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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3584 Introduced in House (IH)]

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.

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

SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT; REFERENCES 
              TO BIPA AND SECRETARY; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare 
Regulatory Fairness and Physician Fee Update Act''.
    (b) Amendments to Social Security Act.--Except as otherwise 
specifically provided, whenever in division A of this Act an amendment 
is expressed in terms of an amendment to or repeal of a section or 
other provision, the reference shall be considered to be made to that 
section or other provision of the Social Security Act.
    (c) BIPA; Secretary.--In this Act:
            (1) BIPA.--The term ``BIPA'' means the Medicare, Medicaid, 
        and SCHIP Benefits Improvement and Protection Act of 2000, as 
        enacted into law by section 1(a)(6) of Public Law 106-554.
            (2) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
    (d) Table of Contents.--The table of contents of 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

                     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.

    TITLE I--PROVISIONS RELATING TO PAYMENT FOR PHYSICIANS' SERVICES

SEC. 101. REVISION OF UPDATES FOR PHYSICIANS' SERVICES.

    (a) Update for 2004 and 2005.--Section 1848(d) of the Social 
Security Act (42 U.S.C. 1395w-4(d)) is amended by adding at the end the 
following new paragraph:
            ``(5) Update for 2004 and 2005.--The update to the single 
        conversion factor established in paragraph (1)(C) for each of 
        2004 and 2005 shall be not less than 1.5 percent.''.
    (b) Conforming Amendment.--Paragraph (4)(B) of such section is 
amended, in the matter before clause (i), by inserting ``and paragraph 
(5)'' after ``subparagraph (D)''.
    (c) Not Treated as Change in Law and Regulation in Sustainable 
Growth Rate Determination.--The amendments made by this subsection 
shall not be treated as a change in law for purposes of applying 
section 1848(f)(2)(D) of the Social Security Act (42 U.S.C. 1395w-
4(f)(2)(D)).

   TITLE II--ADMINISTRATIVE IMPROVEMENTS, REGULATORY REDUCTION, AND 
                           CONTRACTING REFORM

                     Subtitle A--Regulatory Reform

SEC. 201. CONSTRUCTION; DEFINITION OF SUPPLIER.

    (a) Construction.--Nothing in this title shall be construed--
            (1) to compromise or affect existing legal remedies for 
        addressing fraud or abuse, whether it be criminal prosecution, 
        civil enforcement, or administrative remedies, including under 
        sections 3729 through 3733 of title 31, United States Code 
        (commonly known as the ``False Claims Act''); or
            (2) to prevent or impede the Department of Health and Human 
        Services in any way from its ongoing efforts to eliminate 
        waste, fraud, and abuse in the medicare program.
Furthermore, the consolidation of medicare administrative contracting 
set forth in this division does not constitute consolidation of the 
Federal Hospital Insurance Trust Fund and the Federal Supplementary 
Medical Insurance Trust Fund or reflect any position on that issue.
    (b) Definition of Supplier.--Section 1861 (42 U.S.C. 1395x) is 
amended by inserting after subsection (c) the following new subsection:

                               ``Supplier

    ``(d) The term `supplier' means, unless the context otherwise 
requires, a physician or other practitioner, a facility, or other 
entity (other than a provider of services) that furnishes items or 
services under this title.''.

SEC. 202. ISSUANCE OF REGULATIONS.

    (a) Regular Timeline for Publication of Final Rules.--
            (1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)) is 
        amended by adding at the end the following new paragraph:
    ``(3)(A) The Secretary, in consultation with the Director of the 
Office of Management and Budget, shall establish and publish a regular 
timeline for the publication of final regulations based on the previous 
publication of a proposed regulation or an interim final regulation.
    ``(B) Such timeline may vary among different regulations based on 
differences in the complexity of the regulation, the number and scope 
of comments received, and other relevant factors, but shall not be 
longer than 3 years except under exceptional circumstances. If the 
Secretary intends to vary such timeline with respect to the publication 
of a final regulation, the Secretary shall cause to have published in 
the Federal Register notice of the different timeline by not later than 
the timeline previously established with respect to such regulation. 
Such notice shall include a brief explanation of the justification for 
such variation.
    ``(C) In the case of interim final regulations, upon the expiration 
of the regular timeline established under this paragraph for the 
publication of a final regulation after opportunity for public comment, 
the interim final regulation shall not continue in effect unless the 
Secretary publishes (at the end of the regular timeline and, if 
applicable, at the end of each succeeding 1-year period) a notice of 
continuation of the regulation that includes an explanation of why the 
regular timeline (and any subsequent 1-year extension) was not complied 
with. If such a notice is published, the regular timeline (or such 
timeline as previously extended under this paragraph) for publication 
of the final regulation shall be treated as having been extended for 1 
additional year.
    ``(D) The Secretary shall annually submit to Congress a report that 
describes the instances in which the Secretary failed to publish a 
final regulation within the applicable regular timeline under this 
paragraph and that provides an explanation for such failures.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on the date of the enactment of this Act. The 
        Secretary shall provide for an appropriate transition to take 
        into account the backlog of previously published interim final 
        regulations.
    (b) Limitations on New Matter in Final Regulations.--
            (1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)), as 
        amended by subsection (a), is amended by adding at the end the 
        following new paragraph:
    ``(4) If the Secretary publishes a final regulation that includes a 
provision that is not a logical outgrowth of a previously published 
notice of proposed rulemaking or interim final rule, such provision 
shall be treated as a proposed regulation and shall not take effect 
until there is the further opportunity for public comment and a 
publication of the provision again as a final regulation.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to final regulations published on or after the date 
        of the enactment of this Act.

SEC. 203. COMPLIANCE WITH CHANGES IN REGULATIONS AND POLICIES.

    (a) No Retroactive Application of Substantive Changes.--
            (1) In general.--Section 1871 (42 U.S.C. 1395hh), as 
        amended by section 202(a), is amended by adding at the end the 
        following new subsection:
    ``(e)(1)(A) A substantive change in regulations, manual 
instructions, interpretative rules, statements of policy, or guidelines 
of general applicability under this title shall not be applied (by 
extrapolation or otherwise) retroactively to items and services 
furnished before the effective date of the change, unless the Secretary 
determines that--
            ``(i) such retroactive application is necessary to comply 
        with statutory requirements; or
            ``(ii) failure to apply the change retroactively would be 
        contrary to the public interest.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to substantive changes issued on or after the date 
        of the enactment of this Act.
    (b) Timeline for Compliance With Substantive Changes After 
Notice.--
            (1) In general.--Section 1871(e)(1), as added by subsection 
        (a), is amended by adding at the end the following:
    ``(B)(i) Except as provided in clause (ii), a substantive change 
referred to in subparagraph (A) shall not become effective before the 
end of the 30-day period that begins on the date that the Secretary has 
issued or published, as the case may be, the substantive change.
    ``(ii) The Secretary may provide for such a substantive change to 
take effect on a date that precedes the end of the 30-day period under 
clause (i) if the Secretary finds that waiver of such 30-day period is 
necessary to comply with statutory requirements or that the application 
of such 30-day period is contrary to the public interest. If the 
Secretary provides for an earlier effective date pursuant to this 
clause, the Secretary shall include in the issuance or publication of 
the substantive change a finding described in the first sentence, and a 
brief statement of the reasons for such finding.
    ``(C) No action shall be taken against a provider of services or 
supplier with respect to noncompliance with such a substantive change 
for items and services furnished before the effective date of such a 
change.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to compliance actions undertaken on or after the 
        date of the enactment of this Act.
    (c) Reliance on Guidance.--
            (1) In general.--Section 1871(e), as added by subsection 
        (a), is further amended by adding at the end the following new 
        paragraph:
    ``(2)(A) If--
            ``(i) a provider of services or supplier follows the 
        written guidance (which may be transmitted electronically) 
        provided by the Secretary or by a medicare contractor (as 
        defined in section 1889(g)) acting within the scope of the 
        contractor's contract authority, with respect to the furnishing 
        of items or services and submission of a claim for benefits for 
        such items or services with respect to such provider or 
        supplier;
            ``(ii) the Secretary determines that the provider of 
        services or supplier has accurately presented the circumstances 
        relating to such items, services, and claim to the contractor 
        in writing; and
            ``(iii) the guidance was in error;
the provider of services or supplier shall not be subject to any 
penalty or interest under this title or the provisions of title XI 
insofar as they relate to this title (including interest under a 
repayment plan under section 1893 or otherwise) relating to the 
provision of such items or service or such claim if the provider of 
services or supplier reasonably relied on such guidance.
    ``(B) Subparagraph (A) shall not be construed as preventing the 
recoupment or repayment (without any additional penalty) relating to an 
overpayment insofar as the overpayment was solely the result of a 
clerical or technical operational error.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on the date of the enactment of this Act and 
        shall only apply to a penalty or interest imposed with respect 
        to guidance provided on or after July 24, 2003.

SEC. 204. REPORTS AND STUDIES RELATING TO REGULATORY REFORM.

    (a) GAO Study on Advisory Opinion Authority.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study to determine the feasibility and 
        appropriateness of establishing in the Secretary authority to 
        provide legally binding advisory opinions on appropriate 
        interpretation and application of regulations to carry out the 
        medicare program under title XVIII of the Social Security Act. 
        Such study shall examine the appropriate timeframe for issuing 
        such advisory opinions, as well as the need for additional 
        staff and funding to provide such opinions.
            (2) Report.--The Comptroller General shall submit to 
        Congress a report on the study conducted under paragraph (1) by 
        not later than 1 year after the date of the enactment of this 
        Act.
    (b) Report on Legal and Regulatory Inconsistencies.--Section 1871 
(42 U.S.C. 1395hh), as amended by section 203(a)(1), is amended by 
adding at the end the following new subsection:
    ``(f)(1) Not later than 2 years after the date of the enactment of 
this subsection, and every 3 years thereafter, the Secretary shall 
submit to Congress a report with respect to the administration of this 
title and areas of inconsistency or conflict among the various 
provisions under law and regulation.
    ``(2) In preparing a report under paragraph (1), the Secretary 
shall collect--
            ``(A) information from individuals entitled to benefits 
        under part A or enrolled under part B, or both, providers of 
        services, and suppliers and from the Medicare Beneficiary 
        Ombudsman with respect to such areas of inconsistency and 
        conflict; and
            ``(B) information from medicare contractors that tracks the 
        nature of written and telephone inquiries.
    ``(3) A report under paragraph (1) shall include a description of 
efforts by the Secretary to reduce such inconsistency or conflicts, and 
recommendations for legislation or administrative action that the 
Secretary determines appropriate to further reduce such inconsistency 
or conflicts.''.

                     Subtitle B--Contracting Reform

SEC. 211. INCREASED FLEXIBILITY IN MEDICARE ADMINISTRATION.

    (a) Consolidation and Flexibility in Medicare Administration.--
            (1) In general.--Title XVIII is amended by inserting after 
        section 1874 the following new section:

