I

107TH CONGRESS

1ST SESSION H. R. 868

To amend title XVIII of the Social Security Act to ensure that the Secretary

of Health and Human Services provides appropriate guidance to physicians, providers of services, and ambulance providers that are attempting

to properly submit claims under the Medicare Program and to ensure

that the Secretary does not target inadvertent billing errors.

IN THE HOUSE OF REPRESENTATIVES

MARCH 6, 2001

Mr. TOOMEY (for himself, Ms. BERKLEY, Mr. PAUL, Mr. SCHAFFER, Mr.

DEMINT, Mr. VITTER, Mr. SESSIONS, Mr. MCHUGH, Mr. SAXTON, Mrs.

MYRICK, Mr. GOODE, Mr. MILLER of Florida, Mr. PITTS, Mr. HILLEARY,

Mr. CRAMER, Mr. ISTOOK, Mr. HILLIARD, Mr. SOUDER, Mr. TANCREDO,

Mr. JONES of North Carolina, Mr. HASTINGS of Washington, Mr. SHAW,

Mr. TIAHRT, Mr. STENHOLM, Mrs. JO ANN DAVIS of Virginia, Mr.

SMITH of New Jersey, Mrs. KELLY, Mr. FLETCHER, Mr. MCGOVERN,

Mr. GORDON, Mr. BAKER, Mr. SHOWS, Mr. GOODLATTE, Mr.

CUNNINGHAM, Mr. SIMMONS, Mr. NEY, Mr. REYNOLDS, Mr. CAPUANO,

Mr. RYUN of Kansas, Mr. TIBERI, Mr. FOLEY, and Mr. SHADEGG) 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 ensure

that the Secretary of Health and Human Services provides appropriate guidance to physicians, providers of

services, and ambulance providers that are attempting

to properly submit claims under the Medicare Program
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and to ensure that the Secretary does not target inadvertent billing errors.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Medicare Education and Regulatory Fairness Act of

6 2001’’.

7 (b) TABLE OF CONTENTS.—The table of contents of

8 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Definitions.

TITLE I—REGULATORY REFORM

Sec. 101. Prospective application of certain regulations.

Sec. 102. Requirements for judicial and regulatory challenges of regulations.

Sec. 103. Prohibition of recovering past overpayments by certain means.

Sec. 104. Prohibition of recovering past overpayments if appeal pending.

Sec. 105. Prohibition of random prepayment audits.

Sec. 106. Exception on prohibition of waiving medicare copayment.

Sec. 107. Effective date.

TITLE II—APPEALS PROCESS REFORMS

Sec. 201. Construction of hearing rights related to decisions to deny or not

renew a physician enrollment agreement.

Sec. 202. Reform of post-payment audit process.

Sec. 203. Definitions relating to physicians, providers of services, and providers

of ambulance services.

Sec. 204. Right to appeal on behalf of deceased beneficiaries.

Sec. 205. Effective date.

TITLE III—EDUCATION COMPONENTS

Sec. 301. Designated funding levels for physician and provider education.

Sec. 302. Information requests.

TITLE IV—SUSTAINABLE GROWTH RATE REFORMS

Sec. 401. Inclusion of regulatory costs in the calculation of the sustainable

growth rate.
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TITLE V—POLICY DEVELOPMENT REGARDING E&M GUIDELINES

Sec. 501. Policy development regarding E&M Documentation Guidelines.

1 SEC. 2. FINDINGS.

2 Congress finds the following:

3 (1) Congress should focus more resources on

4 and work with physicians and health care providers

5 to combat fraud in the medicare program.

6 (2) The overwhelming majority of physicians

7 and other providers in the United States are law8 abiding citizens who provide important services and

9 care to patients each day.

10 (3) Physicians and other providers of services

11 that participate in the medicare program often have

12 trouble wading through a confusing and sometimes

13 even contradictory maze of medicare regulations.

14 Keeping track of the morass of medicare regulations

15 detracts from the time that physicians have to treat

16 patients.

17 (4) Due to the overly complex nature of medi18 care regulations and the risk of being the subject of

19 an aggressive government investigation, many physi20 cians are leaving the medicare program, limiting the

21 number of medicare patients they see, or refusing to

22 accept new medicare patients at all. If this trend

23 continues, health care for the millions of patients na24 tionwide who depend on medicare will be seriously
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1 compromised. Congress has an obligation to prevent

2 this from happening.

3 (5) Regulatory fairness for physicians and pro4 viders as well as increased access to education about

5 medicare regulations are necessary to preserve the

6 integrity of our health care system and provide for

7 the health of our population.

8 SEC. 3. DEFINITIONS.

9 In this Act:

10 (1) BILLING.—The term ‘‘billing’’ includes any

11 requirement related to the content and timing of an

12 order for care or a plan of treatment by a physician,

13 a provider of service, or a provider of ambulance

14 services.

15 (2) CARRIER.—The term ‘‘carrier’’ means a

16 carrier (as defined in section 1842(f) of the Social

17 Security Act (42 U.S.C. 1395u(f))) with a contract

18 under title XVIII of such Act to administer benefits

19 under part B of such title.

20 (3) EXTRAPOLATION.—The term ‘‘extrapo21 lation’’ has the meaning given such term in section

22 1861(ww)(1) of the Social Security Act (as added by

23 section 203(a)).

