrative 

9 contractor’’. 

10 (10) Subsection (q)(1)(A) is amended by strik11 ing ‘‘carrier’’. 

12 (d) EFFECTIVE DATE; TRANSITION RULE.—

13 (1) EFFECTIVE DATE.—

14 (A) IN GENERAL.—Except as otherwise 

15 provided in this subsection, the amendments 

16 made by this section shall take effect on Octo17 ber 1, 2005, and the Secretary is authorized to 

18 take such steps before such date as may be nec19 essary to implement such amendments on a 

20 timely basis. 

21 (B) CONSTRUCTION FOR CURRENT CON22 TRACTS.—Such amendments shall not apply to 

23 contracts in effect before the date specified 

24 under subparagraph (A) that continue to retain 

25 the terms and conditions in effect on such date 
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•HR 3584 IH 

1 (except as otherwise provided under this Act, 

2 other than under this section) until such date 

3 as the contract is let out for competitive bid4 ding under such amendments. 

5 (C) DEADLINE FOR COMPETITIVE BID6 DING.—The Secretary shall provide for the let7 ting by competitive bidding of all contracts for 

8 functions of medicare administrative contrac9 tors for annual contract periods that begin on 

10 or after October 1, 2011. 

11 (2) GENERAL TRANSITION RULES.—

12 (A) AUTHORITY TO CONTINUE TO ENTER

13 INTO NEW AGREEMENTS AND CONTRACTS AND

14 WAIVER OF PROVIDER NOMINATION PROVISIONS

15 DURING TRANSITION.—Prior to October 1, 

16 2005, the Secretary may, consistent with sub17 paragraph (B), continue to enter into agree18 ments under section 1816 and contracts under 

19 section 1842 of the Social Security Act (42 

20 U.S.C. 1395h, 1395u). The Secretary may 

21 enter into new agreements under section 1816 

22 prior to October 1, 2005, without regard to any 

23 of the provider nomination provisions of such 

24 section. 
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•HR 3584 IH 

1 (B) APPROPRIATE TRANSITION.—The Sec2 retary shall take such steps as are necessary to 

3 provide for an appropriate transition from 

4 agreements under section 1816 and contracts 

5 under section 1842 of the Social Security Act 

6 (42 U.S.C. 1395h, 1395u) to contracts under 

7 section 1874A, as added by subsection (a)(1).

8 (3) AUTHORIZING CONTINUATION OF MIP

9 FUNCTIONS UNDER CURRENT CONTRACTS AND

10 AGREEMENTS AND UNDER TRANSITION CON11 TRACTS.—Notwithstanding the amendments made 

12 by this section, the provisions contained in the ex13 ception in section 1893(d)(2) of the Social Security 

14 Act (42 U.S.C. 1395ddd(d)(2)) shall continue to 

15 apply during the period that begins on the date of 

16 the enactment of this Act and ends on October 1, 

17 2011, and any reference in such provisions to an 

18 agreement or contract shall be deemed to include a 

19 contract under section 1874A of such Act, as in20 serted by subsection (a)(1), that continues the activi21 ties referred to in such provisions. 

22 (e) REFERENCES.—On and after the effective date 

23 provided under subsection (d)(1), any reference to a fiscal 

24 intermediary or carrier under title XI or XVIII of the So25 cial Security Act (or any regulation, manual instruction, 
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•HR 3584 IH 

1 interpretative rule, statement of policy, or guideline issued 

2 to carry out such titles) shall be deemed a reference to 

3 a medicare administrative contractor (as provided under 

4 section 1874A of the Social Security Act). 

5 (f) SECRETARIAL SUBMISSION OF LEGISLATIVE PRO6 POSAL.—Not later than 6 months after the date of the 

7 enactment of this Act, the Secretary shall submit to the 

8 appropriate committees of Congress a legislative proposal 

9 providing for such technical and conforming amendments 

10 in the law as are required by the provisions of this section.

11 (g) REPORTS ON IMPLEMENTATION.—

12 (1) PLAN FOR IMPLEMENTATION.—By not later 

13 than October 1, 2004, the Secretary shall submit a 

14 report to Congress and the Comptroller General of

15 the United States that describes the plan for imple16 mentation of the amendments made by this section. 

17 The Comptroller General shall conduct an evaluation 

18 of such plan and shall submit to Congress, not later 

19 than 6 months after the date the report is received, 

20 a report on such evaluation and shall include in such 

21 report such recommendations as the Comptroller 

22 General deems appropriate. 

23 (2) STATUS OF IMPLEMENTATION.—The Sec24 retary shall submit a report to Congress not later 

25 than October 1, 2008, that describes the status of 
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•HR 3584 IH 

1 implementation of such amendments and that in2 cludes a description of the following: 

3 (A) The number of contracts that have 

4 been competitively bid as of such date. 

5 (B) The distribution of functions among 

6 contracts and contractors. 

7 (C) A timeline for complete transition to 

8 full competition. 

9 (D) A detailed description of how the Sec10 retary has modified oversight and management 

11 of medicare contractors to adapt to full com12 petition. 

13 SEC. 212. REQUIREMENTS FOR INFORMATION SECURITY 

14 FOR MEDICARE ADMINISTRATIVE CONTRAC15 TORS. 

16 (a) IN GENERAL.—Section 1874A, as added by sec17 tion 211(a)(1), is amended by adding at the end the fol18 lowing new subsection: 

19 ‘‘(e) REQUIREMENTS FOR INFORMATION SECU20 RITY.—

21 ‘‘(1) DEVELOPMENT OF INFORMATION SECU22 RITY PROGRAM.—A medicare administrative con23 tractor that performs the functions referred to in 

24 subparagraphs (A) and (B) of subsection (a)(4) (re25 lating to determining and making payments) shall 
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•HR 3584 IH 

1 implement a contractor-wide information security 

2 program to provide information security for the op3 eration and assets of the contractor with respect to 

4 such functions under this title. An information secu5 rity program under this paragraph shall meet the re6 quirements for information security programs im7 posed on Federal agencies under paragraphs (1) 

8 through (8) of section 3544(b) of title 44, United 

9 States Code (other than the requirements under 

10 paragraphs (2)(D)(i), (5)(A), and (5)(B) of such 

11 section). 

12 ‘‘(2) INDEPENDENT AUDITS.—

13 ‘‘(A) PERFORMANCE OF ANNUAL EVALUA14 TIONS.—Each year a medicare administrative 

15 contractor that performs the functions referred 

16 to in subparagraphs (A) and (B) of subsection 

17 (a)(4) (relating to determining and making pay18 ments) shall undergo an evaluation of the infor19 mation security of the contractor with respect 

20 to such functions under this title. The evalua21 tion shall—

22 ‘‘(i) be performed by an entity that 

23 meets such requirements for independence 

24 as the Inspector General of the Depart-
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•HR 3584 IH 

1 ment of Health and Human Services may 

2 establish; and 

3 ‘‘(ii) test the effectiveness of informa4 tion security control techniques of an ap5 propriate subset of the contractor’s infor6 mation systems (as defined in section 

7 3502(8) of title 44, United States Code) 

8 relating to such functions under this title 

9 and an assessment of compliance with the 

10 requirements of this subsection and related 

11 information security policies, procedures, 

12 standards and guidelines, including policies 

13 and procedures as may be prescribed by 

14 the Director of the Office of Management 

15 and Budget and applicable information se16 curity standards promulgated under sec17 tion 11331 of title 40, United States Code. 

18 ‘‘(B) DEADLINE FOR INITIAL EVALUA19 TION.—

20 ‘‘(i) NEW CONTRACTORS.—In the case 

21 of a medicare administrative contractor 

22 covered by this subsection that has not 

23 previously performed the functions referred 

24 to in subparagraphs (A) and (B) of sub25 section (a)(4) (relating to determining and 
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•HR 3584 IH 

1 making payments) as a fiscal intermediary 

2 or carrier under section 1816 or 1842, the 

3 first independent evaluation conducted 

4 pursuant to subparagraph (A) shall be 

5 completed prior to commencing such func6 tions. 

7 ‘‘(ii) OTHER CONTRACTORS.—In the 

8 case of a medicare administrative con9 tractor covered by this subsection that is 

10 not described in clause (i), the first inde11 pendent evaluation conducted pursuant to 

12 subparagraph (A) shall be completed with13 in 1 year after the date the contractor 

14 commences functions referred to in clause 

15 (i) under this section. 

16 ‘‘(C) REPORTS ON EVALUATIONS.—

17 ‘‘(i) TO THE DEPARTMENT OF

18 HEALTH AND HUMAN SERVICES.—The re19 sults of independent evaluations under sub20 paragraph (A) shall be submitted promptly 

21 to the Inspector General of the Depart22 ment of Health and Human Services and 

23 to the Secretary. 

24 ‘‘(ii) TO CONGRESS.—The Inspector 

25 General of the Department of Health and 
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•HR 3584 IH 

1 Human Services shall submit to Congress 

2 annual reports on the results of such eval3 uations, including assessments of the scope 

4 and sufficiency of such evaluations. 

5 ‘‘(iii) AGENCY REPORTING.—The Sec6 retary shall address the results of such 

7 evaluations in reports required under sec8 tion 3544(c) of title 44, United States 

9 Code.’’. 

10 (b) APPLICATION OF REQUIREMENTS TO FISCAL

11 INTERMEDIARIES AND CARRIERS.—

12 (1) IN GENERAL.—The provisions of section 

13 1874A(e)(2) of the Social Security Act (other than 

14 subparagraph (B)), as added by subsection (a), shall 

15 apply to each fiscal intermediary under section 1816 

16 of the Social Security Act (42 U.S.C. 1395h) and 

17 each carrier under section 1842 of such Act (42 

18 U.S.C. 1395u) in the same manner as they apply to 

19 medicare administrative contractors under such pro20 visions. 

21 (2) DEADLINE FOR INITIAL EVALUATION.—In 

22 the case of such a fiscal intermediary or carrier with 

23 an agreement or contract under such respective sec24 tion in effect as of the date of the enactment of this 

25 Act, the first evaluation under section 
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•HR 3584 IH 

1 1874A(e)(2)(A) of the Social Security Act (as added 

2 by subsection (a)), pursuant to paragraph (1), shall 

3 be completed (and a report on the evaluation sub4 mitted to the Secretary) by not later than 1 year 

5 after such date. 

6 Subtitle C—Education and 

7 Outreach 

8 SEC. 221. PROVIDER EDUCATION AND TECHNICAL ASSIST9 ANCE. 

10 (a) COORDINATION OF EDUCATION FUNDING.—

11 (1) IN GENERAL.—Title XVIII is amended by 

12 inserting after section 1888 the following new sec13 tion:

14 ‘‘PROVIDER EDUCATION AND TECHNICAL ASSISTANCE

15 ‘‘SEC. 1889. (a) COORDINATION OF EDUCATION

16 FUNDING.—The Secretary shall coordinate the edu17 cational activities provided through medicare contractors 

18 (as defined in subsection (g), including under section 

19 1893) in order to maximize the effectiveness of Federal 

20 education efforts for providers of services and suppliers.’’. 

21 (2) EFFECTIVE DATE.—The amendment made 

22 by paragraph (1) shall take effect on the date of the 

23 enactment of this Act. 

24 (3) REPORT.—Not later than October 1, 2004, 

25 the Secretary shall submit to Congress a report that 

26 includes a description and evaluation of the steps 
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•HR 3584 IH 

1 taken to coordinate the funding of provider edu2 cation under section 1889(a) of the Social Security 

3 Act, as added by paragraph (1). 

4 (b) INCENTIVES TO IMPROVE CONTRACTOR PER5 FORMANCE.—

6 (1) IN GENERAL.—Section 1874A, as added by 

7 section 211(a)(1) and as amended by section 212(a), 

8 is amended by adding at the end the following new 

9 subsection: 

10 ‘‘(f) INCENTIVES TO IMPROVE CONTRACTOR PER11 FORMANCE IN PROVIDER EDUCATION AND OUTREACH.—

12 The Secretary shall use specific claims payment error 

13 rates or similar methodology of medicare administrative 

14 contractors in the processing or reviewing of medicare 

15 claims in order to give such contractors an incentive to 

16 implement effective education and outreach programs for 

17 providers of services and suppliers.’’. 

18 (2) APPLICATION TO FISCAL INTERMEDIARIES

19 AND CARRIERS.—The provisions of section 1874A(f) 

20 of the Social Security Act, as added by paragraph 

21 (1), shall apply to each fiscal intermediary under 

22 section 1816 of the Social Security Act (42 U.S.C. 

23 1395h) and each carrier under section 1842 of such 

24 Act (42 U.S.C. 1395u) in the same manner as they 
45

•HR 3584 IH 

1 apply to medicare administrative contractors under 

2 such provisions. 

3 (3) GAO REPORT ON ADEQUACY OF METHOD4 OLOGY.—Not later than October 1, 2004, the Comp5 troller General of the United States shall submit to 

6 Congress and to the Secretary a report on the ade7 quacy of the methodology under section 1874A(f) of 

8 the Social Security Act, as added by paragraph (1), 

9 and shall include in the report such recommenda10 tions as the Comptroller General determines appro11 priate with respect to the methodology. 