          ``contracts with medicare administrative contractors

    ``Sec. 1874A. (a) Authority.--
            ``(1) Authority to enter into contracts.--The Secretary may 
        enter into contracts with any eligible entity to serve as a 
        medicare administrative contractor with respect to the 
        performance of any or all of the functions described in 
        paragraph (4) or parts of those functions (or, to the extent 
        provided in a contract, to secure performance thereof by other 
        entities).
            ``(2) Eligibility of entities.--An entity is eligible to 
        enter into a contract with respect to the performance of a 
        particular function described in paragraph (4) only if--
                    ``(A) the entity has demonstrated capability to 
                carry out such function;
                    ``(B) the entity complies with such conflict of 
                interest standards as are generally applicable to 
                Federal acquisition and procurement;
                    ``(C) the entity has sufficient assets to 
                financially support the performance of such function; 
                and
                    ``(D) the entity meets such other requirements as 
                the Secretary may impose.
            ``(3) Medicare administrative contractor defined.--For 
        purposes of this title and title XI--
                    ``(A) In general.--The term `medicare 
                administrative contractor' means an agency, 
                organization, or other person with a contract under 
                this section.
                    ``(B) Appropriate medicare administrative 
                contractor.--With respect to the performance of a 
                particular function in relation to an individual 
                entitled to benefits under part A or enrolled under 
                part B, or both, a specific provider of services or 
                supplier (or class of such providers of services or 
                suppliers), the `appropriate' medicare administrative 
                contractor is the medicare administrative contractor 
                that has a contract under this section with respect to 
                the performance of that function in relation to that 
                individual, provider of services or supplier or class 
                of provider of services or supplier.
            ``(4) Functions described.--The functions referred to in 
        paragraphs (1) and (2) are payment functions (including the 
        function of developing local coverage determinations, as 
        defined in section 1869(f)(2)(B)), provider services functions, 
        and functions relating to services furnished to individuals 
        entitled to benefits under part A or enrolled under part B, or 
        both, as follows:
                    ``(A) Determination of payment amounts.--
                Determining (subject to the provisions of section 1878 
                and to such review by the Secretary as may be provided 
                for by the contracts) the amount of the payments 
                required pursuant to this title to be made to providers 
                of services, suppliers and individuals.
                    ``(B) Making payments.--Making payments described 
                in subparagraph (A) (including receipt, disbursement, 
                and accounting for funds in making such payments).
                    ``(C) Beneficiary education and assistance.--
                Providing education and outreach to individuals 
                entitled to benefits under part A or enrolled under 
                part B, or both, and providing assistance to those 
                individuals with specific issues, concerns, or 
                problems.
                    ``(D) Provider consultative services.--Providing 
                consultative services to institutions, agencies, and 
                other persons to enable them to establish and maintain 
                fiscal records necessary for purposes of this title and 
                otherwise to qualify as providers of services or 
                suppliers.
                    ``(E) Communication with providers.--Communicating 
                to providers of services and suppliers any information 
                or instructions furnished to the medicare 
                administrative contractor by the Secretary, and 
                facilitating communication between such providers and 
                suppliers and the Secretary.
                    ``(F) Provider education and technical 
                assistance.--Performing the functions relating to 
                provider education, training, and technical assistance.
                    ``(G) Additional functions.--Performing such other 
                functions, including (subject to paragraph (5)) 
                functions under the Medicare Integrity Program under 
                section 1893, as are necessary to carry out the 
                purposes of this title.
            ``(5) Relationship to mip contracts.--
                    ``(A) Nonduplication of duties.--In entering into 
                contracts under this section, the Secretary shall 
                assure that functions of medicare administrative 
                contractors in carrying out activities under parts A 
                and B do not duplicate activities carried out under a 
                contract entered into under the Medicare Integrity 
                Program under section 1893. The previous sentence shall 
                not apply with respect to the activity described in 
                section 1893(b)(5) (relating to prior authorization of 
                certain items of durable medical equipment under 
                section 1834(a)(15)).
                    ``(B) Construction.--An entity shall not be treated 
                as a medicare administrative contractor merely by 
                reason of having entered into a contract with the 
                Secretary under section 1893.
            ``(6) Application of federal acquisition regulation.--
        Except to the extent inconsistent with a specific requirement 
        of this section, the Federal Acquisition Regulation applies to 
        contracts under this section.
    ``(b) Contracting Requirements.--
            ``(1) Use of competitive procedures.--
                    ``(A) In general.--Except as provided in laws with 
                general applicability to Federal acquisition and 
                procurement or in subparagraph (B), the Secretary shall 
                use competitive procedures when entering into contracts 
                with medicare administrative contractors under this 
                section, taking into account performance quality as 
                well as price and other factors.
                    ``(B) Renewal of contracts.--The Secretary may 
                renew a contract with a medicare administrative 
                contractor under this section from term to term without 
                regard to section 5 of title 41, United States Code, or 
                any other provision of law requiring competition, if 
                the medicare administrative contractor has met or 
                exceeded the performance requirements applicable with 
                respect to the contract and contractor, except that the 
                Secretary shall provide for the application of 
competitive procedures under such a contract not less frequently than 
once every 5 years.
                    ``(C) Transfer of functions.--The Secretary may 
                transfer functions among medicare administrative 
                contractors consistent with the provisions of this 
                paragraph. The Secretary shall ensure that performance 
                quality is considered in such transfers. The Secretary 
                shall provide public notice (whether in the Federal 
                Register or otherwise) of any such transfer (including 
                a description of the functions so transferred, a 
                description of the providers of services and suppliers 
                affected by such transfer, and contact information for 
                the contractors involved).
                    ``(D) Incentives for quality.--The Secretary shall 
                provide incentives for medicare administrative 
                contractors to provide quality service and to promote 
                efficiency.
            ``(2) Compliance with requirements.--No contract under this 
        section shall be entered into with any medicare administrative 
        contractor unless the Secretary finds that such medicare 
        administrative contractor will perform its obligations under 
        the contract efficiently and effectively and will meet such 
        requirements as to financial responsibility, legal authority, 
        quality of services provided, and other matters as the 
        Secretary finds pertinent.
            ``(3) Performance requirements.--
                    ``(A) Development of specific performance 
                requirements.--
                            ``(i) In general.--The Secretary shall 
                        develop contract performance requirements to 
                        carry out the specific requirements applicable 
                        under this title to a function described in 
                        subsection (a)(4) and shall develop standards 
                        for measuring the extent to which a contractor 
                        has met such requirements.
                            ``(ii) Consultation.--In developing such 
                        performance requirements and standards for 
                        measurement, the Secretary shall consult with 
                        providers of services, organizations 
                        representative of beneficiaries under this 
                        title, and organizations and agencies 
                        performing functions necessary to carry out the 
                        purposes of this section with respect to such 
                        performance requirements.
                            ``(iii) Publication of standards.--The 
                        Secretary shall make such performance 
                        requirements and measurement standards 
                        available to the public.
                    ``(B) Considerations.--The Secretary shall include, 
                as one of the standards developed under subparagraph 
                (A), provider and beneficiary satisfaction levels.
                    ``(C) Inclusion in contracts.--All contractor 
                performance requirements shall be set forth in the 
                contract between the Secretary and the appropriate 
                medicare administrative contractor. Such performance 
                requirements--
                            ``(i) shall reflect the performance 
                        requirements published under subparagraph (A), 
                        but may include additional performance 
                        requirements;
                            ``(ii) shall be used for evaluating 
                        contractor performance under the contract; and
                            ``(iii) shall be consistent with the 
                        written statement of work provided under the 
                        contract.
            ``(4) Information requirements.--The Secretary shall not 
        enter into a contract with a medicare administrative contractor 
        under this section unless the contractor agrees--
                    ``(A) to furnish to the Secretary such timely 
                information and reports as the Secretary may find 
                necessary in performing his functions under this title; 
                and
                    ``(B) to maintain such records and afford such 
                access thereto as the Secretary finds necessary to 
                assure the correctness and verification of the 
                information and reports under subparagraph (A) and 
                otherwise to carry out the purposes of this title.
            ``(5) Surety bond.--A contract with a medicare 
        administrative contractor under this section may require the 
        medicare administrative contractor, and any of its officers or 
        employees certifying payments or disbursing funds pursuant to 
        the contract, or otherwise participating in carrying out the 
        contract, to give surety bond to the United States in such 
        amount as the Secretary may deem appropriate.
    ``(c) Terms and Conditions.--
            ``(1) In general.--A contract with any medicare 
        administrative contractor under this section may contain such 
        terms and conditions as the Secretary finds necessary or 
        appropriate and may provide for advances of funds to the 
        medicare administrative contractor for the making of payments 
        by it under subsection (a)(4)(B).
            ``(2) Prohibition on mandates for certain data 
        collection.--The Secretary may not require, as a condition of 
        entering into, or renewing, a contract under this section, that 
        the medicare administrative contractor match data obtained 
        other than in its activities under this title with data used in 
        the administration of this title for purposes of identifying 
        situations in which the provisions of section 1862(b) may 
        apply.
    ``(d) Limitation on Liability of Medicare Administrative 
Contractors and Certain Officers.--
            ``(1) Certifying officer.--No individual designated 
        pursuant to a contract under this section as a certifying 
        officer shall, in the absence of the reckless disregard of the 
        individual's obligations or the intent by that individual to 
        defraud the United States, be liable with respect to any 
        payments certified by the individual under this section.
            ``(2) Disbursing officer.--No disbursing officer shall, in 
        the absence of the reckless disregard of the officer's 
        obligations or the intent by that officer to defraud the United 
        States, be liable with respect to any payment by such officer 
        under this section if it was based upon an authorization (which 
        meets the applicable requirements for such internal controls 
        established by the Comptroller General of the United States) of 
        a certifying officer designated as provided in paragraph (1) of 
        this subsection.
            ``(3) Liability of medicare administrative contractor.--
                    ``(A) In general.--No medicare administrative 
                contractor shall be liable to the United States for a 
                payment by a certifying or disbursing officer unless, 
                in connection with such payment, the medicare 
                administrative contractor acted with reckless disregard 
                of its obligations under its medicare administrative 
                contract or with intent to defraud the United States.
                    ``(B) Relationship to false claims act.--Nothing in 
                this subsection shall be construed to limit liability 
                for conduct that would constitute a violation of 
                sections 3729 through 3731 of title 31, United States 
                Code.
            ``(4) Indemnification by secretary.--
                    ``(A) In general.--Subject to subparagraphs (B) and 
                (D), in the case of a medicare administrative 
                contractor (or a person who is a director, officer, or 
                employee of such a contractor or who is engaged by the 
                contractor to participate directly in the claims 
                administration process) who is made a party to any 
                judicial or administrative proceeding arising from or 
                relating directly to the claims administration process 
                under this title, the Secretary may, to the extent the 
                Secretary determines to be appropriate and as specified 
                in the contract with the contractor, indemnify the 
                contractor and such persons.
                    ``(B) Conditions.--The Secretary may not provide 
                indemnification under subparagraph (A) insofar as the 
                liability for such costs arises directly from conduct 
                that is determined by the judicial proceeding or by the 
                Secretary to be criminal in nature, fraudulent, or 
                grossly negligent. If indemnification is provided by 
                the Secretary with respect to a contractor before a 
                determination that such costs arose directly from such 
                conduct, the contractor shall reimburse the Secretary 
                for costs of indemnification.
                    ``(C) Scope of indemnification.--Indemnification by 
                the Secretary under subparagraph (A) may include 
                payment of judgments, settlements (subject to 
                subparagraph (D)), awards, and costs (including 
                reasonable legal expenses).
                    ``(D) Written approval for settlements or 
                compromises.--A contractor or other person described in 
                subparagraph (A) may not propose to negotiate a 
                settlement or compromise of a proceeding described in 
                such subparagraph without the prior written approval of 
                the Secretary to negotiate such settlement or 
                compromise. Any indemnification under subparagraph (A) 
                with respect to amounts paid under a settlement or 
                compromise of a proceeding described in such 
                subparagraph are conditioned upon prior written 
                approval by the Secretary of the final settlement or 
                compromise.
                    ``(E) Construction.--Nothing in this paragraph 
                shall be construed--
                            ``(i) to change any common law immunity 
                        that may be available to a medicare 
                        administrative contractor or person described 
                        in subparagraph (A); or
                            ``(ii) to permit the payment of costs not 
                        otherwise allowable, reasonable, or allocable 
                        under the Federal Acquisition Regulation.''.
            (2) Consideration of incorporation of current law 
        standards.--In developing contract performance requirements 
        under section 1874A(b) of the Social Security Act, as inserted 
        by paragraph (1), the Secretary shall consider inclusion of the 
        performance standards described in sections 1816(f)(2) of such 
        Act (relating to timely processing of reconsiderations and 
        applications for exemptions) and section 1842(b)(2)(B) of such 
        Act (relating to timely review of determinations and fair 
        hearing requests), as such sections were in effect before the 
        date of the enactment of this Act.
    (b) Conforming Amendments to Section 1816 (Relating to Fiscal 
Intermediaries).--Section 1816 (42 U.S.C. 1395h) is amended as follows:
            (1) The heading is amended to read as follows:

        ``provisions relating to the administration of part a''.

            (2) Subsection (a) is amended to read as follows:
    ``(a) The administration of this part shall be conducted through 
contracts with medicare administrative contractors under section 
1874A.''.
            (3) Subsection (b) is repealed.
            (4) Subsection (c) is amended--
                    (A) by striking paragraph (1); and
                    (B) in each of paragraphs (2)(A) and (3)(A), by 
                striking ``agreement under this section'' and inserting 
                ``contract under section 1874A that provides for making 
                payments under this part''.
            (5) Subsections (d) through (i) are repealed.
            (6) Subsections (j) and (k) are each amended--
                    (A) by striking ``An agreement with an agency or 
                organization under this section'' and inserting ``A 
                contract with a medicare administrative contractor 
                under section 1874A with respect to the administration 
                of this part''; and
                    (B) by striking ``such agency or organization'' and 
                inserting ``such medicare administrative contractor'' 
                each place it appears.
            (7) Subsection (l) is repealed.
    (c) Conforming Amendments to Section 1842 (Relating to Carriers).--
Section 1842 (42 U.S.C. 1395u) is amended as follows:
            (1) The heading is amended to read as follows:

        ``provisions relating to the administration of part b''.