24 (4) FISCAL INTERMEDIARY.—The term ‘‘fiscal

25 intermediary’’ means a fiscal intermediary (as de-
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1 fined in section 1816(a) of the Social Security Act

2 (42 U.S.C. 1395h(a))) with an agreement under sec3 tion 1816 of such Act to administer benefits under

4 part A or B of such title.

5 (5) HCFA.—The term ‘‘HCFA’’ means the

6 Health Care Financing Administration.

7 (6) MEDICARE PROGRAM.—The term ‘‘medicare

8 program’’ means the health benefits program under

9 title XVIII of the Social Security Act (42 U.S.C.

10 1395 et seq.).

11 (7) PHYSICIAN.—The term ‘‘physician’’ has the

12 meaning given such term in section 1861(r) of the

13 Social Security Act (42 U.S.C. 1395x(r)).

14 (8) PREPAYMENT REVIEW.—The term ‘‘prepay15 ment review’’ has the meaning given such term in

16 section 1861(ww)(2) of the Social Security Act (as

17 added by section 203(a)).

18 (9) PROVIDER OF SERVICES.—The term ‘‘pro19 vider of services’’ has the meaning given such term

20 in section 1861(u) of the Social Security Act (42

21 U.S.C. 1395x(u)).

22 (10) PROVIDER OF AMBULANCE SERVICES.—

23 The term ‘‘provider of ambulance services’’ means a

24 provider of ambulance services described in section
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1 1861(s)(7) of the Social Security Act (42 U.S.C.

2 1395x(s)(7)).

3 (11) SECRETARY.—The term ‘‘Secretary’’

4 means the Secretary of Health and Human Services.

5 TITLE I—REGULATORY REFORM

6 SEC. 101. PROSPECTIVE APPLICATION OF CERTAIN REGU7 LATIONS.

8 Section 1871(a) of the Social Security Act (42 U.S.C.

9 1395hh(a)) is amended by adding at the end the following

10 new paragraphs:

11 ‘‘(3) Any regulation described under paragraph

12 (2) shall not take effect earlier than the effective

13 date of the final regulation. Any regulation described

14 under such paragraph that applies to an agency ac15 tion, including any agency determination, shall only

16 apply as that regulation is in effect at the time that

17 agency action is taken.

18 ‘‘(4) The Secretary shall issue a final rule with19 in 12 months of the date of publication of an interim

20 final rule. Such final rule shall provide responses to

21 comments submitted in response to the interim final

22 rule. Such final rule shall not establish or change a

23 legal standard not raised in the interim final rule

24 unless a new 60-day comment period is provided.
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1 ‘‘(5) Carriers, fiscal intermediaries, and States

2 pursuant to an agreement under section 1864 shall

3 not apply new policy guidances or policy changes

4 retroactively to services provided before the date the

5 new policy was issued.’’.

6 SEC. 102. REQUIREMENTS FOR JUDICIAL AND REGU7 LATORY CHALLENGES OF REGULATIONS.

8 (a) RIGHT TO CHALLENGE CONSTITUTIONALITY AND

9 STATUTORY AUTHORITY OF HCFA REGULATIONS.—Sec10 tion 1872 of the Social Security Act (42 U.S.C. 1395ii)

11 is amended to read as follows:

12 ‘‘APPLICATION OF CERTAIN PROVISIONS OF TITLE II

13 ‘‘SEC. 1872. Subject to subparagraphs (A), (B), (D),

14 and (E) of section 1848(i)(1), the provisions of sections

15 206 and 216(j), and of subsections (a), (d), (e), (h), (i),

16 (j), (k), and (l) of section 205, shall also apply with respect

17 to this title to the same extent as they are applicable with

18 respect to title II, except that—

19 ‘‘(1) in applying such provisions with respect to

20 this title, any reference therein to the Commissioner

21 of Social Security or the Social Security Administra22 tion shall be considered a reference to the Secretary

23 or the Department of Health and Human Services,

24 respectively; and

25 ‘‘(2) section 205(h) shall not apply with respect

26 to any action brought against the Secretary under
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1 section 1331, 1346, 1361, or 2201 of title 28,

2 United States Code, regardless of whether such ac3 tion is unrelated to a specific determination of the

4 Secretary, that challenges—

5 ‘‘(A) the constitutionality of any provision

6 of this title;

7 ‘‘(B) the constitutionality of substantive or

8 interpretive rules of general applicability issued

9 by the Secretary to carry out this title’’;

10 ‘‘(C) the Secretary’s statutory authority to

11 promulgate such substantive or interpretive

12 rules of general applicability; or

13 ‘‘(D) a finding of good cause under sub14 paragraph (B) of the third sentence of section

15 553(b)(3) of title 5, United States Code, if used

16 in the promulgation of such substantive or in17 terpretive rules of general applicability.’’.