12 (4) REPORT ON USE OF METHODOLOGY IN AS13 SESSING CONTRACTOR PERFORMANCE.—Not later 

14 than October 1, 2004, the Secretary shall submit to 

15 Congress a report that describes how the Secretary 

16 intends to use such methodology in assessing medi17 care contractor performance in implementing effec18 tive education and outreach programs, including 

19 whether to use such methodology as a basis for per20 formance bonuses. The report shall include an anal21 ysis of the sources of identified errors and potential 

22 changes in systems of contractors and rules of the 

23 Secretary that could reduce claims error rates. 
46

•HR 3584 IH 

1 (c) PROVISION OF ACCESS TO AND PROMPT RE2 SPONSES FROM MEDICARE ADMINISTRATIVE CONTRAC3 TORS.—

4 (1) IN GENERAL.—Section 1874A, as added by 

5 section 211(a)(1) and as amended by section 212(a) 

6 and subsection (b), is further amended by adding at 

7 the end the following new subsection: 

8 ‘‘(g) COMMUNICATIONS WITH BENEFICIARIES, PRO9 VIDERS OF SERVICES AND SUPPLIERS.—

10 ‘‘(1) COMMUNICATION STRATEGY.—The Sec11 retary shall develop a strategy for communications 

12 with individuals entitled to benefits under part A or 

13 enrolled under part B, or both, and with providers 

14 of services and suppliers under this title. 

15 ‘‘(2) RESPONSE TO WRITTEN INQUIRIES.—Each 

16 medicare administrative contractor shall, for those 

17 providers of services and suppliers which submit 

18 claims to the contractor for claims processing and 

19 for those individuals entitled to benefits under part 

20 A or enrolled under part B, or both, with respect to 

21 whom claims are submitted for claims processing, 

22 provide general written responses (which may be 

23 through electronic transmission) in a clear, concise, 

24 and accurate manner to inquiries of providers of 

25 services, suppliers, and individuals entitled to bene-
47

•HR 3584 IH 

1 fits under part A or enrolled under part B, or both, 

2 concerning the programs under this title within 45 

3 business days of the date of receipt of such inquiries. 

4 ‘‘(3) RESPONSE TO TOLL-FREE LINES.—The 

5 Secretary shall ensure that each medicare adminis6 trative contractor shall provide, for those providers 

7 of services and suppliers which submit claims to the 

8 contractor for claims processing and for those indi9 viduals entitled to benefits under part A or enrolled 

10 under part B, or both, with respect to whom claims 

11 are submitted for claims processing, a toll-free tele12 phone number at which such individuals, providers 

13 of services, and suppliers may obtain information re14 garding billing, coding, claims, coverage, and other 

15 appropriate information under this title. 

16 ‘‘(4) MONITORING OF CONTRACTOR RE17 SPONSES.—

18 ‘‘(A) IN GENERAL.—Each medicare admin19 istrative contractor shall, consistent with stand20 ards developed by the Secretary under subpara21 graph (B)—

22 ‘‘(i) maintain a system for identifying 

23 who provides the information referred to in 

24 paragraphs (2) and (3); and 
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•HR 3584 IH 

1 ‘‘(ii) monitor the accuracy, consist2 ency, and timeliness of the information so 

3 provided. 

4 ‘‘(B) DEVELOPMENT OF STANDARDS.—

5 ‘‘(i) IN GENERAL.—The Secretary 

6 shall establish and make public standards 

7 to monitor the accuracy, consistency, and 

8 timeliness of the information provided in 

9 response to written and telephone inquiries 

10 under this subsection. Such standards shall 

11 be consistent with the performance require12 ments established under subsection (b)(3). 

13 ‘‘(ii) EVALUATION.—In conducting 

14 evaluations of individual medicare adminis15 trative contractors, the Secretary shall 

16 take into account the results of the moni17 toring conducted under subparagraph (A) 

18 taking into account as performance re19 quirements the standards established 

20 under clause (i). The Secretary shall, in 

21 consultation with organizations rep22 resenting providers of services, suppliers, 

23 and individuals entitled to benefits under 

24 part A or enrolled under part B, or both, 

25 establish standards relating to the accu-
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•HR 3584 IH 

1 racy, consistency, and timeliness of the in2 formation so provided. 

3 ‘‘(C) DIRECT MONITORING.—Nothing in 

4 this paragraph shall be construed as preventing 

5 the Secretary from directly monitoring the ac6 curacy, consistency, and timeliness of the infor7 mation so provided. 

8 ‘‘(5) AUTHORIZATION OF APPROPRIATIONS.—

9 There are authorized to be appropriated such sums 

10 as are necessary to carry out this subsection.’’.

11 (2) EFFECTIVE DATE.—The amendment made 

12 by paragraph (1) shall take effect October 1, 2004. 

13 (3) APPLICATION TO FISCAL INTERMEDIARIES

14 AND CARRIERS.—The provisions of section 1874A(g)

15 of the Social Security Act, as added by paragraph 

16 (1), shall apply to each fiscal intermediary under 

17 section 1816 of the Social Security Act (42 U.S.C. 

18 1395h) and each carrier under section 1842 of such 

19 Act (42 U.S.C. 1395u) in the same manner as they 

20 apply to medicare administrative contractors under 

21 such provisions. 

22 (d) IMPROVED PROVIDER EDUCATION AND TRAIN23 ING.—
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•HR 3584 IH 

1 (1) IN GENERAL.—Section 1889, as added by 

2 subsection (a), is amended by adding at the end the 

3 following new subsections: 

4 ‘‘(b) ENHANCED EDUCATION AND TRAINING.—

5 ‘‘(1) ADDITIONAL RESOURCES.—There are au6 thorized to be appropriated to the Secretary (in ap7 propriate part from the Federal Hospital Insurance 

8 Trust Fund and the Federal Supplementary Medical 

9 Insurance Trust Fund) such sums as may be nec10 essary for fiscal years beginning with fiscal year 

11 2005. 

12 ‘‘(2) USE.—The funds made available under 

13 paragraph (1) shall be used to increase the conduct 

14 by medicare contractors of education and training of 

15 providers of services and suppliers regarding billing, 

16 coding, and other appropriate items and may also be 

17 used to improve the accuracy, consistency, and time18 liness of contractor responses. 

19 ‘‘(c) TAILORING EDUCATION AND TRAINING ACTIVI20 TIES FOR SMALL PROVIDERS OR SUPPLIERS.—

21 ‘‘(1) IN GENERAL.—Insofar as a medicare con22 tractor conducts education and training activities, it 

23 shall tailor such activities to meet the special needs 

24 of small providers of services or suppliers (as defined 

25 in paragraph (2)). Such education and training ac-
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•HR 3584 IH 

1 tivities for small providers of services and suppliers 

2 may include the provision of technical assistance 

3 (such as review of billing systems and internal con4 trols to determine program compliance and to sug5 gest more efficient and effective means of achieving 

6 such compliance). 

7 ‘‘(2) SMALL PROVIDER OF SERVICES OR SUP8 PLIER.—In this subsection, the term ‘small provider 

9 of services or supplier’ means—

10 ‘‘(A) a provider of services with fewer than 

11 25 full-time-equivalent employees; or 

12 ‘‘(B) a supplier with fewer than 10 full13 time-equivalent employees.’’. 

14 (2) EFFECTIVE DATE.—The amendment made 

15 by paragraph (1) shall take effect on October 1, 

16 2004.

17 (e) REQUIREMENT TO MAINTAIN INTERNET

18 WEBSITES.—

19 (1) IN GENERAL.—Section 1889, as added by 

20 subsection (a) and as amended by subsection (d), is 

21 further amended by adding at the end the following 

22 new subsection: 

23 ‘‘(d) INTERNET WEBSITES; FAQS.—The Secretary, 

24 and each medicare contractor insofar as it provides serv-
52

•HR 3584 IH 

1 ices (including claims processing) for providers of services 

2 or suppliers, shall maintain an Internet website which—

3 ‘‘(1) provides answers in an easily accessible 

4 format to frequently asked questions, and 

5 ‘‘(2) includes other published materials of the 

6 contractor, 

7 that relate to providers of services and suppliers under the 

8 programs under this title (and title XI insofar as it relates 

9 to such programs).’’. 

10 (2) EFFECTIVE DATE.—The amendment made 

11 by paragraph (1) shall take effect on October 1, 

12 2004. 

13 (f) ADDITIONAL PROVIDER EDUCATION PROVI14 SIONS.—

15 (1) IN GENERAL.—Section 1889, as added by 

16 subsection (a) and as amended by subsections (d) 

17 and (e), is further amended by adding at the end the 

18 following new subsections: 

19 ‘‘(e) ENCOURAGEMENT OF PARTICIPATION IN EDU20 CATION PROGRAM ACTIVITIES.—A medicare contractor 

21 may not use a record of attendance at (or failure to at22 tend) educational activities or other information gathered 

23 during an educational program conducted under this sec24 tion or otherwise by the Secretary to select or track pro-
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1 viders of services or suppliers for the purpose of con2 ducting any type of audit or prepayment review. 

3 ‘‘(f) CONSTRUCTION.—Nothing in this section or sec4 tion 1893(g) shall be construed as providing for disclosure 

5 by a medicare contractor—

6 ‘‘(1) of the screens used for identifying claims 

7 that will be subject to medical review; or 

8 ‘‘(2) of information that would compromise 

9 pending law enforcement activities or reveal findings 

10 of law enforcement-related audits. 

11 ‘‘(g) DEFINITIONS.—For purposes of this section, the 

12 term ‘medicare contractor’ includes the following: 

13 ‘‘(1) A medicare administrative contractor with 

14 a contract under section 1874A, including a fiscal 

15 intermediary with a contract under section 1816 and 

16 a carrier with a contract under section 1842. 

17 ‘‘(2) An eligible entity with a contract under 

18 section 1893. 

19 Such term does not include, with respect to activities of 

20 a specific provider of services or supplier an entity that 

21 has no authority under this title or title IX with respect 

22 to such activities and such provider of services or sup23 plier.’’. 
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1 (2) EFFECTIVE DATE.—The amendment made 

2 by paragraph (1) shall take effect on the date of the 

3 enactment of this Act. 

4 SEC. 222. SMALL PROVIDER TECHNICAL ASSISTANCE DEM5 ONSTRATION PROGRAM. 

6 (a) ESTABLISHMENT.—

7 (1) IN GENERAL.—The Secretary shall establish 

8 a demonstration program (in this section referred to 

9 as the ‘‘demonstration program’’) under which tech10 nical assistance described in paragraph (2) is made 

11 available, upon request and on a voluntary basis, to 

12 small providers of services or suppliers in order to 

13 improve compliance with the applicable requirements 

14 of the programs under medicare program under title 

15 XVIII of the Social Security Act (including provi16 sions of title XI of such Act insofar as they relate 

17 to such title and are not administered by the Office

18 of the Inspector General of the Department of 

19 Health and Human Services). 

20 (2) FORMS OF TECHNICAL ASSISTANCE.—The 

21 technical assistance described in this paragraph is—

22 (A) evaluation and recommendations re23 garding billing and related systems; and 
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•HR 3584 IH 

1 (B) information and assistance regarding 

2 policies and procedures under the medicare pro3 gram, including coding and reimbursement. 

4 (3) SMALL PROVIDERS OF SERVICES OR SUP5 PLIERS.—In this section, the term ‘‘small providers 

6 of services or suppliers’’ means—

7 (A) a provider of services with fewer than 

8 25 full-time-equivalent employees; or 

9 (B) a supplier with fewer than 10 full10 time-equivalent employees. 

11 (b) QUALIFICATION OF CONTRACTORS.—In con12 ducting the demonstration program, the Secretary shall 

13 enter into contracts with qualified organizations (such as 

14 peer review organizations or entities described in section 

15 1889(g)(2) of the Social Security Act, as inserted by sec16 tion 221(f)(1)) with appropriate expertise with billing sys17 tems of the full range of providers of services and sup18 pliers to provide the technical assistance. In awarding such 

19 contracts, the Secretary shall consider any prior investiga20 tions of the entity’s work by the Inspector General of De21 partment of Health and Human Services or the Comp22 troller General of the United States. 

23 (c) DESCRIPTION OF TECHNICAL ASSISTANCE.—The 

24 technical assistance provided under the demonstration 

25 program shall include a direct and in-person examination 
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•HR 3584 IH 

1 of billing systems and internal controls of small providers 

2 of services or suppliers to determine program compliance 

3 and to suggest more efficient or effective means of achiev4 ing such compliance. 