            (2) Subsection (a) is amended to read as follows:
    ``(a) The administration of this part shall be conducted through 
contracts with medicare administrative contractors under section 
1874A.''.
            (3) Subsection (b) is amended--
                    (A) by striking paragraph (1);
                    (B) in paragraph (2)--
                            (i) by striking subparagraphs (A) and (B);
                            (ii) in subparagraph (C), by striking 
                        ``carriers'' and inserting ``medicare 
                        administrative contractors''; and
                            (iii) by striking subparagraphs (D) and 
                        (E);
                    (C) in paragraph (3)--
                            (i) in the matter before subparagraph (A), 
                        by striking ``Each such contract shall provide 
                        that the carrier'' and inserting ``The 
                        Secretary'';
                            (ii) by striking ``will'' the first place 
                        it appears in each of subparagraphs (A), (B), 
                        (F), (G), (H), and (L) and inserting ``shall'';
                            (iii) in subparagraph (B), in the matter 
                        before clause (i), by striking ``to the 
                        policyholders and subscribers of the carrier'' 
                        and inserting ``to the policyholders and 
                        subscribers of the medicare administrative 
                        contractor'';
                            (iv) by striking subparagraphs (C), (D), 
                        and (E);
                            (v) in subparagraph (H)--
                                    (I) by striking ``if it makes 
                                determinations or payments with respect 
                                to physicians' services,'' in the 
                                matter preceding clause (i); and
                                    (II) by striking ``carrier'' and 
                                inserting ``medicare administrative 
                                contractor'' in clause (i);
                            (vi) by striking subparagraph (I);
                            (vii) in subparagraph (L), by striking the 
                        semicolon and inserting a period;
                            (viii) in the first sentence, after 
                        subparagraph (L), by striking ``and shall 
                        contain'' and all that follows through the 
                        period; and
                            (ix) in the seventh sentence, by inserting 
                        ``medicare administrative contractor,'' after 
                        ``carrier,'';
                    (D) by striking paragraph (5);
                    (E) in paragraph (6)(D)(iv), by striking 
                ``carrier'' and inserting ``medicare administrative 
                contractor''; and
                    (F) in paragraph (7), by striking ``the carrier'' 
                and inserting ``the Secretary'' each place it appears.
            (4) Subsection (c) is amended--
                    (A) by striking paragraph (1);
                    (B) in paragraph (2)(A), by striking ``contract 
                under this section which provides for the disbursement 
                of funds, as described in subsection (a)(1)(B),'' and 
                inserting ``contract under section 1874A that provides 
                for making payments under this part'';
                    (C) in paragraph (3)(A), by striking ``subsection 
                (a)(1)(B)'' and inserting ``section 1874A(a)(3)(B)'';
                    (D) in paragraph (4), in the matter preceding 
                subparagraph (A), by striking ``carrier'' and inserting 
                ``medicare administrative contractor''; and
                    (E) by striking paragraphs (5) and (6).
            (5) Subsections (d), (e), and (f) are repealed.
            (6) Subsection (g) is amended by striking ``carrier or 
        carriers'' and inserting ``medicare administrative contractor 
        or contractors''.
            (7) Subsection (h) is amended--
                    (A) in paragraph (2)--
                            (i) by striking ``Each carrier having an 
                        agreement with the Secretary under subsection 
                        (a)'' and inserting ``The Secretary''; and
                            (ii) by striking ``Each such carrier'' and 
                        inserting ``The Secretary'';
                    (B) in paragraph (3)(A)--
                            (i) by striking ``a carrier having an 
                        agreement with the Secretary under subsection 
                        (a)'' and inserting ``medicare administrative 
                        contractor having a contract under section 
                        1874A that provides for making payments under 
                        this part''; and
                            (ii) by striking ``such carrier'' and 
                        inserting ``such contractor'';
                    (C) in paragraph (3)(B)--
                            (i) by striking ``a carrier'' and inserting 
                        ``a medicare administrative contractor'' each 
                        place it appears; and
                            (ii) by striking ``the carrier'' and 
                        inserting ``the contractor'' each place it 
                        appears; and
                    (D) in paragraphs (5)(A) and (5)(B)(iii), by 
                striking ``carriers'' and inserting ``medicare 
                administrative contractors'' each place it appears.
            (8) Subsection (l) is amended--
                    (A) in paragraph (1)(A)(iii), by striking 
                ``carrier'' and inserting ``medicare administrative 
                contractor''; and
                    (B) in paragraph (2), by striking ``carrier'' and 
                inserting ``medicare administrative contractor''.
            (9) Subsection (p)(3)(A) is amended by striking ``carrier'' 
        and inserting ``medicare administrative contractor''.
            (10) Subsection (q)(1)(A) is amended by striking 
        ``carrier''.
    (d) Effective Date; Transition Rule.--
            (1) Effective date.--
                    (A) In general.--Except as otherwise provided in 
                this subsection, the amendments made by this section 
                shall take effect on October 1, 2005, and the Secretary 
                is authorized to take such steps before such date as 
                may be necessary to implement such amendments on a 
                timely basis.
                    (B) Construction for current contracts.--Such 
                amendments shall not apply to contracts in effect 
                before the date specified under subparagraph (A) that 
                continue to retain the terms and conditions in effect 
                on such date (except as otherwise provided under this 
                Act, other than under this section) until such date as 
                the contract is let out for competitive bidding under 
                such amendments.
                    (C) Deadline for competitive bidding.--The 
                Secretary shall provide for the letting by competitive 
                bidding of all contracts for functions of medicare 
                administrative contractors for annual contract periods 
                that begin on or after October 1, 2011.
            (2) General transition rules.--
                    (A) Authority to continue to enter into new 
                agreements and contracts and waiver of provider 
                nomination provisions during transition.--Prior to 
                October 1, 2005, the Secretary may, consistent with 
                subparagraph (B), continue to enter into agreements 
                under section 1816 and contracts under section 1842 of 
                the Social Security Act (42 U.S.C. 1395h, 1395u). The 
                Secretary may enter into new agreements under section 
                1816 prior to October 1, 2005, without regard to any of 
                the provider nomination provisions of such section.
                    (B) Appropriate transition.--The Secretary shall 
                take such steps as are necessary to provide for an 
                appropriate transition from agreements under section 
                1816 and contracts under section 1842 of the Social 
                Security Act (42 U.S.C. 1395h, 1395u) to contracts 
                under section 1874A, as added by subsection (a)(1).
            (3) Authorizing continuation of mip functions under current 
        contracts and agreements and under transition contracts.--
        Notwithstanding the amendments made by this section, the 
        provisions contained in the exception in section 1893(d)(2) of 
        the Social Security Act (42 U.S.C. 1395ddd(d)(2)) shall 
        continue to apply during the period that begins on the date of 
        the enactment of this Act and ends on October 1, 2011, and any 
        reference in such provisions to an agreement or contract shall 
        be deemed to include a contract under section 1874A of such 
        Act, as inserted by subsection (a)(1), that continues the 
        activities referred to in such provisions.
    (e) References.--On and after the effective date provided under 
subsection (d)(1), any reference to a fiscal intermediary or carrier 
under title XI or XVIII of the Social Security Act (or any regulation, 
manual instruction, interpretative rule, statement of policy, or 
guideline issued to carry out such titles) shall be deemed a reference 
to a medicare administrative contractor (as provided under section 
1874A of the Social Security Act).
    (f) Secretarial Submission of Legislative Proposal.--Not later than 
6 months after the date of the enactment of this Act, the Secretary 
shall submit to the appropriate committees of Congress a legislative 
proposal providing for such technical and conforming amendments in the 
law as are required by the provisions of this section.
    (g) Reports on Implementation.--
            (1) Plan for implementation.--By not later than October 1, 
        2004, the Secretary shall submit a report to Congress and the 
        Comptroller General of the United States that describes the 
plan for implementation of the amendments made by this section. The 
Comptroller General shall conduct an evaluation of such plan and shall 
submit to Congress, not later than 6 months after the date the report 
is received, a report on such evaluation and shall include in such 
report such recommendations as the Comptroller General deems 
appropriate.
            (2) Status of implementation.--The Secretary shall submit a 
        report to Congress not later than October 1, 2008, that 
        describes the status of implementation of such amendments and 
        that includes a description of the following:
                    (A) The number of contracts that have been 
                competitively bid as of such date.
                    (B) The distribution of functions among contracts 
                and contractors.
                    (C) A timeline for complete transition to full 
                competition.
                    (D) A detailed description of how the Secretary has 
                modified oversight and management of medicare 
                contractors to adapt to full competition.

SEC. 212. REQUIREMENTS FOR INFORMATION SECURITY FOR MEDICARE 
              ADMINISTRATIVE CONTRACTORS.

    (a) In General.--Section 1874A, as added by section 211(a)(1), is 
amended by adding at the end the following new subsection:
    ``(e) Requirements for Information Security.--
            ``(1) Development of information security program.--A 
        medicare administrative contractor that performs the functions 
        referred to in subparagraphs (A) and (B) of subsection (a)(4) 
        (relating to determining and making payments) shall implement a 
        contractor-wide information security program to provide 
        information security for the operation and assets of the 
        contractor with respect to such functions under this title. An 
        information security program under this paragraph shall meet 
        the requirements for information security programs imposed on 
        Federal agencies under paragraphs (1) through (8) of section 
        3544(b) of title 44, United States Code (other than the 
        requirements under paragraphs (2)(D)(i), (5)(A), and (5)(B) of 
        such section).
            ``(2) Independent audits.--
                    ``(A) Performance of annual evaluations.--Each year 
                a medicare administrative contractor that performs the 
                functions referred to in subparagraphs (A) and (B) of 
                subsection (a)(4) (relating to determining and making 
                payments) shall undergo an evaluation of the 
                information security of the contractor with respect to 
                such functions under this title. The evaluation shall--
                            ``(i) be performed by an entity that meets 
                        such requirements for independence as the 
                        Inspector General of the Department of Health 
                        and Human Services may establish; and
                            ``(ii) test the effectiveness of 
                        information security control techniques of an 
                        appropriate subset of the contractor's 
                        information systems (as defined in section 
                        3502(8) of title 44, United States Code) 
                        relating to such functions under this title and 
                        an assessment of compliance with the 
                        requirements of this subsection and related 
                        information security policies, procedures, 
                        standards and guidelines, including policies 
                        and procedures as may be prescribed by the 
                        Director of the Office of Management and Budget 
                        and applicable information security standards 
                        promulgated under section 11331 of title 40, 
                        United States Code.
                    ``(B) Deadline for initial evaluation.--
                            ``(i) New contractors.--In the case of a 
                        medicare administrative contractor covered by 
                        this subsection that has not previously 
                        performed the functions referred to in 
                        subparagraphs (A) and (B) of subsection (a)(4) 
                        (relating to determining and making payments) 
                        as a fiscal intermediary or carrier under 
                        section 1816 or 1842, the first independent 
                        evaluation conducted pursuant to subparagraph 
                        (A) shall be completed prior to commencing such 
                        functions.
                            ``(ii) Other contractors.--In the case of a 
                        medicare administrative contractor covered by 
                        this subsection that is not described in clause 
                        (i), the first independent evaluation conducted 
                        pursuant to subparagraph (A) shall be completed 
                        within 1 year after the date the contractor 
                        commences functions referred to in clause (i) 
                        under this section.
                    ``(C) Reports on evaluations.--
                            ``(i) To the department of health and human 
                        services.--The results of independent 
                        evaluations under subparagraph (A) shall be 
                        submitted promptly to the Inspector General of 
                        the Department of Health and Human Services and 
                        to the Secretary.
                            ``(ii) To congress.--The Inspector General 
                        of the Department of Health and Human Services 
                        shall submit to Congress annual reports on the 
                        results of such evaluations, including 
                        assessments of the scope and sufficiency of 
                        such evaluations.
                            ``(iii) Agency reporting.--The Secretary 
                        shall address the results of such evaluations 
                        in reports required under section 3544(c) of 
                        title 44, United States Code.''.
    (b) Application of Requirements to Fiscal Intermediaries and 
Carriers.--
            (1) In general.--The provisions of section 1874A(e)(2) of 
        the Social Security Act (other than subparagraph (B)), as added 
        by subsection (a), shall apply to each fiscal intermediary 
        under section 1816 of the Social Security Act (42 U.S.C. 1395h) 
        and each carrier under section 1842 of such Act (42 U.S.C. 
        1395u) in the same manner as they apply to medicare 
        administrative contractors under such provisions.
            (2) Deadline for initial evaluation.--In the case of such a 
        fiscal intermediary or carrier with an agreement or contract 
        under such respective section in effect as of the date of the 
        enactment of this Act, the first evaluation under section 
        1874A(e)(2)(A) of the Social Security Act (as added by 
        subsection (a)), pursuant to paragraph (1), shall be completed 
        (and a report on the evaluation submitted to the Secretary) by 
        not later than 1 year after such date.

                   Subtitle C--Education and Outreach

SEC. 221. PROVIDER EDUCATION AND TECHNICAL ASSISTANCE.

    (a) Coordination of Education Funding.--
            (1) In general.--Title XVIII is amended by inserting after 
        section 1888 the following new section:

             ``provider education and technical assistance

    ``Sec. 1889. (a) Coordination of Education Funding.--The Secretary 
shall coordinate the educational activities provided through medicare 
contractors (as defined in subsection (g), including under section 
1893) in order to maximize the effectiveness of Federal education 
efforts for providers of services and suppliers.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on the date of the enactment of this Act.
            (3) Report.--Not later than October 1, 2004, the Secretary 
        shall submit to Congress a report that includes a description 
        and evaluation of the steps taken to coordinate the funding of 
        provider education under section 1889(a) of the Social Security 
        Act, as added by paragraph (1).
    (b) Incentives To Improve Contractor Performance.--
            (1) In general.--Section 1874A, as added by section 
        211(a)(1) and as amended by section 212(a), is amended by 
        adding at the end the following new subsection:
    ``(f) Incentives To Improve Contractor Performance in Provider 
Education and Outreach.--The Secretary shall use specific claims 
payment error rates or similar methodology of medicare administrative 
contractors in the processing or reviewing of medicare claims in order 
to give such contractors an incentive to implement effective education 
and outreach programs for providers of services and suppliers.''.
            (2) Application to fiscal intermediaries and carriers.--The 
        provisions of section 1874A(f) of the Social Security Act, as 
        added by paragraph (1), shall apply to each fiscal intermediary 
        under section 1816 of the Social Security Act (42 U.S.C. 1395h) 
        and each carrier under section 1842 of such Act (42 U.S.C. 
        1395u) in the same manner as they apply to medicare 
        administrative contractors under such provisions.
            (3) GAO report on adequacy of methodology.--Not later than 
        October 1, 2004, the Comptroller General of the United States 
        shall submit to Congress and to the Secretary a report on the 
        adequacy of the methodology under section 1874A(f) of the 
        Social Security Act, as added by paragraph (1), and shall 
        include in the report such recommendations as the Comptroller 
        General determines appropriate with respect to the methodology.
            (4) Report on use of methodology in assessing contractor 
        performance.--Not later than October 1, 2004, the Secretary 
        shall submit to Congress a report that describes how the 
        Secretary intends to use such methodology in assessing medicare 
        contractor performance in implementing effective education and 
        outreach programs, including whether to use such methodology as 
        a basis for performance bonuses. The report shall include an 
        analysis of the sources of identified errors and potential 
        changes in systems of contractors and rules of the Secretary 
        that could reduce claims error rates.
    (c) Provision of Access to and Prompt Responses From Medicare 
Administrative Contractors.--
            (1) In general.--Section 1874A, as added by section 
        211(a)(1) and as amended by section 212(a) and subsection (b), 
        is further amended by adding at the end the following new 
        subsection:
    ``(g) Communications With Beneficiaries, Providers of Services and 
Suppliers.--
            ``(1) Communication strategy.--The Secretary shall develop 
        a strategy for communications with individuals entitled to 
        benefits under part A or enrolled under part B, or both, and 
        with providers of services and suppliers under this title.
            ``(2) Response to written inquiries.--Each medicare 
        administrative contractor shall, for those providers of 
        services and suppliers which submit claims to the contractor 
        for claims processing and for those individuals entitled to 
        benefits under part A or enrolled under part B, or both, with 
        respect to whom claims are submitted for claims processing, 
        provide general written responses (which may be through 
        electronic transmission) in a clear, concise, and accurate 
        manner to inquiries of providers of services, suppliers, and 
        individuals entitled to benefits under part A or enrolled under 
        part B, or both, concerning the programs under this title 
        within 45 business days of the date of receipt of such 
        inquiries.
            ``(3) Response to toll-free lines.--The Secretary shall 
        ensure that each medicare administrative contractor shall 
        provide, for those providers of services and suppliers which 
        submit claims to the contractor for claims processing and for 
        those individuals entitled to benefits under part A or enrolled 
        under part B, or both, with respect to whom claims are 
        submitted for claims processing, a toll-free telephone number 
        at which such individuals, providers of services, and suppliers 
        may obtain information regarding billing, coding, claims, 
        coverage, and other appropriate information under this title.
            ``(4) Monitoring of contractor responses.--
                    ``(A) In general.--Each medicare administrative 
                contractor shall, consistent with standards developed 
                by the Secretary under subparagraph (B)--
                            ``(i) maintain a system for identifying who 
                        provides the information referred to in 
                        paragraphs (2) and (3); and
                            ``(ii) monitor the accuracy, consistency, 
                        and timeliness of the information so provided.
                    ``(B) Development of standards.--
                            ``(i) In general.--The Secretary shall 
                        establish and make public standards to monitor 
                        the accuracy, consistency, and timeliness of 
                        the information provided in response to written 
                        and telephone inquiries under this subsection. 
                        Such standards shall be consistent with the 
                        performance requirements established under 
                        subsection (b)(3).
                            ``(ii) Evaluation.--In conducting 
                        evaluations of individual medicare 
                        administrative contractors, the Secretary shall 
                        take into account the results of the monitoring 
                        conducted under subparagraph (A) taking into 
                        account as performance requirements the 
                        standards established under clause (i). The 
                        Secretary shall, in consultation with 
                        organizations representing providers of 
                        services, suppliers, and individuals entitled 
                        to benefits under part A or enrolled under part 
                        B, or both, establish standards relating to the 
                        accuracy, consistency, and timeliness of the 
                        information so provided.
                    ``(C) Direct monitoring.--Nothing in this paragraph 
                shall be construed as preventing the Secretary from 
                directly monitoring the accuracy, consistency, and 
                timeliness of the information so provided.
            ``(5) Authorization of appropriations.--There are 
        authorized to be appropriated such sums as are necessary to 
        carry out this subsection.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect October 1, 2004.
            (3) Application to fiscal intermediaries and carriers.--The 
        provisions of section 1874A(g) of the Social Security Act, as 
added by paragraph (1), shall apply to each fiscal intermediary under 
section 1816 of the Social Security Act (42 U.S.C. 1395h) and each 
carrier under section 1842 of such Act (42 U.S.C. 1395u) in the same 
manner as they apply to medicare administrative contractors under such 
provisions.
    (d) Improved Provider Education and Training.--
            (1) In general.--Section 1889, as added by subsection (a), 
        is amended by adding at the end the following new subsections:
    ``(b) Enhanced Education and Training.--
            ``(1) Additional resources.--There are authorized to be 
        appropriated to the Secretary (in appropriate part from the 
        Federal Hospital Insurance Trust Fund and the Federal 
        Supplementary Medical Insurance Trust Fund) such sums as may be 
        necessary for fiscal years beginning with fiscal year 2005.
            ``(2) Use.--The funds made available under paragraph (1) 
        shall be used to increase the conduct by medicare contractors 
        of education and training of providers of services and 
        suppliers regarding billing, coding, and other appropriate 
        items and may also be used to improve the accuracy, 
        consistency, and timeliness of contractor responses.
    ``(c) Tailoring Education and Training Activities for Small 
Providers or Suppliers.--
            ``(1) In general.--Insofar as a medicare contractor 
        conducts education and training activities, it shall tailor 
        such activities to meet the special needs of small providers of 
        services or suppliers (as defined in paragraph (2)). Such 
        education and training activities for small providers of 
        services and suppliers may include the provision of technical 
        assistance (such as review of billing systems and internal 
        controls to determine program compliance and to suggest more 
        efficient and effective means of achieving such compliance).
            ``(2) Small provider of services or supplier.--In this 
        subsection, the term `small provider of services or supplier' 
        means--
                    ``(A) a provider of services with fewer than 25 
                full-time-equivalent employees; or
                    ``(B) a supplier with fewer than 10 full-time-
                equivalent employees.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on October 1, 2004.
    (e) Requirement To Maintain Internet Websites.--
            (1) In general.--Section 1889, as added by subsection (a) 
        and as amended by subsection (d), is further amended by adding 
        at the end the following new subsection:
    ``(d) Internet Websites; FAQs.--The Secretary, and each medicare 
contractor insofar as it provides services (including claims 
processing) for providers of services or suppliers, shall maintain an 
Internet website which--
            ``(1) provides answers in an easily accessible format to 
        frequently asked questions, and
            ``(2) includes other published materials of the contractor,
that relate to providers of services and suppliers under the programs 
under this title (and title XI insofar as it relates to such 
programs).''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on October 1, 2004.
    (f) Additional Provider Education Provisions.--
            (1) In general.--Section 1889, as added by subsection (a) 
        and as amended by subsections (d) and (e), is further amended 
        by adding at the end the following new subsections:
    ``(e) Encouragement of Participation in Education Program 
Activities.--A medicare contractor may not use a record of attendance 
at (or failure to attend) educational activities or other information 
gathered during an educational program conducted under this section or 
otherwise by the Secretary to select or track providers of services or 
suppliers for the purpose of conducting any type of audit or prepayment 
review.
    ``(f) Construction.--Nothing in this section or section 1893(g) 
shall be construed as providing for disclosure by a medicare 
contractor--
            ``(1) of the screens used for identifying claims that will 
        be subject to medical review; or
            ``(2) of information that would compromise pending law 
        enforcement activities or reveal findings of law enforcement-
        related audits.
    ``(g) Definitions.--For purposes of this section, the term 
`medicare contractor' includes the following:
            ``(1) A medicare administrative contractor with a contract 
        under section 1874A, including a fiscal intermediary with a 
        contract under section 1816 and a carrier with a contract under 
        section 1842.
            ``(2) An eligible entity with a contract under section 
        1893.
Such term does not include, with respect to activities of a specific 
provider of services or supplier an entity that has no authority under 
this title or title IX with respect to such activities and such 
provider of services or supplier.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on the date of the enactment of this Act.

SEC. 222. SMALL PROVIDER TECHNICAL ASSISTANCE DEMONSTRATION PROGRAM.

    (a) Establishment.--
            (1) In general.--The Secretary shall establish a 
        demonstration program (in this section referred to as the 
        ``demonstration program'') under which technical assistance 
        described in paragraph (2) is made available, upon request and 
        on a voluntary basis, to small providers of services or 
        suppliers in order to improve compliance with the applicable 
        requirements of the programs under medicare program under title 
        XVIII of the Social Security Act (including provisions of title 
        XI of such Act insofar as they relate to such title and are not 
        administered by the Office of the Inspector General of the 
Department of Health and Human Services).
            (2) Forms of technical assistance.--The technical 
        assistance described in this paragraph is--
                    (A) evaluation and recommendations regarding 
                billing and related systems; and
                    (B) information and assistance regarding policies 
                and procedures under the medicare program, including 
                coding and reimbursement.
            (3) Small providers of services or suppliers.--In this 
        section, the term ``small providers of services or suppliers'' 
        means--
                    (A) a provider of services with fewer than 25 full-
                time-equivalent employees; or
                    (B) a supplier with fewer than 10 full-time-
                equivalent employees.
    (b) Qualification of Contractors.--In conducting the demonstration 
program, the Secretary shall enter into contracts with qualified 
organizations (such as peer review organizations or entities described 
in section 1889(g)(2) of the Social Security Act, as inserted by 
section 221(f)(1)) with appropriate expertise with billing systems of 
the full range of providers of services and suppliers to provide the 
technical assistance. In awarding such contracts, the Secretary shall 
consider any prior investigations of the entity's work by the Inspector 
General of Department of Health and Human Services or the Comptroller 
General of the United States.
    (c) Description of Technical Assistance.--The technical assistance 
provided under the demonstration program shall include a direct and in-
person examination of billing systems and internal controls of small 
providers of services or suppliers to determine program compliance and 
to suggest more efficient or effective means of achieving such 
compliance.
    (d) GAO Evaluation.--Not later than 2 years after the date the 
demonstration program is first implemented, the Comptroller General, in 
consultation with the Inspector General of the Department of Health and 
Human Services, shall conduct an evaluation of the demonstration 
program. The evaluation shall include a determination of whether claims 
error rates are reduced for small providers of services or suppliers 
who participated in the program and the extent of improper payments 
made as a result of the demonstration program. The Comptroller General 
shall submit a report to the Secretary and the Congress on such 
evaluation and shall include in such report recommendations regarding 
the continuation or extension of the demonstration program.
    (e) Financial Participation by Providers.--The provision of 
technical assistance to a small provider of services or supplier under 
the demonstration program is conditioned upon the small provider of 
services or supplier paying an amount estimated (and disclosed in 
advance of a provider's or supplier's participation in the program) to 
be equal to 25 percent of the cost of the technical assistance.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated, from amounts not otherwise appropriated in the Treasury, 
such sums as may be necessary to carry out this section.

SEC. 223. MEDICARE BENEFICIARY OMBUDSMAN.

    (a) In General.--Section 1807, as added and amended by section 200, 
is amended by adding at the end the following new subsection:
    ``(c) Medicare Beneficiary Ombudsman.--
            ``(1) In general.--The Secretary shall appoint within the 
        Department of Health and Human Services a Medicare Beneficiary 
        Ombudsman who shall have expertise and experience in the fields 
        of health care and education of (and assistance to) individuals 
        entitled to benefits under this title.
            ``(2) Duties.--The Medicare Beneficiary Ombudsman shall--
                    ``(A) receive complaints, grievances, and requests 
                for information submitted by individuals entitled to 
                benefits under part A or enrolled under part B, or 
                both, with respect to any aspect of the medicare 
                program;
                    ``(B) provide assistance with respect to 
                complaints, grievances, and requests referred to in 
                subparagraph (A), including--
                            ``(i) assistance in collecting relevant 
                        information for such individuals, to seek an 
                        appeal of a decision or determination made by a 
                        fiscal intermediary, carrier, MA organization, 
                        or the Secretary;
                            ``(ii) assistance to such individuals with 
                        any problems arising from disenrollment from an 
                        MA plan under part C; and
                            ``(iii) assistance to such individuals in 
                        presenting information under section 
                        1839(i)(4)(C) (relating to income-related 
                        premium adjustment; and
                    ``(C) submit annual reports to Congress and the 
                Secretary that describe the activities of the Office 
                and that include such recommendations for improvement 
                in the administration of this title as the Ombudsman 
                determines appropriate.
        The Ombudsman shall not serve as an advocate for any increases 
        in payments or new coverage of services, but may identify 
        issues and problems in payment or coverage policies.
            ``(3) Working with health insurance counseling programs.--
        To the extent possible, the Ombudsman shall work with health 
        insurance counseling programs (receiving funding under section 
        4360 of Omnibus Budget Reconciliation Act of 1990) to 
        facilitate the provision of information to individuals entitled 
        to benefits under part A or enrolled under part B, or both 
        regarding MA plans and changes to those plans. Nothing in this 
        paragraph shall preclude further collaboration between the 
        Ombudsman and such programs.''.
    (b) Deadline for Appointment.--By not later than 1 year after the 
date of the enactment of this Act, the Secretary shall appoint the 
Medicare Beneficiary Ombudsman under section 1807(c) of the Social 
Security Act, as added by subsection (a).
    (c) Funding.--There are authorized to be appropriated to the 
Secretary (in appropriate part from the Federal Hospital Insurance 
Trust Fund, established under section 1817 of the Social Security Act 
(42 U.S.C. 1395i), and the Federal Supplementary Medical Insurance 
Trust Fund, established under section 1841 of such Act (42 U.S.C. 
1395t)) to carry out section 1807(c) of such Act (relating to the 
Medicare Beneficiary Ombudsman), as added by subsection (a), such sums 
as are necessary for fiscal year 2004 and each succeeding fiscal year.
    (d) Use of Central, Toll-Free Number (1-800-MEDICARE).--
            (1) Phone triage system; listing in medicare handbook 
        instead of other toll-free numbers.--Section 1804(b) (42 U.S.C. 
        1395b-2(b)) is amended by adding at the end the following: 
        ``The Secretary shall provide, through the toll-free telephone 
        number 1-800-MEDICARE, for a means by which individuals seeking 
        information about, or assistance with, such programs who phone 
        such toll-free number are transferred (without charge) to 
        appropriate entities for the provision of such information or 
        assistance. Such toll-free number shall be the toll-free number 
        listed for general information and assistance in the annual 
        notice under subsection (a) instead of the listing of numbers 
        of individual contractors.''.
            (2) Monitoring accuracy.--
                    (A) Study.--The Comptroller General of the United 
                States shall conduct a study to monitor the accuracy 
                and consistency of information provided to individuals 
                entitled to benefits under part A or enrolled under 
                part B, or both, through the toll-free telephone number 
                1-800-MEDICARE, including an assessment of whether the 
                information provided is sufficient to answer questions 
                of such individuals. In conducting the study, the 
                Comptroller General shall examine the education and 
                training of the individuals providing information 
                through such number.
                    (B) Report.--Not later than 1 year after the date 
                of the enactment of this Act, the Comptroller General 
                shall submit to Congress a report on the study 
                conducted under subparagraph (A).

SEC. 224. BENEFICIARY OUTREACH DEMONSTRATION PROGRAM.

    (a) In General.--The Secretary shall establish a demonstration 
program (in this section referred to as the ``demonstration program'') 
under which medicare specialists employed by the Department of Health 
and Human Services provide advice and assistance to individuals 
entitled to benefits under part A of title XVIII of the Social Security 
Act, or enrolled under part B of such title, or both, regarding the 
medicare program at the location of existing local offices of the 
Social Security Administration.
    (b) Locations.--
            (1) In general.--The demonstration program shall be 
        conducted in at least 6 offices or areas. Subject to paragraph 
        (2), in selecting such offices and areas, the Secretary shall 
        provide preference for offices with a high volume of visits by 
        individuals referred to in subsection (a).
            (2) Assistance for rural beneficiaries.--The Secretary 
        shall provide for the selection of at least 2 rural areas to 
        participate in the demonstration program. In conducting the 
        demonstration program in such rural areas, the Secretary shall 
        provide for medicare specialists to travel among local offices 
        in a rural area on a scheduled basis.
    (c) Duration.--The demonstration program shall be conducted over a 
3-year period.
    (d) Evaluation and Report.--
            (1) Evaluation.--The Secretary shall provide for an 
        evaluation of the demonstration program. Such evaluation shall 
        include an analysis of--
                    (A) utilization of, and satisfaction of those 
                individuals referred to in subsection (a) with, the 
                assistance provided under the program; and
                    (B) the cost-effectiveness of providing beneficiary 
                assistance through out-stationing medicare specialists 
                at local offices of the Social Security Administration.
            (2) Report.--The Secretary shall submit to Congress a 
        report on such evaluation and shall include in such report 
        recommendations regarding the feasibility of permanently out-
        stationing medicare specialists at local offices of the Social 
        Security Administration.

SEC. 225. INCLUSION OF ADDITIONAL INFORMATION IN NOTICES TO 
              BENEFICIARIES ABOUT SKILLED NURSING FACILITY BENEFITS.

    (a) In General.--The Secretary shall provide that in medicare 
beneficiary notices provided (under section 1806(a) of the Social 
Security Act, 42 U.S.C. 1395b-7(a)) with respect to the provision of 
post-hospital extended care services under part A of title XVIII of the 
Social Security Act, there shall be included information on the number 
of days of coverage of such services remaining under such part for the 
medicare beneficiary and spell of illness involved.
    (b) Effective Date.--Subsection (a) shall apply to notices provided 
during calendar quarters beginning more than 6 months after the date of 
the enactment of this Act.