18 (b) ADMINISTRATIVE AND JUDICIAL REVIEW OF

19 SECRETARY DETERMINATIONS.—Section 1866(h) of the

20 Act (42 U.S.C. 1395cc(h)) is amended—

21 (1) in paragraph (1), by striking ‘‘(1)’’ and all

22 that follows and inserting the following: ‘‘(1) Except

23 as provided in paragraph (3), an institution or agen24 cy dissatisfied with a determination by the Secretary

25 that it is not a provider of services or with a deter-
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1 mination described in subsection (b)(2) (regardless

2 of whether such determination has been made by the

3 Secretary or by a State pursuant to an agreement

4 entered into with the Secretary under section 1864

5 and regardless of whether the Secretary has imposed

6 or may impose a remedy, penalty, or other sanction

7 on the institution or agency in connection with such

8 determination) shall be entitled to a hearing thereon

9 by the Secretary (after reasonable notice) to the

10 same extent as is provided in section 205(b), and to

11 judicial review of the Secretary’s final decision after

12 such hearing as is provided in section 205(g), except

13 that, in so applying such sections and in applying

14 section 205(l) thereto, any reference therein to the

15 Commissioner of Social Security or the Social Secu16 rity Administration shall be considered a reference

17 to the Secretary or the Department of Health and

18 Human Services, respectively, and such hearings are

19 subject to the deadlines specified in paragraph

20 (2)f.’’;

21 (2) by redesignating paragraph (2) as para22 graph (3);

23 (3) by inserting after paragraph (1) the fol24 lowing new paragraph:
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1 ‘‘(2)(A)(i) Except as provided in clause (ii), an ad2 ministrative law judge shall conduct and conclude a hear3 ing on a determination described in subsection (b)(2) and

4 render a decision on such hearing by not later than the

5 end of the 90-day period beginning on the date a request

6 for hearing has been timely filed.

7 ‘‘(ii) The 90-day period under clause (i) shall not

8 apply in the case of a motion or stipulation by the party

9 requesting the hearing to waive such period.

10 ‘‘(B) The Department Appeals Board of the Depart11 ment of Health and Human Services shall conduct and

12 conclude a review of the decision on a hearing described

13 in subparagraph (A) and make a decision or remand the

14 case to the administrative law judge for reconsideration

15 by not later than the end of the 90-day period beginning

16 on the date a request for review has been timely filed.

17 ‘‘(C) In the case of a failure by an administrative law

18 judge to render a decision by the end of the period de19 scribed in subparagraph (A)(i), the party requesting the

20 hearing may request a review by the Departmental Ap21 peals Board of the Departmental of Health and Human

22 Services, notwithstanding any requirements for a hearing

23 for purposes of the party’s right to such a review.

24 ‘‘(D) In the case of a request described in subpara25 graph (D), the Departmental Appeals Board shall review
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1 the case de novo. In the case of the failure of the Depart2 mental Appeals Board to render a decision on such hear3 ing by not later than the end of the 60-day period begin4 ning on the date a request for such a Department Appeals

5 Board hearing has been filed, the party requesting the

6 hearing may seek judicial review of the Secretary’s deci7 sion, notwithstanding any requirements for a hearing for

8 purposes of the party’s right to such review.

9 ‘‘(E) In the case of a request described in subpara10 graph (D), the court shall review the case de novo.’’; and

11 (4) by adding at the end the following new

12 paragraph:

13 ‘‘(4) An institution or agency dissatisfied with a find14 ing or determination by the Secretary, or by a State pur15 suant to an agreement under section 1864, that the insti16 tution or agency if out of compliance with any standard

17 or condition of participation under this title (except a de18 termination described in subsection (b)(2)) shall be enti19 tled to a formal review or reconsideration of the finding

20 or determination, in accordance with the regulations pre21 scribed by the Secretary, prior to the imposition of any

22 remedy, penalty, corrective action, or other sanction in

23 connection with the finding or determination.’’.
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1 SEC. 103. PROHIBITION OF RECOVERING PAST OVERPAY2 MENTS BY CERTAIN MEANS.

3 (a) IN GENERAL.—Subject to section 104 and except

4 as provided in subsection (b) and notwithstanding sections

5 1815(a), 1842(b), and 1861(v)(1)(A)(ii) of the Social Se6 curity Act (42 U.S.C. 1395g(a), 1395u(a), and

7 1395x(v)(1)(A)(ii)), or any other provision of law, for pur8 poses of applying sections 1842(b)(3)(B)(ii),

9 1866(a)(1)(B)(ii), 1870, and 1893 of such Act (42 U.S.C.

10 1395u(b)(3)(B)(ii), 1395cc(a)(1)(B)(ii), 1395gg, and

11 1395ddd) to pending and future audits, the Secretary

12 shall give a physician, provider of services, or provider of

13 ambulance services the option of entering into an arrange14 ment to offset alleged overpayments against future pay15 ments or entering into a repayment plan with its carrier

16 or fiscal intermediary to recoup such an overpayment.

17 Under such an arrangement or plan, a physician, provider

18 of services, or provider of ambulance services shall have

19 up to 3 years to offset or repay the overpayment if the

20 amount of such overpayment exceeds $5,000.

21 (b) EXCEPTION.—This section shall not apply to

22 cases in which the Secretary finds clear and convincing

23 evidence of fraud or similar fault on the part of the physi24 cian, provider of services, or provider of ambulance serv25 ices or in the case of overpayments for which an offset
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1 arrangement is in place as of the date of the enactment

2 of this Act.

3 SEC. 104. PROHIBITION OF RECOVERING PAST OVERPAY4 MENTS IF APPEAL PENDING.

5 Notwithstanding any provision of law, for purposes

6 of applying sections 1842(b)(3)(B)(ii), 1866(a)(1)(B)(ii),

7 1870, and 1893 of the Social Security Act (42 U.S.C.