5 (d) GAO EVALUATION.—Not later than 2 years after 

6 the date the demonstration program is first implemented, 

7 the Comptroller General, in consultation with the Inspec8 tor General of the Department of Health and Human 

9 Services, shall conduct an evaluation of the demonstration 

10 program. The evaluation shall include a determination of 

11 whether claims error rates are reduced for small providers 

12 of services or suppliers who participated in the program 

13 and the extent of improper payments made as a result 

14 of the demonstration program. The Comptroller General 

15 shall submit a report to the Secretary and the Congress 

16 on such evaluation and shall include in such report rec17 ommendations regarding the continuation or extension of 

18 the demonstration program. 

19 (e) FINANCIAL PARTICIPATION BY PROVIDERS.—The 

20 provision of technical assistance to a small provider of 

21 services or supplier under the demonstration program is 

22 conditioned upon the small provider of services or supplier 

23 paying an amount estimated (and disclosed in advance of 

24 a provider’s or supplier’s participation in the program) to 
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•HR 3584 IH 

1 be equal to 25 percent of the cost of the technical assist2 ance. 

3 (f) AUTHORIZATION OF APPROPRIATIONS.—There 

4 are authorized to be appropriated, from amounts not oth5 erwise appropriated in the Treasury, such sums as may 

6 be necessary to carry out this section. 

7 SEC. 223. MEDICARE BENEFICIARY OMBUDSMAN. 

8 (a) IN GENERAL.—Section 1807, as added and 

9 amended by section 200, is amended by adding at the end 

10 the following new subsection: 

11 ‘‘(c) MEDICARE BENEFICIARY OMBUDSMAN.—

12 ‘‘(1) IN GENERAL.—The Secretary shall appoint 

13 within the Department of Health and Human Serv14 ices a Medicare Beneficiary Ombudsman who shall 

15 have expertise and experience in the fields of health 

16 care and education of (and assistance to) individuals 

17 entitled to benefits under this title. 

18 ‘‘(2) DUTIES.—The Medicare Beneficiary Om19 budsman shall—

20 ‘‘(A) receive complaints, grievances, and 

21 requests for information submitted by individ22 uals entitled to benefits under part A or en23 rolled under part B, or both, with respect to 

24 any aspect of the medicare program; 
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1 ‘‘(B) provide assistance with respect to 

2 complaints, grievances, and requests referred to 

3 in subparagraph (A), including—

4 ‘‘(i) assistance in collecting relevant 

5 information for such individuals, to seek 

6 an appeal of a decision or determination 

7 made by a fiscal intermediary, carrier, MA 

8 organization, or the Secretary; 

9 ‘‘(ii) assistance to such individuals 

10 with any problems arising from 

11 disenrollment from an MA plan under part 

12 C; and 

13 ‘‘(iii) assistance to such individuals in 

14 presenting information under section 

15 1839(i)(4)(C) (relating to income-related 

16 premium adjustment; and 

17 ‘‘(C) submit annual reports to Congress 

18 and the Secretary that describe the activities of 

19 the Office and that include such recommenda20 tions for improvement in the administration of 

21 this title as the Ombudsman determines appro22 priate. 

23 The Ombudsman shall not serve as an advocate for 

24 any increases in payments or new coverage of serv-
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1 ices, but may identify issues and problems in pay2 ment or coverage policies. 

3 ‘‘(3) WORKING WITH HEALTH INSURANCE

4 COUNSELING PROGRAMS.—To the extent possible, 

5 the Ombudsman shall work with health insurance 

6 counseling programs (receiving funding under sec7 tion 4360 of Omnibus Budget Reconciliation Act of 

8 1990) to facilitate the provision of information to in9 dividuals entitled to benefits under part A or en10 rolled under part B, or both regarding MA plans 

11 and changes to those plans. Nothing in this para12 graph shall preclude further collaboration between 

13 the Ombudsman and such programs.’’. 

14 (b) DEADLINE FOR APPOINTMENT.—By not later 

15 than 1 year after the date of the enactment of this Act, 

16 the Secretary shall appoint the Medicare Beneficiary Om17 budsman under section 1807(c) of the Social Security Act, 

18 as added by subsection (a). 

19 (c) FUNDING.—There are authorized to be appro20 priated to the Secretary (in appropriate part from the 

21 Federal Hospital Insurance Trust Fund, established

22 under section 1817 of the Social Security Act (42 U.S.C. 

23 1395i), and the Federal Supplementary Medical Insurance 

24 Trust Fund, established under section 1841 of such Act 

25 (42 U.S.C. 1395t)) to carry out section 1807(c) of such 
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1 Act (relating to the Medicare Beneficiary Ombudsman), 

2 as added by subsection (a), such sums as are necessary 

3 for fiscal year 2004 and each succeeding fiscal year. 

4 (d) USE OF CENTRAL, TOLL-FREE NUMBER (1–800–

5 MEDICARE).—

6 (1) PHONE TRIAGE SYSTEM; LISTING IN MEDI7 CARE HANDBOOK INSTEAD OF OTHER TOLL-FREE

8 NUMBERS.—Section 1804(b) (42 U.S.C. 1395b–

9 2(b)) is amended by adding at the end the following: 

10 ‘‘The Secretary shall provide, through the toll-free 

11 telephone number 1–800–MEDICARE, for a means 

12 by which individuals seeking information about, or 

13 assistance with, such programs who phone such toll14 free number are transferred (without charge) to ap15 propriate entities for the provision of such informa16 tion or assistance. Such toll-free number shall be the 

17 toll-free number listed for general information and 

18 assistance in the annual notice under subsection (a) 

19 instead of the listing of numbers of individual con20 tractors.’’. 

21 (2) MONITORING ACCURACY.—

22 (A) STUDY.—The Comptroller General of 

23 the United States shall conduct a study to mon24 itor the accuracy and consistency of information 

25 provided to individuals entitled to benefits 
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1 under part A or enrolled under part B, or both, 

2 through the toll-free telephone number 1–800–

3 MEDICARE, including an assessment of 

4 whether the information provided is sufficient 

5 to answer questions of such individuals. In con6 ducting the study, the Comptroller General 

7 shall examine the education and training of the 

8 individuals providing information through such 

9 number. 

10 (B) REPORT.—Not later than 1 year after 

11 the date of the enactment of this Act, the 

12 Comptroller General shall submit to Congress a 

13 report on the study conducted under subpara14 graph (A). 

15 SEC. 224. BENEFICIARY OUTREACH DEMONSTRATION PRO16 GRAM. 

17 (a) IN GENERAL.—The Secretary shall establish a 

18 demonstration program (in this section referred to as the 

19 ‘‘demonstration program’’) under which medicare special20 ists employed by the Department of Health and Human 

21 Services provide advice and assistance to individuals enti22 tled to benefits under part A of title XVIII of the Social 

23 Security Act, or enrolled under part B of such title, or 

24 both, regarding the medicare program at the location of 

25 existing local offices of the Social Security Administration. 
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1 (b) LOCATIONS.—

2 (1) IN GENERAL.—The demonstration program 

3 shall be conducted in at least 6 offices or areas. 

4 Subject to paragraph (2), in selecting such offices 

5 and areas, the Secretary shall provide preference for 

6 offices with a high volume of visits by individuals re7 ferred to in subsection (a). 

8 (2) ASSISTANCE FOR RURAL BENEFICIARIES.—

9 The Secretary shall provide for the selection of at 

10 least 2 rural areas to participate in the demonstra11 tion program. In conducting the demonstration pro12 gram in such rural areas, the Secretary shall provide 

13 for medicare specialists to travel among local offices 

14 in a rural area on a scheduled basis. 

15 (c) DURATION.—The demonstration program shall be 

16 conducted over a 3-year period. 

17 (d) EVALUATION AND REPORT.—

18 (1) EVALUATION.—The Secretary shall provide 

19 for an evaluation of the demonstration program. 

20 Such evaluation shall include an analysis of—

21 (A) utilization of, and satisfaction of those 

22 individuals referred to in subsection (a) with, 

23 the assistance provided under the program; and 

24 (B) the cost-effectiveness of providing ben25 eficiary assistance through out-stationing medi-
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1 care specialists at local offices of the Social Se2 curity Administration. 

3 (2) REPORT.—The Secretary shall submit to 

4 Congress a report on such evaluation and shall in5 clude in such report recommendations regarding the 

6 feasibility of permanently out-stationing medicare 

7 specialists at local offices of the Social Security Ad8 ministration. 

9 SEC. 225. INCLUSION OF ADDITIONAL INFORMATION IN NO10 TICES TO BENEFICIARIES ABOUT SKILLED 

11 NURSING FACILITY BENEFITS. 

12 (a) IN GENERAL.—The Secretary shall provide that 

13 in medicare beneficiary notices provided (under section 

14 1806(a) of the Social Security Act, 42 U.S.C. 1395b–7(a)) 

15 with respect to the provision of post-hospital extended care 

16 services under part A of title XVIII of the Social Security 

17 Act, there shall be included information on the number 

18 of days of coverage of such services remaining under such 

19 part for the medicare beneficiary and spell of illness in20 volved. 

21 (b) EFFECTIVE DATE.—Subsection (a) shall apply to 

22 notices provided during calendar quarters beginning more 

23 than 6 months after the date of the enactment of this Act. 
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1 SEC. 226. INFORMATION ON MEDICARE-CERTIFIED 

2 SKILLED NURSING FACILITIES IN HOSPITAL 

3 DISCHARGE PLANS. 

4 (a) AVAILABILITY OF DATA.—The Secretary shall 

5 publicly provide information that enables hospital dis6 charge planners, medicare beneficiaries, and the public to 

7 identify skilled nursing facilities that are participating in 

8 the medicare program. 

9 (b) INCLUSION OF INFORMATION IN CERTAIN HOS10 PITAL DISCHARGE PLANS.—

11 (1) IN GENERAL.—Section 1861(ee)(2)(D) (42 

12 U.S.C. 1395x(ee)(2)(D)) is amended—

13 (A) by striking ‘‘hospice services’’ and in14 serting ‘‘hospice care and post-hospital ex15 tended care services’’; and 

16 (B) by inserting before the period at the 

17 end the following: ‘‘and, in the case of individ18 uals who are likely to need post-hospital ex19 tended care services, the availability of such 

20 services through facilities that participate in the 

21 program under this title and that serve the area 

22 in which the patient resides’’.

23 (2) EFFECTIVE DATE.—The amendments made 

24 by paragraph (1) shall apply to discharge plans 

25 made on or after such date as the Secretary shall 

26 specify, but not later than 6 months after the date 
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1 the Secretary provides for availability of information 

2 under subsection (a). 

3 Subtitle D—Appeals and Recovery 

4 SEC. 231. TRANSFER OF RESPONSIBILITY FOR MEDICARE 

5 APPEALS. 

6 (a) TRANSITION PLAN.—

7 (1) IN GENERAL.—Not later than April 1, 

8 2004, the Commissioner of Social Security and the 

9 Secretary shall develop and transmit to Congress 

10 and the Comptroller General of the United States a 

11 plan under which the functions of administrative law 

12 judges responsible for hearing cases under title 

13 XVIII of the Social Security Act (and related provi14 sions in title XI of such Act) are transferred from 

15 the responsibility of the Commissioner and the So16 cial Security Administration to the Secretary and 

17 the Department of Health and Human Services. 

18 (2) CONTENTS.—The plan shall include infor19 mation on the following: 

20 (A) WORKLOAD.—The number of such ad21 ministrative law judges and support staff re22 quired now and in the future to hear and decide 

23 such cases in a timely manner, taking into ac24 count the current and anticipated claims vol-
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1 ume, appeals, number of beneficiaries, and stat2 utory changes. 

3 (B) COST PROJECTIONS AND FINANC4 ING.—Funding levels required for fiscal year 

5 2005 and subsequent fiscal years to carry out 

6 the functions transferred under the plan. 

7 (C) TRANSITION TIMETABLE.—A timetable 

8 for the transition. 

9 (D) REGULATIONS.—The establishment of 

10 specific regulations to govern the appeals proc11 ess. 

12 (E) CASE TRACKING.—The development of 

13 a unified case tracking system that will facili14 tate the maintenance and transfer of case spe15 cific data across both the fee-for-service and 

16 managed care components of the medicare pro17 gram. 

18 (F) FEASIBILITY OF PRECEDENTIAL AU19 THORITY.—The feasibility of developing a proc20 ess to give decisions of the Departmental Ap21 peals Board in the Department of Health and 

22 Human Services addressing broad legal issues 

23 binding, precedential authority. 

24 (G) ACCESS TO ADMINISTRATIVE LAW

25 JUDGES.—The feasibility of—
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1 (i) filing appeals with administrative 

2 law judges electronically; and 

3 (ii) conducting hearings using tele- or 

4 video-conference technologies. 

5 (H) INDEPENDENCE OF ADMINISTRATIVE

6 LAW JUDGES.—The steps that should be taken 

7 to ensure the independence of administrative 

8 law judges consistent with the requirements of 

9 subsection (b)(2). 

10 (I) GEOGRAPHIC DISTRIBUTION.—The 

11 steps that should be taken to provide for an ap12 propriate geographic distribution of administra13 tive law judges throughout the United States to 

14 carry out subsection (b)(3). 