SEC. 226. INFORMATION ON MEDICARE-CERTIFIED SKILLED NURSING FACILITIES 
              IN HOSPITAL DISCHARGE PLANS.

    (a) Availability of Data.--The Secretary shall publicly provide 
information that enables hospital discharge planners, medicare 
beneficiaries, and the public to identify skilled nursing facilities 
that are participating in the medicare program.
    (b) Inclusion of Information in Certain Hospital Discharge Plans.--
            (1) In general.--Section 1861(ee)(2)(D) (42 U.S.C. 
        1395x(ee)(2)(D)) is amended--
                    (A) by striking ``hospice services'' and inserting 
                ``hospice care and post-hospital extended care 
                services''; and
                    (B) by inserting before the period at the end the 
                following: ``and, in the case of individuals who are 
                likely to need post-hospital extended care services, 
                the availability of such services through facilities 
                that participate in the program under this title and 
                that serve the area in which the patient resides''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to discharge plans made on or after such date as 
        the Secretary shall specify, but not later than 6 months after 
        the date the Secretary provides for availability of information 
        under subsection (a).

                    Subtitle D--Appeals and Recovery

SEC. 231. TRANSFER OF RESPONSIBILITY FOR MEDICARE APPEALS.

    (a) Transition Plan.--
            (1) In general.--Not later than April 1, 2004, the 
        Commissioner of Social Security and the Secretary shall develop 
        and transmit to Congress and the Comptroller General of the 
        United States a plan under which the functions of 
        administrative law judges responsible for hearing cases under 
        title XVIII of the Social Security Act (and related provisions 
        in title XI of such Act) are transferred from the 
        responsibility of the Commissioner and the Social Security 
        Administration to the Secretary and the Department of Health 
        and Human Services.
            (2) Contents.--The plan shall include information on the 
        following:
                    (A) Workload.--The number of such administrative 
                law judges and support staff required now and in the 
                future to hear and decide such cases in a timely 
                manner, taking into account the current and anticipated 
                claims volume, appeals, number of beneficiaries, and 
                statutory changes.
                    (B) Cost projections and financing.--Funding levels 
                required for fiscal year 2005 and subsequent fiscal 
                years to carry out the functions transferred under the 
                plan.
                    (C) Transition timetable.--A timetable for the 
                transition.
                    (D) Regulations.--The establishment of specific 
                regulations to govern the appeals process.
                    (E) Case tracking.--The development of a unified 
                case tracking system that will facilitate the 
                maintenance and transfer of case specific data across 
                both the fee-for-service and managed care components of 
                the medicare program.
                    (F) Feasibility of precedential authority.--The 
                feasibility of developing a process to give decisions 
                of the Departmental Appeals Board in the Department of 
                Health and Human Services addressing broad legal issues 
                binding, precedential authority.
                    (G) Access to administrative law judges.--The 
                feasibility of--
                            (i) filing appeals with administrative law 
                        judges electronically; and
                            (ii) conducting hearings using tele- or 
                        video-conference technologies.
                    (H) Independence of administrative law judges.--The 
                steps that should be taken to ensure the independence 
                of administrative law judges consistent with the 
                requirements of subsection (b)(2).
                    (I) Geographic distribution.--The steps that should 
                be taken to provide for an appropriate geographic 
                distribution of administrative law judges throughout 
                the United States to carry out subsection (b)(3).
                    (J) Hiring.--The steps that should be taken to hire 
                administrative law judges (and support staff) to carry 
                out subsection (b)(4).
                    (K) Performance standards.--The appropriateness of 
                establishing performance standards for administrative 
                law judges with respect to timelines for decisions in 
                cases under title XVIII of the Social Security Act 
                taking into account requirements under subsection 
                (b)(2) for the independence of such judges and 
                consistent with the applicable provisions of title 5, 
                United States Code relating to impartiality.
                    (L) Shared resources.--The steps that should be 
                taken to carry out subsection (b)(6) (relating to the 
                arrangements with the Commissioner of Social Security 
                to share office space, support staff, and other 
                resources, with appropriate reimbursement).
                    (M) Training.--The training that should be provided 
                to administrative law judges with respect to laws and 
                regulations under title XVIII of the Social Security 
                Act.
            (3) Additional information.--The plan may also include 
        recommendations for further congressional action, including 
        modifications to the requirements and deadlines established 
        under section 1869 of the Social Security Act (42 U.S.C. 
        1395ff) (as amended by this Act).
            (4) GAO evaluation.--The Comptroller General of the United 
        States shall evaluate the plan and, not later than the date 
        that is 6 months after the date on which the plan is received 
        by the Comptroller General, shall submit to Congress a report 
        on such evaluation.
    (b) Transfer of Adjudication Authority.--
            (1) In general.--Not earlier than July 1, 2005, and not 
        later than October 1, 2005, the Commissioner of Social Security 
        and the Secretary shall implement the transition plan under 
        subsection (a) and transfer the administrative law judge 
        functions described in such subsection from the Social Security 
        Administration to the Secretary.
            (2) Assuring independence of judges.--The Secretary shall 
        assure the independence of administrative law judges performing 
        the administrative law judge functions transferred under 
        paragraph (1) from the Centers for Medicare & Medicaid Services 
        and its contractors. In order to assure such independence, the 
        Secretary shall place such judges in an administrative office 
        that is organizationally and functionally separate from such 
        Centers. Such judges shall report to, and be under the general 
        supervision of, the Secretary, but shall not report to, or be 
        subject to supervision by, another officer of the Department of 
        Health and Human Services.
            (3) Geographic distribution.--The Secretary shall provide 
        for an appropriate geographic distribution of administrative 
law judges performing the administrative law judge functions 
transferred under paragraph (1) throughout the United States to ensure 
timely access to such judges.
            (4) Hiring authority.--Subject to the amounts provided in 
        advance in appropriations Acts, the Secretary shall have 
        authority to hire administrative law judges to hear such cases, 
        taking into consideration those judges with expertise in 
        handling medicare appeals and in a manner consistent with 
        paragraph (3), and to hire support staff for such judges.
            (5) Financing.--Amounts payable under law to the 
        Commissioner for administrative law judges performing the 
        administrative law judge functions transferred under paragraph 
        (1) from the Federal Hospital Insurance Trust Fund and the 
        Federal Supplementary Medical Insurance Trust Fund shall become 
        payable to the Secretary for the functions so transferred.
            (6) Shared resources.--The Secretary shall enter into such 
        arrangements with the Commissioner as may be appropriate with 
        respect to transferred functions of administrative law judges 
        to share office space, support staff, and other resources, with 
        appropriate reimbursement from the Trust Funds described in 
        paragraph (5).
    (c) Increased Financial Support.--In addition to any amounts 
otherwise appropriated, to ensure timely action on appeals before 
administrative law judges and the Departmental Appeals Board consistent 
with section 1869 of the Social Security Act (42 U.S.C. 1395ff) (as 
amended by this Act), there are authorized to be appropriated (in 
appropriate part from the Federal Hospital Insurance Trust Fund, 
established under section 1817 of the Social Security Act (42 U.S.C. 
1395i), and the Federal Supplementary Medical Insurance Trust Fund, 
established under section 1841 of such Act (42 U.S.C. 1395t)) to the 
Secretary such sums as are necessary for fiscal year 2005 and each 
subsequent fiscal year to--
            (1) increase the number of administrative law judges (and 
        their staffs) under subsection (b)(4);
            (2) improve education and training opportunities for 
        administrative law judges (and their staffs); and
            (3) increase the staff of the Departmental Appeals Board.
    (d) Conforming Amendment.--Section 1869(f)(2)(A)(i) (42 U.S.C. 
1395ff(f)(2)(A)(i)) is amended by striking ``of the Social Security 
Administration''.

SEC. 232. PROCESS FOR EXPEDITED ACCESS TO REVIEW.

    (a) Expedited Access to Judicial Review.--
            (1) In general.--Section 1869(b) (42 U.S.C. 1395ff(b)) is 
        amended--
                    (A) in paragraph (1)(A), by inserting ``, subject 
                to paragraph (2),'' before ``to judicial review of the 
                Secretary's final decision''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(2) Expedited access to judicial review.--
                    ``(A) In general.--The Secretary shall establish a 
                process under which a provider of services or supplier 
                that furnishes an item or service or an individual 
                entitled to benefits under part A or enrolled under 
                part B, or both, who has filed an appeal under 
                paragraph (1) (other than an appeal filed under 
                paragraph (1)(F)(i)) may obtain access to judicial 
                review when a review entity (described in subparagraph 
                (D)), on its own motion or at the request of the 
                appellant, determines that the Departmental Appeals 
                Board does not have the authority to decide the 
                question of law or regulation relevant to the matters 
                in controversy and that there is no material issue of 
                fact in dispute. The appellant may make such request 
                only once with respect to a question of law or 
                regulation for a specific matter in dispute in a case 
                of an appeal.
                    ``(B) Prompt determinations.--If, after or 
                coincident with appropriately filing a request for an 
                administrative hearing, the appellant requests a 
                determination by the appropriate review entity that the 
                Departmental Appeals Board does not have the authority 
                to decide the question of law or regulations relevant 
                to the matters in controversy and that there is no 
                material issue of fact in dispute, and if such request 
                is accompanied by the documents and materials as the 
                appropriate review entity shall require for purposes of 
                making such determination, such review entity shall 
                make a determination on the request in writing within 
                60 days after the date such review entity receives the 
                request and such accompanying documents and materials. 
                Such a determination by such review entity shall be 
                considered a final decision and not subject to review 
                by the Secretary.
                    ``(C) Access to judicial review.--
                            ``(i) In general.--If the appropriate 
                        review entity--
                                    ``(I) determines that there are no 
                                material issues of fact in dispute and 
                                that the only issues to be adjudicated 
                                are ones of law or regulation that the 
                                Departmental Appeals Board does not 
                                have authority to decide; or
                                    ``(II) fails to make such 
                                determination within the period 
                                provided under subparagraph (B),
                        then the appellant may bring a civil action as 
                        described in this subparagraph.
                            ``(ii) Deadline for filing.--Such action 
                        shall be filed, in the case described in--
                                    ``(I) clause (i)(I), within 60 days 
                                of the date of the determination 
                                described in such clause; or
                                    ``(II) clause (i)(II), within 60 
                                days of the end of the period provided 
                                under subparagraph (B) for the 
                                determination.
                            ``(iii) Venue.--Such action shall be 
                        brought in the district court of the 
United States for the judicial district in which the appellant is 
located (or, in the case of an action brought jointly by more than one 
applicant, the judicial district in which the greatest number of 
applicants are located) or in the District Court for the District of 
Columbia.
                            ``(iv) Interest on any amounts in 
                        controversy.--Where a provider of services or 
                        supplier is granted judicial review pursuant to 
                        this paragraph, the amount in controversy (if 
                        any) shall be subject to annual interest 
                        beginning on the first day of the first month 
                        beginning after the 60-day period as determined 
                        pursuant to clause (ii) and equal to the rate 
                        of interest on obligations issued for purchase 
                        by the Federal Supplementary Medical Insurance 
                        Trust Fund for the month in which the civil 
                        action authorized under this paragraph is 
                        commenced, to be awarded by the reviewing court 
                        in favor of the prevailing party. No interest 
                        awarded pursuant to the preceding sentence 
                        shall be deemed income or cost for the purposes 
                        of determining reimbursement due providers of 
                        services or suppliers under this title.
                    ``(D) Review entity defined.--For purposes of this 
                subsection, the term `review entity' means an entity of 
                up to three reviewers who are administrative law judges 
                or members of the Departmental Appeals Board selected 
                for purposes of making determinations under this 
                paragraph.''.
            (2) Conforming amendment.--Section 1869(b)(1)(F)(ii) (42 
        U.S.C. 1395ff(b)(1)(F)(ii)) is amended to read as follows:
                            ``(ii) Reference to expedited access to 
                        judicial review.--For the provision relating to 
                        expedited access to judicial review, see 
                        paragraph (2).''.
    (b) Application to Provider Agreement Determinations.--Section 
1866(h)(1) (42 U.S.C. 1395cc(h)(1)) is amended--
            (1) by inserting ``(A)'' after ``(h)(1)''; and
            (2) by adding at the end the following new subparagraph:
    ``(B) An institution or agency described in subparagraph (A) that 
has filed for a hearing under subparagraph (A) shall have expedited 
access to judicial review under this subparagraph in the same manner as 
providers of services, suppliers, and individuals entitled to benefits 
under part A or enrolled under part B, or both, may obtain expedited 
access to judicial review under the process established under section 
1869(b)(2). Nothing in this subparagraph shall be construed to affect 
the application of any remedy imposed under section 1819 during the 
pendency of an appeal under this subparagraph.''.
    (c) Expedited Review of Certain Provider Agreement 
Determinations.--
            (1) Termination and certain other immediate remedies.--
        Section 1866(h)(1) (42 U.S.C. 1395cc(h)(1)), as amended by 
        subsection (b), is amended by adding at the end the following 
        new subparagraph:
    ``(C)(i) The Secretary shall develop and implement a process to 
expedite proceedings under this subsection in which--
            ``(I) the remedy of termination of participation has been 
        imposed;
            ``(II) a remedy described in clause (i) or (iii) of section 
        1819(h)(2)(B) has been imposed, but only if such remedy has 
        been imposed on an immediate basis; or
            ``(III) a determination has been made as to a finding of 
        substandard quality of care that results in the loss of 
        approval of a skilled nursing facility's nurse aide training 
        program.
    ``(ii) Under such process under clause (i), priority shall be 
provided in cases of termination described in clause (i)(I).
    ``(iii) Nothing in this subparagraph shall be construed to affect 
the application of any remedy imposed under section 1819 during the 
pendency of an appeal under this subparagraph.''.
            (2) Waiver of disapproval of nurse-aide training 
        programs.--Sections 1819(f)(2) and section 1919(f)(2) (42 
        U.S.C. 1395i-3(f)(2) and 1396r(f)(2)) are each amended--
                    (A) in subparagraph (B)(iii), by striking 
                ``subparagraph (C)'' and inserting ``subparagraphs (C) 
                and (D)''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(D) Waiver of disapproval of nurse-aide training 
                programs.--Upon application of a nursing facility, the 
                Secretary may waive the application of subparagraph 
                (B)(iii)(I)(c) if the imposition of the civil monetary 
                penalty was not related to the quality of care provided 
                to residents of the facility. Nothing in this 
                subparagraph shall be construed as eliminating any 
                requirement upon a facility to pay a civil monetary 
                penalty described in the preceding sentence.''.
            (3) Increased financial support.--In addition to any 
        amounts otherwise appropriated, to reduce by 50 percent the 
        average time for administrative determinations on appeals under 
        section 1866(h) of the Social Security Act (42 U.S.C. 
        1395cc(h)), there are authorized to be appropriated (in 
        appropriate part from the Federal Hospital Insurance Trust 
        Fund, established under section 1817 of the Social Security Act 
        (42 U.S.C. 1395i), and the Federal Supplementary Medical 
        Insurance Trust Fund, established under section 1841 of such 
        Act (42 U.S.C. 1395t)) to the Secretary such additional sums 
        for fiscal year 2004 and each subsequent fiscal year as may be 
        necessary. The purposes for which such amounts are available 
        include increasing the number of administrative law judges (and 
        their staffs) and the appellate level staff at the Departmental 
        Appeals Board of the Department of Health and Human Services 
and educating such judges and staffs on long-term care issues.
    (d) Effective Date.--The amendments made by this section shall 
apply to appeals filed on or after October 1, 2004.