8 1395u(b)(3)(B)(ii), 1395cc(a)(1)(B)(ii), 1395gg, and

9 1395ddd), the Secretary may not take any action (or au10 thorize any other person, including any fiscal inter11 mediary, carrier, and contractor under section 1893 of

12 such Act (42 U.S.C. 1395ddd)) to recoup an overpayment

13 or to impose a penalty during the period in which a physi14 cian, provider of services, or provider of ambulance serv15 ices is appealing a determination that such an overpay16 ment has been made or the amount of the overpayment.

17 SEC. 105. PROHIBITION OF RANDOM PREPAYMENT AUDITS.

18 Carriers may not, prior to paying a claim under the

19 medicare program, demand the production of records or

20 documentation absent cause.

21 SEC. 106. EXCEPTION ON PROHIBITION OF WAIVING MEDI22 CARE COPAYMENT.

23 (a) IN GENERAL.—Section 1128A(i)(6)(A) of the So24 cial Security Act (42 U.S.C. 1320a–7a(i)(6)(A)) is amend-
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1 ed by inserting ‘‘, except for written, mailed communica2 tion with existing patients,’’ before ‘‘waiver is not’’.

3 (b) EFFECTIVE DATE.—The amendment made by

4 subsection (a) shall apply to communications made on or

5 after the date of the enactment of this Act.

6 SEC. 107. EFFECTIVE DATE.

7 Except as otherwise provided in section 106(b), the

8 amendments made by this title shall take effect 60 days

9 after the date of enactment of this Act.

10 TITLE II—APPEALS PROCESS

11 REFORMS

12 SEC. 201. CONSTRUCTION OF HEARING RIGHTS RELATED

13 TO DECISIONS TO DENY OR NOT RENEW A

14 PHYSICIAN ENROLLMENT AGREEMENT.

15 Section 1842 of the Social Security Act (42 U.S.C.

16 1395u) is amended by adding at the end the following new

17 subsection:

18 ‘‘(u) A carrier decision to deny an initial physician

19 enrollment application and a carrier decision not to renew

20 a physician enrollment agreement shall be treated as an

21 initial determination subject to the same course of appeals

22 as other initial determinations under section 1869.’’.

23 SEC. 202. REFORM OF POST-PAYMENT AUDIT PROCESS.

24 (a) CARRIERS.—Section 1842 of the Social Security

25 Act (42 U.S.C. 1395u), as amended by section 201, is fur-
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1 ther amended by adding at the end the following new sub2 section:

3 ‘‘(v) In carrying out its contract under subsection

4 (b)(3), with respect to physicians’ services or ambulance

5 services, the carrier shall provide for the recoupment of

6 overpayments in the following manner:

7 ‘‘(1)(A) During the 1-year period (or 18-month

8 period in the case of a physician who is in a practice

9 with fewer than 10 full-time equivalent employees,

10 including physicians) beginning on the date on which

11 a physician or provider of ambulance services re12 ceives an overpayment, the physician or provider of

13 ambulance services may return the overpayment

14 without penalty or interest to the carrier making

15 such overpayment if—

16 ‘‘(i) the carrier has not requested any rel17 evant record or file; or

18 ‘‘(ii) the case has not been referred before

19 the date of repayment to the Department of

20 Justice or the Office of Inspector General.

21 ‘‘(B) If a physician or provider of ambulance

22 services returns an overpayment under subpara23 graph (A), neither the carrier, contractor under sec24 tion 1893, nor any law enforcement agency may

25 begin an investigation or target such physician or
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1 provider of ambulance services based on any claim

2 associated with the amount the physician or provider

3 of ambulance services has repaid.

4 ‘‘(2) If a carrier has decided to conduct a post5 payment audit of the physician or provider of ambu6 lance services, the carrier shall send written notice

7 to the physician or provider of ambulance services.

8 If the physician or provider of ambulance services

9 practices in a rural area (as defined in section

10 1886(d)(2)(D)), such notice must be sent by reg11 istered mail.

12 ‘‘(3) The carrier or a contractor under section

13 1893 may not recoup or offset payment amounts

14 based on extrapolation (as defined in section

15 1861(ww)(1)) for the first time that the physician or

16 provider of ambulance services is alleged as a result

17 of a post-payment audit to have received an overpay18 ment.

19 ‘‘(4) As part of any written consent settlement

20 communication, the carrier or a contractor under

21 section 1893 shall clearly state that the physician or

22 provider of ambulance services may submit addi23 tional information (including evidence other than

24 medical records) to dispute the overpayment amount
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1 without waiving any administrative remedy or right

2 to appeal the amount of the overpayment.

3 ‘‘(5)(A) Each consent settlement communica4 tion from the carrier or a contractor under section

5 1893 shall clearly state that prepayment review (as

6 defined in section 1861(ww)(2)) may be imposed

7 where the physician or provider of ambulance serv8 ices submits an actual or projected repayment to the

9 carrier or a contractor under section 1893. Subject

10 to subparagraph (D), any prepayment review shall

11 cease when the physician or provider of ambulance

12 services has submitted claims, found by carrier to be

13 covered services and coded properly for the same

14 services that were the basis for instituting the pre15 payment review, in a 180-day period or after proc16 essing claims of at least 75 percent of the volume of

17 the claims (whichever occurs first) received by the

18 carrier in the full month preceding the start of the

19 prepayment review. The 180-day period begins with

20 the date of the carrier’s written notification that the

21 physician or provider of ambulance services is being

22 placed on prepayment review.

23 ‘‘(B) Prepayment review may not be applied

24 under this part as a result of the voluntary submis25 sion of a claim or record under section 1897(b)(2)
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1 or as a result of information provided pursuant to

2 a request under section 302(b) of the Medicare Edu3 cation and Regulatory Fairness Act of 2001.