15 (J) HIRING.—The steps that should be 

16 taken to hire administrative law judges (and 

17 support staff) to carry out subsection (b)(4). 

18 (K) PERFORMANCE STANDARDS.—The ap19 propriateness of establishing performance 

20 standards for administrative law judges with re21 spect to timelines for decisions in cases under 

22 title XVIII of the Social Security Act taking 

23 into account requirements under subsection 

24 (b)(2) for the independence of such judges and 
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1 consistent with the applicable provisions of title 

2 5, United States Code relating to impartiality. 

3 (L) SHARED RESOURCES.—The steps that 

4 should be taken to carry out subsection (b)(6) 

5 (relating to the arrangements with the Commis6 sioner of Social Security to share office space, 

7 support staff, and other resources, with appro8 priate reimbursement). 

9 (M) TRAINING.—The training that should 

10 be provided to administrative law judges with 

11 respect to laws and regulations under title 

12 XVIII of the Social Security Act. 

13 (3) ADDITIONAL INFORMATION.—The plan may 

14 also include recommendations for further congres15 sional action, including modifications to the require16 ments and deadlines established under section 1869 

17 of the Social Security Act (42 U.S.C. 1395ff) (as 

18 amended by this Act).

19 (4) GAO EVALUATION.—The Comptroller Gen20 eral of the United States shall evaluate the plan 

21 and, not later than the date that is 6 months after 

22 the date on which the plan is received by the Comp23 troller General, shall submit to Congress a report on 

24 such evaluation. 

25 (b) TRANSFER OF ADJUDICATION AUTHORITY.—
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1 (1) IN GENERAL.—Not earlier than July 1, 

2 2005, and not later than October 1, 2005, the Com3 missioner of Social Security and the Secretary shall 

4 implement the transition plan under subsection (a) 

5 and transfer the administrative law judge functions 

6 described in such subsection from the Social Secu7 rity Administration to the Secretary. 

8 (2) ASSURING INDEPENDENCE OF JUDGES.—

9 The Secretary shall assure the independence of ad10 ministrative law judges performing the administra11 tive law judge functions transferred under para12 graph (1) from the Centers for Medicare & Medicaid 

13 Services and its contractors. In order to assure such 

14 independence, the Secretary shall place such judges 

15 in an administrative office that is organizationally 

16 and functionally separate from such Centers. Such 

17 judges shall report to, and be under the general su18 pervision of, the Secretary, but shall not report to, 

19 or be subject to supervision by, another officer of the 

20 Department of Health and Human Services. 

21 (3) GEOGRAPHIC DISTRIBUTION.—The Sec22 retary shall provide for an appropriate geographic

23 distribution of administrative law judges performing 

24 the administrative law judge functions transferred 
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•HR 3584 IH 

1 under paragraph (1) throughout the United States 

2 to ensure timely access to such judges. 

3 (4) HIRING AUTHORITY.—Subject to the 

4 amounts provided in advance in appropriations Acts, 

5 the Secretary shall have authority to hire adminis6 trative law judges to hear such cases, taking into 

7 consideration those judges with expertise in handling 

8 medicare appeals and in a manner consistent with 

9 paragraph (3), and to hire support staff for such 

10 judges. 

11 (5) FINANCING.—Amounts payable under law 

12 to the Commissioner for administrative law judges 

13 performing the administrative law judge functions 

14 transferred under paragraph (1) from the Federal 

15 Hospital Insurance Trust Fund and the Federal 

16 Supplementary Medical Insurance Trust Fund shall 

17 become payable to the Secretary for the functions so 

18 transferred. 

19 (6) SHARED RESOURCES.—The Secretary shall 

20 enter into such arrangements with the Commissioner 

21 as may be appropriate with respect to transferred 

22 functions of administrative law judges to share office 

23 space, support staff, and other resources, with ap24 propriate reimbursement from the Trust Funds de25 scribed in paragraph (5). 
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1 (c) INCREASED FINANCIAL SUPPORT.—In addition to 

2 any amounts otherwise appropriated, to ensure timely ac3 tion on appeals before administrative law judges and the 

4 Departmental Appeals Board consistent with section 1869 

5 of the Social Security Act (42 U.S.C. 1395ff) (as amended 

6 by this Act), there are authorized to be appropriated (in 

7 appropriate part from the Federal Hospital Insurance 

8 Trust Fund, established under section 1817 of the Social 

9 Security Act (42 U.S.C. 1395i), and the Federal Supple10 mentary Medical Insurance Trust Fund, established under 

11 section 1841 of such Act (42 U.S.C. 1395t)) to the Sec12 retary such sums as are necessary for fiscal year 2005 

13 and each subsequent fiscal year to—

14 (1) increase the number of administrative law 

15 judges (and their staffs) under subsection (b)(4); 

16 (2) improve education and training opportuni17 ties for administrative law judges (and their staffs); 

18 and 

19 (3) increase the staff of the Departmental Ap20 peals Board. 

21 (d) CONFORMING AMENDMENT.—Section 

22 1869(f)(2)(A)(i) (42 U.S.C. 1395ff(f)(2)(A)(i)) is amend23 ed by striking ‘‘of the Social Security Administration’’. 

24 SEC. 232. PROCESS FOR EXPEDITED ACCESS TO REVIEW. 

25 (a) EXPEDITED ACCESS TO JUDICIAL REVIEW.—
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1 (1) IN GENERAL.—Section 1869(b) (42 U.S.C. 

2 1395ff(b)) is amended—

3 (A) in paragraph (1)(A), by inserting ‘‘, 

4 subject to paragraph (2),’’ before ‘‘to judicial 

5 review of the Secretary’s final decision’’; and 

6 (B) by adding at the end the following new 

7 paragraph: 

8 ‘‘(2) EXPEDITED ACCESS TO JUDICIAL RE9 VIEW.—

10 ‘‘(A) IN GENERAL.—The Secretary shall 

11 establish a process under which a provider of 

12 services or supplier that furnishes an item or 

13 service or an individual entitled to benefits 

14 under part A or enrolled under part B, or both, 

15 who has filed an appeal under paragraph (1) 

16 (other than an appeal filed under paragraph 

17 (1)(F)(i)) may obtain access to judicial review 

18 when a review entity (described in subpara19 graph (D)), on its own motion or at the request 

20 of the appellant, determines that the Depart21 mental Appeals Board does not have the au22 thority to decide the question of law or regula23 tion relevant to the matters in controversy and 

24 that there is no material issue of fact in dis25 pute. The appellant may make such request 
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•HR 3584 IH 

1 only once with respect to a question of law or 

2 regulation for a specific matter in dispute in a 

3 case of an appeal. 

4 ‘‘(B) PROMPT DETERMINATIONS.—If, after 

5 or coincident with appropriately filing a request 

6 for an administrative hearing, the appellant re7 quests a determination by the appropriate re8 view entity that the Departmental Appeals 

9 Board does not have the authority to decide the 

10 question of law or regulations relevant to the 

11 matters in controversy and that there is no ma12 terial issue of fact in dispute, and if such re13 quest is accompanied by the documents and 

14 materials as the appropriate review entity shall 

15 require for purposes of making such determina16 tion, such review entity shall make a determina17 tion on the request in writing within 60 days 

18 after the date such review entity receives the re19 quest and such accompanying documents and 

20 materials. Such a determination by such review 

21 entity shall be considered a final decision and 

22 not subject to review by the Secretary. 

23 ‘‘(C) ACCESS TO JUDICIAL REVIEW.—

24 ‘‘(i) IN GENERAL.—If the appropriate 

25 review entity—
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1 ‘‘(I) determines that there are no 

2 material issues of fact in dispute and 

3 that the only issues to be adjudicated 

4 are ones of law or regulation that the 

5 Departmental Appeals Board does not 

6 have authority to decide; or 

7 ‘‘(II) fails to make such deter8 mination within the period provided 

9 under subparagraph (B), 

10 then the appellant may bring a civil action 

11 as described in this subparagraph. 

12 ‘‘(ii) DEADLINE FOR FILING.—Such 

13 action shall be filed, in the case described 

14 in—

15 ‘‘(I) clause (i)(I), within 60 days 

16 of the date of the determination de17 scribed in such clause; or 

18 ‘‘(II) clause (i)(II), within 60 

19 days of the end of the period provided 

20 under subparagraph (B) for the deter21 mination. 

22 ‘‘(iii) VENUE.—Such action shall be 

23 brought in the district court of the United

24 States for the judicial district in which the 

25 appellant is located (or, in the case of an 
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1 action brought jointly by more than one 

2 applicant, the judicial district in which the 

3 greatest number of applicants are located) 

4 or in the District Court for the District of 

5 Columbia. 

6 ‘‘(iv) INTEREST ON ANY AMOUNTS IN

7 CONTROVERSY.—Where a provider of serv8 ices or supplier is granted judicial review 

9 pursuant to this paragraph, the amount in 

10 controversy (if any) shall be subject to an11 nual interest beginning on the first day of 

12 the first month beginning after the 60-day 

13 period as determined pursuant to clause 

14 (ii) and equal to the rate of interest on ob15 ligations issued for purchase by the Fed16 eral Supplementary Medical Insurance 

17 Trust Fund for the month in which the 

18 civil action authorized under this para19 graph is commenced, to be awarded by the 

20 reviewing court in favor of the prevailing 

21 party. No interest awarded pursuant to the 

22 preceding sentence shall be deemed income 

23 or cost for the purposes of determining re24 imbursement due providers of services or 

25 suppliers under this title. 
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1 ‘‘(D) REVIEW ENTITY DEFINED.—For pur2 poses of this subsection, the term ‘review entity’ 

3 means an entity of up to three reviewers who 

4 are administrative law judges or members of 

5 the Departmental Appeals Board selected for 

6 purposes of making determinations under this 

7 paragraph.’’. 

8 (2) CONFORMING AMENDMENT.—Section 

9 1869(b)(1)(F)(ii) (42 U.S.C. 1395ff(b)(1)(F)(ii)) is 

10 amended to read as follows: 

11 ‘‘(ii) REFERENCE TO EXPEDITED AC12 CESS TO JUDICIAL REVIEW.—For the pro13 vision relating to expedited access to judi14 cial review, see paragraph (2).’’.

15 (b) APPLICATION TO PROVIDER AGREEMENT DETER16 MINATIONS.—Section 1866(h)(1) (42 U.S.C. 

17 1395cc(h)(1)) is amended—

18 (1) by inserting ‘‘(A)’’ after ‘‘(h)(1)’’; and 

19 (2) by adding at the end the following new sub20 paragraph: 

21 ‘‘(B) An institution or agency described in subpara22 graph (A) that has filed for a hearing under subparagraph 

23 (A) shall have expedited access to judicial review under 

24 this subparagraph in the same manner as providers of 

25 services, suppliers, and individuals entitled to benefits 
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•HR 3584 IH 

1 under part A or enrolled under part B, or both, may ob2 tain expedited access to judicial review under the process 

3 established under section 1869(b)(2). Nothing in this sub4 paragraph shall be construed to affect the application of 

5 any remedy imposed under section 1819 during the pend6 ency of an appeal under this subparagraph.’’. 

7 (c) EXPEDITED REVIEW OF CERTAIN PROVIDER

8 AGREEMENT DETERMINATIONS.—

9 (1) TERMINATION AND CERTAIN OTHER IMME10 DIATE REMEDIES.—Section 1866(h)(1) (42 U.S.C. 

11 1395cc(h)(1)), as amended by subsection (b), is 

12 amended by adding at the end the following new 

13 subparagraph: 

14 ‘‘(C)(i) The Secretary shall develop and implement a 

15 process to expedite proceedings under this subsection in 

16 which—

17 ‘‘(I) the remedy of termination of participation 

18 has been imposed; 

19 ‘‘(II) a remedy described in clause (i) or (iii) of 

20 section 1819(h)(2)(B) has been imposed, but only if 

21 such remedy has been imposed on an immediate 

22 basis; or 

23 ‘‘(III) a determination has been made as to a 

24 finding of substandard quality of care that results in 
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1 the loss of approval of a skilled nursing facility’s 

2 nurse aide training program. 

3 ‘‘(ii) Under such process under clause (i), priority 

4 shall be provided in cases of termination described in 

5 clause (i)(I). 

6 ‘‘(iii) Nothing in this subparagraph shall be con7 strued to affect the application of any remedy imposed 

8 under section 1819 during the pendency of an appeal 

9 under this subparagraph.’’.