SEC. 233. REVISIONS TO MEDICARE APPEALS PROCESS.

    (a) Requiring Full and Early Presentation of Evidence.--
            (1) In general.--Section 1869(b) (42 U.S.C. 1395ff(b)), as 
        amended by section 232(a), is further amended by adding at the 
        end the following new paragraph:
            ``(3) Requiring full and early presentation of evidence by 
        providers.--A provider of services or supplier may not 
        introduce evidence in any appeal under this section that was 
        not presented at the reconsideration conducted by the qualified 
        independent contractor under subsection (c), unless there is 
        good cause which precluded the introduction of such evidence at 
        or before that reconsideration.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on October 1, 2004.
    (b) Use of Patients' Medical Records.--Section 1869(c)(3)(B)(i) (42 
U.S.C. 1395ff(c)(3)(B)(i)) is amended by inserting ``(including the 
medical records of the individual involved)'' after ``clinical 
experience''.
    (c) Notice Requirements for Medicare Appeals.--
            (1) Initial determinations and redeterminations.--Section 
        1869(a) (42 U.S.C. 1395ff(a)) is amended by adding at the end 
        the following new paragraphs:
            ``(4) Requirements of notice of determinations.--With 
        respect to an initial determination insofar as it results in a 
        denial of a claim for benefits--
                    ``(A) the written notice on the determination shall 
                include--
                            ``(i) the reasons for the determination, 
                        including whether a local medical review policy 
                        or a local coverage determination was used;
                            ``(ii) the procedures for obtaining 
                        additional information concerning the 
                        determination, including the information 
                        described in subparagraph (B); and
                            ``(iii) notification of the right to seek a 
                        redetermination or otherwise appeal the 
                        determination and instructions on how to 
                        initiate such a redetermination under this 
                        section;
                    ``(B) such written notice shall be provided in 
                printed form and written in a manner calculated to be 
                understood by the individual entitled to benefits under 
                part A or enrolled under part B, or both; and
                    ``(C) the individual provided such written notice 
                may obtain, upon request, information on the specific 
                provision of the policy, manual, or regulation used in 
                making the redetermination.
            ``(5) Requirements of notice of redeterminations.--With 
        respect to a redetermination insofar as it results in a denial 
        of a claim for benefits--
                    ``(A) the written notice on the redetermination 
                shall include--
                            ``(i) the specific reasons for the 
                        redetermination;
                            ``(ii) as appropriate, a summary of the 
                        clinical or scientific evidence used in making 
                        the redetermination;
                            ``(iii) a description of the procedures for 
                        obtaining additional information concerning the 
                        redetermination; and
                            ``(iv) notification of the right to appeal 
                        the redetermination and instructions on how to 
                        initiate such an appeal under this section;
                    ``(B) such written notice shall be provided in 
                printed form and written in a manner calculated to be 
                understood by the individual entitled to benefits under 
                part A or enrolled under part B, or both; and
                    ``(C) the individual provided such written notice 
                may obtain, upon request, information on the specific 
                provision of the policy, manual, or regulation used in 
                making the redetermination.''.
            (2) Reconsiderations.--Section 1869(c)(3)(E) (42 U.S.C. 
        1395ff(c)(3)(E)) is amended--
                    (A) by inserting ``be written in a manner 
                calculated to be understood by the individual entitled 
                to benefits under part A or enrolled under part B, or 
                both, and shall include (to the extent appropriate)'' 
                after ``in writing,''; and
                    (B) by inserting ``and a notification of the right 
                to appeal such determination and instructions on how to 
                initiate such appeal under this section'' after ``such 
                decision,''.
            (3) Appeals.--Section 1869(d) (42 U.S.C. 1395ff(d)) is 
        amended--
                    (A) in the heading, by inserting ``; Notice'' after 
                ``Secretary''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(4) Notice.--Notice of the decision of an administrative 
        law judge shall be in writing in a manner calculated to be 
        understood by the individual entitled to benefits under part A 
        or enrolled under part B, or both, and shall include--
                    ``(A) the specific reasons for the determination 
                (including, to the extent appropriate, a summary of the 
                clinical or scientific evidence used in making the 
                determination);
                    ``(B) the procedures for obtaining additional 
                information concerning the decision; and
                    ``(C) notification of the right to appeal the 
                decision and instructions on how to initiate such an 
                appeal under this section.''.
            (4) Submission of record for appeal.--Section 
        1869(c)(3)(J)(i) (42 U.S.C. 1395ff(c)(3)(J)(i)) is amended by 
        striking ``prepare'' and inserting ``submit'' and by striking 
``with respect to'' and all that follows through ``and relevant 
policies''.
    (d) Qualified Independent Contractors.--
            (1) Eligibility requirements of qualified independent 
        contractors.--Section 1869(c)(3) (42 U.S.C. 1395ff(c)(3)) is 
        amended--
                    (A) in subparagraph (A), by striking ``sufficient 
                training and expertise in medical science and legal 
                matters'' and inserting ``sufficient medical, legal, 
                and other expertise (including knowledge of the program 
                under this title) and sufficient staffing''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(K) Independence requirements.--
                            ``(i) In general.--Subject to clause (ii), 
                        a qualified independent contractor shall not 
                        conduct any activities in a case unless the 
                        entity--
                                    ``(I) is not a related party (as 
                                defined in subsection (g)(5));
                                    ``(II) does not have a material 
                                familial, financial, or professional 
                                relationship with such a party in 
                                relation to such case; and
                                    ``(III) does not otherwise have a 
                                conflict of interest with such a party.
                            ``(ii) Exception for reasonable 
                        compensation.--Nothing in clause (i) shall be 
                        construed to prohibit receipt by a qualified 
                        independent contractor of compensation from the 
                        Secretary for the conduct of activities under 
                        this section if the compensation is provided 
                        consistent with clause (iii).
                            ``(iii) Limitations on entity 
                        compensation.--Compensation provided by the 
                        Secretary to a qualified independent contractor 
                        in connection with reviews under this section 
                        shall not be contingent on any decision 
                        rendered by the contractor or by any reviewing 
                        professional.''.
            (2) Eligibility requirements for reviewers.--Section 1869 
        (42 U.S.C. 1395ff) is amended--
                    (A) by amending subsection (c)(3)(D) to read as 
                follows:
                    ``(D) Qualifications for reviewers.--The 
                requirements of subsection (g) shall be met (relating 
                to qualifications of reviewing professionals).''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(g) Qualifications of Reviewers.--
            ``(1) In general.--In reviewing determinations under this 
        section, a qualified independent contractor shall assure that--
                    ``(A) each individual conducting a review shall 
                meet the qualifications of paragraph (2);
                    ``(B) compensation provided by the contractor to 
                each such reviewer is consistent with paragraph (3); 
                and
                    ``(C) in the case of a review by a panel described 
                in subsection (c)(3)(B) composed of physicians or other 
                health care professionals (each in this subsection 
                referred to as a `reviewing professional'), a reviewing 
                professional meets the qualifications described in 
                paragraph (4) and, where a claim is regarding the 
                furnishing of treatment by a physician (allopathic or 
                osteopathic) or the provision of items or services by a 
                physician (allopathic or osteopathic), a reviewing 
                professional shall be a physician (allopathic or 
                osteopathic).
            ``(2) Independence.--
                    ``(A) In general.--Subject to subparagraph (B), 
                each individual conducting a review in a case shall--
                            ``(i) not be a related party (as defined in 
                        paragraph (5));
                            ``(ii) not have a material familial, 
                        financial, or professional relationship with 
                        such a party in the case under review; and
                            ``(iii) not otherwise have a conflict of 
                        interest with such a party.
                    ``(B) Exception.--Nothing in subparagraph (A) shall 
                be construed to--
                            ``(i) prohibit an individual, solely on the 
                        basis of a participation agreement with a 
                        fiscal intermediary, carrier, or other 
                        contractor, from serving as a reviewing 
                        professional if--
                                    ``(I) the individual is not 
                                involved in the provision of items or 
                                services in the case under review;
                                    ``(II) the fact of such an 
                                agreement is disclosed to the Secretary 
                                and the individual entitled to benefits 
                                under part A or enrolled under part B, 
                                or both, or such individual's 
                                authorized representative, and neither 
                                party objects; and
                                    ``(III) the individual is not an 
                                employee of the intermediary, carrier, 
                                or contractor and does not provide 
                                services exclusively or primarily to or 
                                on behalf of such intermediary, 
                                carrier, or contractor;
                            ``(ii) prohibit an individual who has staff 
                        privileges at the institution where the 
                        treatment involved takes place from serving as 
                        a reviewer merely on the basis of having such 
                        staff privileges if the existence of such 
                        privileges is disclosed to the Secretary and 
                        such individual (or authorized representative), 
                        and neither party objects; or
                            ``(iii) prohibit receipt of compensation by 
                        a reviewing professional from a contractor if 
                        the compensation is provided consistent with 
                        paragraph (3).
                For purposes of this paragraph, the term `participation 
                agreement' means an agreement relating to the provision 
                of health care services by the individual and does not 
                include the provision of services as a reviewer under 
                this subsection.
            ``(3) Limitations on reviewer compensation.--Compensation 
        provided by a qualified independent contractor to a reviewer in 
        connection with a review under this section shall not be 
        contingent on the decision rendered by the reviewer.
            ``(4) Licensure and expertise.--Each reviewing professional 
        shall be--
                    ``(A) a physician (allopathic or osteopathic) who 
                is appropriately credentialed or licensed in one or 
                more States to deliver health care services and has 
                medical expertise in the field of practice that is 
                appropriate for the items or services at issue; or
                    ``(B) a health care professional who is legally 
                authorized in one or more States (in accordance with 
                State law or the State regulatory mechanism provided by 
                State law) to furnish the health care items or services 
                at issue and has medical expertise in the field of 
practice that is appropriate for such items or services.
            ``(5) Related party defined.--For purposes of this section, 
        the term `related party' means, with respect to a case under 
        this title involving a specific individual entitled to benefits 
        under part A or enrolled under part B, or both, any of the 
        following:
                    ``(A) The Secretary, the medicare administrative 
                contractor involved, or any fiduciary, officer, 
                director, or employee of the Department of Health and 
                Human Services, or of such contractor.
                    ``(B) The individual (or authorized 
                representative).
                    ``(C) The health care professional that provides 
                the items or services involved in the case.
                    ``(D) The institution at which the items or 
                services (or treatment) involved in the case are 
                provided.
                    ``(E) The manufacturer of any drug or other item 
                that is included in the items or services involved in 
                the case.
                    ``(F) Any other party determined under any 
                regulations to have a substantial interest in the case 
                involved.''.
            (3) Reducing minimum number of qualified independent 
        contractors.--Section 1869(c)(4) (42 U.S.C. 1395ff(c)(4)) is 
        amended by striking ``not fewer than 12 qualified independent 
        contractors under this subsection'' and inserting ``a 
        sufficient number of qualified independent contractors (but not 
        fewer than 4 such contractors) to conduct reconsiderations 
        consistent with the timeframes applicable under this 
        subsection''.
            (4) Effective date.--The amendments made by paragraphs (1) 
        and (2) shall be effective as if included in the enactment of 
        the respective provisions of subtitle C of title V of BIPA (114 
        Stat. 2763A-534).
            (5) Transition.--In applying section 1869(g) of the Social 
        Security Act (as added by paragraph (2)), any reference to a 
        medicare administrative contractor shall be deemed to include a 
        reference to a fiscal intermediary under section 1816 of the 
        Social Security Act (42 U.S.C. 1395h) and a carrier under 
        section 1842 of such Act (42 U.S.C. 1395u).

SEC. 234. PREPAYMENT REVIEW.