4 ‘‘(C) Carrier prepayment and coverage policies

5 and claims processing screens used to identify claims

6 for medical review must be incorporated as part of

7 the education programs on medicare policy and

8 proper coding made available to physicians and pro9 viders of ambulance services.

10 ‘‘(D) The time and percentage claim limitations

11 in paragraph (5)(A) shall not apply to cases that

12 have been referred to the Department of Justice or

13 the Office of the Inspector General.’’.

14 (b) FISCAL INTERMEDIARIES.—Section 1816 of such

15 Act (42 U.S.C. 1395h) is amended by adding at the end

16 the following new subsection:

17 ‘‘(m) In carrying out its agreement under this sec18 tion, with respect to payment for items and services fur19 nished under this part, the fiscal intermediary shall pro20 vide for the recoupment of overpayments in the following

21 manner:

22 ‘‘(1)(A) During the 1-year period beginning on

23 the date on which a provider of services receives an

24 overpayment, the provider of services may return the
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1 overpayment without penalty or interest to the fiscal

2 intermediary making such overpayment if—

3 ‘‘(i) the fiscal intermediary has not re4 quested any relevant record or file; or

5 ‘‘(ii) the case has not been referred before

6 the date of repayment to the Department of

7 Justice or the Office of Inspector General.

8 ‘‘(B) If a provider of services returns an over9 payment under subparagraph (A), neither the fiscal

10 intermediary, contractor under section 1893, nor

11 any law enforcement agency may begin an investiga12 tion or target such provider of services based on any

13 claim associated with the amount the provider of

14 services has repaid.

15 ‘‘(2) If a fiscal intermediary has decided to con16 duct a post-payment audit of the provider of serv17 ices, the fiscal intermediary shall send written notice

18 to the provider of services. If the provider of services

19 practices in a rural area (as defined in section

20 1886(d)(2)(D)), such notice must be sent by reg21 istered mail.

22 ‘‘(3) The fiscal intermediary or a contractor

23 under section 1893 may not recoup or offset pay24 ment amounts based on extrapolation (as defined in

25 section 1861(ww)(1)) for the first time that the pro-
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1 vider of services is alleged as a result of a post-pay2 ment audit to have received an overpayment.

3 ‘‘(4) As part of any written consent settlement

4 communication, the fiscal intermediary or a con5 tractor under section 1893 shall clearly state that

6 the provider of services may submit additional infor7 mation (including evidence other than medical

8 records) to dispute the overpayment amount without

9 waiving any administrative remedy or right to appeal

10 the amount of the overpayment.

11 ‘‘(5)(A) Each consent settlement communica12 tion from the fiscal intermediary or a contractor

13 under section 1893 shall clearly state that prepay14 ment review (as defined in section 1861(ww)(2))

15 may be imposed where the provider of services sub16 mits an actual or projected repayment to the fiscal

17 intermediary or a contractor under section 1893.

18 Subject to subparagraph (D), any prepayment re19 view shall cease when the provider of services has

20 submitted claims, found by the fiscal intermediary to

21 be covered services and coded properly for the same

22 services that were the basis for instituting the pre23 payment review, in a 180-day period or after proc24 essing claims of at least 75 percent of the volume of

25 the claims (whichever occurs first) received by the
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1 fiscal intermediary in the full month preceding the

2 start of the prepayment review. The 180-day period

3 begins with the date of the fiscal intermediary’s

4 written notification that the provider of services is

5 being placed on prepayment review.

6 ‘‘(B) Prepayment review may not be applied

7 under this part as a result of the voluntary submis8 sion of a claim, cost report, or record under section

9 1897(b)(2) or as a result of information provided

10 pursuant to a request under section 302(b) of the

11 Medicare Education and Regulatory Fairness Act of

12 2001.

13 ‘‘(C) Fiscal intermediary prepayment and cov14 erage policies and claims processing screens used to

15 identify claims for medical review must be incor16 porated as part of the education programs on medi17 care policy and proper coding made available to pro18 viders of services.

19 ‘‘(D) The time and percentage claim limitations

20 in paragraph (5)(A) shall not apply to cases that

21 have been referred to the Department of Justice or

22 the Office of the Inspector General.’’.
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1 SEC. 203. DEFINITIONS RELATING TO PHYSICIANS, PRO2 VIDERS OF SERVICES, AND PROVIDERS OF

3 AMBULANCE SERVICES.

4 (a) IN GENERAL.—Section 1861 of the Social Secu5 rity Act (42 U.S.C. 1395 et seq.), as amended by section

6 102(b) and 105(b) of the Medicare, Medicaid, and SCHIP

7 Benefits Improvement and Protection Act of 2000 (as en8 acted into law by section 1(a)(6) of Public Law 106–554),

9 is amended by adding at the end the following new sub10 section:

11 ‘‘Definitions Relating to Physicians, Providers of

12 Services, and Providers of Ambulance Services

13 ‘‘(ww) For purposes of provisions of this title relating

14 to physicians, providers of services, and providers of am15 bulance services:

16 ‘‘(1) EXTRAPOLATION.—The term ‘extrapo17 lation’ means the application of an overpayment dol18 lar amount to a larger grouping of claims than those

19 in the audited sample to calculate a projected over20 payment figure.