10 (2) WAIVER OF DISAPPROVAL OF NURSE-AIDE

11 TRAINING PROGRAMS.—Sections 1819(f)(2) and sec12 tion 1919(f)(2) (42 U.S.C. 1395i–3(f)(2) and 

13 1396r(f)(2)) are each amended—

14 (A) in subparagraph (B)(iii), by striking 

15 ‘‘subparagraph (C)’’ and inserting ‘‘subpara16 graphs (C) and (D)’’; and 

17 (B) by adding at the end the following new 

18 subparagraph: 

19 ‘‘(D) WAIVER OF DISAPPROVAL OF NURSE20 AIDE TRAINING PROGRAMS.—Upon application 

21 of a nursing facility, the Secretary may waive 

22 the application of subparagraph (B)(iii)(I)(c) if 

23 the imposition of the civil monetary penalty was 

24 not related to the quality of care provided to 

25 residents of the facility. Nothing in this sub-
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1 paragraph shall be construed as eliminating any 

2 requirement upon a facility to pay a civil mone3 tary penalty described in the preceding sen4 tence.’’. 

5 (3) INCREASED FINANCIAL SUPPORT.—In addi6 tion to any amounts otherwise appropriated, to re7 duce by 50 percent the average time for administra8 tive determinations on appeals under section 

9 1866(h) of the Social Security Act (42 U.S.C. 

10 1395cc(h)), there are authorized to be appropriated 

11 (in appropriate part from the Federal Hospital In12 surance Trust Fund, established under section 1817 

13 of the Social Security Act (42 U.S.C. 1395i), and 

14 the Federal Supplementary Medical Insurance Trust 

15 Fund, established under section 1841 of such Act 

16 (42 U.S.C. 1395t)) to the Secretary such additional 

17 sums for fiscal year 2004 and each subsequent fiscal 

18 year as may be necessary. The purposes for which 

19 such amounts are available include increasing the 

20 number of administrative law judges (and their 

21 staffs) and the appellate level staff at the Depart22 mental Appeals Board of the Department of Health

23 and Human Services and educating such judges and 

24 staffs on long-term care issues. 
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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to appeals filed on or after October 

3 1, 2004. 

4 SEC. 233. REVISIONS TO MEDICARE APPEALS PROCESS. 

5 (a) REQUIRING FULL AND EARLY PRESENTATION OF

6 EVIDENCE.—

7 (1) IN GENERAL.—Section 1869(b) (42 U.S.C. 

8 1395ff(b)), as amended by section 232(a), is further 

9 amended by adding at the end the following new 

10 paragraph: 

11 ‘‘(3) REQUIRING FULL AND EARLY PRESEN12 TATION OF EVIDENCE BY PROVIDERS.—A provider 

13 of services or supplier may not introduce evidence in 

14 any appeal under this section that was not presented 

15 at the reconsideration conducted by the qualified 

16 independent contractor under subsection (c), unless 

17 there is good cause which precluded the introduction 

18 of such evidence at or before that reconsideration.’’. 

19 (2) EFFECTIVE DATE.—The amendment made 

20 by paragraph (1) shall take effect on October 1, 

21 2004. 

22 (b) USE OF PATIENTS’ MEDICAL RECORDS.—Section 

23 1869(c)(3)(B)(i) (42 U.S.C. 1395ff(c)(3)(B)(i)) is amend24 ed by inserting ‘‘(including the medical records of the indi25 vidual involved)’’ after ‘‘clinical experience’’. 
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1 (c) NOTICE REQUIREMENTS FOR MEDICARE AP2 PEALS.— 

3 (1) INITIAL DETERMINATIONS AND REDETER4 MINATIONS.—Section 1869(a) (42 U.S.C. 1395ff(a)) 

5 is amended by adding at the end the following new 

6 paragraphs: 

7 ‘‘(4) REQUIREMENTS OF NOTICE OF DETER8 MINATIONS.—With respect to an initial determina9 tion insofar as it results in a denial of a claim for 

10 benefits—

11 ‘‘(A) the written notice on the determina12 tion shall include—

13 ‘‘(i) the reasons for the determination, 

14 including whether a local medical review 

15 policy or a local coverage determination 

16 was used; 

17 ‘‘(ii) the procedures for obtaining ad18 ditional information concerning the deter19 mination, including the information de20 scribed in subparagraph (B); and 

21 ‘‘(iii) notification of the right to seek 

22 a redetermination or otherwise appeal the 

23 determination and instructions on how to 

24 initiate such a redetermination under this 

25 section; 
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1 ‘‘(B) such written notice shall be provided 

2 in printed form and written in a manner cal3 culated to be understood by the individual enti4 tled to benefits under part A or enrolled under 

5 part B, or both; and 

6 ‘‘(C) the individual provided such written 

7 notice may obtain, upon request, information on 

8 the specific provision of the policy, manual, or 

9 regulation used in making the redetermination. 

10 ‘‘(5) REQUIREMENTS OF NOTICE OF REDETER11 MINATIONS.—With respect to a redetermination in12 sofar as it results in a denial of a claim for bene13 fits—

14 ‘‘(A) the written notice on the redeter15 mination shall include—

16 ‘‘(i) the specific reasons for the rede17 termination; 

18 ‘‘(ii) as appropriate, a summary of the 

19 clinical or scientific evidence used in mak20 ing the redetermination; 

21 ‘‘(iii) a description of the procedures 

22 for obtaining additional information con23 cerning the redetermination; and 

24 ‘‘(iv) notification of the right to ap25 peal the redetermination and instructions 
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1 on how to initiate such an appeal under 

2 this section; 

3 ‘‘(B) such written notice shall be provided 

4 in printed form and written in a manner cal5 culated to be understood by the individual enti6 tled to benefits under part A or enrolled under 

7 part B, or both; and 

8 ‘‘(C) the individual provided such written 

9 notice may obtain, upon request, information on 

10 the specific provision of the policy, manual, or 

11 regulation used in making the redetermina12 tion.’’. 

13 (2) RECONSIDERATIONS.—Section 

14 1869(c)(3)(E) (42 U.S.C. 1395ff(c)(3)(E)) is 

15 amended—

16 (A) by inserting ‘‘be written in a manner 

17 calculated to be understood by the individual 

18 entitled to benefits under part A or enrolled 

19 under part B, or both, and shall include (to the 

20 extent appropriate)’’ after ‘‘in writing,’’; and 

21 (B) by inserting ‘‘and a notification of the 

22 right to appeal such determination and instruc23 tions on how to initiate such appeal under this 

24 section’’ after ‘‘such decision,’’. 
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1 (3) APPEALS.—Section 1869(d) (42 U.S.C. 

2 1395ff(d)) is amended—

3 (A) in the heading, by inserting ‘‘; NO4 TICE’’ after ‘‘SECRETARY’’; and 

5 (B) by adding at the end the following new 

6 paragraph: 

7 ‘‘(4) NOTICE.—Notice of the decision of an ad8 ministrative law judge shall be in writing in a man9 ner calculated to be understood by the individual en10 titled to benefits under part A or enrolled under part 

11 B, or both, and shall include—

12 ‘‘(A) the specific reasons for the deter13 mination (including, to the extent appropriate, 

14 a summary of the clinical or scientific evidence 

15 used in making the determination); 

16 ‘‘(B) the procedures for obtaining addi17 tional information concerning the decision; and 

18 ‘‘(C) notification of the right to appeal the 

19 decision and instructions on how to initiate 

20 such an appeal under this section.’’. 

21 (4) SUBMISSION OF RECORD FOR APPEAL.—

22 Section 1869(c)(3)(J)(i) (42 U.S.C. 

23 1395ff(c)(3)(J)(i)) is amended by striking ‘‘prepare’’

24 and inserting ‘‘submit’’ and by striking ‘‘with re-
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1 spect to’’ and all that follows through ‘‘and relevant 

2 policies’’. 

3 (d) QUALIFIED INDEPENDENT CONTRACTORS.—

4 (1) ELIGIBILITY REQUIREMENTS OF QUALIFIED

5 INDEPENDENT CONTRACTORS.—Section 1869(c)(3) 

6 (42 U.S.C. 1395ff(c)(3)) is amended—

7 (A) in subparagraph (A), by striking ‘‘suf8 ficient training and expertise in medical science 

9 and legal matters’’ and inserting ‘‘sufficient 

10 medical, legal, and other expertise (including 

11 knowledge of the program under this title) and 

12 sufficient staffing’’; and 

13 (B) by adding at the end the following new 

14 subparagraph: 

15 ‘‘(K) INDEPENDENCE REQUIREMENTS.—

16 ‘‘(i) IN GENERAL.—Subject to clause 

17 (ii), a qualified independent contractor 

18 shall not conduct any activities in a case 

19 unless the entity—

20 ‘‘(I) is not a related party (as de21 fined in subsection (g)(5)); 

22 ‘‘(II) does not have a material fa23 milial, financial, or professional rela24 tionship with such a party in relation 

25 to such case; and 
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1 ‘‘(III) does not otherwise have a 

2 conflict of interest with such a party. 

3 ‘‘(ii) EXCEPTION FOR REASONABLE

4 COMPENSATION.—Nothing in clause (i) 

5 shall be construed to prohibit receipt by a 

6 qualified independent contractor of com7 pensation from the Secretary for the con8 duct of activities under this section if the 

9 compensation is provided consistent with 

10 clause (iii). 

11 ‘‘(iii) LIMITATIONS ON ENTITY COM12 PENSATION.—Compensation provided by 

13 the Secretary to a qualified independent 

14 contractor in connection with reviews 

15 under this section shall not be contingent 

16 on any decision rendered by the contractor 

17 or by any reviewing professional.’’. 

18 (2) ELIGIBILITY REQUIREMENTS FOR REVIEW19 ERS.—Section 1869 (42 U.S.C. 1395ff) is 

20 amended—

21 (A) by amending subsection (c)(3)(D) to 

22 read as follows: 

23 ‘‘(D) QUALIFICATIONS FOR REVIEWERS.—

24 The requirements of subsection (g) shall be met 
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•HR 3584 IH 

1 (relating to qualifications of reviewing profes2 sionals).’’; and 

3 (B) by adding at the end the following new 

4 subsection: 

5 ‘‘(g) QUALIFICATIONS OF REVIEWERS.—

6 ‘‘(1) IN GENERAL.—In reviewing determina7 tions under this section, a qualified independent con8 tractor shall assure that—

9 ‘‘(A) each individual conducting a review 

10 shall meet the qualifications of paragraph (2); 

11 ‘‘(B) compensation provided by the con12 tractor to each such reviewer is consistent with 

13 paragraph (3); and 

14 ‘‘(C) in the case of a review by a panel de15 scribed in subsection (c)(3)(B) composed of 

16 physicians or other health care professionals 

17 (each in this subsection referred to as a ‘review18 ing professional’), a reviewing professional 

19 meets the qualifications described in paragraph 

20 (4) and, where a claim is regarding the fur21 nishing of treatment by a physician (allopathic 

22 or osteopathic) or the provision of items or 

23 services by a physician (allopathic or osteo24 pathic), a reviewing professional shall be a phy25 sician (allopathic or osteopathic). 
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1 ‘‘(2) INDEPENDENCE.—

2 ‘‘(A) IN GENERAL.—Subject to subpara3 graph (B), each individual conducting a review 

4 in a case shall—

5 ‘‘(i) not be a related party (as defined 

6 in paragraph (5)); 

7 ‘‘(ii) not have a material familial, fi8 nancial, or professional relationship with 

9 such a party in the case under review; and 

10 ‘‘(iii) not otherwise have a conflict of 

11 interest with such a party. 

12 ‘‘(B) EXCEPTION.—Nothing in subpara13 graph (A) shall be construed to—

14 ‘‘(i) prohibit an individual, solely on 

15 the basis of a participation agreement with 

16 a fiscal intermediary, carrier, or other con17 tractor, from serving as a reviewing profes18 sional if—

19 ‘‘(I) the individual is not involved 

20 in the provision of items or services in 

21 the case under review; 

22 ‘‘(II) the fact of such an agree23 ment is disclosed to the Secretary and 

24 the individual entitled to benefits 

25 under part A or enrolled under part 
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1 B, or both, or such individual’s au2 thorized representative, and neither 

3 party objects; and 

4 ‘‘(III) the individual is not an 

5 employee of the intermediary, carrier, 

6 or contractor and does not provide 

7 services exclusively or primarily to or 

8 on behalf of such intermediary, car9 rier, or contractor; 

10 ‘‘(ii) prohibit an individual who has 

11 staff privileges at the institution where the 

12 treatment involved takes place from serv13 ing as a reviewer merely on the basis of 

14 having such staff privileges if the existence 

15 of such privileges is disclosed to the Sec16 retary and such individual (or authorized 

17 representative), and neither party objects; 

18 or 

19 ‘‘(iii) prohibit receipt of compensation 

20 by a reviewing professional from a con21 tractor if the compensation is provided 

22 consistent with paragraph (3). 

23 For purposes of this paragraph, the term ‘par24 ticipation agreement’ means an agreement re25 lating to the provision of health care services by 
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1 the individual and does not include the provi2 sion of services as a reviewer under this sub3 section. 

4 ‘‘(3) LIMITATIONS ON REVIEWER COMPENSA5 TION.—Compensation provided by a qualified inde6 pendent contractor to a reviewer in connection with 

7 a review under this section shall not be contingent 

8 on the decision rendered by the reviewer. 