    (a) In General.--Section 1874A, as added by section 211(a)(1) and 
as amended by sections 212(b), 221(b)(1), and 221(c)(1), is further 
amended by adding at the end the following new subsection:
    ``(h) Conduct of Prepayment Review.--
            ``(1) Conduct of random prepayment review.--
                    ``(A) In general.--A medicare administrative 
                contractor may conduct random prepayment review only to 
                develop a contractor-wide or program-wide claims 
                payment error rates or under such additional 
                circumstances as may be provided under regulations, 
                developed in consultation with providers of services 
                and suppliers.
                    ``(B) Use of standard protocols when conducting 
                prepayment reviews.--When a medicare administrative 
                contractor conducts a random prepayment review, the 
                contractor may conduct such review only in accordance 
                with a standard protocol for random prepayment audits 
                developed by the Secretary.
                    ``(C) Construction.--Nothing in this paragraph 
                shall be construed as preventing the denial of payments 
                for claims actually reviewed under a random prepayment 
                review.
                    ``(D) Random prepayment review.--For purposes of 
                this subsection, the term `random prepayment review' 
                means a demand for the production of records or 
                documentation absent cause with respect to a claim.
            ``(2) Limitations on non-random prepayment review.--
                    ``(A) Limitations on initiation of non-random 
                prepayment review.--A medicare administrative 
                contractor may not initiate non-random prepayment 
                review of a provider of services or supplier based on 
                the initial identification by that provider of services 
                or supplier of an improper billing practice unless 
                there is a likelihood of sustained or high level of 
                payment error under section 1893(f)(3)(A).
                    ``(B) Termination of non-random prepayment 
                review.--The Secretary shall issue regulations relating 
                to the termination, including termination dates, of 
                non-random prepayment review. Such regulations may vary 
                such a termination date based upon the differences in 
                the circumstances triggering prepayment review.''.
    (b) Effective Date.--
            (1) In general.--Except as provided in this subsection, the 
        amendment made by subsection (a) shall take effect 1 year after 
        the date of the enactment of this Act.
            (2) Deadline for promulgation of certain regulations.--The 
        Secretary shall first issue regulations under section 1874A(h) 
        of the Social Security Act, as added by subsection (a), by not 
        later than 1 year after the date of the enactment of this Act.
            (3) Application of standard protocols for random prepayment 
        review.--Section 1874A(h)(1)(B) of the Social Security Act, as 
        added by subsection (a), shall apply to random prepayment 
        reviews conducted on or after such date (not later than 1 year 
        after the date of the enactment of this Act) as the Secretary 
        shall specify.
    (c) Application to Fiscal Intermediaries and Carriers.--The 
provisions of section 1874A(h) of the Social Security Act, as added by 
subsection (a), shall apply to each fiscal intermediary under section 
1816 of the Social Security Act (42 U.S.C. 1395h) and each carrier 
under section 1842 of such Act (42 U.S.C. 1395u) in the same manner as 
they apply to medicare administrative contractors under such 
provisions.

SEC. 235. RECOVERY OF OVERPAYMENTS.

    (a) In General.--Section 1893 (42 U.S.C. 1395ddd) is amended by 
adding at the end the following new subsection:
    ``(f) Recovery of Overpayments.--
            ``(1) Use of repayment plans.--
                    ``(A) In general.--If the repayment, within 30 days 
                by a provider of services or supplier, of an 
                overpayment under this title would constitute a 
                hardship (as described in subparagraph (B)), subject to 
                subparagraph (C), upon request of the provider of 
                services or supplier the Secretary shall enter into a 
                plan with the provider of services or supplier for the 
                repayment (through offset or otherwise) of such 
                overpayment over a period of at least 6 months but not 
                longer than 3 years (or not longer than 5 years in the 
                case of extreme hardship, as determined by the 
                Secretary). Interest shall accrue on the balance 
                through the period of repayment. Such plan shall meet 
                terms and conditions determined to be appropriate by 
                the Secretary.
                    ``(B) Hardship.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), the repayment of an 
                        overpayment (or overpayments) within 30 days is 
                        deemed to constitute a hardship if--
                                    ``(I) in the case of a provider of 
                                services that files cost reports, the 
                                aggregate amount of the overpayments 
                                exceeds 10 percent of the amount paid 
                                under this title to the provider of 
                                services for the cost reporting period 
                                covered by the most recently submitted 
                                cost report; or
                                    ``(II) in the case of another 
                                provider of services or supplier, the 
                                aggregate amount of the overpayments 
                                exceeds 10 percent of the amount paid 
                                under this title to the provider of 
                                services or supplier for the previous 
                                calendar year.
                            ``(ii) Rule of application.--The Secretary 
                        shall establish rules for the application of 
                        this subparagraph in the case of a provider of 
                        services or supplier that was not paid under 
                        this title during the previous year or was paid 
                        under this title only during a portion of that 
                        year.
                            ``(iii) Treatment of previous 
                        overpayments.--If a provider of services or 
                        supplier has entered into a repayment plan 
                        under subparagraph (A) with respect to a 
                        specific overpayment amount, such payment 
                        amount under the repayment plan shall not be 
                        taken into account under clause (i) with 
                        respect to subsequent overpayment amounts.
                    ``(C) Exceptions.--Subparagraph (A) shall not apply 
                if--
                            ``(i) the Secretary has reason to suspect 
                        that the provider of services or supplier may 
                        file for bankruptcy or otherwise cease to do 
                        business or discontinue participation in the 
                        program under this title; or
                            ``(ii) there is an indication of fraud or 
                        abuse committed against the program.
                    ``(D) Immediate collection if violation of 
                repayment plan.--If a provider of services or supplier 
                fails to make a payment in accordance with a repayment 
                plan under this paragraph, the Secretary may 
                immediately seek to offset or otherwise recover the 
                total balance outstanding (including applicable 
                interest) under the repayment plan.
                    ``(E) Relation to no fault provision.--Nothing in 
                this paragraph shall be construed as affecting the 
                application of section 1870(c) (relating to no 
                adjustment in the cases of certain overpayments).
            ``(2) Limitation on recoupment.--
                    ``(A) In general.--In the case of a provider of 
                services or supplier that is determined to have 
                received an overpayment under this title and that seeks 
                a reconsideration by a qualified independent contractor 
                on such determination under section 1869(b)(1), the 
                Secretary may not take any action (or authorize any 
                other person, including any medicare contractor, as 
                defined in subparagraph (C)) to recoup the overpayment 
                until the date the decision on the reconsideration has 
                been rendered. If the provisions of section 1869(b)(1) 
                (providing for such a reconsideration by a qualified 
                independent contractor) are not in effect, in applying 
                the previous sentence any reference to such a 
                reconsideration shall be treated as a reference to a 
                redetermination by the fiscal intermediary or carrier 
                involved.
                    ``(B) Collection with interest.--Insofar as the 
                determination on such appeal is against the provider of 
                services or supplier, interest on the overpayment shall 
                accrue on and after the date of the original notice of 
                overpayment. Insofar as such determination against the 
                provider of services or supplier is later reversed, the 
                Secretary shall provide for repayment of the amount 
                recouped plus interest at the same rate as would apply 
                under the previous sentence for the period in which the 
                amount was recouped.
                    ``(C) Medicare contractor defined.--For purposes of 
                this subsection, the term `medicare contractor' has the 
                meaning given such term in section 1889(g).
            ``(3) Limitation on use of extrapolation.--A medicare 
        contractor may not use extrapolation to determine overpayment 
        amounts to be recovered by recoupment, offset, or otherwise 
        unless the Secretary determines that--
                    ``(A) there is a sustained or high level of payment 
                error; or
                    ``(B) documented educational intervention has 
                failed to correct the payment error.
        There shall be no administrative or judicial review under 
        section 1869, section 1878, or otherwise, of determinations by 
        the Secretary of sustained or high levels of payment errors 
        under this paragraph.
            ``(4) Provision of supporting documentation.--In the case 
        of a provider of services or supplier with respect to which 
        amounts were previously overpaid, a medicare contractor may 
        request the periodic production of records or supporting 
        documentation for a limited sample of submitted claims to 
        ensure that the previous practice is not continuing.
            ``(5) Consent settlement reforms.--
                    ``(A) In general.--The Secretary may use a consent 
                settlement (as defined in subparagraph (D)) to settle a 
                projected overpayment.
                    ``(B) Opportunity to submit additional information 
                before consent settlement offer.--Before offering a 
                provider of services or supplier a consent settlement, 
                the Secretary shall--
                            ``(i) communicate to the provider of 
                        services or supplier--
                                    ``(I) that, based on a review of 
                                the medical records requested by the 
                                Secretary, a preliminary evaluation of 
                                those records indicates that there 
                                would be an overpayment;
                                    ``(II) the nature of the problems 
                                identified in such evaluation; and
                                    ``(III) the steps that the provider 
                                of services or supplier should take to 
                                address the problems; and
                            ``(ii) provide for a 45-day period during 
                        which the provider of services or supplier may 
                        furnish additional information concerning the 
                        medical records for the claims that had been 
                        reviewed.
                    ``(C) Consent settlement offer.--The Secretary 
                shall review any additional information furnished by 
                the provider of services or supplier under subparagraph 
                (B)(ii). Taking into consideration such information, 
                the Secretary shall determine if there still appears to 
                be an overpayment. If so, the Secretary--
                            ``(i) shall provide notice of such 
                        determination to the provider of services or 
                        supplier, including an explanation of the 
                        reason for such determination; and
                            ``(ii) in order to resolve the overpayment, 
                        may offer the provider of services or 
                        supplier--
                                    ``(I) the opportunity for a 
                                statistically valid random sample; or
                                    ``(II) a consent settlement.
                The opportunity provided under clause (ii)(I) does not 
                waive any appeal rights with respect to the alleged 
                overpayment involved.
                    ``(D) Consent settlement defined.--For purposes of 
                this paragraph, the term `consent settlement' means an 
                agreement between the Secretary and a provider of 
                services or supplier whereby both parties agree to 
                settle a projected overpayment based on less than a 
                statistically valid sample of claims and the provider 
                of services or supplier agrees not to appeal the claims 
                involved.
            ``(6) Notice of over-utilization of codes.--The Secretary 
        shall establish, in consultation with organizations 
        representing the classes of providers of services and 
        suppliers, a process under which the Secretary provides for 
        notice to classes of providers of services and suppliers served 
        by the contractor in cases in which the contractor has 
        identified that particular billing codes may be overutilized by 
        that class of providers of services or suppliers under the 
        programs under this title (or provisions of title XI insofar as 
        they relate to such programs).
            ``(7) Payment audits.--
                    ``(A) Written notice for post-payment audits.--
                Subject to subparagraph (C), if a medicare contractor 
                decides to conduct a post-payment audit of a provider 
                of services or supplier under this title, the 
                contractor shall provide the provider of services or 
                supplier with written notice (which may be in 
                electronic form) of the intent to conduct such an 
                audit.
                    ``(B) Explanation of findings for all audits.--
                Subject to subparagraph (C), if a medicare contractor 
                audits a provider of services or supplier under this 
                title, the contractor shall--
                            ``(i) give the provider of services or 
                        supplier a full review and explanation of the 
                        findings of the audit in a manner that is 
                        understandable to the provider of services or 
                        supplier and permits the development of an 
                        appropriate corrective action plan;
                            ``(ii) inform the provider of services or 
                        supplier of the appeal rights under this title 
                        as well as consent settlement options (which 
                        are at the discretion of the Secretary);
                            ``(iii) give the provider of services or 
                        supplier an opportunity to provide additional 
                        information to the contractor; and
                            ``(iv) take into account information 
                        provided, on a timely basis, by the provider of 
                        services or supplier under clause (iii).
                    ``(C) Exception.--Subparagraphs (A) and (B) shall 
                not apply if the provision of notice or findings would 
                compromise pending law enforcement activities, whether 
                civil or criminal, or reveal findings of law 
                enforcement-related audits.
            ``(8) Standard methodology for probe sampling.--The 
        Secretary shall establish a standard methodology for medicare 
        contractors to use in selecting a sample of claims for review 
        in the case of an abnormal billing pattern.''.
    (b) Effective Dates and Deadlines.--
            (1) Use of repayment plans.--Section 1893(f)(1) of the 
        Social Security Act, as added by subsection (a), shall apply to 
        requests for repayment plans made after the date of the 
        enactment of this Act.
            (2) Limitation on recoupment.--Section 1893(f)(2) of the 
        Social Security Act, as added by subsection (a), shall apply to 
        actions taken after the date of the enactment of this Act.
            (3) Use of extrapolation.--Section 1893(f)(3) of the Social 
        Security Act, as added by subsection (a), shall apply to 
        statistically valid random samples initiated after the date 
        that is 1 year after the date of the enactment of this Act.
            (4) Provision of supporting documentation.--Section 
        1893(f)(4) of the Social Security Act, as added by subsection 
        (a), shall take effect on the date of the enactment of this 
        Act.
            (5) Consent settlement.--Section 1893(f)(5) of the Social 
        Security Act, as added by subsection (a), shall apply to 
        consent settlements entered into after the date of the 
        enactment of this Act.
            (6) Notice of overutilization.--Not later than 1 year after 
        the date of the enactment of this Act, the Secretary shall 
        first establish the process for notice of overutilization of 
        billing codes under section 1893A(f)(6) of the Social Security 
        Act, as added by subsection (a).
            (7) Payment audits.--Section 1893A(f)(7) of the Social 
        Security Act, as added by subsection (a), shall apply to audits 
        initiated after the date of the enactment of this Act.
            (8) Standard for abnormal billing patterns.--Not later than 
        1 year after the date of the enactment of this Act, the 
        Secretary shall first establish a standard methodology for 
        selection of sample claims for abnormal billing patterns under 
        section 1893(f)(8) of the Social Security Act, as added by 
        subsection (a).

SEC. 236. PROVIDER ENROLLMENT PROCESS; RIGHT OF APPEAL.

    (a) In General.--Section 1866 (42 U.S.C. 1395cc) is amended--
            (1) by adding at the end of the heading the following: ``; 
        enrollment processes''; and
            (2) by adding at the end the following new subsection:
    ``(j) Enrollment Process for Providers of Services and Suppliers.--
            ``(1) Enrollment process.--
                    ``(A) In general.--The Secretary shall establish by 
                regulation a process for the enrollment of providers of 
                services and suppliers under this title.
                    ``(B) Deadlines.--The Secretary shall establish by 
                regulation procedures under which there are deadlines 
                for actions on applications for enrollment (and, if 
                applicable, renewal of enrollment). The Secretary shall 
                monitor the performance of medicare administrative 
                contractors in meeting the deadlines established under 
                this subparagraph.
                    ``(C) Consultation before changing provider 
                enrollment forms.--The Secretary shall consult with 
                providers of services and suppliers before making 
                changes in the provider enrollment forms required of 
                such providers and suppliers to be eligible to submit 
                claims for which payment may be made under this title.
            ``(2) Hearing rights in cases of denial or non-renewal.--A 
        provider of services or supplier whose application to enroll 
        (or, if applicable, to renew enrollment) under this title is 
        denied may have a hearing and judicial review of such denial 
        under the procedures that apply under subsection (h)(1)(A) to a 
        provider of services that is dissatisfied with a determination 
        by the Secretary.''.
    (b) Effective Dates.--
            (1) Enrollment process.--The Secretary shall provide for 
        the establishment of the enrollment process under section 
        1866(j)(1) of the Social Security Act, as added by subsection 
        (a)(2), within 6 months after the date of the enactment of this 
        Act.
            (2) Consultation.--Section 1866(j)(1)(C) of the Social 
        Security Act, as added by subsection (a)(2), shall apply with 
        respect to changes in provider enrollment forms made on or 
        after January 1, 2004.
            (3) Hearing rights.--Section 1866(j)(2) of the Social 
        Security Act, as added by subsection (a)(2), shall apply to 
        denials occurring on or after such date (not later than 1 year 
        after the date of the enactment of this Act) as the Secretary 
        specifies.