21 ‘‘(2) PREPAYMENT REVIEW.—The term ‘pre22 payment review’ means a carrier’s and fiscal

23 intermediary’s practice of withholding claim reim24 bursements from physicians, providers of services,

25 and providers of ambulance services pending review
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1 of a claim even if the claims have been properly sub2 mitted and reflect medical services provided.’’.

3 SEC. 204. RIGHT TO APPEAL ON BEHALF OF DECEASED

4 BENEFICIARIES.

5 Notwithstanding section 1870 of the Social Security

6 Act (42 U.S.C. 1395gg) or any other provision of law, the

7 Secretary shall permit any physician, provider of services,

8 and provider of ambulance services to appeal any deter9 mination of the Secretary under the medicare program on

10 behalf of a deceased beneficiary where no substitute party

11 is available.

12 SEC. 205. EFFECTIVE DATE.

13 The amendments made by this title shall take effect

14 at the end of the 180-day period beginning on the date

15 of the enactment of this Act.

16 TITLE III—EDUCATION

17 COMPONENTS

18 SEC. 301. DESIGNATED FUNDING LEVELS FOR PHYSICIAN

19 AND PROVIDER EDUCATION.

20 (a) EDUCATION PROGRAMS FOR PHYSICIANS, PRO21 VIDERS OF SERVICES, AND PROVIDERS OF AMBULANCE

22 SERVICES.—Title XVIII of the Social Security Act (42

23 U.S.C. 1395 et seq.) is amended by adding at the end

24 the following new section:
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1 ‘‘EDUCATION PROGRAMS FOR PHYSICIANS, PROVIDERS OF

2 SERVICES, AND PROVIDERS OF AMBULANCE SERVICES

3 ‘‘SEC. 1897. (a) EDUCATION PROGRAM DEFINED.—

4 In this section, the term ‘education programs’ means pro5 grams undertaken in conjunction with health care associa6 tions that focus on current billing, coding, cost reporting,

7 and documentation laws, regulations, program memo8 randa, instructions to regional offices, and fiscal inter9 mediary and carrier manual instructions that place special

10 emphasis on billing, coding, cost reporting, and docu11 mentation errors that the Secretary has found occur fre12 quently and remedies for these improper billing, coding,

13 cost reporting, and documentation practices.

14 ‘‘(b) CONDUCT OF EDUCATION PROGRAMS.—

15 ‘‘(1) IN GENERAL.—Carriers, fiscal inter16 mediaries, and contractors under section 1893 shall

17 conduct education programs for any physician (or a

18 designee), provider of services, or provider of ambu19 lance services that submits a claim or cost report

20 under paragraph (2)(A). Such carriers, inter21 mediaries, and contractors under section 1893 shall

22 conduct outreach to specifically contact physicians

23 and their designees, providers of services, and pro24 viders of ambulance services with fewer than 10 full25 time-equivalent employees (including physicians) to
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1 implement education programs tailored to their edu2 cation needs and in proximity to their practices.

3 ‘‘(2) PROVIDER EDUCATION.—

4 ‘‘(A) SUBMISSION OF CLAIMS, COST RE5 PORTS, AND RECORDS.—Any physician, pro6 vider of services, or provider of ambulance serv7 ices may voluntarily submit any present or prior

8 claim, cost report, or medical record to the car9 rier or fiscal intermediary to determine whether

10 the billing, coding, and documentation associ11 ated with the claim or cost report is appro12 priate.

13 ‘‘(B) PROHIBITION OF EXTRAPOLATION.—

14 No claim submitted under subparagraph (A) is

15 subject to any type of extrapolation (as defined

16 in section 1861(ww)(1)).

17 ‘‘(C) SAFE HARBOR.—No submission of a

18 claim, cost report, or record under this section

19 shall result in the carrier, fiscal intermediary, a

20 contractor under section 1893, or any law en21 forcement agency beginning an investigation or

22 targeting an investigation based on any claim,

23 cost report, or record submitted under such

24 subparagraph.
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1 ‘‘(3) TREATMENT OF CLAIMS.—If the carrier or

2 fiscal intermediary finds a claim or cost report under

3 paragraph (2) to be improper, the physician, pro4 vider of services, or provider of ambulance services

5 shall have the following options:

6 ‘‘(A) CORRECTION OF PROBLEMS.—To

7 correct the documentation, coding, or billing

8 problem to appropriately substantiate the claim

9 or cost report and either—

10 ‘‘(i) remit the actual overpayment; or

11 ‘‘(ii) receive the appropriate additional

12 payment from the carrier or fiscal inter13 mediary.

14 ‘‘(B) REPAYMENT.—To repay the actual

15 overpayment amount if the service is excluded

16 from medicare coverage under this title or if

17 adequate documentation does not exist.

18 ‘‘(4) PROHIBITION OF PHYSICIAN AND PRO19 VIDER OF SERVICES TRACKING.—Carriers, fiscal

20 intermediaries, and contractors under section 1893

21 may not use the record of attendance or information

22 gathered during an education program conducted

23 under this section or the inquiry regarding claims or

24 cost reports under paragraph (2)(A) to select, iden25 tify, or track such physician, provider of services, or
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1 provider of ambulance services for the purpose of

2 conducting any type of audit or prepayment re3 view.’’.