9 ‘‘(4) LICENSURE AND EXPERTISE.—Each re10 viewing professional shall be—

11 ‘‘(A) a physician (allopathic or osteopathic) 

12 who is appropriately credentialed or licensed in 

13 one or more States to deliver health care serv14 ices and has medical expertise in the field of 

15 practice that is appropriate for the items or 

16 services at issue; or 

17 ‘‘(B) a health care professional who is le18 gally authorized in one or more States (in ac19 cordance with State law or the State regulatory 

20 mechanism provided by State law) to furnish 

21 the health care items or services at issue and

22 has medical expertise in the field of practice 

23 that is appropriate for such items or services. 

24 ‘‘(5) RELATED PARTY DEFINED.—For purposes 

25 of this section, the term ‘related party’ means, with 
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1 respect to a case under this title involving a specific 

2 individual entitled to benefits under part A or en3 rolled under part B, or both, any of the following: 

4 ‘‘(A) The Secretary, the medicare adminis5 trative contractor involved, or any fiduciary, of6 ficer, director, or employee of the Department 

7 of Health and Human Services, or of such con8 tractor. 

9 ‘‘(B) The individual (or authorized rep10 resentative). 

11 ‘‘(C) The health care professional that pro12 vides the items or services involved in the case. 

13 ‘‘(D) The institution at which the items or 

14 services (or treatment) involved in the case are 

15 provided. 

16 ‘‘(E) The manufacturer of any drug or 

17 other item that is included in the items or serv18 ices involved in the case. 

19 ‘‘(F) Any other party determined under 

20 any regulations to have a substantial interest in 

21 the case involved.’’. 

22 (3) REDUCING MINIMUM NUMBER OF QUALI23 FIED INDEPENDENT CONTRACTORS.—Section 

24 1869(c)(4) (42 U.S.C. 1395ff(c)(4)) is amended by 

25 striking ‘‘not fewer than 12 qualified independent 
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1 contractors under this subsection’’ and inserting ‘‘a 

2 sufficient number of qualified independent contrac3 tors (but not fewer than 4 such contractors) to con4 duct reconsiderations consistent with the timeframes 

5 applicable under this subsection’’. 

6 (4) EFFECTIVE DATE.—The amendments made 

7 by paragraphs (1) and (2) shall be effective as if in8 cluded in the enactment of the respective provisions 

9 of subtitle C of title V of BIPA (114 Stat. 2763A–

10 534). 

11 (5) TRANSITION.—In applying section 1869(g) 

12 of the Social Security Act (as added by paragraph 

13 (2)), any reference to a medicare administrative con14 tractor shall be deemed to include a reference to a 

15 fiscal intermediary under section 1816 of the Social 

16 Security Act (42 U.S.C. 1395h) and a carrier under 

17 section 1842 of such Act (42 U.S.C. 1395u).

18 SEC. 234. PREPAYMENT REVIEW. 

19 (a) IN GENERAL.—Section 1874A, as added by sec20 tion 211(a)(1) and as amended by sections 212(b), 

21 221(b)(1), and 221(c)(1), is further amended by adding 

22 at the end the following new subsection: 

23 ‘‘(h) CONDUCT OF PREPAYMENT REVIEW.—

24 ‘‘(1) CONDUCT OF RANDOM PREPAYMENT RE25 VIEW.—
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1 ‘‘(A) IN GENERAL.—A medicare adminis2 trative contractor may conduct random prepay3 ment review only to develop a contractor-wide 

4 or program-wide claims payment error rates or 

5 under such additional circumstances as may be 

6 provided under regulations, developed in con7 sultation with providers of services and sup8 pliers. 

9 ‘‘(B) USE OF STANDARD PROTOCOLS

10 WHEN CONDUCTING PREPAYMENT REVIEWS.—

11 When a medicare administrative contractor con12 ducts a random prepayment review, the con13 tractor may conduct such review only in accord14 ance with a standard protocol for random pre15 payment audits developed by the Secretary. 

16 ‘‘(C) CONSTRUCTION.—Nothing in this 

17 paragraph shall be construed as preventing the 

18 denial of payments for claims actually reviewed 

19 under a random prepayment review. 

20 ‘‘(D) RANDOM PREPAYMENT REVIEW.—

21 For purposes of this subsection, the term ‘ran22 dom prepayment review’ means a demand for 

23 the production of records or documentation ab24 sent cause with respect to a claim. 
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1 ‘‘(2) LIMITATIONS ON NON-RANDOM PREPAY2 MENT REVIEW.—

3 ‘‘(A) LIMITATIONS ON INITIATION OF NON4 RANDOM PREPAYMENT REVIEW.—A medicare 

5 administrative contractor may not initiate non6 random prepayment review of a provider of 

7 services or supplier based on the initial identi8 fication by that provider of services or supplier 

9 of an improper billing practice unless there is a 

10 likelihood of sustained or high level of payment 

11 error under section 1893(f)(3)(A). 

12 ‘‘(B) TERMINATION OF NON-RANDOM PRE13 PAYMENT REVIEW.—The Secretary shall issue 

14 regulations relating to the termination, includ15 ing termination dates, of non-random prepay16 ment review. Such regulations may vary such a 

17 termination date based upon the differences in 

18 the circumstances triggering prepayment re19 view.’’. 

20 (b) EFFECTIVE DATE.—

21 (1) IN GENERAL.—Except as provided in this 

22 subsection, the amendment made by subsection (a) 

23 shall take effect 1 year after the date of the enact24 ment of this Act. 
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1 (2) DEADLINE FOR PROMULGATION OF CER2 TAIN REGULATIONS.—The Secretary shall first issue 

3 regulations under section 1874A(h) of the Social Se4 curity Act, as added by subsection (a), by not later 

5 than 1 year after the date of the enactment of this 

6 Act. 

7 (3) APPLICATION OF STANDARD PROTOCOLS

8 FOR RANDOM PREPAYMENT REVIEW.—Section 

9 1874A(h)(1)(B) of the Social Security Act, as added 

10 by subsection (a), shall apply to random prepayment 

11 reviews conducted on or after such date (not later 

12 than 1 year after the date of the enactment of this 

13 Act) as the Secretary shall specify. 

14 (c) APPLICATION TO FISCAL INTERMEDIARIES AND

15 CARRIERS.—The provisions of section 1874A(h) of the So16 cial Security Act, as added by subsection (a), shall apply 

17 to each fiscal intermediary under section 1816 of the So18 cial Security Act (42 U.S.C. 1395h) and each carrier 

19 under section 1842 of such Act (42 U.S.C. 1395u) in the 

20 same manner as they apply to medicare administrative 

21 contractors under such provisions.

22 SEC. 235. RECOVERY OF OVERPAYMENTS. 

23 (a) IN GENERAL.—Section 1893 (42 U.S.C. 

24 1395ddd) is amended by adding at the end the following 

25 new subsection: 
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1 ‘‘(f) RECOVERY OF OVERPAYMENTS.—

2 ‘‘(1) USE OF REPAYMENT PLANS.—

3 ‘‘(A) IN GENERAL.—If the repayment, 

4 within 30 days by a provider of services or sup5 plier, of an overpayment under this title would 

6 constitute a hardship (as described in subpara7 graph (B)), subject to subparagraph (C), upon 

8 request of the provider of services or supplier 

9 the Secretary shall enter into a plan with the 

10 provider of services or supplier for the repay11 ment (through offset or otherwise) of such over12 payment over a period of at least 6 months but 

13 not longer than 3 years (or not longer than 5 

14 years in the case of extreme hardship, as deter15 mined by the Secretary). Interest shall accrue 

16 on the balance through the period of repay17 ment. Such plan shall meet terms and condi18 tions determined to be appropriate by the Sec19 retary. 

20 ‘‘(B) HARDSHIP.—

21 ‘‘(i) IN GENERAL.—For purposes of 

22 subparagraph (A), the repayment of an 

23 overpayment (or overpayments) within 30 

24 days is deemed to constitute a hardship 

25 if—
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1 ‘‘(I) in the case of a provider of 

2 services that files cost reports, the ag3 gregate amount of the overpayments 

4 exceeds 10 percent of the amount paid 

5 under this title to the provider of 

6 services for the cost reporting period 

7 covered by the most recently sub8 mitted cost report; or 

9 ‘‘(II) in the case of another pro10 vider of services or supplier, the ag11 gregate amount of the overpayments 

12 exceeds 10 percent of the amount paid 

13 under this title to the provider of 

14 services or supplier for the previous 

15 calendar year. 

16 ‘‘(ii) RULE OF APPLICATION.—The 

17 Secretary shall establish rules for the ap18 plication of this subparagraph in the case 

19 of a provider of services or supplier that 

20 was not paid under this title during the 

21 previous year or was paid under this title 

22 only during a portion of that year. 

23 ‘‘(iii) TREATMENT OF PREVIOUS

24 OVERPAYMENTS.—If a provider of services 

25 or supplier has entered into a repayment 
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1 plan under subparagraph (A) with respect 

2 to a specific overpayment amount, such 

3 payment amount under the repayment plan 

4 shall not be taken into account under 

5 clause (i) with respect to subsequent over6 payment amounts. 

7 ‘‘(C) EXCEPTIONS.—Subparagraph (A) 

8 shall not apply if—

9 ‘‘(i) the Secretary has reason to sus10 pect that the provider of services or sup11 plier may file for bankruptcy or otherwise 

12 cease to do business or discontinue partici13 pation in the program under this title; or 

14 ‘‘(ii) there is an indication of fraud or 

15 abuse committed against the program. 

16 ‘‘(D) IMMEDIATE COLLECTION IF VIOLA17 TION OF REPAYMENT PLAN.—If a provider of 

18 services or supplier fails to make a payment in 

19 accordance with a repayment plan under this 

20 paragraph, the Secretary may immediately seek 

21 to offset or otherwise recover the total balance 

22 outstanding (including applicable interest) 

23 under the repayment plan. 

24 ‘‘(E) RELATION TO NO FAULT PROVI25 SION.—Nothing in this paragraph shall be con-
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1 strued as affecting the application of section 

2 1870(c) (relating to no adjustment in the cases 

3 of certain overpayments). 

4 ‘‘(2) LIMITATION ON RECOUPMENT.—

5 ‘‘(A) IN GENERAL.—In the case of a pro6 vider of services or supplier that is determined 

7 to have received an overpayment under this title 

8 and that seeks a reconsideration by a qualified 

9 independent contractor on such determination 

10 under section 1869(b)(1), the Secretary may 

11 not take any action (or authorize any other per12 son, including any medicare contractor, as de13 fined in subparagraph (C)) to recoup the over14 payment until the date the decision on the re15 consideration has been rendered. If the provi16 sions of section 1869(b)(1) (providing for such 

17 a reconsideration by a qualified independent 

18 contractor) are not in effect, in applying the 

19 previous sentence any reference to such a recon20 sideration shall be treated as a reference to a 

21 redetermination by the fiscal intermediary or 

22 carrier involved. 

23 ‘‘(B) COLLECTION WITH INTEREST.—Inso24 far as the determination on such appeal is 

25 against the provider of services or supplier, in-
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1 terest on the overpayment shall accrue on and 

2 after the date of the original notice of overpay3 ment. Insofar as such determination against the 

4 provider of services or supplier is later reversed, 

5 the Secretary shall provide for repayment of the 

6 amount recouped plus interest at the same rate 

7 as would apply under the previous sentence for 

8 the period in which the amount was recouped. 

9 ‘‘(C) MEDICARE CONTRACTOR DEFINED.—

10 For purposes of this subsection, the term ‘medi11 care contractor’ has the meaning given such 

12 term in section 1889(g). 

13 ‘‘(3) LIMITATION ON USE OF EXTRAPO14 LATION.—A medicare contractor may not use ex15 trapolation to determine overpayment amounts to be 

16 recovered by recoupment, offset, or otherwise unless 

17 the Secretary determines that—

18 ‘‘(A) there is a sustained or high level of 

19 payment error; or 

20 ‘‘(B) documented educational intervention 

21 has failed to correct the payment error. 

22 There shall be no administrative or judicial review 

23 under section 1869, section 1878, or otherwise, of 

24 determinations by the Secretary of sustained or high 

25 levels of payment errors under this paragraph. 
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1 ‘‘(4) PROVISION OF SUPPORTING DOCUMENTA2 TION.—In the case of a provider of services or sup3 plier with respect to which amounts were previously 

4 overpaid, a medicare contractor may request the 

5 periodic production of records or supporting docu6 mentation for a limited sample of submitted claims 

7 to ensure that the previous practice is not con8 tinuing. 

9 ‘‘(5) CONSENT SETTLEMENT REFORMS.—

10 ‘‘(A) IN GENERAL.—The Secretary may 

11 use a consent settlement (as defined in sub12 paragraph (D)) to settle a projected overpay13 ment. 