SEC. 237. PROCESS FOR CORRECTION OF MINOR ERRORS AND OMISSIONS WITHOUT 
              PURSUING APPEALS PROCESS.

    (a) Claims.--The Secretary shall develop, in consultation with 
appropriate medicare contractors (as defined in section 1889(g) of the 
Social Security Act, as inserted by section 301(a)(1)) and 
representatives of providers of services and suppliers, a process 
whereby, in the case of minor errors or omissions (as defined by the 
Secretary) that are detected in the submission of claims under the 
programs under title XVIII of such Act, a provider of services or 
supplier is given an opportunity to correct such an error or omission 
without the need to initiate an appeal. Such process shall include the 
ability to resubmit corrected claims.
    (b) Deadline.--Not later than 1 year after the date of the 
enactment of this Act, the Secretary shall first develop the process 
under subsection (a).

SEC. 238. PRIOR DETERMINATION PROCESS FOR CERTAIN ITEMS AND SERVICES; 
              ADVANCE BENEFICIARY NOTICES.

    (a) In General.--Section 1869 (42 U.S.C. 1395ff(b)), as amended by 
section 233(d)(2)(B), is further amended by adding at the end the 
following new subsection:
    ``(h) Prior Determination Process for Certain Items and Services.--
            ``(1) Establishment of process.--
                    ``(A) In general.--With respect to a medicare 
                administrative contractor that has a contract under 
                section 1874A that provides for making payments under 
                this title with respect to physicians' services (as 
                defined in section 1848(j)(3)), the Secretary shall 
                establish a prior determination process that meets the 
                requirements of this subsection and that shall be 
                applied by such contractor in the case of eligible 
                requesters.
                    ``(B) Eligible requester.--For purposes of this 
                subsection, each of the following shall be an eligible 
                requester:
                            ``(i) A participating physician, but only 
                        with respect to physicians' services to be 
                        furnished to an individual who is entitled to 
                        benefits under this title and who has consented 
                        to the physician making the request under this 
                        subsection for those physicians' services.
                            ``(ii) An individual entitled to benefits 
                        under this title, but only with respect to a 
                        physicians' service for which the individual 
                        receives, from a physician, an advance 
                        beneficiary notice under section 1879(a).
            ``(2) Secretarial flexibility.--The Secretary shall 
        establish by regulation reasonable limits on the physicians' 
        services for which a prior determination of coverage may be 
        requested under this subsection. In establishing such limits, 
        the Secretary may consider the dollar amount involved with 
        respect to the physicians' service, administrative costs and 
        burdens, and other relevant factors.
            ``(3) Request for prior determination.--
                    ``(A) In general.--Subject to paragraph (2), under 
                the process established under this subsection an 
                eligible requester may submit to the contractor a 
                request for a determination, before the furnishing of a 
                physicians' service, as to whether the physicians' 
                service is covered under this title consistent with the 
                applicable requirements of section 1862(a)(1)(A) 
                (relating to medical necessity).
                    ``(B) Accompanying documentation.--The Secretary 
                may require that the request be accompanied by a 
                description of the physicians' service, supporting 
                documentation relating to the medical necessity for the 
physicians' service, and any other appropriate documentation. In the 
case of a request submitted by an eligible requester who is described 
in paragraph (1)(B)(ii), the Secretary may require that the request 
also be accompanied by a copy of the advance beneficiary notice 
involved.
            ``(4) Response to request.--
                    ``(A) In general.--Under such process, the 
                contractor shall provide the eligible requester with 
                written notice of a determination as to whether--
                            ``(i) the physicians' service is so 
                        covered;
                            ``(ii) the physicians' service is not so 
                        covered; or
                            ``(iii) the contractor lacks sufficient 
                        information to make a coverage determination 
                        with respect to the physicians' service.
                    ``(B) Contents of notice for certain 
                determinations.--
                            ``(i) Noncoverage.--If the contractor makes 
                        the determination described in subparagraph 
                        (A)(ii), the contractor shall include in the 
                        notice a brief explanation of the basis for the 
                        determination, including on what national or 
                        local coverage or noncoverage determination (if 
                        any) the determination is based, and a 
                        description of any applicable rights under 
                        subsection (a).
                            ``(ii) Insufficient information.--If the 
                        contractor makes the determination described in 
                        subparagraph (A)(iii), the contractor shall 
                        include in the notice a description of the 
                        additional information required to make the 
                        coverage determination.
                    ``(C) Deadline to respond.--Such notice shall be 
                provided within the same time period as the time period 
                applicable to the contractor providing notice of 
                initial determinations on a claim for benefits under 
                subsection (a)(2)(A).
                    ``(D) Informing beneficiary in case of physician 
                request.--In the case of a request by a participating 
                physician under paragraph (1)(B)(i), the process shall 
                provide that the individual to whom the physicians' 
                service is proposed to be furnished shall be informed 
                of any determination described in subparagraph (A)(ii) 
                (relating to a determination of non-coverage) and the 
                right (referred to in paragraph (6)(B)) to obtain the 
                physicians' service and have a claim submitted for the 
                physicians' service.
            ``(5) Binding nature of positive determination.--If the 
        contractor makes the determination described in paragraph 
        (4)(A)(i), such determination shall be binding on the 
        contractor in the absence of fraud or evidence of 
        misrepresentation of facts presented to the contractor.
            ``(6) Limitation on further review.--
                    ``(A) In general.--Contractor determinations 
                described in paragraph (4)(A)(ii) or (4)(A)(iii) 
                (relating to pre-service claims) are not subject to 
                further administrative appeal or judicial review under 
                this section or otherwise.
                    ``(B) Decision not to seek prior determination or 
                negative determination does not impact right to obtain 
                services, seek reimbursement, or appeal rights.--
                Nothing in this subsection shall be construed as 
                affecting the right of an individual who--
                            ``(i) decides not to seek a prior 
                        determination under this subsection with 
                        respect to physicians' services; or
                            ``(ii) seeks such a determination and has 
                        received a determination described in paragraph 
                        (4)(A)(ii),
                from receiving (and submitting a claim for) such 
                physicians' services and from obtaining administrative 
                or judicial review respecting such claim under the 
                other applicable provisions of this section. Failure to 
                seek a prior determination under this subsection with 
                respect to physicians' service shall not be taken into 
                account in such administrative or judicial review.
                    ``(C) No prior determination after receipt of 
                services.--Once an individual is provided physicians' 
                services, there shall be no prior determination under 
                this subsection with respect to such physicians' 
                services.''.
    (b) Effective Date; Sunset; Transition.--
            (1) Effective date.--The Secretary shall establish the 
        prior determination process under the amendment made by 
        subsection (a) in such a manner as to provide for the 
        acceptance of requests for determinations under such process 
        filed not later than 18 months after the date of the enactment 
        of this Act.
            (2) Sunset.--Such prior determination process shall not 
        apply to requests filed after the end of the 5-year period 
        beginning on the first date on which requests for 
        determinations under such process are accepted.
            (3) Transition.--During the period in which the amendment 
        made by subsection (a) has become effective but contracts are 
        not provided under section 1874A of the Social Security Act 
        with medicare administrative contractors, any reference in 
        section 1869(g) of such Act (as added by such amendment) to 
        such a contractor is deemed a reference to a fiscal 
        intermediary or carrier with an agreement under section 1816, 
        or contract under section 1842, respectively, of such Act.
            (4) Limitation on application to sgr.--For purposes of 
        applying section 1848(f)(2)(D) of the Social Security Act (42 
        U.S.C. 1395w-4(f)(2)(D)), the amendment made by subsection (a) 
        shall not be considered to be a change in law or regulation.
    (c) Provisions Relating to Advance Beneficiary Notices; Report on 
Prior Determination Process.--
            (1) Data collection.--The Secretary shall establish a 
        process for the collection of information on the instances in 
which an advance beneficiary notice (as defined in paragraph (5)) has 
been provided and on instances in which a beneficiary indicates on such 
a notice that the beneficiary does not intend to seek to have the item 
or service that is the subject of the notice furnished.
            (2) Outreach and education.--The Secretary shall establish 
        a program of outreach and education for beneficiaries and 
        providers of services and other persons on the appropriate use 
        of advance beneficiary notices and coverage policies under the 
        medicare program.
            (3) GAO report on use of advance beneficiary notices.--Not 
        later than 18 months after the date on which section 1869(h) of 
        the Social Security Act (as added by subsection (a)) takes 
        effect, the Comptroller General of the United States shall 
        submit to Congress a report on the use of advance beneficiary 
        notices under title XVIII of such Act. Such report shall 
        include information concerning the providers of services and 
        other persons that have provided such notices and the response 
        of beneficiaries to such notices.
            (4) GAO report on use of prior determination process.--Not 
        later than 36 months after the date on which section 1869(h) of 
        the Social Security Act (as added by subsection (a)) takes 
        effect, the Comptroller General of the United States shall 
        submit to Congress a report on the use of the prior 
        determination process under such section. Such report shall 
        include--
                    (A) information concerning--
                            (i) the number and types of procedures for 
                        which a prior determination has been sought;
                            (ii) determinations made under the process;
                            (iii) the percentage of beneficiaries 
                        prevailing;
                            (iv) in those cases in which the 
                        beneficiaries do not prevail, the reasons why 
                        such beneficiaries did not prevail; and
                            (v) changes in receipt of services 
                        resulting from the application of such process;
                    (B) an evaluation of whether the process was useful 
                for physicians (and other suppliers) and beneficiaries, 
                whether it was timely, and whether the amount of 
                information required was burdensome to physicians and 
                beneficiaries; and
                    (C) recommendations for improvements or 
                continuation of such process.
            (5) Advance beneficiary notice defined.--In this 
        subsection, the term ``advance beneficiary notice'' means a 
        written notice provided under section 1879(a) of the Social 
        Security Act (42 U.S.C. 1395pp(a)) to an individual entitled to 
        benefits under part A or enrolled under part B of title XVIII 
        of such Act before items or services are furnished under such 
        part in cases where a provider of services or other person that 
        would furnish the item or service believes that payment will 
        not be made for some or all of such items or services under 
        such title.

SEC. 239. APPEALS BY PROVIDERS WHEN THERE IS NO OTHER PARTY AVAILABLE.

    (a) In General.--Section 1870 (42 U.S.C. 1395gg) is amended by 
adding at the end the following new subsection:
    ``(h) Notwithstanding subsection (f) or any other provision of law, 
the Secretary shall permit a provider of services or supplier to appeal 
any determination of the Secretary under this title relating to 
services rendered under this title to an individual who subsequently 
dies if there is no other party available to appeal such 
determination.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of the enactment of this Act and shall apply to 
items and services furnished on or after such date.

SEC. 240. REVISIONS TO APPEALS TIMEFRAMES AND AMOUNTS.

    (a) Timeframes.--Section 1869 (42 U.S.C. 1395ff) is amended--
            (1) in subsection (a)(3)(C)(ii), by striking ``30-day 
        period'' each place it appears and inserting ``60-day period''; 
        and
            (2) in subsection (c)(3)(C)(i), by striking ``30-day 
        period'' and inserting ``60-day period''.
    (b) Amounts.--
            (1) In general.--Section 1869(b)(1)(E) (42 U.S.C. 
        1395ff(b)(1)(E)) is amended by adding at the end the following 
        new clause:
                            ``(iii) Adjustment of dollar amounts.--For 
                        requests for hearings or judicial review made 
                        in a year after 2004, the dollar amounts 
                        specified in clause (i) shall be equal to such 
                        dollar amounts increased by the percentage 
                        increase in the medical care component of the 
                        consumer price index for all urban consumers 
                        (U.S. city average) for July 2003 to the July 
                        preceding the year involved. Any amount 
                        determined under the previous sentence that is 
                        not a multiple of $10 shall be rounded to the 
                        nearest multiple of $10.''.
            (2) Conforming amendments.--(A) Section 1852(g)(5) (42 
        U.S.C. 1395w-22(g)(5)) is amended by adding at the end the 
        following: ``The provisions of section 1869(b)(1)(E)(iii) shall 
        apply with respect to dollar amounts specified in the first 2 
        sentences of this paragraph in the same manner as they apply to 
        the dollar amounts specified in section 1869(b)(1)(E)(i).''.
            (B) Section 1876(b)(5)(B) (42 U.S.C. 1395mm(b)(5)(B)) is 
        amended by adding at the end the following: ``The provisions of 
        section 1869(b)(1)(E)(iii) shall apply with respect to dollar 
        amounts specified in the first 2 sentences of this subparagraph 
        in the same manner as they apply to the dollar amounts 
        specified in section 1869(b)(1)(E)(i).''.

SEC. 241. MEDIATION PROCESS FOR LOCAL COVERAGE DETERMINATIONS.

    (a) In General.--Section 1869 (42 U.S.C. 1395ff), as amended by 
section 238(a), is amended by adding at the end the following new 
subsection:
    ``(i) Mediation Process for Local Coverage Determinations.--
            ``(1) Establishment of process.--The Secretary shall 
        establish a mediation process under this subsection through the 
        use of a physician trained in mediation and employed by the 
        Centers for Medicare & Medicaid Services.
            ``(2) Responsibility of mediator.--Under the process 
        established in paragraph (1), such a mediator shall mediate in 
        disputes between groups representing providers of services, 
        suppliers (as defined in section 1861(d)), and the medical 
        director for a medicare administrative contractor whenever the 
        regional administrator (as defined by the Secretary) involved 
        determines that there was a systematic pattern and a large 
        volume of complaints from such groups regarding decisions of 
        such director or there is a complaint from the co-chair of the 
        advisory committee for that contractor to such regional 
        administrator regarding such dispute.''.
    (b) Inclusion in MAC Contracts.--Section 1874A(b)(3)(A)(i), as 
added by section 211(a)(1), is amended by adding at the end the 
following: ``Such requirements shall include specific performance 
duties expected of a medical director of a medicare administrative 
contractor, including requirements relating to professional relations 
and the availability of such director to conduct medical determination 
activities within the jurisdiction of such a contractor.''.
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