4 (b) FUNDING OF EDUCATION PROGRAMS.—

5 (1) MEDICARE INTEGRITY PROGRAM.—Section

6 1893(b)(4) of such Act (42 U.S.C. 1395ddd(b)(4))

7 is amended by adding at the end the following new

8 sentence: ‘‘No less than 10 percent of the program

9 funds shall be devoted to the education programs for

10 physicians, providers of services, and providers of

11 ambulance services under section 1897.’’.

12 (2) CARRIERS.—Section 1842(b)(3)(H) of such

13 Act (42 U.S.C. 1395u(b)(3)(H)) is amended by add14 ing at the end the following new clause:

15 ‘‘(iii) No less than 2 percent of carrier

16 funds shall be devoted to the education

17 programs for physicians under section

18 1897.’’.

19 (3) FISCAL INTERMEDIARIES.—Section

20 1816(b)(1) of such Act (42 U.S.C. 1395h(b)(1)) is

21 amended—

22 (A) in subparagraph (A), by striking

23 ‘‘and’’ at the end;

24 (B) in subparagraph (B), by striking ‘‘;

25 and’’ and inserting a comma; and
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1 (C) by adding at the end the following new

2 subparagraph:

3 ‘‘(C) that such agency or organization is

4 using no less than 1 percent of its funding for

5 education programs for providers of services

6 and providers of ambulance services under sec7 tion 1897.’’.

8 (c) EFFECTIVE DATE.—The amendments made by

9 this section shall apply to fiscal years beginning after the

10 date of the enactment of this Act.

11 SEC. 302. INFORMATION REQUESTS.

12 (a) CLEAR, CONCISE, AND ACCURATE ANSWERS.—

13 Fiscal intermediaries and carriers shall do their utmost

14 to provide physicians, providers of services, and providers

15 of ambulance services with a clear, concise, and accurate

16 answer regarding billing and cost reporting questions

17 under the medicare program, and will give their true first

18 and last names to such physicians, providers of services,

19 and providers of ambulance services.

20 (b) WRITTEN REQUESTS.—

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

22 a process under which a physician, provider of serv23 ices, or provider of ambulance services may request,

24 free of charge and in writing from a fiscal inter25 mediary or carrier, assistance in addressing ques-
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1 tions regarding coverage, billing, documentation,

2 coding, and cost reporting procedures under the

3 medicare program and then the fiscal intermediary

4 or carrier shall respond in writing within 30 busi5 ness days with the correct substantive or procedural

6 answer.

7 (2) USE OF WRITTEN STATEMENT.—

8 (A) IN GENERAL.—Subject to subpara9 graph (C), a written statement under para10 graph (1) may be used by the physician, pro11 vider of services, or provider of ambulance serv12 ices who submitted the information request and

13 submitted claims in conformance with the an14 swer of the carrier or fiscal intermediary as

15 proof against a future audit or overpayment al16 legation under the medicare program.

17 (B) EXTRAPOLATION PROHIBITION.—Sub18 ject to subparagraph (C), no claim submitted

19 under this section shall be subject to extrapo20 lation, if the claim adheres to the conditions set

21 forth in the information response.

22 (C) LIMITATION ON APPLICATION.—Sub23 paragraphs (A) and (B) shall not apply to cases

24 of fraudulent billing.
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1 (3) SAFE HARBOR.—If a physician, provider of

2 services, or provider of ambulance services requests

3 information under this subsection, neither the fiscal

4 intermediary, the carrier, a contractor under section

5 1893 of the Social Security Act (42 U.S.C.

6 1395ddd), nor any law enforcement agency may

7 begin an investigation or target such physician or

8 provider based on the request.

9 (c) BROAD POLICY GUIDANCE BY THE SEC10 RETARY.—The Secretary shall develop a mechanism to ad11 dress written questions regarding medicare policy and reg12 ulations, which are submitted by health care associations.

13 The Secretary shall issue such answers within 90 calendar

14 days from the date of the receipt of the question and shall

15 make the responses available to the public in an indexed,

16 easily accessible format.

17 (d) NOTICE OF CHANGES IN POLICY.—Carriers and

18 fiscal intermediaries shall provide written, mailed notice

19 within 30 calendar days to physicians, providers of serv20 ices, and providers of ambulance services of all policy or

21 operational changes to the medicare program. Physicians,

22 providers of services, and providers of ambulance services

23 shall have not less than 30 days to comply with such policy

24 changes.
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1 (e) EFFECTIVE DATE.—This section shall take effect

2 180 days after the date of the enactment of this Act.

3 TITLE IV—SUSTAINABLE

4 GROWTH RATE REFORMS

5 SEC. 401. INCLUSION OF REGULATORY COSTS IN THE CAL6 CULATION OF THE SUSTAINABLE GROWTH

7 RATE.

8 (a) IN GENERAL.—Section 1848(f)(2) of the Social

9 Security Act (42 U.S.C. 1395w–4(f)(2)) is amended—

10 (1) by redesignating subparagraphs (A) through

11 (D) as clauses (i) through (iv), respectively;

12 (2) by striking ‘‘SPECIFICATION OF GROWTH

13 RATE.—The sustainable growth rate’’ and inserting

14 ‘‘SPECIFICATION OF GROWTH RATE.—

15 ‘‘(A) IN GENERAL.—The sustainable

16 growth rate’’; and

17 (3) by adding at the end the following new sub18 paragraphs:

19 ‘‘(B) INCLUSION OF SGR REGULATORY

20 COSTS.—The estimate established under clause

21 (iv) or any successor thereto shall include—

22 ‘‘(i) the impact on costs for physi23 cians’ services resulting from regulations

24 implemented by the Secretary during the

25 year for which the sustainable growth rate
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1 is estimated, including those regulations

2 that may be implemented during such

3 year; and

4 ‘‘(ii) the costs described in subpara5 graph (C).