14 ‘‘(B) OPPORTUNITY TO SUBMIT ADDI15 TIONAL INFORMATION BEFORE CONSENT SET16 TLEMENT OFFER.—Before offering a provider 

17 of services or supplier a consent settlement, the 

18 Secretary shall—

19 ‘‘(i) communicate to the provider of 

20 services or supplier—

21 ‘‘(I) that, based on a review of 

22 the medical records requested by the 

23 Secretary, a preliminary evaluation of 

24 those records indicates that there 

25 would be an overpayment; 
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1 ‘‘(II) the nature of the problems 

2 identified in such evaluation; and 

3 ‘‘(III) the steps that the provider 

4 of services or supplier should take to 

5 address the problems; and 

6 ‘‘(ii) provide for a 45-day period dur7 ing which the provider of services or sup8 plier may furnish additional information 

9 concerning the medical records for the 

10 claims that had been reviewed. 

11 ‘‘(C) CONSENT SETTLEMENT OFFER.—The 

12 Secretary shall review any additional informa13 tion furnished by the provider of services or 

14 supplier under subparagraph (B)(ii). Taking 

15 into consideration such information, the Sec16 retary shall determine if there still appears to 

17 be an overpayment. If so, the Secretary—

18 ‘‘(i) shall provide notice of such deter19 mination to the provider of services or sup20 plier, including an explanation of the rea21 son for such determination; and 

22 ‘‘(ii) in order to resolve the overpay23 ment, may offer the provider of services or 

24 supplier—
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1 ‘‘(I) the opportunity for a statis2 tically valid random sample; or 

3 ‘‘(II) a consent settlement. 

4 The opportunity provided under clause (ii)(I) 

5 does not waive any appeal rights with respect to 

6 the alleged overpayment involved. 

7 ‘‘(D) CONSENT SETTLEMENT DEFINED.—

8 For purposes of this paragraph, the term ‘con9 sent settlement’ means an agreement between 

10 the Secretary and a provider of services or sup11 plier whereby both parties agree to settle a pro12 jected overpayment based on less than a statis13 tically valid sample of claims and the provider 

14 of services or supplier agrees not to appeal the 

15 claims involved. 

16 ‘‘(6) NOTICE OF OVER-UTILIZATION OF

17 CODES.—The Secretary shall establish, in consulta18 tion with organizations representing the classes of 

19 providers of services and suppliers, a process under 

20 which the Secretary provides for notice to classes of 

21 providers of services and suppliers served by the con22 tractor in cases in which the contractor has identi23 fied that particular billing codes may be overutilized 

24 by that class of providers of services or suppliers 
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1 under the programs under this title (or provisions of 

2 title XI insofar as they relate to such programs). 

3 ‘‘(7) PAYMENT AUDITS.—

4 ‘‘(A) WRITTEN NOTICE FOR POST-PAY5 MENT AUDITS.—Subject to subparagraph (C), if 

6 a medicare contractor decides to conduct a 

7 post-payment audit of a provider of services or 

8 supplier under this title, the contractor shall 

9 provide the provider of services or supplier with 

10 written notice (which may be in electronic form) 

11 of the intent to conduct such an audit. 

12 ‘‘(B) EXPLANATION OF FINDINGS FOR ALL

13 AUDITS.—Subject to subparagraph (C), if a 

14 medicare contractor audits a provider of serv15 ices or supplier under this title, the contractor 

16 shall—

17 ‘‘(i) give the provider of services or 

18 supplier a full review and explanation of 

19 the findings of the audit in a manner that 

20 is understandable to the provider of serv21 ices or supplier and permits the develop22 ment of an appropriate corrective action 

23 plan; 

24 ‘‘(ii) inform the provider of services or 

25 supplier of the appeal rights under this 
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1 title as well as consent settlement options 

2 (which are at the discretion of the Sec3 retary); 

4 ‘‘(iii) give the provider of services or 

5 supplier an opportunity to provide addi6 tional information to the contractor; and 

7 ‘‘(iv) take into account information 

8 provided, on a timely basis, by the provider 

9 of services or supplier under clause (iii). 

10 ‘‘(C) EXCEPTION.—Subparagraphs (A) 

11 and (B) shall not apply if the provision of no12 tice or findings would compromise pending law 

13 enforcement activities, whether civil or criminal, 

14 or reveal findings of law enforcement-related 

15 audits. 

16 ‘‘(8) STANDARD METHODOLOGY FOR PROBE

17 SAMPLING.—The Secretary shall establish a stand18 ard methodology for medicare contractors to use in 

19 selecting a sample of claims for review in the case 

20 of an abnormal billing pattern.’’. 

21 (b) EFFECTIVE DATES AND DEADLINES.—

22 (1) USE OF REPAYMENT PLANS.—Section 

23 1893(f)(1) of the Social Security Act, as added by 

24 subsection (a), shall apply to requests for repayment 
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1 plans made after the date of the enactment of this 

2 Act. 

3 (2) LIMITATION ON RECOUPMENT.—Section 

4 1893(f)(2) of the Social Security Act, as added by 

5 subsection (a), shall apply to actions taken after the 

6 date of the enactment of this Act. 

7 (3) USE OF EXTRAPOLATION.—Section 

8 1893(f)(3) of the Social Security Act, as added by 

9 subsection (a), shall apply to statistically valid ran10 dom samples initiated after the date that is 1 year 

11 after the date of the enactment of this Act. 

12 (4) PROVISION OF SUPPORTING DOCUMENTA13 TION.—Section 1893(f)(4) of the Social Security 

14 Act, as added by subsection (a), shall take effect on 

15 the date of the enactment of this Act. 

16 (5) CONSENT SETTLEMENT.—Section 

17 1893(f)(5) of the Social Security Act, as added by 

18 subsection (a), shall apply to consent settlements en19 tered into after the date of the enactment of this 

20 Act. 

21 (6) NOTICE OF OVERUTILIZATION.—Not later 

22 than 1 year after the date of the enactment of this 

23 Act, the Secretary shall first establish the process 

24 for notice of overutilization of billing codes under 
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1 section 1893A(f)(6) of the Social Security Act, as 

2 added by subsection (a). 

3 (7) PAYMENT AUDITS.—Section 1893A(f)(7) of 

4 the Social Security Act, as added by subsection (a), 

5 shall apply to audits initiated after the date of the 

6 enactment of this Act. 

7 (8) STANDARD FOR ABNORMAL BILLING PAT8 TERNS.—Not later than 1 year after the date of the 

9 enactment of this Act, the Secretary shall first es10 tablish a standard methodology for selection of sam11 ple claims for abnormal billing patterns under sec12 tion 1893(f)(8) of the Social Security Act, as added 

13 by subsection (a). 

14 SEC. 236. PROVIDER ENROLLMENT PROCESS; RIGHT OF AP15 PEAL. 

16 (a) IN GENERAL.—Section 1866 (42 U.S.C. 1395cc) 

17 is amended—

18 (1) by adding at the end of the heading the fol19 lowing: ‘‘; ENROLLMENT PROCESSES’’; and

20 (2) by adding at the end the following new sub21 section: 

22 ‘‘(j) ENROLLMENT PROCESS FOR PROVIDERS OF

23 SERVICES AND SUPPLIERS.—

24 ‘‘(1) ENROLLMENT PROCESS.—
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1 ‘‘(A) IN GENERAL.—The Secretary shall 

2 establish by regulation a process for the enroll3 ment of providers of services and suppliers 

4 under this title. 

5 ‘‘(B) DEADLINES.—The Secretary shall es6 tablish by regulation procedures under which 

7 there are deadlines for actions on applications 

8 for enrollment (and, if applicable, renewal of 

9 enrollment). The Secretary shall monitor the 

10 performance of medicare administrative con11 tractors in meeting the deadlines established 

12 under this subparagraph. 

13 ‘‘(C) CONSULTATION BEFORE CHANGING

14 PROVIDER ENROLLMENT FORMS.—The Sec15 retary shall consult with providers of services 

16 and suppliers before making changes in the pro17 vider enrollment forms required of such pro18 viders and suppliers to be eligible to submit 

19 claims for which payment may be made under 

20 this title. 

21 ‘‘(2) HEARING RIGHTS IN CASES OF DENIAL OR

22 NON-RENEWAL.—A provider of services or supplier 

23 whose application to enroll (or, if applicable, to 

24 renew enrollment) under this title is denied may 

25 have a hearing and judicial review of such denial 
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1 under the procedures that apply under subsection 

2 (h)(1)(A) to a provider of services that is dissatisfied 

3 with a determination by the Secretary.’’. 

4 (b) EFFECTIVE DATES.—

5 (1) ENROLLMENT PROCESS.—The Secretary 

6 shall provide for the establishment of the enrollment 

7 process under section 1866(j)(1) of the Social Secu8 rity Act, as added by subsection (a)(2), within 6 

9 months after the date of the enactment of this Act. 

10 (2) CONSULTATION.—Section 1866(j)(1)(C) of 

11 the Social Security Act, as added by subsection 

12 (a)(2), shall apply with respect to changes in pro13 vider enrollment forms made on or after January 1, 

14 2004. 

15 (3) HEARING RIGHTS.—Section 1866(j)(2) of 

16 the Social Security Act, as added by subsection 

17 (a)(2), shall apply to denials occurring on or after 

18 such date (not later than 1 year after the date of 

19 the enactment of this Act) as the Secretary specifies. 

20 SEC. 237. PROCESS FOR CORRECTION OF MINOR ERRORS 

21 AND OMISSIONS WITHOUT PURSUING AP22 PEALS PROCESS. 

23 (a) CLAIMS.—The Secretary shall develop, in con24 sultation with appropriate medicare contractors (as de25 fined in section 1889(g) of the Social Security Act, as in-
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1 serted by section 301(a)(1)) and representatives of pro2 viders of services and suppliers, a process whereby, in the 

3 case of minor errors or omissions (as defined by the Sec4 retary) that are detected in the submission of claims under 

5 the programs under title XVIII of such Act, a provider 

6 of services or supplier is given an opportunity to correct 

7 such an error or omission without the need to initiate an 

8 appeal. Such process shall include the ability to resubmit 

9 corrected claims. 

10 (b) DEADLINE.—Not later than 1 year after the date 

11 of the enactment of this Act, the Secretary shall first de12 velop the process under subsection (a). 

13 SEC. 238. PRIOR DETERMINATION PROCESS FOR CERTAIN 

14 ITEMS AND SERVICES; ADVANCE BENE15 FICIARY NOTICES. 

16 (a) IN GENERAL.—Section 1869 (42 U.S.C. 

17 1395ff(b)), as amended by section 233(d)(2)(B), is fur18 ther amended by adding at the end the following new sub19 section: 

20 ‘‘(h) PRIOR DETERMINATION PROCESS FOR CERTAIN

21 ITEMS AND SERVICES.—

22 ‘‘(1) ESTABLISHMENT OF PROCESS.—

23 ‘‘(A) IN GENERAL.—With respect to a 

24 medicare administrative contractor that has a 

25 contract under section 1874A that provides for 
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1 making payments under this title with respect 

2 to physicians’ services (as defined in section 

3 1848(j)(3)), the Secretary shall establish a 

4 prior determination process that meets the re5 quirements of this subsection and that shall be 

6 applied by such contractor in the case of eligible 

7 requesters. 

8 ‘‘(B) ELIGIBLE REQUESTER.—For pur9 poses of this subsection, each of the following 

10 shall be an eligible requester: 

11 ‘‘(i) A participating physician, but 

12 only with respect to physicians’ services to 

13 be furnished to an individual who is enti14 tled to benefits under this title and who 

15 has consented to the physician making the 

16 request under this subsection for those 

17 physicians’ services. 

18 ‘‘(ii) An individual entitled to benefits 

19 under this title, but only with respect to a 

20 physicians’ service for which the individual 

21 receives, from a physician, an advance ben22 eficiary notice under section 1879(a). 

23 ‘‘(2) SECRETARIAL FLEXIBILITY.—The Sec24 retary shall establish by regulation reasonable limits 

25 on the physicians’ services for which a prior deter-
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1 mination of coverage may be requested under this 

2 subsection. In establishing such limits, the Secretary 

3 may consider the dollar amount involved with re4 spect to the physicians’ service, administrative costs 

5 and burdens, and other relevant factors. 

6 ‘‘(3) REQUEST FOR PRIOR DETERMINATION.—

7 ‘‘(A) IN GENERAL.—Subject to paragraph 

8 (2), under the process established under this 

9 subsection an eligible requester may submit to 

10 the contractor a request for a determination, 

11 before the furnishing of a physicians’ service, as 

12 to whether the physicians’ service is covered 

13 under this title consistent with the applicable 

14 requirements of section 1862(a)(1)(A) (relating 

15 to medical necessity). 

16 ‘‘(B) ACCOMPANYING DOCUMENTATION.—

17 The Secretary may require that the request be 

18 accompanied by a description of the physicians’ 

19 service, supporting documentation relating to

20 the medical necessity for the physicians’ service, 

21 and any other appropriate documentation. In 

22 the case of a request submitted by an eligible 

23 requester who is described in paragraph 

24 (1)(B)(ii), the Secretary may require that the 
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1 request also be accompanied by a copy of the 

2 advance beneficiary notice involved. 