6 ‘‘(C) INCLUSION OF OTHER REGULATORY

7 COSTS.—The costs described in this subpara8 graph are per procedure costs incurred by phy9 sicians’ practices in complying with regulations

10 promulgated by the Secretary, regardless of

11 whether such regulation affects the fee schedule

12 established under subsection (b)(1).

13 ‘‘(D) INCLUSION OF COSTS IN REGU14 LATORY IMPACT ANALYSES.—With respect to

15 any regulation promulgated that may impose a

16 regulatory cost described in subparagraph

17 (B)(i) or (C) on a physician, the Secretary shall

18 include in the regulatory impact analysis ac19 companying such regulation an estimate of any

20 such cost.

21 ‘‘(E) INCLUSION OF ESTIMATED COST ON

22 RURAL PHYSICIANS.—In promulgating regula23 tions, the Secretary shall specifically estimate

24 the costs to rural physicians and physicians

25 practices in rural areas and the estimated num-
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1 ber of hours needed to comply with the regula2 tion.’’.

3 (b) EFFECTIVE DATE.—The amendments made by

4 subsection (a) shall apply with respect to any estimate

5 made (or regulation promulgated) by the Secretary of

6 Health and Human Services on or after 1 year after the

7 date of enactment of this Act.

8 TITLE V—POLICY DEVELOP9 MENT REGARDING E&M

10 GUIDELINES

11 SEC. 501. POLICY DEVELOPMENT REGARDING E&M DOCU12 MENTATION GUIDELINES.

13 (a) IN GENERAL.—HCFA may not implement any

14 new evaluation and management documentation guidelines

15 (in this section referred to as ‘‘E&M guidelines’’) under

16 the medicare program, unless HCFA—

17 (1) has provided for an assessment of the pro18 posed guidelines by organizations representing physi19 cians;

20 (2) has established a plan that contains specific

21 goals, including a schedule, for improving use of

22 such guidelines;

23 (3) has completed a minimum of 4 pilot

24 projects consistent with subsection (b) in at least 4

25 different HCFA regions administered by 4 different
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1 carriers (to be specified by the Secretary) to test

2 such guidelines; and

3 (4) finds that the objectives described in sub4 section (c) will be met in the implementation of such

5 guidelines.

6 (b) PILOT PROJECTS.—

7 (1) LENGTH AND CONSULTATION.—Each pilot

8 project under this subsection shall—

9 (A) be of sufficient length to allow for pre10 paratory physician and carrier education, anal11 ysis, and use and assessment of potential E&M

12 guidelines; and

13 (B) be conducted, throughout the planning

14 and operational stages of the project, in con15 sultation with organizations representing physi16 cians.

17 (2) PEER REVIEW PILOT PROJECTS.—Of the

18 pilot projects conducted under this subsection—

19 (A) at least one shall focus on a peer re20 view method by physicians (not employed by a

21 carrier) which evaluates medical record infor22 mation for claims submitted by physicians iden23 tified as statistical outliers relative to defini24 tions published in the CPT book;
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1 (B) at least one shall be conducted for

2 services furnished in a rural area (as defined in

3 section 1886(d)(2)(D) of the Social Security

4 Act, 42 U.S.C. 1395ww(d)(2)(D)); and

5 (C) at least one shall be conducted in a

6 setting where physicians bill under physicians

7 services in teaching settings (described in sec8 tion 415.150 of title 42, Code of Federal Regu9 lations).

10 (3) BANNING OF TARGETING OF PILOT

11 PROJECT PARTICIPANTS.—Data collected under this

12 subsection shall not be used as the basis for overpay13 ment demands or post-payment audits.

14 (4) STUDY OF IMPACT.—Each pilot project

15 shall examine the effect of the E&M guidelines on—

16 (A) different types of physician practices,

17 including those with fewer than 10 full-time

18 employees (including physicians); and

19 (B) the costs of physician compliance, in20 cluding education, implementation, auditing,

21 and monitoring.

22 (c) OBJECTIVES FOR E&M GUIDELINES.—The objec23 tives for E&M guidelines specified in this subsection are

24 as follows (relative to the E&M guidelines and review poli25 cies in effect as of the date of the enactment of this Act):
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1 (1) Enhancing clinically relevant documentation

2 needed to code accurately and assess coding levels

3 accurately.

4 (2) Decreasing the level of non-clinically perti5 nent and burdensome documentation time and con6 tent in the record.

7 (3) Increased accuracy by carrier reviewers.

8 (4) Education of both physicians and reviewers.

9 (5) Promote appropriate use of E&M codes by

10 physicians and their staffs.

11 (6) The extent to which the tested E&M docu12 mentation guidelines substantially adhere to the

13 CPT coding definitions and rules.

14 (d) REPORT ON HOW MET PILOT PROJECT OBJEC15 TIVES.—HCFA shall submit a report to the Committees

16 on Energy and Commerce and Ways and Means of the

17 House of Representatives, the Committee on Finance of

18 the Senate, and the Practicing Physicians Advisory Coun19 cil, six months after the conclusion of the pilot projects.

20 Such report shall include the extent to which the pilot

21 projects met the objectives specified in subsections (b)(4)

22 and (c).

Æ