3 ‘‘(4) RESPONSE TO REQUEST.—

4 ‘‘(A) IN GENERAL.—Under such process, 

5 the contractor shall provide the eligible re6 quester with written notice of a determination 

7 as to whether—

8 ‘‘(i) the physicians’ service is so cov9 ered; 

10 ‘‘(ii) the physicians’ service is not so 

11 covered; or 

12 ‘‘(iii) the contractor lacks sufficient 

13 information to make a coverage determina14 tion with respect to the physicians’ service. 

15 ‘‘(B) CONTENTS OF NOTICE FOR CERTAIN

16 DETERMINATIONS.—

17 ‘‘(i) NONCOVERAGE.—If the con18 tractor makes the determination described 

19 in subparagraph (A)(ii), the contractor 

20 shall include in the notice a brief expla21 nation of the basis for the determination, 

22 including on what national or local cov23 erage or noncoverage determination (if 

24 any) the determination is based, and a de-
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1 scription of any applicable rights under 

2 subsection (a). 

3 ‘‘(ii) INSUFFICIENT INFORMATION.—

4 If the contractor makes the determination 

5 described in subparagraph (A)(iii), the 

6 contractor shall include in the notice a de7 scription of the additional information re8 quired to make the coverage determination.

9 ‘‘(C) DEADLINE TO RESPOND.—Such no10 tice shall be provided within the same time pe11 riod as the time period applicable to the con12 tractor providing notice of initial determinations 

13 on a claim for benefits under subsection 

14 (a)(2)(A). 

15 ‘‘(D) INFORMING BENEFICIARY IN CASE OF

16 PHYSICIAN REQUEST.—In the case of a request 

17 by a participating physician under paragraph 

18 (1)(B)(i), the process shall provide that the in19 dividual to whom the physicians’ service is pro20 posed to be furnished shall be informed of any 

21 determination described in subparagraph (A)(ii) 

22 (relating to a determination of non-coverage) 

23 and the right (referred to in paragraph (6)(B)) 

24 to obtain the physicians’ service and have a 

25 claim submitted for the physicians’ service. 
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1 ‘‘(5) BINDING NATURE OF POSITIVE DETER2 MINATION.—If the contractor makes the determina3 tion described in paragraph (4)(A)(i), such deter4 mination shall be binding on the contractor in the 

5 absence of fraud or evidence of misrepresentation of 

6 facts presented to the contractor. 

7 ‘‘(6) LIMITATION ON FURTHER REVIEW.—

8 ‘‘(A) IN GENERAL.—Contractor determina9 tions described in paragraph (4)(A)(ii) or 

10 (4)(A)(iii) (relating to pre-service claims) are 

11 not subject to further administrative appeal or 

12 judicial review under this section or otherwise. 

13 ‘‘(B) DECISION NOT TO SEEK PRIOR DE14 TERMINATION OR NEGATIVE DETERMINATION

15 DOES NOT IMPACT RIGHT TO OBTAIN SERVICES, 

16 SEEK REIMBURSEMENT, OR APPEAL RIGHTS.—

17 Nothing in this subsection shall be construed as 

18 affecting the right of an individual who—

19 ‘‘(i) decides not to seek a prior deter20 mination under this subsection with re21 spect to physicians’ services; or 

22 ‘‘(ii) seeks such a determination and 

23 has received a determination described in 

24 paragraph (4)(A)(ii), 
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1 from receiving (and submitting a claim for) 

2 such physicians’ services and from obtaining 

3 administrative or judicial review respecting such 

4 claim under the other applicable provisions of 

5 this section. Failure to seek a prior determina6 tion under this subsection with respect to physi7 cians’ service shall not be taken into account in 

8 such administrative or judicial review. 

9 ‘‘(C) NO PRIOR DETERMINATION AFTER

10 RECEIPT OF SERVICES.—Once an individual is 

11 provided physicians’ services, there shall be no 

12 prior determination under this subsection with 

13 respect to such physicians’ services.’’. 

14 (b) EFFECTIVE DATE; SUNSET; TRANSITION.—

15 (1) EFFECTIVE DATE.—The Secretary shall es16 tablish the prior determination process under the 

17 amendment made by subsection (a) in such a man18 ner as to provide for the acceptance of requests for 

19 determinations under such process filed not later 

20 than 18 months after the date of the enactment of 

21 this Act. 

22 (2) SUNSET.—Such prior determination process 

23 shall not apply to requests filed after the end of the 

24 5-year period beginning on the first date on which 
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1 requests for determinations under such process are 

2 accepted. 

3 (3) TRANSITION.—During the period in which 

4 the amendment made by subsection (a) has become 

5 effective but contracts are not provided under sec6 tion 1874A of the Social Security Act with medicare 

7 administrative contractors, any reference in section 

8 1869(g) of such Act (as added by such amendment) 

9 to such a contractor is deemed a reference to a fiscal 

10 intermediary or carrier with an agreement under 

11 section 1816, or contract under section 1842, re12 spectively, of such Act. 

13 (4) LIMITATION ON APPLICATION TO SGR.—For 

14 purposes of applying section 1848(f)(2)(D) of the 

15 Social Security Act (42 U.S.C. 1395w–4(f)(2)(D)), 

16 the amendment made by subsection (a) shall not be 

17 considered to be a change in law or regulation. 

18 (c) PROVISIONS RELATING TO ADVANCE BENE19 FICIARY NOTICES; REPORT ON PRIOR DETERMINATION

20 PROCESS.—

21 (1) DATA COLLECTION.—The Secretary shall 

22 establish a process for the collection of information

23 on the instances in which an advance beneficiary no24 tice (as defined in paragraph (5)) has been provided 

25 and on instances in which a beneficiary indicates on 
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1 such a notice that the beneficiary does not intend 

2 to seek to have the item or service that is the subject 

3 of the notice furnished. 

4 (2) OUTREACH AND EDUCATION.—The Sec5 retary shall establish a program of outreach and 

6 education for beneficiaries and providers of services 

7 and other persons on the appropriate use of advance 

8 beneficiary notices and coverage policies under the 

9 medicare program. 

10 (3) GAO REPORT ON USE OF ADVANCE BENE11 FICIARY NOTICES.—Not later than 18 months after 

12 the date on which section 1869(h) of the Social Se13 curity Act (as added by subsection (a)) takes effect, 

14 the Comptroller General of the United States shall 

15 submit to Congress a report on the use of advance 

16 beneficiary notices under title XVIII of such Act. 

17 Such report shall include information concerning the 

18 providers of services and other persons that have 

19 provided such notices and the response of bene20 ficiaries to such notices. 

21 (4) GAO REPORT ON USE OF PRIOR DETER22 MINATION PROCESS.—Not later than 36 months 

23 after the date on which section 1869(h) of the Social 

24 Security Act (as added by subsection (a)) takes ef25 fect, the Comptroller General of the United States 
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1 shall submit to Congress a report on the use of the 

2 prior determination process under such section. Such 

3 report shall include—

4 (A) information concerning—

5 (i) the number and types of proce6 dures for which a prior determination has 

7 been sought; 

8 (ii) determinations made under the 

9 process; 

10 (iii) the percentage of beneficiaries 

11 prevailing; 

12 (iv) in those cases in which the bene13 ficiaries do not prevail, the reasons why 

14 such beneficiaries did not prevail; and

15 (v) changes in receipt of services re16 sulting from the application of such proc17 ess; 

18 (B) an evaluation of whether the process 

19 was useful for physicians (and other suppliers) 

20 and beneficiaries, whether it was timely, and 

21 whether the amount of information required 

22 was burdensome to physicians and beneficiaries; 

23 and 

24 (C) recommendations for improvements or 

25 continuation of such process. 
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1 (5) ADVANCE BENEFICIARY NOTICE DE2 FINED.—In this subsection, the term ‘‘advance bene3 ficiary notice’’ means a written notice provided 

4 under section 1879(a) of the Social Security Act (42 

5 U.S.C. 1395pp(a)) to an individual entitled to bene6 fits under part A or enrolled under part B of title 

7 XVIII of such Act before items or services are fur8 nished under such part in cases where a provider of 

9 services or other person that would furnish the item 

10 or service believes that payment will not be made for 

11 some or all of such items or services under such 

12 title. 

13 SEC. 239. APPEALS BY PROVIDERS WHEN THERE IS NO 

14 OTHER PARTY AVAILABLE. 

15 (a) IN GENERAL.—Section 1870 (42 U.S.C. 1395gg) 

16 is amended by adding at the end the following new sub17 section: 

18 ‘‘(h) Notwithstanding subsection (f) or any other pro19 vision of law, the Secretary shall permit a provider of serv20 ices or supplier to appeal any determination of the Sec21 retary under this title relating to services rendered under 

22 this title to an individual who subsequently dies if there 

23 is no other party available to appeal such determination.’’. 

24 (b) EFFECTIVE DATE.—The amendment made by 

25 subsection (a) shall take effect on the date of the enact-
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1 ment of this Act and shall apply to items and services fur2 nished on or after such date. 

3 SEC. 240. REVISIONS TO APPEALS TIMEFRAMES AND 

4 AMOUNTS. 

5 (a) TIMEFRAMES.—Section 1869 (42 U.S.C. 1395ff) 

6 is amended—

7 (1) in subsection (a)(3)(C)(ii), by striking ‘‘30-

8 day period’’ each place it appears and inserting ‘‘60-

9 day period’’; and 

10 (2) in subsection (c)(3)(C)(i), by striking ‘‘30-

11 day period’’ and inserting ‘‘60-day period’’. 

12 (b) AMOUNTS.—

13 (1) IN GENERAL.—Section 1869(b)(1)(E) (42 

14 U.S.C. 1395ff(b)(1)(E)) is amended by adding at 

15 the end the following new clause: 

16 ‘‘(iii) ADJUSTMENT OF DOLLAR

17 AMOUNTS.—For requests for hearings or 

18 judicial review made in a year after 2004, 

19 the dollar amounts specified in clause (i) 

20 shall be equal to such dollar amounts in21 creased by the percentage increase in the 

22 medical care component of the consumer 

23 price index for all urban consumers (U.S. 

24 city average) for July 2003 to the July 

25 preceding the year involved. Any amount 
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1 determined under the previous sentence 

2 that is not a multiple of $10 shall be 

3 rounded to the nearest multiple of $10.’’. 

4 (2) CONFORMING AMENDMENTS.—(A) Section 

5 1852(g)(5) (42 U.S.C. 1395w–22(g)(5)) is amended 

6 by adding at the end the following: ‘‘The provisions 

7 of section 1869(b)(1)(E)(iii) shall apply with respect 

8 to dollar amounts specified in the first 2 sentences 

9 of this paragraph in the same manner as they apply 

10 to the dollar amounts specified in section 

11 1869(b)(1)(E)(i).’’. 

12 (B) Section 1876(b)(5)(B) (42 U.S.C. 

13 1395mm(b)(5)(B)) is amended by adding at the end 

14 the following: ‘‘The provisions of section 

15 1869(b)(1)(E)(iii) shall apply with respect to dollar 

16 amounts specified in the first 2 sentences of this 

17 subparagraph in the same manner as they apply to 

18 the dollar amounts specified in section 

19 1869(b)(1)(E)(i).’’.

20 SEC. 241. MEDIATION PROCESS FOR LOCAL COVERAGE DE21 TERMINATIONS. 

22 (a) IN GENERAL.—Section 1869 (42 U.S.C. 1395ff), 

23 as amended by section 238(a), is amended by adding at 

24 the end the following new subsection: 
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1 ‘‘(i) MEDIATION PROCESS FOR LOCAL COVERAGE

2 DETERMINATIONS.—

3 ‘‘(1) ESTABLISHMENT OF PROCESS.—The Sec4 retary shall establish a mediation process under this 

5 subsection through the use of a physician trained in 

6 mediation and employed by the Centers for Medicare 

7 & Medicaid Services. 

8 ‘‘(2) RESPONSIBILITY OF MEDIATOR.—Under 

9 the process established in paragraph (1), such a me10 diator shall mediate in disputes between groups rep11 resenting providers of services, suppliers (as defined 

12 in section 1861(d)), and the medical director for a 

13 medicare administrative contractor whenever the re14 gional administrator (as defined by the Secretary) 

15 involved determines that there was a systematic pat16 tern and a large volume of complaints from such 

17 groups regarding decisions of such director or there 

18 is a complaint from the co-chair of the advisory com19 mittee for that contractor to such regional adminis20 trator regarding such dispute.’’. 

21 (b) INCLUSION IN MAC CONTRACTS.—Section 

22 1874A(b)(3)(A)(i), as added by section 211(a)(1), is 

23 amended by adding at the end the following: ‘‘Such re24 quirements shall include specific performance duties ex25 pected of a medical director of a medicare administrative 
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1 contractor, including requirements relating to professional 

2 relations and the availability of such director to conduct 

3 medical determination activities within the jurisdiction of 

4 such a contractor.’’.

Æ